Vol. 83 Thursday, No. 149 August 2, 2018
Pages 37735–38010
OFFICE OF THE FEDERAL REGISTER
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Contents Federal Register Vol. 83, No. 149
Thursday, August 2, 2018
Agency for Toxic Substances and Disease Registry Environmental Protection Agency NOTICES RULES Set 29 Draft Toxicological Profiles, 37812–37813 Renewable Fuel Standard Program: Grain Sorghum Oil Pathway, 37735–37746 Agriculture Department See Forest Service Farm Credit Administration NOTICES Centers for Medicare & Medicaid Services Meetings; Sunshine Act, 37808 RULES Medicare, Medicaid, and Children’s Health Insurance Federal Aviation Administration Programs: PROPOSED RULES Announcement of Extension of Temporary Moratoria on Airworthiness Directives: Enrollment of Part B Non-Emergency Ground Airbus SAS Airplanes, 37766–37768 Ambulance Suppliers and Home Health Agencies in Bell Helicopter Textron Inc. Helicopters, 37764–37766 Designated Geographic Locations, 37747–37750 Gulfstream Aerospace Corporation Airplanes, 37771– 37773 Civil Rights Commission Viking Air Limited (Type Certificate Previously Held by NOTICES Bombardier, Inc.; Canadair Limited) Airplanes, Meetings: 37768–37770 Massachusetts Advisory Committee, 37783–37784 Modification of Class E Airspace: Alaska Towns; Barrow, Chevak, Clarks Point, Elim, and Coast Guard Golovin, 37774–37776 PROPOSED RULES Alaska Towns; Nuiqsut, Perryville, Pilot Point, and Point Regulated Navigation Areas: Lay, 37776–37778 Straits of Mackinac, Mackinaw City, MI, 37780–37782 Alaska Towns; St. Michael, Shaktoolik, and Tatitlek, 37773–37774 Commerce Department Alaska Towns; Toksook Bay, AK; Unalakleet, AK; See International Trade Administration Wainwright, AK; and Yakutat, AK, 37778–37779 See National Oceanic and Atmospheric Administration NOTICES Petitions for Exemptions; Summaries: See Patent and Trademark Office Honeywell Aerospace, 37882
Community Living Administration Federal Communications Commission NOTICES RULES Administrative Supplements, 37813 Cellular Service, Including Changes in Licensing of Unserved Area, 37760–37763 Education Department Emergency Alert System, 37750–37760 NOTICES NOTICES Annual Updates to Income Contingent Repayment Plan Agency Information Collection Activities; Proposals, Formula for 2018—William D. Ford Federal Direct Submissions, and Approvals, 37808–37812 Loan Program, 37802–37806 Applications for New Awards: Federal Election Commission Grants to States for School Emergency Management NOTICES Program, 37797–37802 Meetings; Sunshine Act, 37812
Employee Benefits Security Administration Federal Highway Administration NOTICES NOTICES Requests for Nominations: Federal Agency Actions: Advisory Council on Employee Welfare and Pension Proposed Highway in California, 37882–37883 Benefit Plans, 37827 Food and Drug Administration Energy Department NOTICES NOTICES Agency Information Collection Activities; Proposals, Applications to Export Electric Energy: Submissions, and Approvals: ADG Group, Inc., 37807 Food and Drug Administration’s Research and Evaluation Requests for Information: Survey for Public Education Campaign on Tobacco H2 at Scale (Hydrogen at Scale): Determining among Lesbian Gay Bisexual Transgender Opportunities to Facilitate Wide-Scale Hydrogen Community, 37817–37819 Adoption for Energy Security and Economic Growth, Emergency Use Authorizations: 37807–37808 In Vitro Diagnostic Device for Detection of Ebola Virus, Understanding Catalyst Production and Development Zalgen Labs, LLC for ReEBOV Antigen Rapid Test; Needs at National Laboratories, 37806–37807 Revocation, 37813–37816
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Meetings: Agency Information Collection Activities; Proposals, Advancing Development of Pediatric Therapeutics 5: Submissions, and Approvals: Advancing Pediatric Pharmacovigilance; Public Alaska Quota Cost Recovery Programs, 37796–37797 Workshop, 37816–37817 Meetings: Atlantic Highly Migratory Species Advisory Panel, Forest Service 37795–37796 NOTICES New Fee Sites, 37783 National Science Foundation NOTICES Health and Human Services Department Meetings: See Agency for Toxic Substances and Disease Registry Advisory Committee for Mathematical and Physical See Centers for Medicare & Medicaid Services Sciences, 37827–37828 See Community Living Administration See Food and Drug Administration Nuclear Regulatory Commission See National Institutes of Health NOTICES Hearings: Homeland Security Department Crow Butte Resources, Inc.; Marsland Expansion Area, See Coast Guard 37828–37830 See U.S. Customs and Border Protection Weapons at Atomic Safety and Licensing Board Proceeding: NOTICES Crow Butte Resources, Inc.; Marsland Expansion Area, First Responders Community of Practice, 37821–37822 37828 Indian Affairs Bureau Patent and Trademark Office NOTICES NOTICES Meetings: Agency Information Collection Activities; Proposals, Establishment of Bureau of Indian Education Standards, Submissions, and Approvals, 37797 Assessments, and Accountability System Negotiated Rulemaking Committee, 37822–37823 Postal Service Proclaiming Certain Lands as Reservations: NOTICES Bois Forte Band of Minnesota Chippewa Tribe of Product Changes: Minnesota, 37824 Parcel Select Negotiated Service Agreement, 37831 Rincon Band of Luiseno Mission Indians of Rincon Priority Mail and First-Class Package Service Negotiated Reservation, CA, 37824–37825 Service Agreement, 37830–37831 Interior Department Priority Mail Express, Priority Mail, and First-Class See Indian Affairs Bureau Package Service Negotiated Service Agreement, See Land Management Bureau 37831 Priority Mail Negotiated Service Agreement, 37830–37831 International Trade Administration NOTICES Presidential Documents Antidumping or Countervailing Duty Investigations, Orders, PROCLAMATIONS or Reviews: Trade: Certain Cold-Rolled Steel Flat Products from Republic of African Growth and Opportunity Act; Beneficiary Korea, 37790–37795 Country Designations (Proc. 9771), 37991–38010 Certain Corrosion-Resistant Steel Products from Republic of Korea and Taiwan, 37785–37790 Securities and Exchange Commission Certain Frozen Warmwater Shrimp from India, 37784– NOTICES 37785 Applications: Deregistration under Investment Company Act, 37855 Labor Department Self-Regulatory Organizations; Proposed Rule Changes: See Employee Benefits Security Administration BOX Options Exchange, LLC, 37853–37854 Miami International Securities Exchange, LLC, 37849– Land Management Bureau 37853 NOTICES Nasdaq GEMX, LLC, 37867–37870 Crude Helium Auction and Sale for Fiscal Year 2019 Nasdaq ISE, LLC, 37870–37873 Delivery, 37825–37827 Nasdaq MRX, LLC, 37873–37875 NYSE Arca, Inc., 37831–37839 National Institutes of Health Options Clearing Corp., 37839–37849, 37855–37867, NOTICES 37875–37878 Meetings: Center for Scientific Review, 37820 Small Business Administration National Cancer Institute, 37820 NOTICES National Institutes of Health, 37820–37821 Agency Information Collection Activities; Proposals, Submissions, and Approvals:, 37878–37879 National Oceanic and Atmospheric Administration Disaster Declarations: NOTICES California, 37879 Agency Information Collection Activities; Proposals, Maryland, 37880 Submissions, and Approvals, 37795 Pennsylvania, 37879–37880
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Surface Transportation Board NOTICES NOTICES Commercial Gaugers and Laboratories; Accreditations and Railroad Revenue Adequacy—2017 Determination; Railroad Approvals: Cost of Capital—2017; Uniform Railroad Costing Laboratory Service, Inc., 37821 System—2017 Calculations, 37880–37881
Separate Parts In This Issue Trade Representative, Office of United States NOTICES Part II WTO Dispute Settlement Proceeding Regarding United Homeland Security Department, U.S. Customs and Border States: Protection, 37886–37990 Anti-Dumping Measures on Fish Fillets from Vietnam, Treasury Department, 37886–37990 37881–37882 Part III Transportation Department Presidential Documents, 37991–38010 See Federal Aviation Administration See Federal Highway Administration Reader Aids Consult the Reader Aids section at the end of this issue for Treasury Department phone numbers, online resources, finding aids, and notice PROPOSED RULES of recently enacted public laws. Modernized Drawback, 37886–37990 To subscribe to the Federal Register Table of Contents electronic mailing list, go to https://public.govdelivery.com/ U.S. Customs and Border Protection accounts/USGPOOFR/subscriber/new, enter your e-mail PROPOSED RULES address, then follow the instructions to join, leave, or Modernized Drawback, 37886–37990 manage your subscription.
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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.
3 CFR Proclamations: 9693 (Amended by Proc. 9771) ...... 37993 9771...... 37993 14 CFR Proposed Rules: 39 (4 documents) ...... 37764, 37766, 37768, 37771 71 (4 documents) ...... 37773, 37774, 37776, 37778 19 CFR Proposed Rules: 113...... 37886 181...... 37886 190...... 37886 191...... 37886 33 CFR Proposed Rules: 165...... 37780 40 CFR 80...... 37735 42 CFR 424...... 37747 47 CFR 11...... 37750 22...... 37760
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Rules and Regulations Federal Register Vol. 83, No. 149
Thursday, August 2, 2018
This section of the FEDERAL REGISTER DATES: The final rule is effective 4. Feedstock Pretreatment contains regulatory documents having general October 1, 2018. 5. Fuel Production applicability and legal effect, most of which 6. Fuel Distribution ADDRESSES: The EPA has established a are keyed to and codified in the Code of 7. Fuel Use docket for this action under Docket ID Federal Regulations, which is published under 8. Results of GHG Lifecycle Analysis 50 titles pursuant to 44 U.S.C. 1510. No. EPA–HQ–OAR–2017–0655. All the IV. Definition of Distillers Corn Oil documents in the docket are listed on V. Summary The Code of Federal Regulations is sold by the http://www.regulations.gov website. VI. Statutory and Executive Order Reviews the Superintendent of Documents. Although listed in the index, some A. Executive Order 12866: Regulatory information is not publicly available, Planning and Review and Executive e.g., CBI or other information whose Order 13563: Improving Regulation and ENVIRONMENTAL PROTECTION disclosure is restricted by statute. Regulatory Review AGENCY Certain other material, such as B. Executive Order 13771: Reducing Regulations and Controlling Regulatory 40 CFR Part 80 copyrighted material, is not placed on the internet and will be publicly Costs [EPA–HQ–OAR–2017–0655; FRL–9981–57– available only in hard copy form. C. Paperwork Reduction Act (PRA) OAR] Publicly available docket materials are D. Regulatory Flexibility Act (RFA) available electronically through http:// E. Unfunded Mandates Reform Act RIN 2060–AT82 (UMRA) www.regulations.gov. F. Executive Order 13132: Federalism Renewable Fuel Standard Program: FOR FURTHER INFORMATION CONTACT: G. Executive Order 13175: Consultation Grain Sorghum Oil Pathway Diana Galperin, Office of Air and and Coordination With Indian Tribal AGENCY: Environmental Protection Radiation, Office of Transportation and Governments Agency (EPA). Air Quality, Mail Code: 6401A, U.S. H. Executive Order 13045: Protection of Children From Environmental Health ACTION: Final rule. Environmental Protection Agency, 1200 Pennsylvania Avenue NW, Washington, Risks and Safety Risks SUMMARY: In this action, the DC 20460; telephone number: 202–564– I. Executive Order 13211: Actions Environmental Protection Agency (EPA) Concerning Regulations That 5687; email address: galperin.diana@ Significantly Affect Energy Supply, determines that biodiesel and heating epa.gov. oil produced from distillers sorghum oil Distribution, or Use SUPPLEMENTARY INFORMATION: J. National Technology Transfer via a transesterification process, and Advancement Act (NTTAA) renewable diesel, jet fuel, heating oil, Outline of This Preamble K. Executive Order 12898: Federal Actions naphtha, and liquefied petroleum gas To Address Environmental Justice in (LPG) produced from distillers sorghum I. General Information A. Does this action apply to me? Minority Populations and Low-Income oil via a hydrotreating process, meet the B. What action is the agency taking? Populations lifecycle GHG emissions reduction C. What is the agency’s authority for taking L. Congressional Review Act (CRA) threshold of 50 percent required for this action? I. General Information advanced biofuels and biomass-based D. What are the incremental costs and diesel under the Renewable Fuel benefits of this action? A. Does this action apply to me? Standard (RFS) program. Based on these II. Introduction analyses, EPA is adding these pathways III. Analysis of GHG Emissions Associated Entities potentially affected by this to the list of approved renewable fuel With Production of Biofuels From action are those involved with the production pathways in the RFS Distillers Sorghum Oil production, distribution, and sale of regulations. EPA is also amending the A. Overview of Distillers Sorghum Oil transportation fuels, including gasoline B. Analysis of Lifecycle GHG Emissions RFS regulations by adding a new 1. Livestock Sector Impacts and diesel fuel or renewable fuels such definition of ‘‘distillers sorghum oil,’’ a. Nutritional Impacts as ethanol, biodiesel, heating oil, and replacing existing references to b. Mass Loss renewable diesel, naphtha and liquefied ‘‘non-food grade corn oil’’ with the 2. Feedstock Production petroleum gas. Potentially regulated newly defined term ‘‘distillers corn oil.’’ 3. Feedstock Transport categories include:
Examples of potentially affected entities NAICS1 codes
Petroleum refineries (including importers) ...... 324110 Ethyl alcohol manufacturing ...... 325193 Other basic organic chemical manufacturing ...... 325199 Chemical and allied products merchant wholesalers ...... 424690 Petroleum bulk stations and terminals ...... 424710, 424720 Other fuel dealers ...... 454310
This table is not intended to be for readers regarding entities likely to be the types of entities that the EPA is now exhaustive, but rather provides a guide regulated by this action. This table lists aware could potentially be affected by
1 North American Industry Classification System.
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this action. Other types of entities not fossil fuel present in transportation fuel, used to determine whether a fuel meets listed in the table could also be affected. heating oil, or jet fuel. Non-exempt the necessary GHG reductions required To determine whether your entity is renewable fuels must achieve at least a under the CAA. Lifecycle analysis regulated by this action, you should 20 percent reduction in lifecycle includes an assessment of emissions carefully examine the applicability greenhouse gas (GHG) emissions as related to the full fuel lifecycle, criteria in the referenced regulations. If compared to a 2005 petroleum including feedstock production, you have any questions regarding the baseline.3 Advanced biofuel and feedstock transportation, fuel applicability of this action to a biomass-based diesel must achieve at production, fuel transportation and particular entity, consult the person least a 50 percent reduction, and distribution, and tailpipe emissions. Per listed in the FOR FURTHER INFORMATION cellulosic biofuel must achieve at least the CAA definition of lifecycle GHG CONTACT section. a 60 percent reduction. emissions, EPA’s lifecycle analyses also include an assessment of significant B. What action is the agency taking? In addition to the lifecycle GHG reduction requirements, there are other indirect emissions, such as those from EPA is amending the RFS regulations definitional criteria for renewable fuel land use changes and agricultural sector to add a new definition of ‘‘distillers (e.g., produced from renewable biomass impacts. sorghum oil’’ and to replace existing as defined in the statute and regulations, EPA received a petition from the references to ‘‘non-food grade corn oil’’ and used to reduce or replace the National Sorghum Producers (NSP), with the newly defined term ‘‘distillers quantity of fossil fuel present in submitted under partial claims of corn oil.’’ This rule also adds the transportation fuel, heating oil, or jet confidential business information (CBI), following pathways to rows F and H of fuel) in CAA section 211(o) and the RFS requesting that EPA evaluate the GHG Table 1 to 80.1426: (1) Biodiesel and regulations at 40 CFR part 80 subpart M. emissions associated with biofuels heating oil produced from distillers Since the formation of the RFS produced using as a feedstock grain sorghum oil and commingled distillers program, EPA has periodically sorghum oil derived from dry mill sorghum and corn oil via a promulgated rules to add new pathways ethanol production, and that EPA transesterification process; and (2) to the regulations.4 In addition, EPA has provide a determination of the renewable diesel, jet fuel, and heating approved facility-specific pathways renewable fuel categories, if any, for oil produced from distillers sorghum oil through the petition process in 40 CFR which such biofuels may be eligible. and commingled distillers sorghum and 80.1416. There are three critical EPA issued a proposed rule in 5 corn oil via a hydrotreating process. components of approved fuel pathways December 2017 to establish approved Pathways for naphtha and LPG under the RFS program: (1) Fuel type; pathways for the use of grain sorghum produced from distillers sorghum oil via (2) feedstock; and (3) production oil, and received comments on this a hydrotreating process are also added process. Each pathway is associated proposal. In this action, EPA is to row I of Table 1 to 40 CFR 80.1426. with a specific ‘‘D-code’’ that amending the RFS program regulations These pathways are approved for corresponds to one of the four categories to define the term ‘‘distillers sorghum biomass-based diesel (D-code 4) or of renewable fuel—general renewable oil.’’ We are also adding pathways to advanced biofuel (D-code 5) renewable fuel, advanced biofuel, cellulosic rows F, H and I of Table 1 to 40 CFR identification numbers (RINs), biofuel, or biomass-based diesel. 80.1426 for biodiesel, renewable diesel, depending on the fuel type and whether EPA’s lifecycle analyses are used to heating oil, naphtha, and LPG produced the production process involves co- assess the overall GHG emissions of a from distillers sorghum oil, via processing renewable biomass and transesterification or hydrotreating fuel throughout each stage of its petroleum.2 processes. production and use. The results of these This preamble describes EPA’s C. What is the agency’s authority for analyses, considering uncertainty and analysis of the GHG emissions taking this action? the weight of available evidence, are associated with distillers sorghum oil Statutory authority for this action when used to produce specified biofuels comes from Clean Air Act sections 114, 3 A baseline volume of renewable fuel produced from facilities that commenced construction on or via particular processes. The analysis 208, 211, and 301. before December 19, 2007, and which completed considers a scenario where distillers construction by December 19, 2010, without an 18- sorghum oil is recovered from distillers D. What are the incremental costs and month hiatus in construction, is exempt from the benefits of this action? grains with solubles (DGS) at dry mill minimum 20 percent GHG reduction requirement plants that produce biofuel from grain There are no incremental costs from that otherwise applies to renewable fuel. In addition, a baseline volume of ethanol from sorghum and where the remaining this action. This action allows for facilities that commenced construction after reduced-oil DGS co-product is used as additional flexibility and feedstock December 19, 2007, and on or before December 31, animal feed. The distillers sorghum oil production options for participating in 2009, qualifies for the same exemption if is then used as a feedstock for the Renewable Fuel Standard (RFS) construction was completed within 36 months without an 18-month hiatus in construction; the conversion into certain biofuels. As program. facility was fired with natural gas, biomass, or any described in section III.B.8 of this II. Introduction combination thereof, at all times the facility preamble, we find that, under these operated between December 19, 2007, and circumstances, biodiesel and heating oil December 31, 2009; and the baseline volume Section 211(o) of the Clean Air Act produced from distillers sorghum oil via (CAA) establishes the RFS program, continues to be produced through processes fired with natural gas, biomass, or any combination a transesterification process meets the under which EPA sets annual thereof. 50 percent GHG reduction threshold percentage standards specifying the 4 Please see information on Pathways I and required for advanced biofuel and amount of renewable fuel, as well as Pathways II in 40 CFR part 80 subpart M, and in biomass-based diesel. We also find that, three subcategories of renewable fuel, the Federal Register at 78 FR 14190 (March 5, 2013) and 79 FR 42128 (July 18, 2014). More information under these circumstances, renewable that must be used to reduce or replace on these can be found at: https://www.epa.gov/ diesel, jet fuel, naphtha, and LPG renewable-fuel-standard-program/final-rule- produced from distillers sorghum oil via 2 The term ‘‘biomass-based diesel’’ is defined in identify-additional-fuel-pathways-under-renewable- the statute to exclude any renewable fuels derived fuel and https://www.epa.gov/renewable-fuel- a hydrotreating process meets the 50 from co-processing biomass with a petroleum standard-program/renewable-fuel-pathways-ii-final- feedstock. CAA Section 211(o)(1)(D). rule-identify-additional-fuel. 5 82 FR 61205 (December 27, 2017).
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percent GHG emission reduction generated using that feedstock code.8 Dry mill ethanol and butanol 10 plants threshold required for advanced biofuel. Fuel producers will be instructed on grind and ferment grain sorghum,11 As discussed in section IV of this how and when to remove the non-food produce ethanol or butanol from the preamble, EPA is also amending the grade corn oil feedstock from their fermented grain sorghum starch, and RFS regulations to add a new definition registration. also produce a DGS co-product (made of for ‘‘distillers corn oil’’ that is consistent With no known exceptions, ethanol non-fermentable solids, solubles syrup, with the new definition of distillers and sorghum oil) that is sold as a type sorghum oil. The definitional change for plants that recover grain sorghum oil also, and in most cases simultaneously, of livestock feed. A portion of the oil distillers corn oil was proposed in the that would otherwise reside in the DGS recover corn oil by the same methods. November 2016 Renewable can be recovered at the biofuel plant, Thus, for practical implementation Enhancement and Growth Support typically through mechanical extraction. purposes, it is important to finalize the proposed rule (the ‘‘November 2016 Sorghum oil is recovered through 6 distillers corn oil definitional changes REGS proposed rule’’). Although that methods identical to that of corn oil in this rulemaking, to provide rule proposed to revise the definition of recovered from DGS, and corn and consistency between these regulatory corn oil extraction, after considering the sorghum oil recovery can occur at the definitions. Finally, we also include in comments received, we decided it was same facilities. more appropriate to leave the definition this rulemaking pathways for biodiesel The recovered distillers corn and of corn oil extraction unchanged, and and heating oil produced from sorghum oils contain a high instead add and define the term commingled distillers sorghum oil and concentration of free-fatty acids, greater distillers corn oil. This new term, distillers corn oil via a than ten percent by weight,12 and are distillers corn oil, will replace the transesterification process, and unsuitable for human consumption existing term, non-food grade corn oil renewable diesel, jet fuel, and, heating without further refining. It can, (which some parties have found oil produced from commingled distillers however, be used without further unclear) in rows F and H of Table 1 to sorghum and corn oil via hydrotreating 40 CFR 80.1426. The primary difference processes. refining as a biofuel feedstock or as an between the existing and new terms is ingredient in animal feed. There are III. Analysis of GHG Emissions that the new definition of distillers corn existing approved RFS fuel pathways for Associated With Production of Biofuels biofuels produced from distillers corn oil allows for the recovery of corn oil at 13 additional points in the ethanol From Distillers Sorghum Oil oil to qualify for advanced biofuel (D- code 5) or biomass-based diesel (D-code production process (provided certain A. Overview of Distillers Sorghum Oil conditions are met). Thus, although the 4) RINs, depending on the production new definition allows additional corn Sorghum is native to Africa, but was process used (see rows F and H of Table oil to be used as a feedstock in the introduced to the U.S. in the early 17th 1 to 40 CFR 80.1426). This rulemaking relevant pathways, the same life cycle century. Grain sorghum belongs to the establishes similar pathways for the use considerations apply and the analyses species Sorghum bicolor (L.) Moench,9 of distillers sorghum oil as currently for those pathways are unaffected.7 The which has been bred for different exist for the use of distillers corn oil, purpose and practical effect of this final purposes including use as a grain (grain and also establishes an additional rule, to allow corn oil extraction at more sorghum), a source of sugar (sweet pathway in row I of Table 1 to 40 CFR stages of ethanol production, closely sorghum), and animal forage (biomass 80.1426, as discussed further below. match the notice of proposed sorghum). In the U.S., grain sorghum is In previous actions, EPA has rulemaking on this topic. In light of the commonly used as animal feed similar approved pathways for the production practical similarity between ‘‘non-food to feed corn, although in some parts of of ethanol from grain sorghum made grade corn oil’’ and ‘‘distillers corn oil’’ the world it is more often grown for through a dry mill process as qualifying and to avoid implementation difficulties human consumption. Pathways for for renewable fuel (D-code 6) RINs, and from continuing to administer ethanol produced from grain sorghum in some cases advanced biofuel (D-code registrations with obsolete terms, fuel were approved in a rule published on 5) RINs, depending on process energy producers who are currently registered December 17, 2012 (77 FR 74592). We sources used during production.14 In for pathways that include non-food also discussed biomass sorghum in a December 2016, EPA also approved grade corn oil as a feedstock will need Federal Register Notice published on (with conditions) a facility-specific to update their registration to include December 31, 2014 (79 FR 78857). In pathway for advanced butanol distillers corn oil feedstock through a that notice, we stated that EPA does not (qualifying for (D-code 5) RINs) company update in EPA’s Central Data consider hybrids of Sorghum bicolor Exchange (CDX). After the effective date and Johnsongrass (Sorghum halepense) 10 Given that ethanol production far exceeds that of this final rule, including a reasonable to be biomass sorghum. We would also of butanol, for the sake of brevity, this preamble often refers only to dry mill ethanol plants, but transition period to allow for adequate not consider such hybrids to be grain time for registration updates to be butanol plants are implied to be included in such sorghum. Johnsongrass hybrids are references, unless stated otherwise. initiated and processed, the non-food explicitly excluded due to concerns 11 Grain sorghum refers to Sorghum bicolor (L.) grade corn oil feedstock code will be regarding their potential to behave as an Moench ssp. Bicolor, see: https://plants.usda.gov/ removed and RINs will not be able to be core/profile?symbol=sobib. invasive species. 12 A Moreau, Robert & B Hicks, Kevin & Johnston, 6 81 FR 80828 (November 16, 2016). David & P. Laun, Nathan. (2010). The Composition 8 of Crude Corn Oil Recovered after Fermentation via 7 See 81 FR 80828, 80900 (‘‘[W]e believe that the For more information on EPA’s guidelines for Centrifugation from a Commercial Dry Grind precise timing and method of corn oil extraction is registration updates see memo to the docket, not relevant for GHG reductions to be accomplished ‘‘Registration Approach for Fuel Producers Ethanol Process. Journal of the American Oil pursuant to pathways F and H, provided that: (1) Transitioning from Non-Food Grade Corn Oil to Chemists’ Society. 87. 10.1007/s11746–010–1568–z. The corn is converted to ethanol; (2) The corn oil Distillers Corn Oil Feedstock,’’ in Air Docket EPA– 13 This rulemaking replaces the term ‘‘non-food is extracted at a point in the dry mill ethanol HQ–OAR–2017–0655. grade corn oil’’ in the feedstock column of rows F production process that renders it unfit for food 9 See, U.S. Department of Agriculture Natural and H of Table 1 to 40 CFR 80.1426 with ‘‘distillers uses without further refining; and (3) The resulting Resource Conservation Service, https:// corn oil.’’ See section VI of this preamble for further DGS from the dry mill operation is marketable as plants.sc.egov.usda.gov/core/profile?symbol= discussion. animal feed.’’) SOBI2, accessed July 02, 2018. 14 Table 1 to 40 CFR 80.1426, Rows R and S.
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produced from grain sorghum as a quantities of feedstocks used’’ for each intend to inform companies with feedstock.15 batch of renewable fuel produced or existing facility-specific pathway Currently about 30 percent of grain imported. The regulations do not approvals for non-food grade corn oil, sorghum grown, or 120 million bushels specify a method for fuel producers to granted through the 40 CFR 80.1416 a year, goes towards ethanol use in determining the quantity of each petition process, that such pathway production.16 Most of this production feedstock when the feedstocks are approvals will be interpreted by EPA as occurs in Texas, Oklahoma, and received as a commingled shipment, as approvals for distillers corn oil. (This Kansas.17 For comparison, in recent would likely be the case for distillers gives such producers the same treatment years over 5,200 million bushels of corn corn oil and distillers sorghum oil. A as producers who registered for non- have been used for ethanol production number of commenters recommended food grade corn oil feedstock without annually.18 Distillers sorghum oil can be that EPA clarify the treatment of mixed first being approved for a facility- produced at these facilities and used for distillers corn and sorghum oil in the specific petition.) In order to generate biofuel production or other uses. final rule. Based on these comments, we (D-code 5) RINs for naphtha and/or LPG However, it is still a relatively niche believe it is appropriate to clarify the produced from distillers corn oil and/or product, and the NSP petition treatment of commingled distillers corn commingled distillers corn and sorghum anticipates that with approval of an RFS and sorghum oils in this rule. Given our oil, a fuel producer would first need to pathway, a potential of 12 to 21 million expectation that a large share of petition EPA pursuant to 40 CFR ethanol-equivalent gallons of biofuel distillers sorghum oil will be mixed 80.1416, have EPA review and approve would be produced from the distiller with distillers corn oil when it is their requested pathway, and then sorghum oil per year. recovered, from a practical standpoint, submit and have EPA accept the To the extent that distillers sorghum approving a distillers sorghum oil registration for the new pathway. oil is used as a biofuel feedstock, it will pathway without clearly allowing for EPA sought comment in the December often be produced together with the use of commingled shipments 2017 sorghum oil proposed rule on a distillers corn oil at ethanol plants using would unnecessarily constrain the use proposed definition for distillers a combination of grain sorghum and of these potential feedstocks. Further, sorghum oil. We summarize comments corn as feedstocks for ethanol we acknowledge that it is not practical received below, with a more detailed production. The commingled distiller to require parties to separate the oils summary and analysis included in the sorghum and corn oils will then be from this mixture and report the docket for this rulemaking. EPA shipped as a mixture to a different distillers sorghum and corn oils as received one comment on the proposed biofuel production facility for use as a individual feedstocks. Taking these definition, asking that EPA clarify the feedstock.19 Due to the recovery process factors into consideration and for ease of phrase ‘‘rendered unfit for food uses’’ to of the oils from the DGS, where the implementation, we are adding specify that this means human food uses ethanol plant is using a feedstock that ‘‘Commingled distillers corn and and not animal food uses. In this combines grain sorghum and corn, it is sorghum oils’’ as a feedstock to rows F comment EPA was also asked to finalize not possible to physically separate the and H of Table 1 to 40 CFR 80.1426. revisions to the definition of corn oil distillers sorghum and corn oils into Thus, facilities producing fuel through extraction that was proposed in the two streams, nor is it possible to these pathways can treat commingled November 2016 REGS proposed rule. account for the volume of sorghum oil distillers corn oil and distillers sorghum The requested clarification is consistent or corn oil in this mixture. Due to this oil as a single feedstock and report the with EPA’s intended meaning, and we specific recovery process and inability combined volume of these oils in RIN are finalizing a definition that says, ‘‘the to separate or allocate volume generation reports under 40 CFR oil is unfit for human food use without associated with each oil in the mixture, 80.1451(b)(ii)(K). They may also further refining.’’ We are also removing we are allowing the mixture of distiller generate RINs in accordance with the the word ‘‘rendered’’ from this part of sorghum and corn oil to be reported formula in 40 CFR 80.1426(f)(2) for the definition, as it is unnecessary and together as one volume. For example, renewable fuel that can be described by seemed to raise questions for the RFS regulations at 40 CFR a single pathway. commenters without any clear benefit. 80.1451(b)(ii)(K) require renewable fuel At this time, EPA is not adding EPA received a number of comments producers to submit RIN generation ‘‘commingled distillers corn and on the November 2016 REGS proposed reports that include the ‘‘types and sorghum oil’’ as a feedstock to row I of rule related to the proposed changes to Table 1 to 40 CFR 80.1426 for the the definition of corn oil extraction 15 December 22, 2016 pathway approval for Gevo, production of naphtha and LPG via a Inc., https://www.epa.gov/renewable-fuel-standard- contained in that proposed rule. Based program/gevo-inc-approval. hydrotreating process. Non-food grade on these comments, we have made a 16 Sorghum Checkoff, ‘‘Renewables,’’ http:// corn oil is not currently listed in that number of changes to the proposed www.sorghumcheckoff.com/market-opportunities/ row, nor has EPA proposed to add it (or definition of distillers sorghum oil to renewables, accessed 09-05-2017, (EPA-HQ-OAR- distillers corn oil). Thus, it would be ensure that it aligns with the definition 2017-0655-0015). 17 USDA, NASS, ‘‘Sorghum for Grain 2016 premature for EPA to add either of distillers corn oil. These comments Harvested Acres by County for Selected States,’’ distillers corn oil or commingled and associated changes are discussed in https://www.nass.usda.gov/Charts_and_Maps/ distillers corn and sorghum oil as section IV, and in more detail in a graphics/AS-HA-RGBChor.pdf, (EPA-HQ-OAR- feedstocks in row I. Through the fuel response to comment document in the 2017-0655-0019). pathway petition process, EPA 18 USDA, ERS, ‘‘Table 5—Corn supply, docket for this rulemaking. disappearance, and share of total corn used for previously approved two petitions As part of this rule, we are adding a ethanol,’’ U.S. Bioenergy Statistics, https:// allowing the generation of advanced definition of distillers sorghum oil in 40 www.ers.usda.gov/data-products/us-bioenergy- biofuel (D-code 5) RINs for naphtha and CFR 80.1401. So long as the criteria in statistics/us-bioenergy-statistics/#Feedstocks, the definition are met, a variety of accessed 09–05–2017, (EPA–HQ–OAR–2017–0655– LPG produced from non-food grade corn 20 0021). oil via a hydrotreating process. We recovery methods could be 19 See comment from the Renewable Fuels Association (EPA–HQ–OAR–2017–0655–0039) and 20 Renewable Energy Group’s facility in Geismar, Green Diesel’s facility in Norco, LA (https:// NSP petition, (EPA–HQ–OAR–2017–0655–0005), LA (https://www.epa.gov/renewable-fuel-standard- www.epa.gov/renewable-fuel-standard-program/ pp. 8. program/reg-geismar-approval-0) and Diamond diamond-green-diesel-llc-approval).
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implemented. For example, this would these comments and conducted further bushel of grain sorghum feedstock can include recovery of sorghum oil before analysis to estimate the potential be recovered using commercially fermentation from the slurry or from indirect GHG emissions associated with available mechanical extraction liquefaction tanks. It would also include replacing the extracted distillers technologies.24 When oil is recovered recovery of sorghum oil after sorghum oil. After accounting for these from the DGS, the total mass of DGS fermentation from the thin stillage and/ emissions, based on available produced could be reduced by up to or DGS. Further, it would also include information and reasonable assumptions approximately 6 percent. However, DGS recovery of sorghum oil by a third-party, to account for uncertainties, our revised from grain sorghum represents less than and/or at a separate location from the analysis continues to show that biofuels 3 percent of DGS fed to domestic biofuel plant. The definition of distillers produced from distillers sorghum oil livestock.25 Even if all distillers sorghum oil is consistent with the satisfy the 50 percent lifecycle GHG sorghum oil were removed from definition of distillers corn oil, which is reduction threshold required to qualify also being finalized in this rule (see as advanced biofuel or biomass-based livestock feed, the overall impact on the section IV of this preamble). diesel. Finally, some commenters on the livestock sector would be extremely proposed distillers sorghum oil rule small. To the extent that sorghum DGS B. Analysis of Lifecycle GHG Emissions suggested that EPA has an obligation to are likely to be fed in combination with EPA evaluated the GHG emissions engage in consultation with the United corn DGS and other livestock feed associated with using distillers sorghum States Fish and Wildlife Service and/or ingredients, the changes in oil content oil as a biofuel feedstock based on that National Marine Fisheries Service on the combined feed could potentially information provided by the petitioner, under Section 7 of the Endangered be too small to discern.26 In that case, input from the U.S. Department of Species Act prior to finalizing the rule. it is unlikely that feedstock suppliers Agriculture (USDA), public comments, Such consultation is required for actions would find a need to replace the and other available data sources. GHG in which the Agency has discretion to distillers sorghum oil with other oils. As emissions include emissions from tailor its actions for the benefit of mentioned previously, EPA has an production and transport of grain threatened or endangered species, or existing pathway approved for non-food sorghum, the production and transport their critical habitat, and where the grade corn oil, now referred to as of distillers sorghum oil; the processing action in question ‘‘may effect’’ listed distillers corn oil. Much of the current of the oil into biofuel; transport of the species. However, as described in the corn DGS on the feed market is already biofuel from the production facility to Response to Comments Document de-oiled, and because all known current the fuel-blender; and, ultimately the use accompanying this rule, EPA does not facilities using sorghum blend with corn of the biofuel by the end consumer. have discretion under the statute to take DGS, we do not expect any significant EPA’s lifecycle analyses include into consideration possible impacts to significant direct and indirect GHG changes in oil concentrations from what threatened or endangered species or already exists on the market. However, emissions (including such emissions their critical habitat in determining based on the comments received, we from land use changes) associated with which biofuels qualify under the have conducted additional analysis on producing a feedstock and transporting renewable fuel standard program as the potential indirect GHG emissions it to the processing facility. All of the advanced biofuel or biomass-based emissions associated with growing, diesel and, even if it did have such impacts on a per pound of oil extracted harvesting, and transporting grain discretion, today’s rule will have no basis. sorghum as a biofuel feedstock were effect on threatened or endangered Chemically, full-oil and reduced-oil calculated and taken into account in species. As a result, Section 7 sorghum DGS share similar EPA’s evaluation of the lifecycle GHG consultation is not required. compositions; they are primarily made emissions associated with grain up of crude protein, fat, and natural and 21 1. Livestock Sector Impacts sorghum ethanol and butanol. acid detergent fibers.27 Where the two In the proposed rule we described our During a typical dry mill fermentation products differ most significantly is in preliminary finding that biofuels process, DGS are produced. These DGS produced from distillers sorghum oil their acid detergent fiber and fat are then used as animal feed, thereby concentrations. reduce lifecycle GHG emissions by displacing feed crops and the GHG approximately 80 percent compared to emissions associated with growing and the petroleum baseline. These results transporting those feed crops. After assumed zero indirect GHG emissions distillers sorghum oil is removed, DGS 24 related to compensating for oil removal 0.88 pounds removal is at the highest end of continue to be produced and sold as the information NSP provided and corresponds to from DGS, based on the premise that livestock feed, but with reduced oil a fat content in reduced-oil distillers grains of certain types of livestock benefit from content. 3.91% rather than 7.2% which NSP considers as a lower-fat DGS and therefore removing We do not expect sorghum oil more likely outcome. the sorghum oil would not result in removal to have significant impact on 25 NSP petition (EPA–HQ–OAR–2017–0655– 0005), pp. 19. And, AgMRC, ‘‘Estimated U.S. Dried significant indirect impacts. EPA the types and quantities of feed used in Distillers Grains with Solubles (DDGS) Production received two comments arguing that the livestock market. EPA’s modeling & Use,’’ https://www.extension.iastate.edu/agdm/ extracting distillers sorghum oil from for the December 2012 grain sorghum crops/outlook/dgsbalancesheet.pdf, (EPA–HQ– DGS reduces the mass, calorific, and fat ethanol final rule assumed average dried OAR–2017–0655–0006). content of the DGS, and that there 26 See Air Docket EPA–HQ–OAR–2017–0655, DGS yield of 17 pounds per bushel of U.S. Department of Agriculture, Office of the Chief would be significant indirect GHG grain sorghum feedstock.22 The oil Scientist and Office of the Chief Economist, emissions associated with replacing content of full oil DGS is approximately ‘‘Memorandum: Technical responses on EPA these losses with other sources of 1.71 pounds per bushel,23 of which assumptions related to the lifecycle GHG livestock feed. As discussed below, we assessment of the proposed grain oil sorghum approximately 0.67–0.88 pounds per biofuel pathway,’’ March 15, 2018, pp. 4. have adjusted our analysis based on 27 Neutral detergent fibers measure the amount of 22 See 77 FR 74592 (December 17, 2012). structural component of plants, while acid 21 See the December 17, 2012 grain sorghum 23 NSP petition (EPA–HQ–OAR–2017–0655– detergent fibers measure the least digestible plant ethanol final rule (77 FR 74592). 0005), Attachment 4, pp. 7. components.
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Table III.1 shows the key constituents the ‘‘displacement rate’’ of a DGS, occurs when milk fat is reduced by 0.2 that make up dried full-oil and reduced- which indicates how much weight a percent or more.33 If milk fat depression oil DGS. pound of distillers grain can replace of occurs over the long term, a decline in another feed. A lower feed displacement overall milk production may occur as TABLE III.1—KEY NUTRIENT MAKE-UP rate for a reduced-oil distillers grain as well as worsened health conditions of OF FULL-OIL AND REDUCED-OIL compared to a full-oil distillers grain the herd. High fat diets have been linked DRIED DISTILLERS GRAINS WITH could result in additional GHG with this condition and have been SOLUBLES (DDGS) DERIVED FROM emissions as it suggests that additional shown to worsen the rumen 34 GRAIN SORGHUM 28 feed is required to replace the missing environment of dairy cattle. Therefore, oil. Displacement rates are calculated by dairy producers seek to avoid high fat Full-oil Reduced-oil taking into account nutrient and energy diets. Given the benefits of reduced-oil Nutrient sorghum sorghum requirements of livestock and their DGS over full-oil DGS for milk fat DDGS DDGS respective recommended DGS inclusion production, it is expected that reduced- rates to maintain animal performance.30 Crude Protein, % .. 30.80 31.36 oil DGS will be preferred over full-oil The next section (III.B.1.b. Mass Loss), Crude Fat, % (aka DGS by dairy producers and that feed Ether Extract) .... 9.75 3.91 describes how we used the displacement rates will be no lower Neutral Detergent displacement rate to analyze the than those of full-oil DGS. emissions impacts associated with the Fiber (NDF), % .. 33.60 37.23 An impact on displacement rates may removal of oil from sorghum DGS. Acid Detergent occur when reduced-oil instead of full- Fiber (ADF), % .. 22.68 31.91 Research suggests that for several oil DGS are used for beef cattle, which Ash, % ...... 6.62 7.60 livestock types there are performance require additional fat. Table III.2 shows Calcium, % ...... 0.12 0.08 improvements, per pound of DGS, when the displacement ratios for the livestock Phosphorus, % ..... 0.76 0.96 oil content of fed-DGS is removed. For sectors where dried DGS (DDGS) are Lysine, % ...... 0.82 0.62 instance, for poultry and swine, Methionine, % ...... 0.54 0.47 used. In this table, for instance, 1 pound ‘‘increased concentrations of free fatty Cystine, % ...... 0.53 0.61 of reduced-oil DDGS fed to beef cattle acids have a negative impact on lipid Tryptophan, % ...... 0.25 0.23 displaces 1.173 pounds of corn, as digestion and energy content.’’ 31 Free opposed to 1.196 pounds of corn for 29 fatty acids are a class of acids that form EPA received two comments full-oil DDGS. A pound of full-oil and regarding the potential greenhouse gas part of a lipid molecule. Full-oil DGS typically contain higher levels of free reduced-oil DDGS also displaces equal impacts on the livestock sector if the amounts (0.056 pounds) of urea. Urea is distillers oil is removed. One potential fatty acids and thus may have a negative impact on the fat digestion of poultry a non-protein nitrogen compound that is impact is based on whether a lower typically fed to cattle for aiding the crude fat concentration would require and swine. Thus, while the fat content may be lower for reduced-oil DGS, per production of protein by rumen changes in the livestock feed microbes.35 These values show that for composition to make up for the pound feeding values of this product may not be lower than full-oil DGS for dairy, swine, and poultry, reduced-oil nutritional loss to the livestock DDGS replace the same amounts of (nutritional impacts). The second poultry and swine and the feed displacement rate may not be lower for alternative feed despite containing less potential impact is related to the oil than full-oil DDGS. This is not the physical reduction in DGS mass reduced-oil versus full-oil DGS. For dairy, there are also benefits from case, however, with respect to beef resulting from the oil recovery (mass cattle. loss). We address both of these potential feeding reduced-oil DGS as compared to impacts in the following sections. full-oil DGS. Research on dairy cows shows that reduced-oil DGS produce a 33 University of Kentucky, ‘‘Preventing Milk Fat a. Nutritional Impacts lessened likelihood of the onset of milk Depression in Dairy Cows,’’ https://afs.ca.uky.edu/ dairy/preventing-milk-fat-depression-dairy-cows. 32 The key issue associated with the first fat depression. Milk fat depression Accessed September 08, 2018, (EPA–HQ–OAR– potential impact is whether the reduced 2017–0655–0017). On the herd level milk fats range 30 calories would impact the amount of For more detail see, Arora et al., (2008). from 3 to 5 percent normally. Oetzel, Garret R., Argonne National Laboratory. ‘‘Update of distillers ‘‘Subacute Ruminal Acidosis in Dairy Herds: feed displaced through the use of grains displacement ratios for corn ethanol Physiology, Pathophysiology, Milk Fat Responses, sorghum DGS. Should fat content not be life-cycle analysis’’ (EPA–HQ–OAR–2017–0655– and Nutritional Management.’’ Preconference at sufficient levels, livestock producers 0007). Seminar 7A: Dairy Herd Problem Investigation might need to add nutrients or other 31 Kerr, B.J., W.A. Dozier, and G.C. Shurson. Strategies: Lameness, Cow Comfort, and Ruminal types of feed to meet appropriate (2016). ‘‘Lipid digestibility and energy content of Acidosis, American Association of Bovine distillers’ corn oil in swine and poultry,’’ Journal Practitioners, 40th Annual Conference, September nutritional targets. This is reflected in of Animal Science. 94:2900–2908. doi:10.2527/ 17, 2007—Vancouver, BC, Canada, https:// jas.2016–0440, pp. 2905 (EPA–HQ–OAR–2017– www.vetmed.wisc.edu/dms/fapm/fapmtools/2nutr/ 28 The chart lists the most prominent constituents 0655–0010). sara1aabp.pdf pp.98. (EPA–HQ–OAR–2017–0655– in distillers grains. Data provided by the National 32 H.A. Ramirez-Ramirez, E. Castillo Lopez, C.J.R. 0012). Sorghum Producers, see Air docket EPA–HQ–OAR– Jenkins, N.D. Aluthge, C. Anderson, S.C. Fernando, 34 Penn State Extension, ‘‘Troubleshooting 2017–0655. Data for full-oil sorghum DDGS is K.J. Harvatine, P.J. Kononoff, (2016). ‘‘Reduced-fat Problems with Milkfat Depression,’’ August 14, sourced from Nutrient Requirements of Swine, 2012 dried distillers grains with solubles reduces the risk 2017, https://extension.psu.edu/troubleshooting- National Academies Press, Washington, DC, pp 329. for milk fat depression and supports milk problems-with-milkfat-depression. Accessed Data for reduced-oil Sorghum DDGS was calculated production and ruminal fermentation in dairy September 08, 2017, (EPA–HQ–OAR–2017–0655– by National Sorghum Producers using the ratio of cows,’’ Journal of Dairy Science, Volume 99, Issue 0016). (1) corn DDGS, between 6 to 9 percent Oil; and (2) 3, Pages 1912–1928, ISSN 0022–0302, http:// 35 Penn State Extension, ‘‘Urea in Beef Cattle corn DDGS, less than 4 percent oil from Nutrient dx.doi.org/10.3168/jds.2015-9712. (http:// Rations,’’ August 08, 2017, https:// Requirements of Swine, 2012 National Academies www.sciencedirect.com/science/article/pii/ extension.psu.edu/urea-in-beef-cattle-rations. Press, Washington, DC, pp. 266 and 267. S0022030216000515), (EPA–HQ–OAR–2017–0655– Accessed October 18, 2017, (EPA–HQ–OAR–2017– 29 EPA–HQ–OAR–2017–0655–0041, 0042. 0014). 0655–0018).
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TABLE III.2—FULL-OIL AND REDUCED-OIL SORGHUM DISTILLERS GRAINS WITH SOLUBLES DISPLACEMENT RATIOS 36 [lb of ingredient/lb of sorghum distillers grains with solubles, dry matter basis]
Beef cattle Dairy cattle Swine Poultry 37 Ingredient Full-oil Reduced-oil Full-oil Reduced-oil Full-oil Reduced-oil Full-oil Reduced-oil
Corn ...... 1.196 1.173 0.731 0.731 0.890 0.890 0.292 0.292 Soybean Meal...... 0.633 0.633 0.095 0.095 ...... Urea ...... 0.056 0.056 ......
b. Mass Loss When oil is removed from the substitution rate for how much corn sorghum DGS, the distillers grains would be needed for every pound of The second issue raised by the decrease in mass. Although feed rations grain sorghum oil diverted to biofuel commenters on potential livestock are complex, for the purposes of production, by livestock type (see Table indirect GHG impacts 38 relates to the conducting this analysis, in USDA’s III.3 below).43 potential impacts of mass reduction judgement it is a reasonable assumption from the removal of oil from sorghum to use corn to substitute for the mass TABLE III.3—FEED SUBSTITUTION DGS. The commenters also suggested loss due to sorghum oil recovery. Corn RATIO that EPA consider the impacts of is a relatively low cost primary product feeding reduced-oil sorghum DGS to all that is readily available in the locations Substitution 40 types of livestock rather than those where sorghum oil is produced. Feed ratio where performance gains were likely to Furthermore, USDA experts noted that Livestock type (lb feed substitute substitute/lb be seen. In evaluating these comments, to the extent that other materials such oil extracted) EPA has undertaken additional analysis as crop residues or waste from the to account for the potential indirect human food supply system were Beef ...... Corn ...... 1.551 GHG emissions associated with this available and used instead, they would Dairy ...... Corn ...... 0.731 ‘‘mass loss’’ effect. Since sorghum likely have a lower GHG profile than Swine ...... Corn ...... 0.890 accounts for less than 3 percent of the corn.41 To the extent that these other Poultry ...... Corn ...... 0.292 domestically consumed distillers grains, materials may be used, assuming corn there is very little market data on the substitutes for mass loss is a Using the national average shares for impacts of removing oil from the conservative assumption for a GHG DDGS use by livestock type,44 we sorghum DGS on the livestock sector. emissions perspective.42 calculated a weighted average 1.2 EPA, therefore, has relied on the To calculate the impact of the mass pounds of corn substituted per pound of expertise of USDA to inform the loss and the greenhouse gas emission distillers sorghum oil removed. Based livestock sector impact analysis impacts from the substitution of corn for on our modeling for the March 2010 described below.39 sorghum DGS, EPA used data obtained RFS rule, we have used an emissions from a study conducted by Argonne factor of 0.27 kgCO2e per pound of corn 36 Information provided by National Sorghum National Laboratory and estimates from produced, transported and consumed.45 Producers, see Air docket EPA–HQ–OAR–2017– NSP for the displacement of feed by The product of these values gives a 0655, using the following sources Arora et al., DGS by livestock type (see Table III.2). livestock sector impact of 0.31 kgCO e (2008). Argonne National Laboratory. ‘‘Update of 2 distillers grains displacement ratios for corn ethanol Using these data, we calculated a per pound of distillers sorghum oil, life-cycle analysis,’’ (EPA–HQ–OAR–2017–0655– which represents the potential indirect 0007); Kerr et al., (2016). ‘‘Lipid digestibility and biofuel pathway,’’ March 15, 2018, Air Docket EPA– emissions resulting from additional corn energy content of distillers’ corn oil in swine and HQ–OAR–2017–0655. produced to substitute for a loss in poultry,’’ Journal of Animal Science 94:2900–8, 40 Corn is demonstrably cheaper than other (EPA–HQ–OAR–2017–0655–0010); Opheim et al., feedstock replacements. For instance, in the U.S. sorghum DGS on a per pound of oil (2016). ‘‘Biofuel feedstock and blended coproducts corn in the 2016/2017 season averaged $0.06/lb extracted basis. The product of this compared with deoiled corn distillers grains in whereas, soy oil in 2017 averaged $0.32/lb and corn value and the yield for each type of feedlot diets: Effects on cattle growth performance, oil averaged $0.28. See USDA ERS, Feed Grains biofuel (pounds of distillers sorghum oil apparent total tract nutrient digestibility, and Yearbook, https://www.ers.usda.gov/data-products/ carcass characteristics,’’ Journal of Animal Science feed-grains-database/feed-grains-yearbook- per mmBtu of fuel) results in the 94:227, (EPA–HQ–OAR–2017–0655–0013); Ramirez tables.aspx (accessed on June 14, 2018) and USDA livestock sector GHG impacts listed in et al., (2016). ‘‘Reduced-fat dried distillers grains Vegetable Oils and Animal Fats, Oil Crop Yearbook, the results table in section III.B.8 of this with solubles reduces the risk for milk fat https://www.ers.usda.gov/data-products/oil-crops- preamble. depression and supports milk production and yearbook.aspx (accessed on June 06, 2018). ruminal fermentation in dairy cows,’’ Journal of 41 See, U.S. Department of Agriculture, Office of Dairy Science 99:1912–28, (EPA–HQ–OAR–2017– the Chief Scientist and Office of the Chief 43 See, Summary for the Final Rule of Key 0655–0014). Poultry displacement ratios were Economist, ‘‘Memorandum: Technical responses on Assumptions for EPA’s Analysis of the Lifecycle provided by the National Sorghum Producers and EPA assumptions related to the lifecycle GHG Greenhouse Gas Emissions Associated with calculated based on data from the Iowa State assessment of the proposed grain oil sorghum Biofuels Produced from Distillers Sorghum Oil and Extension Services, Agricultural Marketing and biofuel pathway,’’ March 15, 2018, Air Docket EPA– Distiller Sorghum Oil LCA Spreadsheet, Air Docket Resources Center, ‘‘Estimated U.S. Dried Distillers HQ–OAR–2017–0655. EPA–HQ–OAR–2017–0655. Grains with Solubles (DDGS) Production and Use,’’ 42 The purpose of lifecycle assessment under the 44 The data comes from the medium projections https://www.extension.iastate.edu/agdm/crops/ RFS program is not to precisely estimate lifecycle for the year 2016–2017 from AgMRC, ‘‘Estimated outlook/dgsbalancesheet.pdf (EPA–HQ–OAR– GHG emissions associated with particular biofuels, U.S. Dried Distillers Grains with Solubles (DDGS) 2017–0655–0006). but instead to determine whether or not the fuels Production & Use,’’ https://www.extension.iastate. 37 Protein sources such as soybean meal can be satisfy specified lifecycle GHG emissions thresholds edu/agdm/crops/outlook/dgsbalancesheet.pdf, used to supplement sorghum DGS for poultry. to qualify as one or more of the four types of (EPA–HQ–OAR–2017–0655–0006). 38 EPA-HQ-OAR–2017–0655–0041, 0042. renewable fuel specified in the statute. Where there 45 See the docket memo ‘‘Summary for the Final 39 See, U.S. Department of Agriculture, Office of are a range of possible outcomes and the fuel Rule of Key Assumptions for EPA’s Analysis of the the Chief Scientist and Office of the Chief satisfies the GHG reduction requirements when Lifecycle Greenhouse Gas Emissions Associated Economist, ‘‘Memorandum: Technical responses on ‘‘conservative’’ assumptions are used, then a more with Biofuels Produced from Distillers Sorghum EPA assumptions related to the lifecycle GHG precise quantification of the matter is not required Oil,’’ Air Docket EPA–HQ–OAR–2017–0655, for assessment of the proposed grain oil sorghum for purposes of a pathway determination. more details.
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2. Feedstock Production 3. Feedstock Transport energy balance data in the NSP petition, Distillers sorghum oil is removed In our analysis, distillers sorghum oil submitted under claim of CBI, the from DGS at dry mill biofuel plants is transported 50 miles by heavy duty conversion of yellow grease and using the same equipment and truck from the dry mill ethanol plant to distillers sorghum oil are expected to technologies used for distillers corn oil the biodiesel or hydrotreating facility require similar energy inputs and yield recovery. Oil recovery requires thermal where it is converted to transportation similar amounts of biodiesel as output. energy to heat the DGS and electricity fuel. GHG emissions associated with For production of renewable diesel, to power centrifuges, pumps and other feedstock transport are relatively small, jet fuel, naphtha and LPG via a oil recovery equipment. Our analysis for and modest changes in transport hydrotreating process, we used the same data and approach as used in the March the March 2010 RFS final rule,46 the distance would not affect the threshold 2013 Pathways I rule,54 and subsequent NSP petition, and two studies,47 48 determinations based on our analysis. facility-specific petitions involving indicate that although extracting oil 4. Feedstock Pretreatment hydrotreating processes.55 The March from DGS uses thermal energy, it also 2013 Pathways I rule evaluated two leads to relatively less thermal energy For emissions from feedstock hydrotreating configurations: One being used later in the process to dry the pretreatment and fuel production, we optimized for renewable diesel DGS, resulting in an overall negligible perform two analyses. In the first production and one optimized for jet change in thermal energy requirements analysis, we calculate the emissions fuel production. For this analysis we for plants that dry their DGS. Our from biodiesel and heating oil produced evaluated a hydrotreating process analysis here includes both the thermal using transesterification. In the second analysis, we calculate the emissions maximized for renewable diesel and electrical energy requirements to production, as that is the most common remove the distillers sorghum oil. We from renewable diesel, jet fuel, LPG, and naphtha, produced using hydrotreating. configuration. The jet fuel configuration do not account for the reduction in results in higher emissions thermal energy needed for DGS drying Before distillers sorghum oil is converted to biodiesel via (approximately 5 kgCO2e/mmBtu mentioned above, so this can be viewed higher), but the threshold GHG as a conservative approach (i.e., transesterification, it is processed to remove free-fatty acids. This process reduction results discussed below are resulting in higher estimated GHG requires thermal energy. Our evaluation not sensitive to this assumption. emissions) for plants that dry their DGS. of yellow grease for the March 2010 RFS Our previous analyses of Based on our review of the data,49 we final rule included 14,532 Btu of natural hydrotreating processes have applied an assume 200 Btu (British thermal units) gas per gallon of biodiesel produced for energy allocation approach for RIN- of grid electricity and 800 Btu of natural pretreatment, and we have applied the generating co-products that qualify as gas are used to recover distillers 56 same assumption for this analysis. renewable fuel. This approach results sorghum oil from DGS, per pound of According to the NSP petition, distillers in higher lifecycle GHG emissions for distillers sorghum oil recovered. These sorghum oil has free fatty acid content each of the fuel products than other parameters are based on energy near or below 15 percent, which is in approaches considered, such as a requirements associated with extracting the range of yellow grease free fatty acid displacement approach, and thus can be oil from DGS at dry mill ethanol plants, contents (<15 percent).51 Our viewed as a conservative approach. We but we believe they are also appropriate assumption on pretreatment thermal have used this approach in assessing and conservative in cases where the oil energy use for distillers sorghum oil is GHG emissions impacts of fuels derived is recovered at any point downstream from distillers sorghum oil. 50 higher than thermal energy use in other from sorghum grinding. (non-EPA) lifecycle assessments of high In the allocation approach, all the emissions from the hydrotreating 46 free-fatty acid biodiesel feedstocks that See section 1.4.1.3 of USEPA (2010). we have reviewed,52 and can be viewed process are allocated across all co- Renewable fuel standard program (RFS2) regulatory products. There are a number of ways to impact analysis. U.S. Environmental Protection as a conservative assumption (i.e., Agency Office of Transportation Air Quality, EPA– resulting in higher GHG emissions). do the allocation, for example on the 420–R–10–006. Washington, DC. https:// Pretreatment to remove free-fatty basis of energy, mass, or economic www.epa.gov/sites/production/files/2015-08/ acids is not required when distillers value. Consistent with the approach documents/420r10006.pdf. taken in the hydrotreating analysis for 47 Wang, Z., et al. (2015). ‘‘Influence of corn oil sorghum oil is used to produce recovery on life-cycle greenhouse gas emissions of renewable diesel, jet fuel, LPG and the March 2013 RFS rule, for this corn ethanol and corn oil biodiesel.’’ Biotechnology naphtha through a hydrotreating analysis of fuels produced from for Biofuels 8(1): 178, (EPA–HQ–OAR–2017–0655– process. distillers sorghum oil feedstock through 0020). a hydrotreating process, we allocated 48 Mueller, S., Kwik, J. (2013). ‘‘2012 Corn 5. Fuel Production emissions to the renewable diesel, Ethanol: Emerging Plant Energy and Environmental Technologies.’’ For biodiesel production, we used the naphtha and LPG based on the energy 49 See sources referenced in footnotes 20 and 21 transesterification analysis for the content (using lower-heating values) of for energy use associated with oil extraction, and March 2010 RFS rule for yellow grease the products produced. Emissions from California Air Resources Board (2014), (EPA–HQ– biodiesel.53 Based on comparison of this the process were allocated equally to all OAR–2017–0655–0011). ‘‘California-Modified yellow grease analysis and the mass and of the Btus of fuel produced. Therefore, GREET Fuel Pathway: Biodiesel Produced in the Midwestern and the Western U.S. from Corn Oil on a per Btu basis, all of the primary Extracted at Dry Mill Ethanol Plants that Produce extraction techniques that would yield higher levels products coming from the hydrotreating Wet Distiller’s Grains with Solubles.’’ Staff of oil. Overall, we expect any differences to be facility have the same emissions from Summary, Method 1 Fuel Pathway (EPA–HQ–OAR– small in the context of this distillers sorghum oil the fuel production stage of the 2017–0655–0009). analysis. 50 There are limited data on the energy efficiency 51 See Table 15 in the January 5, 2012 Pathways of alternative oil extraction technologies. Oil I direct final rule (77 FR 722). 54 See 78 FR 14190 (March 5, 2013). extraction earlier in the dry mill process would 52 See for example: California Environmental 55 For determination documents responding to offer energy efficiency benefits later in the process, Protection Agency Air Resources board, https:// facility specific petitions, see: https://www.epa.gov/ as moving oil through the fermentation and ethanol www.arb.ca.gov/fuels/lcfs/2a2b/apps/co_bd_wdgs- renewable-fuelstandard-program/approved- recovery processes tends to increase energy rpt-102414.pdf, (EPA–HQ–OAR–2017–0655–0008). pathways-renewable-fuel. requirements. Recovery further downstream at a 53 For details see section 2.4 of the RIA for the 56 See the March 2013 Pathways I rule, separate location would likely include chemical March 2010 RFS final rule. specifically 78 FR 14198–14200 (March 5, 2013).
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lifecycle. For this analysis, the energy assumed that heating oil, renewable sensitive to these assumptions. More content was the most appropriate basis diesel, jet fuel, LPG, and naphtha have details on our analysis of fuel use for allocating emissions because all of the same fuel distribution emissions as emissions are described in a memo 57 to the fuel products are used as sources of biodiesel per mmBtu of fuel used. the rulemaking docket. energy. Energy content also has the 7. Fuel Use 8. Results of GHG Lifecycle Analysis advantage of being a fixed factor as opposed to market prices which For this analysis we applied fuel use Table III.4 shows the lifecycle GHG fluctuate over time. emissions factors developed for the emissions associated with biofuels March 2010 RFS final rule. We used the produced from distillers sorghum oil 6. Fuel Distribution biodiesel emissions factor for biodiesel that result from our assessment. The We used the fuel distribution results and biodiesel used as heating oil. For table also shows the percent reduction from the biodiesel analysis for the renewable diesel and jet fuel we used relative to the petroleum baseline. All of March 2010 RFS rule. Fuel distribution the emissions factors for non-CO2 GHGs the fuels are compared to the diesel emissions are relatively small compared for baseline diesel fuel. For naphtha we baseline, except for naphtha which is to baseline lifecycle GHG emissions (see used the emissions factors for non-CO2 compared to the gasoline baseline. Table III.4: Lifecycle GHG Emissions GHGs for baseline gasoline fuel. For Based on the lifecycle GHG emissions Associated With Biofuels Produced LPG we used the LPG non-CO2 results presented above, all of the From Distillers Sorghum Oil (kgCO2-eq/ emissions factor developed for the pathways evaluated meet the 50 percent MJ) below), and although they may be March 2010 RFS rule. The tailpipe GHG reduction threshold required for different for different types of fuel, for emissions are relatively small, and the advanced biofuel and biomass-based the purposes of this analysis we threshold GHG reduction results are not diesel.
TABLE III.4—LIFECYCLE GHG EMISSIONS ASSOCIATED WITH BIOFUELS PRODUCED FROM DISTILLERS SORGHUM OIL
[kgCO2-eq/MJ]
Renewable Fuel Biodiesel, diesel, Naphtha LPG 2005 Diesel 2005 Gasoline heating oil jet fuel baseline baseline
Production process Transesterification Hydrotreating Refining
Livestock Sector Impacts ...... 20.7 19.4 19.4 19.4 ...... Feedstock Production ...... 6.6 6.2 6.2 6.2 18.0 19.2 Feedstock Transport ...... 0.3 0.3 0.3 0.3 Feedstock Pretreatment ...... 8.4 Fuel Production ...... 1.2 8.0 8.0 8.0 Fuel Distribution ...... 0.8 0.8 0.8 0.8 Fuel Use ...... 0.7 0.7 1.7 1.5 79.0 79.0
Total ...... 38.7 35.4 36.4 36.2 97.0 98.2
Percent Reduction ...... 60 64 63 63 ......
IV. Definition of Distillers Corn Oil The proposed definitional change was without further refining, and the oil motivated by the evolution of corn oil extraction results in distillers grains In the March 2010 RFS final rule, EPA extraction technology within the marketable as animal feed.’’ This established two pathways (pathways F ethanol industry, which allows ethanol definitional change was intended to and H in Table 1 to 40 CFR 80.1426) for producers to recover corn oil at different both address the developments in corn biomass-based diesel (D-code 4) or locations in the ethanol production oil extraction and to define the advanced biofuel (D-code 5) made from process, with potential energy efficiency conditions under which corn oil ‘‘non-food grade corn oil.’’ The lifecycle and ethanol yield benefits. qualifies as a feedstock for the purposes GHG analyses for these pathways were In the November 2016 REGS proposed of Table 1. based on the EPA’s modeling of corn oil rule, EPA reasoned that the precise As explained below, rather than the recovered from DGS produced by a dry- timing and method of corn oil extraction approach proposed in the 2016 REGS mill corn ethanol plant through corn oil are not relevant for meeting the 50 proposed rule, which would have extraction. In the November 2016 REGS percent GHG reduction threshold revised the term ‘‘corn oil extraction’’ proposed rule, EPA proposed to revise associated with pathways F and H, and replaced ‘‘non-food grade corn oil’’ pathways F and H in Table 1 to 40 CFR provided that a number of conditions with ‘‘oil from corn oil extraction’’ in are satisfied. Specifically, EPA proposed rows F and H, EPA is instead leaving 80.1426 to specify that the feedstock is the following definition for corn oil the definition of ‘‘corn oil extraction’’ ‘‘oil from corn oil extraction,’’ rather extraction: ‘‘Corn oil extraction means as-is and is finalizing a definition for the than ‘‘non-food grade corn oil,’’ and to the recovery of corn oil at any point term ‘‘distillers corn oil’’ that will be include a revised and somewhat downstream of when a dry mill corn used in Table 1. The substance of the broadened definition of ‘‘corn oil ethanol plant grinds the corn, provided definition of ‘‘distillers corn oil’’ extraction’’ relative to the 2010 that the corn is converted to ethanol, the finalized here is consistent with the definition.58 oil is rendered unfit for food uses proposed definition for ‘‘corn oil
57 See, ‘‘Summary of Key Assumptions for EPA’s Sorghum Oil,’’ Air Docket EPA–HQ–OAR–2017– 58 See section VII.B of the November 2016 REGS Analysis of the Lifecycle Greenhouse Gas Emissions 0655. proposed rule (81 FR 80900–01). Associated with Biofuels Produced from Distillers
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extraction,’’ other than changes made in definition of corn oil extraction.60 They process can be set up at a dry grind response to comments. Thus, based on said the proposed changes were needed ethanol plant and the resulting extracted the comments received on the to update the definition based on corn oil will still meet all the November 2016 REGS proposed rule, technological changes in the industry, requirements for corn oil extraction. EPA is taking the following actions in and to provide a level playing field for Two commenters requested that EPA this rulemaking: (1) Table 1 to 40 CFR new oil extraction methods. Seven clarify the proposed definition of corn 80.1426 is revised to replace the term commenters supported the proposed oil extraction by stating that ‘‘the oil is ‘‘Non-food grade corn oil’’ with revisions and recommended the rendered unfit for human food uses ‘‘Distillers corn oil’’ in rows F and H; relatively small revisions discussed without further refining.’’ 66 One and (2) 40 CFR 80.1401 is revised to add below.61 EPA also received four commenter requested that EPA clarify a definition of ‘‘distillers corn oil’’. comments on the December 2017 the proposed definition of corn oil extraction to state that the resulting The approach taken in this rule sorghum oil proposed rule that supported finalizing the expanded distillers grains include those that have preserves the existing meaning of corn been subjected to further oil recovery by oil extraction for the purpose of the definition of corn oil as part of this 62 a dry mill or third party.67 Three second row of Table 2 to 40 CFR rulemaking. While EPA is not finalizing the definition of ‘‘corn oil commenters stated that EPA’s proposed 80.1426 (the ‘‘corn oil extraction extraction’’ that was proposed in the addition of the phrase ‘‘at any point advanced technology’’); our intent was REGS rule, EPA believes that the downstream’’ is inconsistent with its to broaden the non-food grade corn oil approach being finalized today proposed approach for biointermediates pathways listed in Table 1 to 40 CFR addresses the concerns of these and should be clarified.68 The 80.1426, not to modify the corn oil commenters, as well as those of other commenters also state that the phrase extraction advanced technology commenters who raised questions about ‘‘oil is rendered unfit’’ is unnecessary specified in Table 2, which is relevant continued use of the term ‘‘non-food since all corn oil obtained from for corn starch ethanol pathways. The grade corn oil.’’ extraction is unfit for food uses. One corn oil extraction advanced technology While no commenters objected to commenter recommended using the was included in the regulations based EPA’s overall proposal to revise and term ‘‘distillers corn oil’’ as that term is on analysis completed in the March expand the types of extracted corn oil better understood in the industry, and 2010 RFS rule for pathways in rows A that qualify as approved feedstocks in USDA reporting, to reference corn oil and B of Table 1 that can include rows F and H of Table 1 to 40 CFR from dry mills. extracting oil from whole stillage and/or 80.1426, a number of commenters Based on these comments, EPA is derivatives of whole stillage, thus requested clarifications or modifications finalizing a definition that has been reducing energy use at dry mill ethanol modified in several ways compared to 59 to EPA’s proposed definition. Four plants. In order to avoid altering the commenters suggested that EPA should the one proposed in the November 2016 scope of corn oil extraction for the expand the definition of corn oil REGS proposed rule. First, EPA has purpose of Table 2 (which involves extraction even further to include corn decided to use the term ‘‘distillers corn different pathways than rows F and H), oil recovered at butanol plants, because oil’’ because we agree with the it is most appropriate to create a new the dry mill process for butanol is very commenter that the term is better definition for distillers corn oil and to similar to those for dry mill ethanol understood in the industry and thus preserve the existing definition of corn with respect to conversion of corn to enhances the clarity of the regulations. oil extraction. Incidentally, we generally liquefied mash and recovery of distillers Second, the definition has been revised anticipate that corn oil recovered grains and thin stillage.63 Five to include corn oil recovered at dry mill through corn oil extraction as listed in commenters suggested that EPA should butanol plants, given their similarities Table 2 to 40 CFR 80.1426 should be expand the definition of corn oil in terms of the oil recovery technologies able to qualify as distillers corn oil extraction to include corn oil from wet used, the characteristics of the oil (provided it satisfied all of the milling.64 These commenters stated that recovered and the resulting DGS co- definitional requirements) for the all corn oil meets the requirements of products. Third, we have clarified that purpose of the pathways in rows F and the RFS program and thus should be distillers corn oil is limited to oil that H in Table 1; however, not all distillers eligible feedstocks under the program. is unfit for human food use without corn oil will necessarily be recovered by Four commenters requested that EPA further refining. Fourth, we have processes that qualify as corn oil expand the definition of corn oil removed the word ‘‘rendered’’ from the extraction. The comments received on extraction to include corn oil extracted definition as it is unnecessary and EPA’s proposed corn oil definitional after corn fractionation.65 These seemed to raise questions for changes are summarized below, with a commenters stated that the fractionation commenters. Finally, we replaced the more detailed summary and analysis word ‘‘extraction’’ with ‘‘recovery’’ to included in the docket for this 60 EPA–HQ–OAR–2016–0041–0231, 0296, 0307 avoid any confusion about how the rulemaking. and 0313. For convenience, EPA is providing definition interacts with the term ‘‘corn citations to the docket for the REGS proposed rule oil extraction’’ in 40 CFR 80.1401 and Four commenters on the November for comments that were filed in that docket on 2016 REGS proposed rule supported proposed changes to the regulations for corn oil, but Table 2 to 40 CFR 80.1426. EPA’s proposed revision to the these comments have also been included in the Other modifications recommended by docket for this action. commenters have not been incorporated 61 EPA–HQ–OAR–2016–0041–0243, 0246, 0260, 59 EPA has consistently viewed the non-food into the definition finalized by this 0266, 0267, 0277 and 0286. grade corn oil pathways as only available for rulemaking. Corn oil from wet milling 62 facilities that extract corn oil produced at dry mill EPA–HQ–OAR–2017–0655–0034, 0039, 0028, remains excluded from the definition. 0038. corn ethanol plants (see letter from Karl Simon of Corn oil produced at wet mills is EPA to John W. Bode of the Corn Refiners 63 EPA–HQ–OAR–2016–0041–0243, 0246, 0267 Association, dated October 24, 2013). The change and 0286. from ‘‘non-food grade corn oil’’ to ‘‘distillers corn 64 EPA–HQ–OAR–2016–0041–0259, 0270, 0282, 66 EPA–HQ–OAR–2016–0041–0266 and 0277. oil’’ and the associated definition will more clearly 0300 and 0311. 67 EPA–HQ–OAR–2016–0041–0260. articulate this and other requirements for purposes 65 EPA–HQ–OAR–2016–0041–0278, 0282, 0300 68 EPA–HQ–OAR–2016–0041–0282, 0300 and of Table 1. and 0311. 0311.
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commonly sold as cooking oil for allowing commingled distillers sorghum direct effects on the states, on the human food uses, and thus may have and corn oil to be reported as one relationship between the national significantly different impacts than volume under the existing registration, government and the states, or on the distillers corn oil. The GHG emissions reporting and recordkeeping distribution of power and associated with substituting for oil requirements, and therefore are not responsibilities among the various removed from animal feed, and amending these sections. levels of government. specifically DGS, may be significantly VI. Statutory and Executive Order different than the GHG emissions G. Executive Order 13175: Consultation Reviews associated with substituting for oil and Coordination With Indian Tribal removed from cooking oil markets. A. Executive Order 12866: Regulatory Governments Thus, we believe the current LCA is Planning and Review and Executive This action does not have tribal insufficient to extend the pathway to Order 13563: Improving Regulation and implications as specified in Executive corn oil produced at wet mills and it Regulatory Review Order 13175. This final rule would would be more appropriate to address This action is not a significant affect only producers of distillers wet mill corn oil through a separate regulatory action and was therefore not sorghum oil and producers of biofuels action, such as a new fuel pathway submitted to the Office of Management made from distillers sorghum oil. Thus, petition submitted pursuant to 40 CFR and Budget (OMB) for review. Executive Order 13175 does not apply 80.1416. Fractionation is also not to this action. explicitly included, or otherwise B. Executive Order 13771: Reducing H. Executive Order 13045: Protection of mentioned, in the revised definition, as Regulations and Controlling Regulatory Children From Environmental Health EPA has previously found that oil Costs Risks and Safety Risks recovered through fractionation is likely This action is not expected to be an to be sold for human food use; 69 use of Executive Order 13771 regulatory action The EPA interprets Executive Order such oil for biofuel production would because this action is not significant 13045 as applying only to those require a modified lifecycle assessment under Executive Order 12866. regulatory actions that concern that is beyond the scope of this rule. environmental health or safety risks that Finally, EPA does not believe the C. Paperwork Reduction Act (PRA) EPA has reason to believe may definition finalized in this rulemaking This action does not impose any new disproportionately affect children, per contradicts the biointermediate information collection burden under the the definition of ‘‘covered regulatory provisions in the November 2016 REGS provisions of the Paperwork Reduction action’’ in section 2–202 of the proposed rule. Because it is listed as a Act, 44 U.S.C. 3501 et seq., and Executive Order. This action is not feedstock in Table 1 to 40 CFR 80.1426, therefore is not subject to these subject to Executive Order 13045 the current regulations accommodate requirements. because it because it does not concern an environmental health risk or safety distillers corn oil used through the D. Regulatory Flexibility Act (RFA) pathways in rows F and H unless it is risk. substantially altered at a separate I certify that this action will not have a significant economic impact on a I. Executive Order 13211: Actions facility before delivery to the fuel Concerning Regulations That production facility. substantial number of small entities under the RFA. This action will not Significantly Affect Energy Supply, V. Summary impose any requirements on small Distribution, or Use Based on our GHG lifecycle entities. An agency may certify that a This action is not subject to Executive evaluation described above, we find that rule will not have a significant Order 13211 because it is not a biodiesel and heating oil produced from economic impact on a substantial significant regulatory action under distillers sorghum oil via a number of small entities if the rule Executive Order 12866. transesterification process, and relieves regulatory burden, has no net J. National Technology Transfer renewable diesel, jet fuel and heating oil burden or otherwise has a positive Advancement Act (NTTAA) produced from distillers sorghum oil via economic effect on the small entities a hydrotreating process meet the 50 subject to the rule. This rule enables This rulemaking does not involve percent GHG reduction threshold distillers sorghum oil producers and technical standards. requirement for advanced biofuel and producers of biofuels from distillers K. Executive Order 12898: Federal biomass-based diesel. Based on this sorghum oil to participate in the RFS Actions To Address Environmental finding, and providing that all program, see CAA section 211(o), if they Justice in Minority Populations and regulatory requirements are satisfied, choose to do so in order to obtain Low-Income Populations these fuels are eligible for biomass- economic benefits. The EPA believes that this action does based diesel (D-code 4) RINs if they are E. Unfunded Mandates Reform Act not have disproportionately high and produced through a process that does (UMRA) adverse human health or environmental not co-process renewable biomass and effects on minority populations, low- petroleum, and for advanced biofuel (D- This action does not contain an income populations and/or indigenous code 5) RINs if they are produced unfunded mandate of $100 million or peoples, as specified in Executive Order through a process that does co-process more as described in UMRA, 2 U.S.C. 12898 (59 FR 7629, February 16, 1994). renewable biomass and petroleum. The 1531–1538, and does not significantly or This final rule does not affect the level RFS regulations are also amended to uniquely affect small governments. The of protection provided to human health add new and consistent definitions for action imposes no enforceable duty on or the environment by applicable air ‘‘distillers sorghum oil’’ and ‘‘distillers any state, local or tribal governments or quality standards. This action does not corn oil.’’ As discussed above, we are the private sector. relax the control measures on sources F. Executive Order 13132: Federalism regulated by the fuel programs and RFS 69 See the Regulatory Impact Analysis for the March 2010 RFS rule, section 1.1.3.2 (Corn Oil This action does not have federalism regulations and therefore will not cause Extracted During Ethanol Production). implications. It will not have substantial emissions increases from these sources.
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L. Congressional Review Act (CRA) PART 80—REGULATION OF FUEL recovery processes are marketable as AND FUEL ADDITIVES animal feed. This action is subject to the CRA, and Distillers sorghum oil means grain the EPA will submit a rule report to ■ 1. The authority citation for part 80 sorghum oil recovered at any point each House of the Congress and to the continues to read as follows: downstream of when a dry mill ethanol Comptroller General of the United Authority: 42 U.S.C. 7414, 7521, 7542, or butanol plant grinds the grain States. This action is not a ‘‘major rule’’ 7545, and 7601(a). sorghum, provided that the grain as defined by 5 U.S.C. 804(2). sorghum is converted to ethanol or Subpart M—Renewable Fuel Standard butanol, the recovered oil is unfit for List of Subjects in 40 CFR Part 80 human food use without further ■ 2. Section 80.1401 is amended by refining, and the distillers grains Environmental protection, adding, in alphabetical order, remaining after the dry mill and oil Administrative practice and procedure, definitions for ‘‘distillers corn oil’’ and recovery processes are marketable as Air pollution control, Diesel Fuel, Fuel ‘‘distillers sorghum oil’’ to read as animal feed. additives, Gasoline, Imports, Oil follows: imports, Petroleum, Renewable fuel. * * * * * § 80.1401 Definitions. ■ Dated: July 24, 2018. 3. Section 80.1426 is amended in * * * * * paragraph (f)(1), in Table 1 to § 80.1426, Andrew R. Wheeler, Distillers corn oil means corn oil by revising entries ‘‘F’’, ‘‘H’’, and ‘‘I’’ to Acting Administrator. recovered at any point downstream of read as follows: when a dry mill ethanol or butanol For the reasons set forth in the plant grinds the corn, provided that the § 80.1426 How are RINs generated and preamble, EPA amends 40 CFR part 80 corn starch is converted to ethanol or assigned to batches of renewable fuel by as follows: butanol, the recovered oil is unfit for renewable fuel producers or importers? human food use without further * * * * * refining, and the distillers grains (f) * * * remaining after the dry mill and oil (1) * * *
TABLE 1 TO § 80.1426—APPLICABLE D CODES FOR EACH FUEL PATHWAY FOR USE IN GENERATING RINS
Fuel type Feedstock Production process requirements D-code
******* F ...... Biodiesel, renewable diesel, jet Soy bean oil; Oil from annual One of the following: Trans- 4 fuel and heating oil. covercrops; Oil from algae Esterification Hydrotreating Ex- grown photosynthetically; Bio- cluding processes that co-proc- genic waste oils/fats/greases; ess renewable biomass and pe- Camelina sativa oil; Distillers troleum. corn oil; Distillers sorghum oil; Commingled distillers corn oil and sorghum oil.
******* H ...... Biodiesel, renewable diesel, jet Soy bean oil; Oil from annual One of the following: Trans- 5 fuel and heating oil. covercrops; Oil from algae Esterification Hydrotreating In- grown photosynthetically; Bio- cludes only processes that co- genic waste oils/fats/greases; process renewable biomass and Camelina sativa oil; Distillers petroleum. corn oil; Distillers sorghum oil; Commingled distillers corn oil and sorghum oil. I ...... Naphtha, LPG ...... Camelina sativa oil; Distillers sor- Hydrotreating ...... 5 ghum oil.
*******
* * * * * [FR Doc. 2018–16246 Filed 8–1–18; 8:45 am] BILLING CODE 6560–50–P
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DEPARTMENT OF HEALTH AND moratorium imposed by the Secretary locations 1 (hereafter referred to as HUMAN SERVICES unless the State determines that the HHAs) in Miami-Dade County, Florida imposition of such moratorium would and Cook County, Illinois, as well as Centers for Medicare & Medicaid adversely impact Medicaid surrounding counties, and Medicare Services beneficiaries’ access to care. In addition, Part B ground ambulance suppliers in section 2107(e)(1)(F) of the Act provides Harris County, Texas and surrounding 42 CFR Part 424 that the Medicaid provisions in section counties, in a notice issued on July 31, [CMS–6059–N9] 1902(kk) are also applicable to CHIP. 2013 (78 FR 46339).2 We exercised this In the February 2, 2011 Federal authority again in a notice published on Medicare, Medicaid, and Children’s Register (76 FR 5862), CMS published a February 4, 2014 (79 FR 6475) when we Health Insurance Programs: final rule with comment period titled, extended the existing moratoria for an Announcement of the Extension of ‘‘Medicare, Medicaid, and Children’s additional 6 months and expanded them Temporary Moratoria on Enrollment of Health Insurance Programs; Additional to include enrollment of HHAs in Part B Non-Emergency Ground Screening Requirements, Application Broward County, Florida; Dallas Ambulance Suppliers and Home Health Fees, Temporary Enrollment Moratoria, County, Texas; Harris County, Texas; Agencies in Designated Geographic Payment Suspensions and Compliance and Wayne County, Michigan and Plans for Providers and Suppliers,’’ Locations surrounding counties, and enrollment of which implemented section 1866(j)(7) of ground ambulance suppliers in AGENCY: Centers for Medicare & the Act by establishing new regulations Philadelphia, Pennsylvania and Medicaid Services (CMS), HHS. at 42 CFR 424.570. Under ACTION: Extension of temporary § 424.570(a)(2)(i) and (iv), CMS, or CMS surrounding counties. moratoria. in consultation with the Department of Then, we further extended these Health and Human Services’ Office of moratoria in documents issued on SUMMARY: This document announces the Inspector General (HHS OIG) or the August 1, 2014 (79 FR 44702), February extension of statewide temporary Department of Justice (DOJ), or both, 2, 2015 (80 FR 5551), July 28, 2015 (80 moratoria on the enrollment of new may impose a temporary moratorium on FR 44967), and February 2, 2016 (81 FR Medicare Part B non-emergency ground newly enrolling Medicare providers and 5444). On August 3, 2016 (81 FR 51120), ambulance providers and suppliers and suppliers if CMS determines that there Medicare home health agencies and we extended the current moratoria for is a significant potential for fraud, branch locations in Florida, Illinois, an additional 6 months and expanded waste, or abuse with respect to a Michigan, Texas, Pennsylvania, and them to statewide for the enrollment of particular provider or supplier type, or New Jersey, as applicable, to prevent new HHAs in Florida, Illinois, particular geographic locations, or both. and combat fraud, waste, and abuse. Michigan, and Texas, and Part B non- At § 424.570(a)(1)(ii), CMS stated that it This extension also applies to the emergency ambulance suppliers in New would announce any temporary enrollment of new non-emergency Jersey, Pennsylvania, and Texas. Our moratorium in a Federal Register ground ambulance suppliers and home August 3, 2016 publication also document that includes the rationale for health agencies and branch locations in announced the lifting of temporary the imposition of such moratorium. This Medicaid and the Children’s Health moratoria for all Part B emergency document fulfills that requirement. 3 Insurance Program in those states. ambulance suppliers. On January 9, In accordance with section DATES: Applicable July 29, 2018. 2017 (82 FR 2363) and July 28, 2017 (82 1866(j)(7)(B) of the Act, there is no FR 35122), CMS again issued a FOR FURTHER INFORMATION CONTACT: Jung judicial review under sections 1869 and Kim, (410) 786–9370. 1878 of the Act, or otherwise, of the News media representatives must 1 As noted in the preamble to the final rule with decision to impose a temporary comment period implementing the moratorium contact CMS’ Public Affairs Office at enrollment moratorium. A provider or authority (February 2, 2011, 76 FR 5870), home (202) 690–6145 or email them at press@ supplier may use the existing appeal health agency subunits and branch locations are cms.hhs.gov. subject to the moratoria to the same extent as any procedures at 42 CFR part 498 to other newly enrolling home health agency. SUPPLEMENTARY INFORMATION: administratively appeal a denial of 2 CMS has identified an error in the provider and I. Background billing privileges based on the beneficiary saturation data described in our July 31, imposition of a temporary moratorium; 2013 Federal Register notice (78 FR 46339). We A. CMS’ Implementation of Temporary however, the scope of any such appeal have subsequently revised the methodology by Enrollment Moratoria which we determine provider and beneficiary is limited solely to assessing whether saturation. Following these revisions to the The Social Security Act (the Act) the temporary moratorium applies to the methodology, we simulated application of our provides the Secretary with tools and provider or supplier appealing the current 2016 methodology to the 2013 data, and denial. Under § 424.570(c), CMS denies determined that the 2013 decision to impose the resources to combat fraud, waste, and moratorium would not have been impacted had the abuse in Medicare, Medicaid, and the the enrollment application of a provider revised methodology been applied. Provider Children’s Health Insurance Program or supplier if the provider or supplier is saturation remains one of the criteria used to (CHIP). In particular, section 1866(j)(7) subject to a moratorium. If the provider determine whether to implement a moratorium. or supplier was required to pay an CMS has made market saturation data publicly of the Act provides the Secretary with available at https://data.cms.gov/market-saturation. authority to impose a temporary application fee, the application fee will 3 CMS also concurrently announced a moratorium on the enrollment of new be refunded if the application was demonstration under the authority provided in Medicare, Medicaid, or CHIP providers denied as a result of the imposition of section 402(a)(l)(J) of the Social Security a temporary moratorium (see Amendments of 1967 (42 U.S.C. 1395b–l(a)(l)(J)) and suppliers, including categories of that allows for access to care-based exceptions to providers and suppliers, if the Secretary § 424.514(d)(2)(v)(C)). the moratoria in certain limited circumstances after determines a moratorium is necessary to Based on this authority and our a heightened review of that provider has been prevent or combat fraud, waste, or abuse regulations at § 424.570, we initially conducted. This exception process also applies to imposed moratoria to prevent Medicaid and CHIP providers in each state. This under these programs. Regarding announcement may be found in the Federal Medicaid, section 1902(kk)(4) of the Act enrollment of new home health Register document issued on August 3, 2016 (81 FR requires States to comply with any agencies, subunits, and branch 51116).
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document to extend the temporary 1. Application to Medicaid and the reflected in the Medicare moratoria moratoria for a period of 6 months. Children’s Health Insurance Program regulations at § 424.570(a)(2)(ii) and On September 1, 2017, CMS lifted the (CHIP) (iii), which permit CMS to impose a statewide temporary moratorium on the The February 2, 2011, final rule also Medicare moratorium based solely on a enrollment of new Medicare Part B non- implemented section 1902(kk)(4) of the State imposing a Medicaid moratorium. Accordingly, CMS has determined that emergency ground ambulance suppliers Act, establishing new Medicaid there is a reasonable basis for in Texas under the authority of regulations at § 455.470. Under concluding that a category of providers § 424.570(d). This lifting of the § 455.470(a)(1) through (3), the Secretary may impose a temporary moratorium, in or suppliers that poses a risk to moratorium also applied to Medicaid Medicare also poses a similar risk to and CHIP in Texas. This decision was accordance with § 424.570, on the enrollment of new providers or provider Medicaid and CHIP, and that a a result of the Presidential Disaster moratorium in all of these programs is Declaration signed on August 25, 2017 types after consulting with any affected State Medicaid agencies. The State necessary to effectively combat this risk. for several counties in the State of Texas Medicaid agency must impose a due to Hurricane Harvey. Upon 2. Consultation With Law Enforcement temporary moratorium on the In consultation with the HHS Office declaration of the disaster, CMS enrollment of new providers or provider of Inspector General (OIG) and the carefully reviewed the potential impact types identified by the Secretary as Department of Justice (DOJ), CMS of continued moratoria in Texas, and posing an increased risk to the Medicaid previously identified two provider and decided to lift the temporary enrollment program unless the State determines supplier types in nine geographic moratorium on non-emergency ground that the imposition of such moratorium locations that warrant a temporary ambulance suppliers in Texas in order would adversely affect Medicaid enrollment moratorium. For a more to aid in the disaster response. CMS beneficiaries’ access to medical detailed discussion of this consultation published a formal announcement of assistance and so notifies the Secretary. process, see the July 31, 2013 notice (78 this decision on November 3, 2017 (82 The final rule also implemented section FR 46339) or February 4, 2014 moratoria FR 51274). 2107(e)(1)(D) of the Act by providing, at document (79 FR 6475). Most recently, on January 30, 2018 (83 § 457.990 of the regulations, that all of FR 4147), CMS announced the the provisions that apply to Medicaid 3. Data Analysis extension of the temporary moratoria for under sections 1902(a)(77) and 1902(kk) In addition to consulting with law an additional six months. of the Act, as well as the implementing enforcement, CMS also analyzed its own regulations, also apply to CHIP. data to identify specific provider and B. Determination of the Need for Section 1866(j)(7) of the Act supplier types within geographic Moratoria authorizes imposition of a temporary locations with significant potential for enrollment moratorium for Medicare, fraud, waste or abuse, therefore In imposing these enrollment Medicaid, and/or CHIP, ‘‘if the Secretary moratoria, CMS considered both warranting the imposition of enrollment determines such moratorium is moratoria. qualitative and quantitative factors necessary to prevent or combat fraud, suggesting a high risk of fraud, waste, or waste, or abuse under either such 4. Beneficiary Access to Care abuse. CMS relied on law enforcement’s program.’’ While there may be Beneficiary access to care in longstanding experience with ongoing exceptions, CMS believes that generally, Medicare, Medicaid, and CHIP is of and emerging fraud trends and activities a category of providers or suppliers that critical importance to CMS and its State through civil, criminal, and poses a risk to the Medicare program partners, and CMS carefully evaluated administrative investigations and also poses a similar risk to Medicaid access for the target moratorium prosecutions. CMS’ determination of a and CHIP. Many of the anti-fraud locations with every imposition and high risk of fraud, waste, or abuse in provisions in the Act reflect this extension of the moratoria. Prior to these provider and supplier types concept of ‘‘reciprocal risk’’ in which a imposing and extending these within these geographic locations was provider that poses a risk to one moratoria, CMS reviewed Medicare data then confirmed by CMS’ data analysis, program poses a risk to the other for these areas and found no concerns which relied on factors the agency programs. For example, section with beneficiary access to HHAs or identified as strong indicators of risk. 1902(a)(39) of the Act requires State ground ambulance suppliers. CMS also (For a more detailed explanation of this Medicaid agencies to terminate the consulted with the appropriate State participation of an individual or entity determination process and of these Medicaid Agencies and with the if such individual or entity is authorities, see the July 31, 2013 notice appropriate State Departments of terminated under Medicare or any other (78 FR 46339) or February 4, 2014 Emergency Medical Services to State Medicaid plan. Additional moratoria document (79 FR 6475)). determine if the moratoria would create provisions in the Act also support the access to care concerns for Medicaid Because fraud schemes are highly determination that categories of and CHIP beneficiaries. All of CMS’ migratory and transitory in nature, providers and suppliers pose the same State partners were supportive of CMS’ many of CMS’ program integrity risk to Medicaid as to Medicare. Section analysis and proposals, and together authorities and anti-fraud activities are 1866(j) of the Act requires us to with CMS, determined that continuation designed to allow the agency to adapt to establish levels of screening for of these moratoria would not create emerging fraud in different locations. categories of providers and suppliers access to care issues for Medicaid or The laws and regulations governing based on the risk of fraud, waste, and CHIP beneficiaries. CMS’ moratoria authority give us abuse determined by the Secretary. Section 1902(kk) of the Act requires 5. When a Temporary Moratorium Does flexibility to use any and all relevant Not Apply criteria for future moratoria, and CMS State Medicaid agencies to screen may rely on additional or different providers and suppliers based on the Under § 424.570(a)(1)(iii), a temporary criteria as the basis for future moratoria. same levels established for the Medicare moratorium does not apply to any of the program. This reciprocal concept is also following: (1) Changes in practice
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location (2) changes in provider or ground ambulance providers and all counties in New Jersey and supplier information, such as phone suppliers in the geographic locations Pennsylvania. number or address; or (3) changes in discussed herein. Under the regulations IV. Clarification of Right to Judicial ownership (except changes in at § 455.470 and § 457.990, these Review ownership of HHAs that require initial moratoria also apply to the enrollment enrollment under § 424.550). Also, in of HHAs and non-emergency ground Section 1866(j)(7)(B) of the Act states accordance with § 424.570(a)(1)(iv), a ambulance providers and suppliers in that there shall be no judicial review temporary moratorium does not apply to Medicaid and CHIP in those locations. under section 1869, section 1878, or any enrollment application that a Under § 424.570(b), CMS is required to otherwise, of a temporary moratorium Medicare contractor has already publish a document in the Federal imposed on the enrollment of new approved, but has not yet entered into Register announcing any extension of a providers of services and suppliers if the Provider Enrollment, Chain, and moratorium, and this extension of the Secretary determines that the Ownership System (PECOS) at the time moratoria document fulfills that moratorium is necessary to prevent or the moratorium is imposed. requirement. combat fraud, waste, or abuse. Accordingly, our regulations at 42 CFR 6. Lifting a Temporary Moratorium CMS consulted with the HHS–OIG regarding the extension of the moratoria 498.5(l)(4) state that for appeals of In accordance with § 424.570(b), a on new HHAs and Part B non- denials based on a temporary temporary enrollment moratorium emergency ground ambulance providers moratorium, the scope of review will be imposed by CMS will remain in effect and suppliers in all of the moratoria limited to whether the temporary for 6 months. If CMS deems it states, and HHS–OIG agrees that a moratorium applies to the provider or supplier appealing the denial. The necessary, the moratorium may be significant potential for fraud, waste, agency’s basis for imposing a temporary extended in 6-month increments. CMS and abuse continues to exist regarding moratorium is not subject to review. Our will evaluate whether to extend or lift those provider and supplier types in regulations do not limit the right to seek the moratorium before the end of the these geographic areas. The judicial review of a final agency initial 6-month period and, if circumstances warranting the decision that the temporary moratorium applicable, any subsequent moratorium imposition of the moratoria have not yet applies to a particular provider or periods. If one or more of the moratoria abated, and CMS has determined that supplier. In the preamble to the announced in this document are the moratoria are still needed as we February 2, 2011 (76 FR 5918) final rule extended, CMS will publish a document monitor the indicators and continue with comment period establishing this regarding such extensions in the with administrative actions to combat regulation, we explained that ‘‘a Federal Register. fraud and abuse, such as payment As provided in § 424.570(d), CMS provider or supplier may suspensions and revocations of may lift a moratorium at any time if the administratively appeal an adverse provider/supplier numbers. (For more President declares an area a disaster determination based on the imposition information regarding the monitored under the Robert T. Stafford Disaster of a temporary moratorium up to and indicators, see the February 4, 2014 Relief and Emergency Assistance Act, if including the Department Appeal Board moratoria document (79 FR 6475)). circumstances warranting the (DAB) level of review.’’ We are imposition of a moratorium have abated, Based upon CMS’ consultation with clarifying that providers and suppliers if the Secretary has declared a public the relevant State Medicaid agencies, that have received unfavorable health emergency, or if, in the judgment CMS has concluded that extending decisions in accordance with the of the Secretary, the moratorium is no these moratoria will not create an access limited scope of review described in longer needed. to care issue for Medicaid or CHIP § 498.5(l)(4) may seek judicial review of Once a moratorium is lifted, the beneficiaries in the affected states at this those decisions after they exhaust their provider or supplier types that were time. CMS also reviewed Medicare data administrative appeals. However, we unable to enroll because of the for these states and found there are no reiterate that section 1866(j)(7)(B) of the moratorium will be designated to the current problems with access to HHAs Act precludes judicial review of the ‘‘high’’ screening level in accordance or ground ambulance providers or agency’s basis for imposing a temporary with §§ 424.518(c)(3)(iii) and suppliers. Nevertheless, the agency will moratorium. 455.450(e)(2) if such provider or continue to monitor these locations to supplier applies at any time within 6 make sure that no access to care issues V. Collection of Information months from the date the moratorium arise in the future. Requirements was lifted. Based upon our consultation with law This document does not impose enforcement and consideration of the information collection requirements, II. Extension of Home Health and factors and activities described that is, reporting, recordkeeping or Ambulance Moratoria—Geographic previously, CMS has determined that third-party disclosure requirements. Locations the current temporary enrollment Consequently, there is no need for CMS currently has in place statewide moratoria should be extended for an review by the Office of Management and moratoria on newly enrolling HHAs in additional 6 months. Budget under the authority of the Florida, Illinois, Michigan, and Texas III. Summary of the Moratoria Paperwork Reduction Act of 1995 (44 and Part B non-emergency ambulance Locations U.S.C. 3501 et seq.). suppliers in New Jersey and Pennsylvania. CMS is executing its authority under VI. Regulatory Impact Statement As provided in § 424.570(b), CMS sections 1866(j)(7), 1902(kk)(4), and CMS has examined the impact of this may deem it necessary to extend 2107(e)(1)(D) of the Act to extend and document as required by Executive previously-imposed moratoria in 6- implement temporary enrollment Order 12866 on Regulatory Planning month increments. Under this authority, moratoria on HHAs for all counties in and Review (September 30, 1993), CMS is extending the temporary Florida, Illinois, Michigan, and Texas, Executive Order 13563 on Improving moratoria on the Medicare enrollment of as well as Part B non-emergency ground Regulation and Regulatory Review HHAs and Part B non-emergency ambulance providers and suppliers for (January 18, 2011), the Regulatory
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Flexibility Act (RFA) (September 19, hospital as a hospital that is located SUMMARY: In this document, the 1980, Pub. L. 96–354), section 1102(b) of outside of a metropolitan statistical area Commission amends its rules governing the Social Security Act, section 202 of (MSA) for Medicare payment purposes the Emergency Alert System (EAS) by the Unfunded Mandates Reform Act of and has fewer than 100 beds. CMS is not establishing the Alert Reporting System 1995 (March 22, 1995; Pub. L. 104–4), preparing an analysis for section 1102(b) (ARS), a comprehensive online filing Executive Order 13132 on Federalism of the Act because it has determined, system for EAS that combines the (August 4, 1999) and the Congressional and the Secretary certifies, that this existing EAS Test Reporting System Review Act (5 U.S.C. 804(2)). Executive document will not have a significant (ETRS) with a new, streamlined Orders 12866 and 13563 direct agencies impact on the operations of a substantial electronic system for the filing of State to assess all costs and benefits of number of small rural hospitals. EAS Plans. By replacing paper-based available regulatory alternatives and, if Section 202 of the Unfunded State EAS Plans with an online filing regulation is necessary, to select Mandates Reform Act of 1995 also system, the ARS will minimize the regulatory approaches that maximize requires that agencies assess anticipated burdens on State Emergency net benefits (including potential costs and benefits before issuing any Communications Committees (SECCs), economic, environmental, public health, regulatory action whose mandates and allow the FCC, the Federal and safety effects, distributive impacts, require spending in any 1 year of $100 Emergency Management Agency and equity). A regulatory impact million in 1995 dollars, updated (FEMA), and other authorized entities to analysis (RIA) must be prepared for annually for inflation. In 2018, that better access and use up-to-date major regulatory actions with threshold is approximately $150 information about the EAS, thus economically significant effects ($100 million. This document will have no increasing its value as a tool to protect million or more in any 1 year). This consequential effect on state, local, or life and property for all Americans. document will prevent the enrollment tribal governments or on the private of new home health providers and Part sector. DATES: Effective September 4, 2018. B non-emergency ground ambulance Executive Order 13771, titled Mandatory compliance dates: FCC will suppliers in Medicare, Medicaid, and ‘‘Reducing Regulation and Controlling publish a document in the Federal CHIP in certain states. Though savings Regulatory Costs,’’ was issued on Register announcing dates as outlined may accrue by denying enrollments, the January 30, 2017 (82 FR 9339, February in paragraphs 54–55 and 72–73 in monetary amount cannot be quantified. 3, 2017). It has been determined that SUPPLEMENTARY INFORMATION. Since the imposition of the initial this notice is a transfer notice that does FOR FURTHER INFORMATION CONTACT: moratoria on July 31, 2013, more than not impose more than de minimis costs Austin Randazzo, Attorney Advisor, 1204 HHAs and 26 ambulance and thus is not a regulatory action for Policy and Licensing Division, Public companies in all geographic areas the purposes of E.O. 13771. Safety and Homeland Security Bureau, affected by the moratoria had their Executive Order 13132 establishes at 202–418–1462, or by email at applications denied. We have found the certain requirements that an agency [email protected]. For number of applications that are denied must meet when it promulgates a additional information concerning the after 60 days declines dramatically, as proposed regulatory action (and information collection requirements most providers and suppliers will not subsequent final action) that imposes contained in this document, send an submit applications during the substantial direct requirement costs on email to [email protected] or contact Nicole moratoria period. Therefore, this state and local governments, preempts Ongele, Office of Managing Director, document does not reach the economic state law, or otherwise has Federalism Performance Evaluation and Records threshold, and thus is not considered a implications. Because this document Management, 202–418–2991, or by major action. does not impose any costs on state or email to [email protected]. The RFA requires agencies to analyze local governments, the requirements of options for regulatory relief of small Executive Order 13132 are not SUPPLEMENTARY INFORMATION: This is a entities. For purposes of the RFA, small applicable. summary of the Commission’s Report entities include small businesses, In accordance with the provisions of and Order (Report and Order) in PS nonprofit organizations, and small Executive Order 12866, this document Docket No. 15–94, FCC 18–39, released governmental jurisdictions. Most was reviewed by the Office of on April 10, 2018. The full text of this hospitals and most other providers and Management and Budget. document is available for inspection suppliers are small entities, either by and copying during normal business Dated: July 17, 2018. hours in the FCC Reference Center nonprofit status or by having revenues Seema Verma, of less than $7.5 million to $38.5 (Room CY–1257), 445 12th Street SW, Administrator, Centers for Medicare & Washington, DC 20554, or online at: million in any one year. Individuals and Medicaid Services. states are not included in the definition https://www.fcc.gov/document/fcc- of a small entity. CMS is not preparing [FR Doc. 2018–16547 Filed 7–30–18; 11:15 am] make-emergency-alert-system-more- an analysis for the RFA because it has BILLING CODE 4120–01–P effective. determined, and the Secretary certifies, Synopsis that this document will not have a significant economic impact on a FEDERAL COMMUNICATIONS 1. This Report and Order revises the substantial number of small entities. COMMISSION Commission’s EAS rules to establish the In addition, section 1102(b) of the Act Alert Reporting System (ARS), a 47 CFR Part 11 requires us to prepare a regulatory comprehensive online filing system that impact analysis if an action may have a [PS Docket No. 15–94; FCC 18–39] will combine the existing EAS Test significant impact on the operations of Reporting System (ETRS) with a new, a substantial number of small rural Emergency Alert System streamlined electronic system for the hospitals. This analysis must conform to AGENCY: Federal Communications filing of State EAS Plans. Further, to the provisions of section 604 of the Commission. ensure that the rules for State EAS Plans RFA. For purposes of section 1102(b) of are clear and unambiguous, the Report ACTION: Final rule. the Act, CMS defines a small rural and Order combines all State EAS Plan
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related rules into a single section (11.21) 2017, FEMA, in collaboration with the converting the paper-based filing of part 11. Commission, conducted the second and process for State EAS Plans into a third nationwide tests of the EAS, secure online process that would I. Background respectively. The purpose of the tests interface with the ETRS. 2. The EAS is a national public was to assess the reliability and 9. Online Filing. The Commission warning system used by EAS effectiveness of the EAS, with a revises its Part 11 EAS rules to require Participants to deliver emergency alerts particular emphasis on testing IPAWS. SECCs to file State EAS Plans to the public. The primary purpose of On April 21, 2017, the Public Safety and electronically via an online filing the EAS is to allow the President of the Homeland Security Bureau (PSHSB) system. This will provide a baseline United States (President) to provide released a public version of the second level of uniformity across State EAS information to the general public during test’s results, which indicated that Plans, in terms of both format and periods of national emergency. State although the test had satisfied its terminology, while affording sufficient and local authorities also use the primary purposes, there remained flexibility to accommodate filers’ unique common distribution architecture of the ‘‘strong evidence that many test needs. This online State EAS filing EAS to distribute voluntary weather- participants do not understand their platform, combined with the existing related and other emergency alerts to roles in the EAS structure and are ETRS, will form the Alert Reporting the public. unfamiliar with the State EAS Plans that System. The Commission believes that 3. There are two distribution methods inform them of those roles.’’ the ARS will ensure more efficient and for EAS alerts. The traditional method 6. EAS Test Reporting System (ETRS). effective delivery of Presidential as well distributes alerts through a hierarchical, In connection with the test, the as state, local and weather-related alerts broadcast-based distribution system, in Commission launched the ETRS, an as it will provide the Commission, which an alert originator formats an electronic filing system and related FEMA, and other authorized entities alert using the EAS Protocol and database that upgraded the system the with the means to more easily review initiates its transmission at a designated Commission used for the first and identify gaps in the EAS entry point. This ‘‘daisy chain’’ process nationwide EAS test. The ETRS requires architectures, detect problems, and take relays the alert from one designated EAS Participants to submit detailed measures to address these shortcomings. station to another until it is fully information regarding their receipt and 10. The Commission agrees with the distributed. EAS alerts also are propagation, if applicable, of the alert many commenters that note the benefits distributed over the internet through the code, including an explanation of any of the online filing system. For example, Integrated Public Alert and Warning complications in receiving and broadcast engineer Sean Donelan System (IPAWS), a national alerting propagating the code. The ETRS enables (Donelan) states that a well- system administered by FEMA. Under the Commission to maintain a implemented electronic filing system for the IPAWS, EAS Participants monitor a centralized database of all EAS EAS data will reduce the burden on FEMA-administered website for EAS monitoring assignments and alert state and local EAS committee messages that are written in the distribution pathways. volunteers. Use of an online filing Common Alerting Protocol (CAP). system will also benefit EAS 4. While IPAWS relies upon the II. Discussion Participants, SECCs, and other EAS centralized distribution of alerts using 7. Online State EAS Plan Filing in the stakeholders by facilitating the an alert aggregator and an internet-based Alert Reporting System. State EAS Plans Commission’s swift and efficient review interface, the EAS’s ‘‘daisy chain’’ must describe state and local EAS of State EAS Plans. As the Washington leverages the broadcast-based EAS operations and ‘‘contain guidelines State SECC notes, a standardized filing distribution architectures in each of the which must be followed by EAS system ‘‘is long overdue’’ and will aid states. The Commission’s rules require Participants’ personnel, emergency the Commission’s effort to review State each state to file a State EAS Plan with officials, and [NWS] personnel to EAS Plans. The Commission believes, as the Commission documenting its EAS activate the EAS.’’ State EAS Plans must does Wisconsin SECC Broadcast Chair distribution architecture. State be reviewed and approved by the Chief, Gary Timm, commenting in his Emergency Communications PSHSB, prior to their implementation individual capacity (Timm), that the Committees (SECCs), along with ‘‘to ensure that they are consistent with time required for SECCs to fill out a associated Local Emergency national plans, FCC regulations, and monitoring matrix would be minimal, Communications Committees (LECCs), EAS operation.’’ and that other FCC databases could help draft and file these plans on behalf of 8. Following the first nationwide EAS keep the information updated. The the states. The SECCs and LECCs are test in 2011, PSHSB recommended online filing system will be an efficient volunteer organizations composed of converting the State EAS Plan filing tool for reviewing alerting architecture, state broadcast associations, EAS process into an online system in light of as it will provide an end-to-end picture Participants, emergency management inconsistencies identified in a post-test of the EAS distribution architecture for personnel, and other stakeholders. analysis of the structure of State EAS each state. Further, cross-referencing SECCs grew out of a 1963 Executive Plans. Subsequently, the data from electronically filed State EAS Order that directed the Commission to Communications Security, Reliability Plans with data collected from the ETRS cooperate with other governmental and Interoperability Council (CSRIC) IV will make it easier to identify problems entities to develop emergency recommended that State EAS Plans also such as single points of failure. Finally, communications plans related to the be filed online and recommended that moving to an online system will reduce Emergency Broadcast System (EBS). At the Commission revise its rules to adopt burdens on SECCs by pre-populating that time, the Commission provided an online platform, State EAS Plan data fields in State EAS Plans with SECCs with templates for State EAS template design, and identification information from other FCC databases, Plans that described the kinds of mechanisms for facilities and enabling SECCs to readily update and information that their plans should geographic areas contained within State revise their plans. provide. EAS Plans. In the document, the 11. The Commission believes that the 5. Nationwide EAS Tests. On Commission noted the CSRIC’s efficient and effective administration of September 28, 2016 and September 27, recommendations and proposed the EAS, i.e., its ability to deliver a
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Presidential Alert nationwide, requires elements. The Commission thus ID before accessing the database. The some level of standardization of State disagrees with suggestions that the Commission agrees with the Alaska EAS Plans. State EAS Plans currently online database and template apply only Commenters that, similar to DIRS and lack consistent structure and content. to the monitoring assignment matrix, or ETRS, the Commission should handle An online filing system using uniform to what some commenters characterize user and account management for this and consistent terminology will as the ‘‘federal’’ aspects of State EAS system, and the Commission directs facilitate the input, analysis, and related Plans. State EAS Plans are not limited PSHSB to determine the details of uses of the Plan information. During the to monitoring assignment data, but designing and setting up ARS account first nationwide EAS test, a lack of rather include other elements which, management. uniformity among State EAS Plans taken together, form the EAS activation 16. Several commenters provide ‘‘made it very difficult for the guidelines that EAS stakeholders follow. useful suggestions about access to State Commission and FEMA to create a Similarly, the use and testing of the EAS EAS Plan data that the Commission national propagation map.’’ Similarly, at the state and local level provide adopts as elements of ARS access. The the Commission agrees with CSRIC IV insight into its functionality and Commission agrees with Nevada SECC that the lack of uniform format in State effectiveness at the federal level. Chairwoman Adrienne Abbott, EAS Plans ‘‘makes it difficult for the 14. Finally, the Commission disagrees commenting in her individual capacity FCC to determine if a proper with commenters who suggest that a (Abbott), that only individuals with distribution network exists for . . . State EAS Plan template is unworkable significant roles in SECCs should have distribution [of the Presidential Alert] in because there is no ‘‘one size fits all’’ access to this data, and, further, that each state.’’ Further, an online State framework for State EAS Plans. The such access should be limited to data EAS Plan filing system with consistent template will afford SECCs flexibility to about an SECC’s individual state. The terminology and format will allow provide information they deem relevant Commission disagrees with Monroe SECCs to ‘‘report changes to state plans to design and maintain their states’ EAS Electronics, however, that EAS and EAS EAN Event Code distribution distribution architectures and relay equipment manufacturers and planning in the least demanding and most networks. It will be configured in a consultants should have access to State efficient manner possible that still manner that accommodates variations in EAS Plan data to confirm proper provides the Commission with current state alerting architectures, including configuration of system hardware and and accurate information.’’ areas where alerts are transmitted across software. As noted above, the ARS will 12. Template. The Commission state borders. contain sensitive data and, for this requires State EAS Plan data to be 15. Access. The Commission agrees reason, the Commission believes it entered into a pre-configured online with commenters that State EAS Plan serves the public interest to limit access template. As the Commission discusses information concerning the placement to the ARS. EAS equipment below, it is designed to be minimally of broadcast towers and other vital alert manufacturers and other third-party burdensome, secure, and to offer clear distribution architecture infrastructure vendors may request a particular client’s guidance to SECCs. The template will is sensitive, particularly when data from that client. standardize monitoring and other aggregated with similar information 17. Confidentiality. Finally, the common elements of EAS State Plans, from other states. Accordingly, the Commission affords confidentiality while offering sufficient flexibility to Commission adopts safeguards to ensure protection to State EAS Plan data. Most avoid SECCs’ concerns that a ‘‘one size only authorized entities access this data. commenters agree that some of the fits all’’ template for State EAS Plans The Commission requires SECCs to information in State EAS Plans, such as would be unworkable. It will address all provide an SECC ID, an individual user the call signs and locations of key EAS elements of State EAS Plans, including ID, and a password to input State EAS sources, is sensitive or could become a monitoring assignment matrix similar Plan data into the ARS. Commenters sensitive if aggregated in a single to the one used by the Washington State generally support limiting access to location. The Commission notes that SECC and supported by commenters, so State EAS Plans filed in this manner. details regarding equipment that SECCs may input monitoring data NSBA observes that the security risks of configurations, EAS equipment vendor into the ARS in a structured and aggregating State EAS Plans online market share, and relationships between consistent manner. Where feasible, the justify the use of password or log-in EAS Participants themselves could be Commission will ensure that this matrix protection. Further, the Alaska commercially sensitive. Aggregated and other parts of the template will pre- Broadcasters Association, Alaska State information in State EAS Plans, such as populate elements of State EAS Plans by Emergency Communications configurations and vulnerabilities as cross-referencing data already collected Committee, and the State of Alaska demonstrated by tests, could also by the Commission, as recommended by Department of Military and Veterans implicate national security. Further, CSRIC IV. The Commission directs Affairs, the Division of Homeland nothing in the record indicates a need PSHSB to develop and implement the Security and Emergency Management for public access to State EAS Plan template in Appendix D of the Report (Alaska Commenters) assert that online information. Accordingly, the and Order to include these data that includes specific station and Commission concludes that State EAS functionalities and to minimize equipment information (e.g., make, Plan data and any aggregation of such unnecessary and redundant filing model, manufacturer, and firmware data will have the same level of burdens on SECCs. versions of the encoder, decoder, and confidentiality as data filed in the ETRS, 13. The Commission traditionally has translator equipment) should be i.e., the Commission will share provided SECCs with templates considered sensitive and protected from individual and aggregated data on a describing the kinds of information to disclosure as necessary. To address confidential basis with other federal be included in State EAS Plans, and the these concerns, the Commission adopts agencies and state governmental template the Commission adopts today CSRIC IV’s recommendation to follow emergency management agencies that is consistent with that practice. To be the Disaster Information Reporting have confidentiality protection at least both effective and minimally System (DIRS) two-layer access model. equal to that provided by the Freedom burdensome, the State EAS Plan This model will require a user to input of Information Act (FOIA). The template must address all state plan both an SECC ID and an individual user Commission notes that some SECCs may
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be subject to state-based requirements A PEP is equipped with back-up be necessary to ensure that EAS alerts that require disclosure of some or all of communications equipment and power are available to everyone in the state. In the same data that it will file in the ARS. generators designed to enable it to these instances, especially when SRs are Although the rules the Commission continue broadcasting information to used as alternative monitoring adopts today will prevent unauthorized the public during and after disasters of assignments, the Commission State EAS Plan data disclosure filed by national significance. The PEP System is recognizes that it may be appropriate to an SECC via ARS, the rules will not a nationwide network of such broadcast use special designations for entities prevent or preclude SECCs from stations used to distribute EAS alerts responsible for relaying alerts from a independently filing with its state the formatted in the EAS Protocol. FEMA is PEP, NP, or SP to an LP or PN. same data that it files with the ARS. responsible for designating broadcast 29. State Relay Network (SRN): A 18. EAS Designations. The stations as PEPs. network composed of State Relay (SR) Commission’s part 11 rules provide 21. National Primary (NP): An entity sources, leased common carrier designations for ‘‘key EAS sources.’’ In tasked with the primary responsibility communications facilities or any other the document, the Commission of receiving the Presidential Alert from available communication facilities. The observed that SECCs have inconsistently a PEP and delivering it to an individual network distributes State EAS messages used these designations. This state or portion of a state. In states originated by the Governor or inconsistency inhibits the Commission’s without a PEP, the NP is responsible for designated official. In addition to EAS ability to determine the quality of the receiving the Presidential Alert from an monitoring, satellites, microwave, FM state and national level broadcast-based out-of-state PEP and transmitting it to subcarrier or any other communications EAS, and may inhibit delivery of a the public and other EAS Participants in technology may be used to distribute Presidential Alert. Accordingly, the the state. Multiple entities may be State emergency messages. Commission proposed refining its EAS charged with primary responsibility for 30. The Commission understands that designations in a way that would delivering the Presidential Alert. in some states, such as Washington, the accommodate variations in but also 22. PEP and NP are the only SRN serves as an alternative, redundant promote uniformity among State EAS designations that are solely relevant to system for ensuring the successful Plans. The Commission also sought the transmission of the Presidential delivery of EAS alerts. The Commission comment on whether additional Alert. also understands that some State EAS designations may be necessary. 23. State Primary (SP): An entity Plans, such as Nevada’s, do not rely on 19. The Commission amends section tasked with initiating the delivery of SRNs because ‘‘[s]mall and rural 11.18 to define all its current EAS EAS alerts other than the Presidential broadcasters cannot afford the monthly designations. Although SECCs’ use of Alert. cost of these services.’’ To the extent EAS designations may vary, 24. SPs may, for example, be that SRNs enhance system reliability commenters support retaining the designated by SECCs to initially and resiliency, the Commission finds current designations to support the transmit AMBER alerts or alerts related them to be desirable, and encourage SECCs’ abilities to assign roles and to incidents of severe weather to the SECCs to specify in their state plans the responsibilities. Accordingly, the public and to other EAS Participants extent to which they rely on SRNs as a Commission keeps these designations as that voluntarily monitor for and secondary alert distribution mechanism. tools to help SECCs describe their states’ retransmit such alerts. The Commission does not require any EAS alert distribution hierarchies in 25. Local Primary (LP): An entity that state to utilize a SRN, because it their State EAS Plans ‘‘using common serves as a monitoring assignment for recognizes the maintenance burdens language.’’ These universal designations other EAS Participants within the state. that SRNs may pose for small entities. also will allow the Commission to create LP sources may be assigned numbers 31. The Commission agrees with an EAS Mapbook as contemplated by (e.g., LP–1, LP–2) and are relied on as commenters that additional EAS the EAS rules. The Mapbook will monitoring sources by other EAS designations are unnecessary and provide an accurate and dynamic Participants in the local area. An LP therefore declinesto adopt the nationwide propagation map for the may monitor any other station, additional designations or sub- Presidential Alert, as well as state, including another LP, so long as doing designations proposed in the document county, and local propagation maps. so avoids creating a single point of based on the entities responsible for The Commission agrees with Abbott failure in the alert distribution particular types of alerts (e.g., State that it would be difficult to implement hierarchy. AMBER Alert Primary) or based on the standardized terminology if its 26. Participating National (PN): An type of transmission facility used (e.g., definitions did not provide sufficient EAS Participant that transmits national, State Satellite Primary). The flexibility to accommodate states’ state, or local area EAS messages, and is Commission will continue to monitor varying approaches to establishing EAS not otherwise designated within the whether establishing additional roles monitoring assignments. However, the State EAS Plan. and responsibilities within State EAS EAS designation definitions the 27. State Relay (SR): An entity not Plans may be necessary in the future to Commission adopts today are designed otherwise designated that is charged improve emergency preparedness. to provide a level of uniformity that will with retransmitting EAS alerts for the 32. State EAS Plan Contents. EAS allow SECCs to establish EAS purpose of being monitored by an LP or Participants must conduct EAS monitoring assignments that PN. operations as specified in State EAS accommodate their unique situations. 28. Commenters assert that SR Plans to ensure effective delivery of the Accordingly, the Commission will properly describes the relay function Presidential Alert, yet EAS Participants define the EAS designations as follows. and is used extensively in some State lack consistent knowledge of their roles 20. Primary Entry Point (PEP): A EAS Plans. While the Commission under State EAS Plans, and State EAS private or commercial radio broadcast anticipates that the EAS alert Plans lack the uniformity essential for station that cooperatively participates distribution hierarchy described above dependable dissemination of a with FEMA to provide EAS alerts to the will be sufficient to define the roles and Presidential Alert. The EAS Deployment public. PEPs are the primary source of responsibilities for all EAS Participants Report and Order communicated initial broadcast for a Presidential Alert. in many states, in some states, SRs may expectations for the structure and
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administration of State EAS Plans and procedures for authenticating state EAS EAS Plans. Because State EAS Plans SECCs, but current State EAS Plan rules messages formatted in CAP and signed detail the distribution architecture for do not consistently address SECCs’ with digital signatures; and (9) a delivery of a Presidential Alert, SECCs administration and governance description of the SECC governance should have a governance and oversight practices. Some states’ SECCs and State structure used by the state, including structure to support this function. The EAS Plans have not met the the duties, membership selection Commission requires this baseline Commission’s expectations for several process, and administrative structure of information about SECCs to verify that reasons, including the failure of some the SECC. State EAS Plans provide the framework states to file or update State EAS Plans. 35. The Commission amends the for effective transmission of the Moreover, since the adoption of State Commission’s rules to specify and Presidential Alert. The Commission EAS Plan rules in 1994, the alerting standardize the organizational and agrees with commenters that the landscape has changed dramatically. operational aspects of State EAS Plans Commission should continue to provide Local alerts now originate from a wider to provide State EAS Plans with the the guidance it historically has supplied array of sources and continue to level of order and consistency necessary to SECCs. Obtaining initial information increase in frequency. Many EAS for efficient and reliable distribution of on an SECC’s structure and functions is Participants use alternative distribution emergency information to the public. an essential part of that process. systems such as satellite-based systems 36. Uniform Designations. The Accordingly, SECCs must, at a to supplement or replace the traditional Commission requires that SECCs input minimum, specify their contact points, ‘‘daisy chain’’ alert distribution State EAS Plan monitoring assignment and whether they represent all alert architecture. data into the ARS using the uniform originators, and their decision-making 33. In the EAS Nationwide Test designations for key EAS sources. As structures. This baseline information Report, PSHSB observed a lack of clarity explained in the Nationwide EAS Test will help us contact relevant staff, in State EAS Plans that precluded end- Report, and as supported by the record, identify SECCs that are less active or to-end analysis and review of the EAS the use of consistent terminology in have fewer resources, and formulate system. First, it noted that the State EAS Plans will assist the strategies for addressing all SECCs’ Commission’s rules do not require EAS Commission in reviewing plans; needs. The Commission does not Participants to provide monitoring understanding EAS architecture on a require, however, that SECCs adopt a assignment data below the LP level. nationwide, statewide, and local basis; particular governance structure. For Second, it observed that many State and determining how the states’ these reasons, the Commission disagrees EAS Plans did not identify the distribution systems can be aggregated with commenters that oppose these alternative monitoring sources that EAS into a single, comprehensive requirements as unnecessary or beyond Participants relied upon to receive the distribution mechanism for the the scope of many SECCs. EAN during the first nationwide EAS Presidential Alert. 39. LECCs and Local Area EAS Plans. test. Additionally, PSHSB observed that 37. List of Entities Authorized to The Commission maintains the existing many EAS Participants used the Activate EAS. The Commission allows, language of section 11.21(b), which satellite-based National Public Radio but does not require, that State EAS provides for the development of a Local (NPR) News Advisory Channel (Squawk Plans include a list of all entities Area Plan containing procedures for Channel) to receive the EAN, as authorized to activate the EAS for state local emergencies. CSRIC IV observed opposed to their ‘‘daisy chain’’ and local emergency messages (e.g., that the EAS depends on local monitoring assignments. Based on these PSAPs) whose transmissions might be distribution and recommended findings, PSHSB recommended review interrupted by a Presidential Alert. developing policies to ‘‘encourage local of the State EAS Plan rules. CSRIC IV Commission rules already require State communications distribution systems to recommended that ‘‘SECCs must be free EAS Plans to have a list of authorized participate in the emergency warning to design and maintain their respective entities participating in the state or local process.’’ Timm comments that LECCs state’s own robust and redundant EAS EAS. Thus, State EAS Plans already may have ‘‘local expertise to best manage relay networks in the best and most include, as a component of that list, all EAS alerting in a given area, and Local practical ways possible.’’ entities authorized to activate the EAS Area EAS Plans are still viable for 34. To address these concerns, in the for state and local emergency messages. addressing EAS procedures at a local document, the Commission proposed The Commission will prepopulate the level of detail beyond that possible to that each State EAS Plan include: (1) A online State EAS Plan template with devote room to in the full State EAS list of header codes and messages to be FEMA-approved alert originators, but Plan.’’ Abbott asserts that LECCs and transmitted by key EAS sources; (2) a SECCs may add any state-based alert local plans are a necessary component description of all of the state’s originators not listed by FEMA as of EAS Plans in large states where no procedures for transmitting emergency authorized to initiate an IPAWS alert. one single broadcast station covers an information to the public, including by 38. A Description of SECC entire state and no end-to-end ‘‘daisy EAS, WEA, social media, highway signs, Governance Structure. To ensure the chains’’ connect operational areas in the and other alerting procedures; (3) the efficient and effective delivery of a state. The Commission concludes that extent to which the state’s Presidential Alert, the Commission Local Area Plans are still useful in some dissemination strategy for state and requires SECCs to specify in the State states and that SECCs should have the local alerts differs from its strategy for EAS Plans their governance structure, option of including them in their State disseminating the Presidential Alert; (4) including the duties, membership EAS Plans. a list of all entities authorized to selection process, and administrative 40. The EAS’s primary purpose is activate EAS for state and local structure of the SECC. Most commenters transmitting a message from the emergencies; (5) monitoring support the Commission providing President to the public during a national assignments for key alerting sources; (6) additional guidance to SECCs, but few emergency. To do so, EAS information EAS testing procedures; (7) the extent to commenters provide suggestions on must be properly coordinated and which alert originators coordinate alerts SECC governance, and very few address understood by relevant stakeholders. with ‘‘many-to-one’’ feedback whether basic data regarding SECC Accordingly, the Commission requires mechanisms, such as 911; (8) governance should be included in State State EAS Plans to include transmission
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procedures for an EAS alert and monitoring information. Requiring its redundancy of having EAS Participants accurate, up-to-date monitoring inclusion in all State EAS Plans benefits monitor multiple sources of the assignments for each key EAS source to the industry by bringing consistency to Presidential Alert. The Commission reflect how they receive alerts. the process. To the extent that some continues to require State EAS Plans to 41. Emergency Alerting Procedures. State EAS Plans will supply it for the contain the EAS Header Code and other The Commission concludes that State first time, the Commission expects the EAS Protocol distribution information EAS Plans should contain an accurate incremental cost to be minimal. required under the part 11 rules. The and comprehensive listing of 44. Monitoring Assignments. The Commission also concludes that it also procedures used for transmitting Commission requires State EAS Plans to should allow State EAS Plans to include information to the public via the EAS. include ‘‘[m]onitoring assignments to additional non-EAS Protocol (e.g., CAP) This listing should include the receive the Presidential Alert, and the distribution information. monitoring obligations already required primary and back-up paths for the 46. Organization of section 11.21. To under the rules to transmit the dissemination of the Presidential Alert address all State EAS Plan monitoring Presidential alert. Non-Presidential use to all key EAS sources organized by requirements in the same section of part of the ‘‘daisy chain’’ distribution operational areas within the state.’’ The 11, the Commission merges sections structure facilitates equipment readiness Commission finds that State EAS Plans 11.52 (‘‘EAS code and Attention Signal and maintains user proficiency in the should continue to divide their Monitoring requirements’’) and 11.55 system. Accordingly, the Commission respective states into geographically (‘‘EAS operation during a State or Local requires that SECCs disclose in their based operational areas, specifying Area emergency’’) into section 11.21 by: State EAS Plan the extent to which the primary and backup monitoring (1) Amending section 11.21 to state that state’s dissemination strategy for state assignments in each operational area. EAS Participant monitoring assignments and local alerts differs (if at all) from its CSRIC IV noted a lack of uniformity and EAS operations must be strategy for disseminating the among State EAS Plan definitions of implemented in a manner consistent Presidential Alert. Consistent with ‘‘operational areas’’ and recommended with guidelines established in the CSRIC IV’s recommendations, this that, where possible, such service areas applicable State EAS Plan submitted to information will help the Commission should be uniformly identified. Most the Commission, and (2) removing that and SECCs obtain a baseline of commenters, however, oppose a language from sections 11.52 and 11.55. information upon which to create a plan standardized definition of ‘‘operational All three of these sections address State for more effective use and development areas.’’ These commenters note that the EAS Plan content. The Commission of the EAS in each state. The definition of ‘‘operational areas’’ must agrees with Abbott that these changes Commission provides flexibility to be flexible to accommodate the different will help SECCs apply the State EAS SECCs regarding how this information is reasons for their existence, and that Plan rules. The Commission also agrees, provided in State EAS Plans, as well as such areas are best defined by the local however, with commenters who assert the frequency with which it is updated. or state entities most familiar with them. that removing all state plan terminology 42. Satellite-based Sources of EAS To facilitate this flexibility, the from sections 11.52 and 11.55 could Messages. The Commission requires that Commission will include a drop-down make the rules unclear; therefore, the State EAS Plans specify satellite-based menu in ARS that contains the most Commission does not adopt that communications resources that are used common ways SECCs have described proposal. as alternate monitoring assignments and their operational areas in previously- 47. The Commission finds that this present a reliable source of EANs and approved State EAS Plans as well as an change is supported by CSRIC IV’s other EAS messages. Many EAS opportunity for SECCs to describe recommendation that the Commission Participants currently use satellite-based operational areas that do not comport amend section 11.21 to provide that communications technologies as with the drop-down menu choices. ‘‘[s]tates that want to use the EAS shall monitoring sources because of 45. The Commission also removes the submit a State EAS Plan.’’ The incomplete PEP coverage, broadcast current restriction that State EAS Plans Commission also agrees with several monitoring source difficulties, or other include monitoring assignments for commenters who suggest that it would reasons. Most commenters support Presidential Alerts formatted only in the be helpful to specify in section 11.21 requiring the inclusion of this EAS Protocol. Several commenters that SECCs develop and maintain state information in State EAS Plans and note support removing this restriction. The plans, and the Commission adds this that satellite-based resources may be Commission finds that doing so will language to the rule. Finally, the fast, secure, and reliable. permit states to provide additional Commission agrees with Timm that the 43. Some commenters recommend information in their plans. Technologies language in section 11.21(c) should refer that the Commission remain are evolving, and a Presidential Alert to the state monitoring assignment technologically neutral in light of the may not necessarily be issued using the matrix rather than the state ‘‘data table’’ availability of alternative dissemination EAS Protocol; for example, a new and revise section 11.21(c) accordingly. technologies for EAS alerts. The generation of Presidential Alert may be 48. Testing/Outreach Elements. The Commission’s satellite-based sources introduced using the CAP standard Commission allows State EAS Plans to requirement does not mandate any only. The Commission believes that include procedures for live code tests particular technology, but rather removing this restriction will ensure and Required Weekly Tests (RWTs). requires that State EAS Plans reflect the that state plans remain flexible and Commenters generally agree that State monitoring sources used. Thus, its rules responsive to both changes in EAS Plans should include information maintain technological neutrality while technology and changes FEMA may on EAS testing. Some commenters assert ensuring that State EAS Plans accurately make in the future to the format of that requiring this information would be identify each state’s entire EAS Presidential Alerts. The Commission impractical or overly burdensome, but distribution system. As Abbott suggests, disagrees with Timm, who asserts that other commenters note that this states will determine independently the Commission should not remove the information would help organize test whether they will use satellite-based restriction yet because doing so could scheduling and prevent confusion. The resources. The Commission notes that ‘‘lead to imperiling’’ the EAS Protocol Commission believes that including many state plans include satellite distribution system and diminish the information on state testing programs
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can help ensure that the EAS functions whether it could issue guidance or work of Proposed Rulemaking, the effectively and efficiently. The with SECCs to clarify the roles and Commission proposed requiring Commission also notes that State EAS responsibilities of SECCs in a manner compliance with the amended rules on Plans already must include information that would be useful in each state. The information collection requirements on Required Monthly Tests (RMTs) and Commission also sought comment on (i.e., the State EAS Plan rules) within six special tests. To the extent it is useful whether information on SECC months from the release of a Public to include and memorialize all test governance in State EAS Plans could Notice announcing Office of procedures, including procedures for help develop best practices or other Management and Budget (OMB) live code tests or RWTs, in a guidance for SECCs. approval of related information consolidated manner, SECCs may use 51. Based on the record, the collection requirements or within 60 State EAS Plans and ARS as a vehicle Commission believes it would serve the days of a Public Notice announcing the for doing so. The Commission notes that public interest to provide SECCs with availability of the Commission’s SECCs and EAS Participants will benefit further guidance on their roles and relevant database to receive such from SECCs voluntarily providing this responsibilities. The record information, whichever is later. The information in the ARS, as EAS demonstrates support for reinstating the Commission also noted that its Participants will be able to readily NAC, and commenters generally proposed EAS designation rules did not review plan information relevant to support the Commission adopting rules constitute a collection and required no them. or providing guidance or best practices action by EAS Participants and 49. Other Proposed Contents. The on SECC governance. The Commission accordingly proposed that those rules Commission declines to adopt the notes, however, that under the IPAWS would become effective 30 days from proposals in the document that State Modernization Act of 2015, FEMA the date of their publication in the EAS Plans include a description of the recently established the IPAWS Federal Register. procedures for transmitting emergency Subcommittee to its National Advisory 54. State EAS Plans. The Commission information to the public via WEA, Council, which will consider changes to requires compliance with its rules social media, highway signs, and other improve the IPAWS and develop regarding State EAS Plan content and alerting procedures, as well as a technologies that may be beneficial to electronic submission within one year description of the extent to which alert the public alert and warning system. of publication in the Federal Register of originators coordinate alerts with NSBA observes that ‘‘it would not be a Public Notice announcing: (i) OMB ‘‘many-to-one’’ community feedback unreasonable’’ for the IPAWS approval of ARS information collection mechanisms, such as 911. Although Subcommittee to address issues raised requirements or (ii) the availability of several commenters support the in the document. Thus, rather than the ARS to receive such information, inclusion of some of these capabilities establishing a separate advisory whichever is later. The Commission in alerts, commenters generally oppose committee, the Commission concludes acknowledges commenters’ concerns the incorporation of these elements into that the IPAWS Subcommittee is best that the proposed 6-month deadline State EAS Plans. The Commission positioned to efficiently and effectively imposed a significant burden on SECCs’ agrees with the majority of commenters address issues related to SECC and LECCs’ limited resources. that this information is unnecessary at governance and best practices. Accordingly, the Commission extends this time to ensure the effective delivery Accordingly, the Commission will its proposed 6-month compliance of the EAN, and that its inclusion would coordinate with FEMA to ensure that be unduly burdensome. The SECC administration and governance timeframe to a one-year compliance Commission also shares commenters’ are addressed within the scope of the timeframe. The Commission believes concern that these requirements may IPAWS Subcommittee, which transmits the one-year compliance timeframe that cause confusion or conflict with its recommendations to FEMA’s is supported by the majority of community warning plans, and that National Advisory Council for review. commenters will afford SECCs sufficient they may require the provision of The Commission believes that working time to implement its State EAS Plan information outside of the SECCs’ through these existing mechanisms will requirements effectively and conduct purview. be the most efficient way to generate any necessary outreach, training, and 50. The National Advisory Committee recommendations that the Commission planning. The Commission further and Additional Guidance for SECCs. may evaluate in formulating its own requires that State EAS Plans will CSRIC IV recommended that the guidance to improve communication continue to be updated on a yearly Commission reestablish the National among the Commission, SECCs, FEMA, basis, but note that SECCs may satisfy Advisory Committee (NAC). The NAC NWS, and other EAS stakeholders. this requirement by simply indicating was the federal advisory committee 52. Although a few commenters on the form each year that the plan is responsible for assisting the suggest amending part 11 to regulate up-to-date. Commission with administrating the SECCs, the Commission declines to 55. EAS Designations. The EAS, promoting stakeholder and adopt any rules regulating SECCs. Commission agrees with Timm that the Commission interaction with SECCs, Rather, by way of guidance, the new designations should become and providing information for the Commission provides the SECCs with effective at the same time as the State development and maintenance of State an online filing template for State EAS EAS Plan rule changes because and Local EAS Plans. The document Plans and specify the required contents designation changes likely would need sought comment on CSRIC IV’s of those plans. to be reflected in most state plans. recommendation to reinstate the NAC as 53. Compliance Timeframes. To SECCs may need to engage with key well as whether there is a need for a conform to section 18.17 of the rules of EAS sources in their states to apply its consistent, uniform governance the Administrative Committee of the designations. The Commission structure for SECCs nationwide to Federal Register, 1 CFR 18.17, the above concludes that aligning the ensure effective functioning of the EAS. Dates field and this summary, at implementation timeframes of the state Noting that CSRIC IV discouraged a paragraphs 54–55 and 72–73 below, plan and designation changes will ‘‘one size fits all’’ approach to SECC describe the compliance timeframes for promote efficiency and avoid burdening governance, the Commission asked the new and revised rules. In the Notice SECCs with the need to draft multiple
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versions of their State EAS Plans to transitional cost on all SECCs totaling broadcast engineers. Crowdsourced comply with the new requirements. approximately $236,000. The employee compensation data indicates 56. Legal Authority. The Commission shows that its rules present that the median hourly compensation Communications Act gives the President sufficient benefits to justify these costs. for a broadcast engineer is authority to broadcast alerts during 60. Costs. The cost estimates the approximately $29. According to the times of national emergency and Commission discusses below are Bureau of Labor Statistics, employee prohibits broadcasters from issuing false associated with the decisions adopted in overhead benefits (including paid leave, alerts. Congress has also directed that this Report and Order, as opposed to the supplementary pay, insurance, cable systems afford their viewers the more expansive proposals in the retirement and savings, and legally same opportunities to receive document. The Commission estimates required benefits) add 50 percent to an emergency alerts ‘‘as is afforded by’’ the reasonable one-time cost burden employer’s cost of labor. Thus, the broadcasters ‘‘pursuant to Commission these rules could present to EAS Commission quantifies the value of an regulations.’’ The Act further requires Participants is approximately $236,000. hour spent updating a State EAS Plan as the Commission to ‘‘investigate and Specifically, SECCs collectively will approximately $43.50. The Commission study’’ how to ‘‘obtain[] maximum incur one-time approximate costs of a concludes that the reasonable estimated effectiveness from the use of radio and $235,000 recordkeeping cost for cost of updating a single State EAS Plan wire communications in connection producing State EAS Plans consistent consistent with this Report and Order with safety of life and property.’’ The with its updated State EAS Plan would be approximately $4,350 and the Act empowers us to ‘‘make such rules requirements and EAS designations and estimated total cost of compliance with and regulations’’ as necessary to carry a $1,000 reporting cost for electronically its State EAS Plan rules would be out all of these statutory requirements. filing those plans. The Commission approximately $235,000. Together, these provisions have allowed notes that this is a significantly smaller 62. Additionally, the Commission the Commission to oversee the EAS. estimated total burden than that anticipates that SECC representatives Although the Commission only requires described in the document, which also will incur a one-time estimated use of EAS for Presidential Alerts, state estimated a one-time $5.3 million and $1,000 reporting cost to file their revised and local authorities may use EAS to an annual cost of $596,560. The State EAS Plans in the ARS. The disseminate information to the public Commission also notes that the Commission concludes that the time regarding more localized emergencies. Commission sought comment on the burden of filing State EAS Plans in the 57. In the document, the Commission specific costs of compliance with the ARS will be one hour, the same burden sought comment on its sources of legal proposed rules, but received no dollar that OMB approved for filing data in authority over the EAS, including those figure estimates in response. ETRS. Both filing systems present filers provisions that the Commission Accordingly, the following estimate with the same user interface, and while highlights above, and noted that its leverages publicly available data on the State EAS Plans may include more data proposals are ‘‘primarily intended to financial burdens associated with its points than ETRS filings, entering state prepare the nation’s alerting requirements. plan data in the ARS will be simpler infrastructure for successful 61. The Commission concludes that because SECCs already have the transmission of a Presidential Alert.’’ To producing State EAS Plans consistent relevant information on-hand from the enable the President to reliably execute with its rules will result in process of creating a State EAS Plan. this authority in the public interest, the approximately $235,000 as a one-time The Commission values the cost of an Commission has long considered it recordkeeping cost. In the document, SECC representative’s time spent on this necessary to ensure that the national the Commission estimated that task as approximately $19, the median alerting architecture is ready to transmit implementing these changes would hourly salary of a clerical employee plus a Presidential Alert in an appropriate result in a one-time cost of benefits. Thus, filing state plan data in situation. The rules the Commission approximately $25,000 and that it the ARS will cost approximately $1,000. adopts here provide more consistent would take each SECC approximately 20 63. Therefore, based on the foregoing and reliable access to state plans so that hours to comply with the new State EAS analysis, the Commission finds it the Commission and EAS participants Plan requirements. Commenters observe reasonable to conclude that the benefits will be better prepared to ensure the that this cost assessment, as well as the of the rules the Commission adopts successful transmission of a Presidential Commission’s assessment of the total today will exceed the costs of their Alert. No commenters opposed the hourly burden required to update State implementation. The Commission’s rule Commission’s authority to adopt any of EAS Plans, was too low. In response to changes will improve alerting the proposals contained in the these concerns, the Commission is not organization, support greater testing and document. requiring SECCs to include certain awareness of the EAS, and promote the 58. The Commission notes that the proposed elements in State EAS Plans, security of the EAS. The Commission overall goal of the EAS system is to which the Commission concludes will believes these benefits easily outweigh serve as an effective integral part of a reduce the amount of time required to the one-time $236,000 total compliance ‘‘comprehensive system to alert and revise their plans. Notwithstanding this cost. The Commission also find that warn the American people.’’ Today’s revision, the Commission uses a these rules likely will continue to actions contribute to that goal by quantification of commenters’ accrue value to the public while ‘‘adopt[ing] rules to ensure that assessment of the time that it would reducing recurring costs. communications systems have the take SECCs to write their plans from 64. Benefits. The rules the capacity to transmit alerts and warnings scratch (100 hours) as a reasonable Commission adopts today will improve to the public as part of the public alert ceiling for the time needed to update the nation’s alert and warning capability and warning system.’’ those plans consistent with its rules. by modernizing alerting recordkeeping 59. Cost-Benefit Analysis. In this Based on submissions of State EAS and reducing recurring filing burdens section, the Commission finds that its Plans to date, the Commission expects on SECCs. For over two decades, the rules generally reduce recurring burdens that 54 entities will file such plans. The EAS has proven to be an effective on SECCs. The Commission estimates record shows that the individuals most method of alerting the public and saving that they impose a one-time collective likely to update those plans are lives and property. It continues to stand
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ready to serve its primary purpose of Second Report and Order, the 624(g), 706, and 713of the allowing the President to contact the Commission required ‘‘state and local Communications Act of 1934, as public across the nation quickly and entities to annually confirm their amended, 47 U.S.C. 151, 152, 154(i), reliably, while at the same time plans.’’ Prior to the current Report and 154(o), 301, 303(r), 303(v), 307, 309, providing the vital service of alerting Order, when an SECC updated its plan, 335, 403, 544(g), 606, and 613, as well the public about weather and other it would refile its entire plan. The ARS as the Twenty-First Century emergencies. A majority of the public will reduce this filing burden by Communications and Video continues to rely on the EAS to receive allowing filers to instantaneously Accessibility Act of 2010, Pub. L. 111– emergency information. update elements of their plans, by 260 and Pub. L. 111–265, that the 65. However, there remain saving previously entered data, and by Report and Order in PS Docket No. 15– weaknesses in conveying this critical obviating the need to re-file an entire 94 is hereby adopted. information to the public via the EAS. plan every time a change is made. Recent nationwide testing of the EAS Converting the State EAS Plan filing 72. It is further ordered that the has shown ‘‘shortfalls in some state EAS system to an online filing system will Commission’s rules are hereby amended plans,’’ including confusion and streamline the state plan approval as set forth in Appendix A of the Report difficulties in understanding and process and reduce the recurring costs and Order. implementing monitoring assignments. of revising, updating, and resubmitting 73. It is further ordered that the rules The current paper-based State EAS Plan state plans (e.g., printing and mailing adopted herein will become effective on filing system, EAS designations, and costs). the dates set forth in paragraphs 54–55 State EAS Plan contents collectively above. make it difficult for the Commission and III. Procedural Matters 74. It is further ordered that the other EAS stakeholders to detect 68. Regulatory Flexibility Analysis. Commission’s Consumer and problems or map the propagation of As required by the Regulatory Governmental Affairs Bureau, Reference EAS alerts. This inability to detect and Flexibility Act of 1980, the Commission Information Center, SHALL SEND a resolve problems, in turn, makes it more has prepared a Final Regulatory copy of this Report and Order, likely that some members of the public Flexibility Analysis (FRFA) of the may not receive emergency alerts. The significant economic impact on small including the Final Regulatory Commission’s new requirements entities of the policies and rules Flexibility Analysis, to the Chief address this difficulty by creating a adopted in this document. The FRFA is Counsel for Advocacy of the Small uniform online filing system that will set forth in Appendix B of the Report Business Administration. utilize specific State EAS Plan contents and Order. This part contains rules and and uniform EAS designations. These 69. Paperwork Reduction Analysis. regulations providing for an Emergency improvements will allow the The Report and Order contains Alert System (EAS). The EAS provides Commission, FEMA, and localities to modified information collection the President with the capability to more easily review and identify gaps in requirements subject to the Paperwork provide immediate communications and the EAS architectures, detect problems, Reduction Act of 1995 (PRA), Public information to the general public at the and take measures to address these Law 104–13. It will be submitted to the National, State and Local Area levels shortcomings. In doing so, and by OMB for review under section 3507(d) during periods of national emergency. helping to facilitate measures to of the PRA. OMB, the general public, The rules in this part describe the improve the reach of EAS messages, the and other federal agencies will be required technical standards and Commission improves the likelihood invited to comment on the new operational procedures of the EAS for that a greater segment of the public will information collection requirements analog AM, FM, and TV broadcast receive emergency alerts on a timely contained in this proceeding. The stations, digital broadcast stations, basis and take emergency preparedness Commission notes that pursuant to the analog cable systems, digital cable measures, thereby providing benefits Small Business Paperwork Relief Act of systems, wireline video systems, that include potentially reducing the 2002, Public Law 107–198, the wireless cable systems, Direct Broadcast incidence of injuries and preserving Commission previously sought specific Satellite (DBS) services, Satellite Digital property. comment on how the Commission might Audio Radio Service (SDARS), and 66. The improvements to the EAS that ‘‘further reduce the information other participating entities. The EAS the Commission adopts today will collection burden for small business may be used to provide the heads of contribute to its ability to prevent concerns with fewer than 25 State and local government, or their injuries. The Commission notes that in employees.’’ In addition, the designated representatives, with a 2016, there were 1,276 injuries resulting Commission has described impacts that means of emergency communication from weather events in the United might affect small businesses, which with the public in their State or Local States. If the improvements to the EAS includes most businesses with fewer Area. [72 FR 62132, Nov. 2, 2007] the Commission adopts today prevent than 25 employees, in the FRFA in just 15 injuries, they will produce a Appendix B of the Report and Order. List of Subjects in 47 CFR Part 11 public value of at least $400,000. This 70. Congressional Review Act. The analysis illustrates that injury Commission will send a copy of this Radio, Television. prevention alone, which will continue Report & Order in a report to be sent to Federal Communications Commission. in years to come, is likely to produce Congress and the Government Marlene Dortch, benefits that outweigh those one-time Accountability Office pursuant to the Secretary. costs. Congressional Review Act, see 5 U.S.C. 67. Additionally, the Commission 801(a)(1)(A). Final Rules anticipates that, after the initial one- time cost of compliance with its rules, IV. Ordering Clauses For the reasons discussed in the EAS Participants, SECCs, and state 71. Accordingly, it is ordered, preamble, the Federal Communications emergency alerting authorities will pursuant to sections 1, 2, 4(i), 4(o), 301, Commission amends 47 CFR part 11 as realize long-term cost savings. In the 303(r), 303(v), 307, 309, 335, 403, follows:
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PART 11—EMERGENCY ALERT (f) A Local Primary (LP) is an entity the PEP to all key EAS sources (using SYSTEM (EAS) that serves as a monitoring assignment the uniform designations specified in for other EAS Participants within the § 11.18) and to each station in the plan, ■ 1. The authority citation for part 11 state. LP sources may be assigned organized by operational areas within continues to read as follows: numbers (e.g., LP–1, 2, 3) are relied on the state. If a state’s emergency alert Authority: . 47 U.S.C. 151, 154(i) and (o), as monitoring sources by other EAS system is capable of initiating EAS 303(r), 544(g) and 606. Participants in the Local Area. An LP messages formatted in the Common may monitor any other station, Alerting Protocol (CAP), its EAS State § 11.2 [Amended] including another LP, so long as doing Plan must include specific and detailed ■ 2. Amend § 11.2 by removing so avoids creating a single point of information describing how such paragraphs (b), (c), (f), (g) and (h), and failure in the alert distribution messages will be aggregated and redesignating paragraphs (d), (e), and (i) hierarchy. distributed to EAS Participants within as paragraphs (b), (c), and (d) (g) A Participating National (PN) is an the state, including the monitoring respectively. EAS Participant that transmits national, requirements associated with distributing such messages; ■ 3. Revise § 11.18 to read as follows: state, or Local Area EAS messages, and is not otherwise designated within the (5) State procedures for conducting § 11.18 EAS Designations. State EAS Plan. special EAS tests and Required Monthly (a) A Primary Entry Point (PEP) is a Tests (RMTs); § 11.20 [Removed] (6) A list of satellite-based private or commercial radio broadcast ■ communications resources that are used station that cooperatively participates 4. Remove § 11.20. as alternate monitoring assignments and with FEMA to provide EAS alerts to the ■ 5. Amend § 11.21 by revising present a reliable source of EAS public. PEPs are the primary source of paragraphs (a) and (c) to read as follows: messages; and initial broadcast for a Presidential Alert. § 11.21 State and Local Area Plans and (7) The SECC governance structure A PEP is equipped with back-up FCC Mapbook. utilized by the state in order to organize communications equipment and power * * * * * state and local resources to ensure the generators designed to enable it to (a) State EAS Plans contain guidelines efficient and effective delivery of a continue broadcasting information to that must be followed by EAS Presidential Alert, including the duties the public during and after disasters of Participants’ personnel, emergency of the SECC, the membership selection national significance. The Primary Entry officials, and National Weather Service process utilized by the SECC, and the Point System is a nationwide network of (NWS) personnel to activate the EAS. administrative structure of the SECC. such broadcast stations used to The Plans include information on * * * * * distribute EAS alerts formatted in the actions taken by EAS Participants, in (c) The FCC Mapbook is based on the EAS Protocol. FEMA is responsible for coordination with state and local consolidation of the monitoring designating broadcast stations as PEPs. governments, to ensure timely access to assignment matrices required in each (b) A National Primary (NP) is an EAS alert content by non-English State EAS Plan with the identifying data entity tasked with the primary speaking populations. State EAS Plans contained in the ETRS. The Mapbook responsibility of receiving the must be updated on an annual basis. organizes all EAS Participants according Presidential Alert from a PEP and The plans must be reviewed and to their State, EAS Local Area, and EAS delivering it to an individual state or approved by the Chief, Public Safety designation. EAS Participant monitoring portion of a state. In states without a and Homeland Security Bureau, prior to assignments and EAS operations must PEP, the NP is responsible for receiving implementation to ensure that they are be implemented in a manner consistent the Presidential Alert from an out-of- consistent with national plans, FCC with guidelines established in a State state PEP and transmitting it to the regulations, and EAS operation. State EAS Plan submitted to the Commission public and other EAS Participants in the EAS Plans must include the following in order for the Mapbook to accurately state. Multiple entities may be charged elements: reflect actual alert distribution. with primary responsibility for (1) A list of the EAS header codes and * * * * * delivering the Presidential Alert. messages that will be transmitted by key (c) A State Primary (SP) is an entity EAS sources (NP, LP, SP, and SR); § 11.52 [Amended] tasked with initiating the delivery of (2) Procedures for state emergency ■ 6. Amend § 11.52 by removing EAS alerts other than the Presidential management officials, the National paragraph (d)(3), and redesignating Alert. Weather Service, and EAS Participant paragraphs (d)(4) and (5) as paragraphs (d) A State Relay (SR) is an entity not personnel to transmit emergency (d)(3) and (4), respectively. otherwise designated that is charged information to the public during an ■ 7. Amend § 11.55 by revising with retransmitting EAS alerts for the emergency via the EAS, including the paragraphs (b), (c) introductory text, and purpose of being monitored by a Local extent to which the state’s (c)(1) through (3) to read as follows: Primary or Participating National. dissemination strategy for state and (e) State Relay Network (SRN) is a local emergency alerts differs from its § 11.55 EAS operation during a State or network composed of State Relay (SR) Presidential Alerting strategy; Local Area emergency. sources, leased common carrier (3) Procedures for state and local * * * * * communications facilities or any other activations of the EAS, including a list (b) EAS operations must be conducted available communication facilities. The of all authorized entities participating in as specified in State and Local Area EAS network distributes State EAS messages the State or Local Area EAS; Plans. originated by the Governor or (4) A monitoring assignment matrix, (c) Immediately upon receipt of a designated official. In addition to EAS in computer readable form, clearly State or Local Area EAS message that monitoring, satellites, microwave, FM showing monitoring assignments and has been formatted in the EAS Protocol subcarrier or any other communications the specific primary and backup path or the Common Alerting Protocol, EAS technology may be used to distribute for emergency action notification Participants participating in the State or State emergency messages. (EAN)/Presidential Alert messages from Local Area EAS must do the following:
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(1) State Relays (SR) monitor or Office of Management and Budget similarly regardless of technology deliver EAS alerts as required by the (OMB) under the Paperwork Reduction choice. State EAS Plan. Act. The Commission will publish a 2. To build on the adopted reforms (2) Local Primary (LP) entities document in the Federal Register and to respond to certain submissions monitor SPs, SRs, or other sources as set announcing the effective date of that by commenters in the Commission’s forth in the State EAS Plan. amendment. 2016 Biennial Review of (3) Participating National (PN) sources Telecommunications Regulations FOR FURTHER INFORMATION CONTACT: monitor LPs or other sources as set forth proceeding (WT Biennial Review in the State EAS Plan. Nina Shafran, (202) 418–2781, in the proceeding), the Commission also Mobility Division, Wireless released a companion Second Further * * * * * Telecommunications Bureau. She may [FR Doc. 2018–15818 Filed 8–1–18; 8:45 am] Notice of Proposed Rulemaking (Second also be contacted at (202) 418–7233 BILLING CODE 6712–01–P Further Notice) in the Cellular Reform (TTY). proceeding on March 24, 2017. In the SUPPLEMENTARY INFORMATION: This is a Second Further Notice, the Commission FEDERAL COMMUNICATIONS summary of the Commission’s Third proposed and sought comment on COMMISSION Report and Order in the Cellular Reform additional reforms of its Part 22 rules proceeding (Cellular Third R&O), WT governing the Cellular Service and other 47 CFR Part 22 Docket No. 12–40, RM Nos. 11510 and Part 22 Public Mobile Services (PMS). [WT Docket Nos. 12–40, 16–138; RM–11510, 11660, FCC 18–92 adopted July 12, 2018 The Commission also invited comment RM–11660; FCC 18–92] and released July 13, 2018. The full text on whether other measures could be of the Cellular Third R&O, including all taken to allow Part 22 licensees to Cellular Service, Including Changes in Appendices, is available for inspection benefit from the same level of flexibility Licensing of Unserved Area and copying during normal business available to other commercial wireless hours in the FCC Reference Center, 445 licensees. In that context, the AGENCY: Federal Communications Commission raised the possibility of Commission. 12th Street SW, Room CY–A157, Washington, DC 20554, or by relocating—to Part 27 of the ACTION: Final rule. downloading the text from the Commission’s rules—certain Part 22 rules, as well as the Part 24 PCS rules SUMMARY: In this document, the Federal Commission’s website at https:// Communications Commission docs.fcc.gov/public/attachments/FCC- and other rules governing (Commission) adopts revised rules 18-92A1.pdf. Alternative formats are geographically licensed wireless governing the 800 MHz Cellular available for people with disabilities services. 3. In response to the Second Further Radiotelephone (Cellular) Service and (Braille, large print, electronic files, Notice, interested parties submitted other commercial mobile radio services audio format), by sending an email to comments, reply comments, and ex (CMRS) governed by Part 22 of the [email protected] or calling the parte letters. The specific reforms Commission’s rules. These steps to Consumer and Government Affairs adopted by the Commission in the Third remove unnecessary regulatory burdens Bureau at (202) 418–0530 (voice), (202) R&O are described below. for Cellular Service and other Part 22 418–0432 (TTY). licensees will free up more resources for Synopsis II. Elimination of Unnecessary Rules investment in new technologies and I. Background A. Deletion of 47 CFR 22.301 and 22.303 greater spectrum efficiency to meet Concerning Station Inspection, increasing consumer demand for 1. In a Second Report and Order Retention of Station Authorizations advanced wireless services. Specifically, released March 24, 2017, in the Cellular the Commission modernizes its rules by Reform proceeding (Second R&O), the 4. Commission Rules 22.301 and eliminating several Part 22 Commission modernized numerous 22.303 collectively require that hard recordkeeping and reporting obligations Cellular technical rules, including copies of license authorizations and that were adopted more than two outdated radiated power and related other records be maintained by all Part decades ago—obligations for which rules, to permit power measurement 22 licensees for each station and that there is no longer a benefit to outweigh using power spectral density. These such records and the station itself be the compliance costs and burdens changes facilitate the use of Cellular made available for inspection upon imposed on licensees. It also eliminates spectrum to provide advanced mobile request. The Commission finds that both certain Cellular Service-specific rules broadband services, such as 4G long rules have outlived the usefulness they that are no longer necessary. These term evolution (LTE), while protecting may have had in the past and now reforms will provide Cellular Service public safety communications from impose administrative burdens without 1 and other Part 22 licensees with increased potential for unacceptable any corresponding public benefit. enhanced flexibility and advance the interference. The Second R&O also Because the Commission no longer goal of ensuring more consistency in revised rules to further eliminate routinely mails printed authorizations, licensing across commercial wireless unnecessary filings and other regulatory licensees cannot comply with the hard- services, while taking into account burdens for Cellular licensees. The copy requirement unless they unique features of each service. With Commission’s reforms resulted in themselves print, or request that the this document, the Commission Cellular Service rules more akin to the Commission’s Wireless terminates the Cellular Reform flexible licensing schemes found in Telecommunications Bureau print and proceeding in WT Docket No. 12–40, other similar mobile services, such as mail, an authorization every time an including RM Nos. 11510 and 11660. the Broadband Personal application is granted. Such a DATES: Effective September 4, 2018, Communications Service (PCS), the requirement does not serve the public except for the amendment to 47 CFR commercial service in the 700 MHz 1 The Commission retains in any event its general 22.303, which contains modified band, the 600 MHz Service, and the station inspection authority under the information collection requirements that Advanced Wireless Services (AWS), to Communications Act of 1934, as amended. See 47 have not yet been approved by the help ensure that carriers are treated U.S.C. 303(n).
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interest. The Commission’s Universal complaints report be filed annually applicable Commission rules and only Licensing System (ULS) is available regardless of the licensee’s size. Rule with a valid authorization granted by electronically at all times: licensees 90.168 states that it applies to all CMRS the Commission. It further specifies that have access in ULS to their official (which includes the Part 22 PMS), and authority for subscribers to operate authorizations, while members of the thus it entirely subsumes Rule 22.321. mobile or fixed PMS stations is public have access in ULS to reference Given that all CMRS licensees are included in the authorization of the copies reflecting the most up-to-date subject to 47 CFR 90.168, including licensee providing service to them. The information concerning all 90.168(c), 47 CFR 22.321 is duplicative same provisions are included in the authorizations. The movement away and, accordingly, the Commission later-adopted 47 CFR 1.903, which from site-specific filings renders on-site deletes 47 CFR 22.321 in its entirety. As applies more broadly to numerous comparison of paper records and to the Part 90 reporting requirement, the wireless services in addition to the operating parameters unnecessary and Commission did not propose to remove PMS. Accordingly, the Commission largely infeasible. Moreover, the that requirement, nor did any deletes 47 CFR 22.3 as duplicative. Commission has not imposed the commenters suggest doing so. Part 90 III. Possible Relocation of Rules to Part recordkeeping and station inspection rules are therefore beyond the scope of 27 requirements of Rules 22.301 and this proceeding and the Commission 22.303 on licensees in competing declines at this time to eliminate the 9. The Commission sought comment wireless services governed by Parts 24 complaints reporting requirement in 47 in the Second Further Notice on and 27 of its rules. For these reasons, CFR 90.168. whether to migrate the Part 22 Cellular the Commission deletes 47 CFR 22.301 and Part 24 PCS rules to Part 27, and on D. Deletion of 47 CFR 22.927 and 22.303. possible reorganization of the Part 27 Concerning Responsibility for Mobile rules, either in this proceeding or by B. Deletion of 47 CFR 22.325 Concerning Stations, and 47 CFR 22.3 Concerning initiating a separate rulemaking. In Control Points Authorization Required addition, the Commission noted that 5. Commission Rule 22.325 requires 7. Under 47 CFR 22.927, Cellular there are other geographically-licensed, that ‘‘[e]ach station in the Public Mobile licensees are ‘‘responsible for exercising auctioned services that are not included Services [ ] have at least one control effective operational control over mobile in Part 27, including Public Coast (Part point and a person on duty who is stations receiving service through their 80), Specialized Mobile Radio (SMR), responsible for station operation.’’ The Cellular systems,’’ including mobile Location and Monitoring, and 220 MHz Commission finds that this rule no stations operated by subscribers to a (Part 90), and 218–219 MHz (Part 95), longer serves the public interest; it is different Cellular licensee. Pursuant to and that of these, only SMR is used technologically obsolete, as licensees 47 CFR 1.903(c), the ‘‘[a]uthority for today by wireless carriers to provide today routinely monitor their network subscribers to operate mobile or fixed services directly to consumers operations by automatic and remote stations in the Wireless Radio Services nationwide. The Commission sought mechanisms. As with Rules 22.301 and [WRS],’’ which includes the Cellular comment on whether it should move the 22.303, discussed above, there is no Service, ‘‘is included in the Part 22 Cellular and Part 24 PCS rules similar provision governing competing authorization held by the licensee to Part 27 in conjunction with moving CMRS in the Commission’s Part 24 or providing service to them.’’ Thus, when those other service rule parts to Part 27 Part 27 rules. Part 22 licensees should a WRS licensee, as the host carrier, as well. have the same flexibility as Part 24 and provides service to a subscriber of 10. Only two commenters addressed Part 27 commercial wireless licensees to another carrier (i.e., a subscriber that is the issue, and one of them opposes the determine how to manage their outside its own provider’s service area), idea, highlighting the fact that disparate networks to ensure compliance with the the subscriber’s use of his or her mobile types of operations found in certain rule Commission’s rules, including how best phone to access the spectrum falls parts would make it challenging to to avoid interference. Accordingly, the under that host carrier’s authorization. consolidate Part 22 Cellular, Part 24 Commission deletes 47 CFR 22.325. Rule 1.903(c) thus captures the purpose PCS, and other wireless mobile service underlying Rule 22.927, albeit with less rules into a single set of regulations. C. Deletion of 47 CFR 22.321 detail. While the detailed provision in Such an exercise would entail Concerning Equal Employment Rule 22.927 regarding the host carrier’s painstaking review of numerous rules to Opportunity Programs and Reports responsibility under its authorization determine those that can be 6. Commission Rule 22.321 sets forth may have been warranted when the consolidated and those that must be licensee obligations for equal Cellular Service was in its nascency, the retained for individual services. In the employment opportunity (EEO) Commission finds that this additional absence of strong support on the record programs and policies to assure rule is unnecessary these many decades for this endeavor, which would require nondiscriminatory practices in later. Moreover, the rule creates a significant investment of staff recruitment, placement, promotion, and asymmetry, as the rules for commercial resources to complete, the Commission other areas of employment practices. wireless services established much later declines to pursue the issue at this time. Paragraph (c) of the rule requires all Part than the Cellular Service—such as PCS 22 licensees (i.e., PMS licensees), and AWS—do not have a counterpart to IV. Other Regulations Raised by regardless of their size, to submit an 47 CFR 22.927. Consistent with a key Commenters annual report to the Commission goal in this proceeding to eliminate 11. In response to the Commission’s indicating whether any EEO complaints unnecessary asymmetric regulations, the query in the Second Further Notice as have been filed at the federal, state, or Commission deletes 47 CFR 22.927. to whether any other Part 22 rules are local level against the licensee. 8. The Commission concludes that a ripe for removal in light of changed Commission Rule 90.168, titled Equal related legacy rule that applies to all technology, electronic licensing/ Employment Opportunities, contains Part 22 licensees, 47 CFR 22.3, is also recordkeeping, or other modernizations the same provisions as Rule 22.321. no longer necessary. This rule specifies that have occurred over the past two This includes paragraph 90.168(c) that PMS stations must be used and decades, a few commenters requested which, like 22.321(c), requires that a operated only in accordance with deletion of three Part 22 rules. These
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rules and the Commission’s decisions addition, pre-grant construction under that businesses with fewer than 25 not to delete them at this time are Rule 22.143 is subject to several people will benefit from being subject to explained below. conditions, including, among others, fewer recordkeeping, reporting, and 12. 47 CFR 22.921—911 Call that no petitions to deny or mutually compliance burdens. Processing Procedures. One commenter exclusive (competing) applications have 16. Congressional Review Act. The argued that Rule 22.921, pursuant to been filed. When the Commission Commission will send a copy of this which certain Cellular Service mobile reduced the waiting period from the Third R&O to Congress and the telephones that are capable of operating original 60-day and 90-day post-Public Government Accountability Office in the analog mode must incorporate a Notice periods to the existing Public- pursuant to the Congressional Review special procedure for processing 911 Notice-plus-35-days provision, it agreed Act, see 5 U.S.C. 801(a)(1)(A). calls, is now obsolete because, among that applicants should know within that 17. Final Regulatory Flexibility other reasons, it is unaware of any timeframe whether any petition to deny Analysis. The Regulatory Flexibility Act carrier that still offers analog devices or or competing application had been filed, of 1980 (RFA) requires that an agency operates an analog Cellular system. and retained these conditions to prepare a regulatory flexibility analysis Commission data show that, on the disallow construction when it cannot be for notice and comment rulemakings, contrary, some carriers are still using reasonably certain of being able to grant unless the agency certifies that ‘‘the rule analog technology in the Cellular the application. The Commission has will not, if promulgated, have a Service band—and Rule 22.921 ensures also recognized that construction of significant economic impact on a that 911 calls get through in those PMS facilities entails not only the substantial number of small entities.’’ circumstances. Accordingly, the financial risk to the applicant, but also Accordingly, the Commission has Commission concludes that deletion of environmental and other consequences prepared a Final Regulatory Flexibility 47 CFR 22.921 would not serve the affecting the public, and it would not be Analysis (FRFA), set forth in Appendix public interest and declines to take such in the public interest to allow B of the Third R&O, concerning the action in this proceeding construction until the Commission is possible impact of the rule changes. 13. 47 CFR 22.925—Prohibition on reasonably certain that the facilities can 18. People with Disabilities. To Airborne Operation of Cellular be authorized. In a similar vein, it is in request materials in accessible formats Telephones. Two commenters raised the public interest to minimize the for people with disabilities (Braille, issues regarding the use of Cellular Commission’s risk of having to expend large print, electronic files, audio Service spectrum for communications taxpayer resources to issue notification format), send an email to [email protected] to, from, and onboard aircraft and to the applicant, pursuant to 47 CFR or call the Consumer & Governmental argued that Rule 22.925, which 22.143(b), to stop construction. For all Affairs Bureau at 202–418–0530 (voice), prohibits the operation of Cellular these reasons, the Commission declines 202–418–0432 (tty). Service telephones aboard ‘‘airplanes, to delete 47 CFR 22.143(a) at this time. balloons or any other type of aircraft VI. Ordering Clauses . . . while such aircraft are airborne V. Procedural Matters 19. Accordingly, it is ordered, . . .,’’ should be eliminated, or at least 15. Paperwork Reduction Act pursuant to sections 1, 2, 4(i), 4(j), 7, modified. The issues raised by the two Analysis. One rule amendment adopted 301, 303, 307, 308, 309, and 332 of the commenters are being dealt with in a in the Third R&O—specifically, 47 CFR Communications Act of 1934, as separate Commission proceeding that 22.303, contains modified information amended, 47 U.S.C. 151, 152, 154(i), remains open (WT Docket No. 13–301), collection requirements subject to the 154(j), 157, 301, 303, 307, 308, 309, and and the Commission therefore declines Paperwork Reduction Act of 1995 332, that this third report and order in to consider the issues in this Cellular (PRA), Public Law 104–13. That rule WT Docket No. 12–40 is adopted. Reform proceeding. amendment will be submitted to OMB 14. 47 CFR 22.143(a)— for review under section 3507(d) of the 20. It is further ordered that the third Commencement of Construction Prior to PRA. OMB, the general public, and report and order shall be effective Grant of Application. Rule 22.143 other Federal agencies will be invited to September 4, 2018. permits applicants to begin construction comment on the modified information 21. It is further ordered that Part 22 of PMS facilities prior to grant of their collection requirements. In addition, the of the Commission’s rules, 47 CFR part applications; paragraph (a) of the Rule Commission notes that pursuant to the 22, is amended as specified in specifies that such construction may Small Business Paperwork Relief Act of Appendix A of the third report and begin ‘‘35 days after the date of the 2002, Public Law 107–198, see 44 U.S.C. order, effective September 4, 2018 Public Notice listing the application for 3506(c)(4), the Commission previously except as otherwise provided herein. that facility as acceptable for filing.’’ sought specific comment on how the 22. It is further ordered that the One commenter argues that paragraph Commission might further reduce the amendment adopted in the third report (a) of the Rule should be deleted, information collection burden for small and order, and specified in Appendix A asserting that comparable provisions do business concerns with fewer than 25 of the third report and order, to 47 CFR not exist for other wireless services, and employees. The Commission has 22.303, which contains new or modified that other portions of the Rule put assessed the effects on small business information collection requirements that applicants on notice that they assume concerns of the rule changes it is require approval by the Office of the risk of constructing prior to grant. adopting by this Third R&O and finds Management and Budget under the The Commission disagrees that the Paperwork Reduction Act, will become provision should be deleted, noting that includes commercial wireless services such as PCS effective after the Commission publishes and AWS, the Commission has also established a a document in the Federal Register the same Public-Notice-plus-35-day waiting period, tailored to our competitive bidding period is specified in 47 CFR 90.169 of process: Pre-grant construction is permitted only announcing such approval and the Commission rules for several other upon release of the Public Notice listing the post- relevant effective date. commercial wireless radio services.2 In auction long-form application for that facility as 23. It is further ordered that this acceptable for filing (by which time, mutual Cellular Reform proceeding in WT exclusivity has been eliminated and the 2 The Commission also notes that, for applicants Commission is reasonably certain that the Docket No. 12–40, including RM Nos. for licenses awarded by competitive bidding, which application can be granted). See 47 CFR 1.2113. 11510 and 11660, is hereby terminated.
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24. It is further ordered, pursuant to Federal Communications Commission. § 22.301 [Removed and Reserved] Section 801(a)(1)(A) of the Marlene Dortch, ■ 3. Section 22.301 is removed and Congressional Review Act, 5 U.S.C. Secretary. reserved. 801(a)(1)(A), that the Commission shall send a copy of the third report and order Final Rules § 22.303 [Removed and Reserved] to Congress and to the Government For the reasons discussed in the ■ 4. Section 22.303 is removed and Accountability Office. preamble, the Federal Communications reserved. 25. It is further ordered that the Commission amends 47 CFR part 22 as § 22.321 [Removed and Reserved] Commission’s Consumer and follows: Governmental Affairs Bureau, Reference ■ 5. Section 22.321 is removed and Information Center, shall send a copy of PART 22—PUBLIC MOBILE SERVICES reserved. the third report and order, including the § 22.325 [Removed and Reserved] Final Regulatory Flexibility Analysis, to ■ 1. The authority citation for part 22 ■ 6. Section 22.325 is removed and the Chief Counsel for Advocacy of the continues to read as follows: reserved. Small Business Administration. Authority: 47 U.S.C. 154, 222, 303, 309 § 22.927 [Removed and Reserved] List of Subjects in 47 CFR Part 22 and 332. ■ § 22.3 [Removed and Reserved] 7. Section 22.927 is removed and Communications common carriers, reserved. Reporting and recordkeeping ■ 2. Section 22.3 is removed and [FR Doc. 2018–16512 Filed 8–1–18; 8:45 am] requirements. reserved. BILLING CODE 6712–01–P
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Proposed Rules Federal Register Vol. 83, No. 149
Thursday, August 2, 2018
This section of the FEDERAL REGISTER www.regulations.gov by searching for proposal in light of the comments we contains notices to the public of the proposed and locating Docket No. FAA–2017– receive. issuance of rules and regulations. The 0052; or in person at Docket Operations purpose of these notices is to give interested between 9 a.m. and 5 p.m., Monday Discussion persons an opportunity to participate in the through Friday, except Federal holidays. rule making prior to the adoption of the final We issued AD 2015–04–04, rules. The AD docket contains this proposed Amendment 39–18106 (80 FR 9594, AD, the economic evaluation, any February 24, 2015), for Bell Model 412 comments received and other and 412EP helicopters with an inverter DEPARTMENT OF TRANSPORTATION information. The street address for part number (P/N) 412–375–079–101 or Docket Operations (telephone 800–647– 412–375–079–103 with a serial number Federal Aviation Administration 5527) is in the ADDRESSES section. 29145 or higher. AD 2015–04–04 was Comments will be available in the AD prompted by numerous failures of docket shortly after receipt. 14 CFR Part 39 inverters. The failure of one inverter can For service information identified in result in smoke in the cockpit, making [Docket No. FAA–2017–0052; Product this proposed rule, contact Bell Identifier 2016–SW–081–AD] landing at night and during instrument Helicopter Textron, Inc., P.O. Box 482, meteorological conditions difficult. If RIN 2120–AA64 Fort Worth, TX 76101; telephone (817) two inverters fail, then the pilot will 280–3391; fax (817) 280–6466; or at lose primary flight and navigation Airworthiness Directives; Bell http://www.bellcustomer.com/files/. displays, autopilot, and alternate Helicopter Textron Inc. Helicopters You may review service information at current powered engine and the FAA, Office of the Regional Counsel, AGENCY: Federal Aviation transmission indicators. Administration (FAA), DOT. Southwest Region, 10101 Hillwood Pkwy, Room 6N–321, Fort Worth, TX To address this condition, Bell issued ACTION: Notice of proposed rulemaking 76177. Alert Service Bulletin (ASB) 412–13– (NPRM). 156, dated April 25, 2013, which FOR FURTHER INFORMATION CONTACT: Tim specifies inspecting inverter part SUMMARY: We propose to supersede Beauregard, Aviation Safety Engineer, number (P/N) 412–375–079–101 and airworthiness directive (AD) 2015–04– DSCO Branch, AIR–7J0, FAA, 10101 either repairing it or replacing it with 04 for Bell Helicopter Textron Inc. (Bell) Hillwood Pkwy, Fort Worth, TX 76177; inverter P/N 412–375–079–103 to Model 412 and 412EP helicopters. AD telephone (817) 222–4357; email prevent failure. Because the specific 2015–04–04 requires revising the [email protected]. cause of the inverter failures had not Rotorcraft Flight Manual (RFM) and SUPPLEMENTARY INFORMATION: installing a placard to limit flights to been verified, and since inverter failures visual flight rules (VFR) and prohibiting Comments Invited continued after Bell issued the ASB, we night operations because of failing We invite you to participate in this determined the actions specified in the inverters. This proposed AD would rulemaking by submitting written ASB did not correct the unsafe require replacing the inverters with a comments, data, or views. We also condition. Therefore, AD 2015–04–04 new inverter. The actions in this invite comments relating to the requires revising the RFM and installing proposed AD are intended to correct an economic, environmental, energy, or a placard in full view of the pilot to unsafe condition on these products. federalism impacts that might result limit flights to VFR only and prohibit night operations. DATES: We must receive comments on from adopting the proposals in this this proposed AD by October 1, 2018. document. The most helpful comments Actions Since AD 2015–04–04 Was ADDRESSES: You may send comments by reference a specific portion of the Issued any of the following methods: proposal, explain the reason for any • Federal eRulemaking Docket: Go to recommended change, and include Since we issued AD 2015–04–04, Bell http://www.regulations.gov. Follow the supporting data. To ensure the docket determined the root causes of the online instructions for sending your does not contain duplicate comments, failures were an external connector that comments electronically. commenters should send only one copy caused a short circuit inside inverter • Fax: 202–493–2251. of written comments, or if comments are P/N 412–375–079–101 and components • Mail: Send comments to the U.S. filed electronically, commenters should chafing because of variations in the Department of Transportation, Docket submit only one time. assembly process and packaging Operations, M–30, West Building We will file in the docket all tolerances for inverter P/N 412–375– Ground Floor, Room W12–140, 1200 comments that we receive, as well as a 079–103. Bell introduced an improved New Jersey Avenue SE, Washington, DC report summarizing each substantive inverter, P/N 412–375–079–105, and 20590–0001. public contact with FAA personnel retrofit kits to replace inverter P/N 412– • Hand Delivery: Deliver to the concerning this proposed rulemaking. 375–079–101 or 412–375–079–103 on ‘‘Mail’’ address between 9 a.m. and 5 Before acting on this proposal, we will helicopters with serial numbers 33001 p.m., Monday through Friday, except consider all comments we receive on or or higher. These replacements and Federal holidays. before the closing date for comments. repairs correct the unsafe condition by We will consider comments filed after providing 250 voltage amperes (VA) of Examining the AD Docket the comment period has closed if it is total power instead of 500 VA, thereby You may examine the AD docket on possible to do so without incurring reducing the input power to the the internet at http:// expense or delay. We may change this inverter.
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FAA’s Determination with serial numbers 36649, 36658, 4. Will not have a significant We are proposing this AD because we 36659, 36673, 36681 through 36684, economic impact, positive or negative, evaluated all the relevant information 36686, 36688, 36690, 36692, 36694, and on a substantial number of small entities and determined the unsafe condition 36696 through 36704, and this proposed under the criteria of the Regulatory described previously is likely to exist or AD would not. Bell has notified us of Flexibility Act. develop in other products of these same errors in the S/Ns listed for Part B of We prepared an economic evaluation type designs. ASB 412–16–171. Accordingly, this of the estimated costs to comply with proposed AD would only be applicable this proposed AD and placed it in the Related Service Information to those serial-numbered helicopters AD docket. We reviewed Bell Alert Service subject to the unsafe condition. List of Subjects in 14 CFR Part 39 Bulletin (ASB) 412–15–164, dated Costs of Compliance March 13, 2015 (ASB 412–15–164), Air transportation, Aircraft, Aviation which specifies an alternate means of We estimate that this proposed AD safety, Incorporation by reference, compliance (AMOC) approved by the would affect 73 helicopters of U.S. Safety. FAA for AD 2015–04–04 (80 FR 9594, Registry and that labor costs average $85 The Proposed Amendment February 24, 2015). Instead of the flight per work-hour. Based on these Accordingly, under the authority limitations mandated by AD 2015–04– estimates, we expect that installing a delegated to me by the Administrator, 04, ASB 412–15–164 limits allow new inverter or retrofit kit would the FAA proposes to amend 14 CFR part operation under instrument flight rules require about 3 work-hours and a parts 39 as follows: (IFR) and night operations with two cost of $15,749, for a total cost of pilots. $16,004 per helicopter and $1,168,292 PART 39—AIRWORTHINESS We also reviewed Bell ASB 412–16– for the U.S. fleet. DIRECTIVES 171, dated March 22, 2016 (ASB 412– Authority for This Rulemaking 16–171), which specifies replacing ■ 1. The authority citation for part 39 certain serial-numbered inverters P/N Title 49 of the United States Code continues to read as follows: 412–375–079–101 and 412–375–079– specifies the FAA’s authority to issue Authority: 49 U.S.C. 106(g), 40113, 44701. 103 with inverter P/N 412–375–079–105 rules on aviation safety. Subtitle I, as a direct replacement or with a retrofit section 106, describes the authority of § 39.13 [Amended] kit. Bell specifies that completing the the FAA Administrator. ‘‘Subtitle VII: ■ 2. The FAA amends § 39.13 by actions specified by the ASB constitute Aviation Programs,’’ describes in more removing Airworthiness Directive (AD) terminating action for Bell ASB 412–15– detail the scope of the Agency’s 2015–04–04, Amendment 39–18106 (80 164. authority. FR 9594, February 24, 2015), and adding Lastly, we reviewed Bell Service We are issuing this rulemaking under the following new AD: Instruction for Inverter Retrofit Kit the authority described in ‘‘Subtitle VII, Bell Helicopter Textron Inc.: Docket No. BHT–412–SI–93, dated February 15, Part A, Subpart III, Section 44701: General requirements.’’ Under that FAA–2017–0052; Product Identifier 2016, which provides instructions for 2016–SW–081–AD. installing retrofit kit P/N 412–704–058– section, Congress charges the FAA with 103. promoting safe flight of civil aircraft in (a) Applicability air commerce by prescribing regulations This AD applies to Model 412 and 412EP Proposed AD Requirements for practices, methods, and procedures helicopters with a serial number (S/N) 33001 The proposed AD would require, the Administrator finds necessary for through 33213, 34001 through 34036, 36001 within 25 hours time-in-service (TIS), safety in air commerce. This regulation through 36648, 36650 through 36657, 36660 replacing the inverter with inverter P/N through 36672, 36674 through 36680, 36685, is within the scope of that authority 36687, 36689, 36691, 36693, 36695, and 412–375–079–105 and, for some because it addresses an unsafe condition 37002 through 37012, certificated in any helicopters, installing retrofit kit P/N that is likely to exist or develop on category, with a static inverter (inverter) part 412–704–058–103. products identified in this rulemaking number (P/N) 412–375–079–101 or 412–375– After accomplishing the previous action. 079–103 installed. actions, the proposed AD would allow (b) Unsafe Condition removing the placard and Rotorcraft Regulatory Findings Flight Manual limitations that prohibit We determined that this proposed AD This AD defines the unsafe condition as the failure of an inverter under instrument night operations and restrict flights to would not have federalism implications meteorological conditions or night flight. visual flight rules. under Executive Order 13132. This This condition could result in smoke in the After the effective date of this AD, this proposed AD would not have a cockpit, increased pilot workload due to the proposed AD would prohibit installing substantial direct effect on the States, on loss of primary flight and navigation an inverter P/N 412–375–079–101 or the relationship between the national displays, alternating current powered engine 412–375–079–103 on any helicopter. Government and the States, or on the and transmission indicators, and autopilot, distribution of power and and subsequent loss of control of the Differences Between This Proposed AD helicopter. and the Service Information responsibilities among the various levels of government. (c) Affected ADs Bell ASB 412–16–171 requires For the reasons discussed, I certify This AD replaces AD 2015–04–04, compliance no later than January 1, this proposed regulation: Amendment 39–18106 (80 FR 9594, February 2017, while this proposed AD would 1. Is not a ‘‘significant regulatory 24, 2015). require compliance within 25 hours TIS. action’’ under Executive Order 12866; (d) Comments Due Date Bell ASB 412–16–171 makes an 2. Is not a ‘‘significant rule’’ under the electrical load analysis a determining DOT Regulatory Policies and Procedures We must receive comments by October 1, 2018. factor for corrective actions. This (44 FR 11034, February 26, 1979); proposed AD would make no such 3. Will not affect intrastate aviation in (e) Compliance requirement. Bell ASB 412–16–171 Alaska to the extent that it justifies You are responsible for performing each provides instructions for helicopters making a regulatory distinction; and action required by this AD within the
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specified compliance time unless it has DEPARTMENT OF TRANSPORTATION 0637; or in person at Docket Operations already been accomplished prior to that time. between 9 a.m. and 5 p.m., Monday (f) Required Actions Federal Aviation Administration through Friday, except Federal holidays. The AD docket contains this NPRM, the (1) Within 25 hours time-in-service: 14 CFR Part 39 regulatory evaluation, any comments (i) For helicopters with a S/N 33001 through 33213, 34001 through 34036, and [Docket No. FAA–2018–0637; Product received, and other information. The 36001 through 36086, replace the inverter Identifier 2018–NM–091–AD] street address for Docket Operations with inverter P/N 412–375–079–105. (phone: 800–647–5527) is in the RIN 2120–AA64 (ii) For helicopters with a S/N 36087 ADDRESSES section. Comments will be available in the AD docket shortly after through 36648, 36650 through 36657, 36660 Airworthiness Directives; Airbus SAS through 36672, 36674 through 36680, 36685, receipt. Airplanes 36687, 36689, 36691, 36693, 36695, and FOR FURTHER INFORMATION CONTACT: 37002 through 37012, install retrofit kit P/N AGENCY: Federal Aviation Kathleen Arrigotti, Aerospace Engineer, 412–704–058–103 and replace the inverter Administration (FAA), DOT. International Section, Transport with inverter P/N 412–375–079–105. Standards Branch, FAA, 2200 South (2) After accomplishing the actions ACTION: Notice of proposed rulemaking required by paragraph (f)(1) of this AD, you (NPRM). 216th St., Des Moines, WA 98198; may remove the placard and Rotorcraft Flight telephone and fax 206–231–3218. Manual limitations, required by AD 2015– SUMMARY: We propose to adopt a new SUPPLEMENTARY INFORMATION: 04–04, prohibiting night operations and airworthiness directive (AD) for certain Comments Invited restricting flights to visual flight rules. Airbus SAS Model A350–941 airplanes. (3) After the effective date of this AD, do This proposed AD was prompted by We invite you to send any written not install an inverter P/N 412–375–079–101 leakage of shrouded pipe T-boxes in the relevant data, views, or arguments about or 412–375–079–103 on any helicopter. potable water system. This proposed AD this proposal. Send your comments to (g) Alternative Methods of Compliance would require replacement of the an address listed under the ADDRESSES (AMOCs) affected potable water T-boxes and section. Include ‘‘Docket No. FAA– clamps with new parts. We are (1) The Manager, DSCO, FAA, may 2018–0637; Product Identifier 2018– approve AMOCs for this AD. Send your proposing this AD to address the unsafe NM–091–AD’’ at the beginning of your proposal to: Tim Beauregard, Aviation Safety condition on these products. comments. We specifically invite Engineer, DSCO Branch, AIR–7J0, FAA, DATES: We must receive comments on comments on the overall regulatory, 10101 Hillwood Pkwy, Fort Worth, TX this proposed AD by September 17, economic, environmental, and energy 76177; telephone 817–222–5190; email 9– 2018. aspects of this NPRM. We will consider ASW–190–[email protected]. all comments received by the closing ADDRESSES: You may send comments, (2) For operations conducted under a 14 date and may amend this NPRM using the procedures found in 14 CFR CFR part 119 operating certificate or under because of those comments. 11.43 and 11.45, by any of the following 14 CFR part 91, subpart K, we suggest that We will post all comments we methods: you notify your principal inspector, or receive, without change, to http:// • Federal eRulemaking Portal: Go to lacking a principal inspector, the manager of www.regulations.gov, including any http://www.regulations.gov. Follow the the local flight standards district office or personal information you provide. We certificate holding district office before instructions for submitting comments. will also post a report summarizing each operating any aircraft complying with this • Fax: 202–493–2251. substantive verbal contact we receive AD through an AMOC. • Mail: U.S. Department of about this NPRM. (h) Additional Information Transportation, Docket Operations, M– 30, West Building Ground Floor, Room Discussion Bell Alert Service Bulletin 412–15–164, dated March 13, 2015, and Bell Alert Service W12–140, 1200 New Jersey Avenue SE, The European Aviation Safety Agency Washington, DC 20590. Bulletin 412–16–171, dated March 22, 2016, • (EASA), which is the Technical Agent which are not incorporated by reference, Hand Delivery: Deliver to Mail for the Member States of the European contain additional information about the address above between 9 a.m. and 5 Union, has issued EASA Airworthiness subject of this AD. For service information p.m., Monday through Friday, except Directive 2018–0111R1, dated May 30, identified in this AD, contact Bell Helicopter Federal holidays. 2018 (referred to after this as the Textron, Inc., P.O. Box 482, Fort Worth, TX For service information identified in Mandatory Continuing Airworthiness 76101; telephone (817) 280–3391; fax (817) this NPRM, contact Airbus SAS, 280–6466; or at http://www.bellcustomer. Information, or ‘‘the MCAI’’), to correct Airworthiness Office—EAL, Rond-Point an unsafe condition for certain Airbus com/files/. You may review this service Emile Dewoitine No: 2, 31700 Blagnac information at the FAA, Office of the SAS Model A350–941 airplanes. The Cedex, France; telephone +33 5 61 93 36 MCAI states: Regional Counsel, Southwest Region, 10101 96; fax +33 5 61 93 45 80; email Hillwood Pkwy., Room 6N–321, Fort Worth, During a pressure test on the A350 Final TX 76177. continued-airworthiness.a350@ airbus.com; internet http:// Assembly Line (FAL), leakage was observed on the potable water system shrouded pipes, (i) Subject www.airbus.com. You may view this due to a crack failure on the T-Boxes. Joint Aircraft Service Component (JASC) service information at the FAA, Leakage of a primary pipe may cause water Code: 2422, AC Inverter. Transport Standards Branch, 2200 ingress into the avionics bay. Additionally, South 216th St., Des Moines, WA. For during another pressure proof test on the Issued in Fort Worth, Texas, on June 19, information on the availability of this A350 FAL, loss of torque was detected on the 2018. material at the FAA, call 206–231–3195. clamps used to attach the shrouded pipes on Scott A. Horn, the T-Boxes. Deputy Director for Regulatory Operations, Examining the AD Docket This condition, if not corrected, could lead to loss of systems/equipment located inside Compliance and Airworthiness Division, You may examine the AD docket on the avionics bay, possibly resulting in an Aircraft Certification Service. the internet at http:// unsafe condition. [FR Doc. 2018–16495 Filed 8–1–18; 8:45 am] www.regulations.gov by searching for Prompted by these findings, Airbus BILLING CODE 4910–13–P and locating Docket No. FAA–2018– developed improved potable water T-Boxes
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and clamps, which are embodied in 2018. This service information describes on other products of the same type production through Airbus mod 111435 or procedures for replacing the affected design. mod 111440, and introduced in service potable water T-boxes and clamps with through the SB [Service Bulletin]. Proposed Requirements of This NPRM For the reasons described above, this new parts. This service information is [EASA] AD requires replacement of the reasonably available because the This proposed AD would require affected potable water shrouded pipe T- interested parties have access to it accomplishing the actions specified in Boxes and clamps with new parts. through their normal course of business the service information described This [EASA] AD was revised to exclude or by the means identified in the previously. post-mod 111440 aeroplanes from the ADDRESSES section. Applicability. FAA’s Determination Explanation of Change to Applicability This condition, if not corrected, could lead to the loss of systems/equipment This product has been approved by We have revised the applicability of located inside the avionics bay and the aviation authority of another this AD to identify model designations possible loss of control of the airplane. country, and is approved for operation as published in the most recent type You may examine the MCAI in the AD in the United States. Pursuant to our certificate data sheet for the affected docket on the internet at http:// bilateral agreement with the State of model. www.regulations.gov by searching for Design Authority, we have been notified Costs of Compliance and locating Docket No. FAA–2018– of the unsafe condition described in the 0637. MCAI and service information We estimate that this proposed AD referenced above. We are proposing this affects 7 airplanes of U.S. registry. We Related Service Information Under 1 AD because we evaluated all the estimate the following costs to comply CFR Part 51 relevant information and determined with this proposed AD: Airbus SAS has issued Service the unsafe condition described Bulletin A350–38–P004, dated April 11, previously is likely to exist or develop
ESTIMATED COSTS
Labor cost Parts cost Cost per product Cost on U.S. operators
Up to 16 work-hours × $85 per hour = $1,360 ...... Up to $2,050 ...... Up to $3,410 ...... Up to $23,870.
According to the manufacturer, some FAA Order 8000.51C. In accordance List of Subjects in 14 CFR Part 39 or all of the costs of this proposed AD with that order, issuance of ADs is Air transportation, Aircraft, Aviation may be covered under warranty, thereby normally a function of the Compliance safety, Incorporation by reference, reducing the cost impact on affected and Airworthiness Division, but during Safety. individuals. We do not control warranty this transition period, the Executive coverage for affected individuals. As a Director has delegated the authority to The Proposed Amendment result, we have included all known issue ADs applicable to transport Accordingly, under the authority costs in our cost estimate. category airplanes to the Director of the delegated to me by the Administrator, System Oversight Division. Authority for This Rulemaking the FAA proposes to amend 14 CFR part Title 49 of the United States Code Regulatory Findings 39 as follows: specifies the FAA’s authority to issue We determined that this proposed AD PART 39—AIRWORTHINESS rules on aviation safety. Subtitle I, would not have federalism implications DIRECTIVES section 106, describes the authority of under Executive Order 13132. This the FAA Administrator. Subtitle VII: proposed AD would not have a ■ 1. The authority citation for part 39 Aviation Programs, describes in more substantial direct effect on the States, on continues to read as follows: detail the scope of the Agency’s the relationship between the national Authority: 49 U.S.C. 106(g), 40113, 44701. authority. Government and the States, or on the We are issuing this rulemaking under distribution of power and § 39.13 [Amended] the authority described in Subtitle VII, responsibilities among the various ■ 2. The FAA amends § 39.13 by adding Part A, Subpart III, Section 44701: levels of government. the following new airworthiness ‘‘General requirements.’’ Under that directive (AD): section, Congress charges the FAA with For the reasons discussed above, I promoting safe flight of civil aircraft in certify this proposed regulation: Airbus SAS: Docket No. FAA–2018–0637; air commerce by prescribing regulations 1. Is not a ‘‘significant regulatory Product Identifier 2018–NM–091–AD. for practices, methods, and procedures action’’ under Executive Order 12866; (a) Comments Due Date the Administrator finds necessary for 2. Is not a ‘‘significant rule’’ under the We must receive comments by September safety in air commerce. This regulation DOT Regulatory Policies and Procedures 17, 2018. is within the scope of that authority (44 FR 11034, February 26, 1979); because it addresses an unsafe condition (b) Affected ADs that is likely to exist or develop on 3. Will not affect intrastate aviation in None. Alaska; and products identified in this rulemaking (c) Applicability action. 4. Will not have a significant This AD applies to Airbus SAS Model This proposed AD is issued in economic impact, positive or negative, A350–941 airplanes, certificated in any accordance with authority delegated by on a substantial number of small entities category, except those on which Airbus SAS the Executive Director, Aircraft under the criteria of the Regulatory modification (mod) 111435 or mod 111440 Certification Service, as authorized by Flexibility Act. has been embodied in production.
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(d) Subject (i) Related Information current and borescope inspections. This Air Transport Association (ATA) of (1) Refer to Mandatory Continuing proposed AD would require repetitive America Code 38, Water/waste. Airworthiness Information (MCAI) EASA borescope inspections of the LH and RH Airworthiness Directive 2018–0111R1, dated (e) Reason wing lower skin and repetitive eddy May 30, 2018, for related information. This current inspections of the LH and RH This AD was prompted by leakage of MCAI may be found in the AD docket on the wing front and rear lower spar caps. We shrouded pipe T-boxes in the potable water internet at http://www.regulations.gov by are proposing this AD to address the system. We are issuing this AD to address the searching for and locating Docket No. FAA– possible leakage of water into the avionics 2018–0637. unsafe condition on these products. bay. This condition, if not corrected, could (2) For more information about this AD, DATES: We must receive comments on lead to the loss of systems/equipment located contact Kathleen Arrigotti, Aerospace this proposed AD by September 17, inside the avionics bay and possible loss of Engineer, International Section, Transport 2018. control of the airplane. Standards Branch, FAA, 2200 South 216th (f) Compliance St., Des Moines, WA 98198; telephone and ADDRESSES: You may send comments, fax 206–231–3218. using the procedures found in 14 CFR Comply with this AD within the (3) For service information identified in 11.43 and 11.45, by any of the following compliance times specified, unless already this AD, contact Airbus SAS, Airworthiness methods: done. Office—EAL, Rond-Point Emile Dewoitine • Federal eRulemaking Portal: Go to (g) Required Actions No: 2, 31700 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 http://www.regulations.gov. Follow the Within 36 months after the effective date 93 45 80; email continued- instructions for submitting comments. of this AD: Replace the affected potable water [email protected]; internet • Fax: 202–493–2251. T-boxes and clamps with new parts in http://www.airbus.com. You may view this • Mail: U.S. Department of accordance with the Accomplishment service information at the FAA, Transport Instructions of Airbus Service Bulletin A350– Transportation, Docket Operations, M– Standards Branch, 2200 South 216th St., Des 30, West Building Ground Floor, Room 38–P004, dated April 11, 2018. Moines, WA. For information on the W12–140, 1200 New Jersey Avenue SE, (h) Other FAA AD Provisions availability of this material at the FAA, call 206–231–3195. Washington, DC 20590. The following provisions also apply to this • AD: Hand Delivery: Deliver to Mail Issued in Des Moines, Washington, on July address above between 9 a.m. and 5 (1) Alternative Methods of Compliance 23, 2018. (AMOCs): The Manager, International p.m., Monday through Friday, except Section, Transport Standards Branch, FAA, James Cashdollar, Federal holidays. has the authority to approve AMOCs for this Acting Director, System Oversight Division, For service information identified in AD, if requested using the procedures found Aircraft Certification Service. this NPRM, contact Viking Air Limited, in 14 CFR 39.19. In accordance with 14 CFR [FR Doc. 2018–16488 Filed 8–1–18; 8:45 am] 1959 de Havilland Way, Sidney, British 39.19, send your request to your principal BILLING CODE 4910–13–P Columbia V8L 5V5, Canada; telephone inspector or local Flight Standards District Office, as appropriate. If sending information +1–250–656–7227; fax +1–250–656– 0673; email acs-technical.publications@ directly to the International Section, send it DEPARTMENT OF TRANSPORTATION to the attention of the person identified in vikingair.com; internet http:// www.vikingair.com. You may view this paragraph (i)(2) of this AD. Information may Federal Aviation Administration be emailed to: 9–ANM–116–AMOC– referenced service information at the [email protected]. Before using any FAA, Transport Standards Branch, 2200 14 CFR Part 39 approved AMOC, notify your appropriate South 216th St., Des Moines, WA. For principal inspector, or lacking a principal [Docket No. FAA–2018–0638; Product information on the availability of this inspector, the manager of the local flight Identifier 2018–NM–016–AD] material at the FAA, call 206–231–3195. standards district office/certificate holding district office. RIN 2120–AA64 Examining the AD Docket (2) Contacting the Manufacturer: For any requirement in this AD to obtain corrective Airworthiness Directives; Viking Air You may examine the AD docket on actions from a manufacturer, the action must Limited (Type Certificate Previously the internet at http:// be accomplished using a method approved Held by Bombardier, Inc.; Canadair www.regulations.gov by searching for by the Manager, International Section, Limited) Airplanes and locating Docket No. FAA–2018– Transport Standards Branch, FAA; or the 0638; or in person at the Docket European Aviation Safety Agency (EASA); or AGENCY: Federal Aviation Management Facility between 9 a.m. Airbus SAS’s EASA Design Organization Administration (FAA), DOT. and 5 p.m., Monday through Friday, Approval (DOA). If approved by the DOA, ACTION: Notice of proposed rulemaking the approval must include the DOA- except Federal holidays. The AD docket authorized signature. (NPRM). contains this NPRM, the regulatory (3) Required for Compliance (RC): If any evaluation, any comments received, and SUMMARY: service information contains procedures or We propose to supersede other information. The street address for tests that are identified as RC, those Airworthiness Directive (AD) 2013–11– the Docket Operations office (telephone procedures and tests must be done to comply 03, which applies to certain Viking Air 800–647–5527) is in the ADDRESSES with this AD; any procedures or tests that are Limited Model CL–215–1A10 and CL– section. Comments will be available in not identified as RC are recommended. Those 215–6B11 (CL–215T Variant) airplanes. the AD docket shortly after receipt. procedures and tests that are not identified AD 2013–11–03 requires repetitive as RC may be deviated from using accepted detailed inspections for cracking of the FOR FURTHER INFORMATION CONTACT: methods in accordance with the operator’s left-hand (LH) and right-hand (RH) wing Andrea Jimenez, Aerospace Engineer, maintenance or inspection program without lower skin, and repair if necessary. AD Airframe and Mechanical Systems obtaining approval of an AMOC, provided 2013–11–03 was prompted by reports of Section, FAA, New York ACO Branch, the procedures and tests identified as RC can 1600 Stewart Avenue, Suite 410, be done and the airplane can be put back in a fractured wing lower rear spar cap and reinforcing strap. Since we issued AD Westbury, NY 11590; telephone 516– an airworthy condition. Any substitutions or 228–7330; fax 516–794–5531. changes to procedures or tests identified as 2013–11–03, further analysis has RC require approval of an AMOC. indicated the need for repetitive eddy SUPPLEMENTARY INFORMATION:
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Comments Invited ultrasonic inspection might not have The requirements of [Canadian] AD CF– We invite you to send any written been adequate to detect a crack in the 1992–26R2 remain applicable. spar cap, and there is a need for relevant data, views, or arguments about You may examine the MCAI in the this proposal. Send your comments to repetitive eddy current and borescope inspections. AD docket on the internet at http:// an address listed under the ADDRESSES www.regulations.gov by searching for section. Include ‘‘Docket No. FAA– Transport Canada Civil Aviation (TCCA), which is the aviation authority and locating Docket No. FAA–2018– 2018–0638; Product Identifier 2018– 0638. NM–016–AD’’ at the beginning of your for Canada, has issued Canadian comments. We specifically invite Airworthiness Directive, CF–2013– Related Service Information Under 1 comments on the overall regulatory, 11R1, dated October 30, 2017 (referred CFR Part 51 economic, environmental, and energy to after this as the Mandatory aspects of this proposed AD. We will Continuing Airworthiness Information, Bombardier has issued Alert Service consider all comments received by the or ‘‘the MCAI’’), to correct an unsafe Bulletin 215–A558, Revision 3, dated closing date and may amend this condition for certain Viking Air Limited June 3, 2016. This service information proposed AD based on those comments. Model CL–215–1A10 and CL–215–6B11 describes procedures for detecting We will post all comments we (CL–215T Variant) airplanes. The MCAI cracks using repetitive borescope receive, without change, to http:// states: inspections of the LH and RH wing www.regulations.gov, including any While performing modifications on a CL– lower skin and repetitive eddy current personal information you provide. We 215–1A10 aeroplane, an operator discovered inspections of the LH and RH wing front will also post a report summarizing each that the wing lower rear spar cap and and rear lower spar caps. This service substantive verbal contact we receive reinforcing strap were fractured at Wing information is reasonably available about this proposed AD. Stations (WS) 49.5 and 50 respectively and because the interested parties have the rear spar web and wing lower skin were access to it through their normal course Discussion also cracked. It is suspected that a crack of business or by the means identified initiated at the wing lower spar cap, leading We issued AD 2013–11–03, ADDRESSES to its failure, the subsequent failure of the in the section. Amendment 39–17463 (78 FR 32353, reinforcing strap and cracking of the spar May 30, 2013) (‘‘AD 2013–11–03’’), for FAA’s Determination and Requirements web and wing lower skin. The damage was of This Proposed AD certain Viking Air Limited Model CL– outside of the area addressed by the 215–1A10 and CL–215–6B11 (CL–215T repetitive ultrasonic inspections required by This product has been approved by Variant) airplanes. AD 2013–11–03 [Canadian] AD CF–1992–26R2 [which the aviation authority of another corresponds to FAA AD 2012–11–04, requires repetitive detailed inspections country, and is approved for operation for cracking of the LH and RH wing Amendment 39–17067 (77 FR 32892, June 4, in the United States. Pursuant to our lower skin, and repair if necessary. AD 2012)] and was found 95 hours air time after bilateral agreement with the State of 2013–11–03 resulted from reports of a the last ultrasonic inspection. Failure and cracking of the above-noted Design Authority, we have been notified fractured wing lower rear spar cap and wing structure, if not detected, could result of the unsafe condition described in the reinforcing strap. We issued AD 2013– in failure of the wing. MCAI and service information 11–03 to detect and correct cracked In order to mitigate the unsafe condition, referenced above. We are proposing this wing structure, which could result in [Canadian] AD CF–2013–11 [which AD because we evaluated all pertinent failure of the wing. corresponds to FAA AD 2013–11–03] was released. However, further analysis has information and determined an unsafe Actions Since AD 2013–11–03 Was indicated the need for repetitive eddy current condition exists and is likely to exist or Issued and borescope inspections. Therefore, develop on other products of these same Since we issued AD 2013–11–03, an Revision 1 of this [Canadian] AD mandates type designs. operator reported damage to the wing a repetitive detailed inspection of the wing lower skin using a borescope, changes the Costs of Compliance lower skin and rear spar of an airplane. one-time eddy current inspection of the This damage was noticed 95 flight hours lower front and rear spar caps to a repetitive We estimate that this proposed AD after an ultrasonic inspection. Further inspection and eliminates the one-time affects 4 airplanes of U.S. registry. We analysis by the airplane manufacturer detailed inspection with fuel bladders estimate the following costs to comply and the FAA has determined that the removed. with this proposed AD:
ESTIMATED COSTS
Action Labor cost Parts cost Cost per product Cost on U.S. operators
Borescope and eddy current in- 8 work-hours × $85 per hour = $0 $680 per inspection cycle ...... $2,720 per inspection cycle. spections. $680 per inspection cycle.
We have received no definitive data Aviation Programs,’’ describes in more the Administrator finds necessary for that would enable us to provide cost detail the scope of the Agency’s safety in air commerce. This regulation estimates for the on-condition actions authority. is within the scope of that authority specified in this proposed AD. We are issuing this rulemaking under because it addresses an unsafe condition the authority described in ‘‘Subtitle VII, that is likely to exist or develop on Authority for This Rulemaking Part A, Subpart III, Section 44701: products identified in this rulemaking Title 49 of the United States Code General requirements.’’ Under that action. specifies the FAA’s authority to issue section, Congress charges the FAA with This proposed AD is issued in rules on aviation safety. Subtitle I, promoting safe flight of civil aircraft in accordance with authority delegated by section 106, describes the authority of air commerce by prescribing regulations the Executive Director, Aircraft the FAA Administrator. ‘‘Subtitle VII: for practices, methods, and procedures Certification Service, as authorized by
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FAA Order 8000.51C. In accordance (b) Affected ADs (j) Credit for Previous Actions with that order, issuance of ADs is This AD replaces AD 2013–11–03, This paragraph provides credit for the normally a function of the Compliance Amendment 39–17463 (78 FR 32353, May 30, initial inspections required by paragraphs (g) and Airworthiness Division, but during 2013) (‘‘AD 2013–11–03’’). and (h) of this AD if those actions were this transition period, the Executive performed before the effective date of this AD (c) Applicability Director has delegated the authority to using Bombardier Alert Service Bulletin 215– issue ADs applicable to transport This AD applies to the Viking Air Limited A558, Revision 1, dated January 10, 2014; or category airplanes to the Director of the (Type Certificate previously held by Bombardier Alert Service Bulletin 215–A558, Revision 2, dated January 17, 2014. System Oversight Division. Bombardier, Inc.; Canadair Limited) airplanes identified in paragraphs (c)(1) and (k) No Reporting Requirement Regulatory Findings (c)(2) of this AD, certificated in any category. (1) Model CL–215–1A10 airplanes, serial Although Bombardier Alert Service We determined that this proposed AD numbers (S/Ns) 1001 through 1125 inclusive. Bulletin 215–A558, Revision 3, dated June 3, would not have federalism implications (2) Model CL–215–6B11 (CL–215T Variant) 2016, specifies to submit certain information under Executive Order 13132. This airplanes, S/Ns 1056 through 1125 inclusive. to the manufacturer, this AD does not proposed AD would not have a include that requirement. (d) Subject substantial direct effect on the States, on (l) Other FAA AD Provisions the relationship between the national Air Transport Association (ATA) of America Code 57, Wings. (1) Alternative Methods of Compliance Government and the States, or on the (AMOCs): The Manager, New York ACO distribution of power and (e) Reason Branch, FAA, has the authority to approve responsibilities among the various This AD was prompted by reports of AMOCs for this AD, if requested using the levels of government. cracking of the wing lower skin and rear spar. procedures found in 14 CFR 39.19. In For the reasons discussed above, I We are issuing this AD to address cracked accordance with 14 CFR 39.19, send your certify this proposed regulation: wing structure, which could result in failure request to your principal inspector or local 1. Is not a ‘‘significant regulatory of the wing. Flight Standards District Office, as action’’ under Executive Order 12866, appropriate. If sending information directly (f) Compliance to the manager of the certification office, 2. Is not a ‘‘significant rule’’ under the Comply with this AD within the send it to ATTN: Program Manager, DOT Regulatory Policies and Procedures Continuing Operational Safety, FAA, New (44 FR 11034, February 26, 1979), compliance times specified, unless already done. York ACO Branch. 3. Will not affect intrastate aviation in (2) Contacting the Manufacturer: For any Alaska, and (g) Repetitive Borescope Inspection requirement in this AD to obtain corrective 4. Will not have a significant Within 50 flight hours after the effective actions from a manufacturer, the action must economic impact, positive or negative, date of this AD: Using a borescope, do a be accomplished using a method approved on a substantial number of small entities detailed inspection for cracking of the left- by the Manager, New York ACO Branch, under the criteria of the Regulatory hand (LH) and right-hand (RH) wing lower FAA; or TCCA; or Viking Air Limited’s TCCA DAO. If approved by the DAO, the approval Flexibility Act. skin between wing station (WS) 45.00 and 51.00, in accordance with Part A of must include the DAO-authorized signature. List of Subjects in 14 CFR Part 39 Bombardier Alert Service Bulletin 215–A558, (m) Related Information Revision 3, dated June 3, 2016. Repeat the Air transportation, Aircraft, Aviation (1) Refer to Mandatory Continuing safety, Incorporation by reference, inspection thereafter at intervals not to Airworthiness Information (MCAI) Canadian Safety. exceed 50 flight hours until the initial eddy Airworthiness Directive CF–2013–11R1, current inspection required by paragraph (h) dated October 30, 2017, for related The Proposed Amendment of this AD has been accomplished. After information. This MCAI may be found in the accomplishment of the initial eddy current AD docket on the internet at http:// Accordingly, under the authority inspection required by paragraph (h) of this delegated to me by the Administrator, www.regulations.gov by searching for and AD, the borescope inspection interval locating Docket No. FAA–2018–0638. the FAA proposes to amend 14 CFR part required by this paragraph may be extended (2) For more information about this AD, 39 as follows: to 300 flight hours. contact Andrea Jimenez, Aerospace Engineer, (h) Repetitive Eddy Current Inspections Airframe and Mechanical Systems Section, PART 39—AIRWORTHINESS FAA, New York ACO Branch, 1600 Stewart DIRECTIVES Within 300 flight hours after the effective Avenue, Suite 410, Westbury, NY 11590; date of this AD: Do an eddy current telephone 516–228–7330; fax 516–794–5531. ■ 1. The authority citation for part 39 inspection for cracking of the LH and RH (3) For service information identified in continues to read as follows: wing front and rear lower spar caps, in this AD, contact Viking Air Limited, 1959 de accordance with Parts C–1 and C–2 of Authority: 49 U.S.C. 106(g), 40113, 44701. Havilland Way, Sidney, British Columbia Bombardier Alert Service Bulletin 215–A558, V8L 5V5, Canada; telephone +1–250–656– § 39.13 [Amended] Revision 3, dated June 3, 2016. Repeat the 7227; fax +1–250–656–0673; email acs- [email protected]; ■ 2. The FAA amends § 39.13 by inspection thereafter at intervals not to exceed 300 flight hours. internet http://www.vikingair.com. You may removing Airworthiness Directive (AD) view this service information at the FAA, 2013–11–03, Amendment 39–17463 (78 (i) Corrective Actions Transport Standards Branch, 2200 South FR 32353, May 30, 2013), and adding If any crack, as defined in Bombardier 216th St., Des Moines, WA. For information the following new AD: Alert Service Bulletin 215–A558, Revision 3, on the availability of this material at the Viking Air Limited (Type Certificate dated June 3, 2016, is found during any FAA, call 206–231–3195. Previously Held by Bombardier, Inc.; inspection required by paragraph (g) or Issued in Des Moines, Washington, on July Canadair Limited): Docket No. FAA– paragraph (h) of this AD: Before further 23, 2018. flight, repair using a method approved by the 2018–0638; Product Identifier 2018– James Cashdollar, NM–016–AD. FAA; or Transport Canada Civil Aviation (TCCA); or Viking Air Limited’s TCCA Acting Director, System Oversight Division, (a) Comments Due Date Design Approval Organization (DAO). If Aircraft Certification Service. We must receive comments by September approved by the DAO, the approval must [FR Doc. 2018–16490 Filed 8–1–18; 8:45 am] 17, 2018. include the DAO-authorized signature. BILLING CODE 4910–13–P
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DEPARTMENT OF TRANSPORTATION telephone: 800–810–4853; fax: 912– Aerospace Corporation Models G–IV 965–3520; email: [email protected]; and GIV–X airplanes based on fatigue Federal Aviation Administration internet: http://www.gulfstream.com/ and damage tolerance testing and product_support/technical_pubs/pubs/ updated analysis that indicates current 14 CFR Part 39 index.htm. You may view this service inspection programs may not be information at the FAA, Policy and [Docket No. FAA–2018–0690; Product identifying cracks before reaching Innovation Division, 901 Locust, Kansas Identifier 2018–CE–022–AD] critical size. The revised ALS updates City, Missouri 64106. For information inspection requirements and life limits RIN 2120–AA64 on the availability of this material at the that address fatigue cracking of PSEs. FAA, call (816) 329–4148. We determined that these actions are Airworthiness Directives; Gulfstream necessary to address the identified Aerospace Corporation Airplanes Examining the AD Docket unsafe condition. This condition, if not You may examine the AD docket on corrected, could result in fatigue AGENCY: Federal Aviation the internet at http:// cracking of PSEs, which could result in Administration (FAA), DOT. www.regulations.gov by searching for reduced structural integrity of the PSEs ACTION: Notice of proposed rulemaking and locating Docket No. FAA–2018– (NPRM). 0690; or in person at Docket Operations and critical components with between 9 a.m. and 5 p.m., Monday consequent loss of control of the SUMMARY: We propose to adopt a new through Friday, except Federal holidays. airplane. airworthiness directive (AD) for certain The AD docket contains this NPRM, the Related Service Information Under 1 Gulfstream Aerospace Corporation regulatory evaluation, any comments CFR Part 51 Models G–IV and GIV–X airplanes. This received, and other information. The proposed AD was prompted by a street address for Docket Operations We reviewed Gulfstream Document revision to the airworthiness limitations (phone: 800–647–5527) is in the No. GIV–GER–0008, Summary of section (ALS) of the aircraft ADDRESSES section. Comments will be Changes to the GIV Series and GIV–X maintenance manual (AMM) based on available in the AD docket shortly after Series Airworthiness Limitations, fatigue and damage tolerance testing receipt. Revision B, dated March 12, 2018. The and updated analysis. This proposed FOR FURTHER INFORMATION CONTACT: service information describes more AD would require revising the Ronald ‘‘Ron’’ Wissing, Airframe restrictive inspection intervals or altered maintenance or inspection program to Engineer, Atlanta ACO Branch, FAA, NDT inspection requirements and incorporate updated inspection 1701 Columbia Avenue, College Park, updated life limits that address fatigue requirements and life limits that address Georgia 30337; phone: 404–474–5552; cracking of the PSEs. This service fatigue cracking of principal structural fax: 404–474–5606; email: information is reasonably available elements (PSEs). We are proposing this [email protected]. because the interested parties have AD to address the unsafe condition on SUPPLEMENTARY INFORMATION: access to it through their normal course these products. of business or by the means identified Comments Invited DATES: We must receive comments on in the ADDRESSES section. this proposed AD by September 17, We invite you to send any written 2018. relevant data, views, or arguments about FAA’s Determination this proposal. Send your comments to ADDRESSES: You may send comments, We are proposing this AD because we an address listed under the ADDRESSES using the procedures found in 14 CFR evaluated all the relevant information section. Include ‘‘Docket No. FAA– 11.43 and 11.45, by any of the following and determined the unsafe condition 2018–0690; Product Identifier 2018–CE– methods: described previously is likely to exist or 022–AD’’ at the beginning of your • Federal eRulemaking Portal: Go to develop in other products of the same comments. We specifically invite http://www.regulations.gov. Follow the comments on the overall regulatory, type design. instructions for submitting comments. economic, environmental, and energy • Fax: 202–493–2251. Proposed AD Requirements • aspects of this NPRM. We will consider Mail: U.S. Department of all comments received by the closing This proposed AD would require Transportation, Docket Operations, M– date and may amend this NPRM revising the AMM, Chapter 5 ‘‘Life 30, West Building Ground Floor, Room because of those comments. Limits’’ and ‘‘Airworthiness W12–140, 1200 New Jersey Avenue SE, We will post all comments we Limitations’’ sections, to incorporate Washington, DC 20590. receive, without change, to http:// new inspections and life limits based on • Hand Delivery: Deliver to Mail www.regulations.gov, including any fatigue and damage tolerance (FTD) address above between 9 a.m. and 5 personal information you provide. We testing and updated analysis. p.m., Monday through Friday, except will also post a report summarizing each Federal holidays. substantive verbal contact we receive Costs of Compliance For service information identified in about this NPRM. this NPRM, contact Gulfstream We estimate that this proposed AD Aerospace Corporation, Technical Discussion affects 711 airplanes of U.S. registry. Publications Dept., 500 Gulfstream We received a revision to the ALS of We estimate the following costs to Road, Savannah, GA 31402–2206; the maintenance manual for Gulfstream comply with this proposed AD:
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ESTIMATED COSTS
Cost per Cost on U.S. Action Labor cost Parts cost product operators
Revise ALS and AMM ...... 20 work-hour × $85 per hour = Not applicable ...... $1,700 $1,208,700 $1,700.
Authority for This Rulemaking (3) Will not affect intrastate aviation (e) Unsafe Condition Title 49 of the United States Code in Alaska, and This AD was prompted by a revision to the specifies the FAA’s authority to issue (4) Will not have a significant airworthiness limitations section (ALS) of the economic impact, positive or negative, Model G–IV and Model GIV–X maintenance rules on aviation safety. Subtitle I, manuals based on fatigue and damage on a substantial number of small entities section 106, describes the authority of tolerance testing and updated analysis. We the FAA Administrator. Subtitle VII: under the criteria of the Regulatory are issuing this AD to detect and correct Aviation Programs, describes in more Flexibility Act. fatigue cracking of principal structural detail the scope of the Agency’s List of Subjects in 14 CFR Part 39 elements (PSEs). This unsafe condition, if authority. unaddressed, could result in reduced We are issuing this rulemaking under Air transportation, Aircraft, Aviation structural integrity of a PSE or critical the authority described in Subtitle VII, safety, Incorporation by reference, component and lead to loss of control of the Part A, Subpart III, Section 44701: Safety. airplane. ‘‘General requirements.’’ Under that (f) Compliance The Proposed Amendment section, Congress charges the FAA with Comply with this AD within the promoting safe flight of civil aircraft in Accordingly, under the authority compliance times specified, unless already air commerce by prescribing regulations delegated to me by the Administrator, done. for practices, methods, and procedures the FAA proposes to amend 14 CFR part (g) Airplane Maintenance Manual Revisions the Administrator finds necessary for 39 as follows: safety in air commerce. This regulation Within 12 months after the effective date of this AD, revise the ALS of your is within the scope of that authority PART 39—AIRWORTHINESS because it addresses an unsafe condition maintenance or inspection program (e.g., DIRECTIVES maintenance manual) to incorporate the that is likely to exist or develop on airworthiness limitations specified in products identified in this rulemaking ■ 1. The authority citation for part 39 Gulfstream Document No. GIV–GER–0008, action. continues to read as follows: Summary of Changes to the GIV Series and This proposed AD is issued in GIV–X Series Airworthiness Limitations, accordance with authority delegated by Authority: 49 U.S.C. 106(g), 40113, 44701. Revision B, dated March 12, 2018, as the Executive Director, Aircraft § 39.13 [Amended] applicable to your model and serial number Certification Service, as authorized by airplane. ■ 2. The FAA amends § 39.13 by adding FAA Order 8000.51C. In accordance (h) No Alternative Actions or Intervals with that order, issuance of ADs is the following new airworthiness directive (AD): After the maintenance or inspection normally a function of the Compliance program (e.g., maintenance manual) has been and Airworthiness Division, but during Gulfstream Aerospace Corporation: Docket revised as required by paragraph (g) of this this transition period, the Executive No. FAA–2018–0690; Product Identifier AD, no alternative inspections or intervals Director has delegated the authority to 2018–CE–022–AD. may be used unless approved as an alternative method of compliance in issue ADs applicable to small airplanes, (a) Comments Due Date gliders, balloons, airships, domestic accordance with the procedures specified in We must receive comments by September business jet transport airplanes, and paragraph (i) of this AD. 17, 2018. associated appliances to the Director of (i) Alternative Methods of Compliance the Policy and Innovation Division. (b) Affected ADs (AMOCs) Regulatory Findings None. (1) The Manager, Atlanta ACO Branch, FAA, has the authority to approve AMOCs (c) Applicability We determined that this proposed AD for this AD, if requested using the procedures would not have federalism implications This AD applies to Gulfstream Aerospace found in 14 CFR 39.19. In accordance with under Executive Order 13132. This Corporation Model G–IV airplanes, 14 CFR 39.19, send your request to your proposed AD would not have a certificated in any category, serial numbers principal inspector or local Flight Standards 1000 through 1535; and Model GIV–X substantial direct effect on the States, on District Office, as appropriate. If sending airplanes, certificated in any category, serial the relationship between the national information directly to the manager of the numbers 4001 through 4363. certification office, send it to the attention of government and the States, or on the Note 1 to paragraph (c) of this AD: Model the person identified in paragraph (j)(1) of distribution of power and G–IV airplanes are also referred to by the this AD. responsibilities among the various marketing designations G300 and G400. (2) Before using any approved AMOC, levels of government. Model GIV–X airplanes are also referred to by notify your appropriate principal inspector, For the reasons discussed above, I the marketing designations G350 and G450. or lacking a principal inspector, the manager of the local flight standards district office/ certify this proposed regulation: (d) Subject (1) Is not a ‘‘significant regulatory certificate holding district office. Joint Aircraft System Component (JASC)/ action’’ under Executive Order 12866, Air Transport Association (ATA) of America (j) Related Information (2) Is not a ‘‘significant rule’’ under Code 27, Flight Controls; 32, Landing Gear; (1) For more information about this AD, the DOT Regulatory Policies and 52, Doors; 53, Fuselage; 55, Stabilizers; 57, contact Ronald ‘‘Ron’’ Wissing, Airframe Procedures (44 FR 11034, February 26, Wings; 71, Power Plant-General; and 78, Engineer, Atlanta ACO Branch, FAA, 1701 1979), Engine Exhaust. Columbia Avenue, College Park, Georgia
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30337; phone: 404–474–5552; fax: 404–474– comments. You may also submit decisions on the proposal. Comments 5606; email: [email protected]. comments through the internet at http:// are specifically invited on the overall (2) For service information identified in www.regulations.gov. regulatory, aeronautical, economic, this AD, contact Gulfstream Aerospace FAA Order 7400.11B, Airspace environmental, and energy-related Corporation, P.O. Box 2206, Savannah, aspects of the proposal. Georgia 31402–2206; telephone: (800) 810– Designations and Reporting Points, and subsequent amendments can be viewed Communications should identify both 4853; fax 912–965–3520; email: pubs@ _ gulfstream.com; internet: http:// online at http://www.faa.gov/air traffic/ docket numbers and be submitted in www.gulfstream.com/product_support/ publications/. For further information, triplicate to the address listed above. technical_pubs/pubs/index.htm. You may you can contact the Airspace Policy Persons wishing the FAA to view this referenced service information at Group, Federal Aviation acknowledge receipt of their comments the FAA, Policy and Innovation Division, 901 Administration, 800 Independence on this notice must submit with those Locust, Kansas City, Missouri 64106. For Avenue SW, Washington, DC 20591; comments a self-addressed, stamped information on the availability of this telephone: (202) 267–8783. The Order is postcard on which the following material at the FAA, call (816) 329–4148. also available for inspection at the statement is made: ‘‘Comments to Issued in Kansas City, Missouri, on July 25, National Archives and Records Docket No. FAA–2017–0349/Airspace 2018. Administration (NARA). For Docket No. 17–AAL–5’’. The postcard Pat Mullen, information on the availability of FAA will be date/time stamped and returned Aircraft Certification Service, Acting Deputy Order 7400.11A at NARA, call (202) to the commenter. Director, Policy and Innovation Division, 741–6030, or go to https:// All communications received before AIR–601. www.archives.gov/federal-register/cfr/ the specified closing date for comments [FR Doc. 2018–16491 Filed 8–1–18; 8:45 am] ibr-locations.html. will be considered before taking action BILLING CODE 4910–13–P FAA Order 7400.11, Airspace on the proposed rule. The proposal Designations and Reporting Points, is contained in this notice may be changed published yearly and effective on in light of the comments received. A DEPARTMENT OF TRANSPORTATION September 15. report summarizing each substantive public contact with FAA personnel FOR FURTHER INFORMATION CONTACT: Federal Aviation Administration concerned with this rulemaking will be Richard Roberts, Federal Aviation filed in the docket. 14 CFR Part 71 Administration, Operations Support Group, Western Service Center, 2200 S. Availability of NPRMs [Docket No. FAA–2017–0349; Airspace 216th St., Des Moines, WA, 98198– Docket No. 17–AAL–5] An electronic copy of this document 6547; telephone (206) 231–2245. may be downloaded through the RIN–2120–AA66 SUPPLEMENTARY INFORMATION: internet at http://www.regulations.gov. Authority for This Rulemaking Recently published rulemaking Proposed Modification of Class E documents can also be accessed through Airspace for the Following Alaska The FAA’s authority to issue rules the FAA’s web page at http:// Towns; St. Michael, AK; Shaktoolik, regarding aviation safety is found in www.faa.gov/air_traffic/publications/ AK; and Tatitlek, AK Title 49 of the United States Code. airspace_amendments/. AGENCY: Federal Aviation Subtitle I, Section 106 describes the You may review the public docket Administration (FAA), DOT. authority of the FAA Administrator. containing the proposal, any comments Subtitle VII, Aviation Programs, received, and any final disposition in ACTION: Notice of proposed rulemaking describes in more detail the scope of the person in the Dockets Office (see the (NPRM). agency’s authority. This rulemaking is ADDRESSES section for the address and SUMMARY: This action proposes to promulgated under the authority phone number) between 9:00 a.m. and modify Class E airspace extending described in Subtitle VII, Part A, 5:00 p.m., Monday through Friday, upward from 1,200 feet above the Subpart I, Section 40103. Under that except federal holidays. An informal surface at St. Michael Airport, AK; section, the FAA is charged with docket may also be examined during Shaktoolik Airport, AK; and Tatitlek prescribing regulations to assign the use normal business hours at the Northwest Airport, AK. This proposal would add of airspace necessary to ensure the Mountain Regional Office of the Federal exclusionary language to the legal safety of aircraft and the efficient use of Aviation Administration, Air Traffic descriptions of these airports to exclude airspace. This regulation is within the Organization, Western Service Center, Class E airspace extending beyond 12 scope of that authority as it would Operations Support Group, Western miles from the shoreline, and would amend Class E airspace extending Service Center, 2200 S 216th St., Des ensure the safety and management of upward from 1,200 feet above the Moines, WA 98198–6547. surface at St. Michael Airport, AK; aircraft within the National Airspace Availability and Summary of System. Shaktoolik Airport, AK; and Tatitlek Airport, AK to support IFR operations in Documents for Incorporation by DATES: Comments must be received on standard instrument approach and Reference or before September 17, 2018. departure procedures at these airports. This document proposes to amend ADDRESSES: Send comments on this FAA Order 7400.11B, Airspace proposal to the U.S. Department of Comments Invited Designations and Reporting Points, Transportation, Docket Operations, 1200 Interested parties are invited to dated August 3, 2017, and effective New Jersey Avenue SE, West Building participate in this proposed rulemaking September 15, 2017. FAA Order Ground Floor, Room W12–140, by submitting such written data, views, 7400.11B is publicly available as listed Washington, DC 20590; telephone: 1– or arguments, as they may desire. in the ADDRESSES section of this 800–647–5527, or (202) 366–9826. You Comments that provide the factual basis document. FAA Order 7400.11B lists must identify FAA Docket No. FAA– supporting the views and suggestions Class A, B, C, D, and E airspace areas, 2017–0349; Airspace Docket No. 17– presented are particularly helpful in air traffic service routes, and reporting AAL–5, at the beginning of your developing reasoned regulatory points.
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The Proposal PART 71—DESIGNATION OF CLASS A, DEPARTMENT OF TRANSPORTATION B, C, D, AND E AIRSPACE AREAS; AIR The FAA is proposing an amendment TRAFFIC SERVICE ROUTES; AND Federal Aviation Administration to Title 14 Code of Federal Regulations REPORTING POINTS (14 CFR) part 71 by modifying Class E 14 CFR Part 71 airspace extending upward from 1,200 ■ 1. The authority citation for 14 CFR [Docket No. FAA–2017–0345; Airspace feet above the surface at St. Michael part 71 continues to read as follows: Airport, AK; Shaktoolik Airport, AK; Docket No. 17–AAL–1] and Tatitlek Airport, AK. This action Authority: 49 U.S.C. 106(f), 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, RIN–2120–AA66 would add language to the legal 1959–1963 Comp., p. 389. descriptions of these airports that reads Proposed Modification of Class E ‘‘excluding that airspace that extends § 71.1 [Amended] Airspace for the Following Alaska beyond 12 miles from the shoreline’’. ■ 2. The incorporation by reference in Towns; Barrow, AK; Chevak, AK; Class E airspace designations are 14 CFR 71.1 of FAA Order 7400.11B, Clarks Point, AK; Elim, AK; and published in paragraph 6005 of FAA Airspace Designations and Reporting Golovin, AK Order 7400.11B, dated August 3, 2017, Points, dated August 3, 2017, and AGENCY: Federal Aviation and effective September 15, 2017, which effective September 15, 2017, is Administration (FAA), DOT. is incorporated by reference in 14 CFR amended as follows: ACTION: Notice of proposed rulemaking 71.1. The Class E airspace designations Paragraph 6005 Class E Airspace Areas (NPRM). listed in this document will be Extending Upward From 1,200 Feet or More published subsequently in the Order. Above the Surface of the Earth. SUMMARY: This action proposes to modify Class E airspace extending Regulatory Notices and Analyses * * * * * upward from 1,200 feet above the AAL AK E5 Shaktoolik, AK [Amended] The FAA has determined that this surface in Alaska at Wiley Post/Will Shaktoolik Airport, AK regulation only involves an established ° ′ ″ ° ′ ″ Rogers Memorial Airport, Barrow; (Lat. 64 22 16 N, long. 161 13 26 W) Chevak Airport; Clarks Point Airport; body of technical regulations for which That airspace extending upward from 700 frequent and routine amendments are Elim Airport; and Golovin Airport. This feet above the surface within a 6.4-mile proposal would add exclusionary necessary to keep them operationally radius of Shaktoolik Airport; and that language to the legal descriptions of current, and is non-controversial and airspace extending upward from 1,200 feet these airports to exclude Class E unlikely to result in adverse or negative above the surface within a 73-mile radius of airspace extending beyond 12 miles comments. It, therefore: (1) Is not a Shaktoolik Airport, AK, excluding that from the shoreline, and would ensure ‘‘significant regulatory action’’ under airspace that extends beyond 12 miles of the shoreline. the safety and management of aircraft Executive Order 12866; (2) is not a * * * * * within the National Airspace System. ‘‘significant rule’’ under DOT Also, an editorial change would be Regulatory Policies and Procedures (44 AAL AK E5 St. Michael, AK [Amended] made in the associated airspace FR 11034; February 26, 1979); and (3) St. Michael Airport, AK designation for Chevak Airport. does not warrant preparation of a (Lat. 63°29′24″ N, long. 162°06′37″ W) DATES: Comments must be received on regulatory evaluation as the anticipated That airspace extending upward from 700 or before September 17, 2018. impact is so minimal. Since this is a feet above the surface within an 8.4-mile ADDRESSES: Send comments on this routine matter that will only affect air radius of St. Michael Airport; and that proposal to the U.S. Department of traffic procedures and air navigation, it airspace extending upward from 1,200 feet above the surface within a 73-mile radius of Transportation, Docket Operations, 1200 is certified that this rule, when the St. Michael Airport, excluding that New Jersey Avenue SE, West Building promulgated, would not have a airspace that extends beyond 12 miles of the Ground Floor, Room W12–140, significant economic impact on a shoreline. Washington, DC 20590; telephone: (800) substantial number of small entities * * * * * 647–5527, or (202) 366–9826. You must under the criteria of the Regulatory AAL AK E5 Tatitlek, AK [Amended] identify FAA Docket No. FAA–2017– Flexibility Act. 0345; Airspace Docket No. 17–AAL–1, Tatitlek Airport, AK Environmental Review (Lat. 60°52′21″ N, long. 146°41′28″ W) at the beginning of your comments. You may also submit comments through the That airspace extending upward from 700 This proposal would be subject to an feet above the surface within a 6.4-mile internet at http://www.regulations.gov. environmental analysis in accordance radius of Tatitlek Airport, and within 2 miles FAA Order 7400.11B, Airspace with FAA Order 1050.1F, southwest and 3.4 miles northeast of the 149° Designations and Reporting Points, and ‘‘Environmental Impacts: Policies and radial from Tatitlek Airport extending from subsequent amendments can be viewed Procedures’’ prior to any FAA final the 6.4-mile radius to 11.8 miles southeast of online at http://www.faa.gov/air_traffic/ regulatory action. the airport; and that airspace extending publications/. For further information, upward from 1,200 feet above the surface you can contact the Airspace Policy List of Subjects in 14 CFR Part 71 within a 60-mile radius of the Tatitlek Group, Federal Aviation Airport, excluding that airspace that extends Administration, 800 Independence beyond 12 miles of the shoreline. Airspace, Incorporation by reference, Avenue SW, Washington, DC 20591; Navigation (air). Issued in Seattle, Washington, on July 25, telephone: (202) 267–8783. The Order is 2018. The Proposed Amendment also available for inspection at the Shawn M. Kozica, National Archives and Records Accordingly, pursuant to the Group Manager, Operations Support Group, Administration (NARA). For authority delegated to me, the Federal Western Service Center. information on the availability of FAA Aviation Administration proposes to [FR Doc. 2018–16489 Filed 8–1–18; 8:45 am] Order 7400.11B at NARA, call (202) amend 14 CFR part 71 as follows: BILLING CODE 4910–13–P 741–6030, or go to https://
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www.archives.gov/federal-register/cfr/ All communications received before to FAA Order 7400.2L, Procedures for ibr-locations.html. the specified closing date for comments Handling Airspace Matters. FAA Order 7400.11, Airspace will be considered before taking action Class E airspace designations are Designations and Reporting Points, is on the proposed rule. The proposal published in paragraph 6005 of FAA published yearly and effective on contained in this notice may be changed Order 7400.11B, dated August 3, 2017, September 15. in light of the comments received. A and effective September 15, 2017, which FOR FURTHER INFORMATION CONTACT: report summarizing each substantive is incorporated by reference in 14 CFR Richard Roberts, Federal Aviation public contact with FAA personnel 71.1. The Class E airspace designations Administration, Operations Support concerned with this rulemaking will be listed in this document will be Group, Western Service Center, 2200 S filed in the docket. published subsequently in the Order. 216th St., Des Moines, WA 98198–6547; Availability of NPRMs Regulatory Notices and Analyses telephone (206) 231–2245. The FAA has determined that this SUPPLEMENTARY INFORMATION: An electronic copy of this document may be downloaded through the regulation only involves an established Authority for This Rulemaking internet at http://www.regulations.gov. body of technical regulations for which The FAA’s authority to issue rules Recently published rulemaking frequent and routine amendments are regarding aviation safety is found in documents can also be accessed through necessary to keep them operationally Title 49 of the United States Code. the FAA’s web page at http:// current, and is non-controversial and Subtitle I, Section 106 describes the www.faa.gov/air_traffic/publications/ unlikely to result in adverse or negative authority of the FAA Administrator. airspace_amendments/. comments. It, therefore: (1) Is not a Subtitle VII, Aviation Programs, You may review the public docket ‘‘significant regulatory action’’ under describes in more detail the scope of the containing the proposal, any comments Executive Order 12866; (2) is not a agency’s authority. This rulemaking is received, and any final disposition in ‘‘significant rule’’ under DOT promulgated under the authority person in the Dockets Office (see the Regulatory Policies and Procedures (44 described in Subtitle VII, Part A, ADDRESSES section for the address and FR 11034; February 26, 1979); and (3) Subpart I, Section 40103. Under that phone number) between 9:00 a.m. and does not warrant preparation of a section, the FAA is charged with 5:00 p.m., Monday through Friday, regulatory evaluation as the anticipated prescribing regulations to assign the use except federal holidays. An informal impact is so minimal. Since this is a of airspace necessary to ensure the docket may also be examined during routine matter that will only affect air safety of aircraft and the efficient use of normal business hours at the Northwest traffic procedures and air navigation, it airspace. This regulation is within the Mountain Regional Office of the Federal is certified that this rule, when scope of that authority, as it would Aviation Administration, Air Traffic promulgated, would not have a amend Class E airspace extending Organization, Western Service Center, significant economic impact on a upward from 1,200 feet above the Operations Support Group, 2200 S substantial number of small entities surface at Wiley Post/Will Rogers 216th St., Des Moines, WA 98198–6547. under the criteria of the Regulatory Memorial Airport, Barrow; Chevak Flexibility Act. Availability and Summary of Airport, Clarks Point Airport, Elim Documents for Incorporation by Environmental Review Airport, and Golovin Airport, AK, to Reference support IFR operations in standard This proposal would be subject to an instrument approach and departure This document proposes to amend environmental analysis in accordance procedures at these airports. FAA Order 7400.11B, Airspace with FAA Order 1050.1F, Designations and Reporting Points, ‘‘Environmental Impacts: Policies and Comments Invited dated August 3, 2017, and effective Procedures’’ prior to any FAA final Interested parties are invited to September 15, 2017. FAA Order regulatory action. participate in this proposed rulemaking 7400.11B is publicly available as listed List of Subjects in 14 CFR Part 71 by submitting such written data, views, in the ADDRESSES section of this or arguments, as they may desire. document. FAA Order 7400.11B lists Airspace, Incorporation by reference, Comments that provide the factual basis Class A, B, C, D, and E airspace areas, Navigation (air). supporting the views and suggestions air traffic service routes, and reporting The Proposed Amendment presented are particularly helpful in points. developing reasoned regulatory Accordingly, pursuant to the decisions on the proposal. Comments The Proposal authority delegated to me, the Federal are specifically invited on the overall The FAA is proposing an amendment Aviation Administration proposes to regulatory, aeronautical, economic, to Title 14 Code of Federal Regulations amend 14 CFR part 71 as follows: environmental, and energy-related (14 CFR) part 71 by modifying Class E PART 71—DESIGNATION OF CLASS A, aspects of the proposal. airspace extending upward from 1,200 B, C, D, AND E AIRSPACE AREAS; AIR Communications should identify both feet above the surface at Wiley Post/Will TRAFFIC SERVICE ROUTES; AND docket numbers and be submitted in Rogers Memorial Airport, Barrow, AK; REPORTING POINTS triplicate to the address listed above. Chevak Airport, Clarks Point Airport, Persons wishing the FAA to Elim Airport, and Golovin Airport, AK. ■ 1. The authority citation for 14 CFR acknowledge receipt of their comments This action would add language to the part 71 continues to read as follows: on this notice must submit with those legal descriptions of these airports that Authority: 49 U.S.C. 106(f), 106(g), 40103, comments a self-addressed, stamped reads ‘‘excluding that airspace that 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, postcard on which the following extends beyond 12 miles from the 1959–1963 Comp., p. 389. statement is made: ‘‘Comments to shoreline’’. Docket No. FAA–2017–0345; Airspace An editorial change also would be § 71.1 [Amended] Docket No. 17–AAL–1.’’ The postcard made to the Chevak airspace ■ 2. The incorporation by reference in will be date/time stamped and returned designation removing the city from the 14 CFR 71.1 of FAA Order 7400.11B, to the commenter. airport name to comply with a change Airspace Designations and Reporting
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Points, dated August 3, 2017, and Issued in Seattle, Washington, on July 25, Avenue SW, Washington, DC 20591; effective September 15, 2017, is 2018. telephone: (202) 267–8783. The Order is amended as follows: Shawn M. Kozica, also available for inspection at the Group Manager, Operations Support Group, National Archives and Records Paragraph 6005 Class E Airspace Areas Western Service Center. Extending Upward From 700 Feet or More Administration (NARA). For Above the Surface of the Earth. [FR Doc. 2018–16482 Filed 8–1–18; 8:45 am] information on the availability of FAA Order 7400.11B at NARA, call 202–741– * * * * * BILLING CODE 4910–13–P 6030, or go to https://www.archives.gov/ AAL AK E5 Barrow, AK [Amended] federal-register/cfr/ibr-locations.html. Wiley Post/Will Rogers Memorial Airport, DEPARTMENT OF TRANSPORTATION FAA Order 7400.11, Airspace AK Designations and Reporting Points, is (Lat. 71°17′06″ N, long. 156°46′07″ W) Federal Aviation Administration published yearly and effective on September 15. That airspace extending upward from 700 14 CFR Part 71 feet above the surface within a 6.6-mile FOR FURTHER INFORMATION CONTACT: radius of the Wiley Post/Will Rogers [Docket No. FAA–2017–0348; Airspace Richard Roberts, Federal Aviation Memorial Airport; and that airspace Docket No. 17–AAL–4] Administration, Operations Support extending upward from 1,200 feet above the RIN–2120–AA66 Group, Western Service Center, 2200 S. surface within a 73-mile radius of the Wiley 216th St., Des Moines, WA, 98198– Post/Will Rogers Memorial Airport, Proposed Modification of Class E 6547; telephone (206) 231–2245. excluding that airspace extending beyond 12 Airspace for the Following Alaska SUPPLEMENTARY INFORMATION: miles of the shoreline. Towns; Nuiqsut, AK; Perryville, AK; AAL AK E5 Chevak, AK [Amended] Pilot Point, AK; and Point Lay, AK Authority for This Rulemaking The FAA’s authority to issue rules Chevak Airport, AK AGENCY: ° ′ ″ ° ′ ″ Federal Aviation regarding aviation safety is found in (Lat. 61 32 27 N, long. 165 36 03 W) Administration (FAA), DOT. That airspace extending upward from 700 Title 49 of the United States Code. ACTION: Notice of proposed rulemaking feet above the surface within a 7.0-mile Subtitle I, Section 106 describes the (NPRM). radius of Chevak Airport; and that airspace authority of the FAA Administrator. Subtitle VII, Aviation Programs, extending upward from 1,200 feet above the SUMMARY: This action proposes to describes in more detail the scope of the surface within a 73-mile radius of Chevak modify Class E airspace extending agency’s authority. This rulemaking is Airport, excluding that airspace extending upward from 1,200 feet above the promulgated under the authority beyond 12 miles of the shoreline. surface in Alaska at Nuiqsut Airport; described in Subtitle VII, Part A, AAL AK E5 Clarks Point, AK [Amended] Oooguruk Island Heliport Nuiqsut; Subpart I, Section 40103. Under that Pioneer Heliport, Nuiqsut; Perryville Clarks Point Airport, AK section, the FAA is charged with ° ′ ″ ° ′ ″ Airport; Pilot Point Airport; and Point (Lat. 58 50 01 N, long. 158 31 46 W) prescribing regulations to assign the use Lay Airport. This proposal would add That airspace extending upward from 700 of airspace necessary to ensure the exclusionary language to the legal feet above the surface within a 6.3-mile safety of aircraft and the efficient use of descriptions of these airports to exclude radius of Clarks Point Airport; and that airspace. This regulation is within the Class E airspace extending beyond 12 airspace extending upward from 1,200 feet scope of that authority as it would miles from the shoreline, and would above the surface within a 73-mile radius of amend Class E airspace extending the Clarks Point Airport, excluding that ensure the safety and management of upward from 1,200 feet above the airspace extending beyond 12 miles of the aircraft within the National Airspace surface at Nuiqsut Airport, Oooguruk shoreline. System. Also, this action would remove Island Heliport, Pioneer Heliport, the heliport name from the airspace AAL AK E5 Elim, AK [Amended] Perryville Airport, Pilot Point Airport, designation of Oooguruk Island Heliport Point Hope Airport, Point Lay Airport, Elim Airport, AK and Pioneer Heliport. (Lat. 64°36′54″ N, long. 162°16′14″ W) and Port Heiden Airport, AK, to support DATES: Comments must be received on That airspace extending upward from 700 IFR operations in standard instrument feet above the surface within a 6.8-mile or before September 17, 2018. approach and departure procedures at radius of Elim Airport, and within 3.7 miles ADDRESSES: Send comments on this these airports. either side of the 015° bearing from the Elim proposal to the U.S. Department of Airport, extending from the 6.8-mile radius, Transportation, Docket Operations, 1200 Comments Invited to 12.6 miles north of Elim Airport; and that New Jersey Avenue SE, West Building Interested parties are invited to airspace extending upward from 1,200 feet Ground Floor, Room W12–140, participate in this proposed rulemaking above the surface within a 74-mile radius of Washington, DC 20590; telephone: (800) by submitting such written data, views, the Elim Airport, excluding that airspace 647–5527, or (202) 366–9826. You must or arguments, as they may desire. extending beyond 12 miles of the shoreline. identify FAA Docket No. FAA–2017– Comments that provide the factual basis AAL AK E5 Golovin, AK [Amended] 0348; Airspace Docket No. 17–AAL–4, supporting the views and suggestions Golovin Airport, AK at the beginning of your comments. You presented are particularly helpful in (Lat. 64°33′02″ N, long. 163°00′26″ W) may also submit comments through the developing reasoned regulatory internet at http://www.regulations.gov. decisions on the proposal. Comments That airspace extending upward from 700 feet above the surface within a 7.4-mile FAA Order 7400.11B, Airspace are specifically invited on the overall radius of Golovin Airport, and that airspace Designations and Reporting Points, and regulatory, aeronautical, economic, extending upward from 1,200 feet above the subsequent amendments can be viewed environmental, and energy-related _ surface within a 30-mile radius of lat. online at http://www.faa.gov/air traffic/ aspects of the proposal. 64°43′47″ N, long. 163°15′17″ W and a 30- publications/. For further information, Communications should identify both mile radius of lat. 64°17′57″ N, long. you can contact the Airspace Policy docket numbers and be submitted in 163°01′41″ W, excluding that airspace Group, Federal Aviation triplicate to the address listed above. extending beyond 12 miles of the shoreline. Administration, 800 Independence Persons wishing the FAA to
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acknowledge receipt of their comments Nuiqsut, AK; Perryville Airport, PART 71—DESIGNATION OF CLASS A, on this notice must submit with those Perryville, AK; Pilot Point Airport, Pilot B, C, D, AND E AIRSPACE AREAS; AIR comments a self-addressed, stamped Point, AK; and Point Lay Airport, Point TRAFFIC SERVICE ROUTES; AND postcard on which the following Lay, AK. This action would add REPORTING POINTS statement is made: ‘‘Comments to language to the legal descriptions of Docket No. FAA–2017–0348; Airspace these airports that reads ‘‘excluding that ■ 1. The authority citation for 14 CFR Docket No. 17–AAL–4’’. The postcard airspace that extends beyond 12 miles part 71 continues to read as follows: will be date/time stamped and returned from the shoreline.’’ Authority: 49 U.S.C. 106(f), 106(g), 40103, to the commenter. Also, this action would remove the 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, All communications received before airport name from the airspace 1959–1963 Comp., p. 389. the specified closing date for comments designation for Oooguruk Island will be considered before taking action § 71.1 [Amended] Heliport and Pioneer Heliport, to ■ 2. The incorporation by reference in on the proposed rule. The proposal conform with recent change to FAA contained in this notice may be changed 14 CFR 71.1 of FAA Order 7400.11B, Order 7400.2L, Procedures for Handling Airspace Designations and Reporting in light of the comments received. A Airspace Matters. report summarizing each substantive Points, dated August 3, 2017, and public contact with FAA personnel Class E airspace designations are effective September 15, 2017, is concerned with this rulemaking will be published in paragraph 6005 of FAA amended as follows: filed in the docket. Order 7400.11B, dated August 3, 2017, and effective September 15, 2017, which Paragraph 6005 Class E Airspace Areas Availability of NPRMs is incorporated by reference in 14 CFR Extending Upward From 1,200 Feet or More Above the Surface of the Earth. An electronic copy of this document 71.1. The Class E airspace designations may be downloaded through the listed in this document will be * * * * * internet at http://www.regulations.gov. published subsequently in the Order. AAL AK E5 Nuiqsut AK [Amended] Recently published rulemaking Regulatory Notices and Analyses Nuiqsut Airport, AK documents can also be accessed through (Lat. 70°12′35″ N, long. 151°00′23″ W) the FAA’s web page at http:// The FAA has determined that this That airspace extending upward from 700 www.faa.gov/air_traffic/publications/ regulation only involves an established feet above the surface within a 6.4-mile airspace_amendments/. body of technical regulations for which radius of the Nuiqsut Airport, and that You may review the public docket frequent and routine amendments are airspace extending upward from 1,200 feet containing the proposal, any comments necessary to keep them operationally above the surface within a 73-mile radius of received, and any final disposition in current, and is non-controversial and Nuiqsut Airport, excluding that airspace person in the Dockets Office (see the unlikely to result in adverse or negative which overlies Control 1485L, and excluding that airspace that extends beyond 12 miles of ADDRESSES section for the address and comments. It, therefore: (1) Is not a the shoreline. phone number) between 9:00 a.m. and ‘‘significant regulatory action’’ under 5:00 p.m., Monday through Friday, Executive Order 12866; (2) is not a AAL AK E5 Nuiqsut, AK [Amended] except federal holidays. An informal ‘‘significant rule’’ under DOT Oooguruk Island Heliport, AK docket may also be examined during Regulatory Policies and Procedures (44 (Lat. 70°29′44″ N, long. 150°15′12″ W) normal business hours at the Northwest FR 11034; February 26, 1979); and (3) That airspace extending upward from 700 Mountain Regional Office of the Federal does not warrant preparation of a feet above the surface within a 6-mile radius Aviation Administration, Air Traffic regulatory evaluation as the anticipated of Oooguruk Island Heliport; and that Organization, Western Service Center, impact is so minimal. Since this is a airspace extending upward from 1,200 feet Operations Support Group, 2200 S. above the surface within a 73-mile radius of routine matter that will only affect air Oooguruk Island Heliport, excluding that 216th St., Des Moines, WA, 98198– traffic procedures and air navigation, it airspace that extends beyond 12 miles of the 6547. is certified that this rule, when shoreline. promulgated, would not have a Availability and Summary of AAL AK E5 Nuiqsut, AK [Amended] Documents for Incorporation by significant economic impact on a substantial number of small entities Pioneer Heliport, AK Reference ° ′ ″ ° ′ ″ under the criteria of the Regulatory (Lat. 70 24 51 N, long. 150 01 07 W) This document proposes to amend Flexibility Act. That airspace extending upward from 700 FAA Order 7400.11B, Airspace feet above the surface within a 6-mile radius Designations and Reporting Points, Environmental Review of Pioneer Heliport; and that airspace dated August 3, 2017, and effective extending upward from 1,200 feet above the This proposal would be subject to an September 15, 2017. FAA Order surface within a 73-mile radius of Pioneer environmental analysis in accordance 7400.11B is publicly available as listed Heliport, excluding that airspace that extends with FAA Order 1050.1F, beyond 12 miles of the shoreline. in the ADDRESSES section of this ‘‘Environmental Impacts: Policies and document. FAA Order 7400.11B lists * * * * * Procedures’’ prior to any FAA final Class A, B, C, D, and E airspace areas, regulatory action. AAL AK E5 Perryville, AK [Amended] air traffic service routes, and reporting Perryville Airport, AK points. List of Subjects in 14 CFR Part 71 (Lat. 55°54′24″ N, long. 159°09′39″ W) The Proposal Airspace, Incorporation by reference, That airspace extending upward from 700 Navigation (air). feet above the surface within a 14.7-mile The FAA is proposing an amendment radius of Perryville Airport; and that airspace to Title 14 Code of Federal Regulations The Proposed Amendment east of long. 160°00′00″ W extending upward (14 CFR) part 71 by modifying Class E from 1,200 feet above the surface within an airspace extending upward from 1,200 Accordingly, pursuant to the 81.2-mile radius of Perryville Airport, feet above the surface at Nuiqsut authority delegated to me, the Federal excluding that airspace that extends beyond Airport, Nuiqsut, AK; Oooguruk Island Aviation Administration proposes to 12 miles of the shoreline. Heliport, Nuiqsut, AK; Pioneer Heliport, amend 14 CFR part 71 as follows: * * * * *
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AAL AK E5 Pilot Point, AK [Amended] DATES: Comments must be received on to support IFR operations in standard Pilot Point Airport, AK or before September 17, 2018. instrument approach and departure (Lat. 57°34′49″ N, long. 157°34′19″ W) ADDRESSES: Send comments on this procedures at these airports and to limit That airspace extending upward from 700 proposal to the U.S. Department of Class E airspace to within 12 miles of feet above the surface within a 6.3-mile Transportation, Docket Operations, 1200 the shoreline. radius of Pilot Point Airport; and that New Jersey Avenue SE, West Building Comments Invited airspace extending upward from 1,200 feet Ground Floor, Room W12–140, above the surface within an area bounded by Washington, DC 20590; telephone: 1– Interested parties are invited to lat. 57°51′00″ N, long. 158°03′00″ W, to lat. 800–647–5527, or (202) 366–9826. You participate in this proposed rulemaking 57°51′00″ N, long. 157°05′00″ W, to lat. by submitting such written data, views, 57°24′45″ N, long. 157°05′00″ W, to lat. must identify FAA Docket No. FAA– ° ′ ″ ° ′ ″ 2017–0350; Airspace Docket No. 17– or arguments, as they may desire. 57 24 45 N, long. 158 03 00 W, to the point Comments that provide the factual basis of beginning, excluding that airspace that AAL–6, at the beginning of your supporting the views and suggestions extends beyond 12 miles of the shoreline. comments. You may also submit presented are particularly helpful in comments through the internet at http:// * * * * * developing reasoned regulatory www.regulations.gov. AAL AK E5 Point Lay, AK [Amended] FAA Order 7400.11B, Airspace decisions on the proposal. Comments Point Lay Airport, AK Designations and Reporting Points, and are specifically invited on the overall ° ′ ″ ° ′ ″ (Lat. 69 43 58 N, long. 163 00 19 W) subsequent amendments can be viewed regulatory, aeronautical, economic, environmental, and energy-related That airspace extending upward from 700 online at http://www.faa.gov/air_traffic/ aspects of the proposal. feet above the surface within an 8-mile radius publications/. For further information, Communications should identify both of Point Lay Airport; and that airspace you can contact the Airspace Policy extending upward from 1,200 feet above the docket numbers and be submitted in Group, Federal Aviation surface within a 46-mile radius of the Point triplicate to the address listed above. Administration, 800 Independence Lay Airport, excluding that airspace that Persons wishing the FAA to Avenue SW, Washington, DC 20591; extends beyond 12 miles from the shoreline. acknowledge receipt of their comments telephone: (202) 267–8783. The Order is * * * * * on this notice must submit with those also available for inspection at the comments a self-addressed, stamped Issued in Seattle, Washington, on July 25, National Archives and Records postcard on which the following 2018. Administration (NARA). For statement is made: ‘‘Comments to Shawn M. Kozica, information on the availability of FAA Docket No. FAA–2017–0350, Airspace Group Manager, Operations Support Group, Order 7400.11A at NARA, call (202) Docket No. 17–AAL–6’’. The postcard Western Service Center. 741–6030, or go to https:// will be date/time stamped and returned [FR Doc. 2018–16480 Filed 8–1–18; 8:45 am] www.archives.gov/federal-register/cfr/ to the commenter. BILLING CODE 4910–13–P ibr-locations.html. All communications received before FAA Order 7400.11, Airspace the specified closing date for comments Designations and Reporting Points, is DEPARTMENT OF TRANSPORTATION will be considered before taking action published yearly and effective on on the proposed rule. The proposal September 15. Federal Aviation Administration contained in this notice may be changed FOR FURTHER INFORMATION CONTACT: in light of the comments received. A 14 CFR Part 71 Richard Roberts, Federal Aviation report summarizing each substantive Administration, Operations Support public contact with FAA personnel [Docket No. FAA–2017–0350; Airspace Group, Western Service Center, 2200 S concerned with this rulemaking will be Docket No. 17–AAL–6] 216th St., Des Moines, WA 98198–6547; filed in the docket. telephone (206) 231–2245. RIN–2120–AA66 SUPPLEMENTARY INFORMATION: Availability of NPRMs An electronic copy of this document Proposed Modification of Class E Authority for This Rulemaking Airspace for the Following Alaska may be downloaded through the Towns; Toksook Bay, AK; Unalakleet, The FAA’s authority to issue rules internet at http://www.regulations.gov. AK; Wainwright, AK; and Yakutat, AK regarding aviation safety is found in Recently published rulemaking Title 49 of the United States Code. documents can also be accessed through AGENCY: Federal Aviation Subtitle I, Section 106 describes the the FAA’s web page at http:// Administration (FAA), DOT. authority of the FAA Administrator. www.faa.gov/air_traffic/publications/ _ ACTION: Notice of proposed rulemaking Subtitle VII, Aviation Programs, airspace amendments/. (NPRM). describes in more detail the scope of the You may review the public docket agency’s authority. This rulemaking is containing the proposal, any comments SUMMARY: This action proposes to promulgated under the authority received, and any final disposition in modify Class E airspace extending described in Subtitle VII, Part A, person in the Dockets Office (see the upward from 1,200 feet above the Subpart I, Section 40103. Under that ADDRESSES section for the address and surface at Toksook Bay Airport, Toksook section, the FAA is charged with phone number) between 9:00 a.m. and Bay, AK; Unalakleet Airport, prescribing regulations to assign the use 5:00 p.m., Monday through Friday, Unalakleet, AK; Wainwright Airport, of airspace necessary to ensure the except federal holidays. An informal Wainwright, AK; and Yakutat Airport, safety of aircraft and the efficient use of docket may also be examined during Yakutat, AK. This proposal would add airspace. This regulation is within the normal business hours at the Northwest exclusionary language to the legal scope of that authority as it would Mountain Regional Office of the Federal descriptions of these airports for Class E amend Class E airspace extending Aviation Administration, Air Traffic airspace extending beyond 12 miles upward from 1,200 feet above the Organization, Western Service Center, from the shoreline, and would ensure surface at Toksook Bay Airport, AK; Operations Support Group, Western the safety and management of aircraft Unalakleet Airport, AK; Wainwright Service Center, 2200 S 216th St., Des within the National Airspace System. Airport, AK; and Yakutat Airport, AK, Moines, WA 98198–6547.
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Availability and Summary of under the criteria of the Regulatory bearing of the airport extending from the 7- Documents for Incorporation by Flexibility Act. mile radius to 10 miles south of the airport; Reference and that airspace extending upward from Environmental Review 1,200 feet above the surface within a 74-mile This document proposes to amend This proposal would be subject to an radius of Unalakleet Airport, excluding that FAA Order 7400.11B, Airspace environmental analysis in accordance airspace that extends beyond 12 miles of the Designations and Reporting Points, with FAA Order 1050.1F, shoreline. dated August 3, 2017, and effective ‘‘Environmental Impacts: Policies and AAL AK E5 Wainwright, AK [Amended] September 15, 2017. FAA Order Procedures’’ prior to any FAA final Wainwright Airport, AK 7400.11B is publicly available as listed regulatory action. (Lat. 70°38′17″ N, long. 159°59′41″ W) in the ADDRESSES section of this document. FAA Order 7400.11B lists List of Subjects in 14 CFR Part 71 That airspace extending upward from 700 feet above the surface within an 8.5-mile Class A, B, C, D, and E airspace areas, Airspace, Incorporation by reference, radius of Wainwright Airport; and that air traffic service routes, and reporting Navigation (air). airspace extending upward from 1,200 feet points. The Proposed Amendment above the surface within a 73-mile radius of The Proposal the Wainwright Airport, AK, excluding that Accordingly, pursuant to the portion extending outside the Anchorage The FAA is proposing an amendment authority delegated to me, the Federal Arctic CTA/FIR (PAZA) boundary, and to Title 14 Code of Federal Regulations Aviation Administration proposes to excluding that airspace that extends beyond (14 CFR) part 71 by modifying Class E amend 14 CFR part 71 as follows: 12 miles of the shoreline. airspace extending upward from 1,200 PART 71—DESIGNATION OF CLASS A, AAL AK E5 Wales, AK [Amended] feet above the surface at Toksook Bay B, C, D, AND E AIRSPACE AREAS; AIR Wales Airport, AK Airport, Toksook, AK; Unalakleet TRAFFIC SERVICE ROUTES; AND (Lat. 65°37′21″ N, long. 168°05′42″ W) Airport, Unalakleet, AK; Wainwright REPORTING POINTS That airspace extending upward from 700 Airport, Wainwright, AK; and Yakutat feet above the surface within a 6.35-mile Airport, Yakutat, AK. This action would ■ 1. The authority citation for 14 CFR radius of Wales Airport; and that airspace add language to the legal descriptions of part 71 continues to read as follows: extending upward from 1,200 feet above the these airports that reads ‘‘ excluding surface within an area bounded by lat. Authority: 49 U.S.C. 106(f), 106(g), 40103, that airspace extending beyond 12 miles 65°24′00″ N, long.168°30′00″ W, to lat. 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, of the shoreline’’, and would support 65°53′00″ N, long. 168°30′00″ W, to lat. 1959–1963 Comp., p. 389. IFR operations in standard instrument 66°00′00″ N, long. 167°50′00″ W, to lat. approach and departure procedures at § 71.1 [Amended] 65°24′00″ N, 167°50′00″ W, to point of beginning, excluding that airspace within the these airports. ■ 2. The incorporation by reference in Tin City Class E airspace area, and excluding Class E airspace designations are 14 CFR 71.1 of FAA Order 7400.11B, that airspace that extends beyond 12 miles of published in paragraph 6005 of FAA Airspace Designations and Reporting the shoreline. Order 7400.11B, dated August 3, 2017, Points, dated August 3, 2017, and and effective September 15, 2017, which effective September 15, 2017, is AAL AK E5 Yakutat, AK [Amended] is incorporated by reference in 14 CFR amended as follows: Yakutat Airport, AK (Lat. 59°30′12″ N, long. 139°39′37″ W) 71.1. The Class E airspace designations Paragraph 6005 Class E Airspace Areas listed in this document will be Yakutat VOR/DME Extending Upward From 700 Feet or More ° ′ ″ ° ′ ″ published subsequently in the Order. Above the Surface of the Earth. (Lat. 59 30 39 N, long. 139 38 53 W) * * * * * That airspace extending upward from 700 Regulatory Notices and Analyses feet above the surface within the area AAL AK E5 Toksook Bay, AK [Amended] bounded by lat. 59°47′42″ N, 139°58′48″ W, The FAA has determined that this ° ′ ″ ° ′ ″ regulation only involves an established Toksook Bay Airport, AK to lat. 59 37 33 N, long. 139 40 54 W, then (Lat. 60°32′29″ N, long. 165°05′14″ W) along the 7 mile radius of the Yakutat VOR/ body of technical regulations for which DME clockwise to lat. 59°28′54″ N, long. frequent and routine amendments are That airspace extending upward from 700 ° ′ ″ ° ′ ″ feet above the surface within a 6.3-mile 139 25 36 W, to lat. 59 20 16 N, long. necessary to keep them operationally 139°10′20″ W, to lat. 59°02′49″ N, long. current, and is non-controversial and radius of Toksook Bay Airport; and that ° ′ ″ ° ′ ″ airspace extending upward from 1,200 feet 139 47 45 W, to lat. 59 30 15 N, long. ° ′ ″ unlikely to result in adverse or negative above the surface within a 73-mile radius of 140 36 43 W, to the point of beginning, comments. It, therefore: (1) Is not a the Toksook Bay Airport, excluding that excluding that area beyond 12 miles from the ‘‘significant regulatory action’’ under airspace that extends beyond 12 miles of the shoreline within Gulf of Alaska Low Control Executive Order 12866; (2) is not a shoreline. Area; and that airspace extending upward ‘‘significant rule’’ under DOT from 1,200 feet above the surface within a 75- AAL AK E5 Unalakleet, AK [Amended] Regulatory Policies and Procedures (44 mile radius of the Yakutat VOR/DME, FR 11034; February 26, 1979); and (3) Unalakleet Airport, AK excluding that area extending over Canada, ° ′ ″ ° ′ ″ and that airspace that extends beyond 12 does not warrant preparation of a (Lat. 63 53 19 N, long. 160 47 57 W) miles of the shoreline within Control 1487L. regulatory evaluation as the anticipated That airspace extending upward from 700 impact is so minimal. Since this is a feet above the surface within a 7-mile radius Issued in Seattle, Washington, on July 25, of Unalakleet Airport beginning at the 360° 2018. routine matter that will only affect air ° bearing of the airport clockwise to the 260 Shawn M. Kozica, traffic procedures and air navigation, it bearing of the airport, and within a 13.5-mile is certified that this rule, when radius of the airport beginning at the 260° Group Manager, Operations Support Group, promulgated, would not have a bearing of the airport clockwise to the 360° Western Service Center. significant economic impact on a bearing of the airport, and within 6 miles [FR Doc. 2018–16503 Filed 8–1–18; 8:45 am] substantial number of small entities each side of the Unalakleet Airport 185° BILLING CODE 4910–13–P
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DEPARTMENT OF HOMELAND narrows abruptly to a width of 4 miles. IV. Regulatory Analyses SECURITY Spanning this divide is the Mackinac We developed this proposed rule after Bridge. Two main shipping lanes lead considering numerous statutes and Coast Guard north and south of Bois Blanc Island Executive orders related to rulemaking. and pass under the bridge. Numerous Below we summarize our analyses 33 CFR Part 165 shoals and several islands obstruct the based on a number of these statutes and [Docket Number USCG–2018–0563] Straits Area. Located approximately a Executive orders and we discuss First mile west of the Mackinac Bridge are Amendment rights of protestors. RIN 1625–AA11 submerged electrical cables and the Enbridge Line 5 Pipeline. Posted on A. Regulatory Planning and Review Regulated Navigation Area; Straits of NOAAs navigation charts are cautionary Mackinac, Mackinaw City, MI Executive Orders 12866 and 13563 notes advising mariners of the cable and direct agencies to assess the costs and AGENCY: Coast Guard, DHS. pipeline area. There is no prohibition benefits of available regulatory ACTION: Notice of proposed rulemaking. nor is there an enforcement mechanism alternatives and, if regulation is to discourage anchoring in this area. necessary, to select regulatory SUMMARY: The Coast Guard is proposing The Captain of the Port (COTP) of Sault approaches that maximize net benefits. to establish a Regulated Navigation Area Sainte Marie has determined that the Executive Order 13771 directs agencies (RNA) for certain waters of the Straits of high volume of vessel transits and the to control regulatory costs through a Mackinac. This action is necessary to potential for damage to submerged budgeting process. This NPRM has not provide for the safety of life and infrastructure warrants the creation of a been designated a ‘‘significant protection of property on these regulatory measure to specifically regulatory action,’’ under Executive navigable waters near Mackinaw City, outline an area of regulated navigation Order 12866. Accordingly, the NPRM MI. This proposed rulemaking would that prohibits certain vessels from has not been reviewed by the Office of prohibit persons and vessels from anchoring or loitering. Management and Budget (OMB), and anchoring or loitering within the RNA The purpose of this rulemaking is to pursuant to OMB guidance it is exempt unless authorized by the Captain of the better enhance the safety of vessels and from the requirements of Executive Port of Sault Sainte Marie, Michigan or protection of sub-surface cables and Order 13771. a designated representative. We invite pipelines within the navigable waters of This regulatory action determination your comments on this proposed the Straits of Mackinac. The Coast is based on the fact that no part of this rulemaking. Guard proposes this rulemaking under proposed rulemaking and its DATES: Comments and related material authority in 33 U.S.C. 1231; 50 U.S.C. stipulations will require any additional must be received by the Coast Guard on 191; 33 CFR 1.05–1, 6.04–1, 6.04–6, and equipment purchases or create an undue or before September 4, 2018. 160.5; Department of Homeland burden to marine operations. This Security Delegation No. 0170.1. ADDRESSES: You may submit comments proposed rule will increase identified by docket number USCG– III. Discussion of Proposed Rule communication and situational 2018–0563 using the Federal awareness of the specified area. On the behalf of COTP Sector Sault eRulemaking Portal at http:// Sainte Marie, the Ninth Coast Guard B. Impact on Small Entities www.regulations.gov. See the ‘‘Public District proposes the creation of a Participation and Request for The Regulatory Flexibility Act of Regulated Navigation Area that Comments’’ portion of the 1980, 5 U.S.C. 601–612, as amended, mandates transiting vessels to make a SUPPLEMENTARY INFORMATION section for requires Federal agencies to consider direct passage with no anchoring or further instructions on submitting the potential impact of regulations on loitering, unless expressly granted comments. small entities during rulemaking. The permission from the COTP or term ‘‘small entities’’ comprises small FOR FURTHER INFORMATION CONTACT: If designated representative. Vessels that businesses, not-for-profit organizations you have questions about this proposed would be required to comply with this that are independently owned and rulemaking, call or email Lieutenant RNA include vessels of 40 meters or operated and are not dominant in their Jason Radcliffe, Ninth District more in length, towing vessels of 20 fields, and governmental jurisdictions Waterways Management, U.S. Coast meters or more in length while engaged with populations of less than 50,000. Guard; telephone 216–902–6060, email in towing another vessel, vessels The Coast Guard certifies under 5 U.S.C. [email protected]. certificated to carry 50 or more 605(b) that this proposed rule would not SUPPLEMENTARY INFORMATION: passengers for hire, when engaged in have a significant economic impact on trade, or any dredge or floating plant. I. Table of Abbreviations a substantial number of small entities. Within the RNA, the District While some owners or operators of CFR Code of Federal Regulations Commander or COTP may establish vessels intending to transit the RNA Regulated Navigation Area temporary traffic rules that include but Regulated Navigation Area may be small COTP Captain of the Port are not limited to channel obstructions, entities, for the reasons stated in section DHS Department of Homeland Security winter navigation, unusual weather IV.A above, this proposed rule would FR Federal Register NPRM Notice of proposed rulemaking conditions, or unusual water levels. not have a significant economic impact § Section This proposed rule will ensure on any vessel owner or operator. The U.S.C. United States Code transiting mariners are fully aware of majority of this proposed rule applies to existing and emergent hazards to vessels typically larger than those II. Background, Purpose, and Legal navigation on or below the navigable operated by small entities. The size and Basis waterways and provide the Coast Guard operational applicability of this The northwest part of Lake Huron with greater situational awareness and proposed rule is found at the end of this forms the approach to, and the east part oversight. The regulatory text we are document. of the, Straits of Mackinac. At the proposing appears at the end of this If you think that your business, extreme northwest end, the lake document. organization, or governmental
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jurisdiction qualifies as a small entity that may result in the expenditure by a www.regulations.gov. If your material and that this rule would have a State, local, or tribal government, in the cannot be submitted using http:// significant economic impact on it, aggregate, or by the private sector of www.regulations.gov, contact the person please submit a comment (see $100,000,000 (adjusted for inflation) or in the FOR FURTHER INFORMATION ADDRESSES) explaining why you think it more in any one year. Though this CONTACT section of this document for qualifies and how and to what degree proposed rule would not result in such alternate instructions. this rule would economically affect it. an expenditure, we do discuss the We accept anonymous comments. All Under section 213(a) of the Small effects of this rule elsewhere in this comments received will be posted Business Regulatory Enforcement preamble. without change to http:// Fairness Act of 1996 (Pub. L. 104–121), F. Environment www.regulations.gov and will include we want to assist small entities in any personal information you have understanding this proposed rule. If the We have analyzed this proposed rule provided. For more about privacy and rule would affect your small business, under Department of Homeland the docket, visit http:// organization, or governmental Security Directive 023–01 and www.regulations.gov/privacyNotice. jurisdiction and you have questions Commandant Instruction M16475.1D, which guide the Coast Guard in Documents mentioned in this NPRM concerning its provisions or options for as being available in the docket, and all compliance, please contact the person complying with the National Environmental Policy Act of 1969 (42 public comments, will be in our online listed in the FOR FURTHER INFORMATION docket at http://www.regulations.gov CONTACT section. The Coast Guard will U.S.C. 4321–4370f), and have made a preliminary determination that this and can be viewed by following that not retaliate against small entities that website’s instructions. Additionally, if question or complain about this action is one of a category of actions that do not individually or cumulatively you go to the online docket and sign up proposed rule or any policy or action of for email alerts, you will be notified the Coast Guard. have a significant effect on the human environment. This proposed rule when comments are posted or a final C. Collection of Information involves creating a permanent Regulated rule is published. This proposed rule would not call for Navigation Area detailing how mariners List of Subjects in 33 CFR Part 165 a new collection of information under shall transit through the Straits of the Paperwork Reduction Act of 1995 Mackinac. Normally such actions are Harbors, Marine safety, Navigation (44 U.S.C. 3501–3520). categorically excluded from further (water), Reporting and recordkeeping review under paragraph L61 of requirements, Security measures, D. Federalism and Indian Tribal Appendix A, Table 1 of DHS Instruction Waterways. Governments Manual 023–01–001–01, Rev. 01. A For the reasons discussed in the A rule has implications for federalism preliminary Record of Environmental preamble, the Coast Guard proposes to under Executive Order 13132, Consideration supporting this amend 33 CFR part 165 as follows: Federalism, if it has a substantial direct determination is available in the docket effect on the States, on the relationship where indicated under ADDRESSES. We PART 165—REGULATED NAVIGATION between the national government and seek any comments or information that AREAS AND LIMITED ACCESS AREAS the States, or on the distribution of may lead to the discovery of a power and responsibilities among the significant environmental impact from ■ 1. The authority citation for part 165 various levels of government. We have this proposed rule. continues to read as follows: analyzed this proposed rule under that G. Protest Activities Authority: 33 U.S.C. 1231; 50 U.S.C. 191; Order and have determined that it is 33 CFR 1.05–1, 6.04–1, 6.04–6 and 160.5; consistent with the fundamental The Coast Guard respects the First Department of Homeland Security Delegation federalism principles and preemption Amendment rights of protesters. No. 0170.1. requirements described in Executive Protesters are asked to contact the ■ 2. Add § 165.944 above the heading Order 13132. person listed in the FOR FURTHER ‘‘Eleventh Coast Guard District’’ to read Also, this proposed rule does not have INFORMATION CONTACT section to as follows: tribal implications under Executive coordinate protest activities so that your Order 13175, Consultation and message can be received without § 165.944 Regulated Navigation Area; Coordination with Indian Tribal jeopardizing the safety or security of Straits of Mackinac. Governments, because it would not have people, places, or vessels. (a) Location. All navigable waters of a substantial direct effect on one or the Straits of Mackinac bounded by more Indian tribes, on the relationship V. Public Participation and Request for Comments longitude 084°20′ W and 085°10′ W, between the Federal Government and including Grays Reef Passage, the South We view public participation as Indian tribes, or on the distribution of Channel between Bois Blanc Island and essential to effective rulemaking, and power and responsibilities between the Cheboygan, MI, and the waters between will consider all comments and material Federal Government and Indian tribes. Mackinac Island and St. Ignace, MI. If you believe this proposed rule has received during the comment period. (b) Applicability. Unless otherwise implications for federalism or Indian Your comment can help shape the stated, the provisions of this RNA apply tribes, please contact the person listed outcome of this rulemaking. If you to the following vessels: in the FOR FURTHER INFORMATION submit a comment, please include the CONTACT section. docket number for this rulemaking, (1) Vessels of 40 meters (approx. 131 indicate the specific section of this feet) or more in length, while E. Unfunded Mandates Reform Act document to which each comment navigating; The Unfunded Mandates Reform Act applies, and provide a reason for each (2) Towing vessels of 20 meters of 1995 (2 U.S.C. 1531–1538) requires suggestion or recommendation. (approx. 65 feet) or more in length, Federal agencies to assess the effects of We encourage you to submit while engaged in towing another vessel their discretionary regulatory actions. In comments through the Federal astern, alongside or by pushing ahead; particular, the Act addresses actions eRulemaking Portal at http:// or
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(3) Vessels certificated to carry 50 or any time without the expressed persons and vessels may request more passengers for hire, when engaged permission of the COTP or a designated permission to enter the RNA by in trade; or representative. contacting the COTP or a designated (4) Each dredge or floating plant. (4) Vessels desiring to anchor within representative via VHF–16 or telephone (c) Regulations. The general the confines of the RNA must contact 906–635–3319. regulations contained in 33 CFR 165.10, the COTP or a designated representative (d) Definitions. As used in this RNA: 165.11, and 165.13 apply within this one (1) hour in advance of anchoring via (1) Captain of the Port means the RNA. VHF–16 or telephone 906–635–3319. (1) Nothing in this regulation relieves United States Coast Guard Captain of The person directing the movement of the Port (COTP) of Sault Sainte Marie, any vessel, owner, operator, charterer, the vessel desiring to anchor will master, or person directing the Michigan. provide the time and purpose for (2) Straits of Mackinac means the movement of a vessel, from the anchoring, plus the anchoring location. consequences of any neglect to comply navigable waters of the Great Lakes Vessels getting underway from anchor connecting Lake Huron to Lake with this part or any other applicable will notify the COTP or a designated law or regulation. (i.e., the International Michigan passing between the upper representative no less than 15 minutes and lower peninsulas of Michigan. Regulations for Prevention of Collisions prior to sailing via VHF–16 or telephone at Sea, 1972 (72 COLREGS) or the (e) Notification. The Coast Guard will 906–635–3319. Inland Navigation Rules) or of the rely on the methods described in 33 neglect of any precaution which may be (5) The owner, operator, charterer, CFR 165.7 to notify the public of the required by the ordinary practice of master or person directing the time and duration of any closure of the seamen, or by the special circumstances movement of a vessel desiring to loiter RNA. Reports of violations of this RNA of the case. within the prescribed RNA for the should go to COTP Sault Sainte Marie (2) Vessels transiting in the RNA must purposes of work, dredging, or survey at 906–635–3319 or on VHF-Channel 16. comply with all directions given to must receive permission from the COTP or a designated representative a (f) Waiver. For any vessel, the COTP them by the COTP, or a designated or a designated representative may representative. The ‘‘designated minimum of 72 hours in advance of the desired activity. waive any of the requirements of this representative’’ of the COTP is any section, upon finding that (6) In the RNA, the District Coast Guard commissioned, warrant or circumstances are such that application Commander or COTP may establish petty officer who designated by the of this section is unnecessary or temporary traffic rules for reasons that COTP to act on their behalf. The impractical for the purposes of safety or include but are not limited to channel designated representative may be on a environmental safety. Coast Guard vessel; or other designated obstructions, winter navigation, unusual craft; or on shore and communicating weather conditions, or unusual water Dated: July 27, 2018. via VHF–16 or telephone 906–635– levels. J.M. Nunan, 3319. (7) There may be times that the Ninth Rear Admiral, U.S. Coast Guard, Commander, (3) Vessels transiting through the RNA District Commander or the COTP finds Ninth Coast Guard District. must make a direct passage. No vessel it necessary to close the RNA to vessel [FR Doc. 2018–16549 Filed 8–1–18; 8:45 am] may anchor or loiter within the RNA at traffic. During times of limited closure, BILLING CODE 9110–04–P
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Notices Federal Register Vol. 83, No. 149
Thursday, August 2, 2018
This section of the FEDERAL REGISTER FOR FURTHER INFORMATION CONTACT: Rory and regulations of the U.S. Commission contains documents other than rules or Glueckert, Forest Recreation Program on Civil Rights (Commission), and the proposed rules that are applicable to the Manager, Helena—Lewis & Clark Federal Advisory Committee Act public. Notices of hearings and investigations, National Forest at 406–495–3761 or (FACA), that a planning meeting of the committee meetings, agency decisions and [email protected]; Information about Massachusetts Advisory Committee to rulings, delegations of authority, filing of petitions and applications and agency proposed fee changes can also be found the Commission will convene on statements of organization and functions are on the Helena—Lewis & Clark National Thursday, August 15, 2017 at 1:00 p.m. examples of documents appearing in this Forest website at http:// (EDT) at McCarter & English, LLP, 265 section. www.fs.usda.gov/main/helena. Franklin Street, Boston, MA 02110. The SUPPLEMENTARY INFORMATION: The purpose of the meeting is to hear Federal Recreation Lands Enhancement testimony on human trafficking to DEPARTMENT OF AGRICULTURE Act (Title VII, P.L. 108–447) directed the consider it as a civil rights topic of Secretary of Agriculture to publish a six study. Forest Service month advance notice in the Federal DATES: Thursday, August 15, 2018 (EDT) Notice of New Fee Sites Register whenever new recreation fee at 1:00 p.m. (EDT). areas are established. ADDRESSES: Once public involvement is complete, McCarter & English, LLP, AGENCY: Helena—Lewis & Clark 265 Franklin Street, Boston, MA 02110. National Forest, USDA Forest Service. these new fees will be reviewed by the BLM Western or North Central Montana FOR FURTHER INFORMATION CONTACT: ACTION: Notice of new fee sites. Recreation Resource Advisory Evelyn Bohor, at [email protected] or by phone at 303–866–1040. SUMMARY: The Helena—Lewis & Clark Committees (depending on site location) National Forest is proposing to prior to a final decision and SUPPLEMENTARY INFORMATION: If other implement new fees at the following implementation. persons who plan to attend the meeting sites: Three rental cabins, one Reasonable fees, paid by users of require other accommodations, please campground, and one group these sites and services, will help contact Evelyn Bohor at ebohor@ campground. The Forest is proposing to ensure that the Forest can continue usccr.gov at the Eastern Regional Office charge at the following sites: maintaining and improving the sites for at least ten (10) working days before the • Indian Meadows Cabin; Lincoln future generations. A market analysis of scheduled date of the meeting. Time Ranger District: Proposed fee of $65 per surrounding recreation sites with will be set aside at the end of the night. similar amenities indicates that the meeting so that members of the public • Mergenthaler Cabin; Helena Ranger proposed fees are comparable and may address the Committee after the District: Proposed fee of $60 per night. reasonable. planning meeting. Persons interested in Advance reservations for the Indian • Nevada Creek Cabin; Lincoln the issue are also invited to submit Meadows, Mergenthaler, and Nevada Ranger District: Proposed fee of $45 per written comments; the comments must Creek Cabins and the Quigley Group night. be received in the regional office by Campground will be available through • Quigley Group Campground; Monday, September 17, 2018. Written www.recreation.gov or by calling 1–877– comments may be mailed to the Eastern Helena Ranger District: Proposed fee of 444–6777. The reservation service $50 per night. Regional Office, U.S. Commission on charges a $10 fee for reservations. Civil Rights, 1331 Pennsylvania • Hay Canyon Campground; Avenue, Suite 1150, Washington, DC Musselshell Ranger District: Proposed Dated: January 10, 2018. 20425, faxed to (202) 376–7548, or Fee of $10 per night Chris French, emailed to Evelyn Bohor at ero@ These fees are only proposed and will Associate Deputy Chief, National Forest usccr.gov. Persons who desire be determined upon further analysis System. additional information may contact the and public comment. Editorial note: This document was Eastern Regional Office at (202) 376– DATES: Send any comments about these received for publication by the Office of the 7533. Records and documents discussed Federal Register on July 30, 2018. fee proposals by September 4, 2018 so during the meeting will be available for comments can be compiled, analyzed, [FR Doc. 2018–16560 Filed 8–1–18; 8:45 am] public viewing as they become available and shared with the Western Montana BILLING CODE 3411–15–P at https://facadatabase.gov/committee/ (or North-Central for Hay Canyon meetings.aspx?cid=254 and clicking on Campground) Bureau of Land the ‘‘Meeting Details’’ and ‘‘Documents’’ Management (BLM) Recreation Resource COMMISSION ON CIVIL RIGHTS links. Records generated from this Advisory Committees. The proposed meeting may also be inspected and effective date of implementation of Agenda and Notice of Public Meeting reproduced at the Eastern Regional proposed new fees will be no earlier of the Massachusetts Advisory Office, as they become available, both than six months after publication of this Committee before and after the meeting. Persons notice. AGENCY: Commission on Civil Rights. interested in the work of this advisory ADDRESSES: William Avey, Forest ACTION: Announcement of monthly committee are advised to go to the Supervisor, Helena—Lewis & Clark planning meetings. Commission’s website, www.usccr.gov, National Forest, 2880 Skyway Drive, or to contact the Eastern Regional Office Helena, MT 59602 or Email to wavey@ SUMMARY: Notice is hereby given, at the above phone number, email or fs.fed.us. pursuant to the provisions of the rules street address.
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Agenda it the cash deposit rate of Coastal Aqua.2 information necessary to make a In its submission, CAPL explained that preliminary finding, we find that Thursday, August 15, 2018 at 1:00 p.m. Coastal Aqua undertook a business expedited action is warranted and have (EDT) reorganization and transferred its combined the notice of initiation and I. Roll Call shrimp business to CAPL.3 The the notice of preliminary results.7 II. Hear testimony of human trafficking domestic industry did not file any In this changed circumstances review, III. Discussion on topic of study comments on this request. pursuant to section 751(b) of the Act, IV. Other Business Commerce conducted a successor-in- Scope of the Order V. Open Comment interest analysis. In making a successor- VI. Adjournment The merchandise subject to the order in-interest determination, Commerce is certain frozen warmwater shrimp.4 Dated: July 27, 2018. examines several factors, including, but The product is currently classified not limited to, changes in the following: David Mussatt, under the following Harmonized Tariff (1) Management; (2) production Supervisory Chief, Regional Programs Unit. Schedule of the United States (HTSUS) facilities; (3) supplier relationships; and [FR Doc. 2018–16507 Filed 8–1–18; 8:45 am] item numbers: 0306.17.00.03, (4) customer base.8 While no single BILLING CODE 6335–01–P 0306.17.00.06, 0306.17.00.09, factor or combination of factors will 0306.17.00.12, 0306.17.00.15, necessarily provide a dispositive 0306.17.00.18, 0306.17.00.21, indication of a successor-in-interest DEPARTMENT OF COMMERCE 0306.17.00.24, 0306.17.00.27, relationship, generally, Commerce will 0306.17.00.40, 1605.21.10.30, and consider the new company to be the International Trade Administration 1605.29.10.10. Although the HTSUS successor to the previous company if numbers are provided for convenience the new company’s resulting operation [A–533–840] and customs purposes, the written is not materially dissimilar to that of its product description remains dispositive. predecessor.9 Thus, if the record Certain Frozen Warmwater Shrimp Initiation and Preliminary Results evidence demonstrates that, with From India: Initiation and Preliminary respect to the production and sale of the Results of Antidumping Duty Changed Pursuant to section 751(b)(1) of the subject merchandise, the new company Circumstances Review Act, Commerce will conduct a changed operates as the same business entity as circumstances review upon receipt of the predecessor company, Commerce AGENCY: Enforcement and Compliance, information concerning, or a request may assign the new company the cash International Trade Administration, from, an interested party for a review of deposit rate of its predecessor.10 Department of Commerce. an antidumping duty order which In accordance with 19 CFR 351.216, SUMMARY: The Department of Commerce shows changed circumstances sufficient we preliminarily determine that CAPL (Commerce) is initiating a changed to warrant a review of the order. As is the successor-in-interest to Coastal circumstances review and preliminarily indicated in the ‘‘Background’’ section, Aqua. Record evidence, as submitted by determining that Coastal Aqua Private we received information indicating that CAPL, indicates that CAPL operates as Limited (CAPL) is the successor-in- Coastal Aqua transferred its shrimp essentially the same business entity as interest to Coastal Aqua in the context business to CAPL. This constitutes Coastal Aqua with respect to the subject of the antidumping duty order on changed circumstances warranting a merchandise.11 For the complete certain frozen warmwater shrimp review of the order.5 Therefore, in successor-in-interest analysis, including (shrimp) from India. accordance with section 751(b)(1) of the discussion of business proprietary DATES: Applicable August 2, 2018. Act and 19 CFR 351.216(d) and (e), we FOR FURTHER INFORMATION CONTACT: are initiating a changed circumstances 7 See, e.g., Pasta from Italy Preliminary Results, Brittany Bauer, AD/CVD Operations, review based upon the information 80 FR at 33480–41 (unchanged in Pasta from Italy contained in CAPL’s submission. Final Results, 80 FR at 48807). Office II, Enforcement and Compliance, 8 Section 351.221(c)(3)(ii) of See, e.g., Certain Frozen Warmwater Shrimp International Trade Administration, from India: Initiation and Preliminary Results of U.S. Department of Commerce, 1401 Commerce’s regulations permits Antidumping Duty Changed Circumstances Review, Constitution Avenue NW, Washington, Commerce to combine the notice of 81 FR 75376 (October 31, 2016) (Shrimp from India Preliminary Results) (unchanged in Certain Frozen DC 20230; telephone: 202–482–3860. initiation of a changed circumstances review and the notice of preliminary Warmwater Shrimp from India: Notice of Final SUPPLEMENTARY INFORMATION:. Results of Antidumping Duty Changed results if Commerce concludes that Circumstances Review, 81 FR 90774 (December 15, Background expedited action is warranted.6 In this 2016) (Shrimp from India Final Results)) instance, because the record contains 9 See, e.g., Shrimp from India Preliminary Results, On February 1, 2005, Commerce 81 FR at 75377 (unchanged in Shrimp from India published in the Federal Register an Final Results, 81 FR at 90774). 2 See CAPL’s Letter re: Certain Frozen Warmwater 10 Id.; see also Notice of Final Results of Changed antidumping duty order on shrimp from Shrimp form India: Request to Initiate a Successor- India.1 On June 13, 2018, CAPL Circumstances Antidumping Duty Administrative in-Interest Changed Circumstances Review for Review: Polychloroprene Rubber from Japan, 67 FR requested that, pursuant to section Coastal Aqua Private Limited, dated June 13, 2018 58, 59 (January 2, 2002); Ball Bearings and Parts 751(b)(1) of the Tariff Act of 1930, as (CAPL CCR Request). Thereof from France: Final Results of Changed- 3 amended (the Act) and 19 CFR Id. at 1. Circumstances Review, 75 FR 34688, 34689 (June 4 For a complete description of the Scope of the 18, 2010); and Circular Welded Non-Alloy Steel 351.216(b), Commerce conduct an Order, see 12th AR, and accompanying Issues and Pipe from the Republic of Korea; Preliminary expedited changed circumstances Decision Memorandum at ‘‘Scope of the Order.’’ Results of Antidumping Duty Changed review of the Order to confirm that 5 See 19 CFR 351.216(d). Circumstances Review, 63 FR 14679 (March 26, CAPL is the successor-in-interest to 6 See 19 CFR 351.221(c)(3)(ii). See also Certain 1998), unchanged in Circular Welded Non-Alloy Coastal Aqua and, accordingly, to assign Pasta from Italy: Initiation and Preliminary Results Steel Pipe from Korea; Final Results of of Antidumping Duty Changed Circumstances Antidumping Duty Changed Circumstances Review, Review, 80 FR 33480, 33480–41 (June 12, 2015) 63 FR 20572 (April 27, 1998), in which Commerce 1 See Notice of Amended Final Determination of (Pasta from Italy Preliminary Results) (unchanged found that a company which only changed its name Sales at Less Than Fair Value and Antidumping in Certain Pasta from Italy: Final Results of and did not change its operations is a successor-in- Duty Order: Certain Frozen Warmwater Shrimp Changed Circumstances Review, 80 FR 48807 interest to the company before it changed its name. from India, 70 FR 5147 (February 1, 2005) (Order). (August 14, 2015) (Pasta from Italy Final Results). 11 See CAPL CCR Request.
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information, refer to the accompanying DEPARTMENT OF COMMERCE final affirmative determinations of successor-in-interest memorandum.12 dumping and countervailable International Trade Administration subsidies,3 and the U.S. International Public Comment [A–580–878; C–580–879; A–583–856] Trade Commission (ITC)’s finding of 4 Pursuant to 19 CFR 351.310(c), any material injury, Commerce issued AD interested party may request a hearing Certain Corrosion-Resistant Steel and CVD orders on imports of CORE from Korea and an AD order on imports within 30 days of publication of this Products From the Republic of Korea of CORE from Taiwan (collectively, notice. In accordance with 19 CFR and Taiwan: Initiation of Anti- Circumvention Inquiries on the Orders).5 351.309(c)(1)(ii), interested parties may On June 12, 2018, pursuant to section submit case briefs not later than 30 days Antidumping Duty and Countervailing Duty Orders 781(b) of the Tariff Act of 1930, as after the date of publication of this amended (the Act) and 19 CFR notice. Rebuttal briefs, limited to issues AGENCY: Enforcement and Compliance, 351.225(h), the domestic producers raised in the case briefs, may be filed no International Trade Administration, submitted a request for Commerce to later than five days after the case briefs, Department of Commerce. initiate anti-circumvention inquiries to in accordance with 19 CFR 351.309(d). SUMMARY: In response to requests from determine whether entities in Vietnam Parties who submit case or rebuttal ArcelorMittal USA LLC, Nucor are circumventing the Orders by briefs are encouraged to submit with Corporation, United States Steel exporting, to the United States, CORE each argument: (1) A statement of the Corporation, Steel Dynamics, Inc. and which is completed or assembled in issue; (2) a brief summary of the California Steel Industries (collectively, Vietnam using HRS and/or CRS sourced argument; and (3) a table of the domestic producers), the from Korea and Taiwan.6 Further, authorities.13 All comments are to be Department of Commerce (Commerce) is pursuant to 19 CFR 351.225(f), the filed electronically using Enforcement initiating a country-wide anti- domestic producers request that and Compliance’s Antidumping and circumvention inquiries to determine Commerce initiate anti-circumvention Countervailing Duty Centralized whether imports of certain corrosion- inquiries and issue in conjunction with initiation of the inquiries a preliminary Electronic Service System (ACCESS) resistant steel products (CORE), which are completed in the Socialist Republic determination of circumvention of the available to registered users at https:// of Vietnam (Vietnam) from hot-rolled Orders to suspend liquidation of access.trade.gov and in the Central steel (HRS) and/or cold-rolled steel imports of CORE from Vietnam.7 Records Unit, Room B8024 of the main (CRS) products (i.e., substrate) produced Scope of the Orders Department of Commerce building, and in Taiwan and the Republic of Korea must also be served on interested (Korea), are circumventing the The products covered by these orders parties. An electronically filed antidumping duty (AD) and are certain flat-rolled steel products, document must be received successfully countervailing duty (CVD) orders on either clad, plated, or coated with in its entirety by ACCESS by 5:00 p.m. CORE from Korea and the AD order on Eastern Time on the day it is due.14 CORE from Taiwan. 3 See Certain Corrosion-Resistant Steel Products from the Republic of Korea: Final Determination of Consistent with 19 CFR 351.216(e), DATES: Applicable August 2, 2018. Sales at Less Than Fair Value and Final Affirmative we will issue the final results of this FOR FURTHER INFORMATION CONTACT: Determination of Critical Circumstances, 81 FR changed circumstances review no later 35303 (June 2, 2016); see also Certain Corrosion- Chien-Min Yang (Korea) and Shanah Resistant Steel Products from India, Italy, Republic than 270 days after the date on which Lee (Taiwan), AD/CVD Operations, of Korea and the People’s Republic of China: this review was initiated, or within 45 Office VII and III, respectively, Countervailing Duty Order, 81 FR 48387 (July 25, days if all parties agree to our Enforcement and Compliance, 2016); Certain Corrosion-Resistant Steel Products from India, Italy, the People’s Republic of China, preliminary finding. This notice is International Trade Administration, the Republic of Korea and Taiwan: Amended Final published in accordance with sections U.S. Department of Commerce, 1401 Affirmative Antidumping Determination for India 751(b)(1) and 777(i) of the Act and 19 Constitution Avenue NW, Washington, and Taiwan, and Antidumping Duty Orders, 81 FR 48390 (July 25, 2016); Countervailing Duty CFR 351.216(b), 351.221(b) and DC 20230; telephone: (202) 482–5484 Investigation of Certain Corrosion-Resistant Steel 351.221(c)(3). and (202) 482–6386, respectively. Products from Taiwan: Final Negative SUPPLEMENTARY INFORMATION: Countervailing Duty Determination, 81 FR 35299 Dated: July 26, 2018. (June 2, 2016). Gary Taverman, Background 4 See Certain Corrosion-Resistant Steel Products from China, India, Italy, Korea, and Taiwan; Deputy Assistant Secretary for Antidumping On June 3, 2015, the domestic Determinations, 81 FR 47177 (July 20, 2016). and Countervailing Duty Operations, producers filed petitions seeking the 5 See Certain Corrosion-Resistant Steel Products performing the non-exclusive duties and imposition of antidumping and from India, Italy, the People’s Republic of China, functions of the Assistant Secretary for the Republic of Korea and Taiwan: Amended Final countervailing duties on imports of Affirmative Antidumping Determination for India Enforcement and Compliance. 1 CORE from Korea and Taiwan. In and Taiwan, and Antidumping Duty Orders, 81 FR [FR Doc. 2018–16563 Filed 8–1–18; 8:45 am] response to these petitions, Commerce 48390 (July 25, 2016); Certain Corrosion-Resistant BILLING CODE 3510–DS–P initiated AD and CVD investigations on Steel Products from India, Italy, Republic of Korea 2 and the People’s Republic of China: Countervailing June 23, 2015. Following Commerce’s Duty Order, 81 FR 48387 (July 25, 2016) (Orders). 6 See the domestic producers’ letters, ‘‘Certain 1 See the domestic producers’ letter, ‘‘Petitions for Corrosion-Resistant Steel Products from Taiwan: the Imposition of Antidumping and Countervailing Request for Circumvention Ruling,’’ dated June 12, Duties: Certain Corrosion-Resistant Steel Products 2018 (Anti-Circumvention Ruling Request— from the People’s Republic of China, the Republic Taiwan); ‘‘Certain Corrosion-Resistant Steel 12 See Memorandum, ‘‘Certain Frozen Warmwater of Korea, India, Italy, and Taiwan,’’ dated June 3, Products from the Republic of Korea: Request for 2015 (collectively, petitions). Circumvention Ruling Pursuant to Section 781(b) of Shrimp from India: Initiation and Preliminary 2 See Certain Corrosion-Resistant Steel Products the Tariff Act of 1930,’’ dated June 12, 2018 (Anti- Results of Changed Circumstances Review,’’ dated from Italy, India, the People’s Republic of China, Circumvention Ruling Request—Korea). concurrently with this notice. the Republic of Korea, and Taiwan: Initiation of 7 See Anti-Circumvention Ruling Request— 13 See 19 CFR 351.309(c)(2). Less-Than-Fair-Value Investigations, 80 FR 37228 Taiwan at 22; Anti-Circumvention Ruling Request— 14 See 19 CFR 351.303(b). (June 30, 2015). Korea at 25.
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corrosion-resistant metals such as zinc, • 0.30 percent of zirconium The products subject to these orders aluminum, or zinc-, aluminum-, nickel- Unless specifically excluded, are currently classified in the or iron-based alloys, whether or not products are included in this scope Harmonized Tariff Schedule of the corrugated or painted, varnished, regardless of levels of boron and United States (HTSUS) under item laminated, or coated with plastics or titanium. numbers: 7210.30.0030, 7210.30.0060, other non-metallic substances in For example, specifically included in 7210.41.0000, 7210.49.0030, addition to the metallic coating. The this scope are vacuum degassed, fully 7210.49.0091, 7210.49.0095, products covered include coils that have stabilized (commonly referred to as 7210.61.0000, 7210.69.0000, a width of 12.7 mm or greater, interstitial-free (IF)) steels and high 7210.70.6030, 7210.70.6060, regardless of form of coil (e.g., in strength low alloy (HSLA) steels. IF 7210.70.6090, 7210.90.6000, successively superimposed layers, steels are recognized as low carbon 7210.90.9000, 7212.20.0000, spirally oscillating, etc.). The products steels with micro-alloying levels of 7212.30.1030, 7212.30.1090, covered also include products not in elements such as titanium and/or 7212.30.3000, 7212.30.5000, coils (e.g., in straight lengths) of a niobium added to stabilize carbon and 7212.40.1000, 7212.40.5000, thickness less than 4.75 mm and a nitrogen elements. HSLA steels are 7212.50.0000, and 7212.60.0000. width that is 12.7 mm or greater and recognized as steels with micro-alloying The products subject to these orders that measures at least 10 times the levels of elements such as chromium, may also enter under the following thickness. The products covered also copper, niobium, titanium, vanadium, HTSUS item numbers: 7210.90.1000, include products not in coils (e.g., in and molybdenum. 7215.90.1000, 7215.90.3000, straight lengths) of a thickness of 4.75 Furthermore, this scope also includes 7215.90.5000, 7217.20.1500, mm or more and a width exceeding 150 Advanced High Strength Steels (AHSS) 7217.30.1530, 7217.30.1560, mm and measuring at least twice the and Ultra High Strength Steels (UHSS), 7217.90.1000, 7217.90.5030, thickness. The products described above both of which are considered high 7217.90.5060, 7217.90.5090, may be rectangular, square, circular, or tensile strength and high elongation 7225.91.0000, 7225.92.0000, other shape and include products of steels. 7225.99.0090, 7226.99.0110, either rectangular or non-rectangular Subject merchandise also includes 7226.99.0130, 7226.99.0180, cross-section where such cross-section corrosion-resistant steel that has been 7228.60.6000, 7228.60.8000, and is achieved subsequent to the rolling further processed in a third country, 7229.90.1000. process, i.e., products which have been including but not limited to annealing, The HTSUS subheadings above are ‘‘worked after rolling’’ (e.g., products tempering, painting, varnishing, provided for convenience and customs which have been beveled or rounded at trimming, cutting, punching and/or purposes only. The written description the edges). For purposes of the width slitting or any other processing that of the scope of these orders is and thickness requirements referenced would not otherwise remove the dispositive. above: merchandise from the scope of the Merchandise Subject to the Anti- (1) Where the nominal and actual orders if performed in the country of Circumvention Inquiries measurements vary, a product is within manufacture of the in-scope corrosion the scope if application of either the resistant steel. These anti-circumvention inquiries nominal or actual measurement would All products that meet the written cover imports of CORE exported from place it within the scope based on the physical description, and in which the Vietnam manufactured from HRS and/or definitions set forth above, and chemistry quantities do not exceed any CRS inputs produced in Korea and (2) where the width and thickness one of the noted element levels listed Taiwan. vary for a specific product (e.g., the above, are within the scope of these The domestic producers request that thickness of certain products with non- orders unless specifically excluded. The Commerce treat CORE imports from rectangular cross-section, the width of following products are outside of and/ Vietnam as subject merchandise under certain products with non-rectangular or specifically excluded from the scope the scope of the Orders and impose cash shape, etc.), the measurement at its of these orders: deposit requirements for estimated AD greatest width or thickness applies. • Flat-rolled steel products either and CVD duties on all imports of CORE 8 Steel products included in the scope plated or coated with tin, lead, from Vietnam. of these orders are products in which: chromium, chromium oxides, both tin Initiation of Anti-Circumvention (1) Iron predominates, by weight, over and lead (‘‘terne plate’’), or both Inquiries each of the other contained elements; (2) chromium and chromium oxides (‘‘tin Section 781(b)(1) of the Act provides the carbon content is 2 percent or less, free steel’’), whether or not painted, that Commerce may find circumvention by weight; and (3) none of the elements varnished or coated with plastics or of an AD or CVD order when listed below exceeds the quantity, by other non-metallic substances in merchandise of the same class or kind weight, respectively indicated: addition to the metallic coating; • subject to the order is completed or 2.50 percent of manganese, or • Clad products in straight lengths of • 3.30 percent of silicon, or assembled in a foreign country other 4.7625 mm or more in composite • 1.50 percent of copper, or than the country to which the order thickness and of a width which exceeds • 1.50 percent of aluminum, or applies. In conducting an anti- 150 mm and measures at least twice the • 1.25 percent of chromium, or circumvention inquiry, under section thickness; and • 0.30 percent of cobalt, or 781(b)(1) of the Act, Commerce relies on • Certain clad stainless flat-rolled • 0.40 percent of lead, or the following criteria: (A) Merchandise • products, which are three-layered 2.00 percent of nickel, or imported into the United States is of the • corrosion-resistant flat-rolled steel 0.30 percent of tungsten (also called same class or kind as any merchandise products less than 4.75 mm in wolfram), or produced in a foreign country that is the • 0.80 percent of molybdenum, or composite thickness that consist of a • flat-rolled steel product clad on both 0.10 percent of niobium (also called 8 See Anti-Circumvention Ruling Request—Korea columbium), or sides with stainless steel in a 20%– at 3; Anti-Circumvention Ruling Request—Taiwan • 0.30 percent of vanadium, or 60%–20% ratio. at 22.
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subject of an antidumping or of CORE, stated in a response to CORE from Vietnam increased more countervailing duty order or finding; (B) Commerce in the previously completed than ten-fold between 2015 and 2016.19 before importation into the United anti-circumvention inquiry with regard C. Minor or Insignificant Process States, such imported merchandise is to Chinese substrate finished in Vietnam completed or assembled in another that it ‘‘produces its CORE only with The domestic producers maintain that foreign country from merchandise hot-rolled steel from Japan and the process for completing CORE from which is subject to the order or Taiwan.’’ 14 The domestic producers HRS and CRS is minor or insignificant. merchandise which is produced in the assert that Commerce’s recent Under section 781(b)(2) of the Act, Commerce considers five factors to foreign country that is subject to the affirmative decision in CORE China determine whether the process of order; (C) the process of assembly or Circumvention Final that Chinese HRS assembly or completion in the foreign completion in the foreign country and CRS are used to produce CORE in country is minor or insignificant: (A) referred to in section (B) is minor or Vietnam provides more incentive for insignificant; (D) the value of the The level of investment in the foreign Vietnamese CORE producers to shift to merchandise produced in the foreign country in which the merchandise is Taiwanese-produced inputs.15 country to which the AD or CVD order completed or assembled; (B) the level of applies is a significant portion of the As discussed above, the domestic research and development in the foreign total value of the merchandise exported producers assert that because Vietnam country in which the merchandise is to the United States; and (E) the has little capacity to produce HRS completed or assembled; (C) the nature administering authority determines that domestically, Vietnamese CORE of the production process in the foreign action is appropriate to prevent evasion producers rely heavily on HRS imports. country in which the merchandise is of such order or finding. As discussed In support of this assertion, the completed or assembled; (D) the extent below, domestic producers provided domestic producers presented evidence of production facilities in the foreign evidence with respect to these criteria. showing increasing and substantial country in which the merchandise is completed or assembled, and (E) A. Merchandise of the Same Class or imports of Korean and Taiwanese HRS 16 whether the value of the processing Kind into Vietnam between 2015 and 2017. Specifically, the domestic producers performed in the foreign country in The domestic producers claim that contend that the surge in imports of which the merchandise is completed or CORE exported to the United States is HRS from Taiwan is evidence that, as assembled represents a small proportion the same class or kind as that covered Commerce began its anti-circumvention of the value of the merchandise by the Orders in these inquiries.9 The investigation of Vietnamese CORE imported into the United States. domestic producers provided evidence produced from Chinese substrate, to show that the merchandise from (1) Level of Investment Taiwanese steel producers stepped in to Vietnam enters the United States under The domestic producers contend that fill that gap.17 the same tariff classification as subject the level of investment necessary to merchandise.10 As to the imports of HRS and CRS to complete CORE in Vietnam is less than Vietnam from Korea, the domestic B. Completion of Merchandise in a the level of investment required to producers provided information Foreign Country construct a factory that can produce showing those shipments increased HRS and CRS in Korea and Taiwan.20 In The domestic producers presented from 879,537 tons in 2014 to nearly 1.1 support of their contention, the evidence demonstrating how CORE in million tons in 2015, continued to grow domestic producers compared the Vietnam is produced from HRS or CRS in 2016, and remained substantial in investment necessary to install a cold- produced and imported from Taiwan 2017.18 Additionally, the domestic rolling and coating facility with the 11 and Korea. Further, the domestic producers also provided information investment necessary to produce HRS producers provided evidence that demonstrating that imports into the using a fully-integrated production Vietnam had no capacity to produce United States of CORE from Korea and process for melting iron and casting hot-rolled steel until very recently, May steel.21 The domestic producers rely on 12 Taiwan significantly decreased after the 2017. The domestic producers claim imposition of the Orders. Commerce’s level of investment that this mill is ‘‘still in the ramp-up Simultaneously, the domestic producers findings in CORE China Circumvention phase,’’ and thus, ‘‘most CORE that is provided information demonstrating Final, which found that Vietnamese produced in Vietnam must still be made CORE that uses Chinese substrate 13 that imports into the United States of from imported substrate.’’ circumvents the Chinese CORE order.22 Regarding Taiwan, the domestic 14 In that proceeding, Commerce pointed producers note that China Sumikin See Anti-Circumvention Ruling Request— Taiwan at 8, citing CSVC’s letter, ‘‘Certain to record evidence showing the cost to Vietnam (CSVC), one of Vietnam’s Corrosion-Resistant Steel Products from China— build an integrated steel mill in China principle manufacturers and exporters Response to Petitioners’ Circumvention to produce HRS was in the range of 250 Allegations,’’ dated October 20, 2016. million to 10 billion U.S. dollars (USD) 9 See Anti-Circumvention Ruling Request— 15 See Anti-Circumvention Ruling Request— Taiwan at 8; Anti-Circumvention Ruling Request— Taiwan at 8 (citing Certain Corrosion-Resistant Korea at 8. See also sections 781(b)(1)(A)(i) and (iii) Steel Products from the People’s Republic of China: 19 See Anti-Circumvention Ruling Request— of the Act. Affirmative Final Determination of Circumvention Taiwan at 9–11, Exhibit 1; Anti-Circumvention 10 See Anti-Circumvention Ruling Request— of the Antidumping Duty and Countervailing Duty Ruling Request—Korea at 24, Exhibit 2. Taiwan at Exhibit 4; Anti-Circumvention Ruling Orders, 83 FR 23895 (May 23, 2018) (CORE China 20 See Anti-Circumvention Ruling Request— Request—Korea at Exhibit 1. Circumvention Final) and accompanying Issues and Taiwan at 11; Anti-Circumvention Ruling Request— 11 See Anti-Circumvention Ruling Request— Decision Memorandum (CORE China Korea at 11–14. Taiwan at 4–5, 8–9; Anti-Circumvention Ruling Circumvention IDM). 21 See Anti-Circumvention Ruling Request— Request—Korea at 9–10. 16 . See Anti-Circumvention Ruling Request— Taiwan at 11–12, Exhibits 9–18; Anti- 12 See Anti-Circumvention Ruling Request— Taiwan at 10–11, Exhibit 9; Anti-Circumvention Circumvention Ruling Request—Korea at 11–14, Taiwan at 9–10, Exhibits 5–7; Anti-Circumvention Ruling Request—Korea at 8–10, Exhibits 2, 4. Exhibits 9–11. Ruling Request—Korea at 9, Exhibit 3. 17 See Anti-Circumvention Ruling Request— 22 See Anti-Circumvention Ruling Request— 13 See Anti-Circumvention Ruling Request— Taiwan at 10. Taiwan at 11–12, Exhibits 9–18; Anti- Taiwan at 9–10, Exhibits 6–8; Anti-Circumvention 18 See Anti-Circumvention Ruling Request— Circumvention Ruling Request—Korea at 11–14, Ruling Request—Korea at 9, Exhibit 3. Korea at 8–9; Exhibit 2. Exhibits 9–11.
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and that the cost to build a cold-rolling (R&D) needed to produce steel substrate, expenditures of POSCO Korea, the mill in Vietnam to produce CRS from such as HRS, is greater than the R&D largest steel producer in Korea, and HRS substrate was as low as 28 million specifically needed to produce CORE suggest that the level of R&D in Vietnam USD.23 Regarding Taiwan, the domestic from the substrate.30 The domestic for CORE production is minimal to non- producers also rely on Commerce’s producers cite to Commerce’s findings existent.38 findings in CORE China Circumvention in CORE China Circumvention Prelim, Final to explain that the cost of building where Commerce found that the (3) Nature of Production Process a basic steel mill in Taiwan is as great evidence provided by Vietnamese CORE According to the domestic producers, as China, or much larger given Taiwan’s producers ‘‘did not support their claims the completion process undertaken by higher level of development and GDP.24 that their R&D programs and level of Vietnamese producers of CORE is less Specifically, the domestic producers expenditures are significant.’’ 31 The complex and significant than explain that the property, plant, and domestic producers contend that, rather manufacturing the steel substrate in equipment of China Steel Corporation than developing its own technology, the Taiwan and Korea.39 Citing Commerce’s (CSC), a Taiwanese steel manufacturer Vietnamese steel industry uses finding in CORE China Circumvention that owns 56 percent of Vietnamese technology developed abroad.32 As an Final, the domestic producers contend CORE producer, CSVC, was valued at example of Vietnamese producers using that while the process of galvanizing $14 billion USD at the end of 2014.25 technology developed abroad, the steel is not trivial, it is insignificant Conversely, the domestic producers domestic producers provided evidence compared to the greater steel-making provide evidence to demonstrate that a that Vietnamese producer Ton Dong A processes that include smelting iron, smaller level of investment, ranging Corp installed European and Japanese making, casting, and hot-rolling steel.40 from $70 million to $1.15 billion USD, equipment in its new CORE facility.33 The galvanizing process is the end of is needed to build a coating mill in Furthermore, the domestic producers the production line, and it adds a small Vietnam.26 Relying on the cost of explain that CSVC, the sole mill in part of the total value, requires little building an integrated steel mill in Vietnam with galvanneal (the process of capital and a small proportion of input Korea—for example, Hyundai Steel galvanizing followed by annealing) by weight and volume.41 Thus, the invested 5 billion USD in 2010 for its capability needed for auto and domestic producers explain that even integrated steel mill—the domestic appliance use, is a joint venture relatively sophisticated galvanizing producers claim that the level of between Taiwanese and Japanese parent operations will involve less intensive investment required in Vietnam to companies.34 The domestic producers processing than processing steel complete the production of CORE by provide various evidence to support the substrate.42 rolling and coating is far less than the contention that steel mills in Vietnam investment required to establish an relied on foreign technology and cheap (4) Extent of Production Facilities in integrated mill to produce the hot-rolled domestic labor.35 Moreover, the Vietnam steel substrate.27 domestic producers contend that, Moreover, the domestic producers Finally, the domestic producers because there is greater focus in contend that more capital is required to provide evidence that the cost of producing products for building build an integrated steel mill that building a coated steel sheet factory in construction in Vietnam, there is little includes blast furnace, casting, and hot Vietnam was a fraction of the amount of incentive for Vietnamese CORE rolling, as compared to building a cold- investment needed to build a basic steel producers to invest in R&D for more rolling and coating facility.43 A larger mill.28 The domestic producers advanced products.36 In contrast, the amount of capital also represent larger therefore conclude that in comparison domestic producers point to global R&D production facilities, more equipment to the level of investment necessary to efforts on behalf of CSC, the largest steel and workers. As an example, the build an integrated steel mill in Korea company in Taiwan, including domestic producers explain that CSVC and Taiwan, the level of investment to employing highly-skilled researchers employs 800 employees in Vietnam build a cold-rolling mill in Vietnam is and collaborating with Taiwan’s leading whereas its Taiwanese parent, CSC, has 29 insignificant. universities.37 Similarly, the domestic 7949 employees.44 producers compare the R&D (2) Level of Research and Development (5) Value of Processing in Vietnam The domestic producers assert that 30 See Anti-Circumvention Ruling Request— The domestic producers point to the level of research and development Taiwan at 14. Commerce’s finding in CORE China 31 Id. at 15, citing CORE China Anticircumvention Circumvention Prelim to contend that 23 See Anti-Circumvention Ruling Request— PDM at 19. Taiwan at 12–13, citing Certain Corrosion-Resistant 32 See Anti-Circumvention Ruling Request— ‘‘the value of the materials, labor, Steel Products from the People’s Republic of China: Taiwan at 15–16, Exhibits 5, 8, 14; Anti- energy, overhead, and other items Affirmative Preliminary Determination of Anti- Circumvention Ruling Request—Korea at 14–16 and consumed in the production of CORE Circumvention Inquiries on the Antidumping Duty Exhibits 10, 12–15. and Countervailing Duty Orders, 82 FR 58170 33 See Anti-Circumvention Ruling Request— 38 (December 11, 2017) (CORE China Circumvention Taiwan at 15, Exhibit 14; Anti-Circumvention See Anti-Circumvention Ruling Request— Prelim) and accompanying Preliminary Decision Ruling Request—Korea at 14–16, Exhibits 10, 12– Korea at 15–16, Exhibit 15. Memorandum (CORE China Circumvention PDM) at 15. The domestic producers cited several other 39 See Anti-Circumvention Ruling Request— 17; see also CORE China Circumvention IDM at 32. examples, including CSVC, Hoa Phat Group (HPG) Taiwan at 16–18; Anti-Circumvention Ruling 24 See Anti-Circumvention Ruling Request— and Thai Nguyen Iron and Steel Corporation Request—Korea at 16–21. Taiwan at 13, Exhibits 10, 12, and 13. (TISCO). 40 See Anti-Circumvention Ruling Request— 25 Id. 34 See Anti-Circumvention Ruling Request— Taiwan at 17; see also CORE China Circumvention 26 See Anti-Circumvention Ruling Request— Taiwan at 15, Exhibit 14; Anti-Circumvention IDM at 20–21. Taiwan at 14, Exhibits 14, 15; Anti-Circumvention Ruling Request—Korea at 14–16, Exhibits 10, 12– 41 See Anti-Circumvention Ruling Request— Ruling Request—Korea at 11–14, Exhibits 9–11. 15. Taiwan at 17. 27 See Anti-Circumvention Ruling Request— 35 See Anti-Circumvention Ruling Request— 42 Id. Korea at 13–14, Exhibits 8–11. Taiwan at Exhibit 4; Anti-Circumvention Ruling 43 See Anti-Circumvention Ruling Request— 28 See Anti-Circumvention Ruling Request— Request—Korea at 15 and Exhibit 13. Taiwan at 17–18 (Taiwan); Anti-Circumvention Taiwan at 14 Exhibit 16. 36 See Anti-Circumvention Ruling Request— Ruling Request—Korea at 17–20. 29 See Anti-Circumvention Ruling Request— Taiwan at Exhibit 5. 44 See Anti-Circumvention Ruling Request— Korea at 14, Exhibits 9–11. 37 Id. at 16, Exhibits 15,16. Taiwan at 18 and Exhibit 21.
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represents an insignificant value when to assemble or complete in the foreign produced in and/or exported from compared to the value of the country the merchandise that is Vietnam is of the same class or kind as merchandise sold to the United subsequently imported into the United CORE produced in Korea and Taiwan, States.’’ 45 Moreover, the domestic States, and (C) whether imports into the which is subject to the Orders.56 producers maintain that Commerce’s foreign country of the merchandise . . . Consequently, Commerce finds that the quantitative and qualitative finding that have increased after the initiation of the domestic producers provided sufficient the finishing process in Vietnam adds investigation which resulted in the information in their requests regarding only a small part of the total value of the issuance of such order or finding.’’ the class or kind of merchandise to CORE exported to the United States Regarding patterns of trade, the support the initiation of these anti- applies to Korean and Taiwanese domestic producers contend that circumvention inquiries. substrate.46 As the Korean and exports of CORE from Vietnam to the With regard to completion or Taiwanese steel industries have more United States skyrocketed as exports assembly of merchandise in a foreign sophisticated and advanced technology from Korea and Taiwan declined in the country, pursuant to section 781(b)(1)(B) than those in either China and Vietnam, period after the filing of the petition in of the Act, the domestic producers also the domestic producers assert that the the underlying investigations, as presented information to Commerce percentage of value added in Vietnam to compared to the period before it.51 The indicating that the CORE exported from Taiwanese and Korean substrate is domestic producers further explain that Vietnam to the United States is likely to be lower than it was in CORE while recently exports of CORE from produced in Vietnam using HRS and China Circumvention Final.47 Based on Vietnam to the United States have CRS from Korea and Taiwan.57 We find these assertions, the domestic producers declined slightly, this decline is largely that the information presented by the contend that every statutory factor that due to Commerce’s investigation of domestic producers regarding this Commerce has considered in making its circumvention of the AD and CVD criterion supports its request to initiate affirmative finding in CORE China orders on CORE the China.52 The these anti-circumvention inquiries. Circumvention Final similarly applies to domestic producers also point to the Commerce finds that the domestic both Korea and Taiwan.48 fact that exports of HRS from Korea and producers sufficiently addressed the Additionally, the domestic producers Taiwan to Vietnam also increased after factors described in sections cite the recent ITC investigation of the underlying investigations 781(b)(1)(C) and 781(b)(2) of the Act CORE from China, India, Italy, Korea commenced.53 Finally, regarding regarding whether the process of and Taiwan, stating that the information affiliation, the domestic producers point assembly or completion of CORE in contained therein demonstrates that the out that major Vietnamese CORE Vietnam is minor or insignificant. In cost of Taiwanese and Korean HRS producer CVSC is majority-owned by particular, information in the domestic inputs accounts for 69 to 79 percent of Taiwan’s largest steel manufacturer, producers’ submission indicates that: (1) the price of CORE.49 Additionally, the CSC.54 Similarly, the domestic The level of investment in coating domestic producers explain that the producers assert that Korea’s largest facilities is minimal when compared price of Taiwanese and Korean CRS steel manufacturer POSCO has 13 with the level of investment for basic inputs accounts for 84 to 90 percent of Vietnamese affiliates and offices, steel making facilities; 58 (2) there is the price of CORE.50 including POSCO VIETNAM, and has little or no research and development the capacity to produce 700,000 tons of taking place in Vietnam; 59 (3) the CORE D. Additional Factors To Consider in cold-rolled steel.55 production processes involve the simple Determining Whether Action Is processing of HRS or CRS from a Necessary Analysis of the Allegations country subject to the Orders, (4) the Section 781(b)(3) of the Act directs Based on our analysis of the domestic CORE production facilities in Vietnam Commerce to consider additional factors producer’s anti-circumvention are more limited compared to HRS in determining whether to include allegations and the information facilities in Korea and Taiwan; 60 and (5) merchandise assembled or completed in provided therein, Commerce determines the value of the processing performed in a foreign country within the scope of the that anti-circumvention inquiries of the Vietnam is a small proportion of the order, such as: ‘‘(A) The pattern of trade, AD and CVD orders on CORE from value of the CORE imported into the including sourcing patterns, (B) whether Korea and Taiwan are warranted. United States.61 the manufacturer or exporter of the With regard to whether the With respect to the value of the merchandise . . . is affiliated with the merchandise from Vietnam is of the merchandise produced in Korea and person who uses the merchandise . . . same class or kind as the merchandise Taiwan, pursuant to section 781(b)(1)(D) produced in Korea and Taiwan, the of the Act, the domestic producers 45 Id. at 18, citing CORE China Circumvention domestic producers presented PDM at 21. information to Commerce indicating 56 See Anti-Circumvention Ruling Request— 46 See Anti-Circumvention Ruling Request— that, pursuant to section 781(b)(1)(A) of Taiwan at 8–10, Exhibit 4; Anti-Circumvention Taiwan at 19, citing CORE China Circumvention Ruling Request—Korea at 8, Exhibit 1. PDM at 22 and CORE China Circumvention IDM at the Act, the merchandise being 57 See Anti-Circumvention Ruling Request— 23; Anti-Circumvention Ruling Request—Korea at Taiwan at 20–21, Exhibits 1, 4, 9; Anti- 21–22, citing CORE China Circumvention IDM at 9 51 See Anti-Circumvention Ruling Request— Circumvention Ruling Request—Korea at 8–10, and CORE China Circumvention PDM at 21. Taiwan at 21; Anti-Circumvention Ruling Request— Exhibits 2–4. 47 See Anti-Circumvention Ruling Request— Korea at 24, Exhibit 2. 58 See Anti-Circumvention Ruling Request— Taiwan at 20 and Exhibit 8; Anti-Circumvention 52 See Anti-Circumvention Ruling Request— Taiwan at 11–14; Anti-Circumvention Ruling Ruling Request—Korea at 22–24, Exhibits 14, 17. Taiwan at 21; Anti-Circumvention Ruling Request— Request—Korea at 10–11. 48 See Anti-Circumvention Ruling Request— Korea at 24, Exhibit 2. 59 See Anti-Circumvention Ruling Request— Taiwan at 21; Anti-Circumvention Ruling Request— 53 See Anti-Circumvention Ruling Request— Taiwan at 14–16; Anti-Circumvention Ruling Korea at 24. Taiwan at 21; Anti-Circumvention Ruling Request— Request—Korea at 14–16. 49 See Anti-Circumvention Ruling Request— Korea at 24, Exhibit 2. 60 See Anti-Circumvention Ruling Request— Taiwan at 20, Exhibit 1; Anti-Circumvention Ruling 54 See Anti-Circumvention Ruling Request— Taiwan at 16–18; Anti-Circumvention Ruling Request—Korea at 23–24. Taiwan at 21; Anti-Circumvention Ruling Request— Request—Korea at 16–21. 50 See Anti-Circumvention Ruling Request— Korea at 24, Exhibit 2. 61 See Anti-Circumvention Ruling Request— Taiwan at 20, Exhibit 1; Anti-Circumvention Ruling 55 See Anti-Circumvention Ruling Request— Taiwan at 18–21; Anti-Circumvention Ruling Request—Korea at 23–24. Korea at 24–25. Request—Korea at 21–24.
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relied on published sources, the Act, which may include adverse determination within 300 days of the Commerce’s prior conclusions in CORE inferences, pursuant to section 776(b) of date of publication of this initiation. China Circumvention Final, and the Act. This notice is published in information presented in the ‘‘minor or While we believe sufficient factual accordance with 19 CFR 351.225(f). insignificant process’’ portion of their information has been submitted by the Dated: July 27, 2018. domestic producers supporting their anti-circumvention allegations to Gary Taverman, indicate that the value of the substrate request for inquiries, we do not find that (HRS and CRS manufactured in Korea the record supports the simultaneous Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations, and Taiwan) is a significant portion of issuance of a preliminary ruling. Such performing the non-exclusive functions and the total value of the CORE exported inquiries are by their nature typically duties of the Assistant Secretary for from Vietnam to the United States.62 We complicated and can require Enforcement and Compliance. find that this information adequately information regarding production in [FR Doc. 2018–16565 Filed 8–1–18; 8:45 am] both the country subject to the order meets the requirements of this factor, as BILLING CODE 3510–DS–P discussed above, for the purposes of and the third country completing the initiating these anti-circumvention product. As noted above, Commerce inquiries. intends to request additional DEPARTMENT OF COMMERCE Finally, with respect to the additional information regarding the statutory factors listed under section 781(b)(3) of criteria to determine whether shipments International Trade Administration the Act, we find that the domestic of CORE from Vietnam are producers presented evidence circumventing the AD and CVD orders [A–580–881, C–580–882] indicating that shipments of CORE from on CORE from Korea and the AD order Certain Cold-Rolled Steel Flat Products Vietnam to the United States increased on CORE from Taiwan. Thus, with From the Republic of Korea: Initiation 63 since the imposition of the Orders and further development of the record of Anti-Circumvention Inquiries on the that shipments of HRS from Korea and required before a preliminary ruling can Antidumping Duty and Countervailing Taiwan to Vietnam also increased since be issued, Commerce does not find it Duty Orders the Orders took effect.64 Furthermore, appropriate to issue a preliminary ruling we find that the domestic producers at this time. AGENCY: Enforcement and Compliance, have presented evidence that the largest International Trade Administration, Notification to Interested Parties Korean manufacturer of CRS (POSCO) is Department of Commerce. affiliated with a company in Vietnam In accordance with 19 CFR SUMMARY: In response to requests from that completes the merchandise.65 We 351.225(e), Commerce finds that the ArcelorMittal USA LLC, Nucor also find that the domestic producers issue of whether a product is included Corporation, United States Steel provided sufficient evidence to within the scope of an order cannot be Corporation, Steel Dynamics, Inc. and demonstrate that a Taiwanese steel determined based solely upon the California Steel Industries (collectively, manufacturer, CSC, owns 56 percent of application and the descriptions of the the domestic producers), the Vietnamese CORE producer, CSVC.66 merchandise. Accordingly, Commerce Department of Commerce (Commerce) is Accordingly, we are initiating formal will notify by mail all parties on initiating a country-wide anti- anti-circumvention inquiries concerning Commerce’s scope service list of the circumvention inquiries to determine the AD and CVD orders on CORE from initiation of these anti-circumvention whether imports of certain cold-rolled Korea and the AD order on CORE from inquiries. In addition, in accordance steel flat products (CRS), which are Taiwan, pursuant to section 781(b) of with 19 CFR 351.225(f)(1)(i) and (ii), in completed in the Socialist Republic of the Act. this notice of initiation issued under 19 Vietnam (Vietnam) from hot-rolled steel As these inquiries are initiated on a CFR 351.225(e), we have included a (HRS) produced in the Republic of country-wide basis (i.e., not exclusive to description of the product that is the Korea (Korea), are circumventing the the producers mentioned immediately subject of these anti-circumvention antidumping duty (AD) and above), Commerce intends to issue inquiries (i.e., CORE that contains the countervailing duty (CVD) orders on questionnaires to solicit information characteristics as provided in the scope CRS from Korea. from the Vietnamese producers and of the Orders) and an explanation of the DATES: Applicable August 2, 2018. exporters concerning their shipments of reasons for Commerce’s decision to CORE to the United States and the initiate an anti-circumvention inquiry, FOR FURTHER INFORMATION CONTACT: origin of any imported HRS and CRS as provided above. Tyler Weinhold or Fred Baker, AD/CVD being processed into CORE. A In accordance with 19 CFR Operations, Office VI, Enforcement and company’s failure to respond 351.225(l)(2), if Commerce issues a Compliance, International Trade completely to Commerce’s requests for preliminary affirmative determination, Administration, U.S. Department of information may result in the we will then instruct U.S. Customs and Commerce, 1401 Constitution Avenue application of partial or total facts Border Protection to suspend NW, Washington, DC 20230; telephone: available, pursuant to section 776(a) of liquidation and require a cash deposit of (202) 482–1121 or (202) 482–2924, estimated antidumping and respectively. 62 See Anti-Circumvention Ruling Request— countervailing duties, at the applicable SUPPLEMENTARY INFORMATION: Taiwan at Exhibits 1, 4, and 9; Anti-Circumvention rate, for each unliquidated entry of the Ruling Request—Korea at Exhibits 14, 17. merchandise at issue, entered or Background 63 See Anti-Circumvention Ruling Request— Taiwan at 9–10, Exhibit 4; Anti-Circumvention withdrawn from warehouse for On July 28, 2015, AK Steel Ruling Request—Korea at 24 and Exhibit 2. consumption on or after the date of Corporation, ArcelorMittal USA LLC, 64 See Anti-Circumvention Ruling Request— initiation of the inquiry. Commerce will Nucor Corporation, Steel Dynamics, Taiwan. at 10–11, Exhibit 9; Anti-Circumvention establish a schedule for questionnaires Inc., and the United States Steel Ruling Request—Korea at 24, Exhibit 2. and comments on the issues. In Corporation (the domestic producers) 65 See Anti-Circumvention Ruling Request— Korea at 24–25, Exhibit 19. accordance with section 781(f) of the filed petitions seeking the imposition of 66 See Anti-Circumvention Ruling Request— Act and 19 CFR 351.225(f)(5), antidumping and countervailing duties Taiwan at 11, Exhibit 10. Commerce intends to issue its final on imports of CRS from Brazil, the
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People’s Republic of China, India, liquidation of imports of CRS from • 0.40 percent of lead, or Japan, Korea, the Netherlands, Russia, Vietnam.7 • 2.00 percent of nickel, or and the United Kingdom.1 In response • 0.30 percent of tungsten (also called Scope of the Orders to these petitions, Commerce initiated wolfram), or AD and CVD investigations on August The products covered by the orders • 0.80 percent of molybdenum, or 24, 2015.2 Following Commerce’s final are certain cold-rolled (cold-reduced), • 0.10 percent of niobium (also called affirmative determinations of dumping flat-rolled steel products, whether or not columbium), or and countervailable subsidies,3 and the annealed, painted, varnished, or coated • 0.30 percent of vanadium, or U.S. International Trade Commission with plastics or other non-metallic • 0.30 percent of zirconium (ITC)’s finding of material injury,4 substances. The products covered do Unless specifically excluded, Commerce issued AD and CVD orders not include those that are clad, plated, products are included in this scope on imports of CRS from Korea or coated with metal. The products regardless of levels of boron and (collectively, Orders).5 covered include coils that have a width titanium. On June 12, 2018, pursuant to section or other lateral measurement (‘‘width’’) For example, specifically included in 781(b) of the Tariff Act of 1930, as of 12.7 mm or greater, regardless of form this scope are vacuum degassed, fully amended (the Act) and 19 CFR of coil (e.g., in successively stabilized (commonly referred to as 351.225(h), the domestic producers superimposed layers, spirally interstitial-free (IF)) steels, high strength submitted a request for Commerce to oscillating, etc.). The products covered low alloy (HSLA) steels, motor initiate anti-circumvention inquiries to also include products not in coils (e.g., lamination steels, Advanced High determine whether entities in Vietnam in straight lengths) of a thickness less Strength Steels (AHSS), and Ultra High are circumventing the Orders by than 4.75 mm and a width that is 12.7 Strength Steels (UHSS). If steels are exporting, to the United States, CRS mm or greater and that measures at least recognized as low carbon steels with which is completed or assembled in 10 times the thickness. The products micro-alloying levels of elements such Vietnam using HRS sourced from covered also include products not in as titanium and/or niobium added to Korea.6 Further, pursuant to 19 CFR coils (e.g., in straight lengths) of a stabilize carbon and nitrogen elements. 351.225(f), the domestic producers thickness of 4.75 mm or more and a HSLA steels are recognized as steels request that Commerce initiate anti- width exceeding 150 mm and measuring with micro-alloying levels of elements circumvention inquiries and issue in at least twice the thickness. The such as chromium, copper, niobium, conjunction with initiation of the products described above may be titanium, vanadium, and molybdenum. inquiries a preliminary determination of rectangular, square, circular, or other Motor lamination steels contain micro- circumvention of the Orders to suspend shape and include products of either alloying levels of elements such as rectangular or non-rectangular cross- silicon and aluminum. AHSS and UHSS section where such cross-section is are considered high tensile strength and 1 See Petitioners’ Letter, ‘‘Certain Cold-Rolled Steel Flat Products from Brazil, China, India, Japan, achieved subsequent to the rolling high elongation steels, although AHSS Korea, Netherlands, Russia, and the United process, i.e., products which have been and UHSS are covered whether or not Kingdom,’’ dated July 28, 2015. ‘‘worked after rolling’’ (e.g., products they are high tensile strength or high 2 See Certain Cold-Rolled Steel Flat Products from which have been beveled or rounded at elongation steels. Brazil, India, the People’s Republic of China, the Subject merchandise includes cold- Republic of Korea, and the Russian Federation: the edges). For purposes of the width Initiation of Countervailing Duty Investigations, 80 and thickness requirements referenced rolled steel that has been further FR 51206 (August 24, 2015); and Certain Cold- above: processed in a third country, including Rolled Steel Flat Products from Brazil, the People’s (1) Where the nominal and actual but not limited to annealing, tempering, Republic of China, India, Japan, the Republic of measurements vary, a product is within painting, varnishing, trimming, cutting, Korea, the Netherlands, the Russian Federation, and the United Kingdom: Initiation of Less-Than- the scope if application of either the punching, and/or slitting, or any other Fair-Value Investigations, 80 FR 51198 (August 24, nominal or actual measurement would processing that would not otherwise 2015). place it within the scope based on the remove the merchandise from the scope 3 See Certain Cold-Rolled Steel Flat Products from definitions set forth above, and of the orders if performed in the country the Republic of Korea: Final Determination of Sales (2) where the width and thickness at Less Than Fair Value, 81 FR 49953 (July 29, of manufacture of the cold-rolled steel. 2016); and Countervailing Duty Investigation of vary for a specific product (e.g., the All products that meet the written Certain Cold-Rolled Steel Flat Products from the thickness of certain products with non- physical description, and in which the Republic of Korea: Final Affirmative Determination, rectangular cross-section, the width of chemistry quantities do not exceed any 81 FR 49943 (July 29, 2016). certain products with non-rectangular one of the noted element levels listed 4 See Cold-Rolled Steel Flat Products from Brazil, India, Korea, Russia, and the United Kingdom; shape, etc.), the measurement at its above, are within the scope of the orders Determinations, 81 FR 63806 (September 16, 2016). greatest width or thickness applies. unless specifically excluded. The 5 See Certain Cold-Rolled Steel Flat Products from Steel products included in the scope following products are outside of and/ Brazil, India, the Republic of Korea, and the United of the orders are products in which: (1) or specifically excluded from the scope Kingdom: Amended Final Affirmative Antidumping Iron predominates, by weight, over each Determinations for Brazil and the United Kingdom of the orders: • 8 and Antidumping Duty Orders, 81 FR 64432 of the other contained elements; (2) the Ball bearing steels; (September 20, 2016) (AD Order); see also Certain carbon content is 2 percent or less, by Cold-Rolled Steel Flat Products from Brazil, India, weight; and (3) none of the elements 8 Ball bearing steels are defined as steels which and the Republic of Korea: Amended Final listed below exceeds the quantity, by contain, in addition to iron, each of the following Affirmative Countervailing Duty Determination and weight, respectively indicated: elements by weight in the amount specified: (i) Not Countervailing Duty Order (the Republic of Korea) • less than 0.95 nor more than 1.13 percent of carbon; and Countervailing Duty Orders (Brazil and India), 2.50 percent of manganese, or (ii) not less than 0.22 nor more than 0.48 percent 81 FR 64436 (September 20, 2016) (CVD Order) • 3.30 percent of silicon, or of manganese; (iii) none, or not more than 0.03 (collectively Orders). • 1.50 percent of copper, or percent of sulfur; (iv) none, or not more than 0.03 6 See the Domestic Producers’ Letter, ‘‘Certain • 1.50 percent of aluminum, or percent of phosphorus; (v) not less than 0.18 nor Cold-Rolled Steel Flat Products from the Republic • 1.25 percent of chromium, or more than 0.37 percent of silicon; (vi) not less than of Korea: Request for Circumvention Ruling • 1.25 nor more than 1.65 percent of chromium; (vii) Pursuant to Section 781(b) of the Tariff Act of 0.30 percent of cobalt, or none, or not more than 0.28 percent of nickel; (viii) 1930,’’ dated June 12, 2018 (Anti-Circumvention none, or not more than 0.38 percent of copper; and Ruling Request). 7 Id., at 25. Continued
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• Tool steels; 9 7209.17.0060, 7209.17.0070, completed or assembled in another • Silico-manganese steel; 10 7209.17.0091, 7209.18.1530, foreign country from merchandise • Grain-oriented electrical steels 7209.18.1560, 7209.18.2510, which is subject to the order or (GOES) as defined in the final 7209.18.2520, 7209.18.2580, merchandise which is produced in the determination of the U.S. Department of 7209.18.6020, 7209.18.6090, foreign country that is subject to the Commerce in Grain-Oriented Electrical 7209.25.0000, 7209.26.0000, order; (C) the process of assembly or Steel From Germany, Japan, and 7209.27.0000, 7209.28.0000, completion in the foreign country Poland.11 7209.90.0000, 7210.70.3000, referred to in section (B) is minor or • Non-Oriented Electrical Steels 7211.23.1500, 7211.23.2000, insignificant; (D) the value of the (NOES), as defined in the antidumping 7211.23.3000, 7211.23.4500, merchandise produced in the foreign orders issued by the U.S. Department of 7211.23.6030, 7211.23.6060, country to which the AD or CVD order Commerce in Non-Oriented Electrical 7211.23.6090, 7211.29.2030, applies is a significant portion of the Steel From the People’s Republic of 7211.29.2090, 7211.29.4500, total value of the merchandise exported China, Germany, Japan, the Republic of 7211.29.6030, 7211.29.6080, to the United States; and (E) the Korea, Sweden, and Taiwan.12 7211.90.0000, 7212.40.1000, administering authority determines that The products subject to the orders are 7212.40.5000, 7225.50.6000, action is appropriate to prevent evasion currently classified in the Harmonized 7225.50.8080, 7225.99.0090, of such order or finding. As discussed Tariff Schedule of the United States 7226.92.5000, 7226.92.7050, and below, the domestic producers provided (HTSUS) under item numbers: 7226.92.8050. evidence with respect to these criteria. 7209.15.0000, 7209.16.0030, The products subject to the orders 7209.16.0060, 7209.16.0070, may also enter under the following A. Merchandise of the Same Class or 7209.16.0091, 7209.17.0030, HTSUS numbers: 7210.90.9000, Kind 7212.50.0000, 7215.10.0010, The domestic producers claim that (ix) none, or not more than 0.09 percent of 7215.10.0080, 7215.50.0016, CRS exported to the United States is the molybdenum. same class or kind as that covered by 9 7215.50.0018, 7215.50.0020, Tool steels are defined as steels which contain 13 the following combinations of elements in the 7215.50.0061, 7215.50.0063, the Orders in these inquiries. The quantity by weight respectively indicated: (i) More 7215.50.0065, 7215.50.0090, domestic producers provided evidence than 1.2 percent carbon and more than 10.5 percent 7215.90.5000, 7217.10.1000, to show that the merchandise from chromium; or (ii) not less than 0.3 percent carbon 7217.10.2000, 7217.10.3000, Vietnam enters the United States under and 1.25 percent or more but less than 10.5 percent chromium; or (iii) not less than 0.85 percent carbon 7217.10.7000, 7217.90.1000, the same tariff classification as subject and 1 percent to 1.8 percent, inclusive, manganese; 7217.90.5030, 7217.90.5060, merchandise.14 or (iv) 0.9 percent to 1.2 percent, inclusive, 7217.90.5090, 7225.19.0000, chromium and 0.9 percent to 1.4 percent, inclusive, B. Completion of Merchandise in a molybdenum; or (v) not less than 0.5 percent carbon 7226.19.1000, 7226.19.9000, Foreign Country and not less than 3.5 percent molybdenum; or (vi) 7226.99.0180, 7228.50.5015, not less than 0.5 percent carbon and not less than 7228.50.5040, 7228.50.5070, The domestic producers note that 5.5 percent tungsten. 7228.60.8000, and 7229.90.1000. section 781(b)(l)(B)(ii) of the Act 10 Silico-manganese steel is defined as steels The HTSUS subheadings above are requires that Commerce ‘‘must containing by weight: (i) Not more than 0.7 percent determine whether, prior to importation of carbon; (ii) 0.5 percent or more but not more than provided for convenience and U.S. 1.9 percent of manganese, and (iii) 0.6 percent or Customs purposes only. The written into the United States, the merchandise more but not more than 2.3 percent of silicon. description of the scope of the orders is in the third country is completed from 11 Grain-Oriented Electrical Steel from Germany, dispositive. merchandise produced in the country Japan, and Poland: Final Determinations of Sales at subject to the antidumping or Less Than Fair Value and Certain Final Affirmative Merchandise Subject to the Anti- countervailing duty order.’’ 15 The Determination of Critical Circumstances, 79 FR Circumvention Inquiries 42501, 42503 (July 22, 2014). This determination domestic producers presented evidence defines grain-oriented electrical steel as ‘‘a flat- These anti-circumvention inquiries showing substantial imports of Korean rolled alloy steel product containing by weight at cover imports of CRS exported from HRS into Vietnam following least 0.6 percent but not more than 6 percent of Commerce’s August 2015 initiation of silicon, not more than 0.08 percent of carbon, not Vietnam manufactured from HRS more than 1.0 percent of aluminum, and no other produced in Korea. AD and CVD investigations concerning element in an amount that would give the steel the CRS from Korea.16 Additionally, the characteristics of another alloy steel, in coils or in Initiation of Anti-Circumvention domestic producers provide evidence straight lengths.’’ Inquiries that, from 2015 through 2017, little to 12 Non-Oriented Electrical Steel from the People’s Republic of China, Germany, Japan, the Republic of Section 781(b)(1) of the Act provides no capacity existed in Vietnam to Korea, Sweden, and Taiwan: Antidumping Duty that Commerce may find circumvention produce HRS, and that HRS production Orders, 79 FR 71741, 71741–42 (December 3, 2014). of an AD or CVD order when in Vietnam did not begin until 2017.17 The orders define NOES as ‘‘cold-rolled, flat-rolled, merchandise of the same class or kind Nevertheless, the domestic producers alloy steel products, whether or not in coils, regardless of width, having an actual thickness of subject to the order is completed or maintain that despite Vietnamese 0.20 mm or more, in which the core loss is assembled in a foreign country other imports of HRS being significant even substantially equal in any direction of than the country to which the order before the initiation of AD and CVD magnetization in the plane of the material. The term applies. In conducting an anti- ‘substantially equal’ means that the cross grain investigations on CRS from Korea in direction of core loss is no more than 1.5 times the circumvention inquiry, under section mid-2015, imports increased by 26 straight grain direction (i.e., the rolling direction) of 781(b)(1) of the Act, Commerce relies on percent between 2014 and 2016, before core loss. NOES has a magnetic permeability that the following criteria: (A) Merchandise does not exceed 1.65 Tesla when tested at a field 13 See Anti-Circumvention Ruling Request at 7. of 800 A/m (equivalent to 10 Oersteds) along (i.e., imported into the United States is of the See also sections 781(b)(1)(A)(i) and (iii) of the Act. parallel to) the rolling direction of the sheet (i.e., same class or kind as any merchandise 14 See Anti-Circumvention Ruling Request at B800 value). NOES contains by weight more than produced in a foreign country that is the Exhibit 1. 1.00 percent of silicon but less than 3.5 percent of subject of an antidumping or silicon, not more than 0.08 percent of carbon, and 15 Id. at 7. See also section 781(b)(1)(B)(ii) of the not more than 1.5 percent of aluminum. NOES has countervailing duty order or finding; (B) Act. a surface oxide coating, to which an insulation before importation into the United 16 Id. at 7–8 and Exhibit 3 coating may be applied.’’ States, such imported merchandise is 17 Id. at 8, Exhibit 4, and Exhibit 5.
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dropping only slightly in 2017.18 The low as 28 million USD.22 The domestic expenses of hundreds of billions of domestic producers also provide producers also provide evidence that Korean Won from 2015 through 2017.30 information reflecting the fact that the cost to build one integrated steel (3) Nature of Production Process imports into the United States of CRS mill in Korea was 5 billion USD, and from Korea significantly decreased after that the cost of building an integrated According to the domestic producers, the imposition of the Orders, and that steel mill in Vietnam to one Vietnamese the production process undertaken by imports into the United States of CRS firm, Formosa Ha Tinh, was 10.6 billion Vietnamese producers of CRS is less from Vietnam, as well as imports into USD.23 Finally, the domestic producers complex than steelmaking, and it is Vietnam of Korean HRS, also increased provided evidence that the cost of minimal in nature.31 Citing the ITC significantly.19 building a coated steel sheet factory, report in the underlying investigation of including a cold-rolling mill, was only CRS from Korea, the domestic producers C. Minor or Insignificant Process 70 million USD.24 The domestic describe the process to produce HRS as The domestic producers maintain that producers, therefore, conclude that in consisting of three distinct stages the process for completing CRS from comparison to the investment necessary (melting and refining steel, casting HRS is minor or insignificant. Under for an integrated steel mill in Korea, the molten steel into semi-finished forms, section 781(b)(2) of the Act, Commerce cost of a cold-rolling mill in Vietnam is and hot-rolling the semi-finished forms considers five factors to determine insignificant.25 into HRS).32 In contrast, the domestic producers provide information whether the process of assembly or (2) Level of Research and Development completion in the foreign country in indicating that the production of CRS which the merchandise is completed or The domestic producers assert that from HRS involves less processing assembled is minor or insignificant: (A) the level of research and development (cleaning and pickling, rolling, The level of investment in the foreign (R&D) in Vietnam is either minimal or annealing, and tempering).33 Further, country in which the merchandise is non-existent.26 The domestic producers the domestic producers cite Commerce’s completed or assembled; (B) the level of cite to Commerce’s findings in CRS findings in CRS China Circumvention research and development in the foreign China Circumvention Final, where Final, where Commerce found the country in which the merchandise is Commerce found that no R&D production process to produce CRS completed or assemble; (C) the nature of investments had been made by from HRS inputs in Vietnam to be the production process in the foreign mandatory respondents POSCO comparatively minor.34 country in which the merchandise is Vietnam and VNSteel Phu My Flat Steel (4) Extent of Production Facilities in completed or assembled; (D) the extent Limited.27 The domestic producers Vietnam of production facilities in the foreign contend that rather than developing its country in which the merchandise is own technology, CRS producers in The domestic producers provide completed or assembled, and (E) Vietnam are using technology information indicating that production whether the value of the processing developed abroad.28 As an example of facilities in Vietnam are more limited 35 performed in the foreign country in Vietnamese producers using technology compared to facilities in Korea. They which the merchandise is completed or developed abroad, the domestic maintain that Vietnam had little to no assembled represents a small proportion producers provided evidence that Dong HRS capacity during the relevant of the value of the merchandise A, a Vietnamese steel company, uses period. The domestic producers also imported into the United States. European and Japanese equipment in its point to CRS China Circumvention coated sheet facility (which includes a Final, where Commerce found that ‘‘the (1) Level of Investment pickling and cold-rolling mill).29 In vast majority of production activities necessary to produce CRS occur at the The domestic producers contend that contrast, the domestic producers point molten steel, semi-finished steel, and the level of investment necessary to to POSCO’s R&D activities in Korea, hot-rolling stages.’’ 36 The domestic construct a factory that can produce which included employing an R&D producers conclude that the extent of CRS from HRS in Vietnam is laboratory staff of 934 personnel as of production facilities in Vietnam insignificant. In support of its December 31, 2017, as well as total R&D required to convert Korean HRS to CRS contention, the domestic producers are no greater than those facilities compare the investment necessary to 22 Id. (citing Certain Cold-Rolled Steel Flat install a cold-rolling facility with the Products from the People’s Republic of China: Affirmative Preliminary Determination of Anti 30 investment necessary to produce HRS Id. at 13–14. Circumvention Inquiries on the Antidumping Duty 31 Id. at 14–18. using a fully-integrated production and Countervailing Duty Orders, 82 FR 58178 32 Id. at 15–18 (citing Certain Hot-Rolled Steel 20 process. The domestic producers cite (December 11, 2017) (CRS China Circumvention Flat Products from Australia, Brazil, Japan, Korea, Commerce’s findings in the earlier anti- Preliminary) and accompanying Preliminary the Netherlands, Turkey, and The United Kingdom, Decision Memorandum at 16–17; and Certain Cold- circumvention ruling regarding Inv. Nos. 701–TA–545–547 and 73l–TA–1291– Rolled Steel Flat Products from the People’s 1297, USITC Publication 4570 (Oct. 2015) Vietnamese CRS using Chinese HRS Republic of China: Affirmative Final Determination (Preliminary) at I–18 to I–22). 21 of Circumvention of the Antidumping Duty and inputs (i.e., substrate). There, 33 See id. at 17 (citing Cold-Rolled Steel Flat Countervailing Duty Orders, 83 FR 23891 (May 23, Commerce pointed to record evidence Products from Brazil, China, India, Japan, Korea, 2018) (CRS China Circumvention Final), and the Netherlands, Russia and the United Kingdom, Inv. showing the cost to build an integrated accompanying Issues and Decision Memorandum at Nos. 701–TA–540–544 and 731–TA–1283–1290, steel mill in China to produce HRS was 32). USITC Publication 4564 (Sept. 2015) (Preliminary) 23 in the range of 250 million to 10 billion See Anti-Circumvention Ruling Request at 11– at 1–21). 12. U.S. dollars (USD) and that the cost to 34 See id. at 14–15 (citing CRS China 24 build a cold-rolling mill in Vietnam to Id. at 12. Circumvention Final and the accompanying Issues 25 produce CRS from HRS substrate was as Id. and Decision Memorandum at 39). 26 Id. at 12–14. 35 Id. at 18–19 (citing CRS China Circumvention 27 Id. at 12–13 (citing CRS China Circumvention Final and the accompanying Issues and Decision 18 Id. at 8 and Exhibit 3. Final and the accompanying Issues and Decision Memorandum at 39). 19 Id. at 5–6, 8–9, and Exhibit 1. Memorandum at 37–38). 36 Id. at 18–19 (citing CRS China Circumvention 20 Id. at 10–11. 28 Id. at 13. Final and the accompanying Issues and Decision 21 Id. 29 Id. Memorandum at 39).
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required to convert Chinese HRS to the initiation of the underlying regarding whether the process of CRS.37 investigation, as compared to the period assembly or completion of CRS in before it.41 The domestic producers Vietnam is minor or insignificant. In (5) Value of Processing in Vietnam further explain that while recent exports particular, information in the domestic The domestic producers assert that of CRS from Vietnam to the United producers’ submission indicates that: (1) producing HRS in Korea accounts for a States have declined slightly, this The level of investment in cold-rolling large percentage of the total value of decline is largely due to Commerce’s facilities is minimal when compared CRS that is produced in Vietnam using investigation of circumvention of the with the level of investment for basic HRS from Korea. As support, the AD and CVD orders on CRS from the steel making facilities; 47 (2) there is domestic producers again point to CRS China.42 The domestic producers also little or no research and development China Circumvention Final, where point to the fact that exports of HRS taking place in Vietnam; 48 (3) the CRS Commerce found that CRS producers from Korea to Vietnam also increased production processes involve the simple did not incur significant additional after the original investigations processing of HRS from a country costs in the production of CRS, beyond commenced.43 Finally, regarding subject to the Orders; 49 (4) the CRS the cost of HRS substrate inputs, that affiliation, the domestic producers point production facilities in Vietnam are the value of further processing in out that major Vietnamese CRS more limited compared to facilities in Vietnam comprised only a small producer POSCO Vietnam is wholly Korea; 50 and (5) the value of the proportion of the total export value, and owned by Korea’s largest steel processing performed in Vietnam is a that the value of HRS produced in China manufacturer, POSCO.44 small proportion of the value of the CRS constituted a significant portion of the imported into the United States.51 value of the CRS exported to the United Analysis of the Allegations With respect to the value of the States.38 Additionally, the domestic Based on our analysis of the domestic merchandise produced in Korea, producers cite the recent ITC producer’s anti-circumvention pursuant to section 781(b)(1)(D) of the investigation of CRS from China and allegations and the information Act, the domestic producers relied on Japan, stating that the information provided therein, Commerce determines published sources, Commerce’s prior contained therein demonstrates that the that anti-circumvention inquiries of the conclusions in CRS China cost of Korean HRS inputs account for AD and CVD orders on CRS from Korea Circumvention Final, and information ‘‘roughly 81 to 89 percent’’ of the value are warranted. presented in the ‘‘minor or insignificant of CRS.39 Finally, citing a 2017 With regard to whether the process’’ portion of its anti- Financial Times article, the domestic merchandise from Vietnam is of the circumvention allegation to indicate producers further argue that the cost of same class or kind as the merchandise that the value of the key material, HRS, producing HRS in Korea is higher than produced in Korea, the domestic produced in Korea is significant relative the cost of producing HRS in China.40 producers presented information to to the total value of the CRS exported Commerce indicating that, pursuant to to the United States.52 We find that this D. Additional Factors To Consider in section 781(b)(1)(A) of the Act, the information adequately meets the Determining Whether Action Is merchandise being produced in and/or requirements of this factor, as discussed Necessary exported from Vietnam is of the same above, for the purposes of initiating Section 781(b)(3) of the Act directs class or kind as CRS produced in Korea, these anti-circumvention inquiries. Commerce to consider additional factors which is subject to the Orders.45 Finally, with respect to the additional in determining whether to include Consequently, Commerce finds that the factors listed under section 781(b)(3) of merchandise assembled or completed in domestic producers provided sufficient the Act, we find that the domestic a foreign country within the scope of the information in their requests regarding producers presented evidence order, such as: ‘‘(A) the pattern of trade, the class or kind of merchandise to indicating that shipments of CRS from including sourcing patterns, (B) whether Vietnam to the United States increased support the initiation of these anti- 53 the manufacturer or exporter of the circumvention inquiries. since the imposition of the Orders and merchandise . . . is affiliated with the With regard to completion or that shipments of HRS from Korea to person who uses the merchandise . . . assembly of merchandise in a foreign Vietnam also increased since the Orders 54 to assemble or complete in the foreign country, pursuant to section 781(b)(1)(B) took effect. Furthermore, we find that country the merchandise that is of the Act, the domestic producers also the domestic producers have presented subsequently imported into the United presented information to Commerce evidence that the largest Korean States, and (C) whether imports into the indicating that the CRS exported from manufacturer of CRS (POSCO) is foreign country of the merchandise . . . affiliated with a company in Vietnam Vietnam to the United States is 55 have increased after the initiation of the produced in Vietnam using HRS from that completes the merchandise. Accordingly, we are initiating formal investigation which resulted in the Korea.46 We find that the information anti-circumvention inquiries concerning issuance of such order or finding.’’ presented by the domestic producers the AD and CVD orders on CRS from Regarding patterns of trade, the regarding this criterion supports its Korea, pursuant to section 781(b) of the domestic producers contend that request to initiate these anti- exports of CRS from Vietnam to the Act. circumvention inquiries. As these inquiries are initiated on a United States skyrocketed as exports Commerce finds that the domestic country-wide basis (i.e., not exclusive to from Korea declined in the period after producers sufficiently addressed the factors described in sections 47 Id. at 10–12. 37 Id. at 19. 781(b)(1)(C) and 781(b)(2) of the Act 48 Id. at 12–13. 38 Id. at 19–20 (citing CRS China Circumvention 49 Final and the accompanying Issues and Decision Id. at 14–18. 41 Memorandum at 10, 21, and 21). Id. at 22. 50 Id. at 18–19. 42 51 39 Id. at 21 (citing Cold-Rolled Steel Flat Products Id. Id. at 19–21. from China and Japan, Inv. Nos. 701–TA–541 and 43 Id. 52 Id. at 14–18. 731–TA–1284 and 1286, USITC Publication 4619 44 Id. 53 Id. at 5. (July 2016) (Final) at VII–30 (Table VII–41)). 45 Id. at 7 and Attachment 1. 54 Id. at 6. 40 Id. at 20–21 and exhibit 13. 46 Id. at 5–9, Exhibit 3, Exhibit 4, and Exhibit 5. 55 Id. at 6 and Exhibit 2.
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the producers mentioned immediately countervailing duties, at the applicable information for the enforcement of above), Commerce intends to issue rate, for each unliquidated entry of the fishery regulations. questionnaires to solicit information merchandise at issue, entered or Affected Public: Business or other for- from the Vietnamese producers and withdrawn from warehouse for profit organizations; individuals or exporters concerning their shipments of consumption on or after the date of households. CRS to the United States and the origin initiation of the inquiry. Commerce will Frequency: On occasion. of the imported HRS being processed establish a schedule for questionnaires Respondent’s Obligation: Mandatory. into CRS. A company’s failure to and comments on the issues. In This information collection request respond completely to Commerce’s accordance with section 781(f) of the may be viewed at reginfo.gov. Follow requests for information may result in Act and 19 CFR 351.225(f)(5), the instructions to view Department of the application of partial or total facts Commerce intends to issue its final Commerce collections currently under available, pursuant to section 776(a) of determination within 300 days of the review by OMB. the Act, which may include adverse date of publication of this initiation. Written comments and inferences, pursuant to section 776(b) of This notice is published in recommendations for the proposed the Act. accordance with 19 CFR 351.225(f). information collection should be sent While we believe sufficient factual within 30 days of publication of this Dated: July 27, 2018. information has been submitted by the notice to OIRA_Submission@ domestic producers supporting their Gary Taverman, omb.eop.gov or fax to (202) 395–5806. Deputy Assistant Secretary for Antidumping request for inquiries, we do not find that Dated: July 27, 2018. the record supports the simultaneous and Countervailing Duty Operations, Sarah Brabson, issuance of a preliminary ruling. Such performing the non-exclusive functions and duties of the Assistant Secretary for NOAA PRA Clearance Officer. inquiries are by their nature typically Enforcement and Compliance. complicated and can require [FR Doc. 2018–16500 Filed 8–1–18; 8:45 am] [FR Doc. 2018–16566 Filed 8–1–18; 8:45 am] information regarding production in BILLING CODE 3510–22–P both the country subject to the order BILLING CODE 3510–DS–P and the third country completing the DEPARTMENT OF COMMERCE product. As noted above, Commerce DEPARTMENT OF COMMERCE intends to request additional National Oceanic and Atmospheric information regarding the statutory National Oceanic and Atmospheric Administration criteria to determine whether shipments Administration of CRS from Vietnam are circumventing RIN 0648–XG353 the AD and CVD orders on CRS from Submission for OMB Review; Korea. Thus, with further development Comment Request Atlantic Highly Migratory Species; of the record required before a Meeting of the Atlantic Highly preliminary ruling can be issued, The Department of Commerce will Migratory Species Advisory Panel Commerce does not find it appropriate submit to the Office of Management and Budget (OMB) for clearance the AGENCY: National Marine Fisheries to issue a preliminary ruling at this Service (NMFS), National Oceanic and time. following proposal for collection of information under the provisions of the Atmospheric Administration (NOAA), Notification to Interested Parties Paperwork Reduction Act (44 U.S.C. Commerce. In accordance with 19 CFR Chapter 35). ACTION: Notice of public meeting and 351.225(e), Commerce finds that the Agency: National Oceanic and webinar/conference call. issue of whether a product is included Atmospheric Administration (NOAA). SUMMARY: NMFS will hold a 2-day within the scope of an order cannot be Title: Documentation of fish harvest. Atlantic Highly Migratory Species determined based solely upon the OMB Control Number: 0648–0365. application and the descriptions of the Form Number(s): None. (HMS) Advisory Panel (AP) meeting in merchandise. Accordingly, Commerce Type of Request: Regular (extension of September 2018. The intent of the will notify by mail all parties on a currently approved information meeting is to consider options for the Commerce’s scope service list of the collection). conservation and management of initiation of these anti-circumvention Number of Respondents: 414. Atlantic HMS. The meeting is open to inquiries. In addition, in accordance Average Hours per Response: 10 the public. with 19 CFR 351.225(f)(1)(i) and (ii), in minutes. DATES: The AP meeting and webinar this notice of initiation issued under 19 Burden Hours: 69. will be held from 8:30 a.m. to 6 p.m. on CFR 351.225(e), we have included a Needs and Uses: The seafood dealers Wednesday, September 5, and from 8:30 description of the product that is the who process red porgy, greater a.m. to 3 p.m. on Thursday, September subject of these anti-circumvention amberjack, gag grouper, black grouper, 6. inquiries (i.e., CRS that contains the red grouper, scamp, red hind, rock hind, ADDRESSES: The meeting will be held at characteristics as provided in the scope yellowmouth grouper, yellowfin the Sheraton Silver Spring Hotel, 8777 of the Orders) and an explanation of the grouper, graysby or coney during Georgia Avenue, Silver Spring, MD reasons for Commerce’s decision to seasonal fishery closures for applicable 20910. initiate an anti-circumvention inquiry, species must maintain documentation, The meeting on Wednesday, as provided above. as specified in 50 CFR part 300 subpart September 5, and Thursday, September In accordance with 19 CFR K and 50 CFR 622.192(i), that such fish 6, will also be accessible via conference 351.225(l)(2), if Commerce issues a were harvested from areas other than call and webinar. Conference call and preliminary affirmative determination, state or Federal waters in the South webinar access information are available we will then instruct U.S. Customs and Atlantic. The documentation includes at: https://www.fisheries.noaa.gov/ Border Protection to suspend information on the vessel that harvested event/september-2018-hms-advisory- liquidation and require a cash deposit of the fish, and where and when the fish panel-meeting. Once finalized, the estimated antidumping and were offloaded. NMFS requires the meeting agenda, presentations/
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supplemental materials, and the management; catch-per–unit-effort for FOR FURTHER INFORMATION CONTACT: meeting transcripts will be posted to sharks; and shark stock assessments) Requests for additional information or this same site. We also anticipate inviting other copies of the information collection Participants are strongly encouraged NMFS offices to provide updates, if instrument and instructions should be to log/dial in 15 minutes prior to the available, on their activities relevant to directed to Kurt Iverson (907) 586–7228 meeting. NMFS will show the HMS fisheries such as updates to the or [email protected]. presentations via webinar and allow Marine Recreational Information SUPPLEMENTARY INFORMATION: public comment during identified times Program. The State Department will be I. Abstract on the agenda. invited to provide updates on U.S./ FOR FURTHER INFORMATION CONTACT: Bahama EEZ boundary negotiations. This request is an extension of a Peter Cooper or Brad McHale at (301) Finally, we intend to invite other NMFS currently approved information 427–8503. offices and the United States Coast collection. The Magnuson-Stevens Fishery and SUPPLEMENTARY INFORMATION: The Guard to provide updates on their Conservation Act both authorizes and Magnuson-Stevens Fishery activities relevant to HMS fisheries. requires the collection of cost recovery Conservation and Management Act, 16 Additional information on the fees for Limited Access Privilege (LAP) U.S.C. 1801 et seq., as amended by the meeting and a copy of the draft agenda programs and Western Alaska Sustainable Fisheries Act, Public Law will be posted prior to the meeting at: Community Development Quota (CDQ) 104–297, provided for the establishment https://www.fisheries.noaa.gov/event/ programs. The cost recovery fees may of an AP to assist in the collection and september-2018-hms-advisory-panel- not exceed three percent of the ex-vessel evaluation of information relevant to the meeting. value, and must recover costs associated development of any FMP or FMP Special Accommodations with the management, data collection, amendment for Atlantic HMS. NMFS and enforcement of these programs that consults with and considers the This meeting is physically accessible are directly incurred by government comments and views of AP members to people with disabilities. Requests for agencies tasked with overseeing these when preparing and implementing sign language interpretation or other auxiliary aids should be directed to fisheries. FMPs or FMP amendments for Atlantic In addition, NMFS collects observer tunas, swordfish, billfish, and sharks. Peter Cooper at (301) 427–8503 at least 7 days prior to the meeting. coverage fees to support the funding and The AP has previously consulted with deployment of observers on vessels and NMFS on: Amendment 1 to the Billfish Dated: July 30, 2018. in plants in the partial observer FMP (April 1999); the HMS FMP (April Margo B. Schulze-Haugen, coverage category. The observer 1999); Amendment 1 to the HMS FMP Acting Director, Office of Sustainable coverage fee must be paid by permit (December 2003); the Consolidated HMS Fisheries, National Marine Fisheries Service. holders in the partial observer coverage FMP (October 2006); and Amendments [FR Doc. 2018–16580 Filed 8–1–18; 8:45 am] category, i.e., small catcher/processors, 1, 2, 3, 4, 5a, 5b, 6, 7, 8, 9, 10, and 11 BILLING CODE 3510–22–P catcher vessels, shoreside processors, to the 2006 Consolidated HMS FMP and stationary floating processors (April and October 2008, February and named on a Federal Fisheries Permit, or September 2009, May and September DEPARTMENT OF COMMERCE a person named on a Registered Buyer 2010, April and September 2011, March permit. and September 2012, January and National Oceanic and Atmospheric Processors that receive and purchase September 2013, April and September Administration landings of IFQ halibut or sablefish, 2014, March and September 2015, and Proposed Information Collection; rockfish, groundfish, and crab subject to March, September, and December 2016, observer and/or cost recovery fees must and May and September 2017), among Comment Request; Alaska Quota Cost Recovery Programs submit an Ex-vessel Value and Volume other things. report under 50 CFR 679.5 or 50 CFR The intent of this meeting is to AGENCY: National Oceanic and 680.5 that provides information on the consider alternatives for the Atmospheric Administration (NOAA), pounds purchased and value paid. conservation and management of all Commerce. NMFS uses this information to establish Atlantic tunas, swordfish, billfish, and ACTION: Notice. the total ex-vessel value of the fishery, shark fisheries. We anticipate to calculate standard prices, and to discussing: SUMMARY: The Department of establish annual fee percentages in each • Short- and long-term management Commerce, as part of its continuing fishery. of Atlantic shortfin mako (emergency effort to reduce paperwork and In 2016, due to an associated rule, rule extension and Draft Amendment respondent burden, invites the general revisions to the payment collection 11); public and other Federal agencies to methods were approved under OMB • Bluefin tuna management (Three- take this opportunity to comment on control number 0648–0727. The year review of Amendment 7 measures proposed and/or continuing information extension of the current collection, and next steps) collections, as required by the OMB control number 0648–0711, will • Progress updates on a number of Paperwork Reduction Act of 1995. incorporate these 2016 revisions, and other actions such as Ecosystem-Based 0648–0727 will be discontinued. Fisheries Management; Amendment 12 DATES: Written comments must be (rulemaking to implement NMFS submitted on or before October 1, 2018. II. Method of Collection national policy directives); weak-hook ADDRESSES: Direct all written comments Payment must be submitted online and area based management; cross- to Jennifer Jessup, Departmental through eFISH at https://alaskafisheries. regional vessel electronic reporting (e.g., Paperwork Clearance Officer, noaa.gov/webapps/efish/login for the eVTR, SEFHIER, eTrips); and spatial Department of Commerce, Room 6616, following: management options. 14th and Constitution Avenue NW, • Observer coverage fee; and • Shark management in general Washington, DC 20230 (or via the • cost recovery fees for the Western (Amendment 14 regarding quota internet at [email protected]). Alaska Community Development Quota
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Groundfish and Halibut, American included in the request for OMB rights. The information collected is a Fisheries Act Bering Sea Pollock, approval of this information collection; matter of public record, and thus is Aleutian Islands Pollock, Amendment they also will become a matter of public available at USPTO facilities and on the 80, and Rockfish Programs. record. USPTO website. Additionally, the Payment for the Individual Fishing Dated: July 26, 2018. USPTO provides the information to Quota (IFQ) Program cost recovery fee is Sarah Brabson, other entities, including Patent and submitted online through eFISH, or by Trademark Resource Centers (PTRCs). NOAA PRA Clearance Officer. mail or courier if paying with a check. The PTRCs maintain the information for Payment for the Crab Rationalization [FR Doc. 2018–16502 Filed 8–1–18; 8:45 am] use by the public. (CR) Program cost recovery fee is BILLING CODE 3510–22–P Affected Public: Businesses or other submitted online through eFISH, or by for-profits; not-for-profit institutions. mail or courier if paying with a check. Frequency: On occasion. DEPARTMENT OF COMMERCE After December 2019, NMFS will no Respondent’s Obligation: Required to Obtain or Retain Benefits. longer accept paper checks for cost Patent and Trademark Office recovery program fees. All payments OMB Desk Officer: Nicholas A. Fraser, _ _ will have to be made online. Submission for OMB Review; email: Nicholas A. Fraser@ The IFQ Registered Buyer Ex-Vessel Comment Request; ‘‘Post Registration imb.eop.gov. Once submitted, the Volume and Value Report is submitted (Trademark Processing)’’ request will be publicly available in online through eFISH, or by mail or fax. electronic format through The Rockfish Ex-Vessel, CR Registered The United States Patent and www.reginfo.gov. Follow the Crab Receiver Ex-Vessel, Pacific Cod Ex- Trademark Office (USPTO) will submit instructions to view Department of Vessel, and First Wholesale Volume and to the Office of Management and Budget Commerce collections currently under Value Reports must be submitted online (OMB) for clearance the following review by OMB. through eFISH. Appeals may be proposal for collection of information Further information can be obtained submitted by mail or fax. under the provisions of the 1995 by: Paperwork Reduction Act. This notice • Email: InformationCollection@ III. Data includes adjustments to the collection uspto.gov. Include ‘‘0651–0055 OMB Control Number: 0648–0711. showing an increase in the respondents information request’’ in the subject line Form Number(s): None. and hourly burdens associated with of the message. • Type of Review: Regular submission recent approved fee adjustments. Mail: Catherine Cain, Attorney (extension of a currently approved Agency: United States Patent and Advisor, Office of the Commissioner for collection). Trademark Office, Commerce. Trademarks, United States Patent and Affected Public: Individuals or Title: Post Registration (Trademark Trademark Office, PO Box 1450, households; Business or other for-profit Processing). Alexandria, VA 22313–1450. organizations. OMB Control Number: 0651–0055. Written comments and Estimated Number of Respondents: Form Number(s): recommendations for the proposed 2,182. • PTO Form 1563 information collection should be sent on Estimated Time per Response: 1 • PTO Form 1573 or before September 4, 2018 to minute for cost recovery fee, observer • PTO Form 1583 [email protected], or by coverage fee, and Value and Volume • PTO Form 1597 fax to 202–395–5167, marked to the Report; 4 hours for Appeals for any • PTO Form 1963 attention of Nicholas A. Fraser. • TEAS Global Form person who receives an IAD for Marcie Lovett, incomplete payment of a fee liability. Type of Request: Regular. Director, Records and Information Estimated Total Annual Burden Number of Respondents: 220,272 responses per year. Governance Division, Office of the Chief Hours: 43 hours. Technology Officer, United States Patent and Estimated Total Annual Cost to Average Hours Per Responses: The Trademark Office. USPTO estimates that it will take Public: $416 in recordkeeping/reporting [FR Doc. 2018–16508 Filed 8–1–18; 8:45 am] costs. between approximately 5 minutes (0.08 hours) and 1 hour to complete the BILLING CODE 3510–16–P IV. Request for Comments information in this collection. This Comments are invited on: (a) Whether includes the time to gather the the proposed collection of information necessary information, create the DEPARTMENT OF EDUCATION is necessary for the proper performance documents, and submit the completed Applications for New Awards; Grants of the functions of the agency, including request to the USPTO. to States for School Emergency whether the information shall have Burden Hours: 71,575.70 hours per Management Program practical utility; (b) the accuracy of the year. agency’s estimate of the burden Cost Burden: $63,862,183 per year. AGENCY: Office of Elementary and (including hours and cost) of the Needs and Uses: The USPTO uses the Secondary Education, Department of proposed collection of information; (c) information described in this collection Education. ways to enhance the quality, utility, and to process post registration submissions, ACTION: Notice. clarity of the information to be which include declarations of continued collected; and (d) ways to minimize the use (or excusable non-use) of a mark in SUMMARY: The Department of Education burden of the collection of information commerce and renewal applications, (Department) is issuing a notice inviting on respondents, including through the with the purpose of maintaining the applications for new awards for fiscal use of automated collection techniques quality of the trademark register. The year (FY) 2018 for Grants to States for or other forms of information information in this collection is used by School Emergency Management (GSEM) technology. the public for a variety of private program, Catalog of Federal Domestic Comments submitted in response to business purposes related to Assistance (CFDA) number 84.184Q. this notice will be summarized and/or establishing and enforcing trademark DATES:
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Applications Available: August 2, effective, high-quality school EOP in Absolute Priority: This priority is an 2018. place and that students and staff are absolute priority. Under 34 CFR Deadline for Transmittal of prepared to follow it. A 2016 report 75.105(c)(3) we consider only Applications: September 4, 2018. from the Government Accountability applications that meet this priority. ADDRESSES: For the addresses for Office (GAO) notes that in a survey of This priority is: obtaining and submitting an 51 SEAs, over 60 percent required their Projects that expand the capacity of application, please refer to our Common LEAs to have EOPs and conduct SEAs to provide training and technical Instructions for Applicants to emergency exercises; however, fewer assistance to LEAs. Department of Education Discretionary than half of those States surveyed Projects to increase the long-term Grant Programs, published in the reported they also required their internal capacity of SEAs to provide Federal Register on February 12, 2018 districts or State to review these district training and technical assistance to (83 FR 6003) and available at or school plans. Additionally, an LEAs for the development and www.gpo.gov/fdsys/pkg/FR-2018-02-12/ estimated 59 percent of the surveyed implementation of high-quality school pdf/2018-02558.pdf. LEAs reported having limited resources EOPs. Competitive Preference Priority: For FOR FURTHER INFORMATION CONTACT: available to implement and sustain FY 2018 and any subsequent year in Hamed Negron-Perez, U.S. Department emergency management planning which we make awards from the list of of Education, 400 Maryland Avenue efforts, thus reinforcing the value of 2 unfunded applications from this SW, Room 3C130, Washington, DC State and Federal support. competition, this priority is a 20202–6450. Telephone: (202) 453– Generally, SEAs share with their competitive preference priority. Under 6725. Email: Hamed.Negron-Perez@ LEAs information about applicable laws 34 CFR 75.105(c)(2)(1) we award an ed.gov. and requirements related to school additional 5 points to an application If you use a telecommunications emergency management planning; they that meets this priority. device for the deaf (TDD) or a text also may support LEAs in fulfilling This priority is: telephone (TTY), call the Federal Relay these obligations. For example, SEAs may provide training, resources, and Applications from SEAs that have not Service (FRS), toll free, at 1–800–877– previously received a grant under the 8339. tools to support school safety and security, including emergency GSEM program (5 points). SUPPLEMENTARY INFORMATION: management planning. SEAs may also Projects proposed by applicants that have not previously received a grant Full Text of Announcement work with other State agencies or organizations to provide emergency under this program. A list of former I. Funding Opportunity Description management services to LEAs. recipients of this grant may be found at Purpose of Program: The GSEM In order to develop and implement https://www2.ed.gov/programs/ program provides grants to State high-quality school EOPs, LEA staff schlemergmgt-sea/2014awards.html. educational agencies (SEAs) to increase must have access to training and Requirements: We are establishing their capacity to assist local educational technical assistance on developing, these program requirements and agencies (LEAs) by providing training implementing, and refining their plans. application requirements for the FY and technical assistance in the SEAs can play a critical role in 2018 grant competition and any development and implementation of providing the necessary training and subsequent year in which we make high-quality school emergency technical assistance to LEAs. awards from the list of unfunded operations plans (EOPs), as defined in In 2014, the Department awarded applications from this competition, in this notice. GSEM grants to 26 SEAs, which allowed accordance with section 437(d)(1) of Background: Lessons learned from SEAs to increase their capacity to GEPA, 20 U.S.C. 1232(d)(1). school emergencies highlight the provide high-quality technical Program Requirements: Applicants importance of preparing school officials assistance to their LEAs, while that receive grants under this program and first responders to implement EOPs. increasing the number of high-quality must: By having plans in place to keep school EOPs in each district. The (1) Provide an established point of students and staff safe, schools play a Department will build on the prior contact (e.g., person or office) for school key role in taking preventive and success of this program by awarding emergency management issues and protective measures to stop an new grants of up to five years to SEAs submit that information to the emergency from occurring or reduce its to further support their LEAs through Department no later than the project impact.1 High-quality school EOPs can training and technical assistance. While start date; make our schools safer by supporting the new competition will give priority (2) Provide training and technical efforts to prevent, protect against, to SEAs that have not previously assistance to LEAs on best practices for mitigate, respond to, and recover from received GSEM grants, previous GSEM developing and implementing school all threats and hazards, both natural and grantees are also eligible for awards. EOPs including, but not limited to, the man-made. The GSEM program will Priorities: We are establishing these process described in the ‘‘Guide for help schools address violence and foster priorities for the FY 2018 grant Developing High-Quality School 3 safer school environments by increasing competition and any subsequent year in Emergency Operations Plans’’; the capacity of SEAs to assist LEAs in which we make awards from the list of 3 Available at: https://rems.ed.gov/docs/REMS_K- the development, implementation, and unfunded applications from this 12_Guide_508.pdf. Plans must comply with the review of high-quality and competition, in accordance with section Americans with Disabilities Act (ADA), among comprehensive school EOPs. 437(d)(1) of the General Education other prohibitions on disability discrimination, It is critical for SEAs and LEAs to Provisions Act (GEPA), 20 U.S.C. across the spectrum of emergency management services, programs, and activities, including ensure that every school has an 1232(d)(1). preparation, testing, notification and alerts, evacuation, transportation, sheltering, emergency 1 ‘‘Guide for Developing High-Quality School 2 ‘‘Improved Federal Coordination Could Better medical care and services, transitioning back, Emergency Operations Plans,’’ June 2013. Available Assist K–12 Schools Prepare for Emergencies,’’ recovery, and repairing and rebuilding. Plans at: https://rems.ed.gov/docs/REMS_K-12_Guide_ GAO–16–144, March 2016. Available at: should include students, staff, and parents with 508.pdf. www.gao.gov/assets/680/675737.pdf. disabilities. Among other things, school emergency
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(3) Provide training and technical (d) Alignment of emergency certain to happen in an unpreventable assistance to LEAs on developing or management training, technical way; establish a safe and secure enhancing memoranda of understanding assistance, and resources with environment; save lives and property; with community partners (e.g., local emergency management planning at the and facilitate the transition to recovery. government, law enforcement, public Federal, State, and local levels. (5) Recovery means the capabilities safety or emergency management, (3) A description of a process for the necessary to assist schools affected by public health, and mental health coordination and sustainability of an event or emergency in restoring the agencies); and support that will be provided to LEAs learning environment. (4) Provide training and technical so that they can continue to improve (a) Adequate means the plan assistance to LEAs on the their schools’ EOPs beyond the period identifies and addresses critical courses implementation of the National Incident of Federal financial assistance. of action effectively; the plan can Management System (NIMS). Definitions: We are establishing the accomplish the assigned function; and Information about current NIMS definitions for ‘‘high-quality school the assumptions are valid and requirements for States may be accessed emergency operations plan (EOP),’’ reasonable. at: www.fema.gov/national-incident- ‘‘rural LEA,’’ ‘‘technical assistance,’’ and (b) Feasible means the school can management-system. ‘‘training’’ in this notice for the FY 2018 accomplish the assigned function and Application Requirements: Each grant competition and any subsequent critical tasks by using available application must contain a plan that year in which we make awards from the resources within the time contemplated includes the following: list of unfunded applications from this by the plan, and that the plan explains (1) Information on: competition, in accordance with section where or how the district and school (a) Training, technical assistance, and 437(d)(1) of GEPA, 20 U.S.C. 1232(d)(1). will obtain the resources to support the resources the applicant currently The remaining definitions are from 20 execution of a course of action or to provides to LEAs on emergency U.S.C. 7801(30), 7801(36), 7801(48), and meet a requirement established in the management; 7801(49). plan. (b) The current number of LEAs These definitions are: (c) Acceptable means the plan meets served; High-Quality School Emergency the requirements driven by a threat or (c) The proposed number of LEAs, Operations Plan (EOP) means a hazard, meets cost and time limitations, including rural LEAs that might not comprehensive emergency operations and is consistent with the law. otherwise have full access to school plan that encompasses the five mission (d) Complete means the plan: emergency management training and areas—(1) prevention, (2) protection, (3) (i) Incorporates all courses of action to resources, that would receive training mitigation, (4) response, and (5) be accomplished for all selected threats and technical assistance to improve recovery—and that is (a) adequate, (b) and hazards and identified functions; their school EOPs under the applicant’s feasible, (c) acceptable, (d) complete, (ii) Integrates the needs of the whole proposal. and (e) compliant.4 school community; (d) A description of how the SEA will For the purpose of this definition, the (iii) Provides a complete picture of evaluate the quality of training and following terms are as defined below: what should happen, when, and at technical assistance events administered (1) Prevention means the capabilities whose direction; to their LEAs, which should incorporate necessary to avoid, deter, or stop an (iv) Estimates time for achieving feedback from LEAs and other imminent crime or threatened or actual objectives, with safety remaining as the stakeholders (e.g. parents, students, mass casualty incident. Prevention is utmost priority; teachers, first-responders, etc.) also the action schools take to prevent (v) Identifies success criteria and a (2) A long-term strategy for improving a threatened or actual incident from desired end state; and the applicant’s: occurring; and includes those (vi) Conforms with the planning (a) Capacity to provide training and capabilities necessary to avoid, prevent, principles outlined in the ‘‘Guide for technical assistance to LEAs, including or stop a threatened or actual act of Developing High-Quality School rural LEAs that might not otherwise terrorism, and it includes preventing Emergency Operations Plans.’’ have full access to school emergency imminent threats. (e) Compliant means the plan management training and resources; and (2) Protection means the capabilities complies with applicable State and local capacity to address the unique needs of to secure schools against acts of requirements because these provide a students, staff, and visitors with violence and manmade or natural baseline that facilitates both planning disabilities and other access and disasters. Protection focuses on ongoing and execution. functional needs, including individuals actions that protect students, teachers, LEA means a local educational agency with limited English proficiency; staff, visitors, networks, and property as defined by section 8101(30) of the (b) Existing training and technical from a threat or hazard. Elementary and Secondary Education assistance activities for their LEAs; (3) Mitigation means the capabilities Act of 1965, as amended (ESEA) (20 (c) Catalog of emergency management necessary to eliminate or reduce the loss U.S.C. 7801(30)). resources; and of life and property damage by lessening Outlying areas means the United the impact of an event or emergency. It States Virgin Islands, Guam, American plans must address the provision of appropriate also means reducing the likelihood that Samoa, the Commonwealth of the auxiliary aids and services to ensure effective threats and hazards will happen. Northern Mariana Islands, the Federated communication with individuals with disabilities (4) Response means the capabilities States of Micronesia, and the Republic (e.g., interpreters, captioning, and accessible necessary to stabilize an emergency of the Marshall Islands. (ESEA section information technology); ensure individuals with disabilities are not separated from service animals once it has already happened or is 8101(36), 20 U.S.C. 7801(36)). and assistive devices, and can receive disability- Rural LEA means an LEA with one of related assistance throughout emergencies (e.g., 4 Derived from: (1) Presidential Policy Directive 8, the following district locale codes as assistance with activities of daily living and available at www.dhs.gov/presidential-policy- assigned by the National Center for administration of medications); and comply with directive-8-national-preparedness; and (2) ‘‘Guide the law’s architectural and other requirements. for Developing High-Quality Emergency Operations Education Statistics’ Common Core of Information and technical assistance about the ADA Plans,’’ available at https://rems.ed.gov/docs/ Data: Code 33 (Remote Town); Code 41 is available at www.ada.gov. REMS_K-12_Guide_508.pdf. (Fringe Rural); Code 42 (Distant Rural);
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and Code 43 (Remote Rural). LEA locale and 99. (b) The Office of Management 5. Limitation on Applications: The codes may be obtained by searching the and Budget (OMB) Guidelines to Department will accept only one Common Core of Data database at: Agencies on Governmentwide application per SEA. http://nces.ed.gov/ccd/districtsearch/. Debarment and Suspension IV. Application and Submission SEA means a State educational agency (Nonprocurement) in 2 CFR part 180, as Information as defined by section 8101(49) of the adopted and amended as regulations of ESEA (20 U.S.C. 7801(49)). the Department in 2 CFR part 3485. (c) 1. Application Submission State means any of the 50 States, the The Uniform Administrative Instructions: For information on how to District of Columbia, and the Requirements, Cost Principles, and submit an application please refer to our Commonwealth of Puerto Rico, and Audit Requirements for Federal Awards Common Instructions for Applicants to each of the outlying areas as defined in in 2 CFR part 200, as adopted and Department of Education Discretionary this notice. (ESEA section 8101(48), 20 amended as regulations of the Grant Programs, published in the U.S.C. 7801(48)). Department in 2 CFR part 3474. (d) The Federal Register on February 12, 2018 Technical assistance means regulations in 34 CFR part 299. (83 FR 6003) and available at consultations, information, referrals, www.gpo.gov/fdsys/pkg/FR-2018-02-12/ logistical support, and other assistance II. Award Information pdf/2018-02558.pdf. on specific issues, topics, or problems as Type of Award: Discretionary grants. 2. Intergovernmental Review: This requested by the LEAs and other Estimated Available Funds: program is subject to Executive Order stakeholders. The grantee disseminates $8,000,000. 12372 and the regulations in 34 CFR materials collected, developed, adapted, Contingent upon the availability of part 79. However, under 34 CFR 79.8(a), and adopted for this assistance. funds and the quality of applications, we waive intergovernmental review in Technical assistance may proceed, we may make additional awards in order to make awards by the end of FY follow, or be combined with training subsequent years from the list of 2018. activities. unfunded applications from this V. Application Review Information Training means instruction directed competition. toward imparting knowledge, skills, and Estimated Range of Awards: $250,000 1. Selection Criteria: The selection attitudes supportive of change by to $750,000 per year for up to 5 years. criteria for this program are from 34 CFR engaging, informing, equipping, and Estimated Average Size of Awards: 75.210. The maximum score for all motivating trainees toward the $500,000. selection criteria is 100 points. The development and implementation of Maximum Award: We will not make points or weights assigned to each action plans responsive to the specific an award exceeding $750,000 for a criterion are indicated in parentheses. need or circumstances of the trainees. single budget period of 12 months. Non-Federal peer reviewers will review Training may consist of various formats Estimated Number of Awards: 16. each application and will evaluate and score each program narrative against the (e.g., workshops, seminars, or computer- Note: The Department is not bound by following selection criteria: assisted tutorials). any estimates in this notice. Project Period: Up to 60 months. (a) Significance. (20 points) Waiver of Proposed Rulemaking: The Secretary considers the Under the Administrative Procedure Act III. Eligibility Information significance of the proposed project. In (5 U.S.C. 553) the Department generally determining the significance of the offers interested parties the opportunity 1. Eligible Applicants: SEAs. Note: Consistent with the definitions proposed project, the Secretary to comment on proposed priorities, considers the following factors: requirements, and definitions. Section in this notice, eligible applicants include SEAs in the 50 States, the (i) The likelihood that the proposed 437(d)(1) of GEPA (20 U.S.C. project will result in system change or 1232(d)(1)), however, allows the District of Columbia, the Commonwealth of Puerto Rico, the improvement. (10 points) Secretary to exempt from rulemaking (ii) The extent to which the proposed United States Virgin Islands, Guam, requirements, regulations governing the project is likely to build local capacity American Samoa, the Commonwealth of first grant competition under a new or to provide, improve, or expand services the Northern Mariana Islands, the substantially revised program authority. that address the needs of the target This is the first grant competition for Federated States of Micronesia, and the population. (10 points) this program under title IV, part F, Republic of the Marshall Islands. (b) Quality of the Project Design. (30 subpart 3 of the ESEA (20 U.S.C. 7281), Eligible applicants may collaborate points) and therefore qualifies for this informally or contract with other The Secretary considers the quality of exemption. In order to ensure timely agencies to provide services to LEAs, the design of the proposed project. In grant awards, the Secretary has decided including agencies such as: determining the quality of the design of • A State school safety center; the proposed project, the Secretary to forgo public comment on the • priorities, requirements, and definitions The State emergency management considers the following factors: agency; and (i) The extent to which the design of in this notice under section 437(d)(1) of • GEPA. These priorities, requirements, The State homeland security the proposed project is appropriate to, and definitions will apply to the FY department. and will successfully address, the needs 2018 grant competition and any 2. Cost Sharing or Matching: This of the target population or other subsequent year in which we make program does not require cost sharing or identified needs. (15 points) awards from the list of unfunded matching. (ii) The extent to which the design of applications from this competition. 3. Subgrantees: A grantee under this the proposed project reflects up-to-date competition may not award subgrants to knowledge from research and effective Program Authority: Title IV, part F, entities to directly carry out project practice. (15 points) subpart 3 of the ESEA (20 U.S.C. 7281). activities described in its application. (c) Quality of Project Services. (30 Applicable Regulations: (a) The 4. Administrative Direction and points) Education Department General Control: Administrative direction and The Secretary considers the quality of Administrative Regulations in 34 CFR control over grant funds must remain the services to be provided by the parts 75, 77, 79, 81, 82, 84, 86, 97, 98, with the grantee. proposed project.
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(i) In determining the quality of the review of the risks posed by applicants. this notice and include these and other services to be provided by the proposed Under 2 CFR 3474.10, the Secretary may specific conditions in the GAN. The project, the Secretary considers the impose specific conditions and, in GAN also incorporates your approved quality and sufficiency of strategies for appropriate circumstances, high-risk application as part of your binding ensuring equal access and treatment for conditions on a grant if the applicant or commitments under the grant. eligible project participants who are grantee is not financially stable; has a 3. Open Licensing Requirements: members of groups that have history of unsatisfactory performance; Unless an exception applies, if you are traditionally been underrepresented has a financial or other management awarded a grant under this competition, based on race, color, national origin, system that does not meet the standards you will be required to openly license gender, age, or disability. (5 points) in 2 CFR part 200, subpart D; has not to the public grant deliverables created In addition, the Secretary considers fulfilled the conditions of a prior grant; in whole, or in part, with Department the following factors: or is otherwise not responsible. grant funds. When the deliverable (ii) The extent to which the services 4. Integrity and Performance System: consists of modifications to pre-existing to be provided by the proposed project If you are selected under this works, the license extends only to those are appropriate to the needs of the competition to receive an award that modifications that can be separately intended recipients or beneficiaries of over the course of the project period identified and only to the extent that those services. (10 points) may exceed the simplified acquisition open licensing is permitted under the (iii) The extent to which the training threshold (currently $150,000), under 2 terms of any licenses or other legal or professional development services to CFR 200.205(a)(2) we must make a restrictions on the use of pre-existing be provided by the proposed project are judgment about your integrity, business works. Additionally, a grantee or of sufficient quality, intensity, and ethics, and record of performance under subgrantee that is awarded competitive duration to lead to improvements in Federal awards—that is, the risk posed grant funds must have a plan to practice among the recipients of those by you as an applicant—before we make disseminate these public grant services. (10 points) an award. In doing so, we must consider deliverables. This dissemination plan (iv) The extent to which the services any information about you that is in the can be developed and submitted after to be provided by the proposed project integrity and performance system your application has been reviewed and involve the collaboration of appropriate (currently referred to as the Federal selected for funding. For additional partners for maximizing the Awardee Performance and Integrity information on the open licensing effectiveness of project services. (5 Information System (FAPIIS)), requirements please refer to 2 CFR points) accessible through the System for 3474.20. (d) Adequacy of Resources. (20 Award Management. You may review 4. Reporting: (a) If you apply for a points) and comment on any information about grant under this competition, you must The Secretary considers adequacy of yourself that a Federal agency ensure that you have in place the resources for the proposed project. In previously entered and that is currently necessary processes and systems to determining the adequacy of resources in FAPIIS. comply with the reporting requirements for the proposed project, the Secretary Please note that, if the total value of in 2 CFR part 170 should you receive considers the potential for continued your currently active grants, cooperative funding under the competition. This support for the project after Federal agreements, and procurement contracts does not apply if you have an exception funding ends, including as appropriate, from the Federal Government exceeds under 2 CFR 170.110(b). the demonstrated commitment of $10,000,000, the reporting requirements (b) At the end of your project period, appropriate entities to such support. (20 in 2 CFR part 200, Appendix XII, you must submit a final performance points) require you to report certain integrity report, including financial information, 2. Review and Selection Process: We information to FAPIIS semiannually. as directed by the Secretary. If you remind potential applicants that in Please review the requirements in 2 CFR receive a multiyear award, you must reviewing applications in any part 200, Appendix XII, if this grant submit an annual performance report discretionary grant competition, the plus all the other Federal funds you that provides the most current Secretary may consider, under 34 CFR receive exceed $10,000,000. performance and financial expenditure 75.217(d)(3), the past performance of the information as directed by the Secretary applicant in carrying out a previous VI. Award Administration Information under 34 CFR 75.118. The Secretary award, such as the applicant’s use of 1. Award Notices: If your application may also require more frequent funds, achievement of project is successful, we notify your U.S. performance reports under 34 CFR objectives, and compliance with grant Representative and U.S. Senators and 75.720(c). For specific requirements on conditions. The Secretary may also send you a Grant Award Notification reporting, please go to www.ed.gov/ consider whether the applicant failed to (GAN); or we may send you an email fund/grant/apply/appforms/ submit a timely performance report or containing a link to access an electronic appforms.html. submitted a report of unacceptable version of your GAN. We may notify 5. Performance Measures: The quality. you informally, also. Department has established the In addition, in making a competitive If your application is not evaluated or following Government Performance and grant award, the Secretary also requires not selected for funding, we notify you. Results Act of 1993 (GPRA) performance various assurances, including those 2. Administrative and National Policy measures for the GSEM program: applicable to Federal civil rights laws Requirements: We identify (a) The number of training events that prohibit discrimination in programs administrative and national policy provided by the GSEM program to assist or activities receiving Federal financial requirements in the application package LEAs in the development and assistance from the Department (34 CFR and reference these and other implementation of high-quality school 100.4, 104.5, 106.4, 108.8, and 110.23). requirements in the Applicable EOPs. 3. Risk Assessment and Specific Regulations section of this notice. (b) The extent to which the GSEM Conditions: Consistent with 2 CFR We reference the regulations outlining program expands the capacity of the 200.205, before awarding grants under the terms and conditions of an award in SEAs to provide training and technical this program the Department conducts a the Applicable Regulations section of assistance to LEAs for the development
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and implementation of high-quality DEPARTMENT OF EDUCATION percentage factor used to calculate a school EOPs. borrower’s ICR payment, as required by Annual Updates to the Income 6. Continuation Awards: In making a 34 CFR 685.209(b)(1)(ii)(A). We use the Contingent Repayment (ICR) Plan adjusted income percentage factors to continuation award under 34 CFR Formula for 2018—William D. Ford 75.253, the Secretary considers, among calculate a borrower’s monthly ICR Federal Direct Loan Program payment amount when the borrower other things: whether a grantee has initially applies for the ICR plan or made substantial progress in achieving AGENCY: Federal Student Aid, Department of Education. when the borrower submits his or her the goals and objectives of the project; annual income documentation, as ACTION: Notice. whether the grantee has expended funds required under the ICR plan. This notice in a manner that is consistent with its SUMMARY: The Secretary announces the contains the adjusted income percentage approved application and budget; and, annual updates to the ICR plan formula factors for 2018, examples of how the if the Secretary has established for 2018 to give notice to borrowers and monthly payment amount in ICR is performance measurement the public regarding how monthly ICR calculated, and charts showing sample requirements, the performance targets in payment amounts will be calculated for repayment amounts based on the the grantee’s approved application. the 2018–2019 year under the William adjusted ICR plan formula. This In making a continuation award, the D. Ford Federal Direct Loan (Direct information is included in the following Secretary also considers whether the Loan) Program, Catalog of Federal three attachments: grantee is operating in compliance with Domestic Assistance number 84.063. • Attachment 1—Income Percentage the assurances in its approved DATES: The adjustments to the income Factors for 2018 • application, including those applicable percentage factors for the ICR plan Attachment 2—Examples of the to Federal civil rights laws that prohibit formula contained in this notice are Calculations of Monthly Repayment discrimination in programs or activities applicable from July 1, 2018, to June 30, Amounts • receiving Federal financial assistance 2019, for any borrower who enters the Attachment 3—Charts Showing from the Department (34 CFR 100.4, ICR plan or has his or her monthly Sample Repayment Amounts for 104.5, 106.4, 108.8, and 110.23). payment amount recalculated under the Single and Married Borrowers ICR plan during that period. In Attachment 1, to reflect changes in VII. Other Information FOR FURTHER INFORMATION CONTACT: Ian inflation, we updated the income percentage factors that were published Accessible Format: Individuals with Foss, U.S. Department of Education, 830 First Street NE, Room 113H2, in the Federal Register on July 18, 2017 disabilities can obtain this document (82 FR 32803). Specifically, we have and a copy of the application package in Washington, DC 20202. Telephone: (202) 377–3681. Email: [email protected]. revised the table of income percentage an accessible format (e.g., braille, large If you use a telecommunications factors by changing the dollar amounts print, audiotape, or compact disc) on device for the deaf (TDD) or a text of the incomes shown by a percentage request to the program contact person telephone (TTY), call the Federal Relay equal to the estimated percentage listed under FOR FURTHER INFORMATION Service, toll free, at 1–800–877–8339. change between the not-seasonally- CONTACT. SUPPLEMENTARY INFORMATION: Under the adjusted Consumer Price Index for all Electronic Access to This Document: Direct Loan Program, borrowers may urban consumers for December 2017 The official version of this document is choose to repay their non-defaulted and December 2018. the document published in the Federal loans (Direct Subsidized Loans, Direct The income percentage factors Register. You may access the official Unsubsidized Loans, Direct PLUS Loans reflected in Attachment 1 may cause a edition of the Federal Register and the made to graduate or professional borrower’s payments to be lower than Code of Federal Regulations via the students, and Direct Consolidation they were in prior years, even if the Federal Digital System at: www.gpo.gov/ Loans) under the ICR plan. The ICR plan borrower’s income is the same as in the fdsys. At this site you can view this bases the borrower’s repayment amount prior year. The revised repayment document, as well as all other on the borrower’s income, family size, amount more accurately reflects the documents of this Department loan amount, and the interest rate impact of inflation on the borrower’s current ability to repay. published in the Federal Register, in applicable to each of the borrower’s Accessible Format: Individuals with text or Adobe Portable Document loans. disabilities can obtain this document in Format (PDF). To use PDF you must ICR is one of several income-driven an accessible format (e.g., braille, large have Adobe Acrobat Reader, which is repayment plans. Other income-driven print, audiotape, or compact disc) on available free at this site. repayment plans include the Income- Based Repayment (IBR) plan, the Pay As request to the contact person listed You may also access documents of the You Earn Repayment (PAYE) plan, and under FOR FURTHER INFORMATION Department published in the Federal the Revised Pay As You Earn CONTACT. Register by using the article search Repayment (REPAYE) plan. The IBR, Electronic Access to This Document: feature at: www.federalregister.gov. PAYE, and REPAYE plans provide The official version of this document is Specifically, through the advanced lower payment amounts than the ICR the document published in the Federal search feature at this site, you can limit plan for most borrowers. Register. You may access the official your search to documents published by A Direct Loan borrower who repays edition of the Federal Register and the the Department. his or her loans under the ICR plan pays Code of Federal Regulations via the Federal Digital System at: www.gpo.gov/ Dated: July 27, 2018. the lesser of: (1) The amount that he or she would pay over 12 years with fixed fdsys. At this site, you can view this Frank Brogan, payments multiplied by an income document, as well as all other Assistant Secretary of Elementary and percentage factor; or (2) 20 percent of documents of this Department Secondary Education. discretionary income. published in the Federal Register, in [FR Doc. 2018–16540 Filed 8–1–18; 8:45 am] Each year, to reflect changes in text or Portable Document Format BILLING CODE 4000–01–P inflation, we adjust the income (PDF). To use PDF, you must have
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Adobe Acrobat Reader, which is Specifically, through the advanced Dated: July 30, 2018. available free at this site. search feature at this site, you can limit James F. Manning, You may also access documents of the your search to documents published by Acting Chief Operating Officer, Federal Department published in the Federal the Department. Student Aid. Register by using the article search Program Authority: 20 U.S.C. 1087 et seq. Attachment 1—Income Percentage feature at: www.federalregister.gov. Factors for 2018
INCOME PERCENTAGE FACTORS FOR 2018
Single Married/head of household Income % Factor Income % Factor
$11,860 ...... 55.00 $11,860 50.52 16,318 ...... 57.79 18,712 56.68 20,997 ...... 60.57 22,299 59.56 25,782 ...... 66.23 29,152 67.79 30,352 ...... 71.89 36,114 75.22 36,114 ...... 80.33 45,361 87.61 45,361 ...... 88.77 56,890 100.00 56,891 ...... 100.00 68,424 100.00 68,424 ...... 100.00 85,724 109.40 82,238 ...... 111.80 114,547 125.00 105,302 ...... 123.50 154,905 140.60 149,143 ...... 141.20 216,641 150.00 171,006 ...... 150.00 354,009 200.00 304,590 ...... 200.00 ......
Attachment 2—Examples of the Attachment 1, the applicable income In the formula— Calculations of Monthly Repayment percentage can be calculated by • M is the monthly payment amount; Amounts following the instructions under the • P is the outstanding principal balance of the loan at the time the General notes about the examples in ‘‘Interpolation’’ heading later in this attachment. calculation is performed; this attachment: • I is the annual interest rate on the • We have a calculator that borrowers • Married borrowers may repay their loan, expressed as a decimal (for can use to estimate what their payment Direct Loans jointly under the ICR plan. example, for a loan with an interest rate amounts would be under the ICR plan. If a married couple elects this option, of 6 percent, 0.06); and The calculator is called the ‘‘Repayment we add the outstanding balance on the • N is the total number of months in Estimator’’ and is available at Direct Loans of each borrower and we the repayment period (for example, for StudentAid.gov/repayment-estimator. add together both borrowers’ AGIs to a loan with a 12-year repayment period, Based on information inputted into the determine a joint ICR payment amount. 144 months). calculator by the borrower (for example, We then prorate the joint payment For example, assume that Billy has a income, family size, and tax filing amount for each borrower based on the $10,000 Direct Unsubsidized Loan with status), this calculator provides a proportion of that borrower’s debt to the an interest rate of 6 percent. detailed, individualized assessment of a total outstanding balance. We bill each Step 1: To solve for M, first simplify borrower’s loans and repayment plan borrower separately. the numerator of the fraction by which options, including the ICR plan. • For example, if a married couple, we multiply P, the outstanding • The interest rates used in the John and Sally, has a total outstanding principal balance. To do this divide I, examples are for illustration only. The Direct Loan debt of $60,000, of which the interest rate, as a decimal, by 12. In actual interest rates on an individual $40,000 belongs to John and $20,000 to this example, Billy’s interest rate is 6 borrower’s Direct Loans depend on the Sally, we would apportion 67 percent of percent. As a decimal, 6 percent is 0.06. loan type and when the postsecondary the monthly ICR payment to John and • 0.06 ÷ 12 = 0.005 institution first disbursed the Direct the remaining 33 percent to Sally. To Loan to the borrower. Step 2: Next, simplify the • take advantage of a joint ICR payment, denominator of the fraction by which The Poverty Guideline amounts married couples need not file taxes used in the examples are from the 2018 we multiply P. To do this divide I, the jointly; they may file separately and interest rate, as a decimal, by 12. Then, U.S. Department of Health and Human subsequently provide the other spouse’s Services (HHS) Poverty Guidelines for add one. Next, raise the sum of the two tax information to the borrower’s the 48 contiguous States and the District figures to the negative power that Federal loan servicer. of Columbia. Different Poverty corresponds to the length of the Guidelines apply to residents of Alaska Calculating the monthly payment repayment period in months. In this and Hawaii. The Poverty Guidelines for amount using a standard amortization example, because we are amortizing a 2018 were published in the Federal and a 12-year repayment period. loan to calculate the monthly payment Register on January 18, 2018 (83 FR amount under the ICR plan, the 2642). The formula to amortize a loan with applicable figure is 12 years, which is • All of the examples use an income a standard schedule (in which each 144 months. Finally, subtract the result percentage factor corresponding to an payment is the same over the course of from one. the repayment period) is as follows: adjusted gross income (AGI) in the table • 0.06 ÷ 12 = 0.005 in Attachment 1. If an AGI is not listed M = P × <(I ÷ 12) ÷ [1 ¥ {1 + (I ÷ • 1 + 0.005 = 1.005 in the income percentage factors table in 12)}∧¥N]> • 1.005 ∧ ¥ 144 = 0.48762628
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• 1 ¥ 0.48762628 = 0.51237372 Joseph has a Direct Loan balance of 5 applies to both Joseph’s and Susan’s Step 3: Next, resolve the fraction by $10,000, and Susan has a Direct Loan loans. To determine the amount for dividing the result from Step 1 by the balance of $15,000. The interest rate on which each borrower will be result from Step 2. all of the loans is 6 percent. responsible, prorate the amount • 0.005 ÷ 0.51237372 = 0.0097585 Joseph and Susan have a combined calculated under Step 4 by each AGI of $85,724 and are repaying their spouse’s share of the combined Direct Step 4: Finally, solve for M, the loans jointly under the ICR plan (for Loan debt. Joseph has a Direct Loan debt monthly payment amount, by general information regarding joint ICR of $10,000 and Susan has a Direct Loan multiplying the outstanding principal payments for married couples, see the debt of $15,000. For Joseph, the monthly balance of the loan by the result of Step fifth and sixth bullets under the heading payment amount will be: 3. ‘‘General notes about the examples in • $10,000 ÷ ($10,000 + $15,000) = 40 • $10,000 × 0.0097585 = $97.59 this attachment’’). percent The remainder of the examples in this Step 1: Add Joseph’s and Susan’s • 0.40 × $266.90 = $106.76 attachment will only show the results of Direct Loan balances to determine their For Susan, the monthly payment the formula. combined aggregate loan balance: amount will be: Example 1. Brenda is single with no • $10,000 + $15,000 = $25,000 • $15,000 ÷ ($10,000 + $15,000) = 60 dependents and has $15,000 in Direct Step 2: Determine the combined percent Subsidized and Unsubsidized Loans. • 0.60 × $266.90 = $160.14 The interest rate on Brenda’s loans is 6 monthly payment amount for Joseph percent, and she has an AGI of $30,352. and Susan based on what both Example 3. David is single with no Step 1: Determine the total monthly borrowers would pay over 12 years dependents and has $60,000 in Direct payment amount based on what Brenda using standard amortization. To do this, Subsidized and Unsubsidized Loans. would pay over 12 years using standard use the formula that precedes Example The interest rate on all of the loans is amortization. To do this, use the 1. In this example, the combined 6 percent, and David’s AGI is $36,114. formula that precedes Example 1. In this monthly payment amount would be Step 1: Determine the total monthly example, the monthly payment amount $243.96. payment amount based on what David would be $146.38. Step 3: Multiply the result of Step 2 would pay over 12 years using standard Step 2: Multiply the result of Step 1 by the income percentage factor shown amortization. To do this, use the by the income percentage factor shown in the income percentage factors table formula that precedes Example 1. In this in the income percentage factors table (see Attachment 1 to this notice) that example, the monthly payment amount (see Attachment 1 to this notice) that corresponds to Joseph and Susan’s would be $585.51. corresponds to Brenda’s AGI. In this combined AGI. In this example, the Step 2: Multiply the result of Step 1 example, an AGI of $30,352 corresponds combined AGI of $85,724 corresponds by the income percentage factor shown to an income percentage factor of 71.89 to an income percentage factor of 109.40 in the income percentage factors table percent. percent. (see Attachment 1 to this notice) that • × corresponds to David’s AGI. In this • 0.7189 × $146.38 = $105.23 1.094 $243.96 = $266.90 Step 4: Determine 20 percent of example, an AGI of $36,114 corresponds Step 3: Determine 20 percent of to an income percentage factor of 80.33 Brenda’s discretionary income and Joseph and Susan’s combined discretionary income (discretionary percent. divide by 12 (discretionary income is • × AGI minus the HHS Poverty Guideline income is AGI minus the HHS Poverty 0.8033 $585.51 = $470.34 amount for a borrower’s family size and Guideline amount for a borrower’s Step 3: Determine 20 percent of State of residence). For Brenda, subtract family size and State of residence). To David’s discretionary income and divide the Poverty Guideline amount for a do this, subtract the Poverty Guideline by 12 (discretionary income is AGI family of one from her AGI, multiply the amount for a family of two from the minus the HHS Poverty Guideline result by 20 percent, and then divide by combined AGI, multiply the result by 20 amount for a borrower’s family size and 12: percent, and then divide by 12: State of residence). To do this, subtract • $30,352¥$12,140 = $18,212 • $85,724¥$16,460 = $69,264 the Poverty Guideline amount for a • $18,212 × 0.20 = $3,642.40 • $69,264 × 0.20 = $13,852.80 family of one from David’s AGI, • $3,642.40 ÷ 12 = $303.53 • $13,852.80 ÷ 12 = $1,154.40 multiply the result by 20 percent, and then divide by 12: Step 4: Compare the amount from Step 5: Compare the amount from • ¥ Step 2 with the amount from Step 3. Step 3 with the amount from Step 4. $36,114 $12,140 = $23,974 • × The lower of the two will be the The lower of the two will be Joseph and $23,974 0.20 = $4,794.80 • ÷ monthly ICR payment amount. In this Susan’s joint monthly payment amount. $4,794.80 12 = $399.57 example, Brenda will be paying the Joseph and Susan will jointly pay the Step 4: Compare the amount from amount calculated under Step 2 amount calculated under Step 3 Step 2 with the amount from Step 3. ($105.23). ($266.90). The lower of the two will be David’s Note: Brenda would have a lower Note: For Joseph and Susan, the ICR monthly payment amount. In this payment under other income-driven plan provides the lowest monthly example, David will be paying the repayment plans. Specifically, Brenda’s payment of all of the income-driven amount calculated under Step 3 payment would be $101.18 under the repayment plans. Joseph and Susan ($399.57). PAYE and REPAYE plans. However, would not be eligible for the IBR or Note: David would have a lower Brenda’s payment would be $151.76 PAYE plans, and would have a payment under each of the other under the IBR plan, which is higher combined monthly payment under the income-driven plans. Specifically, than the payment she would have under REPAYE plan of $508.62. David’s payment would be $149.20 the ICR plan. Step 6: Because Joseph and Susan are under the PAYE and REPAYE plans and Example 2. Joseph is married to Susan jointly repaying their Direct Loans $223.80 under the IBR plan. and has no dependents. They file their under the ICR plan, the monthly Interpolation. If an income is not Federal income tax return jointly. payment amount calculated under Step included on the income percentage
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factor table, calculate the income • $50,000¥$45,361 = $4,639 Attachment 3—Charts Showing Sample percentage factor through linear Income-Driven Repayment Amounts for Step 5: Divide the result of Step 4 by interpolation. For example, assume that Single and Married Borrowers Joan is single with an income of the income interval determined in Step 2: Below are two charts that provide $50,000. first-year payment amount estimates for Step 1: Find the closest income listed • ÷ $4,639 $11,530 = 40.23 percent a variety of loan debt sizes and incomes that is less than Joan’s income of under all of the income-driven $50,000 ($45,361) and the closest Step 6: Multiply the result of Step 5 repayment plans and the 10-Year income listed that is greater than Joan’s by the income percentage factor Standard Repayment Plan. The first income of $50,000 ($56,891). interval: Step 2: Subtract the lower amount chart is for single borrowers who have • 11.23 percent × 40.23 percent = 4.52 a family size of one. The second chart from the higher amount (for this percent discussion we will call the result the is for a borrower who is married or a ‘‘income interval’’): Step 7: Add the result of Step 6 to the head of household and who has a family • ¥ lower of the two income percentage size of three. The calculations in $56,891 $45,361 = $11,530 Attachment 3 assume that the loan debt factors used in Step 3 to calculate the Step 3: Determine the difference has an interest rate of 6 percent. For income percentage factor interval for between the two income percentage married borrowers, the calculations $50,000 in income: factors that correspond to the incomes assume that the borrower files a joint used in Step 2 (for this discussion, we • 4.52 percent + 88.77 percent = 93.29 Federal income tax return with his or will call the result the ‘‘income percent (rounded to the nearest her spouse and that the borrower’s percentage factor interval’’): hundredth) spouse does not have Federal student • 100.00 percent¥88.77 percent = 11.23 loans. A field with a ‘‘-’’ character percent The result is the income percentage indicates that the borrower in the Step 4: Subtract from Joan’s income factor that we will use to calculate example would not be eligible to enter the closest income shown on the chart Joan’s monthly repayment amount the applicable income-driven repayment that is less than Joan’s income of under the ICR plan. plan based on the borrower’s income, $50,000: loan debt, and family size.
SAMPLE FIRST-YEAR MONTHLY REPAYMENT AMOUNTS FOR A SINGLE BORROWER
Family Size = 1 Income Plan $20,000 $40,000 $60,000 $80,000 $100,000
Initial Debt ...... $20,000 ICR...... $117 $165 $195 $214 $236 IBR ...... 22 - - - - PAYE ...... 15 182 - - - REPAYE ...... 15 182 348 515 682 10-Year Standard 222 222 222 222 222 40,000 ICR ...... 131 327 390 429 472 BR ...... 22 272 - - - PAYE ...... 15 182 348 - - REPAYE ...... 15 182 348 515 682 10-Year Standard 444 444 444 444 444 60,000 ICR ...... 131 464 586 643 707 IBR ...... 22 272 522 - - PAYE ...... 15 182 348 515 - REPAYE ...... 15 182 348 515 682 10-Year Standard 666 666 666 666 666 80,000 ICR ...... 131 464 781 858 943 IBR ...... 22 272 522 772 - PAYE ...... 15 182 348 515 682 REPAYE ...... 15 182 348 515 692 10-Year Standard 888 888 888 888 888 100,000 ICR ...... 131 464 798 1,072 1,179 IBR ...... 22 272 522 772 1,022 PAYE ...... 15 182 348 515 682 REPAYE ...... 15 182 348 515 692 10-Year Standard 1,110 1,110 1,110 1,110 1,110
SAMPLE FIRST-YEAR MONTHLY REPAYMENT AMOUNTS FOR A MARRIED OR HEAD-OF-HOUSEHOLD BORROWER
Family Size = 3 Income Plan $20,000 $40,000 $60,000 $80,000 $100,000
Initial Debt ...... Income Plan ...... $20,000 $40,000 $60,000 $80,000 $100,000 $20,000 ICR ...... $0 $166 $195 $207 $229 IBR ...... 0 110 - - - PAYE ...... 0 74 - - - REPAYE ...... 0 74 240 407 574 10-Year Standard 222 222 222 222 222
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SAMPLE FIRST-YEAR MONTHLY REPAYMENT AMOUNTS FOR A MARRIED OR HEAD-OF-HOUSEHOLD BORROWER— Continued
Family Size = 3 Income Plan $20,000 $40,000 $60,000 $80,000 $100,000
40,000 ICR ...... 0 314 390 415 457 IBR ...... 0 110 360 - - PAYE ...... 0 74 240 407 - REPAYE ...... 0 74 240 407 574 10-Year Standard 444 444 444 444 444 60,000 ICR ...... 0 320 586 622 686 IBR ...... 0 110 360 610 - PAYE ...... 0 74 240 407 574 REPAYE ...... 0 74 240 407 574 10-Year Standard 666 666 666 666 666 80,000 ICR ...... 0 320 654 830 914 IBR ...... 0 110 360 610 860 PAYE ...... 0 74 240 407 574 REPAYE ...... 0 74 240 407 574 10-Year Standard 888 888 888 888 888 100,000 ICR ...... 0 320 654 987 1,143 IBR ...... 0 110 360 610 860 PAYE ...... 0 74 240 407 574 REPAYE ...... 0 74 240 407 574 10-Year Standard 1,110 1,110 1,110 1,110 1,110
[FR Doc. 2018–16582 Filed 8–1–18; 8:45 am] the email. It is recommended that 00001951] is available at: https://eere- BILLING CODE 4000–01–P attachments with file sizes exceeding exchange.energy.gov/. 25MB be compressed (i.e., zipped) to ensure message delivery. Responses Confidential Business Information must be provided as a Microsoft Word DEPARTMENT OF ENERGY Because information received in (.docx) attachment to the email, and 12 response to this RFI may be used to Notice of Request for Information (RFI) point font, 1 inch margins. Only structure future programs, funding and/ on Understanding Catalyst Production electronic responses will be accepted. and Development Needs at National The complete RFI document is located or otherwise be made available to the Laboratories at https://eere-exchange.energy.gov/. public, respondents are strongly advised to not include any information in their AGENCY: Bioenergy Technologies Office, FOR FURTHER INFORMATION CONTACT: responses that might be considered Office of Energy Efficiency and Questions may be addressed to Jim business sensitive, proprietary, or Renewable Energy, Department of Spaeth, (720) 356–1784, or otherwise confidential. If, however, a Energy. [email protected]. Further respondent chooses to submit business ACTION: Request for information. instructions can be found in the RFI sensitive, proprietary, or otherwise document posted on EERE Exchange. confidential information, it must be SUMMARY: The U.S. Department of clearly and conspicuously marked as Energy (DOE) invites public comment SUPPLEMENTARY INFORMATION: DOE such in the response as detailed in the on its Request for Information (RFI) to posted on its website a RFI to solicit RFI [DE–FOA–00001951] at: https:// understand research, capabilities and feedback from industry (including but yet-to-be addressed challenges pertinent not limited to research organizations, eere-exchange.energy.gov/. to production scale-up of catalysts for manufacturing organizations, catalyst Factors of interest to DOE when the conversion of biomass and waste manufacturers, and catalyst research evaluating requests to treat submitted streams. Additionally, through this RFI, consortia), academia, research information as confidential include: (1) the Bioenergy Technologies Office laboratories, government agencies, and A description of the items; (2) whether (BETO) seeks to understand other biofuels and bioproducts and why such items are customarily enhancement capabilities of process stakeholders on ‘‘catalyst productions treated as confidential within the development units at the National capability for biochemical and industry; (3) whether the information is thermochemical processes.’’ Laboratories in order to increase their generally known by or available from Specifically, BETO seeks information to impact. other sources; (4) whether the help identify and understand additional information has previously been made DATES: Responses to the RFI must be areas of research, capabilities, and yet- available to others without obligation received no later than September 14, to be-addressed challenges pertinent to 2018. production scale-up challenges concerning its confidentiality; (5) an explanation of the competitive injury to ADDRESSES: Interested parties are to (typically in multi-kilogram quantities submit comments electronically to of novel catalysts used in technology the submitting person that would result [email protected]. development and engineering solutions from public disclosure; (6) when such Responses must be provided as for the efficient conversion of information might lose its confidential attachments to an email. Include lignocellulosic, waste, and algal character due to the passage of time; and ‘‘Understanding Catalyst Production feedstocks to produce biofuels and (7) why disclosure of the information and Development RFI’’ as the subject of bioproducts). The RFI [DE–FOA– would be contrary to the public interest.
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Signed in Washington, DC, on July 27, transmission facilities to be utilized by DEPARTMENT OF ENERGY 2018. the Applicant have previously been Jonathan Male, authorized by Presidential Permits Notice of Request for Information (RFI) Director, Bioenergy Technologies Office. issued pursuant to Executive Order on H2@Scale (Hydrogen at Scale): [FR Doc. 2018–16577 Filed 8–1–18; 8:45 am] 10485, as amended, and are appropriate Determining Opportunities To BILLING CODE 6450–01–P for open access transmission by third Facilitate Wide-Scale Hydrogen parties. Adoption for Energy Security and Economic Growth DEPARTMENT OF ENERGY Procedural Matters: Any person desiring to be heard in this proceeding AGENCY: Office of Energy Efficiency and [OE Docket No. EA–457] should file a comment or protest to the Renewable Energy, Department of application at the address provided Energy (DOE). Application to Export Electric Energy; above. Protests should be filed in ACTION: Request for information (RFI). ADG Group Inc. accordance with Rule 211 of the Federal SUMMARY: The U.S. Department of AGENCY: Office of Electricity, Energy Regulatory Commission’s Rules Department of Energy. of Practice and Procedure (18 CFR Energy (DOE) invites public comment on its Request for Information (RFI) on 385.211). Any person desiring to ACTION: Notice of application. H2@Scale (Hydrogen at Scale): become a party to these proceedings SUMMARY: ADG Group Inc. (ADG or Determining Opportunities to Facilitate should file a motion to intervene at the Wide-Scale Hydrogen Adoption for Applicant) has applied for authorization above address in accordance with FERC to transmit electric energy from the Energy Security and Economic Growth. Rule 214 (18 CFR 385.214). Five (5) The Office of Energy Efficiency and United States to Canada pursuant to the copies of such comments, protests, or Federal Power Act. Renewable Energy (EERE) is specifically motions to intervene should be sent to interested in information to quantify the DATES: Comments, protests, or motions the address provided above on or before increasing industrial demand for to intervene must be submitted on or the date listed above. hydrogen, to identify and quantify the before September 4, 2018. Comments and other filings available domestic resources capable of ADDRESSES: Comments, protests, concerning ADG’s application to export generating sufficient hydrogen to motions to intervene, or requests for electric energy to Canada should be sustainably meet the demand in the more information should be addressed near- to long-terms across multiple to: Office of Electricity, Mail Code: OE– clearly marked with OE Docket No. EA– 457. An additional copy is to be sectors, and to identify opportunities to 20, U.S. Department of Energy, 1000 leverage current industrial Independence Avenue SW, Washington, provided to both Xue Chao (David) Cai, ADG Group Inc., 77 King Street West, infrastructure to better meet the growing DC 20585–0350. Because of delays in demands for hydrogen across sectors. handling conventional mail, it is Suite 400, Toronto, Ontario, Canada DATES: Responses to the RFI must be recommended that documents be M5K 0A1, and Peter P. Thieman, received no later than 5:00 p.m. (ET) on transmitted by overnight mail, by Dentons US LLP, 1900 K Street NW, October 31, 2018. electronic mail to Electricity.Exports@ Washington, DC 20006. ADDRESSES: Interested parties are hq.doe.gov, or by facsimile to 202–586– A final decision will be made on this invited to submit comments using the 8008. application after the environmental Online Response Collector found at the SUPPLEMENTARY INFORMATION: Exports of impacts have been evaluated pursuant specified web link included in the RFI electricity from the United States to a to DOE’s National Environmental Policy foreign country are regulated by the document. Alternatively, responses can Act Implementing Procedures (10 CFR be submitted as an attachment to an Department of Energy (DOE) pursuant to part 1021) and after a determination is sections 301(b) and 402(f) of the email addressed to made by DOE that the proposed action [email protected] Department of Energy Organization Act will not have an adverse impact on the (42 U.S.C. 7151(b) and 7172(f)) and with ‘‘H2@Scale RFI’’ in the subject line. sufficiency of supply or reliability of the Email attachments can be provided as a require authorization under section U.S. electric power supply system. 202(e) of the Federal Power Act (16 Microsoft Word (.docx) file or an Adobe U.S.C. 824a(e)). Copies of this application will be PDF (.pdf) file, prepared in accordance On July 17, 2018, DOE received an made available, upon request, for public with the detailed instructions in the application from ADG for authorization inspection and copying at the address RFI. Documents submitted to transmit electric energy from the provided above, by accessing the electronically should clearly indicate United States to Canada as a power program website at http://energy.gov/ which topic areas and specific questions marketer for a five-year term using node/11845, or by emailing Angela Troy are being addressed, and should be existing international transmission at [email protected]. limited to no more than 10MB in size. facilities. The complete RFI [DE–FOA–0001965] Signed in Washington, DC, on July 24, document is located at https://eere- In its application, ADG states that it 2018. does not own, operate, or control any exchange.energy.gov/. Christopher Lawrence, electric power generation, transmission, FOR FURTHER INFORMATION CONTACT: or distribution facilities, and that it has Electricity Policy Analyst, Office of Electricity. Questions may be addressed to no franchised electric power service [FR Doc. 2018–16579 Filed 8–1–18; 8:45 am] [email protected] area. The electric energy that the BILLING CODE 6450–01–P or to Eric Miller at (202) 287–5829. Applicant proposes to export to Canada Further instruction can be found in the would be surplus energy purchased RFI document posted on EERE from third parties such as electric Exchange at https://eere- utilities and other suppliers within the exchange.energy.gov/. United States pursuant to voluntary SUPPLEMENTARY INFORMATION: The H2@ agreements. The existing international Scale initiative aims to develop and
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enable transformational technologies DATES: The regular meeting of the Board SUMMARY: As part of its continuing effort that can sustainably produce and will be held at the offices of the Farm to reduce paperwork burdens, and as efficiently utilize large quantities of Credit Administration in McLean, required by the Paperwork Reduction affordable hydrogen to collectively Virginia, on August 9, 2018, from 9:00 Act (PRA) of 1995, the Federal enable energy storage, energy security, a.m. until such time as the Board Communications Commission (FCC or grid resiliency, domestic employment, concludes its business. the Commission) invites the general and American dominance in energy ADDRESSES: Farm Credit public and other Federal agencies to innovation. The purpose of this RFI is Administration, 1501 Farm Credit Drive, take this opportunity to comment on the to solicit feedback from industry, McLean, Virginia 22102–5090. Submit following information collection. academia, research laboratories, attendance requests via email to Comments are requested concerning: government agencies, and other [email protected]. See Whether the proposed collection of stakeholders on opportunities and SUPPLEMENTARY INFORMATION for further information is necessary for the proper strategies for expanding and information about attendance requests. performance of the functions of the Commission, including whether the diversifying current hydrogen supply FOR FURTHER INFORMATION CONTACT: Dale information shall have practical utility; options, and for leveraging and multi- L. Aultman, Secretary to the Farm the accuracy of the Commission’s purposing current industrial Credit Administration Board, (703) 883– burden estimate; ways to enhance the infrastructure to accommodate 4009, TTY (703) 883–4056, aultmand@ quality, utility, and clarity of the widespread hydrogen usage. The RFI fca.gov. seeks input in five topic areas: information collected; ways to minimize Hydrogen supply expansion and SUPPLEMENTARY INFORMATION: This the burden of the collection of diversification; expansion of markets meeting of the Board will be open to the information on the respondents, requiring significant hydrogen demand; public (limited space available). Please including the use of automated leveraging and/or multi-purposing send an email to VisitorRequest@ collection techniques or other forms of industries and infrastructure to facilitate FCA.gov at least 24 hours before the information technology; and ways to widespread adoption of hydrogen; meeting. In your email include: name, further reduce the information potential sponsored competitions to postal address, entity you are collection burden on small business incentivize widespread adoption of representing (if applicable), and concerns with fewer than 25 employees. hydrogen across multiple sectors; and telephone number. You will receive an The Commission may not conduct or other innovative approaches to help email confirmation from us. Please be sponsor a collection of information enable H2@Scale. prepared to show a photo identification unless it displays a currently valid Confidential Business Information: when you arrive. If you need assistance Office of Management and Budget Because information received in for accessibility reasons, or if you have (OMB) control number. No person shall response to this RFI may be used to any questions, contact Dale L. Aultman, be subject to any penalty for failing to structure future programs, funding and/ Secretary to the Farm Credit comply with a collection of information or otherwise be made available to the Administration Board, at (703) 883– subject to the PRA that does not display public, respondents are strongly advised 4009. The matters to be considered at a valid OMB control number. to not include any information in their the meeting are: DATES: Written comments should be responses that might be considered Open Session submitted on or before September 4, business sensitive, proprietary, or 2018. If you anticipate that you will be otherwise confidential. If, however, a A. Approval of Minutes submitting comments, but find it respondent chooses to submit business • July 12, 2018 difficult to do so within the period of sensitive, proprietary, or otherwise time allowed by this notice, you should B. Report confidential information, it must be advise the contacts listed below as soon clearly and conspicuously marked as • Annual Report on the Farm Credit as possible. such in the response as detailed in the System’s Young, Beginning, and Small ADDRESSES: Direct all PRA comments to RFI [DE–FOA–0001965] at: https://eere- Farmer Mission Performance: 2017 Nicholas A. Fraser, OMB, via email exchange.energy.gov/. Results [email protected]; and Issued in Washington, DC, on July 23, Dated: July 30, 2018. to Cathy Williams, FCC, via email PRA@ 2018. Dale L. Aultman, fcc.gov and to [email protected]. Sunita Satyapal, Secretary, Farm Credit Administration Board. Include in the comments the OMB control number as shown in the Director, Fuel Cell Technologies Office. [FR Doc. 2018–16629 Filed 7–31–18; 11:15 am] SUPPLEMENTARY INFORMATION below. [FR Doc. 2018–16578 Filed 8–1–18; 8:45 am] BILLING CODE 6705–01–P FOR FURTHER INFORMATION CONTACT: BILLING CODE 6450–01–P For additional information or copies of the information collection, contact Cathy FEDERAL COMMUNICATIONS Williams at (202) 418–2918. To view a FARM CREDIT ADMINISTRATION COMMISSION copy of this information collection request (ICR) submitted to OMB: (1) Go Sunshine Act Meeting; Farm Credit [OMB 3060–1162] Administration Board to the webpage http://www.reginfo.gov/ public/do/PRAMain, (2) look for the Information Collection Being AGENCY: Farm Credit Administration. section of the webpage called Submitted for Review and Approval to ACTION: Notice, regular meeting. ‘‘Currently Under Review,’’ (3) click on the Office of Management and Budget the downward-pointing arrow in the SUMMARY: Notice is hereby given, AGENCY: Federal Communications ‘‘Select Agency’’ box below the pursuant to the Government in the Commission. ‘‘Currently Under Review’’ heading, (4) Sunshine Act, of the regular meeting of select ‘‘Federal Communications ACTION: Notice and request for the Farm Credit Administration Board Commission’’ from the list of agencies comments. (Board). presented in the ‘‘Select Agency’’ box,
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(5) click the ‘‘Submit’’ button to the Total Annual Cost: $95,700. disability accessibility requirements. right of the ‘‘Select Agency’’ box, (6) Privacy Act Impact Assessment: Yes. The online form is part of an when the list of FCC ICRs currently As required by OMB Memorandum M– information collection reflected in OMB under review appears, look for the OMB 03–22 (September 26, 2003), the FC control number 3060–0874. control number of this ICR and then completed a Privacy Impact Assessment The Twenty-First Century click on the ICR Reference Number. A (PIA) on June 28, 2007, that gives a full Communications and Video copy of the FCC submission to OMB and complete explanation of how the Accessibility Act of 2010 (CVAA) will be displayed. FCC collects, stores, maintains, directed the Commission to revise its SUPPLEMENTARY INFORMATION: As part of safeguards, and destroys the PII covered regulations to mandate closed its continuing effort to reduce by these information collection captioning on IP-delivered video paperwork burdens, and as required by requirements. The PIA may be reviewed programming that was published or at: http://www.fcc.gov/omd/privacyact/ exhibited on television with captions the Paperwork Reduction Act (PRA) of _ _ 1995 (44 U.S.C. 3501–3520), the Federal Privacy Impact Assessment.html. after the effective date of the Nature and Extent of Confidentiality: Communications Commission (FCC or regulations. Accordingly, the Some assurances of confidentiality are the Commission) invites the general Commission requires video being provided to the respondents. public and other Federal agencies to programming owners (VPOs) to send Parties filing petitions for exemption take this opportunity to comment on the program files to video programming based on economic burden, requests for following information collection. distributors and providers (hereinafter Commission determinations of technical Comments are requested concerning: VPDs) with required captions, and it feasibility and achievability, requests for Whether the proposed collection of requires VPDs to enable the rendering or purpose-based waivers, or responses to information is necessary for the proper pass through of all required captions to complaints alleging violations of the the end user. The CVAA also directed performance of the functions of the Commission’s rules may seek Commission, including whether the the Commission to revise its regulations confidential treatment of information to mandate that all apparatus designed information shall have practical utility; they provide pursuant to the the accuracy of the Commission’s to receive, play back, or record video Commission’s existing confidentiality programming be equipped with built-in burden estimate; ways to enhance the rules. quality, utility, and clarity of the closed caption decoder circuitry or The Commission is not requesting capability designed to display closed- information collected; ways to minimize that individuals who file complaints captioned video programming, except the burden of the collection of alleging violations of our rules that apparatus that use a picture screen information on the respondents, (complainants) submit confidential that is 13 inches or smaller and including the use of automated information (e.g., credit card numbers, recording devices must comply only if collection techniques or other forms of social security numbers, or personal doing so is achievable. These rules are information technology; and ways to financial information) to us. We request codified at 47 CFR 79.4 and 79.100– further reduce the information that complainants submit their names, 79.104. collection burden on small business addresses, and other contact concerns with fewer than 25 employees. information, which enables us to Federal Communications Commission. OMB Control Number: 3060–1162. process complaints. Any use of this Marlene Dortch, Title: Closed Captioning of Video information is covered under the Secretary, Office of the Secretary. Programming Delivered Using internet routine uses listed in the Commission’s [FR Doc. 2018–16511 Filed 8–1–18; 8:45 am] Protocol, and Apparatus Closed Caption SORN, FCC/CGB–1, ‘‘Informal BILLING CODE 6712–01–P Requirements. Complaints, Inquiries, and Requests for Form Number: N/A. Dispute Assistance.’’ The PIA that the Type of Review: Revision of a FCC completed on June 28, 2007 gives FEDERAL COMMUNICATIONS currently approved collection. a full and complete explanation of how COMMISSION Respondents: Individuals or the FCC collects, stores, maintains, Household, Businesses or other for- safeguards, and destroys PII, as required [OMB 3060–1103] profit, Not-for-profit institutions. by OMB regulations and the Privacy Information Collection Being Reviewed Number of Respondents and Act, 5 U.S.C. 552a. The PIA may be by the Federal Communications Responses: 1,172 respondents; 3,341 viewed at: http://www.fcc.gov/omd/ Commission Under Delegated responses. _ _ privacyact/Privacy Impact Authority Estimated Time per Response: 0.084– Assessment.html. The Commission will 10 hours. update the PIA to cover the PII collected AGENCY: Federal Communications Frequency of Response: One time and related to this information collection to Commission. on occasion reporting requirements; incorporate various revisions to it as a ACTION: Notice and request for Recordkeeping requirement; Third party result of revisions to the SORN and as comments. disclosure requirement. required by OMB’s Memorandum M– Obligation to Respond: Mandatory; 03–22 (September 26, 2003) and by the SUMMARY: As part of its continuing effort Required to obtain or retain benefits. Privacy Act, 5 U.S.C. 552a. to reduce paperwork burdens, and as The statutory authority for this Needs and Uses: The Commission is required by the Paperwork Reduction collection is contained in the Twenty- submitting this revised information Act of 1995 (PRA), the Federal First Century Communications and collection to transfer certain information Communications Commission (FCC or Video Accessibility Act of 2010, Public collection burdens associated with this Commission) invites the general public Law 111–260, 124 Stat. 2751, and OMB control number to another OMB and other Federal agencies to take this Sections 4(i), 4(j), 303, 330(b), 713, and control number. This change is being opportunity to comment on the 716 of the Communications Act of 1934, made to reflect the development of an following information collections. as amended (the Act), 47 U.S.C. 154(i), online form for use by consumers in Comments are requested concerning: 154(j), 303, 330(b), 613, and 617. filing complaints with the Commission whether the proposed collection of Total Annual Burden: 9,197 hours. that allege violations of the FCC’s information is necessary for the proper
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performance of the functions of the Needs and Uses: The information FEDERAL COMMUNICATIONS Commission, including whether the collection requirements are as follows: COMMISSION information shall have practical utility; 47 CFR 76.41(b) requires a [OMB 3060–0149] the accuracy of the Commission’s competitive franchise applicant to burden estimate; ways to enhance the include the following information in Information Collection Being Reviewed quality, utility, and clarity of the writing in its franchise application, in by the Federal Communications information collected; ways to minimize Commission the burden of the collection of addition to any information required by information on the respondents, applicable state and local laws: AGENCY: Federal Communications including the use of automated (1) The applicant’s name; Commission. collection techniques or other forms of (2) The names of the applicant’s ACTION: Notice and request for information technology; and ways to officers and directors; comments. further reduce the information collection burden on small business (3) The business address of the SUMMARY: As part of its continuing effort concerns with fewer than 25 employees. applicant; to reduce paperwork burdens, and as The FCC may not conduct or sponsor (4) The name and contact information required by the Paperwork Reduction a collection of information unless it of a designated contact for the applicant; Act (PRA) of 1995, the Federal Communications Commission (FCC or displays a currently valid Office of (5) A description of the geographic Management and Budget (OMB) control the Commission) invites the general area that the applicant proposes to number. No person shall be subject to public and other Federal agencies to serve; any penalty for failing to comply with take this opportunity to comment on the a collection of information subject to the (6) The PEG channel capacity and following information collection. PRA that does not display a valid OMB capital support proposed by the Comments are requested concerning: control number. applicant; whether the proposed collection of DATES: Written PRA comments should (7) The term of the agreement information is necessary for the proper be submitted on or before October 1, proposed by the applicant; performance of the functions of the Commission, including whether the 2018. If you anticipate that you will be (8) Whether the applicant holds an submitting comments, but find it information shall have practical utility; existing authorization to access the difficult to do so within the period of the accuracy of the Commission’s public rights-of-way in the subject time allowed by this notice, you should burden estimate; ways to enhance the franchise service area; advise the contact listed below as soon quality, utility, and clarity of the as possible. (9) The amount of the franchise fee information collected; ways to minimize ADDRESSES: Direct all PRA comments to the applicant offers to pay; and the burden of the collection of Cathy Williams, FCC, via email to PRA@ (10) Any additional information information on the respondents, fcc.gov and to [email protected]. required by applicable state or local including the use of automated collection techniques or other forms of FOR FURTHER INFORMATION CONTACT: For laws. information technology; and ways to additional information about the The information collection further reduce the information information collection, contact Cathy requirements contained in 47 CFR collection burden on small business Williams at (202) 418–2918. 76.41(d) states when a competitive concerns with fewer than 25 employees. SUPPLEMENTARY INFORMATION: franchise applicant files a franchise The FCC may not conduct or sponsor a OMB Control Number: 3060–1103. application with a franchising authority Title: Section 76.41 Franchise collection of information unless it and the applicant has existing authority Application Process. displays a currently valid control Type of Review: Extension of a to access public rights-of-way in the number. No person shall be subject to currently approved collection. geographic area that the applicant any penalty for failing to comply with Form Number: N/A. proposes to serve, the franchising a collection of information subject to the Respondents: State, local or tribal authority grant or deny the application PRA that does not display a valid Office government, Business or other for profit within 90 days of the date the of Management and Budget (OMB) entities. application is received by the control number. Number of Respondents and franchising authority. If a competitive DATES: Written PRA comments should Responses: 22 respondents and 40 franchise applicant does not have be submitted on or before October 1, responses. existing authority to access public 2018. If you anticipate that you will be Estimated Hours per Response: 0.5 to rights-of-way in the geographic area that submitting comments, but find it 4 hours. the applicant proposes to serve, the difficult to do so within the period of Frequency of Response: On occasion franchising authority must perform time allowed by this notice, you should reporting requirements; Third party grant or deny the application within 180 advise the contact listed below as soon disclosure requirement. days of the date the application is as possible. Total Annual Burden: 90 hours. ADDRESSES: Direct all PRA comments to Total Annual Cost: No cost. received by the franchising authority. A Privacy Impact Assessment: No franchising authority and a competitive Nicole Ongele, FCC, via email PRA@ impact(s). franchise applicant may agree in writing fcc.gov and to [email protected]. Nature of Response: Required to to extend the 90-day or 180-day FOR FURTHER INFORMATION CONTACT: For obtain or retain benefits. The statutory deadline, whichever is applicable. additional information about the information collection, contact Nicole authority for this collection is contained Federal Communications Commission. in 47 U.S.C. 151, 152, 154(i), 157nt, 201, Ongele at (202) 418–2991. Marlene Dortch, 531, 541 and 542. SUPPLEMENTARY INFORMATION: As part of Confidentiality: There is no need for Secretary, Office of the Secretary. its continuing effort to reduce confidentiality required with this [FR Doc. 2018–16514 Filed 8–1–18; 8:45 am] paperwork burdens, and as required by collection of information. BILLING CODE 6712–01–P the Paperwork Reduction Act (PRA) of
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1995 (44 U.S.C. 3501–3520), the Federal first obtain FCC authorization either to grandfather data services below speeds Communications Commission (FCC or (1) construct, operate, or engage in of 25 Mbps download speed and 3 Mbps Commission) invites the general public transmission over a line of upload speed are now subject to a and other Federal agencies to take this communications; or (2) discontinue, uniform reduced public comment opportunity to comment on the reduce or impair service over a line of period of 10 days and an automatic following information collections. communications. Part 63 of Title 47 of grant period of 25 days. Second, all Comments are requested concerning: the Code of Federal Regulations (CFR) carriers, whether dominant or non- whether the proposed collection of implements Section 214. Part 63 also dominant, seeking authorization to information is necessary for the proper implements provisions of the Cable discontinue data services below speeds performance of the functions of the Communications Policy Act of 1984 of 25 Mbps download speed and 3 Mbps Commission, including whether the pertaining to video which was approved upload speed that have previously been information shall have practical utility; under this OMB Control Number 3060– grandfathered for a period of at least 180 the accuracy of the Commission’s 0149. In 2009, the Commission modified days are subject to a uniform reduced burden estimate; ways to enhance the Part 63 to extend to providers of public comment period of 10 days and quality, utility, and clarity of the interconnected Voice of Internet an automatic grant period of 31 days, information collected; ways to minimize Protocol (VoIP) service the provided they submit a statement as the burden of the collection of discontinuance obligations that apply to part of their discontinuance application information on the respondents, domestic non-dominant that they have received Commission including the use of automated telecommunications carriers under authority to grandfather the services at collection techniques or other forms of Section 214 of the Communications Act issue at least 180 days prior to the filing information technology; and ways to of 1934, as amended. In 2014, the of the discontinuance application. This further reduce the information Commission adopted improved statement must reference the file collection burden on small business administrative filing procedures for number of the prior Commission concerns with fewer than 25 employees. domestic transfers of control, domestic authorization to grandfather the services OMB Control Number: 3060–0149. discontinuances and notices of network the carrier now seeks to permanently Title: Part 63, Accelerating Wireline changes, and among other adjustments, discontinue. Third, carriers are no Broadband Deployment by Removing modified Part 63 to require electronic longer required to file an application to Barriers to Infrastructure Investment, filing for applications for authorization discontinue, reduce, or impair any WC Docket No. 17–84, FCC 18–74. to discontinue, reduce, or impair service service for which it has had no Form Number(s): N/A. under section 214(a) of the Act. In July customers and no request for service for Type of Review: Revision of a 2016, the Commission concluded that at least a 30-day period immediately currently approved collection. applicants seeking to discontinue a preceding the discontinuance. Fourth, Respondents: Business or other for- legacy time division multiplexing all carriers, whether dominant or non- profit. (TDM)-based voice service as part of a dominant, that seek approval to Number of Respondents and transition to a new technology, whether discontinue legacy voice service can Responses: 80 respondents; 88 Internet Protocol (IP), wireless, or obtain further streamlined processing responses. another type (technology transition Estimated Time per Response: 6–62 with a public comment period of 15 discontinuance application) must days and an automatic grant period of hours per response. demonstrate that an adequate Frequency of Response: One-time 31 days, provided (1) they offer a stand- replacement for the legacy service exists reporting requirement and third-party alone interconnected VoIP service in order to be eligible for streamlined disclosure requirements. throughout the service area, and (2) at treatment and revised part 63 Obligation to Respond: Required to least one alternative stand-alone, accordingly. The Commission obtain or retain benefits. Statutory facilities-based voice service is available concluded that an applicant for a authority for this collection of from an unaffiliated provider technology transition discontinuance information is contained in 47 U.S.C. throughout the affected service area (the may demonstrate that a service is an 214 and 402 of the Communications Act ‘‘alternative options test’’). Finally, all adequate replacement for a legacy voice of 1934, as amended. carriers, whether dominant or non- Total Annual Burden: 1,086 hours. service by certifying or showing that one dominant, that seek approval to Total Annual Cost: $27,900. or more replacement service(s) offers all grandfather legacy voice service are now Privacy Act Impact Assessment: No of the following: (i) Substantially similar subject to a uniform reduced public impact(s). levels of network infrastructure and comment period of 10 days and an Nature and Extent of Confidentiality: service quality as the applicant service; automatic grant period of 25 days. The Information filed in section 214 (ii) compliance with existing federal Commission estimates that it will applications has generally been non- and/or industry standards required to receive three fewer section 214(a) confidential. Requests from parties ensure that critical applications such as discontinuance applications annually in seeking confidential treatment are 911, network security, and applications light of the Commission’s forbearance considered by Commission staff for individuals with disabilities remain from applying its section 214(a) pursuant to 47 CFR 0.459 of the available; and (iii) interoperability and discontinuance requirements to services Commission’s rules. compatibility with an enumerated list of for which the carrier has had no Needs and Uses: The Commission is applications and functionalities customers and no reasonable requests seeking Office of Management and determined to be key to consumers and for service during the preceding 30-day Budget (OMB) approval for a revision of competitors (the ‘‘adequate replacement period. The Commission also a currently approved collection to OMB. test’’). anticipates that the number of The Commission will submit this In June 2018, the Commission further respondents and responses under the information collection to OMB after this modified the rules applicable to section adequate replacement test will likely 60-day comment period. Section 214 of 214(a) discontinuance applications. decrease from 5 and 25, respectively, to the Communications Act of 1934, as First, all carriers, whether dominant or 2 and 10, respectively. The remaining amended, requires that a carrier must non-dominant, that seek approval to 15 responses previously attributable to
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the adequate replacement test will likely (ATSDR), within the Department of ATSDR remains committed to proceed pursuant to the less rigorous Health and Human Services (HHS) providing a public comment period for alternative options test. The announces the availability of Set 29 these documents as a means to provide Commission estimates that the total Draft Toxicological Profiles for review the best service to the public regarding annual burden of the entire collection, and comment. All toxicological profiles public health. as revised, is reduced from 1,923 hours issued as ‘‘Drafts for Public Comment’’ DATES: Comments must be submitted by to 1,086 hours. represent ATSDR’s best efforts to October 31, 2018. Federal Communications Commission. provide important toxicological ADDRESSES: You may submit comments, Marlene Dortch, information on priority hazardous identified by docket number ATSDR– substances. ATSDR is seeking public Secretary. Office of the Secretary. 2015–0001, by either of the following comments and additional information or [FR Doc. 2018–16513 Filed 8–1–18; 8:45 am] methods: reports on studies about the health • Internet: Access the Federal BILLING CODE 6712–01–P effects of Tribufos, eRulemaking Portal at Bromodichloromethane, www.regulations.gov. Follow the Bromomethane, and 2-Hexanone for instructions for submitting comments. FEDERAL ELECTION COMMISSION review and potential inclusion in the • Mail: Division of Toxicology and profiles. Although ATSDR considers key Human Health Sciences, Agency for Sunshine Act Meeting studies for these substances during the Toxic Substances and Disease Registry, profile development process, this 1600 Clifton Rd. NE, MS F–57, Atlanta, TIME AND DATE: Tuesday, August 7, 2018 document solicits any relevant, GA, 30329. Attn: Docket No. ATSDR– at 10:00 a.m. additional information. ATSDR will 2015–0001. PLACE: 1050 First Street NE, evaluate the quality and relevance of Instructions: All submissions must Washington, DC such data or studies for possible include the agency name and docket STATUS: This meeting will be closed to inclusion into the profile. number for this notice. All relevant the public. ATSDR also seeks comments on the comments will be posted without MATTERS TO BE CONSIDERED: Compliance organization and format of the change. This means that no confidential matters pursuant to 52 U.S.C. 30109. Toxicological Profile for business information or other Matters relating to internal personnel Bromodichloromethane. In an effort to confidential information should be decisions, or internal rules and improve the usability of the profiles, submitted in response to this notice. practices. ATSDR recently made content and The public comments, responses, and Information the premature disclosure organizational changes based on user other data submitted in response to the of which would be likely to have a feedback, as well as data identifying the Federal Register notices are available by considerable adverse effect on the most used profile content. Changes request from ATSDR. Contact CDC Info implementation of a proposed include: Removing redundant content; at 1–800–232–4636 or [email protected] Commission action. adding summary figures and tables to to request this information. Matters concerning participation in Chapters 1, 2, 5, and 6 that did not exist FOR FURTHER INFORMATION CONTACT: civil actions or proceedings or in previous Toxicological Profiles; and Susan Ingber, Agency for Toxic arbitration. reformatting the Levels of Significant Substances and Disease Registry, * * * * * Exposure (LSE) tables in Chapter 2. Division of Toxicology and Human ATSDR has only applied the changes to CONTACT PERSON FOR MORE INFORMATION: Health Sciences, 1600 Clifton Rd. NE, the Draft Toxicological Profile for Judith Ingram, Press Officer, Telephone: MS F–57, Atlanta, GA, 30329, Email: Bromodichloromethane, but intends to (202) 694–1220. [email protected]; Phone: use the new format for future profiles. 1–800–232–4636. Dayna C. Brown, Specifically, ATSDR would like to SUPPLEMENTARY INFORMATION: The Secretary and Clerk of the Commission. know: Superfund Amendments and [FR Doc. 2018–16700 Filed 7–31–18; 4:15 pm] (1) Does the chapter organization Reauthorization Act of 1986 (SARA) [42 BILLING CODE 6715–01–P make it easier for you to find the U.S.C. 9601 et seq.] amended the information you need? For example, are Comprehensive Environmental you satisfied with the organization of Response, Compensation, and Liability DEPARTMENT OF HEALTH AND the health effects chapter by organ Act of 1980 (CERCLA or Superfund) [42 HUMAN SERVICES system rather than exposure route? U.S.C. 9601 et seq.] by establishing (2) Are the new tables and figures certain requirements for ATSDR and the Agency for Toxic Substances and clear and useful? Do they make the U.S. Environmental Protection Agency Disease Registry Toxicological Profile easier to read? (EPA) regarding hazardous substances (3) If you have previously used any that are most commonly found at [Docket No. ATSDR–2015–0001] Toxicological Profile(s) for your work, facilities on the CERCLA National which parts or content are the most Availability of Set 29 Draft Priorities List (NPL). Among these useful to you, and what do you use it Toxicological Profiles statutory requirements is a mandate for for? the Administrator of ATSDR to prepare AGENCY: Agency for Toxic Substances (4) Does the profile contain all of the toxicological profiles for each substance and Disease Registry (ATSDR), information you need? If no, please included on the priority list of Department of Health and Human elaborate on what additional hazardous substances [also called the Services (HHS). information would be helpful. Substance Priority List (SPL)]. This list ACTION: Notice of availability; request (5) Is there information you would identifies 275 hazardous substances that for comment. like to see in the profile that is not ATSDR and EPA have determined pose currently included? If yes, please the most significant potential threat to SUMMARY: The Agency for Toxic elaborate on the additional information human health. The SPL is available Substances and Disease Registry you would like to see in the profile. online at www.atsdr.cdc.gov/spl.
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In addition, CERCLA provides ATSDR 2018 will be in the amount of $122,721 SUMMARY: The Food and Drug with the authority to prepare bringing the total award for FY 2018 to Administration (FDA) is announcing the toxicological profiles for substances not $462,590. revocation of the Emergency Use found on the SPL. CERCLA authorizes Program Name: Help America Vote Authorization (EUA) (the Authorization) ATSDR to establish and maintain Act Training and Technical Assistance. issued to Zalgen Labs, LLC for the inventory of literature, research, and Recipients: National Disability Rights ReEBOV Antigen Rapid Test. FDA studies on the health effects of toxic Network (NDRN) and National revoked this Authorization on May 18, substances (CERCLA Section Federation of the Blind (NFB). 2018, under the Federal Food, Drug, and 104(i)(1)(B)); to respond to requests for Period of Performance: The Cosmetic Act (FD&C Act), as requested health consultations (CERCLA Section supplement award will be issued for the by Zalgen Labs, LLC by letter dated 104(i)(4)); and to support the site- second year of the two-year project March 1, 2018. The revocation, which specific response actions conducted by period of September 1, 2018, through includes an explanation of the reasons the agency. August 30, 2019. for revocation, is reprinted in this Total Award Amount: NDRN document. Availability $326,274 in FY 2018 NFB $136,316 in DATES: The Authorization is revoked as FY2018. The Draft Toxicological Profiles are of May 18, 2018. available online at http:// Award Type: Administrative ADDRESSES: Submit written requests for www.atsdr.cdc.gov/ToxProfiles and at Supplement. single copies of the revocation to the www.regulations.gov, Docket No. Statutory Authority: This program is Office of Counterterrorism and ATSDR–2015–0001. authorized under Title II, Subtitle D, Part 5 of HAVA 42 U.S.C. 15461–62, Emerging Threats, Food and Drug Pamela I. Protzel Berman, Section 102 of the Developmental Administration, 10903 New Hampshire Director, Office of Policy, Partnerships and Disabilities Assistance and Bill of Rights Ave., Bldg. 1, Rm. 4338, Silver Spring, Planning, Agency for Toxic Substances and Act of 2000 (DD Act) (42 U.S.C. 15002). MD 20993–0002. Send one self- Disease Registry. Basis for Award: The additional addressed adhesive label to assist that [FR Doc. 2018–16557 Filed 8–1–18; 8:45 am] funding will not be used to begin new office in processing your request or BILLING CODE 4163–70–P projects. The funding will be used to include a Fax number to which the increase NDRN’s capacity building revocation may be sent. See the efforts to provide training and technical SUPPLEMENTARY INFORMATION section for DEPARTMENT OF HEALTH AND assistance to the Protection and electronic access to the revocation. HUMAN SERVICES Advocacy Systems in the electoral FOR FURTHER INFORMATION CONTACT: process and NFB will be able to attend Michael Mair, Office of Administration for Community Living voting related conferences, conduct Counterterrorism and Emerging Threats, Food and Drug Administration, 10903 Announce the Intent To Award an voting outreach campaigns and translate New Hampshire Ave., Bldg. 1, Rm. Administrative Supplement materials into Spanish. FOR FURTHER INFORMATION CONTACT: For 4336, Silver Spring, MD 20993–0002, ACTION: Announcing the Intent to Award further information or comments 301–796–8510 (this is not a toll-free an Administrative Supplement for two regarding this program supplement, number). (2) Help America Vote Act (HAVA) contact Melvenia Wright, U.S. SUPPLEMENTARY INFORMATION: Training and Technical Assistance Department of Health and Human I. Background (T/TA) grantees, the National Disability Services, Administration for Rights Network (NDRN) 90HAVA0001 Community Living, Administration on Section 564 of the FD&C Act (21 and the National Federation of the Blind Disabilities, Administration on U.S.C. 360bbb–3) as amended by the (NFB) 90HAVA0002. Intellectual and Developmental Project BioShield Act of 2004 (Pub. L. Disabilities: telephone (202) 795–7472; 108–276) and the Pandemic and All- SUMMARY: The Administration for email [email protected]. Hazards Preparedness Reauthorization Community Living (ACL) announces the Act of 2013 (Pub. L. 113–5) allows FDA intent to award an administrative Dated: July 26, 2018. to strengthen the public health supplement to the current Help America Lance Robertson, protections against biological, chemical, Vote Act (HAVA) Training and Administrator and Assistant Secretary for nuclear, and radiological agents. Among Technical Assistance (T/TA) grantees Aging. other things, section 564 of the FD&C held by the National Disability Rights [FR Doc. 2018–16561 Filed 8–1–18; 8:45 am] Act allows FDA to authorize the use of Network (NDRN) and the National BILLING CODE 4154–01–P an unapproved medical product or an Federation of the Blind (NFB). The unapproved use of an approved medical purpose of the HAVA programs are product in certain situations. On designed to establish and improve DEPARTMENT OF HEALTH AND February 24, 2015, FDA issued an EUA participation in the election process for HUMAN SERVICES to Corgenix, Inc. for the ReEBOV individuals with a full range of Antigen Rapid Test, subject to the terms Food and Drug Administration disabilities. In each eligible state and of the Authorization. Notice of the territory, seven percent of HAVA funds [Docket No. FDA–2015–N–0126] issuance of the Authorization was are set aside for the Protection and published in the Federal Register on Advocacy Systems (P&As) to ensure that Revocation of Authorization of June 5, 2015 (80 FR 32140), as required individuals with disabilities have the Emergency Use of an In Vitro by section 564(h)(1) of the FD&C Act. In opportunity to participate in every step Diagnostic Device for Detection of response to requests from Zalgen Labs, of the voting process. After receiving Ebola Virus LLC and Corgenix, Inc. to transfer training and technical assistance, P&As AGENCY: Food and Drug Administration, ownership of the EUA for the ReEBOV may inform others on the availability of HHS. Antigen Rapid Test from Corgenix, Inc. accessible voting equipment and its use. to Zalgen Labs, LLC, FDA amended and ACTION: Notice. The administrative supplement for FY reissued the EUA to Zalgen Labs, LLC
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in its entirety on November 3, 2016. revoked the EUA for the ReEBOV IV. The Revocation Under section 564(g)(2), the Secretary of Antigen Rapid Test on May 18, 2018, Health and Human Services may revoke because the criteria for issuance were no Having concluded that the criteria for an EUA if, among other things, the longer met and these circumstances revocation of the Authorization under criteria for issuance are no longer met or made such revocation appropriate to section 564(g) of the FD&C Act are met, other circumstances make such protect the public health or safety. FDA has revoked the EUA for Zalgen revocation appropriate to protect the Labs, LLC’s ReEBOV Antigen Rapid public health or safety. III. Electronic Access Test. The revocation in its entirety follows and provides an explanation of II. EUA Revocation Request for an In An electronic version of this the reasons for revocation, as required Vitro Diagnostic Device for Detection of document and the full text of the by section 564(h)(1) of the FD&C Act. the Ebola Virus revocation are available on the internet Pursuant to a request from Zalgen at https://www.regulations.gov. BILLING CODE 4164–01–P Labs, LLC on March 1, 2018, FDA
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Dated: July 27, 2018. on the latest developments in pediatric Drug Evaluation and Research, Food Leslie Kux, pharmacovigilance from the perspective and Drug Administration, 10903 New Associate Commissioner for Policy. of various stakeholders and to expand Hampshire Ave., Silver Spring, MD [FR Doc. 2018–16537 Filed 8–1–18; 8:45 am] the conversation to include the utility 20993–0002, 301–796–1732, BILLING CODE 4164–01–C and challenges of emerging [email protected]; or pharmacovigilance tools, including Meshaun Payne, Center for Drug specific challenges associated with Evaluation and Research, Food and DEPARTMENT OF HEALTH AND pediatric data tools. Drug Administration, 10903 New HUMAN SERVICES DATES: The public workshop will be Hampshire Ave., Silver Spring, MD 20993–0002, 301–796–6668, Food and Drug Administration held on Friday, September 14, 2018, from 8 a.m. to 5 p.m. See the [email protected]. [Docket No. FDA–2018–N–2657] SUPPLEMENTARY INFORMATION section for SUPPLEMENTARY INFORMATION: registration date and information. Advancing the Development of I. Background Pediatric Therapeutics 5: Advancing ADDRESSES: The public workshop will Pediatric Pharmacovigilance; Public be held at FDAWhite Oak Campus, Drugs and biologics (products) receive Workshop 10903 New Hampshire Ave. Bldg. 31 marketing approval only after Conference Center, the Great Room (Rm. undergoing premarket review and upon AGENCY: Food and Drug Administration, 1503A), Silver Spring, MD 20993. establishment of safety and efficacy HHS. Entrance for the public workshop through adequate and well-controlled ACTION: Notice of public workshop. participants (non-FDA employees) is clinical trials. Because all safety issues through Building 1 where routine related to a product may not be detected SUMMARY: The Division of Pediatric and security check procedures will be Maternal Health, Office of Surveillance in the premarket phase, FDA receives performed. For parking and security and analyzes postmarket safety and Epidemiology, and Office of information, please refer to https:// information to determine if events Pediatric Therapeutics, Food and Drug www.fda.gov/AboutFDA/ reported in the postmarketing period are Administration (FDA or the Agency) are WorkingatFDA/BuildingsandFacilities/ likely to be related to exposure to a announcing a public workshop entitled WhiteOakCampusInformation/ ‘‘Advancing the Development of product. When FDA determines that ucm241740.htm. Pediatric Therapeutics 5: Advancing reported postmarketing events are likely Pediatric Pharmacovigilance.’’ The FOR FURTHER INFORMATION CONTACT: For related to a product, FDA can introduce purpose of this 1-day workshop is to questions regarding the workshop, labeling changes and other activities to provide a forum to gather information contact Denise Pica-Branco, Center for inform the professional and lay public.
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FDA receives reports through the Streaming Webcast of the Public be submitted on or before October 1, MedWatch website (https:// Workshop: Webcast information will be 2018. The https://www.regulations.gov www.fda.gov/Safety/MedWatch/ provided after participants have electronic filing system will accept HowToReport/default.htm), which are registered for the workshop. If you have comments until midnight Eastern Time then entered into the FDA Adverse never attended a Connect Pro event at the end of October 1, 2018. Comments Event Reporting System for subsequent before, test your connection at https:// received by mail/hand delivery/courier analysis. Because the volume of reports collaboration.fda.gov/common/help/en/ (for written/paper submissions) will be is large and because reporting entities support/meeting_test.htm. To get a considered timely if they are (product manufacturers and the quick overview of the Connect Pro postmarked or the delivery service professional or lay public) need only program, visit https://www.adobe.com/ acceptance receipt is on or before that suspect a possible link between product go/connectpro_overview. date. exposure and an adverse event, FDA FDA has verified the website Electronic Submissions employs specific tools and strategies to addresses in this document, as of the assess postmarket safety reports and date this document publishes in the Submit electronic comments in the potential signals that arise from review Federal Register, but websites are following way: • of these reports. The process for receipt subject to change over time. Federal eRulemaking Portal: and assessment of such postmarket https://www.regulations.gov. Follow the Dated: July 27, 2018. instructions for submitting comments. safety information is referred to as Leslie Kux, pharmacovigilance. Comments submitted electronically, Associate Commissioner for Policy. FDA has a specific regulatory including attachments, to https:// [FR Doc. 2018–16524 Filed 8–1–18; 8:45 am] mandate to perform pediatric www.regulations.gov will be posted to pharmacovigilance and to present or BILLING CODE 4164–01–P the docket unchanged. Because your make available the results of such comment will be made public, you are solely responsible for ensuring that your pediatric pharmacovigilance to the DEPARTMENT OF HEALTH AND Pediatric Advisory Committee. comment does not include any HUMAN SERVICES confidential information that you or a II. Topics for Discussion at the Public third party may not wish to be posted, Food and Drug Administration Workshop such as medical information, your or In this workshop, FDA will gather [Docket No. FDA–2015–N–2126] anyone else’s Social Security number, or confidential business information, such information on the latest developments Agency Information Collection in pediatric pharmacovigilance from the as a manufacturing process. Please note Activities; Proposed Collection; that if you include your name, contact perspective of various stakeholders and Comment Request; Food and Drug expand the conversation to include the information, or other information that Administration’s Research and identifies you in the body of your utility and challenges of emerging Evaluation Survey for the Public pharmacovigilance tools, including comments, that information will be Education Campaign on Tobacco posted on https://www.regulations.gov. specific challenges associated with Among the Lesbian Gay Bisexual • pediatric data tools. If you want to submit a comment Transgender Community with confidential information that you III. Participation in the Public do not wish to be made available to the AGENCY: Food and Drug Administration, Workshop HHS. public, submit the comment as a written/paper submission and in the Registration: Persons interested in ACTION: Notice. attending this public workshop must manner detailed (see ‘‘Written/Paper register online at https:// SUMMARY: The Food and Drug Submissions’’ and ‘‘Instructions’’). www.eventbrite.com/e/advancing-the- Administration (FDA or Agency) is Written/Paper Submissions announcing an opportunity for public development-of-pediatric-therapeutics- Submit written/paper submissions as comment on the proposed collection of 5-adept5-tickets-46654530958 by follows: certain information by the Agency. Thursday, September 6, 2018, midnight • Mail/Hand Delivery/Courier (for Under the Paperwork Reduction Act of Eastern Time. Please provide complete written/paper submissions): Dockets 1995 (PRA), Federal Agencies are contact information for each attendee, Management Staff (HFA–305), Food and required to publish notice in the including name, title, affiliation, Drug Administration, 5630 Fishers Federal Register concerning each address, email, and telephone. Onsite Lane, Rm. 1061, Rockville, MD 20852. registration will not be available. proposed collection of information, • For written/paper comments Registration for onsite participation or including each proposed extension of an submitted to the Dockets Management via webcast is free and based on space existing collection of information, and Staff, FDA will post your comment, as availability, with priority given to early to allow 60 days for public comment in well as any attachments, except for registrants. Early registration is response to the notice. This notice information submitted, marked and recommended because seating is solicits comments on FDA’s Research identified, as confidential, if submitted limited; therefore, FDA may limit the and Evaluation Survey for the Public as detailed in ‘‘Instructions.’’ number of participants from each Education Campaign on Tobacco Instructions: All submissions received organization. Registrants will receive (RESPECT) among the Lesbian Gay must include the Docket No. FDA– confirmation when they have been Bisexual Transgender (LGBT). 2015–N–2126 for ‘‘Food and Drug accepted. DATES: Submit either electronic or Administration’s (FDA’s) Research and If you need special accommodations written comments on the collection of Evaluation Survey for the Public due to a disability, please contact information by October 1, 2018. Education Campaign on Tobacco Denise Pica-Branco (denise.picabranco@ ADDRESSES: You may submit comments (RESPECT) among LGBT.’’ Received fda.hhs.gov) or Meshaun Payne as follows. Please note that late, comments, those filed in a timely ([email protected]) no later untimely filed comments will not be manner (see ADDRESSES), will be placed than Thursday, September 6, 2018. considered. Electronic comments must in the docket and, except for those
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submitted as ‘‘Confidential 1320.3(c) and includes Agency requests For the purpose of this notice, these Submissions,’’ publicly viewable at or requirements that members of the campaign elements will be referred to as https://www.regulations.gov or at the public submit reports, keep records, or ‘‘advertisements’’ or ‘‘ads.’’ Dockets Management Staff between 9 provide information to a third party. In support of the provisions of the a.m. and 4 p.m., Monday through Section 3506(c)(2)(A) of the PRA (44 Tobacco Control Act that require FDA to Friday. U.S.C. 3506(c)(2)(A)) requires Federal protect the public health and to reduce • Confidential Submissions—To Agencies to provide a 60-day notice in tobacco use, FDA requests OMB submit a comment with confidential the Federal Register concerning each approval to collect information needed information that you do not wish to be proposed collection of information, to evaluate FDA’s campaign to reduce made publicly available, submit your including each proposed extension of an tobacco use among LGBT young adults. comments only as a written/paper existing collection of information, Comprehensive evaluation of FDA’s submission. You should submit two before submitting the collection to OMB public education campaigns is needed copies total. One copy will include the for approval. To comply with this to ensure campaign messages are information you claim to be confidential requirement, FDA is publishing notice effectively received, understood, and with a heading or cover note that states of the proposed collection of accepted by those for whom they are ‘‘THIS DOCUMENT CONTAINS information set forth in this document. intended. Evaluation is an essential CONFIDENTIAL INFORMATION.’’ The With respect to the following organizational practice in public health Agency will review this copy, including collection of information, FDA invites and a systematic way to account for and the claimed confidential information, in comments on these topics: (1) Whether improve public health actions. its consideration of comments. The the proposed collection of information To evaluate the effectiveness of FDA’s second copy, which will have the is necessary for the proper performance RESPECT at reducing tobacco use claimed confidential information of FDA’s functions, including whether among LGBT young adults aged 18 to redacted/blacked out, will be available the information will have practical 24, FDA contracted with RTI for public viewing and posted on utility; (2) the accuracy of FDA’s International (RTI) to conduct Web- https://www.regulations.gov. Submit estimate of the burden of the proposed based surveys with the target population both copies to the Dockets Management collection of information, including the in the 12 campaign cities and 12 Staff. If you do not wish your name and validity of the methodology and comparison cities. The surveys include contact information to be made publicly assumptions used; (3) ways to enhance measures of tobacco-related knowledge, available, you can provide this the quality, utility, and clarity of the attitudes, beliefs, intentions, and use as information on the cover sheet and not information to be collected; and (4) well as measures of audience awareness in the body of your comments and you ways to minimize the burden of the of and exposure to campaign events and must identify this information as collection of information on advertisements. The voluntary surveys ‘‘confidential.’’ Any information marked respondents, including through the use also collect information on demographic as ‘‘confidential’’ will not be disclosed of automated collection techniques, variables, including sexual orientation, except in accordance with 21 CFR 10.20 when appropriate, and other forms of age, sex, race/ethnicity, education, and and other applicable disclosure law. For information technology. primary language. Baseline data more information about FDA’s posting collection for RESPECT was conducted of comments to public dockets, see 80 Food and Drug Administration’s between February and May 2016. Four FR 56469, September 18, 2015, or access (FDA’s) Research and Evaluation subsequent waves of data collection the information at: https://www.gpo.gov/ Survey for the Public Education were conducted with new (cross- fdsys/pkg/FR-2015-09-18/pdf/2015- Campaign on Tobacco (RESPECT) sectional) and returning (longitudinal) 23389.pdf. Among LGBT respondents. This design facilitated Docket: For access to the docket to OMB Control Number 0910–0808– analysis of relationships between read background documents or the Extension individuals’ exposure to campaign activities and baseline to follow-up electronic and written/paper comments The 2009 Family Smoking Prevention received, go to https:// changes in outcomes of interest between and Tobacco Control Act (Tobacco campaign and comparison cities. www.regulations.gov and insert the Control Act) (Pub. L. 111–31) amended docket number, found in brackets in the Information collection for baseline and the Federal Food, Drug, and Cosmetic the first four follow-ups was reviewed heading of this document, into the Act (FD&C Act) to grant FDA authority ‘‘Search’’ box and follow the prompts and approved by OMB. to regulate the manufacture, marketing, FDA will continue to implement and/or go to the Dockets Management and distribution of tobacco products to RESPECT in 12 U.S. cities through April Staff, 5630 Fishers Lane, Rm. 1061, protect public health and to reduce 2019. To complete the evaluation of Rockville, MD 20852. tobacco use by minors. Section RESPECT, FDA is requesting an FOR FURTHER INFORMATION CONTACT: 1003(d)(2)(D) of the FD&C Act (21 extension of the previously approved Amber Sanford, Office of Operations, U.S.C. 393(d)(2)(D)) supports the information collection in order to Food and Drug Administration, Three development and implementation of conduct two additional waves of data White Flint North, 10A–12M, 11601 FDA public education campaigns collection with the target population. Landsdown St., North Bethesda, MD related to tobacco use. In May 2016, The proposed sixth and seventh waves 20852, 301–796–8867, PRAStaff@ FDA began implementing a public of data collection (i.e., fifth and sixth fda.hhs.gov. education campaign to help prevent and follow-ups after baseline) will coincide SUPPLEMENTARY INFORMATION: Under the reduce tobacco use among LGBT young with the official end of the campaign, PRA (44 U.S.C. 3501–3520), Federal adults and thereby reduce the public and will serve as an assessment of the Agencies must obtain approval from the health burden of tobacco. The campaign campaign at completion. Continued Office of Management and Budget continues to be implemented in 12 U.S. evaluation is necessary in order to (OMB) for each collection of cities and features events, television and determine the campaign’s impact on information they conduct or sponsor. radio and print advertisements, digital outcomes of interest. ‘‘Collection of information’’ is defined communications, including videos, As in previous waves, new and in 44 U.S.C. 3502(3) and 5 CFR social media, and other forms of media. returning survey respondents will be
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invited to complete the online annualized) recruited via social media. total estimated number of follow up questionnaire. New (or cross-sectional) The estimated burden to complete the questionnaires completed by social respondents will be recruited at LGBT screening questionnaire is 5 minutes media recruits to 5,256 (1,752 social venues and via social media (i.e., (0.083 hour), for a total of 2,799 hours annualized) and by in-person recruits to Facebook and Twitter). In-person (933 annualized) for in-person recruits 16,134 (5,378 annualized). At 40 recruitment will take place in a variety and 881 hours (294 annualized) for minutes per completed questionnaire, of LGBT venues. The owners or social media recruits. the total burden is 3,507 hours (1,169 managers of potential recruitment sites Based on analysis of response rates annualized) for social media will be asked a series of questions to from prior waves of data collection, we respondents and 10,761 hours (3,587 determine the appropriateness of its expect 65 percent of intercept annualized) for in-person respondents. clientele for participation in the study. respondents will be deemed eligible and OMB also previously approved 393 For the fifth and sixth follow-ups, an 50 percent of those will complete the hours (approximately 132 annualized) estimated 60 new venues (20 fifth follow-up questionnaire. We expect for social media respondents and 1,182 annualized) will be assessed at 5 30 percent of those recruited via social hours (394 annualized) for in-person minutes per assessment, for an media will be deemed eligible and respondents to complete baseline additional 5 hours (1.67 annualized). A complete the fifth follow-up questionnaires. OMB also approved the total of 1,980 venues (660 annualized) questionnaire. Lastly, we expect 50 pilot test of procedures in bars (6 hours will be assessed during the evaluation percent of returning (or longitudinal) study, for a total of 165 hours (55 respondents to complete the fifth and [2 annualized]). As these study annualized). sixth follow-up questionnaires. We components are complete, the Our goal is to recruit 75 percent of the estimate that approximately 2,100 new corresponding burden will not change. sample via intercept interviews and 25 respondents (700 annualized) and 6,678 Lastly, the original study design percent via social media. To obtain the returning (2,226 annualized) included a media tracking component, target number of completed fifth and respondents will complete the fifth and which included a burden of 414 hours sixth follow-up questionnaires, an sixth follow-up questionnaires, for a (138 annualized) for completing a 5- additional 11,904 adults (3,968 total of 8,778 responses (2,926 minute screening questionnaire and 999 annualized) recruited in person and annualized). hours (333 annualized) for completing 2,736 adults (912 annualized) recruited OMB previously approved 3,156 the media tracking questionnaire. via social media will complete (1,052 annualized) respondents However, this component was dropped screening questionnaires. For the entire recruited via social media and 9,456 from the study; hence, the related evaluation study, a total of 33,717 adults (3,152 annualized) respondents burden has been deducted from the total (11,239 annualized) recruited in person recruited in person to complete the first study burden. will complete screening questionnaires four follow-up questionnaires. Adding FDA estimates the burden of this along with 10,617 adults (3,539 the fifth and sixth follow-ups brings the collection of information as follows:
TABLE 1—ESTIMATED ANNUAL REPORTING BURDEN 1
Number of Total Average Respondent type and activity Number of responses per annual burden per Total respondents respondent responses response hours
Venue Owners and Managers ...... 660 1 660 0.083 (5 minutes) ...... 55 General Population: Pilot test of Procedures in 27 1 27 0.083 (5 minutes) ...... 2 Bars. General population—outcome screener (in per- 11,239 1 11,239 0.083 (5 minutes) ...... 933 son). General population—outcome screener (social 3,539 1 3,539 0.083 (5 minutes) ...... 294 media). LGBT young adults outcome baseline (social 263 1 263 0.500 (30 minutes) ...... 132 media). LGBT young adults outcome baseline (in person) 788 1 788 0.500 (30 minutes) ...... 394 LGBT young adults outcome follow-up question- 1,752 1 1,752 0.667 (40 minutes) ...... 1,169 naire (social media). LGBT young adults outcome follow-up question- 5,378 1 5,378 0.667 (40 minutes) ...... 3,587 naire (in person).
Totals ...... 6,566 1 There are no capital costs or operating and maintenance costs associated with this collection of information.
To accommodate the additional waves which include responses to new venues annualized) and 5,661 hours (1,887 of data collection, FDA requests assessments, screening questionnaires, annualized) for a new total of 70,938 approval to increase the number of and the follow-up questionnaires, for a responses (23,646 annualized) and burden hours under the existing control total of 7,074 additional burden hours 19,692 burden hours (approximately number. The previous number of (2,357 annualized). Removing the media 6,566 annualized). approved responses was 53,967 (17,989 tracking component deducts 6,507 Dated: July 25, 2018. annualized), and the previous burden responses (2,169 annualized) and 1,413 Leslie Kux, was 14,031 hours (4,677 annualized). burden hours (471 annualized). The Associate Commissioner for Policy. The fifth and sixth follow-ups add totals for the entire evaluation study are [FR Doc. 2018–16538 Filed 8–1–18; 8:45 am] 23,478 responses (7,826 annualized), increasing by 16,971 responses (5,657 BILLING CODE 4164–01–P
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DEPARTMENT OF HEALTH AND will be asked to show one form of limitations imposed by the review and HUMAN SERVICES identification (for example, a government- funding cycle. issued photo ID, driver’s license, or passport) (Catalogue of Federal Domestic Assistance National Institutes of Health and to state the purpose of their visit. Program Nos. 93.306, Comparative Medicine; Information is also available on the 93.333, Clinical Research, 93.306, 93.333, National Cancer Institute; Notice of Institute’s/Center’s home page: http:// 93.337, 93.393–93.396, 93.837–93.844, Meeting deainfo.nci.nih.gov/advisory/ncab/ncab.htm, 93.846–93.878, 93.892, 93.893, National where an agenda and any additional Institutes of Health, HHS) Pursuant to section 10(d) of the information for the meeting will be posted Federal Advisory Committee Act, as when available. Dated: July 27, 2018. amended, notice is hereby given of a (Catalogue of Federal Domestic Assistance Sylvia L. Neal, meeting of the National Cancer Program Nos. 93.392, Cancer Construction; Program Analyst, Office of Federal Advisory Advisory Board. 93.393, Cancer Cause and Prevention Committee Policy. Research; 93.394, Cancer Detection and The meeting will be open to the [FR Doc. 2018–16506 Filed 8–1–18; 8:45 am] public as indicated below, with Diagnosis Research; 93.395, Cancer Treatment Research; 93.396, Cancer Biology BILLING CODE 4140–01–P attendance limited to space available. Research; 93.397, Cancer Centers Support; Individuals who plan to attend and 93.398, Cancer Research Manpower; 93.399, need special assistance, such as sign Cancer Control, National Institutes of Health, DEPARTMENT OF HEALTH AND language interpretation or other HHS) HUMAN SERVICES reasonable accommodations, should notify the Contact Person listed below Dated: July 26, 2018. National Institutes of Health in advance of the meeting. The open Melanie J. Pantoja, session will be videocast and can be Program Analyst, Office of Federal Advisory Office of the Secretary; Notice of accessed from the NIH Videocasting and Committee Policy. Meeting Podcasting website (http:// [FR Doc. 2018–16492 Filed 8–1–18; 8:45 am] Pursuant to section 10(d) of the videocast.nih.gov). BILLING CODE 4140–01–P The meeting will be closed to the Federal Advisory Committee Act, as public in accordance with the amended, notice is hereby given of a provisions set forth in sections DEPARTMENT OF HEALTH AND meeting of the Muscular Dystrophy 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., HUMAN SERVICES Coordinating Committee (MDCC). as amended. The grant applications and The meeting will be open to the the discussions could disclose National Institutes of Health public and accessible by teleconference. confidential trade secrets or commercial Participation is limited to space property such as patentable material, Center for Scientific Review; Notice of available. Individuals who plan to and personal information concerning Closed Meeting participate and need special assistance, individuals associated with the grant Pursuant to section 10(d) of the such as reasonable accommodations, applications, the disclosure of which Federal Advisory Committee Act, as should notify the Contact Person listed would constitute a clearly unwarranted amended, notice is hereby given of the below in advance of the meeting. invasion of personal privacy. following meeting. Name of Committee: Muscular Dystrophy Name of Committee: National Cancer The meeting will be closed to the Coordinating Committee. Advisory Board. public in accordance with the Type of meeting: Open Meeting. Date: August 14, 2018. provisions set forth in sections Date: September 17, 2018. Time: 2:00 p.m. to 5:00 p.m. *Eastern Open: 1:00 p.m. to 2:45 p.m. 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., Agenda: Director’s and Program reports Time*—Approximate end time. and presentations; business of the Board. as amended. The grant applications and Agenda: The purpose of this meeting is to Closed: 2:55 p.m. to 4:00 p.m. the discussions could disclose bring together committee members, Agenda: To review and evaluate grant confidential trade secrets or commercial representing government agencies, patient applications. property such as patentable material, advocacy groups, other voluntary health Place: National Cancer Institute—Shady and personal information concerning organizations, and patients and their families Grove, 9609 Medical Center Drive, Room individuals associated with the grant to update one another on progress relevant to TE406, Rockville, MD 20850 (Virtual applications, the disclosure of which the Action Plan for the Muscular Dystrophies Meeting). would constitute a clearly unwarranted and to coordinate activities and discuss gaps Contact Person: Paulette S. Gray, Ph.D., and opportunities leading to better Executive Secretary, Division of Extramural invasion of personal privacy. understanding of the muscular dystrophies, Activities, National Cancer Institute—Shady Name of Committee: Center for Scientific advances in treatments, and improvements in Grove, National Institutes of Health, 9609 Review Special Emphasis Panel; Member patients’ and their families’ lives. Prior to the Medical Center Drive, Room 7W444, Conflict: Chemosensory Systems. meeting, an agenda will be posted to the Bethesda, MD 20892, 240–276–6340, grayp@ Date: August 1, 2018. MDCC website: https://mdcc.nih.gov/. mail.nih.gov. Time: 2:00 p.m. to 6:00 p.m. Registration: To register, please contact This notice is being published less than 15 Agenda: To review and evaluate grant Emily Carifi: [email protected]. days prior to the meeting due to scheduling applications. WebEx/Phone Access: difficulties. Place: National Institutes of Health, 6701 Join WebEx Meeting: https:// Any interested person may file written Rockledge Drive, Bethesda, MD 20892, nih.webex.com/nih/j.php?MTID= comments with the committee by forwarding (Telephone Conference Call). m1c5fd34513186c7c87ebeeee5af47f05; the statement to the Contact Person listed on Contact Person: M. Catherine Bennett, Meeting number (access code): 628 888 this notice. The statement should include the Ph.D., Scientific Review Officer, Center for 923, Meeting password: fEN63PND name, address, telephone number and when Scientific Review, National Institutes of Join by Phone: 1–650–479–3208 Call-in toll applicable, the business or professional Health, 6701 Rockledge Drive, Room 5182, number (US/Canada) affiliation of the interested person. MSC 7846, Bethesda, MD 20892, 301–435– Global call-in numbers: https:// In the interest of security, NIH has 1766, [email protected]. nih.webex.com/nih/globalcallin.php? instituted stringent procedures for entrance This notice is being published less than 15 serviceType=MC&ED=701170342&toll onto the NCI-Shady Grove campus. Visitors days prior to the meeting due to the timing Free=0.
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Place: National Institutes of Health, Dated: July 27, 2018. Scientific Services Directorate, U.S. Neuroscience Center, 6001 Executive Sylvia L. Neal, Customs and Border Protection, 1300 Boulevard, Rockville, MD 20852, (Telephone Program Analyst, Office of Federal Advisory Pennsylvania Avenue NW, Suite 1500N, Conference Call). Committee Policy. Washington, DC 20229, tel. 202–344– Contact Person: Glen H. Nuckolls, Ph.D., [FR Doc. 2018–16505 Filed 8–1–18; 8:45 am] 2029. Executive Secretary, Muscular Dystrophy BILLING CODE 4140–01–P Coordinating Committee, National Institute SUPPLEMENTARY INFORMATION: Notice is of Neurological Disorders and Stroke, NIH, hereby given pursuant to 19 CFR 151.12 6001 Executive Boulevard, NSC 2203, DEPARTMENT OF HOMELAND and 19 CFR 151.13, that Laboratory Bethesda, MD 20892, (301) 496–5745, Service, Inc., 11731 Port Rd., Seabrook, [email protected]. SECURITY TX 77586, has been approved to gauge Any member of the public interested in U.S. Customs and Border Protection petroleum and certain petroleum presenting oral comments to the committee products and accredited to test may notify the Contact Person listed on this Accreditation and Approval of notice at least 10 days in advance of the petroleum and certain petroleum Laboratory Service, Inc., as a products for customs purposes, in meeting. Interested individuals and Commercial Gauger and Laboratory representatives of organizations may submit accordance with the provisions of 19 a letter of intent, a brief description of the AGENCY: U.S. Customs and Border CFR 151.12 and 19 CFR 151.13. organization represented, and a short Protection, Department of Homeland Laboratory Service, Inc., is approved for description of the oral presentation. Only one Security. the following gauging procedures for representative of an organization may be ACTION: Notice of accreditation and petroleum and certain petroleum allowed to present oral comments and if approval of Laboratory Service, Inc., as products from the American Petroleum accepted by the committee, presentations a commercial gauger and laboratory. Institute (API): may be limited to five minutes. Both printed and electronic copies are requested for the SUMMARY: Notice is hereby given, API Chap- Title record. In addition, any interested person pursuant to CBP regulations, that ters may file written comments with the Laboratory Service, Inc., has been committee by forwarding their statement to approved to gauge petroleum and 3 ...... Tank gauging. the Contact Person listed on this notice. The certain petroleum products and 7 ...... Temperature determination. statement should include the name, address, accredited to test petroleum and certain 8 ...... Sampling. telephone number and when applicable, the petroleum products for customs 12 ...... Calculations. business or professional affiliation of the purposes for the next three years as of 17 ...... Maritime measurement. interested person. June 12, 2017. More information can be found on the Muscular Dystrophy Coordinating Committee DATES: The accreditation and approval Laboratory Service, Inc. is accredited home page: https://mdcc.nih.gov/. of Laboratory Service, Inc., as for the following laboratory analysis procedures and methods for petroleum (Catalogue of Federal Domestic Assistance commercial gauger and laboratory Program Nos. 93.853, Clinical Research became effective on June 12, 2017. The and certain petroleum products set forth Related to Neurological Disorders; 93.854, next triennial inspection date will be by the U.S. Customs and Border Biological Basis Research in the scheduled for June 2020. Protection Laboratory Methods (CBPL) Neurosciences, National Institutes of Health, FOR FURTHER INFORMATION CONTACT: and American Society for Testing and HHS) Melanie Glass, Laboratories and Materials (ASTM):
CBPL No. ASTM Title
27–08 ...... D86 Standard Test Method for Distillation of Petroleum Products. 27–48 ...... D4052 Standard Test Method for Density and Relative Density of Liquids by Digital Density Meter. N/A ...... D1364 Standard Test Method for Water in Volatile Solvents (Karl Fischer Reagent Titration Method).
Anyone wishing to employ this entity scientific/commercial-gaugers-and- ACTION: 60-Day Notice of Information to conduct laboratory analyses and laboratories. Collection; request for comment. gauger services should request and Dated: July 2, 2018. (Extension of a Currently Approved receive written assurances from the Dave Fluty, Collection, 1640–0016). entity that it is accredited or approved Executive Director, Laboratories and by the U.S. Customs and Border Scientific Services Directorate. SUMMARY: The Department of Homeland Protection to conduct the specific test or [FR Doc. 2018–16516 Filed 8–1–18; 8:45 am] Security (DHS), Science and Technology gauger service requested. Alternatively, BILLING CODE 9111–14–P (S&T) First Responders Group (FRG) is inquiries regarding the specific test or proposing to extend currently approved gauger service this entity is accredited OMB 1640–0016, an information or approved to perform may be directed DEPARTMENT OF HOMELAND collection, by inviting the public to to the U.S. Customs and Border SECURITY comment on the collection: First Protection by calling (202) 344–1060. Responders Community of Practice [Docket No. DHS–2018–0035] The inquiry may also be sent to (FRCoP) User Registration Page (DHS [email protected]. Please First Responders Community of Form 10059 (9/09)). The FRCoP web reference the website listed below for a Practice based tool collects profile information complete listing of CBP approved from first responders and select gaugers and accredited laboratories. AGENCY: Science and Technology authorized non-first responder users to http://www.cbp.gov/about/labs- Directorate, Department of Homeland facilitate networking and formation of Security. online communities. All users are
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required to authenticate prior to collection request (ICR) that is described Committee (Committee). The Committee entering the site. In addition, the tool below. The Department of Homeland will advise the Secretary of the Interior provides members the capability to Security is especially interested in (Secretary) through the BIE and the create wikis, discussion threads, blogs, public comment addressing the Assistant Secretary—Indian Affairs on documents, etc., allowing them to enter following issues: (1) Is this collection the development of regulations to fulfill and upload content in accordance with necessary to the proper functions of the the Secretary’s responsibility to define the site’s Rules of Behavior. Members Department; (2) will this information be standards, assessments, and are able to participate in threaded processed and used in a timely manner; accountability system consistent with discussions and comment on other (3) is the estimate of burden accurate; ESEA section 1111, as amended, for members’ content. The FRCoP program (4) how might the Department enhance schools funded by BIE on a national, is responsible for providing a the quality, utility, and clarity of the regional, or Tribal basis, as appropriate, collaborative environment for the first information to be collected; and (5) how taking into account the unique responder community to share might the Department minimize the circumstances and needs of such information, best practices, and lessons burden of this collection on the schools and the students served by such learned. The Homeland Security Act of respondents, including through the use schools and the process for requesting a 2002 established this requirement. of information technology. Please note waiver for these definitions. This notice Interested persons may receive a copy of that written comments received in also announces the dates and locations the collection by contacting the DHS response to this notice will be of each of the public meetings of the S&T Paperwork Reduction Act (PRA) considered public records. Committee. Coordinator. Title of Collection: First Responders DATES: For a listing of the dates of each Community of Practice User DATES: Comments are encouraged and Committee meeting, refer to ‘‘Committee accepted until October 1, 2018. Registration Page (DHS Form 10059 (9/ Meetings’’ under SUPPLEMENTARY 09)). INFORMATION section of this notice. ADDRESSES: You may submit comments, Prior OMB Control Number: 1640– identified by docket number DHS– ADDRESSES: For a listing of the locations 0016. of each Committee meeting, refer to 2018–0035, at: Federal Register • Prior Document: ‘‘Committee Meetings’’ under Federal eRulemaking Portal: http:// 78 FR 53464, August 29, 2013. www.regulations.gov. Please follow the SUPPLEMENTARY INFORMATION section of Type of Review: An extension of an this notice. instructions for submitting comments. information collection. • FOR FURTHER INFORMATION CONTACT: Mail and hand delivery or Respondents/Affected Public: Federal, The commercial delivery: Science and State, Local, and Tribal Governments. Designated Federal Officer, Sue Bement, Technology Directorate, ATTN: Chief Frequency of Collection: Once per Education Program Specialist, Bureau of Information Office—Mary Cantey, 245 respondent. Indian Education, by any of the Murray Drive, Mail Stop 0202, Average Burden per Response: 30 following methods: • (Preferred method) Email to: Washington, DC 20528. minutes. Instructions: All submissions received [email protected]; Total Estimated Number of Annual • Mail, hand-carry or use an must include the agency name and Responses: 2000. docket number DHS–2018–0035. All overnight courier service to the Total Estimated Number of Annual Designated Federal Officer, Ms. Sue comments received will be posted Burden Hours: 1000. without change to http:// Bement, C/O The Office of Regulatory www.regulations.gov, including any Rick Stevens, Affairs and Collaborative Action, 1001 personal information provided. Please Chief Information Officer, Science and Indian School Road NW, Suite 312, note that comments submitted by fax or Technology Directorate. Albuquerque, NM 87104. • email and those submitted after the [FR Doc. 2018–16452 Filed 8–1–18; 8:45 am] Telephone: (952) 851–5427. comment period will not be accepted. BILLING CODE 9110–9F–P SUPPLEMENTARY INFORMATION: Docket: For access to the docket to Background read background documents or On September 14, 2017, a notice in comments received, go to http:// DEPARTMENT OF THE INTERIOR www.regulations.gov. the Federal Register (82 FR 43199) Bureau of Indian Affairs announced the U.S. Department of the FOR FURTHER INFORMATION CONTACT: Interior’s intent to form a negotiated DHS/S&T/FRG System Owner: Rochele [189A2100DD/AAKC001030/ rulemaking committee under the Every Smith, [email protected], (202) A0A501010.999900 253G] Student Succeeds Act (ESSA), the 254–8634 (Not a toll free number). Notice of Establishment of the Bureau Negotiated Rulemaking Act, and the SUPPLEMENTARY INFORMATION: DHS, in of Indian Education Standards, Federal Advisory Committee Act (5 accordance with the PRA (6 U.S.C. 193), Assessments, and Accountability U.S.C. Appendix 2). On April 17, 2018, provides the general public and Federal System Negotiated Rulemaking a notice in the Federal Register (83 FR agencies with an opportunity to Committee; Notice of Meetings 16806) announced the proposed comment on proposed, revised, and membership. The Committee will advise continuing collection of information. AGENCY: Bureau of Indian Affairs, the Secretary through the BIE and the This helps the Department assess the Interior. Assistant Secretary—Indian Affairs on impact of its information collection ACTION: Notice of Establishment and the development of regulations to fulfill requirements and minimize the public’s notice of public meetings. the Secretary’s responsibility to define reporting burden. It also helps the standards, assessments, and public understand the Department’s SUMMARY: The Department of the accountability system consistent with information collection requirements and Interior is establishing the Bureau of ESEA section 1111 (20 U.S.C. 6311), as provides the requested data in the Indian Education (BIE) Standards, amended, for schools funded by BIE on desired format. DHS is soliciting Assessments, and Accountability a national, regional, or Tribal basis, as comments on the proposed information System Negotiated Rulemaking appropriate, taking into account the
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unique circumstances and needs of such The Secretary received additional included in this Federal Register schools and the students served by such proposed nominations in response to Notice. schools and the process for requesting a the April 17, 2018, notice and Committee Membership waiver for these definitions. considered the nominations based on The April 17, 2018, notice discussed the qualifications outlined in the notice The two nominees were received for the issues to be negotiated and the for approval. The nominees were consideration following the April 17, interest group representatives proposed approved to join the Committee and are 2018, Federal Register notice and will as members of the Committee. now be appointed to the Committee.
Tribe(s) represented Proposed committee members Nominated by
Navajo Nation ...... Genevieve Jackson ...... Dine´ Bi Olta School Board Association, Inc. Northwest Tribes ...... Dr. Amy McFarland ...... Chief Leschi Schools.
Committee Meetings The BIE expects to have three in-person provide technical assistance; and meetings and one teleconference, with provide any additional support required Revised regulations must be put in each in-person meeting lasting three to fulfill the Committee’s place as soon as possible, thus the days in length. The BIE has dedicated responsibilities. The meeting dates and Committee will be expected to meet resources required to: Ensure the locations are as follows: frequently within a short time frame. Committee is able to conduct meetings;
Date Time Location
Tuesday, September 25, 2018 Through Thurs- Begin at 8:30 a.m. on September 25, and end Bureau of Indian Affairs, Rocky Mountain Re- day, September 27, 2018. at 4:30 p.m. on September 27, 2018, local gional Office, Medicine Wheel Room—3rd time. floor, 2021 Fourth Avenue North Billings, MT 59101. Tuesday, October 30, 2018 Through Thursday, Begin at 8:30 a.m. on October 30, and end at Bureau of Indian Affairs, Southwest Regional November 1, 2018. 4:30 p.m. on November 1, 2018, local time. Office, Pojoaque Classroom #271, 2nd floor, 1011 Indian School Road NW, Albu- querque, NM 87104. Tuesday, December 4, 2018 Through Thurs- Begin at 8:30 a.m. on December 4, and end Office of Hearings & Appeals, 2nd Floor Con- day, December 6, 2018. at 4:30 p.m. on December 6, 2018, local ference Room, 801 N Quincy Street, Arling- time. ton, VA 22203. 1/2-day Webinar, Spring 2019 ...... Begin at 11:30 a.m. and end at 2:30 p.m., Via Teleconference, 1 (866) 818–9861, Partic- Eastern Time. ipant code: 70319382, Refer to BIE Nego- tiated Rulemaking Committee website for additional information.
Detailed information about Committee subcommittees and tasks between the information in your comment, you meetings, including detailed agendas, first and second meeting; and should be aware that your entire can be accessed at https://www.bie.edu/ • Public comments. comment—including your personal Resources/NRMC/index.htm. The second meeting will focus on identifying information—may be made edits to the draft preamble and the Agenda for BIE Standards, Assessments, publicly available at any time. While proposed rule, public comments, and you can ask in your comment that the and Accountability System Negotiated reaffirm Committee tasks in preparation Rulemaking Committee BIA withhold your personal identifying for the third meeting. information from public review, the BIA At the first meeting, the Committee The third meeting will focus on the cannot guarantee that it will be able to will conduct introductions of members draft proposed rule for publication, seek do so. at the start of the meeting and will consensus on the draft, schedule continue with the following items on government-to-government All meetings are open to the public; the agenda: consultations including what key however, transportation, lodging, and • Review and discussion of information will be shared during means are the responsibility of the Committee Operations including consultation, and public comment. participating public. operating protocols and decision- The final meeting, via WebEx, will Authority: The Elementary and Secondary making criteria; review public comments received, Education Act of 1965, as amended, 20 • Overview and discussion of existing discuss any substantive comments that U.S.C. 6301 et seq. regulations (25 CFR part 30) will affect the proposed rule, and seek implemented at BIE schools and an consensus on a recommended approach Dated: July 27, 2018. overview topic paper; to addressing the comments. The final John Tahsuda, • Overview and discussion of ESSA meeting will include a close-out Principal Deputy Assistant Secretary—Indian Section 8007(2) and ESEA Section 1111 discussion about the process. Affairs, Exercising the Authority of the and standards, assessments, and Written comments may be sent to the Assistant Secretary—Indian Affairs. accountability topic papers; Designated Federal Officer listed in the [FR Doc. 2018–16588 Filed 8–1–18; 8:45 am] • Discussion of the Committee’s tasks FOR FURTHER INFORMATION CONTACT BILLING CODE 4337–15–P and approach to draft regulations section above. Before including your including discussion of draft address, phone number, email address, regulations, outline work; formation of or other personal identifying
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DEPARTMENT OF THE INTERIOR Parcel 6: NE1⁄4 NE1⁄4, Section 28, Township DEPARTMENT OF THE INTERIOR 62N, Range 16W, 4th Principal Meridian Bureau of Indian Affairs (40 acres) Bureau of Indian Affairs Parcel 7: SE1⁄4 NE1⁄4, Section 28, Township [189A2100DD/AAKC001030/ 62N, Range 16W, 4th Principal Meridian [189A2100DD/AAKC001030/ A0A51010.999900] A0A51010.999900] (40 acres) 1 1 Proclaiming Certain Lands as Parcel 8: S ⁄2 SW ⁄4, Section 27, Township Proclaiming Certain Lands as Reservation for the Bois Forte Band of 62N, Range 16W, 4th Principal Meridian Reservation for the Rincon Band of (80 acres) the Minnesota Chippewa Tribe of Luiseno Mission Indians of the Rincon Parcel 9: Government Lot 1, Section 27, Minnesota Township 62N, Range 16W, 4th Principal Reservation, California AGENCY: Bureau of Indian Affairs, Meridian (25.25 acres) AGENCY: Bureau of Indian Affairs, Interior. Parcel 10: S1⁄2 SE1⁄4, Section 27, Township Interior. 62N, Range 16W, 4th Principal Meridian ACTION: ACTION: Notice of Reservation (80 acres) Notice of Reservation Proclamation. Proclamation. Parcel 11: W1⁄2 SE1⁄4, Section 22, Township SUMMARY: This notice informs the public 62N, Range 16W, 4th Principal Meridian SUMMARY: This notice informs the public that the Acting Assistant Secretary— (80 acres) that the Principal Deputy Assistant Parcel 12: SW1⁄4 NW1⁄4, Section 27, Indian Affairs proclaimed Secretary—Indian Affairs proclaimed Township 62N, Range 16W, 4th Principal approximately 1,146.17 acres, more or Meridian (40 acres) approximately 520 acres, more or less, less, an addition to the reservation of an addition to the reservation of the Parcel 13: NE1⁄4 NW1⁄4, Section 27, Township the Bois Forte Band of the Minnesota 62N, Range 16W, 4th Principal Meridian Rincon Band of Luiseno Mission Chippewa Tribe of Minnesota on July 9, (40 acres) Indians of the Rincon Reservation, 2018. Parcel 14: W1⁄2 NE1⁄4, Section 27, Township California on July 9, 2018. FOR FURTHER INFORMATION CONTACT: Ms. 62N, Range 16W, 4th Principal Meridian FOR FURTHER INFORMATION CONTACT: Ms. Sharlene M. Round Face, Bureau of (80 acres) Sharlene M. Round Face, Bureau of Indian Affairs, Division of Real Estate Parcel 15: SE1⁄4 NW1⁄4, Section 27, Township Indian Affairs, Division of Real Estate Services, 1849 C Street NW, MS–4642– 62N, Range 16W, 4th Principal Meridian Services, 1849 C Street NW, MS–4642– MIB, Washington, DC 20240, telephone (40 acres) MIB, Washington, DC 20240, telephone (202) 208–3615. Parcel 16: S1⁄2 SW1⁄4, Section 22, Township (202) 208–3615. 62N, Range 16W, 4th Principal Meridian SUPPLEMENTARY INFORMATION: This SUPPLEMENTARY INFORMATION: This (80 acres) notice is published in the exercise of notice is published in the exercise of Parcel 17: NW1⁄4 NE1⁄4, Section 34, Township authority delegated by the Secretary of 62N, Range 16W, 4th Principal Meridian authority delegated by the Secretary of the Interior to the Assistant Secretary— (40 acres) the Interior to the Assistant Secretary— Indian Affairs by part 209 of the Parcel 18: SE1⁄4 NE1⁄4, Section 34, Township Indian Affairs by part 209 of the Departmental Manual. 62N, Range 16W, 4th Principal Meridian Departmental Manual. A proclamation was issued according (40 acres) A proclamation was issued according to the Act of June 18, 1934 (48 Stat. 984; Parcel 19: NE1⁄4 NW1⁄4, Section 34, Township to the Act of June 18, 1934 (48 Stat. 986; 25 U.S.C. 5110), for the land described 62N, Range 16W, 4th Principal Meridian 25 U.S.C. 5110) for the lands described below. The land was proclaimed to be (40 acres) below. The land was proclaimed to be an addition to the reservation of the Parcel 20: NE1⁄4 NE1⁄4, Section 34, Township part of the reservation for the Rincon Bois Forte Band of the Minnesota 62N, Range 16W, 4th Principal Meridian Band of Luiseno Mission Indians of the Chippewa Tribe, Saint Louis County, (40 acres) Rincon Reservation, California, County State of Minnesota. Parcel 21: SW1⁄4 NW1⁄4, Section 34, of San Diego, and State of California. Township 62N, Range 16W, 4th Principal Reservation for the Bois Forte Band of the Meridian (40 acres) Reservation for the Rincon Band of Luiseno Minnesota Chippewa Tribe Mission Indians of the Rincon Reservation, Parcel 22: SE1⁄4 NW1⁄4, Section 34, Township California 23 Contiguous Parcels 62N, Range 16W, 4th Principal Meridian (40 acres) One Tribal Trust Tract Encompasses Two Principal Meridian Parcel 23: SW1⁄4, NE1⁄4, Section 34, Township Parcels 62N, Range 16W, 4th Principal Meridian Saint Louis County, State of Minnesota San Bernardino Base and Meridian San (40 acres) Diego County, California Legal Description Containing 1,146.17 Acres, The above described lands contain a total More or Less of 1,146.17 acres, more or less, which are Legal Descriptions Containing 520 Acres, Parcel 1: NW1⁄4 NW1⁄4, Section 34, Township subject to all valid rights, reservations, rights- More or Less 62N, Range 16W, 4th Principal Meridian of-way, and easements of record. The Mowry Property (Tract 587–T–5532) (40 acres) This proclamation does not affect title to Parcel 2: That portion of the Westerly 100 ft. the land described above, nor does it affect Parcel 1: APN 133–190–04 of the Easterly 600 ft. of Government Lot any valid existing easements for public roads, The South half, the West half of the 2, Section 22, Township 62N, Range 16W, highways, public utilities, railroads, and Northeast quarter, the Northeast quarter of 4th Principal Meridian, lying South of pipelines or any other valid easements or the Northeast quarter and the Northeast County Highway 414 (0.92 acres) quarter of the Northwest quarter of Section 1 1 rights-of-way or reservations of record. Parcel 3: SE ⁄4 NE ⁄4, Section 33, Township 36, Township 10 South, Range 1 West, San 62N, Range 16W, 4th Principal Meridian Dated: July 9, 2018. Bernardino Base and Meridian in the County (40 acres) John Tahsuda, of San Diego, State of California, according to Parcel 4: N1⁄2 SE1⁄4, Section 27, Township Principal Deputy Assistant Secretary—Indian official plat thereof. 62N, Range 16W, 4th Principal Meridian Affairs, Exercising the Authority of the (80 acres) Parcel 2: APN 133–190–07 Assistant Secretary—Indian Affairs. Parcel 5: N1⁄2 SW1⁄4, Section 27, Township The Southeast quarter of the Northeast 62N, Range 16W, 4th Principal Meridian [FR Doc. 2018–16583 Filed 8–1–18; 8:45 am] quarter of Section 36, Township 10 South, (80 acres) BILLING CODE 4337–15–P Range 1 West, San Bernardino Base and
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Meridian, in the County of San Diego, State Helium Auction deaf (TDD) may call the Federal Relay of California, according to official plat Service (FRS) at 1–800–877–8339. The thereof. August 31, 2018—FY 2019 helium auction held in Amarillo, Texas FRS is available 24 hours a day, 7 days The above described lands contain a total a week, to leave a message. You will of 520 acres, more or less, which are subject September 4, 2018—FY 2019 helium to all valid rights, reservations, rights-of-way, auction results published on the receive a reply during normal business and easements of record. BLM website hours. This proclamation does not affect title to September 5, 2018—Invoices for SUPPLEMENTARY INFORMATION: the lands described above, nor does it affect auction sent on or before this date; any valid existing easement for public roads payments due 15 days from invoice A. Purpose and Background and highways, public utilities, railroads, pipelines, or any other valid easement or Helium Sale In October 2013, Congress passed the HSA, which requires the Department of rights-of-way or reservation of record. August 31, 2018—Invitation for offers the Interior, through the BLM Director, (IFO) posted for helium sale Dated: July 9, 2018. to offer for auction and sale annually a John Tahsuda, September 4, 2018—Bids due from IFO portion of the helium reserves owned by Principal Deputy Assistant Secretary—Indian the United States and stored Affairs Exercising the Authority of the September 4, 2018—Award announcements published on the underground at the Cliffside Gas Field Assistant Secretary—Indian Affairs. near Amarillo, Texas. [FR Doc. 2018–16584 Filed 8–1–18; 8:45 am] BLM website September 5, 2018—Invoices for sale On July 23, 2014, the BLM published BILLING CODE 4337–15–P sent on or before; payments due 15 a ‘‘Final Notice for Implementation of days from invoice Helium Stewardship Act Sales and Auctions’’ in the Federal Register (79 DEPARTMENT OF THE INTERIOR Helium Delivery FR 42808) (2014 Final Notice). The 2014 Bureau of Land Management September 30, 2018—Helium Final Notice contained information transferred to buyers’ storage about the HSA, definitions of terms accounts used in the Notice, the reasons for the [LLNM006200 L99110000.EK0000 XXX If payment is not received by L4053RV] action, and a process for conducting the September 20, 2018, volumes will be re- auctions and sales in FY 2014. Notice of Crude Helium Auction and offered for sale to all over bidders, On August 24, 2015, the BLM Sale for Fiscal Year 2019 Delivery proportionally, on September 21, 2018. published a ‘‘Notice of Final Action: Subsequently, for these re-offered Crude Helium Sale and Auction for AGENCY: Bureau of Land Management, volumes to count toward October 1, Fiscal Year 2016 Delivery’’ in the Interior. 2018 allocation percentages, payment Federal Register (80 FR 51304) (2015 ACTION: Notice of auction and sale. must be received by September 28, Final Notice). The 2015 Final Notice 2018. refined the process the BLM used in SUMMARY: The Secretary of the Interior ADDRESSES: The August 31, 2018, 2014 for conducting the auction and (Secretary), through the Bureau of Land helium auction will be held in the main sale of crude helium. The BLM will use Management (BLM) New Mexico State conference room of the Amarillo Field the process set forth in the 2015 Final Office, is issuing this Notice to conduct Office, 801 South Fillmore, Suite 500, Notice for the auction and sale of crude an auction and sale from the Federal Amarillo, TX 79101. The BLM’s Federal helium to occur in FY 2018 for FY 2019 Helium Program, administered by the Helium Program HSA Implementation delivery. BLM New Mexico, Amarillo Field page website is located at https:// Both the 2014 and 2015 Final Notices Office. The Helium Stewardship Act of www.blm.gov/programs/energy-and- are available from the BLM’s HSA 2013 (HSA) requires the BLM to minerals/helium/federal-helium- Implementation Page website (see conduct an annual auction and sale of operations. Questions related to the ADDRESSES). Search under the crude helium. Accordingly, the BLM auction can be submitted by phone to ‘‘Documents and Reports’’ link. will once again use the auction and sale the BLM at 806–356–1000. B. Volumes Offered in the FY 2019 process established in the Federal FOR FURTHER INFORMATION CONTACT: Helium Auction and Sale: Register dated June 20, 2017, for a Samuel R.M. Burton, Amarillo Field previous sale. Manager, at telephone: 806–356–1000, Table 1 identifies the volumes to be DATES: The schedule for the auction and email: [email protected]. Persons who offered for auction and sale in FY 2018 sale process is: use a telecommunications device for the for FY 2019 delivery.
TABLE 1—PROJECTED VOLUMES FOR AUCTION AND SALES FOR FY 2019 DELIVERY
Forecasted In-kind Total Volume Volume Volume production sales remaining available available available capability (sales to production for auction for non- for sale (NITEC federal available allocated Fiscal year (FY) study) users) for sale/ sale auction or delivery MMcf MMcf MMcf * MMcf MMcf MMcf
FY 2019 ...... 825 155 300 *** 210 ** 9 81 * MMcf means one million cubic feet of gas measured at standard conditions of 14.65 per square inch atmosphere (psia) and 60 degrees Fahr- enheit. ** 70 percent of total production capacity after deducting in-kind (rounded). *** Volumes offered fulfill the requirement of the HSA to reach Phase C.
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C. FY 2019 Helium Auction qualified bidder may participate in the helium from the Federal Helium 1.01 What is the minimum FY 2019 auction. The logistics for the auction Pipeline (as defined in 50 U.S.C. auction price and the FY 2019 sales and the pre-bid qualification form is 167(2)). price? The minimum FY 2019 auction included in a document entitled, ‘‘FY 2.02 How will helium sold in the FY price is $110 per Mcf (one thousand 2019 Helium Auction Notice and 2019 sale be allocated among those participating in the non-allocated sale? cubic feet of gas measured at standard Guide’’ on the BLM’s HSA The non-allocated sale will be made conditions of 14.65 psia and 60 degrees Implementation Page website (see available to all qualified offerors not Fahrenheit). The BLM will announce ADDRESSES). Click on the ‘‘Federal eligible to participate in the allocated the FY 2019 sale price after the auction Register Notices’’ link. sales. The minimum volume that can be has concluded, and the BLM completes 1.05 Who is qualified to purchase requested is 1 MMcf. The total volume its analysis of the auction information. helium at the auction? Only qualified available for the non-allocated portion The BLM will use this information to bidders, as defined in 50 U.S.C. 167(9), of the sale is 9 MMcf. Any volumes not publish the crude helium price for FY may participate in and purchase helium sold at auction will be distributed 2019. at the auction. The BLM will make the between the non-allocated (10 percent) 1.02 What will happen to the helium final determination of who is a qualified and the allocated sale (90 percent). Any offered but not sold in the helium bidder using the HSA’s definition of a volumes not purchased at the non- auction? Any volume of helium offered, qualified bidder, regardless of whether allocated sale will be sold in the but not sold in the FY 2019 auction, will or not that person was previously allocated portion. be added to the helium available for sale determined to be a qualified bidder. Payment must be received not later than 2.03 How will the helium sold in the and will be offered in the FY 2019 sale. FY 2019 sale be allocated among the 1.03 When will the auction and sale the close of business September 20, persons to accept delivery of crude take place? The BLM will offer helium 2018. 1.06 How many helium lots does the helium from the Federal Helium for FY 2019 according to the following Pipeline? Any person wishing to schedule: BLM anticipate offering at the FY 2019 auction? The BLM anticipates participate in the allocated portion of Helium Auction auctioning 210 MMcf in a total of 12 lots the FY 2019 sale needs to report its August 31, 2018—FY 2019 helium for delivery in FY 2019. The lots would excess refining capacity and operational auction held in Amarillo, Texas be divided as follows: capacity a minimum of 14 calendar days September 4, 2018—FY 2019 helium 5 lots of 25 MMcf each; and prior to the sale, using the Excess auction results published on the 5 lots of 15 MMcf each; and Refining Capacity form. The form can be BLM website 2 lots of 5 MMcf each. downloaded from the BLM’s HSA September 5, 2018—Invoices for 1.07 What must I do to bid at auction? Implementation Page website (see auction sent on or before this date; The BLM has described the live auction ADDRESSES). Click on the links for payments due 15 days from invoice procedures, including detailed bidding ‘‘Crude Helium Auctions & Sales’’ and instructions and pre-bid registration then ‘‘FY 2019 Refiner Estimated Excess Helium Sale requirements, in a document entitled, Capacity.’’ Each person participating in August 31, 2018—Invitation for offers ‘‘FY 2019 Auction Notice and Guide,’’ the sale will then be allocated a (IFO) posted for helium sale which is available on the BLM’s HSA proportional share based upon that September 4, 2018—Bids due from Implementation Page website (see person’s operational capacity. IFO ADDRESSES). Click on the ‘‘Federal 2.04 How does a person apply for September 4, 2018—Award Register Notices’’ link. access to the Federal Helium Pipeline announcements published on the 1.08 When will helium that is for the purpose of taking crude helium? BLM website purchased at sale or won at auction be The steps for taking crude helium are September 5, 2018—Invoices for sale available in the purchaser’s storage provided in the BLM’s HSA sent on or before; payments due 15 account? The BLM will transfer the Implementation Page website (see days from invoice volumes purchased in the FY 2019 ADDRESSES). The steps are contained in auction and sale to the buyer’s storage a document entitled, ‘‘How to Establish Helium Transfer accounts on September 30, 2018. a Storage Contract and Pipeline September 30, 2018—Helium Connection Point.’’ Click on the link for D. FY 2019 Helium Sale transferred to buyers’ storage ‘‘Helium Storage.’’ Reporting forms can accounts (in accordance with 2.01 Who will be allowed to purchase be downloaded from the same website Section 1.08) helium in the FY 2019 sale? The crude address, click on the link for If payment is not received by helium sale will be separated into two ‘‘Documents and Reports.’’ The forms September 20, 2018, volumes will be re- distinct portions, a non-allocated show the requirements and due dates offered for sale to all over-bidders, portion and an allocated portion. The for each report. The length of time proportionally, on September 21, 2018. non-allocated portion will be ten required to apply for and obtain access Subsequently, for these re-offered percent of the total amount offered for to the Federal Helium Pipeline can vary volumes to count toward October 1, sale for FY 2019, and will be available based on the person’s plans for plant 2018 allocation percentages, payment to those storage contract holders who do construction, pipeline metering must be received by September 28, not have ability to accept delivery of installation, and other variables. The 2018. crude helium from the Federal Helium BLM is available to provide technical 1.04 What is the auction format? The Pipeline (as defined in 50 U.S.C. 167(2)) assistance, including contact auction will be a live auction, held in as of May 30, 2018. The allocated information for applying for access and the main conference room of the portion will be 90 percent of the total meeting any applicable National Amarillo Field Office at 1:00 p.m. amount offered for sale for FY 2019, and Environmental Policy Act requirements. Central Time, on August 31, 2018. The will be available to any person address is 801 South Fillmore, Suite (including individuals, corporations, E. Delivery of Helium in FY 2019 500, Amarillo, TX 79101. Anyone partnerships, or other entities) with the 3.01 When will I receive the helium meeting the HSA definition of a ability to accept delivery of crude that I purchase in a sale or win based
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on a successful auction bid? Helium and Pension Benefit Plans (the Council), nomination by an organization, by an purchased at the FY 2019 sale or won consisting of 15 members appointed by authorized representative of the at the FY 2019 auction will be delivered the Secretary of Labor (the Secretary) as organization. The Department starting September 30, 2018, in follows: encourages you to include additional accordance with the crude helium • Three representatives of employee supporting letters of nomination. It will storage contract. The intent is to ensure organizations (at least one of whom not consider self-nominees who have no delivery of all helium purchased at sale shall be a representative of an supporting letters. or auction up to the BLM’s production organization whose members are Nominations, including supporting capability for the year. participants in a multiemployer plan); letters, should: 3.02 How will the BLM prioritize • three representatives of employers • State the person’s qualifications to delivery? The HSA gives priority to (at least one of whom shall be a serve on the Council (including any Federal in-kind helium (i.e., helium sold representative of employers maintaining particular specialized knowledge or to Federal users) (50 U.S.C. or contributing to multiemployer plans); experience relevant to the nominee’s 167d(b)(1)(D)) and (b)(3)). After meeting • one representative each from the proposed Council position); that priority, the BLM will make fields of insurance, corporate trust, • state that the candidate will accept delivery on a reasonable basis, as actuarial counseling, investment appointment to the Council if offered; described in the crude helium storage counseling, investment management, • include which of the five positions contract, to ensure storage contract and accounting; and (representing groups or fields) you are holders who have purchased or won • three representatives from the nominating the candidate to fill; helium at auction have the opportunity general public (one of whom shall be a • include the nominee’s full name, during the year to have that helium person representing those receiving work affiliation, mailing address, phone produced or refined in monthly benefits from a pension plan). number, and email address; increments. No more than eight members of the • include the nominator’s full name, mailing address, phone number, and F. Background documents Council shall be members of the same political party. email address; Supplementary documents referenced Council members must be qualified to • include the nominator’s signature, in this Notice are available at the BLM’s appraise the programs instituted under whether sent by email or otherwise. HSA Implementation Page website (see ERISA. Appointments are for three-year Please do not include any information ADDRESSES) and include the following terms. The Council’s prescribed duties that you do not want publicly disclosed. documents: are to advise the Secretary with respect The Department will contact a. This Federal Register Notice for to carrying out his functions under nominees for information on their Fiscal year 2019 Delivery; ERISA, and to submit to the Secretary, political affiliation and their status as b. The HSA (50 U.S.C. 167); or his designee, related registered lobbyists. Anyone currently c. FY 2019 Helium Auction Notice recommendations. The Council will subject to federal registration and Guide; meet at least four times each year. requirements as a lobbyist is not eligible d. 2016 Storage Contract (template for The terms of five Council members for appointment. Nominees should be information only); expire at the end of this year. The aware of the time commitment for e. Determination of Fair Market Value groups or fields they represent are as attending meetings and actively Pricing of Crude Helium; follows: participating in the work of the Council. f. Storage Fees; (1) Employee organizations; Historically, this has meant a g. Required Forms for Helium (2) employers; commitment of at least 20 days per year. Reporting; and (3) actuarial counseling; The Department of Labor has a process h. FY 2014 through FY 2018 Federal (4) investment counseling; and for vetting nominees under Register Notices for Helium Auctions (5) the general public. consideration for appointment. and Sales. The Department of Labor is Signed at Washington, DC, on July 30, Authority: The HSA of 2013 (Pub. L. 113– committed to equal opportunity in the 2018. 40) codified to various sections in 50 U.S.C. workplace and seeks a broad-based and Preston Rutledge, 167–167q. diverse Council. Assistant Secretary, Employee Benefits Richard T. Cardinale, If you or your organization wants to Security Administration. nominate one or more people for Acting Deputy Director, Operations. [FR Doc. 2018–16571 Filed 8–1–18; 8:45 am] appointment to the Council to represent [FR Doc. 2018–16685 Filed 8–1–18; 8:45 am] one of the groups or fields specified BILLING CODE 4510–29–P BILLING CODE 4310–FB–P above, submit nominations to Larry Good, Council Executive Secretary, Frances Perkins Building, U.S. NATIONAL SCIENCE FOUNDATION DEPARTMENT OF LABOR Department of Labor, 200 Constitution Ave. NW, Suite N–5623, Washington, Advisory Committee for Mathematical Employee Benefits Security DC 20210, or as email attachments to Administration and Physical Sciences; Notice of [email protected]. Nominations must Meeting Advisory Council on Employee Welfare be received on or before September 17, 2018. Please allow three weeks for In accordance with the Federal and Pension Benefit Plans; Advisory Committee Act (Pub. L. 92– Nominations for Vacancies regular mail delivery to the Department of Labor. If sending electronically, 463, as amended), the National Science Section 512 of the Employee please use an attachment in rich text, Foundation (NSF) announces the Retirement Income Security Act of 1974 Word, or pdf format. Nominations may following meeting: (ERISA), 88 Stat. 895, 29 U.S.C. 1142, be in the form of a letter, resolution or NAME AND COMMITTEE CODE: Advisory provides for the establishment of an petition, signed by the person making Committee for Mathematical and Advisory Council on Employee Welfare the nomination or, in the case of a Physical Sciences (#66).
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DATE AND TIME: NUCLEAR REGULATORY NUCLEAR REGULATORY August 14, 2018; 12:30 p.m.–5:00 p.m. COMMISSION COMMISSION August 15, 2018; 8:30 a.m.–4:00 p.m. [Docket No. 40–8943–MLA–2; ASLBP No. [Docket No. 40–8943–MLA–2; ASLBP No. 13–926–01–MLA–BD01] PLACE: National Science Foundation, 13–926–01–MLA–BD01] 2415 Eisenhower Ave. Alexandria, VA Notice of Hearing (Notice of 22314. Notice (Regarding Weapons at Atomic Evidentiary Hearing and Opportunity Safety and Licensing Board To Provide Oral, Written, and Audio- MEETING INFORMATION: https:// Proceeding); In the Matter of Crow Recorded Limited Appearance www.nsf.gov/mps/advisory.jsp. Butte Resources, Inc. (Marsland Statements); In the Matter of Crow TYPE OF MEETING: Open. Expansion Area) Butte Resources, Inc. (Marsland Expansion Area) CONTACT PERSON: Christopher Coox, July 27, 2018. July 27, 2018. National Science Foundation, 2415 Atomic Safety and Licensing Board Panel Eisenhower Ave., Alexandria, VA Before the Licensing Board: G. Paul Bollwerk, Atomic Safety and Licensing Board Panel Before the Licensing Board: G. Paul Bollwerk, 22314; Telephone: 703.292.5137; Email: III, Chairman, Dr. Richard E. Wardwell, [email protected]. III, Chairman, Dr. Richard E. Wardwell, Dr. Dr. Thomas J. Hirons Thomas J. Hirons PURPOSE OF MEETING: To provide advice, Notice is hereby given that the rules The Atomic Safety and Licensing recommendations, and counsel on major and policies regarding the possession of Board hereby gives notice that it will goals and policies pertaining to weapons in United States Courthouses convene an evidentiary hearing to mathematical and physical sciences and United States Federal Buildings in receive testimony and exhibits in this programs and activities. the State of Nebraska shall apply to all proceeding regarding intervenor Oglala Agenda proceedings conducted in governmental Sioux Tribe’s (OST) challenge to the or private facilities in Nebraska by the May 2012 application of Crow Butte Tuesday, August 14, 2018 Atomic Safety and Licensing Board of Resources, Inc., (CBR) seeking to amend the existing 10 CFR part 40 source • the U.S. Nuclear Regulatory Meeting opening, FACA briefing, materials license for its Crow Butte in Commission. introductions, and approval of situ uranium recovery (ISR) site to previous meeting minutes Accordingly, no person other than authorize CBR to operate a satellite ISR • MPS update federal law enforcement personnel or facility within the Marsland Expansion law enforcement personnel from the Area (MEA) in Dawes County, Nebraska. • Big Ideas: Quantum Leap: Leading the Dawes County Sheriff’s Department, or The evidentiary hearing will concern Next Quantum Revolution any other authorized Nebraska state or OST’s admitted Contention 2, which • Big Ideas: Windows on the Universe: local law enforcement organization, raises hydrogeological-related The Era of Multi-Messenger while performing official duties, shall environmental and safety matters Astrophysics wear or otherwise carry a firearm, edged regarding the proposed license • Preparation for meeting with the NSF weapon, impact weapon, electronic amendment. In addition, the Board Director and Chief Operating Officer control device, chemical weapon, gives notice that, in accordance with 10 (COO) ammunition, or other dangerous CFR 2.315(a) and the procedures weapon into the limited appearance specified below, it will entertain oral, Wednesday, August 15, 2018 session scheduled at the Chadron State written, and audio-recorded limited appearance statements from members of • Meeting opening and FACA briefing College Student Center in Chadron, Nebraska, on Sunday, October 28, 2018, the public in connection with the issues • Update: Sexual Harassment or the evidentiary hearing scheduled to raised by Contention 2. • Big Ideas: Harnessing the Data begin on Tuesday, October 30, 2018, at A. Matters To Be Considered Revolution the Crawford Community Building in As set forth by the Licensing Board in • Big Ideas: Understanding the Rules of Crawford, Nebraska. a July 20, 2018 issuance, OST Life: Predicting Phenotype This notice does not apply to state or Contention 2 provides as follows: • Discussion: Synthetic Biology local law enforcement officers OST Contention 2: Failure to Include • Update from MPSAC sub-committee responding to a call for assistance from Adequate Hydrogeological Information within the Chadron State College to Demonstrate Ability to Contain Fluid on the Physics Frontiers Centers Migration Program Student Center or the Crawford Community Building. The application and final environmental • Discussion with NSF Director and assessment fail to provide sufficient COO For the Atomic Safety and Licensing information regarding the geological setting of the area to meet the requirements of 10 • Board. Wrap up and opportunity for public Dated: Rockville, Maryland, July 27, 2018. CFR part 40, Appendix A, Criteria 4(e) and Q&A/comments 5G(2); the National Environmental Policy George P. Bollwerk III, Act; and NUREG–1569 section 2.6. The Dated: July 30, 2018. Chairman, Administrative Judge. application and final environmental Crystal Robinson, [FR Doc. 2018–16545 Filed 8–1–18; 8:45 am] assessment similarly fail to provide sufficient Committee Management Officer. information to establish potential effects of BILLING CODE 7590–01–P the project on the adjacent surface and [FR Doc. 2018–16551 Filed 8–1–18; 8:45 am] ground-water resources, as required by BILLING CODE 7555–01–P NUREG–1569 section 2.7, and the National Environmental Policy Act. LBP–18–3, 88 NRC __, __(slip op. at 43) (July 20, 2018). This issue will be the
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subject matter of the evidentiary hearing Date: Sunday, October 28, 2018 (if E. Submitting a Request To Make an and should be the focus of any limited there is sufficient interest). Oral Limited Appearance Statement appearance statements.1 Time: 2:00 p.m. to 4:00 p.m. MT. A person wishing to make an oral B. Date, Time, and Location of Location: Scottsbluff Room, Chadron statement who has submitted a timely Evidentiary Hearing State College Student Center, 1000 Main written request to do so will be given The Board will convene an Street, Chadron, Nebraska. priority over those who have not filed evidentiary hearing conducted in accord such a request. To be considered timely, with the procedures set forth in 10 CFR D. Participation Guidelines for Oral a written request to make an oral part 2, subpart L, regarding the Limited Appearance Statements statement must either be mailed, faxed, environmental and safety matters or sent by email so as to be received by Any person not a party, or the 5:00 p.m. Eastern Time (ET) on Monday, specified in section A above on the representative of a party, to this following date at the specified location October 12, 2018. Based on its review of proceeding will be permitted to make an the requests received by October 12, and time: oral statement setting forth his or her Date: Tuesday, October 30, 2018. 2018, the Licensing Board may decide Time: 8:30 a.m. Mountain Time (MT). position on matters of concern relating that the Sunday afternoon session will Location: Crawford Community to the proceeding. Although these not be held due to lack of adequate Building, 1005 1st Street, Crawford, statements do not constitute testimony interest in that session. Written requests Nebraska. or evidence, they nonetheless may help to make an oral limited appearance The hearing will continue from day-to- the Licensing Board and/or the parties received after Monday, October 12, day until concluded. CBR, the NRC in their consideration of the matters of 2018, will be honored to the extent staff, and OST will be parties to the concern in this proceeding relating to practicable. hearing and will sponsor witnesses and OST Contention 2. Written requests to make an oral evidentiary material. Oral limited appearance statements statement should be submitted to: Any member of the public who plans will be entertained during the hours Mail: Administrative Judge G. Paul to attend the hearing is advised that specified in section C above, or such Bollwerk, III, Atomic Safety and security measures may be employed at lesser period as may be necessary to Licensing Board Panel, Mail Stop the entrance to the room where the accommodate the speakers who are T–3A02, U.S. Nuclear Regulatory hearing will take place, including present. In this regard, if all scheduled Commission, Washington, DC searches of hand-carried items such as and unscheduled speakers present at the 20555–0001. briefcases or backpacks, and is session have made a presentation, the Fax: (301) 415–5205 (verification (301) reminded to arrive in sufficient time to Licensing Board reserves the right to 415–5277). allow for security screening. Items that Email: [email protected] and could readily be used as weapons will terminate the session before the ending [email protected]. not be permitted in the room where the time listed in section C above. The evidentiary hearing sessions will be Board also reserves the right to cancel F. Submitting Written Limited held. Also, during the evidentiary the Sunday afternoon session scheduled Appearance Statements hearing session no signs will be above if there has not been a sufficient As provided in 10 CFR 2.315(a), any permitted in the hearing room. showing of public interest as reflected by the number of preregistered speakers. person not a party, or the representative C. Date, Time, and Location of Oral of a party, to the proceeding may submit Limited Appearance Statement Session Any member of the public who plans a written statement setting forth his or to attend the limited appearance session A 10 CFR 2.315(a) oral limited her position on matters of concern is strongly advised to arrive early to relating to this proceeding. Although appearance session regarding the MEA allow time to pass through any security ISR proceeding will be held on the these statements do not constitute measures that may be employed. testimony or evidence, they nonetheless following date at the specified location Attendees are also requested not to and time: may help the Board or the parties in bring any unnecessary hand-carried their consideration of the matters of items, such as packages, briefcases, 1 As the Board also indicated in its July 2018 concern in this proceeding relating to issuance, LBP–18–3, 88 NRC at __(slip op. at 43), backpacks, or other items that might OST Contention 2. the scope of the safety and environmental concerns need to be examined individually. Items A written limited appearance encompassed by this contention include the that could readily be used as weapons following: (1) The adequacy of the descriptions of statement may be submitted at any time, the affected environment for establishing the will not be permitted in the room where however, for the statement to be the potential effects of the proposed MEA operation on this session will be held. During the oral most helpful to the Board and parties the adjacent surface water and groundwater limited appearance session, signs no resources; (2) exclusively as a safety concern, the relative to the evidentiary hearing on absence in the applicant’s technical report, in larger than 18 inches by 18 inches will Contention 2, it should be submitted so accord with NUREG–1569 section 2.7, of a be permitted, but may not be attached as to be received by Wednesday, October description of the effective porosity, hydraulic to sticks, held over one’s head, or 24, 2018. The written limited statement porosity, hydraulic conductivity, and hydraulic gradient of site hydrogeology, along with other moved about in the room. should be sent to the Office of the information relative to the control and prevention The time allotted for each limited Secretary using one of the methods of excursions such as transmissivity and storativity; prescribed below: (3) the failure to develop, in accord with NUREG– appearance statement normally will be 1569 section 2.7, an acceptable conceptual model no more than five minutes, but to ensure Mail: Office of the Secretary, of site hydrology that is adequately supported by everyone will have an opportunity to Rulemakings and Adjudications site characterization data so as to demonstrate with speak, may be further limited depending Staff, U.S. Nuclear Regulatory scientific confidence that the area hydrogeology, including horizontal and vertical hydraulic on the number of written requests to Commission, Washington, DC conductivity, will result in the confinement of make an oral statement that are 20555–0001. extraction fluids and expected operational and submitted in accordance with section E Fax: (301) 415–1101 (verification (301) restoration performance; and (4) whether the final EA contains unsubstantiated assumptions as to the below and/or the number of persons 415–1677). isolation of the aquifers in the ore-bearing zones. present at the designated times. Email: [email protected].
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In addition, using the same method of Licensing Board Panel, Mail Stop POSTAL SERVICE service, a copy of the written limited T–3A02, U.S. Nuclear Regulatory appearance statement should be sent to Commission, Washington, DC Product Change—Priority Mail the Licensing Board Chairman as 20555–0001. Negotiated Service Agreement follows: H. Availability of Documentary AGENCY: Postal ServiceTM. Mail: Administrative Judge G. Paul Information Regarding the Proceeding Bollwerk, III, Atomic Safety and ACTION: Notice. Licensing Board Panel, Mail Stop The CBR application and license and various staff documents relating to the T–3A02, U.S. Nuclear Regulatory SUMMARY: The Postal Service gives application are available on the NRC Commission, Washington, DC notice of filing a request with the Postal website at https://www.nrc.gov/info- 20555–0001. Regulatory Commission to add a finder/materials/uranium/licensed- Fax: (301) 415–5599 (verification (301) domestic shipping services contract to facilities/crow-butte.html.2 These and 415–6094). the list of Negotiated Service Email: [email protected] and other documents relating to this Agreements in the Mail Classification [email protected]. proceeding also are available for public Schedule’s Competitive Products List. inspection at the Commission’s Public G. Submitting Audio-Recorded Limited Document Room (PDR), located at One DATES: Date of required notice: August Appearance Statements White Flint North, 11555 Rockville Pike 2, 2018. As provided in 10 CFR 2.315(a), any (first floor), Rockville, Maryland, or FOR FURTHER INFORMATION CONTACT: person not a party, or the representative electronically from the publicly- Elizabeth Reed, 202–268–3179. of a party, to the proceeding may submit available records component of NRC’s an audio-recorded statement setting document system (ADAMS) at SUPPLEMENTARY INFORMATION: The forth his or her position on matters of www.nrc.gov/reading-rm/adams.html United States Postal Service® hereby concern relating to this proceeding. (the Public Electronic Reading Room), gives notice that, pursuant to 39 U.S.C. Although these statements do not including the agency’s Electronic 3642 and 3632(b)(3), on July 27, 2018, constitute testimony or evidence, they Hearing Docket, https://adams.nrc.gov/ it filed with the Postal Regulatory nonetheless may help the Board or the ehd/ (under Docket No. 40–8943–MLA– Commission a USPS Request to Add parties in their consideration of the 2). Persons who do not have access to Priority Mail Contract 455 to matters of concern in this proceeding ADAMS or who encounter problems in Competitive Product List. Documents relating to OST Contention 2. accessing the documents located in are available at www.prc.gov, Docket To ensure that the Licensing Board ADAMS should contact the NRC PDR Nos. MC2018–199, CP2018–277. members will have the opportunity to reference staff by telephone at (800) review an audio-recorded limited 397–4209 or (301) 415–4737 (available Elizabeth Reed, appearance statements prior to the between 8:00 a.m. and 4:00 p.m. ET, Attorney, Corporate and Postal Business Law. beginning of the evidentiary hearing, an Monday through Friday, except federal [FR Doc. 2018–16523 Filed 8–1–18; 8:45 am] audio-recorded limited appearance holidays), or by email to [email protected]. BILLING CODE 7710–12–P statement must be submitted so that it is received by Friday, October 12, 2018. I. Information Updates to Schedule All recordings must conform to the Any updates or revisions to the POSTAL SERVICE directions below in order for the Board evidentiary hearing schedule or the and parties to consider the information schedule for the limited appearance Product Change—Priority Mail and and concerns contained therein. All session can be found on the NRC First-Class Package Service audio-recorded limited appearance website at www.nrc.gov/public-involve/ Negotiated Service Agreement statements will be transcribed by a court public-meetings/index.cfm, or by calling AGENCY: Postal ServiceTM. reporter and included in the docket of (800) 368–5642, extension 5036 this proceeding. (available between 7:00 a.m. and 9:00 ACTION: Notice. 1. Size p.m. ET, Monday through Friday, except federal holidays), or by calling (301) SUMMARY: The Postal Service gives Due to technical constraints, all 415–5036 (available seven days a week, notice of filing a request with the Postal audio-recorded limited appearance twenty-four hours a day). Regulatory Commission to add a statements submitted must be no more It is so ordered. domestic shipping services contract to than 15 minutes in length. For the Atomic Safety and Licensing the list of Negotiated Service 2. Format and Submission Board. Agreements in the Mail Classification Schedule’s Competitive Products List. Audio-recorded limited appearance Rockville, Maryland, July 27, 2018. statements may be sent to the Board one George P. Bollwerk III, DATES: Date of required notice: August of two ways. An audio-recorded limited Chairman, Administrative Judge. 2, 2018. appearance statement may be sent by [FR Doc. 2018–16546 Filed 8–1–18; 8:45 am] FOR FURTHER INFORMATION CONTACT: email to [email protected] as an BILLING CODE 7590–01–P Elizabeth Reed, 202–268–3179. attachment. The total size of the email cannot exceed 17 megabytes (MB). The 2 On May 24, 2018, the staff notified the Board SUPPLEMENTARY INFORMATION: The attached file must be sent as an .mp3, that, in accordance with 10 CFR 2.1202(a), the CBR United States Postal Service® hereby .mp4, or .dss file. license amendment license had been issued, effective immediately. See Letter from Emily gives notice that, pursuant to 39 U.S.C. An audio-recorded limited Monteith, NRC Staff Counsel, to Licensing Board at 3642 and 3632(b)(3), on July 27, 2018, appearance statement may also be sent 1 (May 24, 2018). Although section 2.1213(a) it filed with the Postal Regulatory by mail on either a compact disc (CD) afforded OST the opportunity to seek a stay of this Commission a USPS Request to Add or digital versatile disc (DVD) to: staff action, no such request was filed. Nonetheless, the CBR license amendment is subject to any merits Priority Mail & First-Class Package Mail: Administrative Judge G. Paul determinations the Board might make relative to Service Contract 85 to Competitive Bollwerk, III, Atomic Safety and OST’s pending contention. Product List. Documents are available at
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www.prc.gov, Docket Nos. MC2018–196, Commission a USPS Request to Add SUPPLEMENTARY INFORMATION: The CP2018–274. Priority Mail Contract 456 to United States Postal Service® hereby Competitive Product List. Documents gives notice that, pursuant to 39 U.S.C. Elizabeth Reed, are available at www.prc.gov, Docket 3642 and 3632(b)(3), on July 27, 2018, Attorney, Corporate and Postal Business Law. Nos. MC2018–200, CP2018–278. it filed with the Postal Regulatory [FR Doc. 2018–16525 Filed 8–1–18; 8:45 am] Commission a USPS Request to Add Elizabeth Reed, BILLING CODE 7710–12–P Priority Mail Express, Priority Mail, & Attorney, Corporate and Postal Business Law. First-Class Package Service Contract 43 [FR Doc. 2018–16519 Filed 8–1–18; 8:45 am] to Competitive Product List. Documents POSTAL SERVICE BILLING CODE 7710–12–P are available at www.prc.gov, Docket Product Change—Parcel Select Nos. MC2018–198, CP2018–276. Negotiated Service Agreement POSTAL SERVICE Elizabeth Reed, AGENCY: Postal ServiceTM. Attorney, Corporate and Postal Business Law. Product Change—Priority Mail [FR Doc. 2018–16522 Filed 8–1–18; 8:45 am] ACTION: Notice. Negotiated Service Agreement BILLING CODE 7710–12–P SUMMARY: The Postal Service gives AGENCY: Postal ServiceTM. notice of filing a request with the Postal ACTION: Notice. Regulatory Commission to add a SECURITIES AND EXCHANGE domestic shipping services contract to SUMMARY: The Postal Service gives COMMISSION the list of Negotiated Service notice of filing a request with the Postal Agreements in the Mail Classification Regulatory Commission to add a [Release No. 34–83733; File No. SR– NYSEArca–2018–25] Schedule’s Competitive Products List. domestic shipping services contract to DATES: Date of notice required under 39 the list of Negotiated Service Self-Regulatory Organizations; NYSE U.S.C. 3642(d)(1): August 2, 2018. Agreements in the Mail Classification Arca, Inc.; Notice of Filing of FOR FURTHER INFORMATION CONTACT: Schedule’s Competitive Products List. Amendment No. 1 and Order Instituting Elizabeth Reed, 202–268–3179. DATES: Date of required notice: August Proceedings To Determine Whether To SUPPLEMENTARY INFORMATION: The 2, 2018. Approve or Disapprove a Proposed United States Postal Service® hereby FOR FURTHER INFORMATION CONTACT: Rule Change as Modified by gives notice that, pursuant to 39 U.S.C. Elizabeth Reed, 202–268–3179. Amendment No. 1 Thereto Regarding 3642 and 3632(b)(3), on July 27, 2018, the Continued Listing and Trading of it filed with the Postal Regulatory SUPPLEMENTARY INFORMATION: The United States Postal Service® hereby Shares of the Natixis Loomis Sayles Commission a Request of the United Short Duration Income ETF States Postal Service to Add Parcel gives notice that, pursuant to 39 U.S.C. Select Contract 32 to Competitive 3642 and 3632(b)(3), on July 27, 2018, July 27, 2018. it filed with the Postal Regulatory Product List. Documents are available at I. Introduction www.prc.gov, Docket Nos. MC2018–197, Commission a USPS Request to Add CP2018–275. Priority Mail Contract 457 to On April 16, 2018, NYSE Arca, Inc. Competitive Product List. Documents (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed Elizabeth Reed, are available at www.prc.gov, Docket with the Securities and Exchange Attorney, Corporate and Postal Business Law. Nos. MC2018–201, CP2018–279. Commission (‘‘Commission’’), pursuant [FR Doc. 2018–16520 Filed 8–1–18; 8:45 am] 1 Elizabeth Reed, to Section 19(b)(1) of the Securities BILLING CODE 7710–12–P Exchange Act of 1934 (‘‘Exchange Attorney, Corporate and Postal Business Law. Act’’) 2 and Rule 19b–4 thereunder,3 a [FR Doc. 2018–16521 Filed 8–1–18; 8:45 am] proposed rule change to continue listing POSTAL SERVICE BILLING CODE 7710–12–P and trading shares of the Natixis Loomis Sayles Short Duration Income ETF Product Change—Priority Mail under NYSE Arca Rule 8.600–E, POSTAL SERVICE Negotiated Service Agreement Managed Fund Shares.4 The proposed AGENCY: Postal ServiceTM. Product Change—Priority Mail rule change was published for comment 5 ACTION: Notice. Express, Priority Mail, & First-Class in the Federal Register on May 3, 2018. Package Service Negotiated Service On June 5, 2018, the Commission SUMMARY: The Postal Service gives Agreement extended the time period within which notice of filing a request with the Postal to approve the proposed rule change, Regulatory Commission to add a AGENCY: Postal ServiceTM. disapprove the proposed rule change, or domestic shipping services contract to ACTION: Notice. institute proceedings to determine the list of Negotiated Service whether to approve or disapprove the Agreements in the Mail Classification SUMMARY: The Postal Service gives proposed rule change to August 1, Schedule’s Competitive Products List. notice of filing a request with the Postal DATES: Date of required notice: August Regulatory Commission to add a 1 15 U.S.C. 78s(b)(1). 2, 2018. domestic shipping services contract to 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. FOR FURTHER INFORMATION CONTACT: the list of Negotiated Service 4 Currently, the Exchange lists and trades the Elizabeth Reed, 202–268–3179. Agreements in the Mail Classification Schedule’s Competitive Products List. shares pursuant to NYSE Arca Rule 8.600–E. As SUPPLEMENTARY INFORMATION: The discussed further below, the Exchange submitted United States Postal Service® hereby DATES: Date of required notice: August this proposed rule change to permit the fund’s 2, 2018. portfolio to deviate from two of the ‘‘generic’’ listing gives notice that, pursuant to 39 U.S.C. requirements applicable to Managed Fund Shares. 3642 and 3632(b)(3), on July 27, 2018, FOR FURTHER INFORMATION CONTACT: 5 See Securities Exchange Act Release No. 83122 it filed with the Postal Regulatory Elizabeth Reed, 202–268–3179. (April 27, 2018), 83 FR 19578. (‘‘Notice’’).
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2018.6 On June 6, 2018, the Exchange the Fund. Loomis, Sayles & Company, 5.2–E(j)(3); however, Commentary .06 in filed Amendment No. 1 to the proposed L.P. is the Fund’s sub-adviser (‘‘Sub- connection with the establishment of a rule change, which replaced and Adviser’’). ALPS Distributors, Inc. (the ‘‘fire wall’’ between the investment superseded the proposed rule change as ‘‘Distributor’’) is the principal adviser and the broker-dealer reflects originally filed. The Commission underwriter and distributor of the the applicable open-end fund’s received no comments on the proposed Fund’s Shares. The Adviser is the portfolio, not an underlying benchmark rule change. The Commission is Fund’s administrator. State Street Bank index, as is the case with index-based publishing this notice and order to and Trust Company (‘‘State Street’’) funds. The Adviser and Sub-Adviser are solicit comments on the proposed rule serves as the custodian, and transfer not registered as broker-dealers but each change, as modified by Amendment No. agent (‘‘Transfer Agent’’ or ‘‘Custodian’’) is affiliated with a broker-dealer and has 1, from interested persons and to for the Fund.9 implemented and will maintain a ‘‘fire institute proceedings under Section Commentary .06 to Rule 8.600–E wall’’ with respect to such broker-dealer 19(b)(2)(B) of the Exchange Act to provides that, if the investment adviser regarding access to information determine whether to approve or to the investment company issuing concerning the composition and/or disapprove the proposed rule change as Managed Fund Shares is affiliated with changes to the Fund’s portfolio. In the modified by Amendment No. 1. a broker-dealer, such investment adviser event (a) the Adviser or Sub-Adviser shall erect a ‘‘fire wall’’ between the becomes registered as a broker-dealer or II. Self-Regulatory Organization’s investment adviser and the broker- Statement of the Purpose of, and the newly affiliated with a broker-dealer, or dealer with respect to access to (b) any new adviser or sub-adviser is a Statutory Basis for, the Proposed Rule information concerning the composition Change registered broker-dealer or becomes and/or changes to such investment affiliated with a broker-dealer, it will In its filing with the Commission, the company portfolio. In addition, implement and maintain a fire wall with self-regulatory organization included Commentary .06 further requires that respect to its relevant personnel or statements concerning the purpose of, personnel who make decisions on the broker-dealer affiliate regarding access and basis for, the proposed rule change open-end fund’s portfolio composition to information concerning the and discussed any comments it received must be subject to procedures designed composition and/or changes to the on the proposed rule change. The text to prevent the use and dissemination of portfolio, and will be subject to of those statements may be examined at material nonpublic information procedures designed to prevent the use the places specified in Item IV below. regarding the open-end fund’s and dissemination of material non- The Exchange has prepared summaries, portfolio.10 Commentary .06 to Rule public information regarding such set forth in sections A, B, and C below, 8.600–E is similar to Commentary portfolio. of the most significant parts of such .03(a)(i) and (iii) to NYSE Arca Rule statements. Natixis Loomis Sayles Short Duration 9 Income ETF A. Self-Regulatory Organization’s The Trust is registered under the 1940 Act. On December 26, 2017, the Trust filed with the Statement of the Purpose of, and the Commission its registration statement on Form N– Principal Investments Statutory Basis for, the Proposed Rule 1A under the Securities Act of 1933 (15 U.S.C. 77a), According to the Registration Change and under the 1940 Act relating to the Fund (File Nos. 333–210156 and 811–23146) (‘‘Registration Statement, the Fund’s investment 1. Purpose Statement’’). The description of the operation of the objective is current income consistent Trust and the Fund herein is based, in part, on the with preservation of capital. Under The Exchange proposes to list and Registration Statement. In addition, the normal market conditions,11 the Fund trade shares (‘‘Shares’’) of the following Commission has issued an order granting certain will invest at least 80% of its net assets under NYSE Arca Rule 8.600–E, which exemptive relief to the Trust under the 1940 Act. in ‘‘Fixed-Income Securities’’ (as governs the listing and trading of See Investment Company Act Release No. 30654 (August 20, 2013) (File No. 812–13942–02) described below). Managed Fund Shares: 7 Natixis Loomis (‘‘Exemptive Order’’). The Fixed Income Securities in which Sayles Short Duration Income ETF 10 An investment adviser to an open-end fund is the Fund may invest are the following: (‘‘Fund’’). The Shares are offered by required to be registered under the Investment • Advisers Act of 1940 (the ‘‘Advisers Act’’). As a U.S. Government Securities, Natixis ETF Trust (the ‘‘Trust’’), which including U.S. Treasury Bills, U.S. is registered with the Commission as an result, the Adviser and Sub-Adviser and their related personnel are subject to the provisions of Treasury Notes and Bonds, U.S. open-end management investment Rule 204A–1 under the Advisers Act relating to Treasury Floating Rate Notes, Treasury 8 codes of ethics. This Rule requires investment company. Natixis Advisors, L.P. (the Inflation-Protected Securities (‘‘TIPS’’), ‘‘Adviser’’) is the investment adviser for advisers to adopt a code of ethics that reflects the fiduciary nature of the relationship to clients as and obligations of U.S. agencies or well as compliance with other applicable securities instrumentalities (e.g., ‘‘Ginnie Maes’’, 6 See Securities Exchange Act Release No. 83385, laws. Accordingly, procedures designed to prevent ‘‘Fannie Maes’’ and ‘‘Freddie Macs’’); 83 FR 27034 (June 11, 2018). the communication and misuse of non-public • 7 A Managed Fund Share is a security that information by an investment adviser must be agency and non-agency asset- represents an interest in an investment company consistent with Rule 204A–1 under the Advisers backed securities (‘‘ABS’’); registered under the Investment Company Act of Act. In addition, Rule 206(4)–7 under the Advisers • U.S. dollar-denominated foreign 1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’) organized as Act makes it unlawful for an investment adviser to securities, including emerging market an open-end investment company or similar entity provide investment advice to clients unless such that invests in a portfolio of securities selected by investment adviser has (i) adopted and securities; its investment adviser consistent with its implemented written policies and procedures • Adjustable-Rate Mortgage Securities investment objectives and policies. In contrast, an reasonably designed to prevent violation, by the (‘‘ARMs’’); open-end investment company that issues investment adviser and its supervised persons, of • junior and senior loans; Investment Company Units, listed and traded on the Advisers Act and the Commission rules adopted • the Exchange under NYSE Arca Rule 5.2–E(j)(3), thereunder; (ii) implemented, at a minimum, an bank loans, loan participations and seeks to provide investment results that correspond annual review regarding the adequacy of the assignments; generally to the price and yield performance of a policies and procedures established pursuant to • agency and non-agency mortgage- specific foreign or domestic stock index, fixed subparagraph (i) above and the effectiveness of their backed securities (‘‘MBS’’); income securities index or combination thereof. implementation; and (iii) designated an individual 8 Shares of the Fund commenced trading on the (who is a supervised person) responsible for Exchange on December 28, 2017 pursuant to administering the policies and procedures adopted 11 The term ‘‘normal market conditions’’ is Commentary .01 to NYSE Arca Rule 8.600–E. under subparagraph (i) above. defined in NYSE Arca Rule 8.600–E(c)(5).
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• collateralized mortgage obligations the-counter (‘‘OTC’’) options on Fixed basis through the Distributor at the net (‘‘CMOs’’); Income Securities, domestic and foreign asset value (‘‘NAV’’) next determined • zero coupon and pay-in-kind equity and fixed income indices, CDX, after receipt of an order in proper form securities; U.S. Treasury futures contracts, interest on any business day. The size of a • corporate bonds; rates and currencies. Creation Unit is subject to change. • Non-US government securities, The Fund may invest in futures on The consideration for purchase of supranational entities obligations issued Fixed Income Securities, domestic and Creation Units generally consists of by foreign governments, or international foreign equity and fixed income indices, ‘‘Deposit Securities’’ and the ‘‘Cash agencies and instrumentalities; interest rates and CDX. Component’’, which generally • inflation-linked and inflation- The Fund may invest in publicly or correspond pro rata, to the extent indexed securities; privately issued interests in investment practicable, to the Fund securities, or, as • money market instruments; 12 pools whose underlying assets are credit • permitted by the Fund, the ‘‘Cash mortgage-related securities (such as default, credit-linked, interest rate, Deposit.’’ Together, the Deposit Government National Mortgage currency exchange, equity-linked or Securities and the Cash Component or, Association or Federal National other types of swap contracts and alternatively, the Cash Deposit, Mortgage Association certificates); related underlying securities or constitute the ‘‘Fund Deposit,’’ which • mortgage dollar rolls; • securities loan agreements. represents the minimum initial and variable and floating rate securities; The Fund may invest in non- • Rule 144A securities; subsequent investment amount for a • taxable municipal securities; exchange-traded open-end investment Creation Unit of the Fund. • step-coupon securities; and company securities. The Transfer Agent and Custodian, • stripped securities. With respect to any of the Fund’s through the National Securities Clearing The Fund may hold any portion of its investments identified above, the Fund Corporation (‘‘NSCC’’), makes available assets in cash (U.S. dollars, foreign may purchase securities on a forward on each business day, prior to the currencies or multinational currency commitment or when-issued or delayed opening of the Core Trading Session on units) and/or cash equivalents.13 delivery basis. NYSE Arca (currently 9:30 a.m., Eastern Time (‘‘E.T.’’)), the identity and the Use of Derivatives by the Fund Other Investments required number of each Deposit While the Fund, under normal market Investments in derivative instruments Security and the amount of the Cash conditions, will invest at least 80% of will be consistent with the Fund’s Component to be included in the its net assets in the securities and investment objective and policies. The current Fund Deposit (based on financial instruments described above, Fund will typically use derivative information at the end of the previous the Fund may invest its remaining instruments as a substitute for taking a business day). assets in the securities and financial position in the underlying asset where The Fund may also permit the instruments referenced below. advantageous and/or as part of a strategy substitution of an amount of cash (a The Fund may enter into short sales designed to reduce exposure to other ‘‘cash-in-lieu’’ amount) to replace any of Fixed Income Securities. risks, such as interest rate risk. The Deposit Security of the Fund that is a The Fund may invest in exchange- Fund may also use derivative non-deliverable instrument. The amount traded funds (‘‘ETFs’’) 14 and exchange- instruments to enhance returns, manage of cash contributed will be equivalent to traded notes (‘‘ETNs’’). 15 portfolio duration, or manage the risk of the price of the instrument listed as a The Fund may invest in bilateral securities price fluctuations. To limit Deposit Security. The Fund reserves the credit default swaps, bilateral interest the potential risk associated with such right to permit the substitution of a rate swaps and bilateral standardized transactions, the Fund segregates or ‘‘cash in-lieu’’ amount to be added to commodity and equity index total ‘‘earmarks’’ assets determined to be replace any Deposit Security under return swaps. The Fund may invest in liquid by the Adviser in accordance specified circumstances. the following swaps: Interest rate, credit with procedures established by the Procedures for Creating Creation Units default, credit default swaps index Trust’s Board of Trustees (the ‘‘Board’’) (‘‘CDX’’), commodity, equity-linked, to cover its obligations under derivative To be eligible to place orders with the fixed income, credit default, credit- instruments. In addition, the Fund has Distributor and to create a Creation Unit linked and currency exchange swaps or included appropriate risk disclosure in of the Fund, an entity must be: (i) A an index or indexes of the foregoing. its offering documents, including ‘‘Participating Party’’ (i.e., a broker- The Fund may invest in swaptions. leveraging risk. Leveraging risk is the dealer or other participant in the The Fund may invest in the following risk that certain transactions of the clearing process through the Continuous options: U.S. exchange-traded and over- Fund, including the Fund’s use of Net Settlement System of the NSCC; or derivatives, may give rise to leverage, (ii) a participant of the Depository Trust 12 Money market instruments are short-term causing the Fund to be more volatile Company (‘‘DTC’’) (‘‘DTC Participant’’) instruments referenced in Commentary .01 (c) to than if it had not been leveraged. and must have executed an Authorized NYSE Arca Rule 8.600–E. Participant agreement with the 13 For purposes of this filing, cash equivalents Because the markets for certain shall mean the short-term instruments enumerated securities, or the securities themselves, Distributor, and accepted by the in Commentary .01(c) to NYSE Arca Rule 8.600–E. may be unavailable or cost prohibitive Transfer Agent, with respect to creations 14 For purposes of this filing, the term ‘‘ETFs’’ as compared to derivative instruments, and redemptions of Creation Units. A includes Investment Company Units (as described suitable derivative transactions may be Participating Party or DTC Participant in NYSE Arca Rule 5.2–E(j)(3)); Portfolio Depositary who has executed an ‘‘Authorized Receipts (as described in NYSE Arca Rule 8.100– an efficient alternative for the Fund to E); and Managed Fund Shares (as described in obtain the desired asset exposure. Participant Agreement’’ is referred to as NYSE Arca Rule 8.600–E). All ETFs will be listed an ‘‘Authorized Participant.’’ and traded in the U.S. on a national securities Creation and Redemption of Shares To initiate a creation order for a exchange. While the Fund may invest in inverse According to the Registration Creation Unit, an Authorized ETFs, the Fund will not invest in leveraged (e.g., 2X, -2X, 3X or -3X) ETFs. Statement, the Fund issues and sells Participant must submit an irrevocable 15 ETNs are Index-Linked Securities as described Shares of the Fund only in Creation order to purchase Shares in proper form in NYSE Arca Rule 5.2–E(j)(6). Units of 100,000 Shares on a continuous to the Transfer Agent no later than 2:00
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p.m., E.T. on any business day for In the event that the Fund Securities these positions intraday. On a daily creation of Creation Units to be effected have a value greater than the NAV of the basis, the Fund discloses the based on the NAV of Shares of the Fund Shares, a compensating cash payment information regarding the Disclosed on the following business day. equal to the difference will be included Portfolio required under NYSE Arca in the Cash Component required to be Rule 8.600–E (c)(2) to the extent Redemption of Creation Units delivered by an Authorized Participant. applicable. Shares may be redeemed only in Impact on Arbitrage Mechanism Creation Units at their NAV next Derivatives Valuation Methodology for determined after receipt of a redemption Purposes of Determining Portfolio The Adviser believes there will be request in proper form on a business Indicative Value minimal, if any, impact to the arbitrage day and only through a Participating On each business day, before mechanism as a result of the use of Party or DTC Participant who has commencement of trading in Fund derivatives. Market makers and executed an Authorized Participant Shares on NYSE Arca, the Fund participants should be able to value Agreement. discloses on its website the identities derivatives as long as the positions are With respect to the Fund, State Street, and quantities of the portfolio disclosed with relevant information. through the NSCC, makes available instruments and other assets held by the The Adviser believes that the price at immediately prior to the opening of the Fund that form the basis for the Fund’s which Shares of the Fund trade will Core Trading Session on the NYSE Arca calculation of NAV at the end of the continue to be disciplined by arbitrage on each business day, the identity of the business day. The NAV of the Shares of opportunities created by the ability to Fund’s securities and/or an amount of the Fund is determined once each day purchase or redeem Shares of the Fund cash that will be applicable to the New York Stock Exchange (the at their NAV, which should ensure that redemption requests received in proper ‘‘NYSE’’) is open, as of the close of its Shares of the Fund will not trade at a form on that day. The Fund’s securities regular trading session (normally 4:00 material discount or premium in received on redemption generally p.m., E.T.) (‘‘NYSE Close’’). relation to their NAV. correspond pro rata, to the positions in In order to provide additional The Adviser does not believe there is the Fund’s portfolio. The Fund’s information regarding the intra-day any significant impact to the settlement securities received on redemption value of Shares of the Fund, one or more or operational aspects of the Fund’s (‘‘Fund Securities’’) will generally be major market data vendors disseminates arbitrage mechanism due to the use of identical to Deposit Securities that are every 15 seconds an updated Intraday derivatives. Because derivatives applicable to creations of Creation Indicative Value (‘‘IIV’’) for the Fund as generally are not eligible for in-kind Units. calculated by an information provider or transfer, they will be substituted with a ‘‘cash in lieu’’ amount when the Fund Subject to the terms of the applicable market data vendor. A third party processes purchases or redemptions of Authorized Participant Agreement and market data provider calculates the IIV block-size ‘‘Creation Units’’ (as any creation and redemption procedures for the Fund. described above) in-kind. adopted by the Fund and provided to all With respect to specific derivatives: • Authorized Participants, to initiate a Foreign currency derivatives may Application of Generic Listing redemption order for a Creation Unit, an be valued intraday using market quotes, Requirements or another proxy as determined to be Authorized Participant must submit an The Exchange is submitting this irrevocable order to redeem Shares in appropriate by the third party market data provider. proposed rule change because the proper form to the Transfer Agent no • portfolio for the Fund would not meet later than 2:00 p.m., E.T. on any Futures may be valued intraday using the relevant futures exchange all of the ‘‘generic’’ listing requirements business day for redemption of Creation of Commentary .01 to NYSE Arca Rule Units to be effected based on the NAV data, or another proxy as determined to be appropriate by the third party market 8.600–E applicable to the listing of of shares of the Fund on that business Managed Fund Shares. The Fund’s day. data provider. • Swaps may be valued using portfolio would meet all such Unless cash only redemptions are requirements except for those set forth available or specified for the Fund, the intraday data from market vendors, or based on underlying asset price, or in Commentary .01(b)(5) and redemption proceeds for a Creation Unit Commentary .01(a)(1). generally consists of Fund Securities— another proxy as determined to be appropriate by the third party market The Fund will not comply with the as announced on the business day of the requirement of Commentary .01(b)(5) to request for a redemption order received data provider. • Exchange listed options may be NYSE Arca Rule 8.600–E that non- in proper form—plus cash in an amount valued intraday using the relevant agency, non-government-sponsored equal to the difference between the NAV exchange data, or another proxy as entity (‘‘GSE’’) and privately-issued of the Shares being redeemed, as next determined to be appropriate by the mortgage-related and other asset-backed determined after a receipt of a request third party market data provider. securities components of a portfolio in proper form, and the value of the • OTC options and swaptions may be shall not account, in the aggregate, for Fund Securities, less the redemption valued intraday through option more than 20% of the weight of the transaction fee and variable fees.16 The 17 valuation models (e.g., Black-Scholes) or fixed income portion of the portfolio. Fund may substitute a ‘‘cash-in-lieu’’ using exchange-traded options as a Instead, up to 30% of the weight of the amount to replace any Fund Security in proxy, or another proxy as determined certain limited circumstances. The 17 to be appropriate by the third party Commentary .01(b)(5) to NYSE Arca Rule amount of cash paid out in such cases 8.600–E provides that the components of the fixed market data provider. will be equivalent to the value of the income portion of a portfolio shall meet the following criteria initially and on a continuing instrument listed as the Fund Security. Disclosed Portfolio basis: non-agency, non-government-sponsored The Fund’s disclosure of derivative entity (‘‘GSE’’) and privately-issued mortgage- 16 The Adviser represents that, to the extent the related and other asset-backed securities Trust effects the redemption of Shares in cash, such positions in the applicable Disclosed components of a portfolio shall not account, in the transactions will be effected in the same manner for Portfolio includes information that aggregate, for more than 20% of the weight of the all Authorized Participants. market participants can use to value fixed income portion of the portfolio.
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Fixed Income Securities portion of the equity securities will not be principal 2008 Approval Order approving Fund’s portfolio may consist of non- investments of the Fund.19 Such amendments to Commentary .01(a) to agency, non-GSE and privately-issued investments, which may include mutual Rule 5.2(j)(3) that exclude Derivative mortgage-related and other asset-backed funds that invest, for example, Securities Products from certain securities. The Adviser represents that principally in fixed income securities, provisions of Commentary .01(a) (which permitting limited investments in non- would be utilized to help the Fund meet exclusions are similar to those in agency, non-GSE and privately-issued its investment objective and to equitize Commentary .01(a)(1) to Rule 8.600–E), mortgage-related and other asset-backed cash in the short term.20 Because such the Commission stated that ‘‘based on securities, as described above, would be securities must have a net asset value the trading characteristics of Derivative in the best interest of the Fund’s based on the value of securities and Securities Products, it may be difficult shareholders because such investments financial assets the investment company for component Derivative Securities have the potential to reduce the overall holds, the Exchange believes it is both Products to satisfy certain quantitative risk profile of the Fund’s portfolio unnecessary and inappropriate to apply index criteria, such as the minimum through diversification. In the Adviser’s to such investment company securities market value and trading volume view, such investments would reduce the criteria in Commentary .01(a)(1). limitations.’’ The Exchange notes that it the Fund’s risk with respect to non- The Exchange notes that Commentary would be difficult or impossible to agency, non-GSE and privately-issued .01(A) through (D) to Rule 8.600–E apply to non-exchange-traded mortgage-related and other asset-backed exclude application of those provisions investment company securities the securities by diversifying the Fund’s to certain ‘‘Derivative Securities generic quantitative criteria (e.g., market exposure among borrowers of such debt Products’’ that are exchange-traded capitalization, trading volume, or issues. The Adviser represents that the investment company securities, portfolio criteria) in Commentary .01 (A) Fund will only purchase U.S. dollar including Investment Company Units through (D) applicable to U.S. denominated non-agency ABS and MBS (as described in NYSE Arca Rule 5.2– Component Stocks. For example, the that are settled through DTC. In E(j)(3)), Portfolio Depositary Receipts (as requirement for U.S. Component Stocks addition, by allowing the Fund to described in NYSE Arca Rule 8.100–E)) in Commentary .01(a)(1)(B) that there be allocate up to 30% of the weight of its and Managed Fund Shares (as described minimum monthly trading volume of 21 Fixed Income Securities investments in in NYSE Arca Rule 8.600–E). In its 250,000 shares, or minimum notional such issues would afford the Fund volume traded per month of greater flexibility to invest in the most equity weight of the portfolio (excluding such $25,000,000, averaged over the last six Derivative Securities Products and Index-Linked months is tailored to exchange-traded liquid available Fixed Income Securities Securities) each shall have a minimum monthly issues, in that such issues are expected trading volume of 250,000 shares, or minimum securities (e.g., U.S. Component Stocks) to be as liquid, or more liquid, than notional volume traded per month of $25,000,000, and not to mutual fund shares, which other possible Fund investments. averaged over the last six months; do not trade in the secondary market. (C) The most heavily weighted component stock Moreover, application of such criteria As noted above, the Fund may invest (excluding Derivative Securities Products and in equity securities that are non- Index-Linked Securities) shall not exceed 30% of would not serve the purpose served exchange-traded securities of other the equity weight of the portfolio, and, to the extent with respect to U.S. Component Stocks, open-end investment company applicable, the five most heavily weighted namely, to establish minimum liquidity component stocks (excluding Derivative Securities and diversification criteria for U.S. securities (e.g., mutual funds). The Products and Index-Linked Securities) shall not Exchange believes that it is appropriate exceed 65% of the equity weight of the portfolio; Component Stocks held by series of and in the public interest to approve (D) Where the equity portion of the portfolio does Managed Fund Shares. listing and trading of Shares of the Fund not include Non-U.S. Component Stocks, the equity The Exchange notes that the portion of the portfolio shall include a minimum of Commission has previously approved on the Exchange notwithstanding that 13 component stocks; provided, however, that there the Fund would not meet the shall be no minimum number of component stocks requirements of Commentary if (i) one or more series of Derivative Securities ‘‘Derivative Securities Products’’ (i.e., Investment Products or Index-Linked Securities constitute, at Company Units and securities described in Section .01(a)(1)(A) through (E) to Rule 8.600–E least in part, components underlying a series of 2 of Rule 8) and ‘‘Index-Linked Securities (as with respect to the Fund’s investments Managed Fund Shares, or (ii) one or more series of described in Rule 5.2–E (j)(6)) from Commentary in such securities.18 Investments in such Derivative Securities Products or Index-Linked .01(a)(A) (1) through (4) to Rule 5.2–E(j)(3 in Securities account for 100% of the equity weight of Securities Exchange Act Release No. 57751 (May 1, the portfolio of a series of Managed Fund Shares; 2008), 73 FR 25818 (May 7, 2008) (SR–NYSEArca– 18 Commentary .01 (a) to Rule 8.600–E specifies (E) Except as provided herein, equity securities in 2008–29) (Order Granting Approval of a Proposed the equity securities accommodated by the generic the portfolio shall be U.S. Component Stocks listed Rule Change, as Modified by Amendment No. 1 criteria in Commentary .01(a), namely, U.S. on a national securities exchange and shall be NMS Thereto, to Amend the Eligibility Criteria for Component Stocks (as described in Rule 5.2– Stocks as defined in Rule 600 of Regulation NMS Components of an Index Underlying Investment E(j)(3)); Non-U.S. Component Stocks (as described under the Securities Exchange Act of 1934. Company Units)(‘‘2008 Approval Order’’). See also, in Rule 5.2–E(j)(3)); Derivative Securities Products 19 For purposes of this section of the filing, non- Securities Exchange Act Release No. 57561 (March (i.e., Investment Company Units and securities exchange-traded securities of other registered 26, 2008), 73 FR 17390 (April 1, 2008) (Notice of described in Section 2 of Rule 8–E); and Index- investment companies do not include money Filing of Proposed Rule Change and Amendment Linked Securities that qualify for Exchange listing market funds, which are cash equivalents under No. 1 Thereto to Amend the Eligibility Criteria for and trading under Rule 5.2–E(j)(6). Commentary Commentary .01(c) to Rule 8.600–E and for which Components of an Index Underlying Investment .01(a)(1) to Rule 8.600–E (U.S. Component Stocks) there is no limitation in the percentage of the Company Units). The Commission subsequently provides that the component stocks of the equity portfolio invested in such securities. approved generic criteria applicable to listing and portion of a portfolio that are U.S. Component 20 The Commission has previously approved trading of Managed Fund Shares, including Stocks shall meet the following criteria initially and proposed rule changes under Section 19(b) of the exclusions for Derivative Securities Products and on a continuing basis: Act for series of Managed Fund Shares that may Index-Linked Securities in Commentary .01(a)(1)(A) (A) Component stocks (excluding Derivative invest in non-exchange traded investment company through (D), in Securities Exchange Act Release No. Securities Products and Index-Linked Securities) securities to the extent permitted by Section 78397 (July 22, 2016), 81 FR 49320 (July 27, 2016) that in the aggregate account for at least 90% of the 12(d)(1) of the 1940 Act and the rules thereunder. (Order Granting Approval of Proposed Rule Change, equity weight of the portfolio (excluding such See, e.g., Securities Exchange Act Release No. as Modified by Amendment No. 7 Thereto, Derivative Securities Products and Index-Linked 78414 (July 26, 2016), 81 FR 50576 (August 1, 2016) Amending NYSE Arca Equities Rule 8.600 To Securities) each shall have a minimum market (SR–NYSEArca–2016–79) (order approving listing Adopt Generic Listing Standards for Managed Fund value of at least $75 million; and trading of shares of the Virtus Japan Alpha ETF Shares). See also, Amendment No. 7 to SR– (B) Component stocks (excluding Derivative under NYSE Arca Equities Rule 8.600). NYSEArca–2015–110, available at https:// Securities Products and Index-Linked Securities) 21 The Commission initially approved the www.sec.gov/comments/sr-nysearca-2015-110/ that in the aggregate account for at least 70% of the Exchange’s proposed rule change to exclude nysearca2015110-9.pdf.
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listing and trading of an issue of On a daily basis, the Fund discloses via the Options Clearing Corporation Managed Fund Shares that may invest the information required under NYSE (‘‘OCC’’) is available via the Options in equity securities that are non- Arca Rule 8.600–E (c)(2) to the extent Price Reporting Authority. In addition, exchange-traded securities of other applicable. The website information the IIV, as defined in NYSE Arca Rule open-end investment company will be publicly available at no charge. 8.600–E (c)(3), will be widely securities notwithstanding that the fund In addition, a basket composition file, disseminated by one or more major would not meet the requirements of which includes the security names and market data vendors at least every 15 Commentary .01(a)(1)(A) through (E) to share quantities, if applicable, required seconds during the Core Trading Rule 8.600–E with respect to such to be delivered in exchange for the Session. The dissemination of the IIV, fund’s investments in such securities.22 Fund’s Shares, together with estimates together with the Disclosed Portfolio, Thus, the Exchange believes that it is and actual cash components, is publicly may allow investors to determine an appropriate to permit the Fund to invest disseminated daily prior to the opening approximate value of the underlying in non-exchange-traded open-end of the Exchange via the NSCC. The portfolio of the Fund on a daily basis management investment company basket represents one Creation Unit of and to provide an estimate of that value securities, as described above. the Fund. Authorized Participants may throughout the trading day. refer to the basket composition file for The Exchange notes that, other than information regarding Fixed Income Trading Halts Commentary .01(a)(1)(A) through (E) Securities, and any other instrument With respect to trading halts, the and Commentary.01(b)(5) to Rule 8.600– that may comprise the Fund’s basket on Exchange may consider all relevant E, the Fund’s portfolio will meet all a given day. factors in exercising its discretion to other requirements of Rule 8.600–E. Investors can also obtain the Trust’s halt or suspend trading in the Shares of Availability of Information Statement of Additional Information the Fund. Trading in Shares of the Fund (‘‘SAI’’), the Fund’s Shareholder will be halted if the circuit breaker The Fund’s website Reports, and the Fund’s Forms N–CSR parameters in NYSE Arca Rule 7.12–E (www.im.natixis.com/us/active-short- and Forms N–SAR, filed twice a year. have been reached. Trading also may be duration-income-etf) includes a form of The Fund’s SAI and Shareholder halted because of market conditions or the prospectus for the Fund that may be Reports will be available free upon for reasons that, in the view of the downloaded. The Fund’s website request from the Trust, and those Exchange, make trading in the Shares includes additional quantitative documents and the Form N–CSR, Form inadvisable. These may include: (1) The information updated on a daily basis N–PX and Form N–SAR may be viewed extent to which trading is not occurring including, for the Fund, (1) daily trading on-screen or downloaded from the in the securities and/or the financial volume, the prior business day’s Commission’s website at www.sec.gov. instruments comprising the Disclosed reported closing price, NAV and Intra-day and closing price information Portfolio of the Fund; or (2) whether midpoint of the bid/ask spread at the regarding exchange-traded options other unusual conditions or time of calculation of such NAV (the (including options on futures) and circumstances detrimental to the ‘‘Bid/Ask Price’’),23 and a calculation of futures will be available from the maintenance of a fair and orderly the premium and discount of the Bid/ exchange on which such instruments market are present. Trading in the Ask Price against the NAV, and (2) data are traded. Intra-day and closing price Shares will be subject to NYSE Arca in chart format displaying the frequency information regarding Fixed Income Rule 8.600–E (d)(2)(D), which sets forth distribution of discounts and premiums Securities also will be available from circumstances under which Shares of of the daily Bid/Ask Price against the major market data vendors. Price the Fund may be halted. NAV, within appropriate ranges, for information relating to Rule 144A Trading Rules each of the four previous calendar securities, interests in investment pools, quarters. On each business day, before OTC options, swaps and swaptions will The Exchange deems the Shares to be commencement of trading in Shares in be available from major market data equity securities, thus rendering trading the Core Trading Session on the vendors. Intra-day price information for in the Shares subject to the Exchange’s Exchange, the Fund discloses on its exchange-traded derivative instruments existing rules governing the trading of website the Disclosed Portfolio as will be available from the applicable equity securities. Shares will trade on defined in NYSE Arca Rule 8.600–E exchange and from major market data the NYSE Arca Marketplace from 4:00 (c)(2) that forms the basis for the Fund’s vendors. Price information regarding a.m. to 8:00 p.m. E.T. in accordance calculation of NAV at the end of the non-exchange-traded investment with NYSE Arca Rule 7.34–E (Early, business day.24 company securities will be available Core, and Late Trading Sessions). The from the applicable investment Exchange has appropriate rules to 22 See Securities Exchange Act Release No. 83319 company. Information regarding market facilitate transactions in the Shares (May 24, 2018) (SR–NYSEArca-2018–15) (Order price and trading volume of the Shares during all trading sessions. As provided Approving a Proposed Rule Change, as Modified by will be continually available on a real- in NYSE Arca Rule 7.6–E, the minimum Amendment No. 1 Thereto, to Continue Listing and time basis throughout the day on price variation (‘‘MPV’’) for quoting and Trading Shares of the PGIM Ultra Short Bond ETF Under NYSE Arca Rule 8.600–E). brokers’ computer screens and other entry of orders in equity securities 23 The Bid/Ask Price of the Fund’s Shares will be electronic services. Information traded on the NYSE Arca Marketplace is determined using the mid-point of the highest bid regarding the previous day’s closing $0.01, with the exception of securities and the lowest offer on the Exchange as of the time price and trading volume information that are priced less than $1.00 for which of calculation of the Fund’s NAV. The records for the Shares will be published daily in the MPV for order entry is $0.0001. relating to Bid/Ask Prices will be retained by the Fund and its service providers. the financial section of newspapers. The Shares will conform to the initial 24 Under accounting procedures followed by the Quotation and last sale information for and continued listing criteria under Fund, trades made on the prior business day (‘‘T’’) the Shares, ETFs and ETNs will be NYSE Arca Rule 8.600–E. The Exchange will be booked and reflected in NAV on the current available via the Consolidated Tape represents that, for initial and continued business day (‘‘T+1’’). Accordingly, the Fund will be able to disclose at the beginning of the business Association (‘‘CTA’’) high-speed line. listing, the Fund will be in compliance day the portfolio that will form the basis for the Exchange-traded options quotation and with Rule 10A–3 under the Act, as NAV calculation at the end of the business day. last sale information for options cleared provided by NYSE Arca Rule 5.3–E. The
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Exchange has obtained a representation for surveillance purposes in connection 2. Statutory Basis from the issuer of the Shares that the with trading in the Shares. The basis under the Act for this NAV per Share will be calculated daily In addition, the Exchange also has a proposed rule change is the requirement and that the NAV and the Disclosed general policy prohibiting the under Section 6(b)(5) that an exchange Portfolio will be made available to all distribution of material, non-public have rules that are designed to prevent market participants at the same time. information by its employees. fraudulent and manipulative acts and All statements and representations practices, to promote just and equitable Surveillance made in this filing regarding (a) the principles of trade, to remove description of the portfolio or reference The Exchange represents that trading impediments to, and perfect the in the Shares will be subject to the assets, (b) limitations on portfolio holdings or reference assets, or (c) the mechanism of a free and open market existing trading surveillances and, in general, to protect investors and administered by the Exchange, as well applicability of Exchange rules and surveillance procedures shall constitute the public interest. as cross-market surveillances The Exchange believes that the continued listing requirements for administered by the Financial Industry proposed rule change is designed to listing the Shares on the Exchange. Regulatory Authority (‘‘FINRA’’) on prevent fraudulent and manipulative behalf of the Exchange, which are The issuer has represented to the Exchange that it will advise the acts and practices in that the Shares will designed to detect violations of be listed and traded on the Exchange Exchange rules and applicable federal Exchange of any failure by the Fund to comply with the continued listing pursuant to the initial and continued securities laws. The Exchange listing criteria in NYSE Arca Rule represents that these procedures are requirements, and, pursuant to its obligations under Section 19(g)(1) of the 8.600–E. The Exchange has in place adequate to properly monitor Exchange surveillance procedures that are trading of the Shares in all trading Act, the Exchange will monitor for compliance with the continued listing adequate to properly monitor trading in sessions and to deter and detect the Shares in all trading sessions and to violations of Exchange rules and federal requirements. If the Fund is not in compliance with the applicable listing deter and detect violations of Exchange securities laws applicable to trading on requirements, the Exchange will rules and federal securities laws the Exchange. commence delisting procedures under applicable to trading on the Exchange. The surveillances referred to above NYSE Arca Rule 5.5–E(m). The Adviser is not registered as a generally focus on detecting securities broker-dealer but the Adviser is trading outside their normal patterns, Information Bulletin affiliated with a broker-dealer and has which could be indicative of Prior to the commencement of implemented and will maintain a ‘‘fire manipulative or other violative activity. trading, the Exchange will inform its wall’’ with respect to such broker-dealer When such situations are detected, Equity Trading Permit (‘‘ETP’’) Holders regarding access to information surveillance analysis follows and in an Information Bulletin (‘‘Bulletin’’) concerning the composition and/or investigations are opened, where of the special characteristics and risks changes to the Fund’s portfolio. The appropriate, to review the behavior of associated with trading the Shares of the Exchange or FINRA, on behalf of the all relevant parties for all relevant Fund. Specifically, the Bulletin will Exchange, or both, will communicate as trading violations. discuss the following: (1) The needed regarding trading in the Shares, The Exchange or FINRA, on behalf of procedures for purchases and ETFs, ETNs, certain exchange-traded the Exchange, or both, will redemptions of Shares in Creation Units options and certain futures with other communicate as needed regarding (and that Shares are not individually markets and other entities that are trading in the Shares, ETFs, ETNs, redeemable); (2) NYSE Arca 9.2–E(a), members of the ISG, and the Exchange certain exchange-traded options and which imposes a duty of due diligence or FINRA, on behalf of the Exchange, or certain futures with other markets and on its ETP Holders to learn the essential both, may obtain trading information other entities that are members of the facts relating to every customer prior to regarding trading in the Shares, ETFs, ISG, and the Exchange or FINRA, on trading the Shares; (3) the risks involved ETNs, certain exchange-traded options behalf of the Exchange, or both, may in trading the Shares during the Early and certain futures from such markets obtain trading information regarding and Late Trading Sessions when an and other entities. In addition, the trading in the Shares, ETFs, ETNs, updated IIV will not be calculated or Exchange may obtain information certain exchange-traded options and publicly disseminated; (4) how regarding trading in the Shares, ETFs, certain futures from such markets and information regarding the IIV and the ETNs, certain exchange-traded options other entities. In addition, the Exchange Disclosed Portfolio is disseminated; (5) and certain futures from markets and may obtain information regarding the requirement that ETP Holders other entities that are members of ISG or trading in the Shares, ETFs, ETNs, deliver a prospectus to investors with which the Exchange has in place certain exchange-traded options and purchasing newly issued Shares prior to a comprehensive surveillance sharing certain futures from markets and other or concurrently with the confirmation of agreement. The Exchange is able to entities that are members of ISG or with a transaction; and (6) trading access from FINRA, as needed, trade which the Exchange has in place a information. information for certain fixed income comprehensive surveillance sharing In addition, the Bulletin will securities held by the Fund reported to agreement (‘‘CSSA’’). The Exchange is reference that the Fund is subject to FINRA’s TRACE. FINRA also can access able to access from FINRA, as needed, various fees and expenses described in data obtained from the MSRB relating to trade information for certain Fixed the Registration Statement. The Bulletin certain municipal bond trading activity Income Securities held by the Fund will discuss any exemptive, no-action, for surveillance purposes in connection reported to FINRA’s Trade Reporting and interpretive relief granted by the with trading in the Shares. and Compliance Engine (‘‘TRACE’’). Commission from any rules under the The proposed rule change is designed FINRA also can access data obtained Act. The Bulletin will also disclose that to promote just and equitable principles from the Municipal Securities the NAV for the Shares of the Fund is of trade and to protect investors and the Rulemaking Board (‘‘MSRB’’) relating to calculated after 4:00 p.m. E.T. each public interest in that the Exchange will certain municipal bond trading activity trading day. obtain a representation from the issuer
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of the Shares that the NAV per Share other asset-backed securities by The proposed rule change is designed will be calculated daily and that the diversifying the Fund’s exposure among to perfect the mechanism of a free and NAV and the Disclosed Portfolio will be borrowers of such debt issues. In open market and, in general, to protect made available to all market addition, by allowing the Fund to investors and the public interest in that participants at the same time. In allocate up to 30% of the weight of its it will facilitate the listing and trading addition, a large amount of information Fixed Income Securities investments in of an additional type of actively is publicly available regarding the Fund such issues would afford the Fund managed ETF that will enhance and the Shares, thereby promoting greater flexibility to invest in the most competition among market participants, market transparency. The website for liquid available Fixed Income Securities to the benefit of investors and the the Fund includes a form of the issues, in that such issues are expected marketplace. As noted above, the prospectus for the Fund and additional to be as liquid, or more liquid, than Exchange has in place surveillance data relating to NAV and other other possible Fund investments. procedures relating to trading in the applicable quantitative information. The Exchange also believes that it is Shares and may obtain information via Trading in Shares of the Fund will be appropriate and in the public interest to ISG from other exchanges that are halted if the circuit breaker parameters approve listing and trading of Shares of members of ISG or with which the in NYSE Arca Rule 7.12–E have been the Fund on the Exchange Exchange has entered into a CSSA. In reached or because of market conditions notwithstanding that the Fund would addition, as noted above, investors have or for reasons that, in the view of the not meet the requirements of ready access to information regarding Exchange, make trading in the Shares Commentary .01(a)(1)(A) through (E) to the Fund’s holdings, the IIV, the inadvisable, and trading in the Shares Rule 8.600–E with respect to the Fund’s Disclosed Portfolio, and quotation and will be subject to NYSE Arca 8.600–E investments in non-exchange-traded last sale information for the Shares. (d)(2)(D), which sets forth circumstances open-end investment company B. Self-Regulatory Organization’s under which trading in the Shares of the securities. Investments in such equity Statement on Burden on Competition Fund may be halted. In addition, as securities will not be principal The Exchange does not believe that noted above, investors have ready investments of the Fund. Such the proposed rule change will impose access to information regarding the investments, which may include mutual any burden on competition that is not Fund’s holdings, the IIV, the Disclosed funds that invest, for example, necessary or appropriate in furtherance Portfolio, and quotation and last sale principally in fixed income securities, of the purpose of the Act. The Exchange information for the Shares. In the would be utilized to help the Fund meet notes that the proposed rule change will aggregate, at least 90% of the weight of its investment objective and to equitize facilitate the listing and trading of an the Fund’s holdings invested in futures, cash in the short term. Because such issue of Managed Fund Shares that, exchange-traded options, and listed securities have a net asset value based through permitted use of an increased swaps shall, on both an initial and on the value of securities and financial level of non-agency ABS and MBS continuing basis, consist of futures, assets the investment company holds, above that currently permitted by the options, and swaps for which the the Exchange believes it is both generic listing requirements of Exchange may obtain information from unnecessary and inappropriate to apply other members or affiliates of the ISG or Commentary .01 to NYSE Arca Rule to such investment company securities for which the principal market is a 8.600–E, will enhance competition the criteria in Commentary .01(a)(1). market with which the Exchange has a among market participants, to the CSSA. The Exchange notes that it would be benefit of investors and the marketplace. As described above, deviations from difficult or impossible to apply to non- the generic requirements of exchange-traded investment company C. Self-Regulatory Organization’s Commentary .01(a) are necessary for the securities the generic quantitative Statement on Comments on the Fund to achieve its investment objective criteria (e.g., market capitalization, Proposed Rule Change Received From in a manner that is cost-effective and trading volume, or portfolio criteria) in Members, Participants, or Others that maximizes investors’ returns. Commentary .01 (A) through (D) No written comments were solicited Further, the proposed alternative applicable to U.S. Component Stocks. or received with respect to the proposed requirements are narrowly tailored to For example, the requirement for U.S. rule change. allow the Fund to achieve its Component Stocks in Commentary III. Proceedings to Determine Whether investment objective in manner that is .01(a)(1)(B) that there be minimum to Approve or Disapprove SR– consistent with the principles of Section monthly trading volume of 250,000 NYSEArca–2018–25 and Grounds for 6(b)(5) of the Act. As a result, it is in the shares, or minimum notional volume Disapproval Under Consideration public interest to approve listing and traded per month of $25,000,000, trading of Shares of the Fund on the averaged over the last six months is The Commission is instituting Exchange pursuant to the requirements tailored to exchange-traded securities proceedings pursuant to Section set forth herein. (e.g., U.S. Component Stocks) and not to 19(b)(2)(B) of the Exchange Act 25 to The Adviser represents that mutual fund shares, which do not trade determine whether the proposed rule permitting limited investments in non- in the secondary market. Moreover, change, as modified by Amendment No. agency, non-GSE and privately-issued application of such criteria would not 1, should be approved or disapproved. mortgage-related and other asset-backed serve the purpose served with respect to Institution of such proceedings is securities, as described above, would be U.S. Component Stocks, namely, to appropriate at this time in view of the in the best interest of the Fund’s establish minimum liquidity and legal and policy issues raised by the shareholders because such investments diversification criteria for U.S. proposed rule change. Institution of have the potential to reduce the overall Component Stocks held by series of proceedings does not indicate that the risk profile of the Fund’s portfolio. In Managed Fund Shares. Other than Commission has reached any the Adviser’s view, such investments Commentary .01(a)(1)(A) through (E) conclusions with respect to any of the would reduce the Fund’s risk with and Commentary.01(b)(5) to Rule 8.600– issues involved. Rather, as described respect to non-agency, non-GSE and E, the Fund’s portfolio will meet all privately-issued mortgage-related and other requirements of Rule 8.600–E. 25 15 U.S.C. 78s(b)(2)(B).
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below, the Commission seeks and any request for an opportunity to make personal identifying information from encourages interested persons to an oral presentation.29 comment submissions. You should provide comments on the proposed rule Interested persons are invited to submit only information that you wish change. submit written data, views, and to make available publicly. All Pursuant to Section 19(b)(2)(B) of the arguments regarding whether the submissions should refer to File Exchange Act,26 the Commission is proposal should be approved or Number SR–NYSEArca-2018–25 and providing notice of the grounds for disapproved by August 23, 2018. Any should be submitted on or before disapproval under consideration. The person who wishes to file a rebuttal to August 23, 2018. Rebuttal comments Commission is instituting proceedings any other person’s submission must file should be submitted by September 6, to allow for additional analysis of the that rebuttal by September 6, 2018. 2018. proposal’s consistency with Section Comments may be submitted by any of the following methods: For the Commission, by the Division of 6(b)(5) of the Exchange Act, which Trading and Markets, pursuant to delegated requires, among other things, that the Electronic Comments authority.30 rules of a national securities exchange • Robert W. Errett, be designed to prevent fraudulent and Use the Commission’s internet manipulative acts and practices, to comment form (http://www.sec.gov/ Deputy Secretary. promote just and equitable principles of rules/sro.shtml); or [FR Doc. 2018–16536 Filed 8–1–18; 8:45 am] • trade, and to protect investors and the Send an email to rule-comments@ BILLING CODE 8011–01–P public interest.27 In light of the sec.gov. Please include File Number SR– portfolio’s potential exposure to the NYSEArca–2018–25 on the subject line. SECURITIES AND EXCHANGE permitted investments identified above Paper Comments (including junior loans, ABS, MBS, and COMMISSION • Send paper comments in triplicate interests in investment pools in to Secretary, Securities and Exchange particular), the Commission seeks [Release No. 34–83725; File No. SR–OCC– Commission, 100 F Street NE, commenters’ views on the sufficiency of 2017–020] Washington, DC 20549–1090. the information provided in the proposed rule change to support a All submissions should refer to File Self-Regulatory Organizations; The determination that the listing and Number SR–NYSEArca–2018–25. This Options Clearing Corporation; Notice trading of the Shares would be file number should be included on the of Filing of Amendments No. 1 and 2 consistent with Section 6(b)(5) of the subject line if email is used. To help the to Proposed Rule Change Concerning Exchange Act as modified by Commission process and review your Enhanced and New Tools for Recovery Amendment No. 1. The Commission comments more efficiently, please use Scenarios only one method. The Commission will notes that the Exchange proposes to July 27, 2018. exempt equity interests in investment post all comments on the Commission’s pools from all of the requirements of internet website (http://www.sec.gov/ On December 18, 2017, The Options Commentary .01(a)(1) to NYSE Arca rules/sro.shtml). Copies of the Clearing Corporation (‘‘OCC’’) filed with Rule 8.600–E.In light of the portfolio’s submission, all subsequent the Securities and Exchange potential exposure to the permitted amendments, all written statements Commission (‘‘Commission’’) proposed investments identified above, the with respect to the proposed rule rule change SR–OCC–2017–020 Commission seeks commenters’ views change that are filed with the (‘‘Proposed Rule Change’’) pursuant to on the sufficiency of the information Commission, and all written Section 19(b)(1) of the Securities provided in the proposed rule change to communications relating to the Exchange Act of 1934 (‘‘Act’’),1 and support a determination that the listing proposed rule change between the Rule 19b–4 thereunder,2 concerning and trading of the Shares would be Commission and any person, other than enhanced and new tools for recovery consistent with Section 6(b)(5) of the those that may be withheld from the scenarios.3 The Proposed Rule Change Exchange Act as modified by public in accordance with the was published for comment in the Amendment No. 1. provisions of 5 U.S.C. 552, will be Federal Register on December 26, available for website viewing and 2017.4 On March 22, 2018, the IV. Procedure: Request for Written printing in the Commission’s Public Commission instituted proceedings Comments Reference Room, 100 F Street NE, under Section 19(b)(2)(B)(i) of the Act 5 Interested persons are invited to Washington, DC 20549 on official to determine whether to approve or submit written views, data, and business days between the hours of arguments concerning the foregoing, 10:00 a.m. and 3:00 p.m. Copies of the 30 17 CFR 200.30–3(a)(57). including whether the proposed rule filing also will be available for 1 15 U.S.C. 78s(b)(1). change as modified by Amendment No. inspection and copying at the principal 2 17 CFR 240.19b–4. 1 is consistent with Section 6(b)(5) or office of the Exchange. All comments 3 On December 8, 2017, OCC also filed this received will be posted without change. proposal as an advance notice SR–OCC–2017–809 any other provision of the Exchange (‘‘Advance Notice’’) with the Commission pursuant Act, or the rules and regulations Persons submitting comments are to Section 806(e)(1) of Title VIII of the Dodd-Frank thereunder. Although there do not cautioned that we do not redact or edit Wall Street Reform and Consumer Protection Act, appear to be any issues relevant to entitled the Payment, Clearing, and Settlement approval or disapproval that would be 29 Section 19(b)(2) of the Exchange Act, as Supervision Act of 2010 (12 U.S.C. 5465(e)(1)) and amended by the Securities Acts Amendments of Rule 19b–4(n)(1)(i) of the Act (17 CFR 240.19b– facilitated by an oral presentation of 1975, Pub. L. 94–29 (June 4, 1975), grants the 4(n)(1)(i)). Notice of filing of the Advance Notice views, data, and arguments, the Commission flexibility to determine what type of was published for comment in the Federal Register Commission will consider, pursuant to proceeding—either oral or notice and opportunity on January 23, 2018. Securities Exchange Act Rule 19b–4 under the Exchange Act,28 for written comments—is appropriate for Release No. 82513 (Jan. 17, 2018), 83 FR 3244 (Jan. consideration of a particular proposal by a self- 23, 2018) (SR–OCC–2017–809). regulatory organization. See Securities Acts 4 Securities Exchange Act Release No. 82531 (Dec. 26 Id. Amendments of 1975, Senate Comm. on Banking, 19, 2017), 82 FR 61107 (Dec. 26, 2017) (SR–OCC– 27 15 U.S.C. 78f(b)(5). Housing & Urban Affairs, S. Rep. No. 75, 94th 2017–020) (‘‘Initial Filing’’). 28 17 CFR 240.19b–4. Cong., 1st Sess. 30 (1975). 5 15 U.S.C. 78s(b)(2)(B)(i).
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disapprove the Proposed Rule Change.6 Clearing Agency’s Statement of the risks that arises or is borne by the CCA On June 20, 2018 the Commission Purpose of, and Statutory Basis for, the by, at a minimum, describing the designated a longer period for Proposed Rule Change process for replenishing any liquid resource that a CCA may employ during Commission action on proceedings to 1. Purpose determine whether to approve or a stress event, (5) ensure it has the disapprove the Proposed Rule Change.7 Background authority and operational capacity to On July 11, 2018, OCC filed The purpose of this proposed rule take timely action to contain losses and Amendment No. 1 to the Proposed Rule change is to make certain revisions to liquidity demands and continue to meet Change. On July 12, 2018, OCC filed OCC’s Rules and By-Laws Laws that are its obligations, (6) publicly disclose Amendment No. 2 to the Proposed Rule designed to enhance OCC’s existing relevant rules and material procedures, Change to supersede and replace tools to address the risks of liquidity including key aspects of its default rules Amendment No. 1 in its entirety, due to shortfalls and credit losses and to and procedures, and (7) provide technical defects in Amendment No. 1. establish tools by which OCC could re- sufficient information to enable Therefore, the Initial Filing, as modified establish a matched book following a participants to identify and evaluate the by Amendment No. 2, reflects the default. Each of the tools proposed risks, fees, and other material costs they changes proposed. herein is contemplated to be deployed incur by participating in the CCA. The relevant portions of each of these new Pursuant to Section 19(b)(1) of the by OCC in an extreme stress event that has placed OCC into a recovery or requirements is restated below: Act 8 and Rule 19b–4 thereunder 9 the • orderly wind-down scenario. Each of Rule 17Ad–22(e)(3)(ii) requires that Commission is publishing notice of the proposed revisions also is designed each CCA ‘‘establish, implement, these Amendments No. 1 and 2 to the to further OCC’s compliance, in whole maintain and enforce written policies Proposed Rule Change as described in or in part, with the provisions of the and procedures reasonably designed to Items I, II and III below, which Items Commission’s rules identified . . . [m]aintain a sound risk have been prepared by OCC. The immediately below. management framework for Commission is publishing this notice to On September 28, 2016, the comprehensively managing legal, credit, solicit comments on the Proposed Rule Commission adopted amendments to liquidity, operational, general business, Change, as modified by Amendments Rule 17Ad–2210 and added new Rules investment, custody, and other risks No. 1 and 2, from interested persons. 17Ad–22(e)(3)(ii), (e)(4)(viii), (e)(4)(ix), that arise in or are borne by the [CCA], which . . . [i]ncludes plans for the I. Clearing Agency’s Statement of the (e)(7)(ix), (e)(13), (e)(23)(i) and 11 recovery and orderly wind-down of the Terms of Substance of the Proposed (e)(23)(ii) pursuant to Section 17A of 12 [CCA] necessitated by credit losses, Rule Change the Securities Exchange Act of 1934 and the Payment, Clearing, and liquidity shortfalls, losses from general This proposed rule change by the Settlement Supervision Act of 2010 business risk, or any other losses.’’ 15 • OCC would make certain revisions to (‘‘Payment, Clearing and Settlement Rule 17Ad–22(e)(4)(viii) requires OCC’s Rules and By-Laws to enhance Supervision Act’’).13 In relevant part, that each CCA ‘‘establish, implement, OCC’s existing tools to address the risks these new rules collectively require a maintain and enforce written policies of liquidity shortfalls and credit losses covered clearing agency (‘‘CCA’’), as and procedures reasonably designed to and to establish new tools by which defined by Rule 17Ad–22(a)(5),14 to . . . [e]ffectively identify, measure, OCC could re-establish a matched book establish, implement, maintain and monitor, and manage its credit following a default. Each of the tools enforce written policies and procedures exposures to participants and those proposed herein is contemplated to be reasonably designed to: (1) Maintain a arising from its payment, clearing, and deployed by OCC in an extreme stress risk management framework including settlement processes, including by . . . event that has placed OCC into a plans for recovery and orderly wind- [a]ddressing allocation of credit losses recovery or orderly wind-down down necessitated by credit losses, the [CCA] may face if its collateral and scenario. liquidity shortfalls, general business risk other resources are insufficient to fully losses or any other losses, (2) effectively cover its credit exposures, including the II. Clearing Agency’s Statement of the identify, measure, monitor and manage repayment of any funds the [CCA] may Purpose of, and Statutory Basis for, the its credit exposures to participants and borrow from liquidity providers.’’ 16 • Proposed Rule Change those arising from its payment, clearing Rule 17Ad–22(e)(4)(ix) requires that each CCA ‘‘establish, implement, In its filing with the Commission, and settlement processes, including by addressing the allocation of credit losses maintain and enforce written policies OCC included statements concerning and procedures reasonably designed to the purpose of and basis for the a CCA might face if its collateral and other resources are insufficient to fully . . . [e]ffectively identify, measure, proposed rule change and discussed any monitor, and manage its credit comments it received on the proposed cover its credit exposures, (3) effectively identify, measure, monitor and manage exposures to participants and those rule change. The text of these statements arising from its payment, clearing, and may be examined at the places specified credit exposures, including by describing the process to replenish any settlement processes, including by . . . in Item IV below. OCC has prepared [d]escribing the [CCA’s] process to summaries, set forth in sections (A), (B), financial resource that a CCA may use following a default event or other event replenish any financial resources it may and (C) below, of the most significant use following a default or other event in aspects of these statements. in which use of such resource is contemplated, (4) effectively identify, which use of such resources is 17 measure, monitor and manage liquidity contemplated.’’ 6 See Securities Exchange Act Release No. 82926 • Rule 17Ad-22(e)(7)(ix) requires that (Mar. 22, 2018), 83 FR 13171 (Mar. 27, 2018) (SR– each CCA ‘‘establish, implement, OCC–2018–020). 10 17 CFR 240.17Ad–22. 7 See Securities Exchange Act Release No. 83484 11 17 CFR 240.17Ad–22(e)(3)(ii), (e)(4)(viii), maintain and enforce written policies (Jun. 20, 2018), 83 FR 29846 (Jun. 26, 2018) (SR– (e)(4)(ix), (e)(7)(ix), (e)(13), (e)(23)(i) and (e)(23)(ii). OCC–2017–020). 12 15 U.S.C. 78q–1. 15 17 CFR 240.17Ad–22(e)(3)(ii). 8 15 U.S.C. 78s(b)(1). 13 12 U.S.C. 5461 et seq. 16 17 CFR 240.17Ad–22(e)(v)(viii). 9 17 CFR 240.19b–4. 14 17 CFR 240.17Ad–22(a)(5). 17 17 CFR 240.17Ad–22(e)(4)(ix).
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and procedures reasonably designed payment of a proportionate charge amounts recovered from the defaulted to. . . [e]ffectively measure, monitor, against the Clearing Fund (‘‘triggering Clearing Members. and manage the liquidity risk that arises proportionate charge’’), during which (3) Adopt a new Rule 1111 that would in or is borne by the [CCA], including period the aggregate liability of a provide authority to: measuring, monitoring, and managing Clearing Member to replenish the its settlement and funding flows on an Clearing Fund (inclusive of (a) Allow OCC to call for voluntary ongoing and timely basis, and its use of assessments) would be 200% of the tear-ups (‘‘Voluntary Tear-Up,’’ as intraday liquidity by, at a minimum, Clearing Member’s required defined below) of non-defaulting doing the following . . . [d]escribing the contribution as of the time immediately Clearing Member and/or customer [CCA’s] process to replenish any liquid preceding the triggering proportionate positions at any time following the resources that the clearing agency may charge; suspension or default of a Clearing employ during a stress event.’’ 18 (b) Clarify that a Clearing Member that Member, with the scope of any such • Rule 17Ad–22(e)(13) requires that chooses to terminate its membership Voluntary Tear-Ups being determined each CCA ‘‘establish, implement, status during a cooling-off period will by the Risk Committee of OCC’s Board maintain and enforce written policies not be liable for replenishment of the (‘‘Risk Committee’’); and procedures reasonably designed to Clearing Fund immediately following (b) Allow OCC’s Board to vote to tear- . . . [e]nsure the covered clearing the expiration of such cooling-off up the ‘‘Remaining Open Positions’’ agency has the authority and period, provided that the withdrawing (defined below) of a defaulted Clearing operational capacity to take timely Clearing Member satisfies enumerated Member, as well as any ‘‘Related Open action to contain losses and liquidity criteria, including providing notice of Positions’’ (defined below) in a demands and continue to meet its such termination by no later than the circumstance where OCC has attempted obligations. . .’’ 19 end of the cooling-off period and by one or more auctions of such defaulted • Rule 17Ad–22(e)(23)(i) requires that closing-out and/or transferring of all its Clearing Member’s remaining open each CCA ‘‘establish, implement, open positions with OCC by no later positions and OCC has determined that maintain and enforce written policies than the last day of the cooling-off it may not have sufficient resources to and procedures reasonably designed to period; and satisfy its obligations and liabilities . . . [p]ublicly disclos[e] all relevant (c) Delineate between the obligation of resulting from such default with the rules and material procedures, a Clearing Member to replenish its scope of any such tear-up (‘‘Partial Tear- including key aspects of its default rules contributions to the Clearing Fund and Up’’) being determined by the Risk 20 and procedures.’’ its obligations to meet additional Committee; and • Rule 17Ad–22(e)(23)(ii) requires ‘‘assessments’’ that may be levied (c) Allow OCC’s Board to vote to re- that each CCA ‘‘establish, implement, following a proportionate charge to the allocate losses, costs and fees imposed maintain and enforce written policies Clearing Fund. upon holders of positions extinguished and procedures reasonably designed (2) Adopt a new Rule 1011 23 that to. . . [p]rovid[e] sufficient information would provide OCC with discretionary in a Partial Tear-Up through a special to enable participants to identify and authority to call for voluntary payments charge levied against remaining non- evaluate the risks, fees, and other from non-defaulting Clearing Members defaulting Clearing Members. material costs they incur by in a circumstance where one or more (4) Revise the descriptions and participating in the covered clearing Clearing Members has already defaulted authorizations in Article VIII of OCC’s agency.’’ 21 and OCC has determined that it may not By-Laws concerning the use of the OCC meets the definition of a CCA have sufficient resources to satisfy its Clearing Fund to reflect the discretion of and is therefore subject to the obligations and liabilities resulting from OCC to use remaining Clearing Fund requirements of the CCA rules, such default.24 Rule 1011 also would contributions to re-allocate losses including new Rules 17Ad–22(e)(3)(ii), establish that OCC would prioritize imposed on non-defaulting Clearing (e)(4)(viii), (e)(4)(ix), (e)(7)(ix), (e)(13), compensation of Clearing Members that Members and customers from a (e)(23)(i) and (e)(23)(ii).22 made voluntary payments from any Voluntary Tear-Up or a mandatory tear- Proposed Changes up (‘‘Partial Tear-Up,’’ as defined 23 OCC is amending the Initial Filing to renumber below). Summary of Proposed Changes proposed Rule 1009 to proposed Rule 1011 and In order to enhance OCC’s existing updated related cross references in Rule 1111 to Discussion of Proposed Changes reflect this renumbering. OCC is also amending the tools to address the risks of liquidity Default Management Policy as submitted in the Each of the proposed revisions to shortfalls and credit losses and to Initial Filing to update similar cross references. OCC’s Rules and By-Laws is described establish new tools by which OCC could 24 Under the Initial Filing, OCC’s authority to in more detail in the following sub- conduct Partial Tear-Ups, as well as call for re-establish a matched book following a sections: default, OCC is proposing to make the voluntary payments or to conduct Voluntary Tear- Ups, would be conditioned in part on OCC having following revisions to its Rules and By- determined that, notwithstanding the availability of 1. Proposed Changes to OCC’s Laws: any remaining resources, OCC may not have Assessment Powers (1) Revise the existing assessment sufficient resources to satisfy its obligations and a. Current Assessment Powers powers in Section 6 of Article VIII of liabilities resulting from such default. Under the Initial Filing, the proposed text of Rules 1009(a), OCC’s By-Laws, specifically to: 1111(a) and 1111(b) incorrectly transcribed this OCC’s current assessment powers are (a) Establish a rolling ‘‘cooling-off condition to require that OCC determine that, described in Section 6 of Article VIII of period’’ that would be triggered by the notwithstanding the availability of any remaining OCC’s By-Laws. Section 6 establishes a resources, OCC does not have sufficient resources to satisfy its obligations and liabilities resulting general requirement for each Clearing 18 17 CFR 240.17Ad–22(e)(7)(ix). from such default (emphasis added). In each such Member to promptly make good any 19 17 CFR 240.17Ad–22(e)(13). instance, OCC is amending the proposed text of deficiency in its required contribution 20 17 CFR 240.17Ad–22(e)(23)(i). Rules 1009(a) (which is being renumbered as Rule to the Clearing Fund whenever an 21 17 CFR 240.17Ad–22(e)(23)(ii). 1011(a)), 1111(a) and 1111(b) in Exhibit 5B of the 22 17 CFR 240.17Ad–22(e)(3)(ii), (e)(4)(viii), Initial Filing to delete the word ‘‘does’’ and insert amount is paid out of its Clearing Fund (e)(4)(ix) and (e)(7)(ix). in its place the word ‘‘may.’’ contribution (whether by proportionate
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charge or otherwise).25 In this regard, a Clearing Fund contributions. While the and, if the Clearing Member is a Market Clearing Member’s obligation to cooling-off period will continue for a Loan Clearing Member or a Hedge replenish the Clearing Fund is not minimum of fifteen consecutive Clearing Member, not initiate any Stock currently subject to any pre-determined calendar days, if one or more of the Loan transaction, through any of its limit. Notwithstanding the foregoing, a events described in clauses (i) through accounts, and (iii) close-out or transfer Clearing Member can limit the amount (iv) of Article VIII, Section 5(a) of OCC’s all of its open positions by no later than of its liability for replenishing the By-Laws occur(s) during that fifteen the last day of the cooling-off period. If Clearing Fund (at an additional 100% of calendar day period and result in one or a Clearing Member fails to satisfy all of the amount of its then-required Clearing more proportionate charges against the these conditions by the end of a given Fund contribution) by winding-down its Clearing Fund, the cooling-off period cooling-off period, it would not have clearing activities and terminating its shall be extended through either (i) the completed all of the requirements status as a Clearing Member. Any fifteenth calendar day from the date of necessary to terminate its status as a Clearing Member seeking to so limit its the most recent proportionate charge Clearing Member under Article VIII, liability for replenishing the Clearing resulting from the subsequent event, or Section 6 of OCC’s By-Laws and Fund must: (i) notify OCC in writing not (ii) the twentieth day from the date of therefore it would remain subject to the later than the fifth business day after the the proportionate charge that initiated obligation to replenish the Clearing proportionate charge that it is the cooling-off period, whichever is Fund after the end of the cooling-off terminating its status as a Clearing sooner. period. Member, (ii) not initiate any opening During a cooling-off period, each Third, the proposal would clarify the purchase or opening writing transaction, Clearing Member would have its distinction between ‘‘replenishment’’ of and, if the Clearing Member is a Market aggregate liability to replenish the the Clearing Fund and a Clearing Loan Clearing Member or a Hedge Clearing Fund capped at 200% of the Member’s obligation to answer Clearing Member, not initiate any Stock Clearing Member’s then-required ‘‘assessments.’’ In this context, the term Loan transaction, through any of its contribution to the Clearing Fund. Once ‘‘replenish’’ (and its variations) shall to accounts, and (iii) close out or transfer the cooling-off period ends each refer to a Clearing Member’s standing all of its open positions as promptly as remaining Clearing Member would be duty, following any proportionate practicable after giving notice to OCC. required to replenish the Clearing Fund charge against the Clearing Fund, to Thus, withdrawal from clearing in the amount necessary to meet its return its Clearing Fund contribution to membership is the only means by which then-required contribution. Once the the amount required from such Clearing a Clearing Member currently can limit cooling-off period ends, any remaining Member for the month in question.27 its liability for replenishing the Clearing losses or expenses suffered by OCC as The term ‘‘assessment’’ (and its Fund. a result of any event described in variations) shall refer to the amount, clauses (i) through (iv) of Article VIII, during any cooling-off period, that a b. Proposed Changes to Assessment Clearing Member would be required to Powers Section 5(a) of OCC’s By-Laws that occurred during such cooling-off period contribute to the Clearing Fund in OCC proposes to revise Section 6 of could not be charged against the excess of the amount of the Clearing Article VIII of OCC’s By-Laws to make amounts Clearing Members have Member’s pre-funded required Clearing three primary modifications regarding contributed to replenish the Clearing Fund contribution. its existing authority to assess Fund upon the expiration of the Proposed Addition of Ability To proportionate charges against Clearing 26 cooling-off period. Request Voluntary Payments Members’ contributions to the Clearing Second, in connection with the Fund. First, the proposal introduces an cooling-off period, the proposal would OCC proposes to add new Rule 1011, automatic minimum fifteen calendar extend the time frame within which a which will provide a framework by day ‘‘cooling-off’’ period that begins Clearing Member may provide a which OCC could receive voluntary when a proportionate charge is assessed termination notice to OCC to avoid payments in a circumstance where a by OCC against Clearing Members’ liability for replenishment of the Clearing Member has defaulted and Clearing Fund after the cooling-off OCC has determined that, 25 Under Article VIII, Section 6 of OCC’s By-Laws, period and would modify the notwithstanding the availability of any OCC currently has authority to assess proportionate remaining resources under OCC Rules charges against Clearing Members’ contributions to obligations of such a terminating Clearing Member for closing-out and 707, 1001, 1104 through 1107, 2210 and the Clearing Fund in certain enumerated situations. 28 For example, Section 6 generally provides that if transferring its remaining open 2211, OCC may not have sufficient the conditions regarding a Clearing Member default positions. Specifically, to effectively resources to satisfy its obligations and specified in subparagraphs (a)(i) through (vi) of liabilities resulting from such default. Article VIII, Section 5 of OCC’s By-Laws are terminate its status as a Clearing Member and not be liable for Under new Rule 1011, OCC will initiate satisfied, OCC will make good resulting losses or a call for voluntary payments by issuing expenses that are suffered by OCC by applying the replenishing the Clearing Fund after the defaulting Clearing Member’s Clearing Fund cooling-off period, a Clearing Member contribution after first applying other funds 27 This assumes that the proportionate charge available to OCC in the accounts of the Clearing would be required to: (i) notify OCC in resulted in the Clearing Member’s actual Clearing Member. If the sum of the obligations, however, writing of its intent to terminate not Fund contribution dropping below the amount of exceeds the total Clearing Fund contribution and later than the last day of the cooling-off its required contribution (i.e., that the Clearing other funds of the defaulting Clearing Member period, (ii) not initiate any opening Member did not have excess above its required available to OCC, then OCC will charge the amount contribution that was sufficient to cover the amount of the remaining deficiency on a proportionate basis purchase or opening writing transaction, of the proportionate charge allocated to such against all non-defaulting Clearing Members’ Clearing Member). required contributions to the Clearing Fund at the 26 After a cooling-off period has ended, the 28 Rule 707 addresses the treatment of funds in a time. Section 5(b) of Article VIII of OCC’s By-Laws occurrence of any event described in clauses (i) Clearing Member’s X–M accounts. Rule 1001 similarly provides for proportionate charges against through (iv) of Article VIII, Section 5(a) of OCC’s addresses the size of OCC’s Clearing Fund and the Clearing Members’ contributions to the Clearing By-Laws that results in a proportionate charge amount of a Clearing Member’s contribution. Rules Fund when certain conditions are met that involve against the Clearing Fund would trigger a new 1104 through 1107 concern the treatment of the a failure by a bank or a securities or commodities cooling off period, and thusly, a cap of 200% of portfolio of a defaulted Clearing Member. Rules clearing organization to perform obligations to OCC each Clearing Member’s then-required contribution 2210 and 2211 concern the treatment of Stock Loan when they are due. would again apply. positions of a defaulted Clearing Member.
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a ‘‘Voluntary Payment Notice’’ inviting Rule 1111(c) also would impose be assigned a Tear-Up Price and OCC all non-defaulting Clearing Members to standards designed to circumscribe the would draw on its remaining financial make payments to the Clearing Fund in Risk Committee’s discretion, requiring resources in order to extinguish the addition to any amounts they are that any determination regarding the torn-up positions at the assigned Tear- otherwise required to contribute scope of a voluntary tear-up shall (i) be Up Price without forcing a reduction in pursuant to Rule 1001. The Voluntary based on then-existing facts and the amount of unpaid value of such Payment Notice would specify the terms circumstances, (ii) be in furtherance of positions. OCC is amending the Initial applicable to any voluntary payment, the integrity of OCC and the stability of Filing to clarify that while OCC does not including but not limited to, that any the financial system, and (iii) take into intend, in the first instance, for its tear- voluntary payment may not be consideration the legitimate interests of up process to serve as a means of loss withdrawn once made, that no Clearing Clearing Members and market allocation, circumstances may arise Member shall be obligated to make a participants. such that, despite best efforts, OCC has voluntary payment and that OCC shall Once the Risk Committee has inadequate remaining financial retain full discretion to accept or reject determined the scope of the Voluntary resources to extinguish torn-up any voluntary payment. Rule 1011 Tear-Up, OCC will initiate the call for positions at their assigned Tear-Up Price specifies that if OCC subsequently voluntary tear-ups by issuing a without forcing a reduction in the recovers from the defaulted Clearing ‘‘Voluntary Tear-Up Notice.’’ The amount of unpaid value of such Member or the estate(s) of the defaulted Voluntary Tear-Up Notice shall inform positions (e.g., despite best efforts, Clearing Member(s), OCC would seek to all non-defaulting Clearing Members of market movements not accounted for by compensate first from such recovery all the opportunity to participate in a monitoring, additional Clearing Member non-defaulting Clearing Members that Voluntary Tear-Up.30 The Voluntary defaults occur immediately preceding a made voluntary payments (and if the Tear-Up Notice would specify the terms tear-up). In such circumstances, despite amount recovered from the defaulted applicable to any voluntary tear-up, best efforts, OCC would use its partial Clearing Member(s) is less than the including but not limited to, that no tear-up process as a means of loss aggregate amount of voluntary Clearing Member or customers of a allocation.33 payments, non-defaulting Clearing Clearing Member shall be obligated to The proposed changes would provide Members that made voluntary payments participate in a voluntary tear-up and OCC with two separate and non- each would receive a percentage of the that OCC shall retain full discretion to exclusive means of equitably re- recovery that corresponds to that accept or reject any voluntary tear-up. allocating the losses, costs or expenses Clearing Member’s percentage of the OCC is not proposing a tear-up imposed upon the holders of torn-up total amount of voluntary payments process that would require the positions as a result of the tear-up(s). received). imposition of ‘‘gains haircutting’’ (i.e., First, the proposed changes to Article the reduction of unpaid gains) on a VIII would provide OCC discretion to Proposed Addition of Ability To portion of OCC’s cleared contracts.31 use remaining Clearing Fund Conduct Voluntary Tear-Ups Instead, OCC has determined that its contributions to re-allocate losses OCC proposes to add new Rule 1111, tear-up process—for both Voluntary imposed on non-defaulting Clearing which, in relevant part, will establish a Tear-Ups as well as Partial Tear-Ups— Members and customers from such tear- framework by which non-defaulting should be initiated on a date sufficiently up(s). Second, Rule 1111(a) would Clearing Members and non-defaulting in advance of the exhaustion of OCC’s provide that if OCC subsequently customers of Clearing Members could be financial resources such that OCC recovers from the defaulted Clearing given an opportunity to voluntarily would be expected to have adequate Member or the estate(s) of the defaulted extinguish (i.e., voluntarily tear-up) remaining resources to cover the Clearing Member(s) and the amount of amount it must pay to extinguish the their open positions at OCC in a such recovery exceeds the amount OCC positions of Clearing Members and circumstance where a Clearing Member received in voluntary payments, then customers without haircutting gains.32 has defaulted and OCC has determined non-defaulting Clearing Members and In OCC’s proposed tear-up process, non-defaulting customers that that, notwithstanding the availability of the holders of torn-up positions would any remaining resources under OCC voluntarily tore-up open positions and Rules 707, 1001, 1104 through 1107, incurred losses from such tear-ups remaining in the portfolio(s) of the defaulted would be repaid from the amount of the 2210 and 2211, OCC may not have Clearing Member(s). sufficient resources to satisfy its 30 Since OCC does not know the identities of recovery in excess of the amount OCC 34 obligations and liabilities resulting from Clearing Members’ customers, OCC would depend received in voluntary payments. If the such default. on each Clearing Member to notify its customers amount recovered is less than the with positions in scope of the Voluntary Tear-Up aggregate amount of Voluntary Tear-Up, While Risk Committee approval is not of the opportunity to participate in such tear-up. needed to commence a voluntary tear- 31 In general, forced gains haircutting is a tool that 33 up, the Risk Committee would be can be more easily applied to products whose gains This change does not impact the statutory basis are settled at least daily, like futures through an for the proposed rule change. responsible for determining the exchange of variation margin, and by central 34 In order to effect re-allocation of the losses, appropriate scope of each voluntary counterparties with comparatively large daily costs or expenses imposed upon the holders of torn- tear-up. To ensure OCC retains settlement flows. Listed options, which constitute up positions, OCC expects that after it has sufficient flexibility to effectively the vast majority of the contracts cleared by OCC, completed its tear-up process and re-established a do not have daily settlement flows and any attempt matched book, holders of both voluntarily torn-up deploy this tool in an extreme stress to reduce the ‘‘unrealized gains’’ of a listed options and mandatorily torn-up positions would be event, proposed Rule 1111(c) is drafted contract would require the reduction of the option provided with a limited opportunity to re-establish to provide the Risk Committee with premium that is embedded within the required positions in the contracts that were voluntarily or discretion to determine the appropriate margin (such a process would effectively require mandatorily extinguished. After the expiration of 29 haircutting the listed option’s initial margin). such period, OCC would seek to collect the scope of each voluntary tear-up. New 32 OCC anticipates that it would determine the information on the losses, costs or expenses that date on which to initiate Partial Tear-Ups by had been imposed on the holders of torn-up 29 Notwithstanding the discretion that would be monitoring its remaining financial resources against positions. Based on the information collected, OCC afforded by the text of proposed Rule 1111(c), OCC the potential exposure of the remaining would determine whether it can reasonably anticipates that the scope of voluntary tear-ups unauctioned positions from the portfolio(s) of the determine the losses, costs and expenses likely would be dictated by the cleared contracts defaulted Clearing Member(s). sufficiently to re-allocate such amounts.
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each non-defaulting Clearing Member which the Partial Tear-Up will occur.35 The scope of any Partial Tear-Up will and non-defaulting customer that With regard to the date and time of a be determined in accordance with Rule incurred losses from voluntarily torn-up Partial Tear-Up, Rule 1111(d) specifies 1111(e).38 With respect to the positions would be repaid in an amount that the Risk Committee shall set the extinguishment of Remaining Open proportionate to the percentage of its date and time. With regard to the Partial Positions, OCC will designate Tear-Up total amount of losses, costs and fees Tear-Up Price, OCC anticipates that it is Positions in identical Cleared Contracts imposed on Clearing Members or likely to use the last established end-of- and Cleared Securities on the opposite customers as a result of the Voluntary day settlement price, in accordance with side of the market and in an aggregate Tear-Ups. its existing practices concerning pricing amount equal to that of the Remaining and valuation. However, given that it is Open Positions. OCC will only With respect to Voluntary Tear-Ups, not possible to know in advance the designate Tear-Up Positions in the new Rule 1111(h) would clarify that no precise circumstances that would cause accounts of non-defaulting Clearing action or omission by OCC pursuant to OCC to conduct a tear-up, Rule 1111(f) Members (inclusive of such Clearing and in accordance Rule 1111 shall has been drafted to allow OCC to Members’ customer accounts) with an constitute a default by OCC. exercise reasonable discretion, if open position in the applicable Cleared 39 Proposed Addition of Ability To necessary, in establishing the Partial Contract or Cleared Security. Tear-Up Conduct Partial Tear-Ups Tear-Up Price by some means other than Positions shall be designated and its existing practices concerning pricing applied by OCC on a pro rata basis OCC proposes to add new Rule 1111, and valuation.36 Specifically, Rule across all the identical positions in which, in relevant part, will provide the 1111(f) would require that OCC, in Cleared Contracts and Cleared Board with discretion to extinguish the exercising any such discretion, would Securities on the opposite side of the remaining open positions of any act in good faith and in a commercially market in the accounts of non-defaulted defaulted Clearing Member or customer reasonable manner to adopt methods of Clearing Members and their 40 of such defaulted Clearing Member(s) valuation expected to produce customers. (such positions, ‘‘Remaining Open reasonably accurate substitutes for the Rule 1111(e)(iii) provides that every Positions’’), as well as any related open values that would have been obtained Partial Tear-Up position is from the relevant market if it were positions as necessary to mitigate automatically terminated upon and with operating normally, including but not effect from the Partial Tear-Up Time, further disruptions to the markets limited to the use of pricing models that without the need for any further step by affected by the Remaining Open use the market price of the underlying any party to such Cleared Contract or Positions (such positions, ‘‘Related interest or the market prices of its Cleared Security, and that upon Open Positions’’), in a circumstance components. Rule 1111(f) further termination, either OCC or the relevant where a Clearing Member has defaulted specifies that OCC may consider the Clearing Member (as the case may be) and OCC has determined that, same information set forth in subpart (c) shall be obligated to pay the other the notwithstanding the availability of any of Section 27, Article VI of OCC’s By- applicable Partial Tear-Up Price. Rule remaining resources under OCC Rules Laws.37 707, 1001, 1104 through 1107, 2210 and the Corporation. A position having a positive close- 2211, OCC may not have sufficient 35 Since OCC does not know the identities of out value shall be an ‘asset position’ and a position resources to satisfy its obligations and Clearing Members’ customers, OCC would depend having a negative close-out value shall be a ‘liability liabilities resulting from such default on each Clearing Member to notify its customers position.’ ’’ with positions in scope of the Partial Tear-Up of the 38 OCC is amending the Initial Filing to reflect (such tear-ups hereinafter collectively possibility of tear-up. that after further evaluation of its proposed recovery referred to as ‘‘Partial Tear-Ups’’). Like 36 For example, OCC has observed certain rare tools and the proposed tear-up process, OCC does the determination for Voluntary Tear- circumstances in which a closing price for an not believe there would be a need to assign or Ups, the Risk Committee shall underlying security of an option may be stale or transfer any hedging transactions established with unavailable. A stale or unavailable closing price relation to tear-up positions. OCC is therefore determine the appropriate scope of each could be the result of a halt on trading in the amending the Initial Filing to remove text in Partial Tear-Up and such determination underlying security, or a corporate action resulting proposed Rule 1111(e) concerning proposed shall (i) be based on then-existing facts in a cash-out or conversion of the underlying authority for OCC to offer to assign or transfer any and circumstances, (ii) be in furtherance security (but that has not yet been finalized), or the hedging transactions related to Remaining Open result of an ADR whose underlying security is being Positions with related Tear-Up Positions. This of the integrity of OCC and the stability impacted by certain provisions under foreign laws. change does not impact the statutory basis for the of the financial system, and (iii) take OCC would consider the presence of these factors proposed rule change. into consideration the legitimate on its end-of-day prices in determining whether use 39 Since, as stated in the Initial Filing, the interests of Clearing Members and of the discretion that would be afforded under objective of Partial Tear-Ups is to extinguish the proposed Rule 1111(f) might be warranted. Remaining Open Positions cleared by the defaulted market participants. Once the Risk 37 In relevant part, subpart (c) reads as follows: Clearing Member(s) or customer of such defaulted Committee has determined the scope of ‘‘In determining a close-out amount, the Clearing Member(s) (emphasis added), OCC does the Partial Tear-Up, OCC will initiate Corporation may consider any information that it not believe there would be a need to designate Tear- the Partial Tear-Up process by issuing a deems relevant, including, but not limited to, any Up Positions to the non-defaulted customers of a of the following: (1) Prices for underlying interests defaulted Clearing Member. OCC is therefore ‘‘Partial Tear-Up Notice.’’ The Partial in recent transactions, as reported by the market or amending the Initial Filing to remove references to Tear-Up Notice shall (i) identify the markets for such interests; (2) quotations from non-defaulted customers of defaulted Clearing Remaining Open Positions and Related leading dealers in the underlying interest, setting Members. forth the price (which may be a dealing price or an 40 OCC is amending the Initial Filing to clarify Open Positions designated for tear-up, indicative price) that the quoting dealer would that a non-defaulted Clearing Member would be (ii) identify the open positions of non- charge or pay for a specified quantity of the required to allocate the assigned Tear-Up Positions defaulting Clearing Members and non- underlying interest; (3) relevant historical and on a pro rata basis across those customers that have defaulting customers that will be subject current market data for the relevant market, open positions in such Cleared Contract or Cleared provided by reputable outside sources or generated Security in such account, and for any listed option to Partial Tear-Up (such positions, internally; and (4) values derived from theoretical positions being extinguished, allocation across ‘‘Tear-Up Positions’’), (iii) specify the pricing models using available prices for the customer accounts should occur in accordance with termination price (‘‘Partial Tear-Up underlying interest or a related interest and other such Clearing Member’s procedures for allocating Price’’) for each position to be torn-up, relevant data. Amounts stated in a currency other exercises and assignments. This change does not than U.S. Dollars shall be converted to U.S. Dollars impact the statutory basis for the proposed rule and (iv) list the date and time as of at the current rate of exchange, as determined by change.
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1111(e)(iii) further provides that the in a recovery and orderly wind-down from such an event more broadly, corresponding open position shall be scenario. In this regard, the proposed consistent with the general principle of deemed terminated at the Partial Tear- changes are designed to further address mutualized loss that upon which central Up Price.41 the risks of liquidity shortfalls and clearing rests. In this regard, OCC Rule 1111(g) provides that to the credit losses resulting from a Clearing believes the proposed changes foster extent losses imposed upon non- Member default or certain other loss cooperation and coordination with defaulting Clearing Members and non- events and to establish tools to enable participants in the clearing system, defaulting customers resulting from a OCC to re-establish a matched book and consistent with Section 17A(b)(3)(F) of Partial Tear-Up can reasonably be limit OCC’s potential exposure to losses the Act.47 determined, the Board may elect to re- from a Clearing Member default, in each As stated above, the proposed changes allocate such losses among all non- case as might result from an are designed to enable OCC to further defaulting Clearing Members through a unprecedented loss scenario that address the risks of liquidity shortfalls special charge to all non-defaulting exceeds OCC’s standard risk and credit losses resulting from a Clearing Members in an amount management and default management Clearing Member default or certain corresponding to each such non- procedures. OCC’s process in crafting other loss events and to re-establish a defaulting Clearing Member’s the proposed changes was informed by matched book and limit OCC’s potential proportionate share of the variable published guidance from OCC’s primary exposure to losses from a Clearing amount of the Clearing Fund at the time regulators (the Commission and the Member default, in each case as might such Partial Tear-Up is conducted.42 Commodity Futures Trading result from an unprecedented loss With respect to Partial Tear-Ups, new Commission), the publications of key scenario that exceeds OCC’s standard Rule 1111(h) would clarify that no international organizations (including risk management and default action or omission by OCC pursuant to the Bank for International Settlements, management procedures. OCC believes and in accordance Rule 1111 shall the International Organization of that the proposed changes will facilitate constitute a default by OCC. Securities Commissions and the its ability to fully allocate, and Financial Stability Board) and the 2. Statutory Basis ultimately extinguish, the loss so that it publications of key industry trade has a better opportunity of withstanding Section 17A(b)(3)(F) of the Securities organizations. OCC’s proposal was an extreme stress scenario without 43 Exchange Act of 1934 (‘‘Act’’), further informed by conversations with, sacrificing its viability as a going requires, among other things, that the among others, OCC’s Board, OCC’s Risk concern or its ability to continue to rules of a clearing agency be designed to Committee, Clearing Members and provide its critical clearing services. In foster cooperation and coordination market participants. this regard, OCC believes that the with persons engaged in the clearance Informed by these perspectives, OCC proposed changes remove impediments and settlement of securities has crafted the proposed changes with to and perfect the mechanism of a transactions, to remove impediments to the aim of enhancing its ability to national system for the prompt and and perfect the mechanism of a national address an unprecedented loss event but accurate clearance and settlement of system for the prompt and accurate also, to the extent possible, providing a securities transactions, consistent with clearance and settlement of securities reasonable amount of certainty to Section 17A(b)(3)(F) of the Act.48 Clearing Members, customers and other transactions, and, in general, to protect The proposed changes are designed to stakeholders about the potential investors and the public interest. OCC enhance the stability of the clearing consequences of such an event and the believes that the proposed rule change system generally and are aimed at resources and tools that would be is consistent with the requirements of ensuring that OCC has adequate tools 44 expected to be available to OCC in Section 17A(b)(3)(F) of the Act and and resources to better protect market support of its clearing operations.45 the rules thereunder applicable to OCC participants from the risks of extreme for the reasons set forth below. Accordingly, the proposed changes stress scenarios and unprecedented loss As stated above, each of the changes should leave Clearing Members, events. In this regard, OCC believes that is designed to provide OCC with tools customers and other stakeholders in a the proposed changes are reasonably to address the risks OCC might confront position to better evaluate the risks and designed to protect investors and the benefits of clearing in order to facilitate public interest, consistent with Section 41 OCC is amending the Initial Filing and the their own risk management, and to the 17A(b)(3)(F) of the Act.49 proposed text of Rule 1111(e)(iii) to clarify that if, extent applicable, their own regulatory in certain circumstances discussed above (see fn. 27 The proposed changes also are and associated text), OCC, in its discretion, and capital considerations. The proposed changes also seek to avoid a designed to further OCC’s compliance, determines that its remaining resources are in whole or in part, with the provisions inadequate to pay the applicable Partial Tear-Up result that would force only particular Price for each position being extinguished in the clearing participants to shoulder certain of the Commission’s rules discussed Partial Tear-Up, OCC shall be obligated to pay each immediately below: relevant Clearing Member a pro rata amount of the losses in an extreme stress scenario (i.e., applicable Partial Tear-Up Price based on OCC’s holders of positions extinguished in Recovery and Orderly Wind-Down remaining resources, and the relevant Clearing Partial Tear-Ups),46 and instead leaves Member shall have a claim against the Corporation OCC and its Board with discretionary In relevant part, Rule 17Ad– for the value of the difference between the pro rata tools that could provide a more 22(e)(3)(ii) requires that each CCA amount received and the Partial Tear-Up Price. This ‘‘establish, implement, maintain and change does not impact the statutory basis for the equitable method of allocating the losses proposed rule change. enforce written policies and procedures 42 For the avoidance of doubt, the special charge 45 OCC notes that the very nature of an extreme reasonably designed to . . . plan[] for would be distinct and separate from a Clearing stress and unprecedented loss event means that its the recovery and orderly wind-down of Member’s obligation to satisfy Clearing Fund impact is difficult to predict and quantify in the [CCA] necessitated by credit losses, assessments, and therefore, would not be subject to advance. liquidity shortfalls, losses from general the aforementioned assessment cap in the amount 46 Absent a means of re-allocating the potential of 200% of a Clearing Member’s then-required losses, costs and fees imposed upon holders of contribution to the Clearing Fund. positions extinguished during tear-ups, the holders 47 15 U.S.C. 78q–1(b)(3)(F). 43 15 U.S.C. 78q–1(b)(3)(F). of such positions would be left to individually 48 Id. 44 Id. address such losses, costs and fees. 49 Id.
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business risk, or any other losses.’’ 50 As resources to satisfy its obligations and assessments) would be 200% of the stated above, each of the proposed liabilities resulting from such default. Clearing Member’s required changes is designed to provide OCC Second, new Rule 1111 would establish contribution as of the time immediately with tools to address the risks OCC a framework by which non-defaulting preceding the triggering proportionate might confront in a recovery and orderly Clearing Members and non-defaulting charge. Compared to the current wind-down scenario.51 Consistent with customers of Clearing Members could be requirement under which a Clearing the requirements of Rule 17Ad– given an opportunity to participate in Member may cap its liability to 22(e)(3)(ii), the proposed tools would Voluntarily Tear-Ups in a circumstance proportionate charges at an additional enable OCC to better address the risks where a Clearing Member has defaulted 100% of its then-required contribution, of liquidity shortfalls and credit losses and OCC has determined that, a Clearing Member would instead be resulting from a Clearing Member notwithstanding the availability of any permitted to cap its liability for default or certain other loss events and, remaining resources under OCC Rules proportionate charges at an additional if necessary, to ultimately re-establish a 707, 1001, 1104 through 1107, 2210 and 200% of its then-required Clearing Fund matched book in a recovery or orderly 2211, OCC may not have sufficient contribution. wind-down scenario.52 In this context, resources to satisfy its obligations and OCC believes that the proposed the proposed changes serve as a critical liabilities resulting from such default. approach improves predictability for component of OCC’s recovery and Finally, new Rule 1111 also would OCC and for Clearing Members orderly wind-down plan. As a result, in provide the Board with discretion to regarding the size of Clearing Fund OCC’s view, the proposed changes are mandatorily tear-up Remaining Open contributions that are likely to be consistent with the requirements of Rule Positions and Related Open Positions, subject to assessments for proportionate 17Ad–22(e)(3)(ii) as to the recovery and in a circumstance where a Clearing charges. Additionally, replacing the five orderly wind-down plan.53 Member has defaulted and OCC has business day withdrawal period with determined that, notwithstanding the Allocation of Credit Losses Above the withdrawal period commensurate availability of any remaining resources Available Resources with the cooling-off period (which, as under OCC Rules 707, 1001, 1104 proposed would be a minimum of In relevant part, Rule 17Ad– through 1107, 2210 and 2211, OCC may fifteen calendar days) would give 22(e)(4)(viii) requires that each CCA not have sufficient resources to satisfy Clearing Members a more reasonable ‘‘establish, implement, maintain and its obligations and liabilities resulting period in which to meet the wind-down enforce written policies and procedures from such default.56 In OCC’s view, and termination requirements necessary reasonably designed to . . . [a]ddress[ each of these tools could be deployed by to cap their liability. OCC believes that ] allocation of credit losses the [CCA] OCC, if necessary, to allocate credit this would afford them greater certainty may face if its collateral and other losses in excess of the collateral and regarding their maximum liability with resources are insufficient to fully cover other resources available to OCC, in respect to the Clearing Fund during its credit exposures . . .’’ 54 The accordance with Rule 17Ad– extreme stress events, which in turn, proposed changes would provide OCC 57 22(e)(4)(viii). facilitates Clearing Members’ with three distinct tools that could be management of their own risk used to allocate any credit losses OCC Replenishment of Financial Resources management, and to the extent may face in excess of collateral and Following a Default applicable, regulatory capital other resources available to OCC. First, In relevant part, Rule 17Ad– new Rule 1011 would provide a 22(e)(4)(ix) requires that each CCA considerations. And OCC believes this framework by which OCC could receive ‘‘establish, implement, maintain and increased predictability would also be voluntary payments in a circumstance enforce written policies and procedures beneficial to OCC by helping it to more where a Clearing Member has defaulted reasonably designed to . . . [d]escrib[e] reliably understand the amount of and OCC has determined that, the [CCA’s] process to replenish any Clearing Fund contributions that will financial resources it may use following likely be available to it after a notwithstanding the availability of any 59 remaining resources under OCC Rules a default or other event in which use of proportionate charge is assessed. 707, 1001, 1104 through 1107, 2210 and such resources is contemplated.’’ 58 OCC believes that the relative 2211,55 OCC may not have sufficient OCC’s Clearing Members have a certainty provided by the proposed standing obligation to replenish the cooling-off period and 200% cap on 50 17 CFR 240.17Ad–22(e)(3)(ii). Clearing Fund following any assessments ultimately could reduce the 51 Indeed, the OCC’s separately filed recovery and proportionate charge. The proposed risks of successive or ‘‘cascading’’ orderly wind-down plan identifies OCC’s changes would establish a rolling defaults, in which the financial assessment powers, ability to call for voluntary demands on remaining non-defaulting payments, ability to call for Voluntary Tear-Ups and cooling-off period, triggered by the ability to impose Partial Tear-Ups among its payment of a proportionate charge Clearing Members to continually ‘‘Recovery Tools.’’ OCC has filed a proposed rule against the Clearing Fund, during which replenish OCC’s Clearing Fund (and change with the Commission in connection with period the aggregate liability of a similar guaranty funds at other CCPs to this proposal. See Securities Exchange Act Release which such Clearing Members might No. 82352 (December 19, 2017), 82 FR 61072 Clearing Member to replenish the (December 26, 2017) (SR–OCC–2017–021). On Clearing Fund (inclusive of belong) have the effect of further March 22, 2018, the Commission instituted weakening such Clearing Members to proceedings to determine whether to approve or portfolio of a defaulted Clearing Member. Rules the point of default. In this regard, the disapprove the proposed rule change. See Securities 2210 and 2211 concern the treatment of Stock Loan proposed changes are designed to Exchange Act Release No. 82927 (March 22, 2018), positions of a defaulted Clearing Member. provide OCC, Clearing Members and 83 FR 13176 (March 27, 2018) (SR–OCC–2017–021). 56 Rule 1111(g), which would provide the Board 52 other stakeholders with sufficient time 17 CFR 240.17Ad–22(e)(3)(ii). authority to equitably re-allocate losses, costs and 53 17 CFR 240.17Ad–22(e)(3)(ii). fees directly imposed as a result of a Partial Tear- to manage the ongoing default(s) 54 17 CFR 240.17Ad–22(e)(v)(viii). Up among all non-defaulting Clearing Members 55 Rule 707 addresses the treatment of funds in a through a special charge, would serve as a 59 Under the existing approach, it is less certain Clearing Member’s X–M accounts. Rule 1001 discretionary tool to redistribute the credit losses from OCC’s standpoint regarding whether Clearing addresses the size of OCC’s Clearing Fund and the allocated through Partial Tear-Up. Members would reasonably be able to cap their amount of a Clearing Member’s contribution. Rules 57 17 CFR 240.17Ad–22(e)(v)(viii). liability to proportionate charges within five 1104 through 1107 concern the treatment of the 58 17 CFR 240.17Ad–22(e)(4)(ix). business days.
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without further aggravating the extreme off period is likely to be a sufficient the proposed changes as consistent with stresses facing market participants. amount for Clearing Members (and their Rule 17Ad–22(e)(7)(ix).64 OCC recognizes that the proposed customers) to orderly reduce or Timely Action to Contain Losses changes would limit the maximum rebalance their positions, in an attempt amount of Clearing Fund resources that to mitigate stress losses and exposure to In relevant part, Rule 17Ad–22(e)(13) could be available to OCC in an extreme potential initial margin increases as they requires that each CCA ‘‘establish, stress scenario, which introduces the navigate the stress event. Through implement, maintain and enforce possibility, however remote, that the conversations with Clearing Members, written policies and procedures proposed 200% cap ultimately could be OCC also believes that the proposed reasonably designed to . . . [e]nsure the reached. If during any cooling-off period cooling-off period is likely to be a [CCA] has the authority and operational the amount of aggregate proportionate sufficient amount for certain Clearing capacity to take timely action to contain charges against the Clearing Fund Members to orderly close-out their losses and liquidity demands and approaches the 200% cap, the amount positions and transfer customer continue to meet its obligations . . .’’ 65 remaining in the Clearing Fund may no positions as they withdraw from The proposed changes would provide longer be sufficient to comply with the clearing membership. OCC believes the OCC with the authority to call for applicable minimum regulatory proposed cooling-off period, coupled Voluntary Tear-Ups and OCC’s Board financial resources requirements in the with the other proposed changes to with the discretion to impose Partial CCAs. In any such event, OCC’s existing OCC’s assessment powers, is likely to Tear-Ups, which would provide OCC authority under Rule 603 would permit provide Clearing Members with an with authority necessary to extinguish OCC to call on participants for adequate measure of stability and certain losses (and attendant liquidity additional initial margin, which could predictability as to the potential use of demands) thereby potentially enabling ensure that OCC’s minimum financial Clearing Fund resources, which OCC OCC to continue to meet its remaining resources remain in excess of applicable believes removes the existing incentive obligations to participants. As designed, 60 CCA requirements. OCC recognizes for Clearing Members to withdraw Voluntary Tear-Ups and Partial Tear- that the imposition of increased margin following a proportionate charge.61 Ups would be initiated on a date requirements could have an immediate In light of the foregoing, OCC believes sufficiently in advance of the pro-cyclical impact on participants (and that the proposed changes would exhaustion of OCC’s financial resources consequential impacts on the broader enhance and strengthen its process to such that OCC is expected to have financial system) that is potentially replenish the Clearing Fund following a adequate resources remaining to cover greater than the impact of replenishing default or other event in which use of the amount it must pay to extinguish the the Clearing Fund. These risks would be the Clearing Fund is contemplated, in positions of Clearing Members and limited to a specific extreme stress event accordance with Rule 17Ad– customers without haircutting gains. and could be mitigated by certain 22(e)(4)(ix).62 Accordingly, OCC believes that its factors. First, OCC, in coordination with authority and capacity to conduct a its regulators, would carefully evaluate Replenishment of Liquid Resources Partial Tear-Up should be timely, any potential increase in the context of In relevant part, Rule 17Ad– relative to the adequacy of OCC’s then-existing facts and circumstances. 22(e)(7)(ix) requires that each CCA remaining financial resources. Finally, Second, during the cooling-off period, OCC believes it has the operational and Clearing Members and their customers ‘‘establish, implement, maintain and enforce written policies and procedures systems capacity sufficient to support will have the opportunity to reduce or the proposed changes, and OCC’s rebalance their respective portfolios in reasonably designed to . . . [d]escrib[e] the [CCA’s] process to replenish any policies and procedures will be updated order to mitigate their exposures to accordingly to reflect the existence of stress losses and initial margin liquid resources that the clearing agency may employ during a stress event.’’ 63 these new tools. As a result, OCC increases. Finally, since initial margin is believes that the proposed changes not designed to be subject to mutualized Since the use any part of the cash portion of OCC’s Clearing Fund would conform to the relevant requirements in loss, the risk of loss faced by Clearing Rule 17Ad–22(e)(13).66 Members for amounts posted as constitute a depletion of one of OCC’s additional margin would be liquid resources, OCC’s assessment Public Disclosure of Key Aspects of substantially less than for power, discussed above, is the primary Default Rules means of replenishing the Clearing replenishments of the Clearing Fund. In relevant part, Rule 17Ad– Fund cash that OCC used to address the Given the products cleared by OCC 22(e)(23)(i) requires that each CCA stress event. For the same reasons stated and the composition of its clearing ‘‘establish, implement, maintain and above, OCC believes that the proposed membership, OCC has determined that enforce written policies and procedures changes enhance and strengthen its a minimum 15-calendar day cooling-off reasonably designed to . . . [p]ublicly process to replenish the Clearing Fund, period, rolling up to a maximum of 20 disclos[e] all relevant rules and material as necessary, following a default or calendar days, is likely to be a sufficient procedures, including key aspects of its other stress event in which the Clearing amount of time for OCC to manage the default rules and procedures.’’ 67 As Fund is used, and therefore, OCC views ongoing default(s) and take necessary stated above, each of the tools discussed steps in furtherance of stabilizing the herein are contemplated to be deployed clearing system. Further, through 61 OCC initially considered a fixed 15-calendar by OCC if an extreme stress event has day cooling-off period; however, OCC concluded conversations with Clearing Members, that a fixed 15-calendar day cooling-off period may placed OCC into a recovery or orderly OCC believes that the proposed cooling- increase the risks of successive or cascading wind-down scenario, and therefore, the Clearing Member defaults and may perversely tools discussed herein constitute key 60 Rule 603 provides that ‘‘[t]he Risk Committee incentivize Clearing Members to seek to withdraw aspects of OCC’s default rules. By may, from time to time, increase the amount of from clearing membership. Through conversations margin which may be required in respect of a with Clearing Members, OCC believes that these 64 cleared contract, open short position or exercised potentially disruptive consequences are mitigated 17 CFR 240.17Ad–22(e)(7)(ix). contract if, in its discretion, it determines that such by the proposed rolling cooling-off period. 65 17 CFR 240.17Ad–22(e)(13). increase is advisable for the protection of [OCC], the 62 17 CFR 240.17Ad–22(e)(4)(ix). 66 17 CFR 240.17Ad–22(e)(13). Clearing Members or the general public.’’ 63 17 CFR 240.17Ad–22(e)(7)(ix). 67 17 CFR 240.17Ad–22(e)(23)(i).
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incorporating the proposed changes into OCC’s Rules and By-Laws, as further (C) Clearing Agency’s Statement on OCC’s Rules and By-Laws, as further supplemented by the discussion in Comments on the Proposed Rule supplemented by the discussion in OCC’s public rule filing, OCC believes Change Received From Members, OCC’s public rule filing, OCC believes that is has provided sufficient Participants or Others that proposed changes would conform information to enable participants to Written comments were not and are to the relevant requirements in Rule identify and evaluate the risks, fees, and 68 not intended to be solicited with respect 17Ad–22(e)(23)(i). other material costs they could incur by to the proposed rule change, and none Sufficient Information Regarding the participating OCC, consistent with the have been received. Risks, Fees and Costs of Clearing requirements in Rule 17Ad– III. Date of Effectiveness of the 22(e)(23)(ii).70 In relevant part, Rule 17Ad– Proposed Rule Change and Timing for 22(e)(23)(ii) requires that each CCA (B) Clearing Agency’s Statement on Commission Action ‘‘establish, implement, maintain and Burden on Competition Within 45 days of the date of enforce written policies and procedures Section 17A(b)(3)(I) of the Act 71 reasonably designed to . . . [p]rovid[e] publication of this notice in the Federal requires that the rules of a clearing Register or within such longer period sufficient information to enable agency not impose any burden on participants to identify and evaluate the up to 90 days (i) as the Commission may competition not necessary or risks, fees, and other material costs they designate if it finds such longer period appropriate in furtherance of the incur by participating in the covered to be appropriate and publishes its clearing agency.’’ 69 The proposed purposes of the Act. OCC does not reasons for so finding or (ii) as to which changes would clearly explain to believe the proposed rule change would the self-regulatory organization Clearing Members and market have any impact or impose any burden consents, the Commission will: participants that an extreme stress on competition. The primary purpose of (A) By order approve or disapprove scenario could result in the use—and the proposed changes is to make certain the proposed rule change, or theoretically the exhaustion—of OCC’s revisions to OCC’s Rules and By-Laws (B) institute proceedings to determine financial resources, inclusive of OCC’s Laws that are designed to enhance whether the proposed rule change proposed assessment powers. Proposed OCC’s existing tools to address the risks should be disapproved. changes to Section 6, Article VIII of of liquidity shortfalls and credit losses IV. Solicitation of Comments OCC’s By-Laws would explain Clearing and to establish tools by which OCC Interested persons are invited to Members’ replenishment obligation and could re-establish a matched book submit written data, views, and liability for assessments. The proposed following a default. As explained above, arguments concerning the foregoing, changes also would clearly explain, each of the tools proposed herein is through proposed Rules 1011 and 1111, including whether the proposed rule contemplated to be deployed by OCC in change is consistent with the Act. that as OCC nears the exhaustion of its an extreme stress event that has placed assessment powers, Clearing Members Comments may be submitted by any of OCC into a recovery or orderly wind- the following methods: may be asked for voluntary payments down scenario. The proposed rule and, if necessary, Clearing Members and change is intended to provide Clearing Electronic Comments customers may be asked to participate Members, market participants and other • in a Voluntary Tear-Up and/or subject to Use the Commissions internet stakeholders with greater certainty as to a Partial Tear-Up. Proposed Rules comment form (http://www.sec.gov/ their liabilities and potential exposure rules/sro.shtml); or 1011(b) and 1111(a)(ii) also would make • clear that Clearing Members that made to OCC in the event of an Send an email to rule-comments@ voluntary payments and Clearing unprecedented loss scenario. OCC does sec.gov. Please include File Number SR– Members and customers whose not believe that the proposed changes OCC–2017–020 on the subject line. tendered positions were extinguished in would discriminatorily impact any Paper Comments Clearing Member’s access to OCC’s the Voluntary Tear-Up would be • prioritized in the distribution of any services or unnecessarily disadvantage Send paper comments in triplicate recovery from the defaulted Clearing or favor any particular user in to Brent Fields, Secretary, Securities Member(s). Proposed changes to Article relationship to another user. OCC and Exchange Commission, 100 F Street VIII would clarify that the Clearing recognizes that the nature of a Partial NE, Washington, DC 20549–1090. Fund contributions remaining after OCC Tear-Up means that only particular All submissions should refer to File has conducted a Voluntary Tear-Up or Clearing Members and market Number SR–OCC–2017–020. This file Partial Tear-Up could be used to participants holding certain positions number should be included on the compensate the non-defaulting Clearing may be impacted; however, the risk of subject line if email is used. To help the Members and non-defaulting customers Partial Tear-Ups is extremely remote, Commission process and review your for the losses, costs or fees imposed and even then, the proposed changes comments more efficiently, please use only one method. The Commission will upon them as a result of such Voluntary seek to provide means of equitably re- post all comments on the Commission’s Tear-Up or Partial Tear-Up. Proposed allocating the losses, costs and fees Rule 1111(g) would make clear that, internet website (http://www.sec.gov/ imposed by Voluntary Tear-Up or rules/sro.shtml). Copies of the following a Partial Tear-Up, OCC’s Partial Tear-Up. Therefore, OCC Board may seek to equitably re-allocate submission, all subsequent believes that the proposed changes losses, costs and fees directly imposed amendments, all written statements would not have any impact or impose as a result of a Partial Tear-Up among with respect to the proposed rule any burden on competition. all non-defaulting Clearing Members change that are filed with the through a special charge. By Commission, and all written incorporating the proposed changes into communications relating to the proposed rule change between the 68 17 CFR 240.17Ad–22(e)(13). 70 17 CFR 240.17Ad–22(e)(23)(ii). Commission and any person, other than 69 17 CFR 240.17Ad–22(e)(23)(ii). 71 15 U.S.C. 78q–1(b)(3)(I). those that may be withheld from the
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public in accordance with the I. Self-Regulatory Organization’s trading in the System 5 and would provisions of 5 U.S.C. 552, will be Statement of the Terms of Substance of communicate such determination to available for website viewing and the Proposed Rule Change Members 6 via Regulatory Circular.7 The printing in the Commission’s Public Exchange is now proposing to make Reference Section, 100 F Street NE, The Exchange is filing a proposal to certain changes to its rule text, in Washington, DC 20549, on official amend Exchange Rule 518, Complex connection with the upcoming launch business days between the hours of Orders, to update its rule text regarding of such orders on the Exchange, which 10:00 a.m. and 3:00 p.m. Copies of such stock-option orders, in connection with is scheduled for the third quarter of filing also will be available for the upcoming launch of such orders on 2018. inspection and copying at the principal the Exchange. Currently, the Exchange provides office of OCC and on OCC’s website at The text of the proposed rule change price protection for certain complex https://www.theocc.com/about/ is available on the Exchange’s website at option trading strategies such as Vertical publications/bylaws.jsp. http://www.miaxoptions.com/rule- Spreads 8 and Calendar Spreads 9 to filings/ at MIAX Options’ principal All comments received will be posted prevent executions at potentially office, and at the Commission’s Public without change. Persons submitting erroneous prices. Specifically, the Reference Room. comments are cautioned that we do not Exchange provides a Vertical Spread redact or edit personal or identifying II. Self-Regulatory Organization’s Variance (‘‘VSV’’) price protection and a information from comment submissions. Statement of the Purpose of, and Calendar Spread Variance (‘‘CSV’’) price You should submit only information Statutory Basis for, the Proposed Rule protection. The VSV establishes minimum and maximum trading price that you wish to make available Change 10 publicly. limits for Vertical Spreads. The CSV In its filing with the Commission, the establishes a minimum trading price All submissions should refer to File Exchange included statements limit for Calendar Spreads.11 If the Number SR–OCC–2017–020 and should concerning the purpose of and basis for execution price of a complex order be submitted on or before August 17, the proposed rule change and discussed would be outside of the limits 2018. any comments it received on the established for Vertical Spreads and For the Commission by the Division of proposed rule change. The text of these Calendar Spreads, such complex order Trading and Markets, pursuant to delegated statements may be examined at the will be placed on the Strategy Book and authority.72 places specified in Item IV below. The will be managed to the appropriate Robert W. Errett, Exchange has prepared summaries, set trading price limit as described in Rule Deputy Secretary. forth in sections A, B, and C below, of 518(c)(4), Managed Interest Process for [FR Doc. 2018–16535 Filed 8–1–18; 8:45 am] the most significant aspects of such Complex Orders. Orders to buy below statements. the minimum trading price limit and BILLING CODE 8011–01–P orders to sell above the maximum A. Self-Regulatory Organization’s trading price limit (in the case of Statement of the Purpose of, and Vertical Spreads) will be rejected by the SECURITIES AND EXCHANGE Statutory Basis for, the Proposed Rule COMMISSION System.12 Change The Exchange now proposes to adopt 1. Purpose new subsection (g) in Rule 518, [Release No. 34–83726; File No. SR–MIAX– Interpretations and Policies .01, to 2018–16] The Exchange proposes to amend provide a price protection feature for Exchange Rule 518, Complex Orders, to Self-Regulatory Organizations; Miami certain stock-option strategies that have update its rule text regarding stock- a single option component tied to a International Securities Exchange LLC; option orders, in connection with the Notice of Filing and Immediate stock component with a standard upcoming launch of such orders on the 13 Effectiveness of a Proposed Rule deliverable. The proposed price Exchange. In particular, the Exchange is protection feature, named ‘‘Parity Price Change To Amend Exchange Rule 518, proposing to (i) adopt new rule text to Complex Orders Protection,’’ will provide price introduce a new price protection feature protection for strategies that consist of a July 27, 2018. for certain stock-option strategies, (ii) delete certain existing rule text to 5 The term ‘‘System’’ means the automated Pursuant to the provisions of Section eliminate an unnecessary execution trading system used by the Exchange for the trading 19(b)(1) of the Securities Exchange Act price restriction for the stock of securities. See Exchange Rule 100. of 1934 (‘‘Act’’) 1 and Rule 19b–4 component of a stock-option strategy, 6 The term ‘‘Member’’ means an individual or thereunder,2 notice is hereby given that organization approved to exercise the trading rights and (iii) make certain minor clarifying associated with a Trading Permit. Members are on July 16, 2018, Miami International edits to existing rule text. deemed ‘‘members’’ under the Exchange Act. See Securities Exchange, LLC (‘‘MIAX Complex orders began trading on the Exchange Rule 100. Options’’ or ‘‘Exchange’’) filed with the 7 Exchange on October 24, 2016.3 In its See supra note 4. Securities and Exchange Commission 8 A ‘‘Vertical Spread’’ is a complex strategy rule filing to establish the trading of (‘‘Commission’’) a proposed rule change consisting of the purchase of one call (put) option complex orders, the Exchange adopted as described in Items I and II below, and the sale of another call (put) option overlying rules for handling stock-option orders.4 the same security that have the same expiration but which Items have been prepared by the The Exchange also indicated that it different strike prices. See Exchange Rule 518.05(a). Exchange. The Commission is 9 would determine when stock-option A ‘‘Calendar Spread’’ is a complex strategy publishing this notice to solicit consisting of the purchase of one call (put) option orders would be made available for comments on the proposed rule change and the sale of another call (put) option overlying the same security that have different expirations but from interested persons. 3 See MIAX Regulatory Circular 2016–43, October the same strike price. See Exchange Rule 518.05(b). 20, 2016. 10 See Exchange Rule 518.05(a). 72 17 CFR 200.30–3(a)(12). 4 See Securities Exchange Act Release No. 79072 11 See Exchange Rule 518.05(b). 1 15 U.S.C. 78s(b)(1). (October 7, 2016), 81 FR 71131 (October 14, 2016) 12 See Exchange Rule 518.05(c). 2 17 CFR 240.19b–4. (SR–MIAX–2016–26). 13 The standard stock deliverable is 100 shares.
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sale of one call 14 and the purchase of ¥ $45.00 = $49.90 ¥ $45.00 = $4.90). Exchange Rule 518, Interpretations and one hundred shares of the underlying The Exchange will calculate the parity Policies .01, subsection (b), to eliminate stock (‘‘Buy-Write’’) and the contra side protected price for a Married-Put an unnecessary execution price of the strategy, or that consist of the Strategy by leveraging the put option restriction for the stock component of a purchase of one put 15 and the purchase parity formula by simply subtracting the stock-option strategy. Exchange Rule of one hundred shares of the underlying PSV from the strike price of the option. 518, Interpretations and Policies .01 stock (‘‘Married-Put’’) and the contra This would result in a parity protected subsection (b), contains a paragraph that side of the strategy. The Exchange will price for the strategy of $49.90 using the provides that, ‘‘[t]he execution price of establish a Parity Spread Variance figures above. the underlying security component (‘‘PSV’’) value between $0.00 and $0.50. This allows for the stock component must be also within the high-low range The PSV value will be uniform for all and the option component prices to for the day in the underlying security at option classes traded on the Exchange fluctuate to achieve the strategy’s net the time the stock-option order is as determined by the Exchange and price, but ensures that the strategy will processed and within a certain price communicated to Members via not trade below its parity protected from the current market, which the Regulatory Circular prior to accepting price. Married Put Strategy interest Exchange will establish and such orders on the Exchange. The PSV received to sell a price protected communicate to Members via will be used to calculate a minimum Married-Put Strategy below $49.90 will Regulatory Circular. If the underlying option trading price limit that the be placed on the Strategy Book 16 at security component price is not within System will prevent the option leg from $49.90. Married Put Strategy interest these parameters, the stock-option order trading below by applying the PSV received to buy a price protected is not executable.’’ 18 The Exchange value to the strike price of the option to Married-Put Strategy below $49.90 will does not believe that this execution establish a parity protected price for the be rejected. price restriction for the stock strategy. For call option legs, the PSV Example 2 (Buy-Write) component is necessary given the value is added to the strike price of the existing price protections already in option; for put option legs, the PSV In its simplest terms the parity price place on the Exchange. value is subtracted from the strike price of a call option can be expressed as The Exchange believes that the ¥ of the option. The System will then (Stock Price Strike Price = Call execution price restriction for the stock prevent the strategy from trading below Option Parity Price). If, for example, the component of a stock-option strategy is its parity protected price limit to ensure stock is trading at $45.00 and the Strike unnecessary because all complex orders that the strategy does not execute at a Price of the call option is $40.00, the on the Exchange, including stock-option potentially erroneous price. parity price of the call option would orders, receive Implied Complex MIAX The examples below provide an then be $5.00 ($45.00 ¥ $40.00 = Best Bid or Offer (‘‘icMBBO’’) illustration of how the protection is $5.00). The Exchange is able to leverage protection.19 The icMBBO is a calculated for Buy-Write and Married- the parity relationship between the calculation that uses the best price from Put strategies. For the purposes of the components to establish a minimum the Simple Order Book for each following examples the PSV used in the option trading price limit for Buy-Write component of a complex strategy calculations is $.10. Strategies by adding the PSV to the including displayed and non-displayed Following is an example of the strike price of the option. The effect on trading interest. For stock-option orders, operation of the price protection feature the option price can be seen in the the icMBBO for a complex strategy is for a Married-Put Strategy: following calculation ($45.00 ¥ ($40.00 calculated using the best price (whether + $.10) = $45.00 ¥ $40.10 = $4.90). The displayed or non-displayed) on the Example 1 (Married-Put) Exchange will calculate the parity Simple Order Book 20 in the individual In its simplest terms the parity price protected price for a Buy-Write Strategy option component(s), and the NBBO 21 of a put option can be expressed as by leveraging the call option parity in the stock component.22 Exchange (Strike Price ¥ Stock Price = Put Option formula by simply adding the PSV to Rule 518(c)(2)(ii) provides, in relevant Parity Price). If, for example, the stock the strike price of the option. This part, that incoming complex orders and is trading at $45.00 and the Strike Price would result in a parity protected price quotes will not be executed at prices of the put option is $50.00, the parity for the strategy of $40.10 net debit using inferior to the icMBBO or at a price that price of the put option would then be the figures above. is equal to the icMBBO when there is a $5.00 ($50.00 ¥ $45.00 = $5.00). The This allows for the stock component Priority Customer Order (as defined in Exchange is able to leverage the parity and the option component prices to Rule 100) at the best icMBBO price. relationship between the components to fluctuate to achieve the strategy’s net Further, the rule provides that complex establish a minimum option trading price, but ensures that the strategy will orders will never be executed at a price price limit for Married-Put Strategies by not trade below its parity protected that is outside of the individual simply subtracting the PSV from the price. Buy-Write strategy interest component prices on the Simple Order strike price of the option. The effect on received to sell a price protected Buy- Book, and the net price of a complex the option price can be seen in the Write Strategy below $40.10 net debit order executed against another complex following calculation (($50.00 ¥ $0.10) will be placed on the Strategy Book at order on the Strategy Book will never be $40.10 net debit.17 Buy-Write strategy 14 The term ‘‘call’’ means an option contract interest received to buy a price 18 See Exchange Rule 518, Interpretations and under which the holder of the option has the right, protected Buy-Write Strategy below Policies .01(b). in accordance with the terms of the option, to $40.10 net debit will be rejected. 19 See Exchange Rule 518(a)(11). purchase from the Clearing Corporation the number Second, the Exchange proposes to 20 The ‘‘Simple Order Book’’ is the Exchange’s of units of the underlying security covered by the regular electronic book of orders and quotes. See option contract. See Exchange Rule 100. delete certain existing rule text from Exchange Rule 518(a)(15). 15 The term ‘‘put’’ means an option contract under 21 The term ‘‘NBBO’’ means the national best bid which the holder of the option has the right, in 16 The ‘‘Strategy Book’’ is the Exchange’s or offer as calculated by the Exchange based on accordance with the terms and provisions of the electronic book of complex orders and complex market information received by the Exchange from option, to sell to the Clearing Corporation the quotes. See Exchange Rule 518(a)(17). the appropriate Securities Information Processor number of units of the underlying security covered 17 A seller of the strategy would receive a $40.10 (‘‘SIP’’). See Exchange Rule 518(a)(14). by the option contract. See Exchange Rule 100. net credit. 22 See Exchange Rule 518(a)(11).
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inferior to the price that would be Section 6(b) of the Act 24 in general, and with confidence that protections are in available if the complex order legged furthers the objectives of Section 6(b)(5) place on the Exchange to reduce the risk into the Simple Order Book. of the Act 25 in particular, in that it is of these strategies being executed at Accordingly, as a result of the icMBBO designed to prevent fraudulent and potentially erroneous prices. As a result, price protection feature, the execution manipulative acts and practices, to the Exchange believes that the proposed price for the stock component of a stock- promote just and equitable principles of price protection feature will promote option order will always be inside the trade, to foster cooperation and just and equitable principles of trade. NBBO of the stock. Therefore, rule text coordination with persons engaged in Additionally the Exchange’s proposal stating that the execution price of the facilitating transactions in securities, to to remove unnecessary rule text from its underlying security component must be remove impediments to and perfect the current rule which requires that the within the high-low range for the day is mechanisms of a free and open market execution price of the underlying unnecessary, as the icMBBO protection and a national market system and, in security component be within the high- ensures that executions are always general, to protect investors and the low range for the day in the underlying within the NBBO. public interest. security at the time the stock-option Finally, the Exchange proposes to The Exchange believes establishing a order is processed is consistent with make a number of minor, non- parity price protection for certain Buy- Section 6(b) of the Act 26 in general, and substantive edits to Rule 518, Write and Married-Put strategies furthers the objectives of Section 6(b)(5) Interpretations and Policies .05(e), to promotes just and equitable principles of the Act 27 in particular. The Exchange add clarity and precision to the of trade and removes impediments to believes that its existing icMBBO price and perfects the mechanisms of a free Exchange’s rule text. Since the protection feature will sufficiently guard and open market and a national market Exchange will be introducing the against potentially erroneous system and, in general, protects trading of complex strategies which transaction prices for complex strategies investors and the public interest by include a ‘‘stock’’ component, the which include an underlying stock ensuring that strategies are not executed Exchange seeks to clarify certain aspects component. The icMBBO for a complex at potentially erroneous prices. of the rule that are intended to apply strategy involving a stock component is Given the relationship that the stock calculated using the best price on the only to the ‘‘option’’ component of a price, strike price, and option price have complex strategy. Specifically, the Simple Order Book in the individual to each other, the Exchange is able to option component(s) and the NBBO in Exchange proposes to clarify the calculate a minimum option trading definition of a Wide Market Condition, the stock component.28 Every complex price limit for the option leg of certain order entered on the Exchange receives as described in Interpretations and stock-option strategies with a call or a Policies .05, subsection (e)(1), so that it the icMBBO price protection 29 and as a put component. Specifically, the parity result, the execution price for the stock is clear that it is only applying to the price of a call option can be derived by ‘‘option’’ component of a complex component of a stock-option order will subtracting the strike price from the always be inside the NBBO of the stock. strategy. The new proposed rule text stock price (Stock Price ¥ Strike Price will provide that, ‘‘[a] ‘wide market Removal of the unnecessary rule text = Call Option Parity Price); and the will protect investors and the public condition’ is defined as any individual parity price of a put option can be option component of a complex strategy interest by providing clarity and derived by subtracting the stock price precision in the Exchange’s rules. having, at the time of evaluation, an from the strike price (Strike Price ¥ MBBO 23 quote width that is wider than Further, the Exchange notes that other Stock Price = Put Option Parity Price). exchanges that offer stock-option orders the permissible valid quote width as Using these relationships the PSV may do not have this provision in their defined in Rule 603(b)(4).’’ By be applied to establish a minimum rules.30 definition, the MBBO is comprised of option trading price limit that the option interest only, therefore providing Finally, the Exchange proposes to System will prevent the option leg from make minor non-substantive changes to additional detail to the existing rule trading below to establish a parity adds clarity to the Exchange’s rules. its rule to clarify that Wide Market protected price for the strategy to ensure Conditions and Simple Market Auction Similarly, the Exchange proposes to the strategy does not trade below its or Timer Events on the Exchange are clarify that Simple Market Auction or parity protected price at a potentially related to the ‘‘option’’ components only Timer Events (‘‘SMAT Events’’) pertain erroneous price. for complex strategies. The Exchange only to ‘‘option’’ components of a The Exchange believes that Members believes the proposed changes promote complex strategy, by amending will benefit from the proposed risk just and equitable principles of trade, Interpretations and Policies .05, protection measure as the protection remove impediments to and perfect the subsection (e)(2)(i) and (e)(2)(ii), to ensures that these stock-option mechanism of a free and open market include the term ‘‘option component’’ in strategies are not executed below their and a national market system because the first sentence of each section. By parity protected price as calculated by they seek to add clarity and precision to definition, the Exchange’s Simple the Exchange. Consequently, the the Exchange’s rules. The Exchange Market is comprised of option interest proposed risk protection is designed to believes that the proposed rule changes only, on the Simple Order Book, encourage Members to submit will provide greater clarity to Members therefore providing additional detail to additional order flow and liquidity to and the public regarding the Exchange’s the existing rule adds clarity to the the Exchange in these strategies, thereby Rules, and it is in the public interest for Exchange’s rules. removing impediments to and rules to be accurate and concise so as to perfecting the mechanisms of a free and eliminate the potential for confusion. 2. Statutory Basis open market and a national market system and, in general, protecting The Exchange believes that its 26 15 U.S.C. 78f(b). proposed rule change is consistent with investors and the public interest. This 27 15 U.S.C. 78f(b)(5). protection should provide Members 28 See supra note 21. 23 The term ‘‘MBBO’’ means the best bid or offer 29 See supra note 19. on the Simple Order Book on the Exchange. See 24 15 U.S.C. 78f(b). 30 See CBOE Rule 6.53C.06 and NASDAQ ISE Exchange Rule 518(a)(13). 25 15 U.S.C. 78f(b)(5). Rule 722.
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B. Self-Regulatory Organization’s C. Self-Regulatory Organization’s public interest because the proposed Statement on Burden on Competition Statement on Comments on the parity price protection feature is Proposed Rule Change Received From designed to prevent Buy-Write and The Exchange does not believe that Members, Participants, or Others Married Put strategies from executing at the proposed rule change will impose Written comments were neither potentially erroneous prices. As noted any burden on competition not solicited nor received. above, Buy-Write and Married Put necessary or appropriate in furtherance interest to buy that is priced below the of the purposes of the Act. The III. Date of Effectiveness of the parity protected price for the strategy Exchange believes the proposed rule Proposed Rule Change and Timing for will be rejected, and Buy-Write and change will foster competition as it Commission Action Married Put interest to sell that is priced provides a risk protection mechanism Because the foregoing proposed rule below the parity protected price will be for certain complex strategies entered on change does not: (i) Significantly affect placed on the Strategy Book at the parity the Exchange and may promote the protection of investors or the public protected price for the strategy. competition by enabling Members to interest; (ii) impose any significant Therefore, the Commission hereby trade more aggressively on the Exchange burden on competition; and (iii) become waives the operative delay and knowing that these strategies will not be operative for 30 days after the date of designates the proposed rule change as executed below [sic] parity protected the filing, or such shorter time as the operative upon filing.36 price at potentially erroneous prices. Commission may designate, it has At any time within 60 days of the Accordingly, the price protection become effective pursuant to 19(b)(3)(A) filing of the proposed rule change, the 32 33 Commission summarily may feature should instill additional of the Act and Rule 19b–4(f)(6) temporarily suspend such rule change if confidence in Members that submit thereunder. A proposed rule change filed it appears to the Commission that such certain stock-option orders to the action is necessary or appropriate in the Exchange that their orders receive price pursuant to Rule 19b–4(f)(6) under the Act 34 normally does not become public interest, for the protection of protection, and thus should encourage investors, or otherwise in furtherance of Members to submit additional order operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 35 the purposes of the Act. If the flow and liquidity to the Exchange, permits the Commission to designate a Commission takes such action, the thereby removing impediments to and shorter time if such action is consistent Commission shall institute proceedings perfecting the mechanisms of a free and with the protection of investors and the to determine whether the proposed rule open market and a national market public interest. The Exchange has asked should be approved or disapproved. system and, in general, protecting the Commission to waive the 30-day IV. Solicitation of Comments investors and the public interest. operative delay. The Exchange states Interested persons are invited to The removal of unnecessary rule text that waiver of the operative delay is submit written data, views, and pertaining to the execution price of the consistent with the protection of arguments concerning the foregoing, stock component of a stock-option order investors and the public interest including whether the proposed rule does not impose any burden on because it will enable market change is consistent with the Act. competition as the proposed change will participants to benefit from the Comments may be submitted by any of align the Exchange’s rule with that of proposed parity price protection feature, the following methods: other exchanges.31 Further, the which is designed to safeguard against additional proposed changes remedy the possibility of executions occurring Electronic Comments minor non-substantive issues in the text at potentially erroneous prices. MIAX • Use the Commission’s internet of various rules identified in this also states that the proposal protects comment form (http://www.sec.gov/ proposal. investors and the public interest by rules/sro.shtml); or • The Exchange does not believe the deleting a provision requiring the Send an email to rule-comments@ execution price of the underlying proposed rule change will impose any sec.gov. Please include File Number SR– security component of a stock-option burden on intra-market competition as MIAX–2018–16 on the subject line. order to be within the underlying price protection is available to all component’s high-low range for the day. Paper Comments market participants that submit orders MIAX notes that this provision is • Send paper comments in triplicate in certain stock-option strategies. The unnecessary because all complex orders to Brent J. Fields, Secretary, Securities Exchange further believes that the on MIAX are protected by the icMBBO and Exchange Commission, 100 F Street proposed price protection should price protection feature, which assures NE, Washington, DC 20549–1090. promote inter-market competition, and that the stock leg of a stock-option order All submissions should refer to File result in more competitive order flow to will not be executed at a price that is Number SR–MIAX–2018–16. This file the Exchange by protecting market inferior to the NBBO for the stock. The number should be included on the participants from potentially erroneous Commission believes that waiving the subject line if email is used. To help the executions occurring at prices below the 30-day operative delay is consistent Commission process and review your parity protected price of the strategy, as with the protection of investors and the comments more efficiently, please use calculated by the Exchange. only one method. The Commission will The Exchange does not believe that 32 15 U.S.C. 78s(b)(3)(A). post all comments on the Commission’s the proposed rule change will impose 33 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– internet website (http://www.sec.gov/ 4(f)(6) requires a self-regulatory organization to give any burden on competition not the Commission written notice of its intent to file rules/sro.shtml). Copies of the necessary or appropriate in furtherance the proposed rule change at least five business days submission, all subsequent of the purposes of the Act, and believes prior to the date of filing of the proposed rule the proposed change will enhance change, or such shorter time as designated by the 36 For purposes only of waiving the 30-day Commission. The Exchange has satisfied this competition. operative delay, the Commission has also requirement. considered the proposed rule’s impact on 34 17 CFR 240.19b–4(f)(6). efficiency, competition, and capital formation. See 31 Id. 35 17 CFR 240.19b–4(f)(6)(iii). 15 U.S.C. 78c(f).
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amendments, all written statements prepared by the Exchange. The Connection type Monthly fees with respect to the proposed rule Exchange filed the proposed rule change change that are filed with the pursuant to Section 19(b)(3)(A)(ii) of the Non-10 Gb Connec- $1,000 per connec- Commission, and all written Act,3 and Rule 19b–4(f)(2) thereunder,4 tion. tion. 10 Gb Connection ..... 5,000 per connection. communications relating to the which renders the proposal effective proposed rule change between the upon filing with the Commission. The The Exchange also proposes to amend Commission and any person, other than Commission is publishing this notice to those that may be withheld from the certain language and numbering in solicit comments on the proposed rule Section VI.A to reflect the changes public in accordance with the change from interested persons. provisions of 5 U.S.C. 552, will be discussed above. Specifically, BOX available for website viewing and I. Self-Regulatory Organization’s proposes to add the title ‘‘Third Party printing in the Commission’s Public Statement of the Terms of the Substance Connectivity Fees’’ under Section VI.A. Further, the Exchange proposes to add Reference Room, 100 F Street NE, of the Proposed Rule Change Washington, DC 20549, on official Section VI.A.2 which details the business days between the hours of The Exchange is filing with the proposed BOX Connectivity Fees 10:00 a.m. and 3:00 p.m. Copies of the Securities and Exchange Commission discussed above. Participants and non-Participants filing also will be available for (‘‘Commission’’) a proposed rule change inspection and copying at the principal to amend the Fee Schedule on the BOX with ten (10) Gigabit Connections will be charged a monthly fee of $5,000 per office of the Exchange. All comments Market LLC (‘‘BOX’’) options facility. connection. Participants and non- received will be posted without change. The text of the proposed rule change is Persons submitting comments are Participants with non-10 Gigabits available from the principal office of the Connections will be charged a monthly cautioned that we do not redact or edit Exchange, at the Commission’s Public personal identifying information from fee of $1,000 per connection. The Reference Room and also on the Exchange notes that another exchange comment submissions. You should Exchange’s internet website at http:// submit only information that you wish in the industry has similar connectivity boxexchange.com. 5 to make available publicly. All fees. The Exchange also notes that submissions should refer to File II. Self-Regulatory Organization’s certain fees will continue to be assessed Number SR–MIAX–2018–16 and should Statement of the Purpose of, and by the datacenters and will be billed be submitted on or before August 23, Statutory Basis for, the Proposed Rule directly to the market participant. Next, the Exchange is amending 2018. Change Section VI.C. High Speed Vendor Feed For the Commission, by the Division of In its filing with the Commission, the (‘‘HSVF’’) of the Fee Schedule. Trading and Markets, pursuant to delegated Specifically, BOX is proposing to delete authority.37 Exchange included statements Section VI.C. and reclassify the HSVF Robert W. Errett, concerning the purpose of and basis for Connection as a Port Fee. The Exchange Deputy Secretary. the proposed rule change and discussed any comments it received on the believes this reclassification is more [FR Doc. 2018–16528 Filed 8–1–18; 8:45 am] proposed rule change. The text of these accurate, as HSVF subscription is not BILLING CODE 8011–01–P statements may be examined at the dependent on a physical connection to places specified in Item IV below. The the Exchange. Instead, subscribers must Exchange has prepared summaries, set be credentialed by BOX to receive the SECURITIES AND EXCHANGE HSVF. The HSVF Fee will remain COMMISSION forth in Sections A, B, and C below, of unchanged, BOX will assess a HSVF the most significant aspects of such [Release No. 34–83728; File No. SR–BOX– Port Fee of $1,500 per month 6 for each statements. 2018–24] month a Participant or non-Participant A. Self-Regulatory Organization’s is credentialed to use the HSVF Port. Self-Regulatory Organizations; BOX Statement of the Purpose of, and The Exchange notes that another Options Exchange LLC; Notice of Statutory Basis for, the Proposed Rule Filing and Immediate Effectiveness of Change 5 See Miami International Securities Exchange a Proposed Rule Change To Amend LLC (‘‘MIAX’’) Fee Schedule. MIAX charges its the Fee Schedule on the BOX Market 1. Purpose Members and non-Members a monthly fee of $1,100 LLC (‘‘BOX’’) Options Facility To for each 1 Gigabit connection and $5,500 for each Establish BOX Connectivity Fees for The Exchange proposes to amend 10 Gigabit connection to MIAX’s Primary/ Secondary Facility. The Exchange notes a minor Participants and Non-Participants Who Section VI. (Technology Fees) of the difference between MIAX’s connectivity fees and Connect to the BOX Network BOX Fee Schedule to establish BOX BOX’s proposal. MIAX prorates their connectivity Connectivity Fees for Participants and fees when a Member makes a change to their July 27, 2018. connectivity (by adding or deleting connections). non-Participants who connect to the BOX notes that, like the Exchange’s Port Fees and Pursuant to Section 19(b)(1) of the BOX network. Connectivity fees will be Securities Exchange Act of 1934 (the HSVF Fees, Participants or non-Participants based upon the amount of bandwidth connected as of the last trading day of each calendar ‘‘Act’’),1 and Rule 19b–4 thereunder,2 that will be used by the Participant or month will be charged the applicable Connectivity notice is hereby given that on July 19, Fee for that month. non-Participant. Further, BOX 2018, BOX Options Exchange LLC (the 6 The Exchange notes that with the proposed ‘‘Exchange’’) filed with the Securities Participants or non-Participants change discussed herein, Participants and non- and Exchange Commission connected as of the last trading day of Participants credentialed to use the HSVF Port who each calendar month will be charged the also have physical connections to the BOX system (‘‘Commission’’) the proposed rule will be charged for both the HSVF monthly fee and change as described in Items I, II, and applicable Connectivity Fee for that the applicable amount for their physical III below, which Items have been month. The Connectivity Fees will be as connections to BOX. For example, if non- follows: Participant X is credentialed to use the HSVF Port and has three (3) physical non-10Gb connections to 37 17 CFR 200.30–3(a)(12). BOX, non-Participant X will be charged $1,500 for 1 15 U.S.C. 78s(b)(1). 3 15 U.S.C. 78s(b)(3)(A)(ii). the monthly HSVF Port Fee and $3,000 for the three 2 17 CFR 240.19b–4. 4 17 CFR 240.19b–4(f)(2). non-10Gb physical connections to BOX.
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exchange in the industry charges similar expenditures made by the Exchange in including whether the proposed rule fees.7 order to offer such services to change is consistent with the Act. Participants and non-Participants. Comments may be submitted by any of 2. Statutory Basis the following methods: The Exchange believes that the B. Self-Regulatory Organization’s proposal is consistent with the Statement on Burden on Competition Electronic Comments requirements of Section 6(b) of the Act, The Exchange does not believe that • Use the Commission’s internet in general, and Section 6(b)(4) and the proposed rule change will impose comment form (http://www.sec.gov/ 6(b)(5)of the Act,8 in particular, in that any burden on competition not rules/sro.shtml); or it provides for the equitable allocation necessary or appropriate in furtherance • Send an email to rule-comments@ of reasonable dues, fees, and other of the purposes of the Act. Unilateral sec.gov. Please include File Number SR– charges among BOX Participants and action by BOX in establishing fees for BOX–2018–24 on the subject line. other persons using its facilities and services provided to its Participants and Paper Comments does not unfairly discriminate between others using its facilities will not have • customers, issuers, brokers or dealers. an impact on competition. As a small Send paper comments in triplicate The Exchange believes that the Exchange in the already highly to Secretary, Securities and Exchange proposed Connectivity Fees in general competitive environment for options Commission, 100 F Street NE, constitute an equitable allocation of trading, BOX does not have the market Washington, DC 20549–1090. fees, and are not unfairly power necessary to set prices for All submissions should refer to File discriminatory, because they allow the services that are unreasonable or Number SR–BOX–2018–24. This file Exchange to recover costs associated unfairly discriminatory in violation of number should be included on the with offering access through the the Exchange Act. BOX’s proposed fees, subject line if email is used. To help the network connections. The proposed as described herein, are comparable to Commission process and review your Connectivity Fees are also expected to and generally lower than fees charged comments more efficiently, please use offset the costs BOX incurs in by other options exchanges for the same only one method. The Commission will maintaining, and implementing ongoing or similar services. Lastly, the Exchange post all comments on the Commission’s improvements to the trading systems, believes the proposed change will not internet website (http://www.sec.gov/ including connectivity costs, costs impose a burden on intramarket rules/sro.shtml). Copies of the incurred on software and hardware competition as the proposed fees are submission, all subsequent enhancements and resources dedicated applicable to all Participants and others amendments, all written statements to software development, quality using its facilities that connect to BOX. with respect to the proposed rule assurance, and technology support. The change that are filed with the Exchange believes that its proposed fees C. Self-Regulatory Organization’s Commission, and all written are reasonable in that they are Statement on Comments on the communications relating to the competitive with those charged by Proposed Rule Change Received From proposed rule change between the another exchange. Further, the Members, Participants, or Others Commission and any person, other than Exchange believes that the proposed No written comments were either those that may be withheld from the Connectivity Fees are not unfairly solicited or received. public in accordance with the discriminatory as they are assessed to provisions of 5 U.S.C. 552, will be III. Date of Effectiveness of the all market participants who wish to available for website viewing and Proposed Rule Change and Timing for connect to the BOX network. printing in the Commission’s Public Commission Action The Exchange believes that the Reference Room, 100 F Street NE, proposed HSVF Port Fee is reasonable The foregoing rule change has become Washington, DC 20549 on official as it is similar to fees assessed at effective pursuant to Section business days between the hours of another exchange in the industry.9 19(b)(3)(A)(ii) of the Exchange Act 11 10:00 a.m. and 3:00 p.m. Copies of such Further, the Exchange believes that and Rule 19b–4(f)(2) thereunder,12 filing also will be available for charging Participants and non- because it establishes or changes a due, inspection and copying at the principal Participants for both the HSVF monthly or fee. office of the Exchange. All comments fee and applicable physical connection At any time within 60 days of the received will be posted without change. fees as outlined in the example above is filing of the proposed rule change, the Persons submitting comments are reasonable as it is in line with another Commission summarily may cautioned that we do not redact or edit exchange in the industry.10 Further, the temporarily suspend the rule change if personal identifying information from Exchange believes that the proposed it appears to the Commission that the comment submissions. You should change is equitable and not unfairly action is necessary or appropriate in the submit only information that you wish discriminatory because it allows the public interest, for the protection of to make available publicly. All Exchange to recoup ongoing investors, or would otherwise further submissions should refer to File the purposes of the Act. If the Number SR–BOX–2018–24, and should 7 See Cboe Data Services, LLC. (‘‘Cboe CDS’’) Fee Commission takes such action, the be submitted on or before August 23, Schedule. Cboe CDS charges its Customers that Commission shall institute proceedings receive data through a direct connection to CDS or 2018. through a connection to CDS provided by an to determine whether the proposed rule should be approved or disapproved. For the Commission, by the Division of extranet provider $500 per port per month. Cboe Trading and Markets, pursuant to delegated CDS’s port fee applies to receipt of any Cboe authority.13 Options data feed but is only assessed once per data IV. Solicitation of Comments port. In addition to the data port fee, Cboe Exchange Interested persons are invited to Robert W. Errett, Inc. (‘‘Cboe’’) charges connectivity fees based on the Deputy Secretary. bandwidth used to connect to the Exchange to submit written data, views, and receive such data. See Cboe Fee Schedule. arguments concerning the foregoing, [FR Doc. 2018–16531 Filed 8–1–18; 8:45 am] 8 15 U.S.C. 78f(b)(4) and (5). BILLING CODE 8011–01–P 9 See supra note 7. 11 15 U.S.C. 78s(b)(3)(A)(ii). 10 Id. 12 17 CFR 240.19b–4(f)(2). 13 17 CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE Applicant’s Address: 800 Clinton funded financial resources. Specifically, COMMISSION Square, Rochester, New York 14604. the proposed changes would: (1) Reorganize, restate, and [Investment Company Act Release No. Cohen & Steers Active Commodities consolidate the provisions of OCC’s By- 33184] Strategy Fund, Inc. [File No. 811– Laws and Rules relating to the Clearing 22938] Notice of Applications for Fund into a newly revised Chapter X of Deregistration Under Section 8(f) of the Summary: Applicant seeks an order OCC’s Rules; Investment Company Act of 1940 declaring that it has ceased to be an (2) modify the coverage level of OCC’s investment company. On April 13, Clearing Fund sizing requirement to July 27, 2018. 2018, applicant made a liquidating protect OCC against losses stemming The following is a notice of distribution to its shareholders, based from the default of the two Clearing applications for deregistration under on net asset value. Expenses of $50,599 Member Groups that would potentially section 8(f) of the Investment Company incurred in connection with the cause the largest aggregate credit Act of 1940 for the month of July 2018. liquidation were paid by the applicant. exposure for OCC in extreme but A copy of each application may be Filing Date: The application was filed plausible market conditions (i.e., adopt obtained via the Commission’s website on July 11, 2018. a ‘‘Cover 2 Standard’’ for sizing the by searching for the file number, or for Applicant’s Address: 280 Park Clearing Fund); an applicant using the Company name Avenue, 10th Floor New York, New (3) adopt a new risk tolerance for OCC box, at http://www.sec.gov/search/ York 10017. to cover a 1-in-50 year hypothetical search.htm or by calling (202) 551– For the Commission, by the Division of market event at a 99.5% confidence 8090. An order granting each Investment Management, pursuant to level over a two-year look-back period; application will be issued unless the delegated authority. (4) adopt a new Clearing Fund and SEC orders a hearing. Interested persons Robert W. Errett, stress testing methodology, which may request a hearing on any Deputy Secretary. would be underpinned by a new application by writing to the SEC’s [FR Doc. 2018–16527 Filed 8–1–18; 8:45 am] scenario-based one-factor risk model Secretary at the address below and BILLING CODE 8011–01–P stress testing approach, as detailed in serving the relevant applicant with a the newly proposed Policy and copy of the request, personally or by Methodology Description; mail. Hearing requests should be SECURITIES AND EXCHANGE (5) document governance, monitoring, received by the SEC by 5:30 p.m. on COMMISSION and review processes related to Clearing August 21, 2018, and should be Fund and stress testing; accompanied by proof of service on [Release No. 34–83735; File No. SR–OCC– (6) provide for certain anti-procyclical applicants, in the form of an affidavit or, 2018–008] limitations on the reduction in Clearing for lawyers, a certificate of service. Fund size from month to month; Pursuant to Rule 0–5 under the Act, Self-Regulatory Organizations; The (7) increase the minimum Clearing hearing requests should state the nature Options Clearing Corporation; Order Fund contribution requirement for of the writer’s interest, any facts bearing Approving Proposed Rule Change, as Clearing Members to $500,000; upon the desirability of a hearing on the Modified by Amendments No. 1 and 2, (8) modify OCC’s allocation weighting matter, the reason for the request, and Related to The Options Clearing methodology for Clearing Fund the issues contested. Persons who wish Corporation’s Stress Testing and contributions; to be notified of a hearing may request Clearing Fund Methodology (9) reduce from five to two business notification by writing to the July 27, 2018. days the timeframe within which Commission’s Secretary. Clearing Members are required to fund ADDRESSES: The Commission: Secretary, I. Introduction Clearing Fund deficits due to monthly U.S. Securities and Exchange On May 30, 2018, The Options or intra-month resizing or due to Rule Commission, 100 F Street NE, Clearing Corporation (‘‘OCC’’) filed with amendments; Washington, DC 20549–1090. the Securities and Exchange (10) provide additional clarity in FOR FURTHER INFORMATION CONTACT: Commission (‘‘Commission’’) the OCC’s Rules regarding certain anti- Shawn Davis, Branch Chief, at (202) proposed rule change SR–OCC–2018– procyclicality measures in OCC’s 551–6413 or Chief Counsel’s Office at 008 (‘‘Proposed Rule Change’’) pursuant margin model; and (202) 551–6821; SEC, Division of to Section 19(b) of the Securities (11) make a number of other non- Investment Management, Chief Exchange Act of 1934 (‘‘Act’’) 1 and Rule substantive clarifying, conforming, and Counsel’s Office, 100 F Street NE, 19b–4 2 thereunder to propose changes organizational changes to OCC’s By- Washington, DC 20549–8010. to OCC’s By-Laws and Rules, the Laws, Rules, Collateral Risk formalization of a substantially new Management Policy, Default Broadstone Real Estate Access Fund, Clearing Fund Methodology Policy Management Policy, and filed Inc. [File No. 811–23303] (‘‘Policy’’), and the adoption of a procedures, including retiring OCC’s Summary: Applicant, a closed-end document describing OCC’s new existing Clearing Fund Intra-Month Re- investment company, seeks an order Clearing Fund and stress testing sizing Procedure, Financial Resources declaring that it has ceased to be an methodology (‘‘Methodology Monitoring and Call Procedure (‘‘FRMC investment company. Applicant has Description’’).3 The proposed changes Procedure’’), and Monthly Clearing never made a public offering of its are primarily designed to enhance Fund Sizing Procedure, as these securities and does not propose to make OCC’s overall resiliency, particularly procedures would no longer be relevant a public offering or engage in business with respect to the level of OCC’s pre- to OCC’s proposed Clearing Fund and of any kind. stress testing methodology and would Filing Dates: The application was 1 15 U.S.C. 78s(b)(1). be replaced by the proposed Rules, filed on July 11, 2018, and amended on 2 17 CFR 240.19b–4. Policy, and Methodology Description July 19, 2018. 3 See Notice of Filing infra note 5, at 83 FR 28018. described herein.
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On June 7, 2018, OCC filed Change are primarily designed to on the following categories: (a) Stress Amendment No. 1 to the Proposed Rule enhance OCC’s overall resiliency, testing; (b) total financial resources; (c) Change.4 The Proposed Rule Change, as particularly with respect to the level of financial resource sufficiency; (d) amended, was published for public OCC’s pre-funded financial resources.11 allocation of clearing fund comment in the Federal Register on As enumerated in the Notice of Filing, contributions; and (e) textual June 15, 2018.5 On July 11, 2018, OCC the specific modifications that OCC clarification and consolidation. filed Amendment No. 2 to the Proposed proposes are as follows: (1) Reorganize, Rule Change.6 The Commission restate, and consolidate the provisions A. OCC’s Current Process for Sizing the received five comment letters in support of OCC’s By-Laws and Rules relating to Clearing Fund of the proposal.7 This order approves the clearing fund into a revised Chapter OCC’s process for determining the the Proposed Rule Change as modified X of OCC’s Rules; (2) modify the size of its clearing fund was initially by Amendments No. 1 and 2. coverage level of OCC’s clearing fund approved in 2011,13 and enhanced in sizing requirement to protect OCC 2015,14 resulting in OCC’s current II. Background against losses stemming from the default process. Currently, OCC resizes its The Proposed Rule Change concerns of the two clearing member groups that clearing fund at the beginning of each proposed changes to OCC’s By-Laws 8 would potentially cause the largest month to maintain financial resources, and Rules,9 the formalization of the aggregate credit exposure for OCC in in excess of margin, to cover its credit substantially new Policy, and the extreme but plausible market conditions exposures to its clearing members. The adoption of OCC’s new Methodology (i.e., adopt a ‘‘Cover 2 Standard’’ for current process is effectively an Description.10 According to OCC, the sizing the clearing fund); (3) adopt a extension of OCC’s daily margin changes comprising the Proposed Rule new risk tolerance for OCC to cover a 1- process, in which OCC calculates what in-50 year hypothetical market event at it refers to as the ‘‘daily draw’’ based on 4 In Amendment No. 1, OCC corrected formatting a 99.5% confidence level over a two- observations from its margin model at errors in Exhibits 5A and 5B without changing the year look-back period; (4) adopt a new 15 substance of the Proposed Rule Change. specific confidence levels each day. 5 Securities Exchange Act Release No. 83406 (Jun. clearing fund and stress testing OCC tracks the rolling five-day average 11, 2018), 83 FR 28018 (Jun. 15, 2018) (SR–OCC– methodology, which would be of these daily draws and, at the 2018–008) (‘‘Notice of Filing’’). On May 30, 2018, underpinned by a new scenario-based beginning of each month, sets the OCC also filed a related advance notice (SR–OCC– one-factor risk model stress testing 2018–803) (‘‘Advance Notice’’) with the clearing fund size to the sum of (1) the Commission pursuant to Section 806(e)(1) of Title approach, as detailed in the proposed largest five-day rolling average observed VIII of the Dodd-Frank Wall Street Reform and Policy and Methodology Description; (5) over the last three months and (2) a $1.8 Consumer Protection Act, entitled the Payment, document governance, monitoring, and billion buffer.16 Clearing, and Settlement Supervision Act of 2010 review processes related to the clearing As described in detail below, OCC is and Rule 19b–4(n)(1)(i) under the Act. 12 U.S.C. 5465(e)(1). 15 U.S.C. 78s(b)(1) and 17 CFR 240.19b– fund and stress testing; (6) provide for proposing three primary changes to the 4, respectively. The Advance Notice was published certain anti-procyclical limitations on existing approach. First, instead of in the Federal Register on July 6, 2018. Securities the reduction in clearing fund size from simply relying on its margin model, Exchange Act Release No. 83561 (Jun. 29, 2018), 83 month to month; (7) increase the OCC would rely on the proposed stress FR 31594 (Jul. 6, 2018) (SR–OCC–2018–803). minimum clearing fund contribution 6 In Amendment No. 2, OCC made three non- testing framework, including both sizing substantive changes to the proposal. Specifically, requirement for clearing members from and sufficiency stress tests. Second, OCC (1) updated a cross-reference in Article VI, $150,000 to $500,000; (8) modify OCC’s OCC would set the size of its clearing Section 27 of the OCC By-Laws to reflect the allocation weighting methodology for fund based on a Cover 2 Standard. relocation of OCC’s clearing fund-related rules, (2) clearing fund contributions; (9) reduce added an Interpretation and Policy to proposed Third, OCC would eliminate the current Rule 1001 to clarify the applicability of the 5 from five to two business days the $1.8 billion static buffer because it percent month-over-month limitation in the timeframe within which clearing would be obsolete in light of the new reduction of clearing fund size is not intended to members are required to fund clearing apply to the initial changes in to OCC’s clearing sizing stress tests and increased fund sizing resulting from implementation of the fund deficits due to monthly or intra- coverage afforded by the move to a proposed methodology, and (3) clarified an month resizing; (10) provide additional Cover 2 Standard that, together, would implementation date of September 1, 2018 for the clarity in OCC’s Rules regarding certain function as a dynamic buffer. proposed changes in the filing. anti-procyclicality measures in OCC’s 7 See letter from Andrej Bolkovic, CEO, ABN margin model; and (11) make a number B. Stress Testing AMRO Clearing Corporation LLC (‘‘AACC’’), dated June 26, 2018, to Brent Fields, Secretary, of other non-substantive clarifying, OCC proposes to adopt a new stress Commission (AACC Letter I); letter from Chris conforming, and organizational changes testing methodology, as detailed in both Concannon, President and COO, Cboe Global to OCC’s By-Laws, Rules and filed the proposed Policy and the proposed Markets (‘‘CBOE’’), dated July 6, 2018, to Brent procedures, including retiring OCC’s Fields, Secretary, Commission (CBOE Letter I); letter from Matthew R. Scott, President, Merrill existing Clearing Fund Intra-Month Re- 13 See Securities Exchange Act Release No. 65386 Lynch Professional Clearing Corp. (‘‘MLPRO’’), sizing Procedure, Financial Resources (Sep. 23, 2011), 76 FR 60572 (Sep. 29, 2011) (Order dated July 6, 2018, to Brent J. Fields, Secretary, Monitoring and Call Procedure, and Approving Clearing Fund I). 14 Commission (MLPRO Letter I); letter from Kurt Monthly Clearing Fund Sizing See Securities Exchange Act Release No. 75528 Eckert, Partner, Wolverine Execution Services (Jul. 27, 2015), 80 FR 45690 (Jul. 31, 2015) (Order (‘‘WEX’’), dated July 12, 2018, to Brent Fields, Procedure, as these procedures would Approving Clearing Fund II). Secretary, Commission (WEX Letter I); and letter be replaced by the proposed Rules, 15 See Order Approving Clearing Fund I, 76 FR at from Mark Dehnert, Managing Director, Goldman Policy, and Methodology Description.12 60572–60573. Each day, OCC estimates credit Sachs & Co. LLC (‘‘GS’’), dated July 17, 2018, to The remainder of this section will exposures under the stressed margin model for two Brent J. Fields, Secretary, Commission (GS Letter I), scenarios: The greater of the two estimates is the available at https://www.sec.gov/comments/sr-occ- first provide an overview of OCC’s daily draw. The two scenarios are of (1) the single 2018-008/occ2018008.htm. current process for sizing the clearing largest credit exposure that would arise out of the 8 OCC’s By-Laws are available at https:// fund, followed by a more detailed default of a single clearing member group www.theocc.com/components/docs/legal/rules_ discussion of the specific changes (‘‘idiosyncratic default’’) and (2) the credit exposure and_bylaws/occ_bylaws.pdf. that would arise out of the default of two-randomly 9 OCC’s Rules are available at https:// proposed by OCC, with particular focus selected clearing member groups (‘‘minor systemic www.theocc.com/components/docs/legal/rules_ default’’). See Notice of Filing, 83 FR at 28019. and_bylaws/occ_rules.pdf. 11 See id. 16 See Order Approving Clearing Fund II, 80 FR 10 See Notice of Filing, 83 FR at 28018. 12 See id. at 28018–19. at 45691.
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Methodology Description.17 OCC up or down price shocks for the SPX its clearing fund each month based on believes that its proposed methodology assuming a 1-in-80 year market event.25 the peak-five daily rolling average of would enable it to measure its credit OCC’s proposed stress testing estimated stress exposures; however, exposure at a level sufficient to cover framework would categorize OCC’s such exposures would be based on the potential losses under extreme but inventory of stress tests by each stress output from OCC’s stress testing plausible market conditions.18 To do so, test’s intended purpose: Adequacy, framework going forward as opposed to OCC proposes to conduct daily stress sizing, sufficiency, and informational.26 the margin-derived approach described tests that consider a range of relevant Specifically, OCC would use the (1) above.31 stress scenarios and related price ‘‘Adequacy Stress Tests’’ to determine As its benchmark for identifying changes, including but not limited to: whether the financial resources extreme but plausible market (1) Relevant peak historic price collected from all clearing members conditions, OCC proposes to adopt a volatilities; (2) shifts in other market collectively are adequate to cover OCC’s credit risk tolerance defined by OCC’s factors including, as appropriate, price risk tolerance; (2) ‘‘Sizing Stress Tests’’ largest potential aggregate credit determinants and yield curves; and (3) to establish the monthly size of the exposure to two clearing member groups the default of one or multiple clearing clearing fund; (3) ‘‘Sufficiency Stress under a 1-in-50-year hypothetical members.19 Tests’’ to monitor whether OCC’s credit market event as opposed to the greater exposure to the portfolios of individual of exposures arising under an The stress scenarios used in OCC’s clearing member groups is at a level proposed methodology would consist of idiosyncratic default or a minor sufficiently large enough to necessitate 32 two types of scenarios: Historical systemic default. OCC further OCC calling for additional resources so proposes to base its daily draw on the scenarios and hypothetical scenarios.20 that OCC continues to maintain Historical Scenarios would replicate aggregate credit exposures estimated sufficient financial resources to guard under a 1-in-80-year hypothetical historical events in current market against potential losses under a wide market event.33 Additionally, OCC conditions, which include the set of range of stress scenarios, including proposes to size the clearing fund to a currently existing securities and their extreme but plausible market Cover 2 Standard.34 prices and volatility levels.21 conditions; and (4) ‘‘Informational Hypothetical scenarios, rather than Stress Tests’’ to monitor and assess the OCC believes that sizing the clearing replicating past events, would simulate size of OCC’s pre-funded financial fund to cover a 1-in-80-year event events in which market conditions resources against a wide range of stress would provide sufficient coverage in change in ways that may have not yet scenarios that may include extreme but excess of the exposures estimated under been observed.22 Hypothetical implausible and reverse stress testing a 1-in-50-year event to justify no longer Scenarios, constructed using statistical scenarios.27 collecting the $1.8 prudential margin of 35 methods, would generally include price safety. C. Total Financial Resources shocks specific to various instruments, 2. Proposal To Limit Reductions in such as equity products, volatility As noted above, OCC proposes to (i) Clearing Fund Size From Month to products, and fixed income products. to adopt a new clearing fund Month Each scenario would represent a draw methodology, which would be from a multivariate distribution fitted to underpinned by a new scenario-based Currently, OCC does not constrain historical data regarding the relevant one-factor risk model stress testing month-over-month changes in the size 28 instrument (e.g., returns of the S&P approach, modify the coverage level of of the clearing fund. OCC proposes to 500).23 In a hypothetical scenario, the OCC’s clearing fund sizing requirement adopt two limitations on month-over- shock to a risk driver would be used to to a Cover 2 Standard; (iii) provide for month decreases in the size of the determine the relative shock to each certain anti-procyclical limitations on clearing fund. First, OCC proposes to associated risk factor (i.e., related the reduction in clearing fund size from prohibit a clearing fund decrease of month to month; and (iv) reduce from underlying security).24 For example, more than 5 percent month-over- five business days to two business days 36 OCC would establish the size of its month. Second, OCC proposes to limit the timeframe within which clearing clearing fund according to a scenario the clearing fund decreases based on its members are required to satisfy clearing that is based on statistically generated daily monitoring of OCC’s financial fund deficits due to monthly or intra- resources. When determining the size of month resizing.29 the clearing fund at the beginning of a 17 See Notice of Filing, 83 FR at 28021. 18 See id. 1. Proposal To Change the Monthly given month, OCC would not allow that 19 See id. Clearing Fund Size Calculation size to be less than 90 percent of the 20 See id. Because not all of the underlying peak credit exposures estimated under securities in current portfolios existed during the As discussed above, OCC proposes to the stress tests used for daily monitoring events on which historical scenarios are based, OCC replace the methodology by which it during the last five business days of the has developed methodologies to approximate the determines the monthly clearing fund past price and volatility movements as appropriate. size with an approach based on 31 See id. at 28024. Specifically, OCC would See id. at 28023. hypothetical stress scenarios that 21 See id. at 28021. identify its exposures under a 1-in-80-year 22 See id. at 28022. assume SPX shocks (up and down) hypothetical event. See id. 32 23 See id. at 28023. Risk drivers are a selected set associated with a 1-in-80-year market See id. at 28021. As discussed above, OCC’s of securities or market indices (e.g., the Cboe S&P event.30 Under the proposal, OCC hypothetical stress scenarios represent draws from 500 Index (‘‘SPX’’) or the Cboe Volatility Index would continue determining the size of a fitted distribution of 2-day log returns for a given (‘‘VIX’’)) that are used to represent the main sources risk driver. OCC noted in its proposal that a 1-in- or drivers for the price changes of the risk factors. 50-year hypothetical market event corresponds to a 25 See id. at 28023. See id. at 28021, n. 25. The term risk factor refers 99.9921 percent confidence interval under OCC’s 26 broadly to all of the individual underlying See id. at 28024. chosen distribution of 2-day logarithmic S&P 500 securities (such as Google, IBM and Standard & 27 See id. at 28024–26. index returns. See id., n. 24. Poor’s Depositary Receipts (‘‘SPDR’’), S&P 500 28 OCC detailed the new methodology in the 33 See id. at 28024. Exchange Traded Funds (‘‘SPY’’), etc.) listed on a proposed Policy and Methodology Description. 34 See id. at 28021. market. See id. 29 See Notice of Filing, 83 FR at 28020. 35 See id., n. 23. 24 See id. at 28022. 30 See id. at 28023. 36 See id. at 28027.
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preceding month.37 These limitations clearing member group generating the such margin calls to each clearing are designed to reduce the potential for credit exposures.45 The size of such a member to $500 million or 100 percent cyclical movements in the size of the margin call is the difference between the of the clearing member’s net capital.56 clearing fund, as well as reduce the idiosyncratic default exposure and the OCC also proposes to revise the need for OCC to call for additional base clearing fund amount.46 The process for increasing the size of the financial resources intra-month.38 margin call is allocated among the clearing fund under more extreme 3. Timing of Clearing Fund individual clearing members in the scenarios. OCC proposes to increase the Contributions clearing member group based on each size of the clearing fund when it clearing member’s proportionate share observes a Sufficiency Stress Test In addition to revising the of the risk to OCC.47 OCC may limit the exposure in excess of 90 percent of the methodology for sizing OCC’s total size of the margin call to each clearing clearing fund.57 Similar to the current financial resources, OCC proposes member to the lesser of $500 million or process, the size of the clearing fund generally to reduce the time in which 100 percent of such clearing member’s increase would be the greater of $1 each clearing member must make its net capital.48 billion or 125 percent of the difference 39 clearing fund contribution. Clearing OCC’s current procedures also call for between the Sufficiency Stress Test members currently have five business increases to the total size of the clearing exposure and the clearing fund.58 OCC days to satisfy a clearing fund fund in more extreme scenarios. When also proposes to provide new authority deficiency arising out of the monthly OCC observes credit exposures to its Chief Executive Officer, Chief sizing or intra-month resizing processes. estimated under the idiosyncratic Administrative Officer, and Chief OCC proposes to reduce that time to two default 49 exceeding 90 percent of the 40 Operating Officer to temporarily business days. OCC also proposes to clearing fund size OCC must, under its increase the size of the clearing fund, require clearing members to satisfy any procedures, increase the size of the subject to notice and later review by clearing fund deficit resulting from a clearing fund.50 The size of the increase OCC’s Board Risk Committee (‘‘RC’’).59 decrease in the value of the clearing to the clearing fund is the greater of $1 Additionally, OCC proposes to add a member’s existing contribution within billion or 125 percent of the difference one hour of notification by OCC.41 new threshold at which it would between the idiosyncratic default commence enhanced monitoring of a D. Financial Resource Sufficiency exposure and the clearing fund.51 clearing member group.60 Where OCC OCC proposes to revise this process As noted above, OCC proposes to (i) observes that a clearing member group’s by replacing the above-described adopt a new clearing fund methodology, Sufficiency Stress Test exposure idiosyncratic default approach with an as detailed in the newly-proposed exceeds 65 percent of the clearing fund, Policy and Methodology Description approach that compares the size of the OCC would commence enhanced and (ii) document governance, clearing fund to the exposures estimated monitoring of, and provide notice to the monitoring, and review processes under a set of historical scenario stress clearing member group.61 tests (‘‘Sufficiency Stress Tests’’).52 The related to the clearing fund and stress 2. Proposal To Document Governance testing.42 Proposed changes to OCC’s Sufficiency Stress Tests proposed by OCC include the largest market moves Processes Related to the Clearing Fund clearing fund methodology include the and Stress Testing assessment of OCC’s clearing fund up and down during 2008 on a cover 2 against a wide range of historical basis and the market moves associated OCC proposes to establish, as part of scenarios.43 with the 1987 market crash on a cover its rules, processes for the governance, 1 basis.53 monitoring, and review of the stress 1. Proposal To Monitor the Sufficiency OCC proposes to call for additional testing framework and clearing fund of OCC’s Financial Resources margin when it observes that one or methodology described above.62 Such Currently, OCC monitors the more clearing member groups’ exposure processes would cover daily, monthly, sufficiency of its financial resources under a Sufficiency Stress Test exceeds and annual review of OCC’s stress daily by estimating whether the size of 75 percent of the clearing fund.54 Under testing framework and clearing fund the clearing fund is sufficient to cover the proposal, the size of the margin call methodology. a maximum potential loss from a would be the amount by which the On a daily basis, OCC’s staff would simulated idiosyncratic default.44 Under Sufficiency Stress Test exposure monitor the size of the clearing fund 55 its current procedures, when OCC exceeds the 75 percent threshold. against OCC’s risk tolerance and observes credit exposures estimated Similar to the current process, OCC sufficiency stress tests.63 OCC staff under the idiosyncratic default in excess proposes to retain authority to limit would be required to report material of 75 percent of the clearing fund size, issues to the Executive Vice President of 45 OCC issues a margin call against the See id. OCC’s Financial Risk Management 46 See id. As noted above in section II.A., the base clearing fund amount is the size of the clearing fund group (‘‘EVP–FRM’’). The EVP–FRM 37 See id. As discussed below, OCC proposes to less the $1.8 billion prudential margin of safety. monitor the sufficiency of its financial resources 47 daily by comparing the size of the clearing fund to See id., n. 13. 56 See id. the output of several historical stress tests. 48 See id. at 28019. 57 See id. at 28025–26. 38 See id. 49 OCC would reduce the size of the idiosyncratic 58 See id. at 28026. 39 See id. at 28028–29. default exposure by factoring in margin calls issued 59 See id. 40 See id. at 28029. due to a breach of the 75 percent threshold 60 See id. at 28025. Based on OCC’s procedures, described above. See id. 41 See id. at 28028. staff understands that such monitoring would entail 50 See id. 42 See id. at 28020. escalation within OCC’s Financial Risk 51 See id. 43 See id. Management group noting the relevant clearing 52 See id. at 28024. member, the future potential for breach of the 75 44 See id. at 28019. As noted above, an 53 idiosyncratic default is one of the two scenarios that See id. OCC proposes to measure the clearing percent margin call threshold, and a summary of OCC currently uses to determine the size of the fund against the two largest exposures under the the apparent risk drivers resulting in the stress clearing fund each month. See supra note 15. 2008-like events and the one largest exposure under exposures. Specifically, the single largest credit exposure that a 1987-like event. See id. 61 See id. would arise out of the default of a single clearing 54 See id. at 28025. 62 See id. at 28026. member group. 55 See id. 63 See id.
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would further escalate issues with OCC clearing members, the majority of which Clearing Fund requirements.81 Given management as applicable. did not express concerns over the the scope of changes described above, On a monthly basis, OCC’s staff proposed increase.75 OCC believes that it is appropriate to would provide reports and analyses of make such revisions at this time.82 the daily stress tests to OCC’s 2. Proposal To Modify the Clearing Fund Allocation Weighting The changes to the provisions Management Committee and RC.64 currently residing in OCC’s By-Laws OCC’s staff would also be responsible In addition to the fixed amount require an affirmative vote of two-thirds for conducting a comprehensive described above, most clearing members of the directors then in office, but not analysis of stress test results, scenarios, are required to contribute an additional less than a majority of the number of models, parameters, and assumptions amount to OCC’s clearing fund (the directors fixed by the By-Laws; monthly or more frequently when the ‘‘variable amount’’). The variable however, changes to OCC’s rules products cleared or markets served by amount is based on the weighted generally require only a majority vote of OCC display high volatility or become average of each clearing member’s OCC’s Board of Directors.83 OCC less liquid or when the size or proportionate share of total risk, open proposes to amend its By-Laws to 76 concentration of positions held by interest, and volume. Currently, OCC maintain the existing requirements for OCC’s participants increases uses the following weighting in its modifying those rules that would be significantly.65 allocation of clearing fund moved from Article VIII of OCC’s By- On an annual basis, OCC’s Model requirements: 35 percent total risk; 50 Laws to Chapter X of its Rules.84 Validation Group would be required to percent open interest; and 15 percent perform a model validation of OCC’s volume.77 OCC proposes to modify the 2. Proposal To Add Rule Text Clarifying clearing fund methodology.66 The RC allocation weighting as follows: 70 Anti-Procyclicality Measures in OCC’s would review such validations.67 The percent total risk; 15 percent open Margin Model RC would also be responsible for annual interest; and 15 percent volume.78 OCC’s existing methodology for 68 review and approval of the Policy. F. Textual Clarification and calculating margin requirements E. Allocation of Clearing Fund Consolidation incorporates measures designed to ensure that margin requirements are not Contributions Finally, as noted above, OCC proposes lower than those that would be As noted above, OCC proposes to (i) to (i) reorganize, restate, and consolidate calculated using volatility estimated increase the minimum clearing fund the provisions of OCC’s By-Laws and over a historical look-back period of at contribution requirement for clearing Rules relating to the Clearing Fund into least ten years.85 OCC now proposes to members to $500,000 and (ii) modify a newly-revised Chapter X of OCC’s amend its Rule 601(c) to reflect this OCC’s allocation weighting Rules; (ii) provide additional clarity in practice.86 OCC believes that the methodology for clearing fund OCC’s Rules regarding certain anti- 69 proposed change would provide more contributions. procyclicality measures in OCC’s 87 margin model; and (iii) make a number clarity and transparency in its rules. 1. Proposal To Increase the Minimum of other non-substantive clarifying, 3. Proposal To Make Other Non- Clearing Fund Contribution conforming, and organizational changes Substantive Changes to OCC’s Rules Currently, the minimum amount a to OCC’s By-Laws, Rules, and filed OCC proposes a number of clarifying, clearing member must contribute to procedures, including retiring OCC’s conforming, and organizational changes OCC’s clearing fund (the ‘‘fixed existing Clearing Fund Intra-Month Re- to its By-Laws, Rules, Collateral Risk amount’’) is $150,000.70 OCC proposes sizing Procedure, Financial Resources to increase the fixed amount to Monitoring and Call Procedure, and Management Policy, Default Management Policy, and Clearing Fund- $500,000.71 The minimum contribution Monthly Clearing Fund Sizing requirement has been in place since Procedure, as these procedures would related procedures in connection with the proposed enhancements to its Pre- June 5, 2000,72 and has remained static be replaced by the proposed Rules, Funded Financial Resources and the while the average size of OCC’s clearing Policy, and Methodology Description.79 relocation of OCC’s Clearing Fund- fund has increased significantly.73 OCC 1. Proposal To Reorganize, Restate, and related By-Laws into Chapter X of the also noted that other CCPs’ minimum Consolidate Certain Rule Text Rules.88 requirements are well in excess of OCC’s minimum contribution The primary provisions that address In addition to the relocation of rules described above, OCC would also make requirement.74 OCC analyzed the OCC’s Clearing Fund are currently minor, non-substantive revisions. For impact of the proposed change on its located in Article VIII of the By-Laws 80 example, OCC would replace text clearing members and discussed such and Chapter X of the Rules. OCC referencing ‘‘computed contributions to impacts with the potentially affected believes that consolidating all of the Clearing Fund-related provisions of its the Clearing Fund’’ and ‘‘as fixed at the 64 See id. at 28026–27. By-Laws and Rules into one place time’’ with text stating ‘‘required 65 See id. at 28026. would provide more clarity around, and contributions to the Clearing Fund’’ and 66 See id. at 28027. enhance the readability of, OCC’s ‘‘as calculated at the time’’ to more 67 See id. accurately reflect that these rules are 68 See id. 75 See id. intended to refer to a Clearing Member’s 69 See id. at 28020. 76 See id. at 28028. Total risk refers to a clearing required Clearing Fund contribution 70 See id. at 28028. The initial amount that a new member’s margin requirement. See id., n. 43. clearing member must contribute to OCC’s clearing Additionally, the current methodology calculates 81 fund is also $150,000. See id. at 28027. volume based on executed volume. See id. at 28028. See id. 82 71 See id. at 28028. OCC similarly proposes to 77 See id. See id. 83 increase the initial contribution. See id. at 28027. 78 See id. The definition of total risk would See id. 72 See id. (citing Securities Exchange Act Release remain the same, but OCC would calculate volume 84 See id. No. 42897 (June 5, 2000), 65 FR 36750 (June 9, based on cleared volume as opposed to executed 85 See id. at 28029. 2000) (SR–OCC–99–9)). volume. See id. 86 See id. 73 See id. at 28027. 79 See id. at 28020. 87 See id. 74 See id. 80 See id. 88 See id. at 28029–30.
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amount as calculated under the transparent and predictable model.98 address potential default scenarios proposed rules.89 Similarly, GS supports OCC’s proposal would address issues that MLPRO Further, OCC proposes to update to include more comprehensive testing identifies with OCC’s current model.106 references to Article VIII of the By-Laws scenarios by including observed market MLPRO also supports OCC’s (1) in its Collateral Risk Management Policy events over a longer historical period, adopting risk tolerance and stress and Default Management Policy to which would improve the overall testing assumptions that are developed reflect the relocation of OCC’s Clearing quality of OCC’s stress testing and from extreme, but plausible scenarios, Fund-related By-Laws into Chapter X of strengthen OCC’s ability to model risk and (2) calibrating individual equity the Rules.90 scenarios.99 Additionally, WEX believes price movements to the price shock for Finally, OCC proposes to replace that the proposed changes, specifically the applicable equity index to address procedures regarding its processes for (i) changes regarding how the monthly issues with the current model.107 the monthly resizing of its Clearing clearing fund sizing process will Regarding the changes to the clearing Fund, (ii) the addition of financial address anti-procyclicality, should help fund allocation methodology, resources, and (iii) the execution of any reduce operational issues related to a commenters believe that the proposal intra-month resizing of the Clearing clearing member’s obligations would better align clearing members’ Fund.91 OCC proposes to retire its increasing and decreasing.100 required clearing fund contribution to existing procedures because the relevant AACC states that, from a theoretical the risk they present to OCC and other rule requirements would be maintained perspective, OCC’s proposed sizing market participants.108 AACC states that in the proposed rules as well as the methodology constitutes a significant the proposed changes would place more Clearing Fund Methodology Policy and improvement over the current sizing emphasis on the economic risk Clearing Fund Methodology Description methodology in that the size of the presented by a clearing member’s included as part of the Proposed Rule clearing fund would be less influenced cleared contracts than the operational Change.92 by changes in volatility because OCC is risk presented by a high volume clearing III. Summary of Comments introducing other risk drivers into the member, thereby better recognizing that sizing methodology as well as certain types of clearing members As noted above, the Commission monitoring and augmenting such risk present a relatively lower risk to OCC received five comment letters—AACC drivers on a daily basis based on market even though they may represent a Letter I, CBOE Letter I, MLPRO Letter I, conditions.101 AACC also comments higher percentage of overall activity WEX Letter I, and GS Letter I— that the proposal would cause the size (i.e., clearing members with market- supporting the changes in the Proposed of OCC’s clearing fund to become more maker and other risk-neutral Rule Change.93 Two of the commenters stable because OCC would test for customers).109 Similarly, WEX supports urge the Commission to approve the adequacy and sufficiency on a daily allocation based on cleared volumes as proposal as expeditiously as possible.94 basis using a series of historical and opposed to executed volumes in AACC believes that the proposal would hypothetical stress tests that are rooted consideration of where a positon is remediate two problems with the in extreme but plausible market cleared as opposed to where it is current clearing fund methodology: (1) events.102 executed.110 MLPRO also supports OCC’s current clearing fund sizing Commenters also believe that the increases the weighting of total risk in methodology failing to contain proposal would improve OCC’s risk the allocation process.111 Commenters sufficient anti-procyclicality measures, models by correcting existing also believe that the proposed changes and (2) OCC’s current clearing fund shortcomings.103 CBOE comments that make sense from a default and contribution allocation methodology the adoption of a Cover 2 standard liquidation perspective.112 failing to appropriately incentivize would ensure that the size of the Commenters AACC and WEX believe clearing member risk management.95 clearing fund is sufficient to protect that the proposed changes would have Regarding the clearing fund sizing OCC against losses from the positive effects on the listed options methodology, AACC believes that the simultaneous default of its two largest market.113 Similarly, MLPRO believes proposal would implement a number of Clearing Members under extreme, but that the proposed changes would measures intended to provide stability plausible market conditions.104 GS also increase liquidity in the listed options and consistency to the size of OCC’s agrees with OCC’s proposal to adopt a 114 96 market. Additionally, GS believes clearing fund. Specifically, AACC Cover 2 Standard.105 MLPRO comments that the proposed changes will greatly supports (1) sizing the clearing fund that the adoption of a Cover 2 standard enhance OCC’s resiliency and risk based on a variety of risk factors, and (2) in establishing a new model to measure management.115 testing the size of the clearing fund on the adequacy of the clearing fun and a daily basis against extreme but IV. Discussion and Commission plausible market events, thereby 98 MLPRO Letter I at 2. Findings lowering the likelihood that OCC’s 99 GS Letter I at 2. In its letter, GS refers to OCC’s Section 19(b)(2)(C) of the Act directs clearing fund would be insufficient to movement to a 1-in-80-year period from a 1-in-50- the Commission to approve a proposed protect OCC and market participants in year model. The Commission notes that OCC’s current process is not based on a 1-in-50-year rule change of a self-regulatory the event of a clearing member model, and that OCC is now proposing to adopt a organization if it finds that such default.97 MLPRO believes that the new risk tolerance based on a 1-in-50-year hypothetical event. See Notice of Filing, 83 FR at proposed changes would create a more 106 MLPRO Letter I at 1–2. 31596. Further, OCC proposes to base the size of the 107 clearing fund on the aggregate credit exposures Id. 89 See id. at 28031, n. 52. estimated under a 1-in-80-year hypothetical market 108 AACC Letter I at 4; WEX Letter I at 1; GS 90 See id. at 28031. event (as opposed to an historical market event). Letter I at 1. 91 See id. See id. at 31600. 109 AACC Letter I at 4. 92 See id. 100 WEX Letter I at 1. 110 WEX Letter I at 2. 93 See supra note 7. 101 AACC Letter I at 3. 111 MLPRO Letter I at 2. 94 AACC Letter I at 1; MLPRO Letter I at I. 102 Id. 112 AACC Letter I at 4; GS Letter I at 1. 95 AACC Letter I at 1. 103 CBOE Letter I at 1; MLPRO Letter I at 1–2. 113 AACC Letter I at 5; WEX Letter I at 2. 96 Id. at 2. 104 CBOE Letter I at 1. 114 MLPRO Letter I at 1. 97 Id. at 2–3. 105 GS Letter I at 2. 115 GS Letter I at 2.
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proposed rule change is consistent with assessment of the financial resources it of OCC’s single largest exposure or two the requirements of the Act and the would need to hold in its clearing fund random exposures. For the same rules and regulations thereunder to cover its credit risk exposure to its reasons, the Commission believes this, applicable to such organization.116 After members in extreme but plausible too, would improve OCC’s risk carefully considering the Proposed Rule market conditions. management practices. Finally, OCC Change, the Commission finds the Second, with respect to the robustness proposes to limit the potential proposal is consistent with the of the new stress testing framework reductions in the size of the clearing requirements of the Act and the rules itself, the Commission believes that the fund month-over-month. Such and regulations thereunder applicable to stress tests proposed in OCC’s limitations would avoid large drops in OCC. More specifically, the Commission framework are an improvement over the clearing fund size over a short finds that the proposal is consistent OCC’s current approach in this area, as period of time and unnecessary with Section 17A(b)(3)(F) of the Act 117 the stress tests comprise a wide range of reductions followed by immediate calls and Rules 17Ad–22(e)(1) and 17Ad– foreseeable stress scenarios. The for additional resources at the beginning 22(e)(4) thereunder.118 scenarios cover historical events as of each month. extreme as the 2008 financial crisis and Fourth, the proposal discussed above A. Consistency With Section 1987 market crash as well as would expand and improve upon the 17A(b)(3)(F) of the Act hypothetical events derived from a scope of stress scenarios against which Section 17A(b)(3)(F) of the Act dataset of historical S&P returns. OCC’s OCC monitors is financial resources. requires that the rules of a clearing proposed stress testing framework Under the proposal, OCC would agency be designed to, among other would also include a category of stress continue to review the size of its things, promote the prompt and tests designed specifically for review of clearing fund against exposures under a accurate clearance and settlement of OCC’s financial resources against stress scenario designed to replicate the securities transactions, assure the implausible scenarios and reverse stress 1987 market crash, and would also safeguarding of securities and funds tests. Such stress tests would not introduce monitoring against other which are in the custody or control of directly affect the total amount of OCC’s historical scenarios such as the largest the clearing agency or for which it is financial resources, but would facilitate market moves up and down observed responsible, and, in general, to protect a more forward looking risk during the 2008 financial crisis. In investors and the public interest.119 management process. Accordingly, addition, OCC would continue its Based on its review of the record, the while as an ongoing supervisory matter practice of collecting additional Commission believes that the proposed the Commission expects OCC to resources in margin collateral and changes are designed to promote the consider and, as necessary, implement clearing fund requirements where stress prompt and accurate clearance and future enhancements to its suite of exposures exceed 75 percent and 90 settlement of securities transactions, stress tests, the Commission believes percent, respectively, of the size of the assure the safeguarding of securities and that the suite of stress tests that OCC clearing fund. Based on a review of the funds which are in OCC’s custody or proposes to establish in its risk parameters of the scenario replicating control, and, in general, protect management framework pursuant to the the 1987 market crash, the Commission investors and the public interest by Proposed Rule Change represents a believes that the scenario presents enhancing OCC’s overall risk material improvement to OCC’s current potential losses that are extreme while management for the reasons set forth risk management practices for also plausible in light of their historical below. estimating potential future losses in basis. Additionally, the Commission First, as described above, OCC’s extreme but plausible market believes that the scenario would provide current process for sizing the clearing conditions. stress exposure estimates that would be fund was established in 2011 and Third, as described above, OCC meaningful for the monitoring of OCC’s strengthened under a 2015 interim proposes to adopt several enhancements total financial resources. The approach. The current process is to its methodology for determining the Commission also believes that the essentially an extension of OCC’s size of its clearing fund. OCC proposes introduction of new historical scenarios, margin model. In general, margin to adopt an internal credit risk tolerance such as those replicating the financial requirements for clearing members are based on hypothetical stress scenarios, crisis, would provide additional depth very reactive to market movements and which would provide OCC with a to the monitoring of OCC’s financial changes in clearing member portfolios. benchmark that it believes represents resources. The Commission believes, Because OCC’s current process for extreme but plausible market therefore, that the changes proposed in sizing the clearing fund is based on a conditions. The Commission believes the Proposed Rule Change include the relatively dynamic daily margin that establishing such a tolerance is a adoption of a wide range of stress process, the size of the clearing fund can valuable step in accurately estimating scenarios for the testing of OCC’s at times be volatile and cyclical in the total financial resources necessary to financial resources. nature. The Proposed Rule Change cover OCC’s exposures in extreme but Fifth, OCC would document its plausible market conditions. Next, OCC periodic review and analysis of its stress would base the sizing and monitoring of proposes to set the size of its clearing testing framework and clearing fund OCC’s clearing fund on a stable fund to cover a scenario that is more methodology, which would include (1) inventory of stress tests rather than extreme than its internal tolerance to daily review of stress test outputs, (2) continuing to rely on a dynamic margin ensure consistent coverage, which the monthly (or more frequently as needed) model. The Commission believes this Commission believes would be another analysis of the stress test results, new approach would provide OCC with valuable step in accurately estimating scenarios, models, parameters, and a more precise, rigorous, and stable OCC’s necessary total financial assumptions, and (3) annual validation resources. Further, OCC proposes to of the clearing fund methodology. OCC 116 15 U.S.C. 78s(b)(2)(C). 117 15 U.S.C. 78q–1(b)(3)(F). cover its two largest credit exposures also would clearly define the process for 118 17 CFR 240.17Ad–22(e)(1); 17 CFR 240.17Ad– when setting the size of the clearing escalating the results of its daily and 22(e)(4). fund, which goes further than OCC’s monthly analyses and require on an 119 15 U.S.C. 78q–1(b)(3)(F). current practice of covering the greater annual basis Board level review and
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approval of the Clearing Fund securities and funds it holds during extreme but plausible market Methodology Policy. The Commission periods of market stress. conditions.121 believes that these governance processes Finally, the Commission believes that As described above, the proposal would help ensure that OCC is in a OCC’s proposed measures addressing includes enhancements to OCC’s the potential procyclical nature of position to continuously monitor, methodology for sizing its clearing fund analyze, and adjust as necessary both clearing fund obligations, as well as the to ensure that it maintains sufficient the stress testing framework and the textual clarifications and reorganization financial resources, including: (i) clearing fund methodology, thereby set forth in the proposal, are consistent Adoption of an internal credit risk helping to ensure the accuracy and with the protection of investors and the reliability of the methodology by which public interest. The enhanced certainty tolerance that OCC believes represents OCC tests the sufficiency of its financial for Clearing Members that should be extreme but plausible market resources. achieved in the form of clearly conditions; (ii) sizing the clearing fund Taken together, and for the reasons established and understood limitations to cover credit exposures under discussed above, the Commission on the reduction in Clearing Fund size scenarios that are more extreme than believes that the proposed changes will from month to month should make it OCC’s risk tolerance, (iii) sizing the increase the likelihood that OCC will easier for Clearing Members, and their clearing fund to cover the default of the have sufficient financial resources in customers and investors more broadly, two clearing member groups that that excess of margin to address credit losses to more easily anticipate and manage would potentially cause the largest that could arise from a wide range of financial resource demands that can aggregate credit exposure for OCC; (iv) stress scenarios including, but not arise from OCC’s risk management limiting the potential reduction in limited to, the default of the participant processes in respect of the clearing clearing fund size month-over-month; family that would potentially cause the fund. In addition, the reorganization and (v) shortening the time by which largest aggregate credit exposure for and consolidation of rule provisions each clearing member must fund its OCC in extreme but plausible market related to OCC’s clearing fund would clearing fund contribution. conditions. Having an improved enhance the readability of OCC’s public- Taken together, the Commission capacity to access and apply sufficient facing rules, and additional clarification financial resources to credit losses in a believes that proposed changes of OCC’s margin rules would promote described above are designed to wide range of stress scenarios should, in transparency by providing the public turn, enhance OCC’s ability to continue improve the process by which OCC with information about OCC’s risk sizes its total financial resources and are to promptly and accurately clear and management processes. The consistent with the requirements of settle securities transactions for Commission believes that the additional Rules 17Ad–22(e)(4)(i) and (iii) under participants in the options markets clarity, predictability and transparency the Act. First, the proposal is designed during periods of market stress. provided by these proposed changes Therefore, the Commission believes that would generally be consistent with the to cover credit exposures in excess of the proposal is consistent with protection of investors and the public those posed by any one clearing member promoting the prompt and accurate interest by removing potential sources group because OCC is proposing to clearance and settlement of securities of confusion, surprise or cover the largest aggregate exposure to transactions. misunderstanding regarding the two clearing member groups. Second, The Commission further believes that operations and potential consequences the proposal is designed to cover credit the proposed changes are consistent of OCC’s risk management processes in exposures in extreme but plausible with assuring the safeguarding of respect of the clearing fund. market conditions because OCC securities and funds which are in OCC’s Accordingly, and for the reasons proposes to size its clearing fund based custody or control, or for which it is stated above, the Commission finds that on scenarios that are more extreme than responsible. By establishing a clearing the Proposed Rule Change is consistent those that OCC believes to represent fund that is sized to address credit with Section 17A(b)(3)(F) of the Act.120 extreme but plausible market losses that could arise from a wide range conditions. Further, based on the of stress scenarios including, but not B. Consistency With Rule 17Ad–22(e)(4) Commission’s detailed analysis of the limited to, the default of the participant Under the Act relevant scenarios through the family that would potentially cause the 1. Total Financial Resources supervisory process, the Commission largest aggregate credit exposure for believes that OCC has defined extreme OCC in extreme but plausible market Rules 17Ad–22(e)(4)(i) and (iii) under conditions, the proposal will enhance the Act requires, among other things, but plausible scenarios in an acceptable OCC’s ability to use the clearing fund as that OCC establish, implement, manner for the markets served. Finally, a means to safeguard the securities and maintain, and enforce written policies the Commission believes that proposal funds it holds for its Clearing Members and procedures reasonably designed to would support the consistent and stable during periods of market stress. In effectively identify, measure, monitor, maintenance of an appropriate level of addition, the Commission believes that and manage its credit exposures to total financial resources by limiting the proposed changes to OCC’s participants and those arising from its month-over-month reductions in the allocation weighting will allow OCC to payment, clearing, and settlement size of clearing fund and requiring better manage its credit exposures to its processes by, among other things, clearing members to make clearing fund clearing members by better aligning maintaining financial resources at the contributions within two business days. each clearing member’s contributions to minimum to enable OCC to cover a wide Accordingly, the Commission believes the credit risk it poses to OCC. This range of foreseeable stress scenarios that that the proposed modifications to improved ability to manage credit include, but are not limited to, the OCC’s clearing fund sizing methodology exposure in the form of clearing fund default of the participant family that are consistent with Rule 17Ad– amounts more closely calibrated to would potentially cause the largest 22(e)(4)(i) and (iii).122 credit exposure should, in turn, improve aggregate credit exposure for OCC in OCC’s ability to rely upon the clearing 121 17 CFR 240.17Ad–22(e)(4)(i) and (iii). fund as a resource to safeguard the 120 15 U.S.C. 78q–1(b)(3)(F). 122 Id.
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2. Financial resource sufficiency the proposed changes described above As discussed above, OCC manages its Rule 17Ad–22(e)(4)(vi) under the Act are consistent with Rules 17Ad– credit exposures not covered by margin 126 requires OCC to establish, implement, 22(e)(4)(vi) and (vii) under the Act, through the allocation of clearing fund maintain, and enforce written policies because, among other reasons, (i) they requirements to its clearing members. and procedures reasonably designed to are designed to improve the testing of OCC proposes to determine the size of effectively identify, measure, monitor, OCC’s financial resources; (ii) is clearing fund based on the and manage its credit exposures to expanding the scope of stress scenarios measurement of its credit exposures participants and those arising from its against which OCC monitors its under hypothetical stress scenarios, and payment, clearing, and settlement financial resources would increase the to monitor such exposures under processes by testing the sufficiency of likelihood that OCC maintains sufficient historical stress scenarios. OCC also its total financial resources available to financial resources at all times; and (iii) proposes to increase the initial and meet the minimum financial resource the formalization of OCC’s processes for minimum clearing fund contribution requirements under paragraphs Rules the periodic review and analysis its amounts from $150,000 to $500,000, 17Ad–22(e)(4)(i) through (iii).123 Such stress testing framework and clearing and to modify the allocation weighting testing must include (A) Conducting fund methodology is designed to used to determine the variable amount stress testing of OCC’s total financial support OCC’s monitoring of its that most clearing members contribute resources once each day using standard financial resources. to the clearing fund. Specifically, under predetermined parameters and In addition, the Commission believes the proposal, the proposed clearing fund assumptions; (B) conducting a that (i) the daily testing of OCC’s contribution requirements would be comprehensive analysis on at least a financial resources against the based on an allocation methodology of monthly basis of the existing stress sufficiency stress tests, including stress 70 percent of total risk, 15 percent of testing scenarios, models, and tests based on market movements in the open interest and 15 percent of open underlying parameters and 2008 financial crisis and the 1987 interest (as opposed to the current assumptions, and considering market crash included in the proposal weighting of 35 percent total risk, 50 modifications to ensure they are would be consistent with the daily percent open interest, and 15 percent appropriate for determining the covered stress testing requirements of Rule volume). clearing agency’s required level of 17Ad–22(e)(4)(vi)(A), as described The Commission believes that the default protection in light of current and above; (ii) the at least monthly analysis changes described above are reasonably evolving market conditions; (C) of stress test results, scenarios, models, designed to improve OCC’s management conducting a comprehensive analysis of parameters, and assumptions, with more of its credit exposures to participants. stress testing scenarios, models, and frequent review and analysis as required First, OCC’s overall clearing fund size underlying parameters and assumptions would be consistent with the monthly has increased significantly since the more frequently than monthly when the comprehensive analysis requirements current initial and minimum products cleared or markets served set forth in Rule 17Ad–22(e)(4)(vi)(B) contributions were set in 2000 and display high volatility or become less and (C) as described above; and (iii) the OCC’s requirements are lower than the liquid, or when the size or annual validation of OCC’s clearing minimum requirements imposed by concentration of positions held by the fund methodology discussed in more other CCPs. The Commission believes covered clearing agency’s participants detail above would be consistent with that the proposed changes to OCC’s increases significantly; and (D) reporting model validation requirements of Rule initial and minimum clearing fund the results of such analyses to 17Ad–22(e)(4)(vii). The proposal also contribution amounts are designed to appropriate decision makers at OCC, contemplates the reporting and better manage the risks posed by including but not limited to, its risk escalation of such testing, analyses, and clearing members with minimal open management committee or board of validations to OCC’s management and interest, and are commensurate with the directors, and using these results to Board of Directors, which the growth of OCC’s clearing fund over evaluate the adequacy of and adjust its Commission believes would be time. The Commission also believes that margin methodology, model parameters, consistent with the reporting the changes to OCC’s allocation models used to generate clearing or requirements of Rule 17Ad– weighting will allow OCC to better guaranty fund requirements, and any 22(e)(4)(vi)(D). manage its credit exposures to its other relevant aspects of its credit risk Accordingly, taken together and for clearing members by better aligning management framework, in supporting the reasons discussed above, the each clearing member’s contributions to compliance with the minimum financial Commission believes that the proposed the credit risk it poses to OCC, thereby resources requirements set forth in stress testing and clearing fund allowing OCC to better manage its credit paragraphs (e)(4)(i) through (iii) of Rule methodology governance changes are exposures to its participants. 17Ad–22.124 Additionally, pursuant to consistent with Rules 17Ad–2(e)(4)(vi) Accordingly, based on the foregoing, Rule 17Ad–22(e)(4)(vii) under the Act, and (vii).127 the Commission believes that the the policies and procedures required proposed changes pertaining to the 3. Proposal To Modify the Clearing sizing, monitoring, and allocation of under Rule 17Ad–22(e)(4) must include Fund Allocation Methodology the performance of a model validation clearing fund requirements are of OCC’s credit risk models not less than As noted above, Rule 17Ad–22(e)(4) consistent with Exchange Act Rule annually or more frequently as may be under the Act requires that OCC 17Ad–22(e)(4).129 establish, implement, maintain, and contemplated by OCC’s risk C. Consistency With Rule 17Ad–22(e)(1) 125 enforce written policies and procedures management framework. Under the Act After reviewing and assessing the reasonably designed to, among other proposal, the Commission believes that things, effectively manage its credit Rule 17Ad–22(e)(1) under the Act exposures to participants.128 requires that OCC establish, implement, 123 17 CFR 240.17Ad–22(e)(4)(vi) (citing 17 CFR maintain, and enforce written policies 240.17Ad–22(e)(4)(i)–(iii)). 126 17 CFR 240.17Ad–22(e)(4)(vi) and (vii). and procedures reasonably designed to 124 17 CFR 240.17Ad–22(e)(4)(vi)(A)–(D). 127 Id. 125 17 CFR 240.17Ad–22(e)(4)(vii). 128 17 CFR 240.17Ad–22(e)(4). 129 Id.
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provide for a well-founded, clear, SECURITIES AND EXCHANGE Partial Amendment No. 2 to the transparent, and enforceable legal basis COMMISSION Proposed Rule Change to supersede and for each aspect of its activities in all replace Partial Amendment No. 1 in its [Release No. 34–83732; File No. SR–OCC– relevant jurisdictions.130 The entirety, due to technical defects in 2017–021] Commission has stated that, in Partial Amendment No. 1. Therefore, establishing and maintaining policies Self-Regulatory Organizations; The the Initial Filing, as modified by and procedures to address legal risk, a Options Clearing Corporation; Notice Amendment No. 2, reflects the changes covered clearing agency generally of Filing of Partial Amendments No. 1 proposed. should consider whether its rules, and 2 to Proposed Rule Change policies and procedures, and contracts Pursuant to Section 19(b)(1) of the Concerning Updates to and Act 8 and Rule 19b–4 thereunder 9 the are clear, understandable, and Formalization of OCC’s Recovery and consistent with relevant laws and Commission is publishing notice of Orderly Wind-Down Plan regulations.131 these Partial Amendments No. 1 and 2 The Commission believes that the July 27, 2018. to the Proposed Rule Change as proposed consolidation and On December 8, 2017, The Options described in Items I and II below, which reorganization of OCC’s Rules described Clearing Corporation (‘‘OCC’’) filed with Items have been prepared by OCC. The above would improve readability by the Securities and Exchange Commission is publishing this notice to locating all rules related to the clearing Commission (‘‘Commission’’) proposed solicit comments on the Proposed Rule fund in one place, thereby enhancing rule change SR–OCC–2017–021 Change, as modified by Amendments the clarity, transparency, consistency, (‘‘Proposed Rule Change’’) pursuant to No. 1 and 2, from interested persons. and understandability of OCC’s Rules Section 19(b)(1) of the Securities related to the clearing fund. Exchange Act of 1934 (‘‘Act’’),1 and I. Clearing Agency’s Statement of the Additionally, by amending the Rules to Rule 19b–4 thereunder,2 concerning Terms of Substance of Partial accurately reflect OCC’s current margin enhanced and new tools for recovery Amendments to the Proposed Rule practices, the Commission believes scenarios.3 The Proposed Rule Change Change OCC’s Rules will be more transparent was published for comment in the This Partial Amendment No. 2 would and understandable. Federal Register on December 26, make the following three amendments Accordingly, the Commission finds 2017.4 On March 22, 2018, the to the Initial Filing: (1) Removal of that the proposed textual reorganization Commission instituted proceedings and clarifications are consistent with under Section 19(b)(2)(B)(i) of the Act 5 sections of the RWD Plan concerning 132 Rule 17Ad–22(e)(1). to determine whether to approve or OCC’s proposed authority to require cash settlement of certain physically V. Conclusion disapprove the Proposed Rule Change.6 On June 20, 2018 the Commission delivered options and single stock On the basis of the foregoing, the designated a longer period for futures; (2) updating the list of OCC’s Commission finds that the Proposed 10 Commission action on proceedings to Critical Support Functions; and (3) Rule Change is consistent with the determine whether to approve or making three changes to Chapter 5 of requirements of the Act, and in disapprove the Proposed Rule Change.7 the RWD Plan in order to conform to a particular, the requirements of Section change contemporaneously proposed in 17A of the Act 133 and the rules and On July 11, 2018, OCC filed Partial Amendment No. 2 to OCC proposed rule regulations thereunder. Amendment No. 1 to the Proposed Rule change SR–OCC–2017–020 concerning It is therefore ordered, pursuant to Change. On July 13, 2018, OCC filed Section 19(b)(2) of the Act,134 that the enhanced and new tools for recovery 1 11 Proposed Rule Change (SR–OCC–2018– 15 U.S.C. 78s(b)(1). scenarios. 2 17 CFR 240.19b–4. 008), as modified by Amendments No. 3 On December 8, 2017, OCC also filed a related With regard to the removal of sections 1 and 2, be, and hereby is, approved. advance notice (SR–OCC–2017–810) with the of the RWD Plan concerning OCC’s For the Commission, by the Division of Commission pursuant to Section 806(e)(1) of Title proposed authority to require cash Trading and Markets, pursuant to delegated VIII of the Dodd-Frank Wall Street Reform and settlement of certain physically Consumer Protection Act, entitled the Payment, authority.135 Clearing, and Settlement Supervision Act of 2010 delivered options and single stock Robert W. Errett, and Rule 19b–4(n)(1)(i) under the Act (‘‘Advance futures, OCC proposes to amend the Deputy Secretary. Notice’’). 12 U.S.C. 5465(e)(1) and 17 CFR 240.19b– following text on pages 16 and 55–56 of 4(n)(1)(i), respectively. The Advance Notice was [FR Doc. 2018–16529 Filed 8–1–18; 8:45 am] the Initial Filing (new text is underlined published in the Federal Register on January 23, BILLING CODE 8011–01–P 2018. Securities Exchange Act Release No. 82513 and proposed deletions are marked in (Jan. 17, 2018), 83 FR 3224 (Jan. 23, 2018) (SR– strikethrough text). 130 17 CFR 240.17Ad–22(e)(1). OCC–2017–810). 131 4 Securities Exchange Act Release No. 82352 (Dec. Securities Exchange Act Release 78961 (Sep. 8 15 U.S.C. 78s(b)(1). 28, 2016), 81 FR 70786, 70802 (Oct. 13, 2016) (S7– 19, 2017), 82 FR 61072 (Dec. 26, 2017) (SR–OCC– 9 17 CFR 240.19b–4. 03–14) (‘‘Covered Clearing Agency Standards’’). 2017–021) (‘‘Initial Filing’’). 10 132 17 CFR 240.17Ad–22(e)(1). 5 15 U.S.C. 78s(b)(2)(B)(i). The amendment to the list of Critical Support 133 In approving this Proposed Rule Change, the 6 See Securities Exchange Act Release No. 82927 Functions would be made to the confidential and Commission has considered the proposed rules’ (March 22, 2018), 83 FR 13176 (March 27, 2018) redacted portions of the RWD Plan. impact on efficiency, competition, and capital (SR–OCC–2018–021). 11 See Amendment No. 2 to SR–OCC–2017–020. formation. See 15 U.S.C. 78c(f). 7 See Securities Exchange Act Release No. 83485 The three amendments to Chapter 5 also would be 134 15 U.S.C. 78s(b)(2). (Jun. 20, 2018), 83 FR 29843 (Jun. 26, 2018) (SR– made to the confidential and redacted portions of 135 17 CFR 200.30–3(a)(12). OCC–2017–021). the RWD Plan.
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OCC also proposes to amend the 63 of the Initial Filing (including following text on pages 22–23 and 61– associated footnotes).
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OCC plans to resubmit the proposed of its enhanced and new tools for In addition, OCC proposes to make cash settlement tool previously filed in recovery scenarios and would submit a the following amendments on pages 32 SR–OCC–2017–018 and SR–OCC–2017– subsequent filing to the Commission to and 72 of the Initial Filing. 807 on a separate timeline from the rest amend the RWD Plan at that time.
With regard to updating the list of Amendment No. 2 to proposed rule despite best efforts, OCC has inadequate OCC’s Critical Support Functions, the change SR–OCC–2017–020 concerning remaining financial resources to amendment would revise OCC’s RWD enhanced and new tools for recovery extinguish torn-up positions at their Plan to consistently identify one of scenarios.12 Specifically, OCC would assigned Tear-Up Price without forcing OCC’s internal functions as a Critical change the aforementioned exhibit, list a reduction in the amount of unpaid Support Function. and paragraph in Chapter 5 to recognize value of such positions (e.g., despite Finally, OCC proposes to make two that while OCC does not intend, in the best efforts, market movements not changes to Chapter 5 of the RWD Plan, first instance for its tear-up process to accounted for by monitoring, additional which would align an exhibit, a related serve as a means of loss allocation, Clearing Member defaults occur list and a related paragraph with the circumstances may arise such that, immediately preceding a tear-up). In certain changes OCC is such circumstances, despite best efforts, contemporaneously proposing in 12 See Amendment No. 2 to SR–OCC–2017–020.
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OCC would use its partial tear-up with respect to the proposed rule publishing this notice to solicit process as a means of loss allocation. change that are filed with the comments on the proposed rule change OCC has included an updated Exhibit Commission, and all written from interested persons. 5 containing its RWD Plan as well as an communications relating to the I. Self-Regulatory Organization’s Exhibit 4 showing the changes proposed proposed rule change between the Statement of the Terms of Substance of in this Partial Amendment No. 2 to the Commission and any person, other than the Proposed Rule Change proposed rule text in the Initial Filing, those that may be withheld from the with the proposed changes in the Initial public in accordance with the The Exchange proposes to codify the Filing marked in underlined and provisions of 5 U.S.C. 552, will be definitions of the protocols that strikethrough text. Exhibits 4 and 5 have available for website viewing and Members can use to enter quotes and been redacted and filed separately with printing in the Commission’s Public orders on the Exchange. the Commission and confidential Reference Room, 100 F Street NE, The text of the proposed rule change treatment for Exhibits 4 and 5 is Washington, DC 20549, on official is available on the Exchange’s website at requested pursuant to 17 CFR 240.24b– business days between the hours of http://nasdaqgemx.cchwallstreet.com/, 2. 10:00 a.m. and 3:00 p.m. Copies of such at the principal office of the Exchange, The partial amendment would not filing also will be available for and at the Commission’s Public change the purpose of or basis for the inspection and copying at the principal Reference Room. proposed rule change. All other office of OCC and on OCC’s website at II. Self-Regulatory Organization’s representations in the Initial Filing http://www.theocc.com/about/ Statement of the Purpose of, and remain as stated therein and no other publications/bylaws.jsp. Statutory Basis for, the Proposed Rule changes are being made. All comments received will be posted Change without change. Persons submitting II. Date of Effectiveness of Proposed comments are cautioned that we do not In its filing with the Commission, the Rule Change and Timing for redact or edit personal or identifying Exchange included statements Commission Action information from comment submissions. concerning the purpose of and basis for the proposed rule change and discussed As the Commission stated in You should submit only information any comments it received on the Securities Exchange Act Release No. that you wish to make available proposed rule change. The text of these 83485, the Commission shall by order publicly. statements may be examined at the approve or disapprove the proposed All submissions should refer to File places specified in Item IV below. The rule change by August 23, 2018.13 Number SR–OCC–2017–021 and should be submitted on or before August 17, Exchange has prepared summaries, set III. Solicitation of Comments 2018. forth in sections A, B, and C below, of the most significant aspects of such Interested persons are invited to For the Commission by the Division of submit written data, views, and Trading and Markets, pursuant to delegated statements. arguments concerning the foregoing, authority.14 A. Self-Regulatory Organization’s including whether the proposed rule Robert W. Errett, Statement of the Purpose of, and change is consistent with the Act. Deputy Secretary. Statutory Basis for, the Proposed Rule Comments may be submitted by any of [FR Doc. 2018–16533 Filed 8–1–18; 8:45 am] Change the following methods: BILLING CODE 8011–01–P 1. Purpose Electronic Comments The purpose of the proposed rule • Use the Commissions internet SECURITIES AND EXCHANGE change is to codify the definitions of the comment form (http://www.sec.gov/ COMMISSION protocols that Members use to enter rules/sro.shtml); or quotes and orders on the Exchange, • Send an email to rule-comments@ [Release No. 34–83731; File No. SR–GEMX– specifically, the Specialized Quote Feed 2018–26] sec.gov. Please include File Number SR– (‘‘SQF’’), Ouch to Trade Options OCC–2017–021 on the subject line. Self-Regulatory Organizations; Nasdaq (‘‘OTTO’’), Financial Information eXchange (‘‘FIX’’), and Nasdaq Precise Paper Comments GEMX, LLC; Notice of Filing and (‘‘Precise’’). On April 27, 2017, the • Immediate Effectiveness of Proposed Send paper comments in triplicate Rule Change To Codify the Protocol Exchange filed a proposed rule change to Brent Fields, Secretary, Securities Definitions That Members Use To Enter that established the ports that Members and Exchange Commission, 100 F Street Quotes and Orders use to connect to the Exchange, NE, Washington, DC 20549–1090. including ports used for quote and order All submissions should refer to File July 27, 2018. entry—i.e., SQF, OTTO and FIX.3 The Number SR–OCC–2017–021. This file Pursuant to Section 19(b)(1) of the Exchange has also filed proposed rule number should be included on the Securities Exchange Act of 1934 changes that briefly describe the subject line if email is used. To help the (‘‘Act’’),1 and Rule 19b–4 thereunder,2 availability of Precise, which is the Commission process and review your notice is hereby given that on July 16, Exchange’s proprietary front-end comments more efficiently, please use 2018, Nasdaq GEMX, LLC (‘‘GEMX’’ or interface used by Electronic Access only one method. The Commission will ‘‘Exchange’’) filed with the Securities Members (‘‘EAMs’’) and their Sponsored post all comments on the Commission’s and Exchange Commission Customers 4 to send orders to the internet website (http://www.sec.gov/ (‘‘Commission’’) the proposed rule rules/sro.shtml). Copies of the change as described in Items I and II 3 See Securities Exchange Act Release No. 80649 submission, all subsequent below, which Items have been prepared (May 10, 2017), 82 FR 22595 (May 16, 2017) (SR– by the Exchange. The Commission is GEMX–2017–07). amendments, all written statements 4 A ‘‘Sponsored Customer’’ is a non-member of the Exchange that trades under a sponsoring 13 See Securities Exchange Act Release No. 83485 14 17 CFR 200.30–3(a)(12). member’s execution and clearing identity pursuant (June 20, 2018), 83 FR 29843 (June 26, 2018) (SR– 1 15 U.S.C. 78s(b)(1). to a sponsorship arrangement between such non- OCC–2017–021). 2 17 CFR 240.19b–4. Continued
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Exchange and perform other related A. Financial Information eXchange notifications; (7) auction notifications; functions.5 The protocols used by Ports (8) auction responses; and (9) post trade Members to submit quotes and orders When the Exchange initially filed to allocation messages. play an important role in the operation adopt order and quote entry protocols, C. Specialized Quote Feed Ports of the trading system as critical it described the FIX protocol as follows: Exchange functionality used by When the Exchange initially filed to ‘‘FIX is an interface that allows market adopt order and quote entry protocols, Members to transact in options is participants to connect and send orders offered through these protocols. The it described the SQF protocol as follows: and auction orders into the Exchange. ‘‘SQF is an interface that allows market Exchange therefore believes that Data includes the following: (1) Options codifying definitions of these protocols makers to connect and send quotes, Symbol Directory Messages; (2) System in its rules will increase transparency sweeps and auction responses into the Event Messages (e.g., start of messages, around its operations. Exchange. Data includes the following: As it relates to FIX, OTTO, and SQF, start of system hours, start of quoting, (1) Options Auction Notifications (e.g., the proposed language is substantially start of opening); (3) Option Trading opening imbalance, Flash, PIM, similar to the language included in SR– Action Messages (e.g., halts, resumes); Solicitation and Facilitation or other GEMX–2017–07 with changes to more (4) Execution Messages; (5) Order information); (2) Options Symbol clearly and accurately reflect the certain Messages (order messages, risk Directory Messages; (3) System Event information included on each protocol, protection triggers or purge Messages (e.g., start of messages, start of such as by separating out different notifications).’’ system hours, start of quoting, start of categories of messages (e.g., auction The Exchange now proposes to codify opening); (4) Option Trading Action orders, auction notifications, and the following definition of FIX in its Messages (e.g., halts, resumes); (5) auction responses). Furthermore, the rulebook: ‘‘Financial Information Execution Messages; (6) Quote Messages proposed definitions will be eXchange’’ or ‘‘FIX’’ is an interface that (quote/sweep messages, risk protection harmonized where appropriate with allows Members and their Sponsored triggers or purge notifications).’’ definitions to be included in the rules Customers to connect, send, and receive The Exchange now proposes to codify of the Exchange’s affiliated options messages related to orders and auction the following definition of SQF in its markets, including by using consistent orders to the Exchange. Features include rulebook: ‘‘Specialized Quote Feed’’ or terms to define the buckets of the following: (1) Execution messages; ‘‘SQF’’ is an interface that allows market information transmitted, or the features (2) order messages; (3) risk protection makers to connect, send, and receive available, on each protocol.6 Although triggers and cancel notifications; and (4) messages related to quotes, Immediate- the Exchange is changing how it post trade allocation messages. or-Cancel Orders, and auction responses categorizes various features included on B. Ouch To Trade Options Ports to the Exchange. Features include the FIX, OTTO, and SQF as part of its following: (1) Options symbol directory harmonization effort, the list of features When the Exchange initially filed to messages (e.g., underlying instruments); included in the proposed definitions are adopt order and quote entry protocols, (2) system event messages (e.g., start of intended to be exhaustive with respect it described the OTTO protocol as trading hours messages and start of to the buckets of information provided follows: ‘‘OTTO is an interface that opening); (3) trading action messages on each protocol. The Exchange also allows market participants to connect (e.g., halts and resumes); (4) execution seeks to memorialize Precise to reflect and send orders, auction orders and messages; (5) quote messages; (6) the specific categories of features that auction responses into the Exchange. Immediate-or-Cancel Order messages; are available on the Precise front-end Data includes the following: (1) Options (7) risk protection triggers and purge today (e.g., order and execution Auction Notifications (e.g., Flash, PIM, notifications; (8) opening imbalance management, market data, and risk Solicitation and Facilitation or other messages; (9) auction notifications; and management). Overall, the Exchange information); (2) Options Symbol (10) auction responses. The SQF Purge believes that the proposed changes will Directory Messages; (3) System Event Interface only receives and notifies of allow Members to more easily Messages (e.g., start of messages, start of purge requests from the market maker.7 system hours, start of quoting, start of understand what information is D. Nasdaq Precise available on which protocol. opening); (5) Option Trading Action As proposed, Supplementary Material Messages (e.g., halts, resumes); (6) ‘‘Nasdaq Precise’’ or ‘‘Precise’’ is a .03 to Rule 715 (i.e., Types of Orders) Execution Messages; (7) Order Messages front-end interface that allows will provide that the Exchange offers (order messages, risk protection triggers Electronic Access Members and their Members the following protocols for or purge notifications).’’ Sponsored Customers to send orders to entering orders and quotes respectively: The Exchange now proposes to codify the Exchange and perform other related the following definition of OTTO in its functions. Features include the member and sponsoring member, as set forth in rulebook: ‘‘Ouch to Trade Options’’ or following: (1) Order and execution Supplementary Material to Rule 706. Market makers ‘‘OTTO’’ is an interface that allows management: Enter, modify, and cancel must connect to the Exchange via SQF, which is the Members and their Sponsored orders on the Exchange, and manage Exchange’s quoting protocol, and are therefore not Customers to connect, send, and receive executions (e.g., parent/child orders, eligible to use Precise. inactive orders, and post-trade 5 See Securities Exchange Act Release No. 81109 messages related to orders, auction (July 10, 2017), 82 FR 32594 (July 14, 2017) (SR– orders, and auction responses to the allocations); (2) market data: Access to GEMX–2017–28) (proposed rule change regarding Exchange. Features include the real-time market data (e.g., NBBO and how Immediate-or-Cancel Orders will be handled); following: (1) Options symbol directory and Securities Exchange Act Release No. 81970 7 messages (e.g., underlying instruments); All of the notification messages available on (October 27, 2017), 82 FR 50910 (November 2, 2017) SQF ports as described above (i.e., options symbol (SR–GEMX–2017–50) (proposed rule change related (2) system event messages (e.g., start of directory messages, system event messages, trading to the Kill Switch risk protection). trading hours messages and start of action messages, etc.) are configurable in that 6 The Exchange’s affiliates—i.e., Nasdaq ISE, LLC opening); (3) trading action messages market makers can select the specific types of (‘‘ISE’’), Nasdaq MRX, LLC (‘‘MRX’’), Nasdaq PHLX (e.g., halts and resumes); (4) execution notifications they wish to receive on their SQF LLC (‘‘Phlx’’), Nasdaq Options Market (‘‘NOM’’), ports. As such, SQF Purge Interface ports are a and Nasdaq BX, LLC (‘‘BX’’)—intend to file similar messages; (5) order messages; (6) risk subpart of SQF ports that have been configured to rule changes as part of this exercise. protection triggers and cancel only receive and notify of purge requests.
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Exchange BBO); (3) risk management: been enabled.10 Lastly, Precise provides trading on the Exchange. The Exchange set customizable risk parameters (e.g., a comprehensive audit trail of orders believes codifying the quote and order kill switch); and (4) book keeping and and trades through its book keeping and entry protocols will increase reporting: comprehensive audit trail of reporting features, including order transparency to the Members that use orders and trades (e.g., order history and history reports and done away trade these protocols to connect to the done away trade reports). reports.11 Exchange. Precise is a software application that 2. Statutory Basis is offered by the Exchange to EAMs and B. Self-Regulatory Organization’s their Sponsored Customers. Use of The Exchange believes that the Statement on Burden on Competition Precise is completely voluntary. The proposed rule change is consistent with Exchange makes Precise available to Section 6(b) of the Securities Exchange In accordance with Section 6(b)(8) of 14 EAMs and their Sponsored Customers Act of 1934 (the ‘‘Act’’),12 in general, the Act, the Exchange does not believe as a convenience for entering and and furthers the objectives of Section that the proposed rule change will managing orders, but the protocol is not 6(b)(5) of the Act,13 in particular, in that impose any burden on intermarket or an exclusive means for any user to send it is designed to promote just and intramarket competition that is not orders to GEMX. Precise is merely a equitable principles of trade, to remove necessary or appropriate in furtherance front-end interface to the Exchange’s impediments to and perfect the of the purposes of the Act. As explained existing trading system, and is designed mechanism for a free and open market above, the Exchange is codifying the as an alternative to the Exchange’s other and a national market system, and, in quote and order entry protocols that protocols (i.e., FIX, OTTO, and SQF) for general, to protect investors and the Members use to connect to the the sending of orders to GEMX. Precise public interest. Exchange’s trading system. The is also an alternative to similar front-end The Exchange believes that the Exchange does not believe that proposed rule change is consistent with order and execution management codifying these protocols in the the protection of investors and the systems currently offered by other rulebook will have any competitive public interest as it codifies the technology providers as well as other impact. FIX, OTTO, and SQF were exchanges.8 protocols used to connect to the Exchange’s trading system. As discussed established in SR–GEMX–2017–07, and Precise provides users with access to are already available to Members, who GEMX’s regular order book. The above, the Exchange previously filed to establish FIX, OTTO, and SQF in SR– use these protocols to connect and protocol offers order and execution manage their trading activity on the features that allow users to send, GEMX–2017–07. These protocols will Exchange. Adding rule language that modify, and cancel their orders, and now be codified in the Exchange’s describes these Exchange offerings will manage executions. For example, the rulebook. In addition, the Exchange has protocol offers users the capability to briefly described Precise in various increase transparency around the stage larger orders and divide them into proposed rule changes filed with the operation of the Exchange without smaller orders for execution (i.e., Commission. In the interest of having any impact on intermarket or parent/child orders), or stage multiple transparency, the Exchange has intramarket competition. Furthermore, orders to send for execution at a later included a more fulsome description of Precise is a voluntary piece of time (i.e., inactive orders). Precise also the functionalities offered via Precise in functionality that EAMs and their offers post trade allocation, including this proposed rule change, and is Sponsored Customers may use as a the capability for users to directly adjust codifying language in its rules that convenience for entering and managing clearing information on the front-end would describe this protocol. orders and executions, as an alternative While no functional changes to the protocol. Precise users can also access to the Exchange’s other protocols (i.e., protocols are proposed in this filing, the and display real-time market data such FIX, OTTO, and SQF). Precise is also an Exchange believes that including a as the National Best Bid and Offer alternative to similar front-end order description of the protocols in its (‘‘NBBO’’) and the Exchange Best Bid and execution management systems rulebook will benefit Members by and Offer (‘‘Exchange BBO’’). increasing transparency around the currently offered by other technology Precise also provides risk providers as well as other exchanges management capabilities that allow operation of the Exchange. Furthermore, the proposed definitions being included (e.g., PULSe). If market participants users to set customizable risk believe that other products available in parameters.9 For example, Precise in the rulebook will more clearly and accurately reflect the information the marketplace are more beneficial supports the kill switch risk protection than Precise, they will simply use those feature, which is an optional tool that included on the protocols, and will be harmonized with language to be products instead. For the foregoing enables members to initiate a message(s) reasons, the Exchange does not believe to the Exchange’s trading system to included in the rules of its affiliated that its proposal to codify Precise will promptly cancel orders and restrict exchanges to the extent that the impose any burden on intermarket or entry of new orders until re-entry has protocols operate in the same manner. The protocols described in this filing intramarket competition that is not 8 For example, Cboe Exchange, Inc. currently provide a range of important features to necessary or appropriate in furtherance offers a similar front-end order and execution Members, including the ability to of the purposes of the Act. management system called PULSeSM that allows submit quotes and orders, and perform users to send orders to Cboe Options Exchange, C2 other functions necessary to manage C. Self-Regulatory Organization’s Options, Cboe Futures Exchange, and other U.S. Statement on Comments on the options and stock exchanges. See https:// 10 Proposed Rule Change Received From www.cboe.org/hybrid/pulsesalessheet.pdf. See Rule 711(d). Precise is able to send a 9 The Exchange is characterizing the risk message to the Exchange to initiate the kill switch Members, Participants, or Others protections on Precise under a broader category of through Precise. risk management compared to the risk protection 11 Done away trade reports allow Precise users to No written comments were either categories on the other protocols because Precise record orders and executions, including executions solicited or received. also supports administrator capability for accessing on a different venue than the Exchange. and setting risk parameters for multiple users 12 15 U.S.C. 78f(b). within a member firm. 13 15 U.S.C. 78f(b)(5). 14 15 U.S.C. 78f(b)(8).
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III. Date of Effectiveness of the rules/sro.shtml). Copies of the Commission is publishing this notice to Proposed Rule Change and Timing for submission, all subsequent solicit comments on the proposed rule Commission Action amendments, all written statements change from interested persons. with respect to the proposed rule Because the foregoing proposed rule I. Self-Regulatory Organization’s change that are filed with the change does not: (i) Significantly affect Statement of the Terms of Substance of Commission, and all written the protection of investors or the public the Proposed Rule Change interest; (ii) impose any significant communications relating to the proposed rule change between the The Exchange proposes to codify the burden on competition; and (iii) become definitions of the protocols that operative for 30 days from the date on Commission and any person, other than those that may be withheld from the Members can use to enter quotes and which it was filed, or such shorter time orders on the Exchange. as the Commission may designate, it has public in accordance with the provisions of 5 U.S.C. 552, will be The text of the proposed rule change become effective pursuant to Section is available on the Exchange’s website at 19(b)(3)(A)(iii) of the Act 15 and available for website viewing and printing in the Commission’s Public http://ise.cchwallstreet.com/, at the subparagraph (f)(6) of Rule 19b–4 Reference Room, 100 F Street NE, principal office of the Exchange, and at thereunder.16 Washington, DC 20549, on official the Commission’s Public Reference At any time within 60 days of the Room. filing of the proposed rule change, the business days between the hours of Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of the II. Self-Regulatory Organization’s temporarily suspend such rule change if filing also will be available for Statement of the Purpose of, and it appears to the Commission that such inspection and copying at the principal Statutory Basis for, the Proposed Rule action is: (i) Necessary or appropriate in office of the Exchange. All comments Change received will be posted without change. the public interest; (ii) for the protection Persons submitting comments are In its filing with the Commission, the of investors; or (iii) otherwise in cautioned that we do not redact or edit Exchange included statements furtherance of the purposes of the Act. personal identifying information from concerning the purpose of and basis for If the Commission takes such action, the comment submissions. You should the proposed rule change and discussed Commission shall institute proceedings submit only information that you wish any comments it received on the to determine whether the proposed rule to make available publicly. All proposed rule change. The text of these should be approved or disapproved. submissions should refer to File statements may be examined at the IV. Solicitation of Comments Number SR–GEMX–2018–26 and places specified in Item IV below. The Exchange has prepared summaries, set Interested persons are invited to should be submitted on or before August 23, 2018. forth in sections A, B, and C below, of submit written data, views, and the most significant aspects of such arguments concerning the foregoing, For the Commission, by the Division of statements. including whether the proposed rule Trading and Markets, pursuant to delegated change is consistent with the Act. authority.17 A. Self-Regulatory Organization’s Comments may be submitted by any of Robert W. Errett, Statement of the Purpose of, and the following methods: Deputy Secretary. Statutory Basis for, the Proposed Rule [FR Doc. 2018–16530 Filed 8–1–18; 8:45 am] Change Electronic Comments BILLING CODE 8011–01–P 1. Purpose • Use the Commission’s internet comment form (http://www.sec.gov/ The purpose of the proposed rule rules/sro.shtml); or SECURITIES AND EXCHANGE change is to codify the definitions of the • Send an email to rule-comments@ COMMISSION protocols that Members use to enter sec.gov. Please include File Number SR– quotes and orders on the Exchange, [Release No. 34–83729; File No. SR–ISE– GEMX–2018–26 on the subject line. specifically, the Specialized Quote Feed 2018–65] (‘‘SQF’’), Ouch to Trade Options Paper Comments Self-Regulatory Organizations; Nasdaq (‘‘OTTO’’), Financial Information • Send paper comments in triplicate ISE, LLC; Notice of Filing and eXchange (‘‘FIX’’), and Nasdaq Precise to Secretary, Securities and Exchange Immediate Effectiveness of Proposed (‘‘Precise’’). On June 23, 2017, the Commission, 100 F Street NE, Rule Change To Codify the Definitions Exchange filed a proposed rule change Washington, DC 20549–1090. of the Protocols That Members Can that established the ports that Members All submissions should refer to File Use To Enter Quotes and Orders use to connect to the Exchange, Number SR–GEMX–2018–26. This file including ports used for quote and order number should be included on the July 27, 2018. entry—i.e., SQF, OTTO and FIX.3 The subject line if email is used. To help the Pursuant to Section 19(b)(1) of the Exchange has also filed several Commission process and review your Securities Exchange Act of 1934 proposed fee and other rule changes that comments more efficiently, please use (‘‘Act’’),1 and Rule 19b–4 thereunder,2 briefly describe the availability of only one method. The Commission will notice is hereby given that on July 16, Precise, which is the Exchange’s post all comments on the Commission’s 2018, Nasdaq ISE, LLC (‘‘ISE’’ or proprietary front-end interface used by internet website (http://www.sec.gov/ ‘‘Exchange’’) filed with the Securities Electronic Access Members (‘‘EAMs’’) and Exchange Commission and their Sponsored Customers 4 to send 15 15 U.S.C. 78s(b)(3)(A)(iii). (‘‘Commission’’) the proposed rule 16 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– change as described in Items I, II, and 3 See Securities Exchange Act Release No. 81095 4(f)(6) requires a self-regulatory organization to give III, below, which Items have been (July 7, 2017), 82 FR 32409 (July 13, 2017) (SR–ISE– the Commission written notice of its intent to file prepared by the Exchange. The 2017–62). the proposed rule change at least five business days 4 A ‘‘Sponsored Customer’’ is a non-member of prior to the date of filing of the proposed rule the Exchange that trades under a sponsoring change, or such shorter time as designated by the 17 17 CFR 200.30–3(a)(12). member’s execution and clearing identity pursuant Commission. In this case, the Commission waives 1 15 U.S.C. 78s(b)(1). to a sponsorship arrangement between such non- the five-day pre-filing requirement. 2 17 CFR 240.19b–4. member and sponsoring member, as set forth in
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orders to the Exchange and perform understand what information is messages (e.g., underlying and complex other related functions.5 The protocols available on which protocol. instruments); (2) system event messages used by Members to submit quotes and As proposed, Supplementary Material (e.g., start of trading hours messages and orders play an important role in the .03 to Rule 715 (i.e., Types of Orders) start of opening); (3) trading action operation of the trading system as will provide that the Exchange offers messages (e.g., halts and resumes); (4) critical Exchange functionality used by Members the following protocols for execution messages; (5) order messages; Members to transact in options and entering orders and quotes respectively: (6) risk protection triggers and cancel stock tied to options is offered through A. Financial Information eXchange notifications; (7) auction notifications; these protocols. The Exchange therefore Ports (8) auction responses; and (9) post trade allocation messages. believes that codifying definitions of When the Exchange initially filed to these protocols in its rules will increase adopt order and quote entry protocols, C. Specialized Quote Feed Ports transparency around its operations. it described the FIX protocol as follows: When the Exchange initially filed to As it relates to FIX, OTTO, and SQF, ‘‘FIX is an interface that allows market adopt order and quote entry protocols, the proposed language is substantially participants to connect and send orders it described the SQF protocol as follows: similar to the language included in SR– and auction orders into the Exchange. ‘‘SQF is an interface that allows market ISE–2017–62 with changes to more Data includes the following: (1) Options makers to connect and send quotes, clearly and accurately reflect the certain Symbol Directory Messages; (2) System sweeps and auction responses into the information included on each protocol, Event Messages (e.g., start of messages, Exchange. Data includes the following: such as by separating out different start of system hours, start of quoting, (1) Options Auction Notifications (e.g., categories of messages (e.g., auction start of opening); (3) Option Trading opening imbalance, Flash, PIM, orders, auction notifications, and Action Messages (e.g., halts, resumes); Solicitation and Facilitation or other auction responses). Furthermore, the (4) Execution Messages; (5) Order information); (2) Options Symbol proposed definitions will be Messages (order messages, risk Directory Messages; (3) System Event harmonized where appropriate with protection triggers or purge Messages (e.g., start of messages, start of definitions to be included in the rules notifications).’’ system hours, start of quoting, start of The Exchange now proposes to codify opening); (4) Option Trading Action of the Exchange’s affiliated options the following definition of FIX in its Messages (e.g., halts, resumes); (5) markets, including by using consistent rulebook: ‘‘Financial Information Execution Messages; (6) Quote Messages terms to define the buckets of eXchange’’ or ‘‘FIX’’ is an interface that (quote/sweep messages, risk protection information transmitted, or the features allows Members and their Sponsored triggers or purge notifications).’’ 6 available, on each protocol. Although Customers to connect, send, and receive The Exchange now proposes to codify the Exchange is changing how it messages related to orders and auction the following definition of SQF in its categorizes various features included on orders to the Exchange. Features include rulebook: ‘‘Specialized Quote Feed’’ or FIX, OTTO, and SQF as part of its the following: (1) Execution messages; ‘‘SQF’’ is an interface that allows market harmonization effort, the list of features (2) order messages; (3) risk protection makers to connect, send, and receive included in the proposed definitions are triggers and cancel notifications; and (4) messages related to quotes, Immediate- intended to be exhaustive with respect post trade allocation messages. or-Cancel Orders, and auction responses to the buckets of information provided to the Exchange. Features include the on each protocol. The Exchange also B. Ouch To Trade Options Ports following: (1) Options symbol directory seeks to memorialize Precise to reflect When the Exchange initially filed to messages (e.g., underlying and complex the specific categories of features that adopt order and quote entry protocols, instruments); (2) system event messages are available on the Precise front-end it described the OTTO protocol as (e.g., start of trading hours messages and today (e.g., order and execution follows: ‘‘OTTO is an interface that start of opening); (3) trading action management, market data, and risk allows market participants to connect messages (e.g., halts and resumes); (4) management). Overall, the Exchange and send orders, auction orders and execution messages; (5) quote messages; believes that the proposed changes will auction responses into the Exchange. (6) Immediate-or-Cancel Order allow Members to more easily Data includes the following: (1) Options messages; (7) risk protection triggers and Auction Notifications (e.g., Flash, PIM, purge notifications; (8) opening Supplementary Material to Rule 706. Market makers Solicitation and Facilitation or other imbalance messages; (9) auction must connect to the Exchange via SQF, which is the information); (2) Options Symbol notifications; and (10) auction Exchange’s quoting protocol, and are therefore not Directory Messages; (3) System Event responses. The SQF Purge Interface only eligible to use Precise. Messages (e.g., start of messages, start of receives and notifies of purge requests 5 See Securities Exchange Act Release No. 53788 system hours, start of quoting, start of from the market maker.7 (May 11, 2006), 71 FR 28728 (May 17, 2006) (SR– ISE–2006–19) (proposed fee change establishing opening); (5) Option Trading Action D. Nasdaq Precise Precise). SR–ISE–2006–19 described Precise as Messages (e.g., halts, resumes); (6) ISE’s proprietary front-end interface used by EAMs Execution Messages; (7) Order Messages ‘‘Nasdaq Precise’’ or ‘‘Precise’’ is a to send orders to ISE and view market data. See also (order messages, risk protection triggers front-end interface that allows Securities Exchange Act Release No. 81034 (June Electronic Access Members and their 27, 2017), 82 FR 30923 (July 3, 2017) (SR–ISE– or purge notifications).’’ 2017–58) (proposed rule change regarding how The Exchange now proposes to codify Sponsored Customers to send orders to Immediate-or-Cancel Orders will be handled); and the following definition of OTTO in its the Exchange and perform other related Securities Exchange Act Release No. 81971 (October rulebook: ‘‘Ouch to Trade Options’’ or 27, 2017), 82 FR 50907 (November 2, 2017) (SR– ‘‘OTTO’’ is an interface that allows 7 All of the notification messages available on ISE–2017–94) (proposed rule change related to the SQF ports as described above (i.e., options symbol Kill Switch risk protection). Members and their Sponsored directory messages, system event messages, trading 6 The Exchange’s affiliates—i.e., Nasdaq GEMX, Customers to connect, send, and receive action messages, etc.) are configurable in that LLC (‘‘GEMX’’), Nasdaq MRX, LLC (‘‘MRX’’), messages related to orders, auction market makers can select the specific types of Nasdaq PHLX LLC (‘‘Phlx’’), Nasdaq Options orders, and auction responses to the notifications they wish to receive on their SQF Market (‘‘NOM’’), and Nasdaq BX, LLC (‘‘BX’’)— ports. As such, SQF Purge Interface ports are a intend to file similar rule changes as part of this Exchange. Features include the subpart of SQF ports that have been configured to exercise. following: (1) options symbol directory only receive and notify of purge requests.
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functions. Features include the supports the kill switch risk protection exchanges to the extent that the following: (1) order and execution feature, which is an optional tool that protocols operate in the same manner. management: enter, modify, and cancel enables members to initiate a message(s) The protocols described in this filing orders on the Exchange, and manage to the Exchange’s trading system to provide a range of important features to executions (e.g., parent/child orders, promptly cancel orders and restrict Members, including the ability to inactive orders, and post-trade entry of new orders until re-entry has submit quotes and orders, and perform allocations); (2) market data: access to been enabled.10 Lastly, Precise provides other functions necessary to manage real-time market data (e.g., NBBO and a comprehensive audit trail of orders trading on the Exchange. The Exchange Exchange BBO); (3) risk management: and trades through its book keeping and believes codifying the quote and order set customizable risk parameters (e.g., reporting features, including order entry protocols will increase kill switch); and (4) book keeping and history reports and done away trade transparency to the Members that use reporting: comprehensive audit trail of reports.11 orders and trades (e.g., order history and these protocols to connect to the done away trade reports). 2. Statutory Basis Exchange. Precise is a software application that The Exchange believes that the B. Self-Regulatory Organization’s is offered by the Exchange to EAMs and proposed rule change is consistent with Statement on Burden on Competition their Sponsored Customers. Use of Section 6(b) of the Securities Exchange Precise is completely voluntary. The Act of 1934 (the ‘‘Act’’),12 in general, In accordance with Section 6(b)(8) of Exchange makes Precise available to and furthers the objectives of Section the Act,14 the Exchange does not believe EAMs and their Sponsored Customers 6(b)(5) of the Act,13 in particular, in that that the proposed rule change will as a convenience for entering and it is designed to promote just and impose any burden on intermarket or managing orders, but the protocol is not equitable principles of trade, to remove intramarket competition that is not an exclusive means for any user to send impediments to and perfect the necessary or appropriate in furtherance orders to ISE. Precise is merely a front- mechanism for a free and open market of the purposes of the Act. As explained end interface to the Exchange’s existing and a national market system, and, in above, the Exchange is codifying the trading system, and is designed as an general, to protect investors and the quote and order entry protocols that alternative to the Exchange’s other public interest. Members use to connect to the protocols (i.e., FIX, OTTO, and SQF) for The Exchange believes that the Exchange’s trading system. The the sending of orders to ISE. Precise is proposed rule change is consistent with Exchange does not believe that also an alternative to similar front-end the protection of investors and the order and execution management public interest as it codifies the codifying these protocols in the systems currently offered by other protocols used to connect to the rulebook will have any competitive technology providers as well as other Exchange’s trading system. As discussed impact. FIX, OTTO, and SQF were exchanges.8 above, the Exchange previously filed to established in SR–ISE–2017–62, and are Precise provides users with access to establish FIX, OTTO, and SQF in SR– already available to Members, who use ISE’s regular and complex order books. ISE–2017–62. These protocols will now these protocols to connect and manage The protocol offers order and execution be codified in the Exchange’s rulebook. their trading activity on the Exchange. features that allow users to send, In addition, the Exchange has briefly Adding rule language that describes modify, and cancel their orders, and described Precise in various proposed these Exchange offerings will increase manage executions. For example, the rule changes filed with the Commission. transparency around the operation of protocol offers users the capability to In the interest of transparency, the the Exchange without having any stage larger orders and divide them into Exchange has included a more fulsome impact on intermarket or intramarket smaller orders for execution (i.e., description of the functionalities offered competition. Furthermore, Precise is a parent/child orders), or stage multiple via Precise in this proposed rule change, voluntary piece of functionality that orders to send for execution at a later and is codifying language in its rules EAMs and their Sponsored Customers time (i.e., inactive orders). Precise also that would describe this protocol. may use as a convenience for entering offers post trade allocation, including While no functional changes to the and managing orders and executions, as the capability for users to directly adjust protocols are proposed in this filing, the an alternative to the Exchange’s other clearing information on the front-end Exchange believes that including a protocol. Precise users can also access protocols (i.e., FIX, OTTO, and SQF). description of the protocols in its Precise is also an alternative to similar and display real-time market data such rulebook will benefit Members by front-end order and execution as the National Best Bid and Offer increasing transparency around the management systems currently offered (‘‘NBBO’’) and the Exchange Best Bid operation of the Exchange. Furthermore, by other technology providers as well as and Offer (‘‘Exchange BBO’’). the proposed definitions being included Precise also provides risk in the rulebook will more clearly and other exchanges (e.g., PULSe). If market management capabilities that allow accurately reflect the information participants believe that other products users to set customizable risk included on the protocols, and will be available in the marketplace are more parameters.9 For example, Precise harmonized with language to be beneficial than Precise, they will simply included in the rules of its affiliated use those products instead. For the 8 For example, Cboe Exchange, Inc. currently foregoing reasons, the Exchange does offers a similar front-end order and execution not believe that its proposal to codify management system called PULSeSM that allows and setting risk parameters for multiple users users to send orders to Cboe Options Exchange, C2 within a member firm. Precise will impose any burden on Options, Cboe Futures Exchange, and other U.S. 10 See Rule 711(d). Precise is able to send a intermarket or intramarket competition message to the Exchange to initiate the kill switch options and stock exchanges. See https:// that is not necessary or appropriate in www.cboe.org/hybrid/pulsesalessheet.pdf. through Precise. 9 The Exchange is characterizing the risk 11 Done away trade reports allow Precise users to furtherance of the purposes of the Act. protections on Precise under a broader category of record orders and executions, including executions risk management compared to the risk protection on a different venue than the Exchange. categories on the other protocols because Precise 12 15 U.S.C. 78f(b). also supports administrator capability for accessing 13 15 U.S.C. 78f(b)(5). 14 15 U.S.C. 78f(b)(8).
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C. Self-Regulatory Organization’s number should be included on the ‘‘Exchange’’) filed with the Securities Statement on Comments on the subject line if email is used. To help the and Exchange Commission Proposed Rule Change Received From Commission process and review your (‘‘Commission’’) the proposed rule Members, Participants, or Others comments more efficiently, please use change as described in Items I and II No written comments were either only one method. The Commission will below, which Items have been prepared solicited or received. post all comments on the Commission’s by the Exchange. The Commission is internet website (http://www.sec.gov/ publishing this notice to solicit III. Date of Effectiveness of the rules/sro.shtml). Copies of the comments on the proposed rule change Proposed Rule Change and Timing for submission, all subsequent from interested persons. Commission Action amendments, all written statements I. Self-Regulatory Organization’s with respect to the proposed rule Because the foregoing proposed rule Statement of the Terms of Substance of change that are filed with the change does not: (i) Significantly affect the Proposed Rule Change the protection of investors or the public Commission, and all written The Exchange proposes to codify the interest; (ii) impose any significant communications relating to the definitions of the protocols that burden on competition; and (iii) become proposed rule change between the Members can use to enter quotes and operative for 30 days from the date on Commission and any person, other than those that may be withheld from the orders on the Exchange. which it was filed, or such shorter time The text of the proposed rule change as the Commission may designate, it has public in accordance with the provisions of 5 U.S.C. 552, will be is available on the Exchange’s website at become effective pursuant to Section http://nasdaqmrx.cchwallstreet.com/, at 19(b)(3)(A)(iii) of the Act 15 and available for website viewing and printing in the Commission’s Public the principal office of the Exchange, and subparagraph (f)(6) of Rule 19b–4 at the Commission’s Public Reference 16 Reference Room, 100 F Street NE, thereunder. Room. At any time within 60 days of the Washington, DC 20549, on official filing of the proposed rule change, the business days between the hours of II. Self-Regulatory Organization’s Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of the Statement of the Purpose of, and temporarily suspend such rule change if filing also will be available for Statutory Basis for, the Proposed Rule it appears to the Commission that such inspection and copying at the principal Change action is: (i) Necessary or appropriate in office of the Exchange. All comments received will be posted without change. In its filing with the Commission, the the public interest; (ii) for the protection Exchange included statements of investors; or (iii) otherwise in Persons submitting comments are cautioned that we do not redact or edit concerning the purpose of and basis for furtherance of the purposes of the Act. the proposed rule change and discussed If the Commission takes such action, the personal identifying information from comment submissions. You should any comments it received on the Commission shall institute proceedings proposed rule change. The text of these to determine whether the proposed rule submit only information that you wish to make available publicly. All statements may be examined at the should be approved or disapproved. submissions should refer to File places specified in Item IV below. The IV. Solicitation of Comments Number SR–ISE–2018–65 and should be Exchange has prepared summaries, set submitted on or before August 23, 2018. forth in sections A, B, and C below, of Interested persons are invited to the most significant aspects of such submit written data, views, and For the Commission, by the Division of statements. arguments concerning the foregoing, Trading and Markets, pursuant to delegated including whether the proposed rule authority.17 A. Self-Regulatory Organization’s change is consistent with the Act. Robert W. Errett, Statement of the Purpose of, and Comments may be submitted by any of Deputy Secretary. Statutory Basis for, the Proposed Rule the following methods: [FR Doc. 2018–16534 Filed 8–1–18; 8:45 am] Change Electronic Comments BILLING CODE 8011–01–P 1. Purpose • Use the Commission’s internet The purpose of the proposed rule comment form (http://www.sec.gov/ SECURITIES AND EXCHANGE change is to codify the definitions of the rules/sro.shtml); or COMMISSION protocols that Members use to enter • Send an email to rule-comments@ quotes and orders on the Exchange, [Release No. 34–83730; File No. SR–MRX– specifically, the Specialized Quote Feed sec.gov. Please include File Number SR– 2018–25] ISE–2018–65 on the subject line. (‘‘SQF’’), Ouch to Trade Options (‘‘OTTO’’), and Financial Information Paper Comments Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing and eXchange (‘‘FIX’’). On July 20, 2017, the • Send paper comments in triplicate Immediate Effectiveness of Proposed Exchange filed a proposed rule change to Secretary, Securities and Exchange Rule Change To Codify the Definitions that established the ports that Members Commission, 100 F Street NE, of the Protocols That Members Can use to connect to the Exchange, Washington, DC 20549–1090. Use To Enter Quotes and Orders including ports used for quote and order All submissions should refer to File entry—i.e., SQF, OTTO and FIX.3 The Number SR–ISE–2018–65. This file July 27, 2018. protocols used by Members to submit Pursuant to Section 19(b)(1) of the quotes and orders play an important 15 15 U.S.C. 78s(b)(3)(A)(iii). Securities Exchange Act of 1934 role in the operation of the trading 16 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– (‘‘Act’’),1 and Rule 19b–4 thereunder,2 system as critical Exchange 4(f)(6) requires a self-regulatory organization to give notice is hereby given that on July 16, functionality used by Members to the Commission written notice of its intent to file 2018, Nasdaq MRX, LLC (‘‘MRX’’ or the proposed rule change at least five business days transact in options is offered through prior to the date of filing of the proposed rule change, or such shorter time as designated by the 17 17 CFR 200.30–3(a)(12). 3 See Securities Exchange Act Release No. 81312 Commission. The Exchange has satisfied this 1 15 U.S.C. 78s(b)(1). (August 3, 2017), 82 FR 37253 (August 9, 2017) requirement. 2 17 CFR 240.19b–4. (SR–MRX–2017–13).
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these protocols. The Exchange therefore Customers 5 to connect, send, and Messages (e.g., start of messages, start of believes that codifying definitions of receive messages related to orders and system hours, start of quoting, start of these protocols in its rules will increase auction orders to the Exchange. Features opening); (4) Option Trading Action transparency around its operations. include the following: (1) Execution Messages (e.g., halts, resumes); (5) The proposed language is messages; (2) order messages; (3) risk Execution Messages; (6) Quote Messages substantially similar to the language protection triggers and cancel (quote/sweep messages, risk protection included in SR–MRX–2017–13 with notifications; and (4) post trade triggers or purge notifications).’’ changes to more clearly and accurately allocation messages. The Exchange now proposes to codify the following definition of SQF in its reflect the certain information included B. Ouch To Trade Options Ports on each protocol, such as by separating rulebook: ‘‘Specialized Quote Feed’’ or When the Exchange initially filed to out different categories of messages (e.g., ‘‘SQF’’ is an interface that allows market adopt order and quote entry protocols, auction orders, auction notifications, makers to connect, send, and receive it described the OTTO protocol as and auction responses). Furthermore, messages related to quotes, Immediate- follows: ‘‘OTTO is an interface that or-Cancel Orders, and auction responses the proposed definitions will be allows market participants to connect to the Exchange. Features include the harmonized where appropriate with and send orders, auction orders and following: (1) Options symbol directory definitions to be included in the rules auction responses into the Exchange. messages (e.g., underlying instruments); of the Exchange’s affiliated options Data includes the following: (1) Options (2) system event messages (e.g., start of markets, including by using consistent Auction Notifications (e.g., Flash, PIM, trading hours messages and start of terms to define the buckets of Solicitation and Facilitation or other opening); (3) trading action messages information transmitted, or the features information); (2) Options Symbol (e.g., halts and resumes); (4) execution available, on each protocol.4 Although Directory Messages; (3) System Event messages; (5) quote messages; (6) the Exchange is changing how it Messages (e.g., start of messages, start of Immediate-or-Cancel Order messages; categorizes various features included on system hours, start of quoting, start of (7) risk protection triggers and purge FIX, OTTO, and SQF as part of its opening); (5) Option Trading Action notifications; (8) opening imbalance harmonization effort, the list of features Messages (e.g., halts, resumes); (6) messages; (9) auction notifications; and included in the proposed definitions are Execution Messages; (7) Order Messages (10) auction responses. The SQF Purge intended to be exhaustive with respect (order messages, risk protection triggers Interface only receives and notifies of to the buckets of information provided or purge notifications).’’ purge requests from the market maker.6 on each protocol. The Exchange believes The Exchange now proposes to codify that the proposed changes will allow the following definition of OTTO in its 2. Statutory Basis Members to more easily understand rulebook: ‘‘Ouch to Trade Options’’ or The Exchange believes that the what information is available on which ‘‘OTTO’’ is an interface that allows proposed rule change is consistent with protocol. Members and their Sponsored Section 6(b) of the Securities Exchange As proposed, Supplementary Material Customers to connect, send, and receive Act of 1934 (the ‘‘Act’’),7 in general, and .03 to Rule 715 (i.e., Types of Orders) messages related to orders, auction furthers the objectives of Section 6(b)(5) will provide that the Exchange offers orders, and auction responses to the of the Act,8 in particular, in that it is Members the following protocols for Exchange. Features include the designed to promote just and equitable entering orders and quotes respectively: following: (1) Options symbol directory principles of trade, to remove messages (e.g., underlying instruments); impediments to and perfect the A. Financial Information eXchange (2) system event messages (e.g., start of mechanism for a free and open market Ports trading hours messages and start of and a national market system, and, in When the Exchange initially filed to opening); (3) trading action messages general, to protect investors and the adopt order and quote entry protocols, (e.g., halts and resumes); (4) execution public interest. it described the FIX protocol as follows: messages; (5) order messages; (6) risk The Exchange believes that the ‘‘FIX is an interface that allows market protection triggers and cancel proposed rule change is consistent with participants to connect and send orders notifications; (7) auction notifications; the protection of investors and the and auction orders into the Exchange. (8) auction responses; and (9) post trade public interest as it codifies the Data includes the following: (1) Options allocation messages. protocols used to connect to the Symbol Directory Messages; (2) System Exchange’s trading system. As discussed C. Specialized Quote Feed Ports above, the Exchange previously filed to Event Messages (e.g., start of messages, establish FIX, OTTO, and SQF in SR– start of system hours, start of quoting, When the Exchange initially filed to MRX–2017–13. These protocols will start of opening); (3) Option Trading adopt order and quote entry protocols, now be codified in the Exchange’s Action Messages (e.g., halts, resumes); it described the SQF protocol as follows: ‘‘SQF is an interface that allows market rulebook. (4) Execution Messages; (5) Order While no functional changes to the Messages (order messages, risk makers to connect and send quotes, sweeps and auction responses into the protocols are proposed in this filing, the protection triggers or purge Exchange believes that including a notifications).’’ Exchange. Data includes the following: (1) Options Auction Notifications (e.g., description of the protocols in its The Exchange now proposes to codify opening imbalance, Flash, PIM, the following definition of FIX in its Solicitation and Facilitation or other 6 All of the notification messages available on rulebook: ‘‘Financial Information information); (2) Options Symbol SQF ports as described above (i.e., options symbol eXchange’’ or ‘‘FIX’’ is an interface that directory messages, system event messages, trading Directory Messages; (3) System Event action messages, etc.) are configurable in that allows Members and their Sponsored market makers can select the specific types of 5 A ‘‘Sponsored Customer’’ is a non-member of notifications they wish to receive on their SQF 4 The Exchange’s affiliates—i.e., Nasdaq ISE, LLC the Exchange that trades under a sponsoring ports. As such, SQF Purge Interface ports are a (‘‘ISE’’), Nasdaq GEMX, LLC (‘‘GEMX’’), Nasdaq member’s execution and clearing identity pursuant subpart of SQF ports that have been configured to PHLX LLC (‘‘Phlx’’), Nasdaq Options Market to a sponsorship arrangement between such non- only receive and notify of purge requests. (‘‘NOM’’), and Nasdaq BX, LLC (‘‘BX’’)—intend to member and sponsoring member, as set forth in 7 15 U.S.C. 78f(b). file similar rule changes as part of this exercise. Supplementary Material to Rule 706. 8 15 U.S.C. 78f(b)(5).
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rulebook will benefit Members by which it was filed, or such shorter time those that may be withheld from the increasing transparency around the as the Commission may designate, it has public in accordance with the operation of the Exchange. Furthermore, become effective pursuant to Section provisions of 5 U.S.C. 552, will be the proposed definitions being included 19(b)(3)(A)(iii) of the Act 10 and available for website viewing and in the rulebook will more clearly and subparagraph (f)(6) of Rule 19b–4 printing in the Commission’s Public accurately reflect the information thereunder.11 Reference Room, 100 F Street NE, included on the protocols, and will be At any time within 60 days of the Washington, DC 20549, on official harmonized with language to be filing of the proposed rule change, the business days between the hours of included in the rules of its affiliated Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of the exchanges to the extent that the temporarily suspend such rule change if filing also will be available for protocols operate in the same manner. it appears to the Commission that such inspection and copying at the principal The protocols described in this filing action is: (i) Necessary or appropriate in office of the Exchange. All comments provide a range of important features to the public interest; (ii) for the protection received will be posted without change. Members, including the ability to of investors; or (iii) otherwise in Persons submitting comments are submit quotes and orders, and perform furtherance of the purposes of the Act. cautioned that we do not redact or edit other functions necessary to manage If the Commission takes such action, the personal identifying information from trading on the Exchange. The Exchange Commission shall institute proceedings comment submissions. You should believes codifying the quote and order to determine whether the proposed rule submit only information that you wish entry protocols will increase should be approved or disapproved. to make available publicly. All transparency to the Members that use submissions should refer to File IV. Solicitation of Comments these protocols to connect to the Number SR–MRX–2018–25 and should Exchange. Interested persons are invited to be submitted on or before August 23, submit written data, views, and B. Self-Regulatory Organization’s 2018. arguments concerning the foregoing, Statement on Burden on Competition For the Commission, by the Division of including whether the proposed rule In accordance with Section 6(b)(8) of Trading and Markets, pursuant to delegated change is consistent with the Act. authority.12 the Act,9 the Exchange does not believe Comments may be submitted by any of Robert W. Errett, that the proposed rule change will the following methods: impose any burden on intermarket or Deputy Secretary. intramarket competition that is not Electronic Comments [FR Doc. 2018–16526 Filed 8–1–18; 8:45 am] necessary or appropriate in furtherance • Use the Commission’s internet BILLING CODE 8011–01–P of the purposes of the Act. As explained comment form (http://www.sec.gov/ above, the Exchange is codifying the rules/sro.shtml); or quote and order entry protocols that • Send an email to rule-comments@ SECURITIES AND EXCHANGE Members use to connect to the sec.gov. Please include File Number SR– COMMISSION Exchange’s trading system. The MRX–2018–25 on the subject line. Exchange does not believe that [Release No. 34–83724; File No. SR–OCC– Paper Comments codifying these protocols in the 2018–010] rulebook will have any competitive • Send paper comments in triplicate impact. FIX, OTTO, and SQF were to Secretary, Securities and Exchange Self-Regulatory Organizations; The established in SR–MRX–2017–13, and Commission, 100 F Street NE, Options Clearing Corporation; Notice are already available to Members, who Washington, DC 20549–1090. of Filing and Immediate Effectiveness use these protocols to connect and All submissions should refer to File of Proposed Rule Change To Amend manage their trading activity on the Number SR–MRX–2018–25. This file the Definition of Flexibly Structured Exchange. Adding rule language that number should be included on the Options describes these Exchange offerings will subject line if email is used. To help the July 27, 2018. increase transparency around the Commission process and review your operation of the Exchange without comments more efficiently, please use Pursuant to Section 19(b)(1) of the having any impact on intermarket or only one method. The Commission will Securities Exchange Act of 1934 intramarket competition. post all comments on the Commission’s (‘‘Act’’),1 and Rule 19b–4 thereunder,2 internet website (http://www.sec.gov/ notice is hereby given that on July 16, C. Self-Regulatory Organization’s 2018, The Options Clearing Corporation Statement on Comments on the rules/sro.shtml). Copies of the submission, all subsequent (‘‘OCC’’) filed with the Securities and Proposed Rule Change Received From Exchange Commission (‘‘Commission’’) Members, Participants, or Others amendments, all written statements with respect to the proposed rule the proposed rule change as described No written comments were either change that are filed with the in Items I, II, and III below, which Items solicited or received. Commission, and all written have been prepared by OCC. OCC filed III. Date of Effectiveness of the communications relating to the the proposed rule change pursuant to proposed rule change between the Section 19(b)(3)(A) 3 of the Act and Rule Proposed Rule Change and Timing for 4 Commission Action Commission and any person, other than 19b–4(f)(4)(ii) thereunder so that the proposal was effective upon filing with Because the foregoing proposed rule 10 15 U.S.C. 78s(b)(3)(A)(iii). the Commission. The Commission is change does not: (i) Significantly affect 11 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– publishing this notice to solicit the protection of investors or the public 4(f)(6) requires a self-regulatory organization to give interest; (ii) impose any significant the Commission written notice of its intent to file 12 17 CFR 200.30–3(a)(12). the proposed rule change at least five business days burden on competition; and (iii) become 1 15 U.S.C. 78s(b)(1). prior to the date of filing of the proposed rule 2 operative for 30 days from the date on change, or such shorter time as designated by the 17 CFR 240.19b–4. Commission. In this case, the Commission waives 3 15 U.S.C. 78s(b)(3)(A). 9 15 U.S.C. 78f(b)(8). the five-day pre-filing requirement. 4 17 CFR 240.19b–4(f)(4)(ii).
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comments on the proposed rule change currently provide that once a series of manner that is consistent with Cboe from interested persons. non-flexibly structured options (other Options’ rules, OCC proposes to amend than a series of quarterly options or I. Clearing Agency’s Statement of the its definition of ‘‘flexibly structured short term options) is opened for trading Terms of Substance of the Proposed option’’ in Article I of its By-Laws by on an options exchange, any existing Rule Change deleting ‘‘(other than a series of flexibly structured option contracts that quarterly options or short term OCC proposes to amend the definition have identical variable terms shall be options)’’ in the two instances in which of the term ‘‘flexibly structured option’’ fully fungible with options in such it appears in the definition.12 OCC as provided in Article I, Section 1.F.(8) series, and shall cease to be flexibly added this text to its definition of a of OCC’s By-Laws to conform the structured options.8 In other words, flexibly structured option in 2009 to definition to a recent rule change by with the exception of quarterly options ensure consistency with Cboe Options Cboe Exchange, Inc. (‘‘Cboe Options’’ or and short term options series, once an ‘‘CBOE’’). The proposed changes to exchange opens a non-flexibly rules, which were amended at that time OCC’s By-Laws can be found in Exhibit structured option series having identical to, among other things, allow for 5 to the filing. All terms with initial terms to a flexibly structured option, the flexibly structured options to become capitalization that are not otherwise flexibly structured option would fungible with subsequently introduced defined herein have the same meaning become fungible with the non-flexibly non-flexibly structured options series as set forth in the By-Laws and Rules.5 structured option series. that have the same terms (other than a Pursuant to a recent rule change, Cboe series of quarterly options or short term II. Clearing Agency’s Statement of the 13 Purpose of, and Statutory Basis for, the Options has made all flexibly structured options). Consistent with Cboe Proposed Rule Change options fungible with subsequently- Options’ rule change at that time, OCC introduced non-flexibly structured amended its definition of flexibly In its filing with the Commission, options series having identical variable structured options in 2009 to provide OCC included statements concerning terms.9 This includes non-flexibly that a flexibly structured option cannot the purpose of and basis for the structured quarterly options and short have the same terms as any series of proposed rule change and discussed any 10 term options series. As a result, for non-flexibly structured options comments it received on the proposed instance, under Cboe Options’ rules, a previously opened for trading on the rule change. The text of these statements flexibly structured option that has the exchange other than a series of quarterly may be examined at the places specified same terms as a subsequently- 14 in Item IV below. OCC has prepared options or short term options. OCC introduced quarterly or short term intended the 2009 amended definition summaries, set forth in sections (A), (B), option series would now be fungible and (C) below, of the most significant to clarify that a flexibly structured with that non-flexibly structured option could share the same terms as a aspects of these statements. quarterly or short term option series. non-flexibly structured quarterly or (A) Clearing Agency’s Statement of the Cboe Options has requested that OCC amend its By-Laws to allow Cboe short term option series and still be Purpose of, and Statutory Basis for, the considered a flexibly structured option. Proposed Rule Change Options’ rule change to become effective. Cboe Options noted in its rule Consistent with Cboe Options’ most (1) Purpose change that the change ‘‘will have the recent rule change, OCC proposes to Flexibly structured options are effect of more FLEX Options becoming eliminate from the language of its options that give investors the ability to fungible with Non-Flex Options, which definition of a flexibly structured option customize basic option features will potentially increase the liquidity the first instance of ‘‘(other than a series including size, expiration date, exercise available to traders of FLEX Options.’’ 11 of quarterly options or short term style, and certain exercise prices. OCC To clear and settle flexibly structured options)’’ to provide that a flexibly currently defines a ‘‘flexibly structured options traded on Cboe Options in a structured option cannot share the same option’’ as an option having variable terms as a non-flexibly structured terms that are negotiated between the OCC’s By-Laws and Rules. Under Article I of OCC option series that has been previously parties to a confirmed trade pursuant to By-Laws, the term ‘‘quarterly option’’ means ‘‘an opened for trading on the exchange, option of a series of stock options or index options Exchange Rules and that do not that expires on the last business day of a calendar including a currently-trading quarterly correspond to the variable terms 6 of any quarter,’’ and the term ‘‘short term option’’ means options or short term options series. series of non-flexibly structured options ‘‘an option of a series of options that expires one Consistent with Cboe Options’ rules, previously opened for trading on the week after it is opened for trading.’’ 8 OCC believes that this change would Exchange (other than a series of OCC By-Laws, Article I., Section 1.F.(8). 9 See Securities Exchange Act Release No. 83205 amend the definition in a manner to quarterly options or short term (May 9, 2018), 83 FR 22550 (May 15, 2018) (SR– make it clear that flexibly structured options).7 In addition, OCC’s By-Laws CBOE–2018–008) (Order Approving a Proposed options cannot share the same terms as Rule Change Relating to Flexibly Structured non-flexibly structured option series 5 OCC’s By-Laws and Rules can be found on Options) (‘‘Cboe Options has proposed to amend OCC’s public website: http://optionsclearing.com/ the rule to make all FLEX Options fungible with 12 OCC By-Laws, Article I., Section 1.F.(8). Non-FLEX Options that have identical terms.’’) about/publications/bylaws.jsp. 13 See Securities Exchange Act Release No. 59675 10 6 OCC By-Laws, Article I., Section 1.V.(1), which This also includes weekly expirations and End (April 1, 2009), 74 FR 15794 (April 7, 2009) (SR– of Month (‘‘EOM’’) expirations. Cboe Options stated defines ‘‘variable terms’’ in respect of a series of OCC–2009–05); Securities Exchange Act Release in its proposal that flexibly structured options with option contracts other than OTC options to mean No. 59417 (February 18, 2009), 74 FR 8591 these expirations were not originally intended to be ‘‘the name of the underlying interest, the exercise (February 25, 2009) (order approving SR–CBOE– price (or, in respect of a series of delayed start fungible. See Securities Exchange Release Act No. 2008–115). options that does not yet have a set exercise price, 82622 (February 2, 2018), 83 FR 5668 (February 8, 14 the exercise price setting formula and exercise price 2018) (SR–CBOE–2018–008) (Notice of Filing of a See Securities Exchange Act Release No. 59060 setting date), the index value determinant and the Proposed Rule Change Relating to Flexibly (December 5, 2008), 73 FR 76075 (December 15, index multiplier (in the case of a flexibly structured Structured Options). 2008) (SR–CBOE–2008–115) (‘‘subject to certain index option), the cap interval (in the case of a 11 See Securities Exchange Act Release No. 82622 aggregation requirements for cash settled options, capped option) and the expiration date of such (February 2, 2018), 83 FR 5668 (February 8, 2018) the current FLEX Rules do permit the expiration of option contract.’’ (SR–CBOE–2018–008) (Notice of Filing of a FLEX Options on the same day that Non-FLEX 7 OCC By-Laws, Article I. Non-flexibly structured Proposed Rule Change Relating to Flexibly quarterly index options (‘‘QIX’’) and Non-FLEX weekly options are called ‘‘short term options’’ in Structured Options). Weeklys Options expire.’’).
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that have been previously opened for consistency between OCC’s By-Laws terms that are later opened for trading trading on the exchange. and Rules and Cboe Options’ rules as on the exchange. The second instance of ‘‘(other than a applied to the clearance and settlement In addition, the proposed rule change series of quarterly options or short term of flexibly structured options. OCC is not inconsistent with the existing By- options)’’ in the flexibly structured further believes that the proposed rule Laws and Rules of OCC, including any option definition was adopted in 2009 change accomplishes this by providing rules proposed to be amended. to provide, consistent with Cboe that all flexibly structured options are (B) Clearing Agency’s Statement on Options rules then in effect and as an subject to the same requirements. The Burden on Competition exception to general fungibility, that a proposed rule change would make all quarterly options or short term options flexibly structured options fungible with Section 17A(b)(3)(I) of the Act 21 series with the same terms as a flexibly subsequently introduced non-flexibly requires that the rules of a clearing structured option would not become structured options with identical terms, agency not impose any burden on fungible with that flexibly structured thereby increasing operational competition not necessary or option. As noted above, Cboe Options efficiency by eliminating the need for appropriate in furtherance of the Act. has recently adopted a rule change to OCC to monitor and treat a certain OCC does not believe that the proposed eliminate this restriction and allow all group of flexibly structured options (i.e., rule change would impact or impose flexibly structured options to become ones with the same terms as quarterly any burden on competition.22 The fungible with non-flexibly structured options and short term options series) proposed rule change would not affect options series having identical variable differently than other flexibly structured the competitive dynamics between terms that are later opened for trading options. In addition, Cboe Options has clearing members, but rather would on the exchange.15 Accordingly, OCC noted that its rule change will solely affect the treatment of flexibly proposes to eliminate the second potentially increase the liquidity structured options with the same terms instance of this text from the language available to traders of flexibly structured as quarterly options and short term of the definition of a flexibly structured options.18 Moreover, the Commission options series. In this respect, it would option in OCC’s By-Laws to make it has previously noted that it would be facilitate consistent treatment of such consistent with Cboe Options’ rules. As concerned if flexibly structured options flexibly structured options with all amended, OCC’s definition of a flexibly were to act as a surrogate for trading in other flexibly structured options, structured option would provide that standardized options (i.e., non-flexibly providing that all flexibly structured once a series of non-flexibly structured structured exchange-traded options) and options will become fungible with options is opened for trading on an that allowing for flexibly structured subsequently-introduced standardized exchange, any existing flexibly options to become fungible with options with the same terms. The structured option contracts that have standardized options would help proposed rule change also would not identical variable terms shall be fully alleviate this concern.19 In this respect, inhibit access to OCC’s services or fungible with options in such series, the Commission noted the following disadvantage or favor any particular and shall cease to be flexibly structured when it initially approved Cboe user in relationship to another. The options. OCC believes that this change Options’ rules to provide for fungibility proposed rule change would treat would allow OCC clear and settle between flexibly structured options and equally all holders of flexibly structured flexibly structured options traded on standardized options series with the options with the same terms as Cboe Options in a manner that is same terms: subsequently introduced quarterly consistent with Cboe Options’ rules and options and short term options series, However, the rules, as proposed by the would have the effect of making more CBOE, help to ensure that FLEX market providing that such flexibly structured flexibly structured options fungible with participants cannot avoid the protections options held by them would become identical non-flexibly structured options provided to retail investors in the fungible with such standardized options series. standardized options market simply by series. For the foregoing reasons, OCC trading FLEX Options. In this regard, once a (2) Statutory Basis believes the proposed rule change is in series is open for trading, new FLEX Options the public interest, would be consistent Section 17A(b)(3)(F) of the Securities are not permitted in that series. In addition, with the requirements of the Act once a Non-FLEX Options series is open, all Exchange Act of 1934, as amended applicable to clearing agencies, and (‘‘Act’’) 16 requires, among other things, outstanding FLEX Options in the same series become fungible with the standardized would not impact or impose a burden that the rules of a clearing agency be market, are traded pursuant to standardized on competition. designed to promote the prompt and market trading rules, and are aggregated for accurate clearance and settlement of position and exercise limit purposes. These (C) Clearing Agency’s Statement on securities and derivatives transactions, rules help to alleviate these surrogate Comments on the Proposed Rule to foster cooperation and coordination concerns and should help to ensure that Change Received From Members, with persons engaged in clearance and FLEX Options market continues to operate as Participants or Others 20 settlement, and, in general, to protect intended. Written comments on the proposed investors and the public interest. OCC The proposed rule change would help rule change were not and are not believes that the proposed rule change to further address this concern by intended to be solicited with respect to is consistent with Section 17A(b)(3)(F) allowing all flexibly structured options the proposed rule change and none have of Act 17 because it is designed to to become fungible with non-flexibly been received. promote the prompt and accurate structured options series with the same clearance and settlement of securities III. Date of Effectiveness of the Proposed Rule Change and Timing for transactions in flexibly structured 18 See supra note 10. options. The proposed rule change 19 See Securities Exchange Act Release No. 59417 Commission Action accomplishes this by maintaining (February 18, 2009), 74 FR 8591 (February 25, 2009) The foregoing rule change has become (order approving SR–CBOE–2008–115). See also supra note 9. effective pursuant to Section 19(b)(3)(A) 15 See supra note 9. 20 See Securities Exchange Act Release No. 59417 16 15 U.S.C. 78q–1(b)(3)(F). (February 18, 2009), 74 FR 8591 (February 25, 2009) 21 15 U.S.C. 78q–1(b)(3)(I). 17 15 U.S.C. 78q–1(b)(3)(F). (order approving SR–CBOE–2008–115). 22 15 U.S.C. 78q–1(b)(3)(I).
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of the Act 23 and Rule 19b–4(f)(4)(ii) 24 available for website viewing and Analyst, 202–205–7030, curtis.rich@ thereunder because it effects a change in printing in the Commission’s Public sba.gov; an existing service that (i) does not Reference Room, 100 F Street NE, SUPPLEMENTARY INFORMATION: SBA Form adversely affect the safeguarding of Washington, DC 20549, on official 1050, Settlement Sheet is used in SBA’s securities or funds in the custody or business days between the hours of 7(a) Loan Program to collect information control of the clearing agency or for 10:00 a.m. and 3:00 p.m. Copies of such from lenders and borrowers regarding which it is responsible and (ii) does not filing also will be available for the disbursement of loan proceeds. SBA significantly affect the respective rights inspection and copying at the principal relies on this information during the or obligations of the clearing agency or office of OCC and on OCC’s website at guaranty purchase review process as a persons using the service. https://www.theocc.com/components/ component in determining whether to At any time within 60 days of the _ _ _ _ _ docs/legal/rules and bylaws/sr occ 18 honor a loan guaranty. The currently filing of the proposed rule change, the 010.pdf. Commission summarily may approved form primarily requires the All comments received will be posted lender and borrower to certify to temporarily suspend such rule change if without change. Persons submitting it appears to the Commission that such whether they complied with a series of comments are cautioned that we do not loan requirements. The current form action is necessary or appropriate in the redact or edit personal identifying public interest, for the protection of also requires submission of information from comment submissions. documentation (e.g., joint payee or investors, or otherwise in furtherance of You should submit only information the purposes of the Act.25 cancelled checks, invoices or paid that you wish to make available receipts, and wire transfer records) in IV. Solicitation of Comments publicly. support of the certification. SBA has All submissions should refer to File determined that this current information Interested persons are invited to Number SR–OCC–2018–010 and should collection lacks enough specificity to submit written data, views and be submitted on or before August 23, yield the information regarding use of arguments concerning the foregoing, 2018. including whether the proposed rule proceeds that would enable the agency change is consistent with the Act. For the Commission, by the Division of to effectively monitor compliance with Trading and Markets, pursuant to delegated loan disbursement procedures. As a Comments may be submitted by any of 26 the following methods: authority. result, SBA is proposing to change both Robert W. Errett, the content and format of the Form Electronic Comments Deputy Secretary. 1050. • Use the Commission’s internet [FR Doc. 2018–16532 Filed 8–1–18; 8:45 am] The form will be divided into several comment form (http://www.sec.gov/ BILLING CODE 8011–01–P sections to clearly identify the rules/sro.shtml); or information to be submitted. The • Send an email to rule-comments@ revised form will continue to collect the sec.gov. Please include File Number SR– SMALL BUSINESS ADMINISTRATION same basic identifying information such OCC–2018–010 on the subject line. as loan amount, loan number and Paper Comments Data Collection Available for Public lender’s name. In addition, the form will Comments • continue to require certifications from Send paper comments in triplicate both the lender and borrower regarding to Brent J. Fields, Secretary, Securities ACTION: 60-Day notice and request for compliance with the disbursement and Exchange Commission, 100 F Street comments. requirements and accuracy of NE, Washington, DC 20549–1090. information submitted. However, All submissions should refer to File SUMMARY: The Small Business Administration (SBA) intends to request generally the enumerated statements Number SR–OCC–2018–010. This file will be reduced or combined and number should be included on the approval, from the Office of Management and Budget (OMB) for the replaced with requests for specific subject line if email is used. To help the information. the revised form will Commission process and review your collection of information described below. The Paperwork Reduction Act include a listing of all of the uses of loan comments more efficiently, please use proceeds. For each applicable use, only one method. The Commission will (PRA) of 1995, requires federal agencies to publish a notice in the Federal information regarding the names of the post all comments on the Commission’s payees, the amount disbursed, and the internet website (http://www.sec.gov/ Register concerning each proposed collection of information before authorized amount remaining will be rules/sro.shtml). Copies of the collected. The revised form will also submission, all subsequent submission to OMB, and to allow 60 days for public comment in response to include a section to document the amendments, all written statements borrower’s equity injection of cash, with respect to the proposed rule the notice. This notice complies with that requirement. assets, and any seller contribution (on change that are filed with the full standby for the life of the loan). Commission, and all written DATES: Submit comments on or before These changes will allow the lender communications relating to the October 1, 2018. to more clearly document all of the proposed rule change between the ADDRESSES: Send all comments to Susan sources and uses of funds at the time of Commission and any person, other than Suckfiel, Supervisory Financial Analyst, loan closing. This additional those that may be withheld from the Office of Capital Access, Small Business information will better allow both public in accordance with the Administration, 409 3rd Street, 8th lenders and SBA staff to ensure that the provisions of 5 U.S.C. 552, will be Floor, Washington, DC 20416. necessary information is collected at the FOR FURTHER INFORMATION CONTACT: time of loan origination 23 15 U.S.C. 78s(b)(3)(A). Susan Suckfiel, Supervisory Financial 24 17 CFR 240.19b–4(f)(4)(ii). Analyst, 202–205–6443, susan.suckfiel@ (a) Solicitation of Public Comments 25 Notwithstanding the foregoing, implementation of this rule change will be delayed until this rule sba.gov or Curtis B. Rich, Management SBA is requesting comments on (i) change is deemed certified under CFTC Regulation Whether the collection of information is § 40.6. 26 17 CFR 200.30–3(a)(12). necessary for the agency to properly
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perform its functions; (ii) whether the filed at the address listed above or other Economic Injury (EIDL) Loan burden estimates are accurate; (iii) locally announced locations. Application Deadline Date: 04/24/2019. whether there are ways to minimize the The following areas have been ADDRESSES: Submit completed loan burden, including through the use of determined to be adversely affected by applications to: U.S. Small Business automated techniques or other forms of the disaster: Administration, Processing and information technology; and (iv) Primary Counties: Siskiyou. Disbursement Center, 14925 Kingsport whether there are ways to enhance the Contiguous Counties: Road, Fort Worth, TX 76155. California: Del Norte, Humboldt, quality, utility, and clarity of the FOR FURTHER INFORMATION CONTACT: Modoc, Shasta, Trinity. information. A. Escobar, Office of Disaster Oregon: Jackson, Josephine, Klamath. (b) Summary of Information Collection Assistance, U.S. Small Business The Interest Rates are: Administration, 409 3rd Street SW, Title: Settlement Statement. Suite 6050, Washington, DC 20416, Form Numbers: SBA Form 1050. Percent OMB Control Number: 3245–0200. (202) 205–6734. Description of Respondents: SBA For Physical Damage: SUPPLEMENTARY INFORMATION: Notice is Lenders and Borrowers. Homeowners with Credit Avail- hereby given that as a result of the Estimated Number of Respondents: able Elsewhere ...... 3.875 Administrator’s disaster declaration, Homeowners without Credit 28,224. applications for disaster loans may be Available Elsewhere ...... 1.938 filed at the address listed above or other Frequency of Response per Businesses with Credit Avail- Respondent: 1. able Elsewhere ...... 7.220 locally announced locations. Total Estimated Annual Responses: Businesses without Credit The following areas have been 28,224. Available Elsewhere ...... 3.610 determined to be adversely affected by Total Estimated Annual Hour Burden: Non-Profit Organizations with the disaster: 4,800. Credit Available Elsewhere ... 2.500 Primary Counties: Allegheny, Non-Profit Organizations with- Curtis Rich, out Credit Available Else- Westmoreland. Management Analyst. where ...... 2.500 Contiguous Counties: Pennsylvania: Armstrong, Beaver, [FR Doc. 2018–16558 Filed 8–1–18; 8:45 am] For Economic Injury: Businesses & Small Agricultural Butler, Cambria, Fayette, Indiana, BILLING CODE 8025–01–P Cooperatives without Credit Somerset, Washington. Available Elsewhere ...... 3.610 Non-Profit Organizations with- The Interest Rates are: SMALL BUSINESS ADMINISTRATION out Credit Available Else- Percent [Disaster Declaration #15614 and #15615; where ...... 2.500 CALIFORNIA Disaster Number CA–00285] For Physical Damage: The number assigned to this disaster Homeowners with Credit Administrative Declaration of a for physical damage is 15614 5 and for Available Elsewhere ...... 3.875 Disaster for the State of California economic injury is 15615 0. Homeowners without The States which received an EIDL Credit Available Else- AGENCY: U.S. Small Business Declaration # are California, Oregon. where ...... 1.938 Administration. (Catalog of Federal Domestic Assistance Businesses with Credit ACTION: Notice. Number 59008) Available Elsewhere ...... 7.220 Businesses without Credit SUMMARY: This is a notice of an Linda E. McMahon, Available Elsewhere ...... 3.610 Administrative declaration of a disaster Administrator. Non-Profit Organizations for the State of California dated [FR Doc. 2018–16541 Filed 8–1–18; 8:45 am] with Credit Available Elsewhere ...... 2.500 07/25/2018. BILLING CODE 8025–01–P Incident: Klamathon Fire. Non-Profit Organizations Incident Period: 07/05/2018 through without Credit Available 07/23/2018. Elsewhere ...... 2.500 SMALL BUSINESS ADMINISTRATION For Economic Injury: DATES: Issued on 07/25/2018. [Disaster Declaration #15586 and #15587; Businesses & Small Agri- Physical Loan Application Deadline Pennsylvania Disaster Number PA–00084] cultural Cooperatives Date: 09/24/2018. without Credit Available Economic Injury (EIDL) Loan Administrative Declaration of a Elsewhere ...... 3.610 Application Deadline Date: 04/25/2019. Disaster for the Commonwealth of Non-Profit Organizations ADDRESSES: Submit completed loan Pennsylvania without Credit Available applications to: U.S. Small Business Elsewhere ...... 2.500 AGENCY: Administration, Processing and U.S. Small Business Disbursement Center, 14925 Kingsport Administration. The number assigned to this disaster Road, Fort Worth, TX 76155. ACTION: Notice. for physical damage is 15586 6 and for economic injury is 15587 0. FOR FURTHER INFORMATION CONTACT: SUMMARY: This is a notice of an The State which received an EIDL A. Escobar, Office of Disaster Administrative declaration of a disaster Declaration # is Pennsylvania. Assistance, U.S. Small Business for the Commonwealth of Pennsylvania (Catalog of Federal Domestic Assistance Administration, 409 3rd Street SW, dated 07/24/2018. Number 59008) Suite 6050, Washington, DC 20416, Incident: Flooding. (202) 205–6734. Incident Period: 06/20/2018 through Dated: July 24, 2018. SUPPLEMENTARY INFORMATION: Notice is 06/21/2018. Linda E. McMahon, hereby given that as a result of the DATES: Issued on 07/24/2018. Administrator. Administrator’s disaster declaration, Physical Loan Application Deadline [FR Doc. 2018–16544 Filed 8–1–18; 8:45 am] applications for disaster loans may be Date: 09/24/2018. BILLING CODE 8025–01–P
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SMALL BUSINESS ADMINISTRATION Percent Pennsylvania: Bedford, Cambria, Centre, Clearfield, Huntingdon. [Disaster Declaration #15610 and #15611; Businesses & Small Agri- Maryland Disaster Number MD–00037] cultural Cooperatives The Interest Rates are: without Credit Available Administrative Declaration of a Elsewhere ...... 3.610 Percent Disaster for the State of Maryland Non-Profit Organizations without Credit Available For Physical Damage: AGENCY: U.S. Small Business Elsewhere ...... 2.500 Homeowners with Credit Administration. Available Elsewhere ...... 3.875 ACTION: Notice. Homeowners without Credit The number assigned to this disaster Available Elsewhere ...... 1.938 for physical damage is 15610 6 and for SUMMARY: This is a notice of an Businesses with Credit Avail- economic injury is 15611 0. Administrative declaration of a disaster able Elsewhere ...... 7.220 The State which received an EIDL for the State of Maryland dated Businesses without Credit Declaration # is Maryland. Available Elsewhere ...... 3.610 07/25/2018. Non-Profit Organizations with Incident: Severe Flooding. (Catalog of Federal Domestic Assistance Number 59008) Credit Available Elsewhere 2.500 Incident Period: 05/27/2018. Non-Profit Organizations DATES: Issued on 07/25/2018. Dated: July 25, 2018. without Credit Available Physical Loan Application Deadline Linda E. McMahon, Elsewhere ...... 2.500 Date: 09/24/2018. Administrator. For Economic Injury: Economic Injury (EIDL) Loan [FR Doc. 2018–16542 Filed 8–1–18; 8:45 am] Businesses & Small Agricul- tural Cooperatives without Application Deadline Date: 04/25/2019. BILLING CODE 8025–01–P Credit Available Elsewhere 3.610 ADDRESSES: Submit completed loan Non-Profit Organizations applications to: U.S. Small Business without Credit Available Administration, Processing and SMALL BUSINESS ADMINISTRATION Elsewhere ...... 2.500 Disbursement Center, 14925 Kingsport [Disaster Declaration #15612 and #15613; Road, Fort Worth, TX 76155. Pennsylvania Disaster Number PA–00085] The number assigned to this disaster FOR FURTHER INFORMATION CONTACT: for physical damage is 15612 6 and for A. Escobar, Office of Disaster Administrative Declaration of a economic injury is 15613 0. Assistance, U.S. Small Business Disaster for the Commonwealth of The State which received an EIDL Administration, 409 3rd Street SW, Pennsylvania Declaration # is Pennsylvania. Suite 6050, Washington, DC 20416, AGENCY: U.S. Small Business (Catalog of Federal Domestic Assistance (202) 205–6734. Administration. Number 59008) SUPPLEMENTARY INFORMATION: Notice is ACTION: Notice. Dated July 25, 2018. hereby given that as a result of the Linda E. McMahon, Administrator’s disaster declaration, SUMMARY: This is a notice of an Administrator. applications for disaster loans may be Administrative declaration of a disaster [FR Doc. 2018–16543 Filed 8–1–18; 8:45 am] filed at the address listed above or other for the Commonwealth of Pennsylvania BILLING CODE 8025–01–P locally announced locations. dated 07/25/2018. The following areas have been Incident: Flooding. determined to be adversely affected by Incident Period: 07/02/2018. the disaster: DATES: Issued on 07/25/2018. SURFACE TRANSPORTATION BOARD Primary Counties: Baltimore City, Physical Loan Application Deadline [Docket No. EP 552 (Sub-No. 22); Docket Howard. Date: 09/24/2018. No. EP 558 (Sub-No. 21); Docket No. EP Contiguous Counties: Economic Injury (EIDL) Loan 750] Maryland: Anne Arundel, Baltimore, Application Deadline Date: 04/25/2019. Carroll, Frederick, Montgomery, ADDRESSES: Submit completed loan Railroad Revenue Adequacy—2017 Prince George’s. applications to: U.S. Small Business Determination; Railroad Cost of Administration, Processing and Capital—2017; Uniform Railroad The Interest Rates are: Disbursement Center, 14925 Kingsport Costing System—2017 Calculations Road, Fort Worth, TX 76155. Percent AGENCY: Surface Transportation Board. FOR FURTHER INFORMATION CONTACT: ACTION: Decision seeking comment. For Physical Damage: A. Escobar, Office of Disaster Homeowners with Credit Assistance, U.S. Small Business SUMMARY: The Board is seeking Available Elsewhere ...... 3.875 Administration, 409 3rd Street SW, comment on whether to make Homeowners without Suite 6050, Washington, DC 20416, adjustments to its 2017 annual cost of Credit Available Else- (202) 205–6734. where ...... 1.938 capital determination, revenue Businesses with Credit SUPPLEMENTARY INFORMATION: Notice is adequacy determination, and Uniform Available Elsewhere ...... 7.220 hereby given that as a result of the Railroad Costing System calculations, to Businesses without Credit Administrator’s disaster declaration, account for a one-time revaluation of Available Elsewhere ...... 3.610 applications for disaster loans may be rail carriers’ deferred tax liabilities due Non-Profit Organizations filed at the address listed above or other to the reduction of the federal corporate with Credit Available locally announced locations. The income tax rate in the Tax Cuts and Jobs Elsewhere ...... 2.500 following areas have been determined to Act enacted in December 2017. Non-Profit Organizations be adversely affected by the disaster: without Credit Available DATES: Comments are due by August 16, Elsewhere ...... 2.500 Primary Counties: Blair. 2018. Reply comments are due by For Economic Injury: Contiguous Counties: September 5, 2018.
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FOR FURTHER INFORMATION CONTACT: on-line submissions, please contact 1994 (Antidumping Agreement), Jonathon Binet, (202) 245–0368. Federal Sandy McKinzy at (202) 395–9483. Articles VI and XVI of the GATT 1994, Information Relay Service (FIRS) for the FOR FURTHER INFORMATION CONTACT: and Paragraph 1.2 of Part I of the hearing impaired: (800) 877–8339. Assistant General Counsel Ryan Majerus Protocol on the Accession of the SUPPLEMENTARY INFORMATION: at [email protected] or Socialist Republic of Viet Nam Additional information is contained in (202) 395–0380. (Accession Protocol). the Board’s decision, which is available SUPPLEMENTARY INFORMATION: III. Public Comments: Requirements for on our website, http://www.stb.gov. Submissions Copies of the decision may be I. Background USTR invites written comments purchased by contacting the Office of Section 127(b)(1) of the Uruguay concerning the issues raised in this Public Assistance, Governmental Round Agreements Act (URAA) (19 dispute. All submissions must be in Affairs, and Compliance at (202) 245– U.S.C. 3537(b)(1)) requires notice and English and sent electronically via 0238. Assistance for the hearing opportunity for comment after the www.regulations.gov. impaired is available through FIRS at United States submits or receives a To submit comments via (800) 877–8339. request for the establishment of a WTO www.regulations.gov, enter docket This action will not significantly dispute settlement panel. Pursuant to number USTR–2018–0021 on the home affect either the quality of the human this provision, USTR is providing notice page and click ‘‘search.’’ The site will environment or energy conservation. that Vietnam has requested a dispute provide a search-results page listing all By the Board, Board Members Begeman settlement panel pursuant to the WTO documents associated with this docket. and Miller. Understanding on Rules Procedures Find a reference to this notice by Decided: July 27, 2018. Governing the Settlement of Disputes selecting ‘‘notice’’ under ‘‘document Andrea Pope-Matheson, (DSU). The panel established by the type’’ on the left side of the search- Clearance Clerk. WTO will hold its meetings in Geneva, results page, and click on the link Switzerland. [FR Doc. 2018–16624 Filed 8–1–18; 8:45 am] entitled ‘‘comment now!’’ For further BILLING CODE 4915–01–P II. Major Issues Raised by Vietnam information on using the www.regulations.gov website, please On January 8, 2018, Vietnam consult the resources provided on the requested consultations with the United website by clicking on ‘‘How to Use OFFICE OF THE UNITED STATES States. You can find the consultation Regulations.gov’’ on the bottom of the TRADE REPRESENTATIVE request at www.wto.org in a document home page. [Docket Number USTR–2018–0021; Dispute designated as WT/DS536/1. The United The www.regulations.gov website Number WT/DS536] States and Vietnam held consultations allows users to provide comments by on March 1, 2018. On June 8, 2018, filling in a ‘‘type comment’’ field, or by WTO Dispute Settlement Proceeding Vietnam requested the WTO to establish attaching a document using an ‘‘upload Regarding United States—Anti- a WTO dispute settlement panel file’’ field. USTR prefers that comments Dumping Measures on Fish Fillets regarding the U.S. Department of be provided in an attached document. If From Vietnam Commerce (DOC) determinations in the a document is attached, it is sufficient following antidumping proceedings on AGENCY: Office of the United States to type ‘‘see attached’’ in the ‘‘type Certain Frozen Fish Fillets from the Trade Representative. comment’’ field. USTR prefers Socialist Republic of Vietnam: submissions in Microsoft Word (.doc) or ACTION: Notice with request for • Fifth Administrative Review and Adobe Acrobat (.pdf). If the submission comments. Fourth New Shipper Review: Certain is in an application other than those Frozen Fish Fillets from the Socialist SUMMARY: The Office of the United two, please indicate the name of the States Trade Representative (USTR) is Republic of Vietnam (DOC investigation application in the ‘‘type comment’’ number A–552–801). field. providing notice that Vietnam has • requested the establishment of a dispute Certain Frozen Fish Fillets from the For any comments submitted settlement panel under the Marrakesh Socialist Republic of Vietnam: Sixth electronically that contain business Agreement Establishing the World Trade Antidumping Duty Administrative confidential information (BCI), the file Organization (WTO Agreement). You Review and New Shipper Review (DOC name of the business confidential investigation number A–552–801). version should begin with the characters can find the request at www.wto.org in • a document designated as WT/DS536/2. Certain Frozen Fish Fillets from the ‘‘BC’’. Any page containing BCI must USTR invites written comments Socialist Republic of Vietnam: Seventh clearly be marked ‘‘BUSINESS concerning the issues raised in this Antidumping Duty Administrative CONFIDENTIAL’’ on the top and bottom dispute. Review (DOC investigation number A– of that page and the submission should 552–801). clearly indicate, via brackets, DATES: Although USTR will accept any Vietnam’s request for establishment of highlighting, or other means, the comments during the course of the a panel appears to be concerned with specific information that is business dispute settlement proceedings, you the alleged use of ‘‘zeroing’’, timeliness confidential. If you request business should submit your comment on or of a request for revocation, applying a confidential treatment, you must certify before September 4, 2018, to be assured Vietnam-wide entity rate based on facts in writing that disclosure of the of timely consideration by USTR. available, and Section 129 of the URAA. information would endanger trade ADDRESSES: USTR strongly prefers Vietnam claims that certain alleged secrets or profitability, and that the electronic submissions made through measures of the United States are not information would not customarily be the Federal eRulemaking Portal: http:// consistent with the United States’ released to the public. Filers of www.regulations.gov. Follow the obligations under Articles 1, 2, 6, 9, 11, submissions containing BCI also must instructions for submitting comments in and 18 the WTO Agreement on submit a public version of their Section III below. The docket number Implementation of Article VI of the comments. The file name of the public USTR–2018–0021. For alternatives to General Agreement on Tariffs and Trade version should begin with the character
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‘‘P’’. Follow the ‘‘BC’’ and ‘‘P’’ with the from specified requirements of Federal Issued in Washington, DC, July 27, 2018. name of the person or entity submitting Aviation Regulations. The purpose of Dale Bouffiou, the comments or rebuttal comments. If this notice is to improve the public’s Deputy Executive Director, Office of this is not sufficient to protect BCI or awareness of, and participation in, the Rulemaking. otherwise protect business interests, FAA’s exemption process. Neither Petition for Exemption please contact Sandy McKinzy at (202) publication of this notice nor the 395–9483 to discuss whether alternative inclusion or omission of information in Docket No.: FAA–2018–0472. arrangements are possible. the summary is intended to affect the Petitioner: Honeywell Aerospace. USTR may determine that information legal status of the petition or its final Section(s) of 14 CFR Affected: or advice contained in a comment, other disposition. § 21.303(b)(3). than BCI, is confidential in accordance Description of Relief Sought: with section 135(g)(2) of the Trade Act DATES: Comments on this petition must Honeywell Aerospace (Honeywell) of 1974 (19 U.S.C. 2155(g)(2)). If a identify the petition docket number and petitioned the Federal Aviation submitter believes that information or must be received on or before August 7, Administration for an exemption from advice is confidential, s/he must clearly 2018. § 21.303(b)(3) of Title 14, Code of Federal Regulations (CFR). The designate the information or advice as ADDRESSES: Send comments identified confidential and mark it as proposed exemption, if granted, would by docket number FAA–2018–0472 allow Honeywell to add articles from ‘‘SUBMITTED IN CONFIDENCE’’ at the using any of the following methods: top and bottom of the cover page and the Civil Aviation Administration of • each succeeding page, and provide a Federal eRulemaking Portal: Go to China (CAAC), approved supplemental non-confidential summary of the http://www.regulations.gov and follow type certificate to its existing parts information or advice. the online instructions for sending your manufacture approval issued by the Pursuant to section 127(e) of the comments electronically. Federal Aviation Administration under URAA (19 U.S.C. 3537(e)), USTR will • Mail: Send comments to Docket 14 CFR Subpart K. maintain a docket on this dispute Operations, M–30; U.S. Department of [FR Doc. 2018–16554 Filed 8–1–18; 8:45 am] settlement proceeding, docket number Transportation (DOT), 1200 New Jersey BILLING CODE 4910–13–P USTR–2018–0021, accessible to the Avenue SE, Room W12–140, West public at www.regulations.gov. The Building Ground Floor, Washington, DC public file will include non-confidential 20590–0001. DEPARTMENT OF TRANSPORTATION public comments USTR receives • Hand Delivery or Courier: Take Federal Highway Administration regarding the dispute. If a dispute comments to Docket Operations in settlement panel is composed, or in the Room W12–140 of the West Building Notice of Final Federal Agency Actions event of an appeal from a panel, USTR Ground Floor at 1200 New Jersey on Proposed Highway in California will make the following documents Avenue SE, Washington, DC, between 9 publicly available at www.ustr.gov: the a.m. and 5 p.m., Monday through AGENCY: Federal Highway U.S. submissions and any non- Friday, except Federal holidays. Administration (FHWA), DOT. confidential summaries of submissions ACTION: Notice of limitation on claims • Fax: Fax comments to Docket received from other participants in the for judicial review of actions by the Operations at 202–493–2251. dispute. If a dispute settlement panel is California Department of Transportation composed, or in the event of an appeal Privacy: In accordance with 5 U.S.C. (Caltrans). from a panel, the report of the panel, 553(c), DOT solicits comments from the and, if applicable, the report of the public to better inform its rulemaking SUMMARY: The FHWA, on behalf of Appellate Body, also will be available process. DOT posts these comments, Caltrans, is issuing this notice to on the website of the World Trade without edit, including any personal announce actions taken by Caltrans that Organization, at www.wto.org. information the commenter provides, to are final. The actions relate to a http://www.regulations.gov, as proposed highway project, the State Juan Millan, described in the system of records Route 84 (SR 84) Expressway Widening Assistant United States Trade Representative notice (DOT/ALL–14 FDMS), which can and SR 84/Interchange 680 (I–680) for Monitoring and Enforcement, Office of Interchange Improvements Project from the U.S. Trade Representative. be reviewed at http://www.dot.gov/ privacy. post miles 17.9 to 22.9 on SR 84 and [FR Doc. 2018–16562 Filed 8–1–18; 8:45 am] from post miles 10.3 to 15.3 on I–680 in Docket: Background documents or BILLING CODE 3290–F8–P the County of Alameda, State of comments received may be read at California. Those actions grant licenses, http://www.regulations.gov at any time. permits, and approvals for the project. DEPARTMENT OF TRANSPORTATION Follow the online instructions for accessing the docket or go to the Docket DATES: By this notice, the FHWA, on Federal Aviation Administration Operations in Room W12–140 of the behalf of Caltrans, is advising the public West Building Ground Floor at 1200 of final agency actions subject to 23 [Summary Notice No. 2018–11] New Jersey Avenue SE, Washington, U.S.C. 139(l)(1). A claim seeking judicial review of the Federal agency Petition for Exemption; Summary of DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. actions on the highway project will be Petition Received; Honeywell barred unless the claim is filed on or Aerospace FOR FURTHER INFORMATION CONTACT: before December 31, 2018. If the Federal A.W. Pendergrass (202) 267–4713, AGENCY: Federal Aviation law that authorizes judicial review of a Administration (FAA), DOT. Office of Rulemaking, Federal Aviation claim provides a time period of less Administration, 800 Independence than 150 days for filing such claim, then ACTION: Notice. Avenue SW, Washington, DC 20591. that shorter time period still applies. SUMMARY: This notice contains a This notice is published pursuant to FOR FURTHER INFORMATION CONTACT: For summary of a petition seeking relief 14 CFR 11.85. Caltrans: Brian Gassner, Environmental
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Branch Chief, 111 Grand Avenue MS other project records are available by 19. Rehabilitation Act 8B, Oakland, CA 94612, 510–286–6025 contacting Caltrans at the address 20. Americans with Disabilities Act (Voice), email [email protected]. provided above. The Caltrans EA and 21. Comprehensive Environmental SUPPLEMENTARY INFORMATION: Effective FONSI can be viewed and downloaded Response, Compensation, and July 1, 2007, the Federal Highway from the project website at Liability Act (CERCLA) Administration (FHWA) assigned, and www.dot.ca.gov/d4/ 22. Resource Conservation and Recovery the California Department of 84expresswayproject. Act (RCRA) This notice applies to all Federal Transportation (Caltrans) assumed, 23. Safe Drinking Water Act environmental responsibilities for this agency decisions as of the issuance date project pursuant to 23 U.S.C. 327. of this notice and all laws under which 24. Occupational Safety and Health Act Notice is hereby given that Caltrans has such actions were taken, including but 25. Atomic Energy Act taken final agency actions subject to 23 not limited to: 26. Toxic Substances Control Act U.S.C. 139(l)(1) by issuing licenses, 1. National Environmental Policy Act 27. Federal Insecticide, Fungicide and permits, and approvals for the following (NEPA) Rodenticide Act highway project in the State of 2. Fixing America’s Surface 28. E.O. 11990 Protection of Wetlands; California: The State Route 84 (SR 84) Transportation Act (Fast Act) E.O. 11988 Floodplain Management Expressway Widening and SR 84/ 3. Clean Air Act 29. E.O. 12898, Federal Actions to Interchange 680 (I–680) Interchange 4. Federal-Aid Highway Act Address Environmental Justice in Improvements Project would widen and 5. Clean Water Act Minority Populations and Low 6. Historic Sites Act conform SR 84 to expressway standards Income Populations 7. Section 106 of the National Historic between south of Ruby Hill Drive and 30. E.O. 12088, Federal Compliance the I–680 interchange. The project Preservation Act 8. Archeological Resources Protection with Pollution Control Standards would also improve SR 84/I–680 (Catalog of Federal Domestic Assistance interchange ramps and extend the Act 9. Archeological and Historic Program Number 20.205, Highway Planning existing southbound I–680 High Preservation Act and Construction. The regulations Occupancy Vehicle/express lane (HOV/ 10. Antiquities Act implementing Executive Order 12372 express lane) northward by 11. Endangered Species Act regarding intergovernmental consultation on approximately 2 miles, to approximately 12. Migratory Bird Treaty Act Federal programs and activities apply to this program.) 0.8 mile north of Koopman Road. The 13. Fish and Wildlife Coordination Act project area is in Pleasanton, Sunol, and 14. Magnuson-Stevens Fishery Authority: 23 U.S.C. 139(l)(1). unincorporated Alameda County. The Conservation and Management Act actions by the Federal agencies, and the 15. Section 4(f) of the Department of Issued on: July 27, 2018. laws under which such actions were Transportation Act Tashia Clemons, taken, are described in the 16. Civil Rights Act, Title VI Director, Planning and Environment, Federal Environmental Assessment (EA) and 17. Farmland Protection Policy Act Highway Administration, Sacramento, Finding of No Significant Impact 18. Uniform Relocation Assistance and California. (FONSI) for the project, approved on Real Property Acquisition Policies [FR Doc. 2018–16569 Filed 8–1–18; 8:45 am] May 30th, 2018. The EA, FONSI, and Act BILLING CODE 4910–RY–P
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Part II
Department of Homeland Security
U.S. Customs and Border Protection
Department of the Treasury
19 CFR Parts 113, 181, 190, et al. Modernized Drawback; Proposed Rule
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DEPARTMENT OF HOMELAND DATES: Comments must be received on information on how to submit SECURITY or before September 17, 2018. comments. ADDRESSES: You may submit comments, Background U.S. Customs and Border Protection identified by docket number USCBP– 2018–0029, by one of the following Table of Contents DEPARTMENT OF THE TREASURY methods: I. Authority • Federal eRulemaking Portal: http:// II. Modernized Drawback 19 CFR Parts 113, 181, 190, and 191 www.regulations.gov. Follow the A. TFTEA-Drawback Modernization 1 instructions for submitting comments. Overview [USCBP–2018–0029] • 1. Transition Period (February 24, 2018– Mail: Trade and Commercial February 23, 2019) RIN 1515–AE23 Regulations Branch, Regulations and (a) Claims may be filed under the existing Rulings, Office of Trade, U.S. Customs drawback process or the TFTEA- Modernized Drawback and Border Protection, 90 K Street NE, Drawback process during the transition 10th Floor, Washington, DC 20229– period. AGENCY: U.S. Customs and Border 1177. (b) TFTEA-Drawback substitution claims Protection, Department of Homeland Instructions: All submissions received cannot designate imported merchandise Security; Department of the Treasury. must include the agency name and if the associated entry summary was already included on a drawback claim ACTION: Notice of proposed rulemaking. docket title for this rulemaking, and filed prior to February 24, 2018. must reference docket number USCBP– 2. Filing Requirements and Deadline SUMMARY: This document proposes to 2018–0029 . All comments received will (a) All TFTEA-Drawback claims are amend U.S. Customs and Border be posted without change to http:// required to be submitted electronically Protection (CBP) regulations to www.regulations.gov, including any in ACE. implement changes to the drawback personal information provided. For (b) The import entry summary line item regulations as directed by the Trade detailed instructions on submitting must be identified for all imported Facilitation and Trade Enforcement Act comments and additional information merchandise for TFTEA-Drawback of 2015 (TFTEA). These proposed on the rulemaking process, see the claims. regulations establish a new process for (c) TFTEA-Drawback claims have a ‘‘Public Participation’’ heading of the uniform five-year filing deadline from drawback pursuant to TFTEA which SUPPLEMENTARY INFORMATION section of liberalizes the merchandise substitution the date of importation of the designated the document. imported merchandise. standard, simplifies recordkeeping Docket: For access to the docket or to 3. HTSUS-Based Substitution Standards requirements, extends and standardizes read background documents or (a) TFTEA-Drawback substitution claims timelines for filing drawback claims, comments received, go to http:// for most manufacturing and unused and requires the electronic filing of www.regulations.gov. Submitted merchandise have new standards based drawback claims. TFTEA allows a on HTSUS classification. comments may also be inspected during transition period wherein drawback (b) The new standards do not apply to business days between the hours of 9:00 claimants will have the choice between certain claims if substitution is based a.m. and 4:30 p.m. at the Office of filing claims under the existing process upon alternative rules (source material Trade, Regulations and Rulings, U.S. detailed in the current regulations or for sought chemical elements, wine, and Customs and Border Protection, 90 K finished petroleum derivatives) or if filing claims under the proposed new Street NE, 10th Floor, Washington, DC. pursuant to NAFTA drawback. process. This document explains how Arrangements to inspect submitted 4. ‘‘Lesser of’’ Rule for Substitution Claims filings during the transition period will comments should be made in advance (a) TFTEA-Drawback substitution claims work, discusses the interim policy by calling Mr. Joseph Clark at (202) 325– are generally subject to a ‘‘lesser of’’ rule guidance procedures for filing claims regarding the amount of duties, taxes, 0118. prior to these regulations becoming and fees to be refunded where the final, and proposes to make TFTEA- FOR FURTHER INFORMATION CONTACT: amount to be refunded will be equal to related changes, dealing with bonds, Randy Mitchell, U.S. Customs and 99 percent of the lesser of (1) the amount regarding joint and several liability for Border Protection, Office of Trade, of duties, taxes, and fees paid with respect to the imported merchandise; or the importer of the goods and the Trade Policy and Programs, 202–863– 6532, [email protected]. (2) the amount of duties, taxes, and fees drawback claimant, and technical that would apply to the substituted corrections and conforming changes to SUPPLEMENTARY INFORMATION: merchandise if the substituted CBP regulations. This document also Public Participation merchandise were imported. proposes to clarify the prohibition on (b) The TFTEA-Drawback ‘‘lesser of’’ rule the filing of a substitution drawback Interested persons are invited to does not apply to certain claims if claim for internal revenue excise tax participate in this rulemaking by substitution is based upon alternative paid on imported merchandise in submitting written data, views, or rules (wine and finished petroleum situations where no excise tax was paid arguments on all aspects of the derivatives) or if pursuant to NAFTA drawback. upon the substituted merchandise; or proposed rule. CBP also invites 5. Expanded Scope and Calculation the substituted merchandise is the comments that relate to the economic, Methods for Refunds subject of a different claim for refund or environmental, or federalism effects that (a) The scope of refunds for direct drawback of tax under any provision of might result from this proposed identification and substitution the Internal Revenue Code. CBP is rulemaking. Comments that will provide manufacturing drawback claims will be proposing these amendments regarding the most assistance to CBP will expanded from duties to also include excise taxes to protect the revenue by reference a specific portion of the taxes and fees. clarifying the relationship between proposed rulemaking, explain the drawback claims and Federal excise tax reason for any recommended change, 1 For purposes of this document, ‘‘TFTEA- Drawback’’ is the term generally used to refer to liability. Further, CBP proposes to add and include data, information, or drawback under section 1313, as amended by the a basic importation and entry bond authority to support such recommended Trade Facilitation and Trade Enforcement Act of condition to foster compliance. change. See ADDRESSES above for 2015.
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(b) TFTEA-Drawback direct identification B. Executive Order 13771 (Reducing States using domestic merchandise claim refunds will be calculated based Regulation and Controlling Regulatory substituted for imported duty-paid on the invoice value of the designated Costs) merchandise meeting the statutory imported merchandise, which is C. Regulatory Flexibility Act unchanged from the current D. Paperwork Reduction Act criteria (substitution manufacturing requirements. V. Proposed Effective/Applicability Dates drawback). See 19 U.S.C. 1313(a) and (c) TFTEA-Drawback substitution claim VI. Signing Authority (b). refunds will be calculated based on the List of Subjects Rejected merchandise drawback may per unit average value reported on the Proposed Amendments to the Regulations be available upon the exportation or line from the entry summary that I. Authority destruction of imported duty-paid covered the designated imported merchandise entered or withdrawn for merchandise. Drawback, as provided for in section (d) The imported merchandise reported on consumption meeting the statutory 313 of the Tariff Act of 1930, as criteria (i.e., not conforming to sample a single entry summary line item may amended (19 U.S.C. 1313), is the refund not be the basis of a direct identification or specifications, shipped without and a substitution claim under TFTEA- or remission, in whole or in part, of consent, determined to be defective at Drawback. duties, taxes, and fees imposed and paid the time of import, or ultimately sold at 6. Recordkeeping and Proof of Export under Federal law upon importation or retail and returned). See 19 U.S.C. (a) Congress, through TFTEA, changed the entry and due on the imported 1313(c). starting date for the three-year time merchandise. Drawback is a privilege, Unused merchandise drawback may period for maintaining supporting not a right, subject to compliance with records for drawback claims from the be claimed on imported merchandise prescribed rules and regulations that was exported or destroyed without date of payment to the date of administered by U.S. Customs and liquidation. having been used within the United Border Protection (CBP). See 19 U.S.C. (b) Claimants for manufacturing drawback States (direct identification unused 1313(l). Currently, the implementing must provide a certification that they are merchandise drawback) as well as on regulations regarding drawback are in possession of the relevant bill of goods that were exported or destroyed contained in part 191 of the CBP materials or formula for the without being used that were manufactured goods, in lieu of actual Regulations (title 19 of the Code of substituted for imported merchandise submission thereof, for each claim filed. Federal Regulations (CFR) (19 CFR part meeting the appropriate criteria (c) Congress, through TFTEA, permits the 191)) and part 181 of the CBP (substitution unused merchandise future use of an electronic export system Regulations (19 CFR part 181, subpart E, as automated proof of export for drawback). See 19 U.S.C. 1313(j)(1) and which pertains to drawback claims drawback claims, but no system will be (2). reliable for this purpose on February 24, under the North American Free Trade Agreement (NAFTA)). Additionally, the Originally, as provided for in section 2018; and, proof of export must be 3 of the second Act of Congress, the documented in records that are Internal Revenue Code (IRC) of 1986, as summarized for the drawback claim. amended (IRC), codified as title 26 of Tariff Act of July 4, 1789, drawback of 7. Transfers of Merchandise and Liability the United States Code (26 U.S.C.), is 99% of duties paid on imported (a) Specific formats for certificates of the main body of domestic statutory tax merchandise (except distilled spirits) delivery and specific formats for law of the United States and includes, was permitted if the merchandise was certificates of manufacture and delivery inter alia, laws covering Federal excise exported within a year. However, are no longer required when drawback drawback expanded over time to, among products or other drawback-eligible taxes. Federal excise taxes are imposed on the manufacture and distribution of other things, provide for refunds of goods are transferred between parties, taxes and fees in some situations, allow although records of manufacture and certain consumer goods, such as transfer must be provided and distilled spirits, wines, beer, tobacco for merchandise to be destroyed as an maintained to support the drawback products, imported taxable fuel and alternative to exportation, allow for the claim. petroleum products. These Federal substitution of goods on which (b) The first drawback claim to be filed that excise taxes, and certain limitations drawback could be claimed, and designates any portion of imported regarding drawback claims, are provide more than just a single year merchandise from a given entry discussed below in the section titled within which goods must be exported or summary line item will determine the destroyed. type of drawback eligibility for all other Federal Excise Tax and Substitution imported merchandise covered by that Drawback Claims. Historically, drawback claims were entry summary line item. In essence, a drawback claim is a submitted entirely on paper. While (c) Importers are now jointly and severally request for a refund or remission of filing a claim entirely on paper is liable with drawback claimants for certain duties, taxes, and fees imposed currently still an option, most drawback refunds associated with their imported upon importation which is filed with claims consist of two portions: The merchandise, when designated on a CBP after the merchandise or articles electronic transmission of the entry drawback claim. have been exported or destroyed. There summary data for the designated B. Filing a TFTEA-Drawback Claim are three main categories of drawback: imported merchandise via the CBP- C. Required TFTEA-Drawback Certifications for Existing Manufacturing Manufacturing drawback, rejected authorized electronic data interchange Rulings and Privileges merchandise drawback, and unused (EDI); and the physical delivery of the D. Federal Excise Tax and Substitution merchandise drawback. Each main CBP Form 7551 (Drawback Entry) and Drawback Claims category of drawback is discussed, in all required documents supporting the III. Explanation of Proposed Amendments turn, below. claim. For TFTEA-Drawback claims, A. Proposed New Part 190 Manufacturing drawback may be filers will electronically transmit the B. Other Conforming Amendments claimed on exported articles that have drawback entry summary data and the C. Amendments Regarding Federal Excise been manufactured or produced in the entry summary data for the designated Tax and Substitution Drawback Claims United States with imported duty-paid imported merchandise to CBP and will IV. Statutory and Regulatory Requirements A. Executive Order 13563 (Improving merchandise (direct identification upload all documents required to Regulation and Regulatory Review) and manufacturing drawback), as well as on support the claim. CBP has programmed Executive Order 12866 (Regulatory exported articles that have been the Automated Commercial Planning and Review) manufactured or produced in the United Environment (ACE) for receiving
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electronic drawback claims.2 An extend and standardize timelines for opportunity to choose which drawback electronically submitted drawback filing drawback claims, and require regime to operate under while providing claim will not be complete until the electronic filing. However, while the additional time, if needed, to complete claim has been successfully transmitted changes are significant, on balance, any programming requirements for with all required documents uploaded. section 906 of TFTEA left most of 19 transmitting claims in ACE. Information for filing a drawback entry U.S.C. 1313 unchanged. In other words, (b) TFTEA-Drawback substitution is contained in the relevant CBP and except for the significant changes claims cannot designate imported Trade Automated Interface brought about by Section 906 of TFTEA merchandise if the associated entry Requirements (CATAIR) document, which are discussed below, most of the summary was included on a drawback which is available at: https:// underlying processes involved in claim filed under part 191(and vice www.cbp.gov/trade/ace/catair. drawback remain unchanged. CBP also versa). Upon receipt of a claim, CBP notes that additional steps to further Claimants are precluded from filing conducts an initial review, which automate or simplify the drawback TFTEA-Drawback substitution claims allows CBP the opportunity to work claims process (which may or may not for imported merchandise associated with claimants to ensure that the claim require regulatory changes) are with an entry summary if any other is complete and timely. Once a anticipated to be announced subsequent merchandise covered on that entry complete claim is timely filed, to the implementation of the changes summary has been designated as the drawback specialists review the proposed in this document. basis of a claim under part 191, supporting documentation to ensure including during the transition period. 1. Transition Period (February 24, 2018– Nevertheless, claimants may continue to that the claim is properly documented February 23, 2019) and the amount of the drawback is make claims (including substitution correctly calculated. In many instances, (a) Claims may be filed under the claims) under part 191 for these entries it is necessary for CBP to contact existing drawback process or the through the end of the transition period claimants to obtain additional TFTEA-Drawback process during the on February 23, 2019. Similarly, supporting documentation, such as transition period. claimants are precluded from filing any when there are questions regarding the Section 906(q)(3) of TFTEA provides drawback claims under part 191 for identity of the merchandise in transfer for a transition period, beginning imported merchandise associated with scenarios or to confirm the actual date February 24, 2018, and ending February an entry summary if any other and fact of exportation. If additional 23, 2019, during which claimants may merchandise covered on that entry information is required, CBP will send file claims under the current drawback summary has been designated as the a request for information (CBP Form 28) process and regulations detailed in part basis of a TFTEA-Drawback substitution to the claimant through the ACE portal 191 (and under section 313 of the Tariff claim, including during the transition or through the end of the transition Act of 1930 as in effect on the day period. These limitations exist because period by physically transmitting the before TFTEA was signed into law) or drawback refund amounts are claimed request, depending upon the method under the amended statute and the at the entry summary header level (i.e., used to file the claim was filed. implementing regulations (proposed the aggregate of all lines for which part 190). February 23, 2019, is the last Claimants generally respond via the drawback was claimed on an entry) for day of the transition period. During the method by which they were contacted. claims under part 191 and CBP is transition period, claimants may choose The increased use of electronic filing unable to trace whether merchandise which process to file on a claim-by- and correspondence will expedite claim from a specific line on an entry claim basis, meaning that claimants may processing and payment. summary was designated as the basis for Requests for information do not toll file some claims under the old drawback a drawback claim under part 191. process and some claims under the the deadlines for timely filing. In any 2. New Filing Requirements and event, claimants are bound by the TFTEA-Drawback process throughout the entirety of the transition period. For Deadline deadlines for claims with respect to purposes of this document, ‘‘TFTEA- filing, amending, and perfecting. (a) All TFTEA-Drawback claims are Drawback’’ is the term generally used to required to be submitted electronically II. Modernized Drawback refer to drawback under section 1313, as in ACE. amended by TFTEA, and the While all TFTEA-Drawback claims A. TFTEA-Drawback Overview implementing regulations contained in must be filed electronically, it is not On February 24, 2016, the Trade proposed Part 190. until February 24, 2019 (the first day Facilitation and Trade Enforcement Act While TFTEA-Drawback claims have after the end of the transition period), of 2015 (TFTEA) (Pub. L. 114–125, 130 been accepted in ACE since February that all drawback claims must be filed Stat. 122, February 24, 2016) was signed 24, 2018, it is not until February 24, electronically. See 19 U.S.C. into law. Section 906 of TFTEA, 2019, that all claims must be filed in 1313(r)(3)(B). Consequently, claims filed Drawback and Refunds, made compliance with the amended statute. under part 191 do not have to be filed significant changes to the drawback Section II.B, Filing a TFTEA-Drawback electronically. Drawback claims must be laws which generally liberalize the Claim, below, contains information on filed electronically through a standards for substituting merchandise, how to file claims, including during the combination of transmitting certain ease documentation requirements, transition period under the interim information to the system and policy guidance procedures announced uploading supporting documentation. 2 On February 9, 2018, in anticipation of delays February 8, 2018, in anticipation of the By moving to a fully electronic regarding the proposal and finalization of the environment as of February 24, 2019, TFTEA-Drawback regulations, CBP posted interim delay in finalizing these proposed policy guidance for filing TFTEA-Drawback claims regulations. Accordingly, the changes CBP will be able to better validate all in ACE during the transition period, available at: proposed in this document have no drawback claims based upon certain https://www.cbp.gov/trade/programs- immediate effect on the drawback criteria specific to the type of drawback administration/entry-summary/ace-process-and- claim, including (but not limited to) the policy. This interim policy guidance is discussed in processes and requirements contained detail below in section B, Filing a TFTEA-Drawback in part 191 of the CBP regulations. The timeliness of the claim, the amount of Claim. transition period allows claimants the refund claimed, and the suitability of
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the merchandise involved. As a result, U.S.C. 1313(j)(2)). Prior to TFTEA, manufacturing claims for sought drawback claimants should benefit from determining whether goods were of the chemical elements have a special rule expedited processing, review, and same kind and quality or were for source material regardless of the 8- payment of claims. commercially interchangeable was a digit HTSUS subheading number. See (b) The import entry summary line commodity-specific question that 19 U.S.C. 1313(b)(4) (which defines a item must be identified for all imported imposed burdens on claimants (to prove sought chemical element as either an merchandise for TFTEA-Drawback that the merchandise met the applicable element from the Periodic Table of claims. standard) and on CBP (to research and Elements or a chemical compound Many of the benefits for drawback rule on the eligibility of the goods to be consisting of such elements). Unused claim processing noted above are made substituted). The new standards will merchandise claims involving wine possible by systematic enhancements in reduce much of the above-cited burdens have a distinct standard involving price ACE concerning line item reporting. by generally eliminating uncertainty as variations and color. See 19 U.S.C. Line item reporting, which is required to the whether the standard for 1313(j)(2). Both manufacturing and for all TFTEA-Drawback claims, substitution has been met. unused merchandise drawback claims requires claimants to provide certain Substitution under 19 U.S.C. 1313(b), for finished petroleum products, if filed relevant information for the designated for manufacturing drawback claims, is under 19 U.S.C. 1313(p), are already imported merchandise on a drawback subject to a new standard that requires subject to more specific HTSUS-based claim associated with the line item on the substituted merchandise used in substitution standards. Substitution an entry summary, including the tariff manufacturing to be classifiable under manufacturing claims for NAFTA classification, quantity, and value, as the same 8-digit HTSUS subheading drawback remain subject to the ‘‘same well as the duties, taxes, and fees number as the designated imported kind and quality’’ standard in part 181, assessed thereon. Line item reporting merchandise. Similarly, substitution consistent with 19 U.S.C. 3333(a)(3). will enable more system validations at under 19 U.S.C. 1313(j)(2), for unused the line level and will help ensure that merchandise drawback claims, is 4. ‘‘Lesser of’’ Rule for Substitution CBP does not overpay refunds. subject to a new standard that requires Claims (c) TFTEA-Drawback claims have a the substituted merchandise to be (a) TFTEA-Drawback substitution uniform five-year filing deadline from classifiable under the same 8-digit claims are generally subject to a ‘‘lesser the date of importation of the HTSUS subheading number as the of’’ rule regarding the amount of duties, designated imported merchandise. imported merchandise, except that there taxes, and fees to be refunded where the All TFTEA-Drawback claims must be are restrictions with respect to HTSUS amount to be refunded will be equal to filed not later than 5 years after the date basket provisions (i.e., subheadings with 99 percent of the lesser of (1) the the merchandise on which drawback is descriptions that begin with the term amount of duties, taxes, and fees paid claimed was imported. See 19 U.S.C. ‘‘other’’). Specifically, and only for with respect to the imported 1313(r)(1). Previously, section 1313 unused merchandise drawback claims, merchandise; or (2) the amount of provided three-year filing deadlines merchandise cannot be substituted if the duties, taxes, and fees that would apply beginning from different starting points 8-digit HTSUS subheading number to the substituted merchandise if the for various types of claims (e.g., three begins with the term ‘‘other’’, unless the substituted merchandise were imported. years from the receipt of imported imported merchandise and the Section 906(g) of TFTEA provides for merchandise or three years after the date substituted merchandise are both a ‘‘lesser of’’ rule, as a safeguard, to of importation or withdrawal). This five- classifiable under the same 10-digit ensure that the revenue is protected in year deadline does not apply to claims HTSUS statistical reporting number and light of the liberalization and filed under the existing drawback laws the description for that 10-digit HTSUS simplification of the standards for provided for in part 191 during the statistical reporting number does not substitution drawback claims. The transition period. begin with the term ‘‘other’’. See 19 ‘‘lesser of’’ rule provides that the refund U.S.C. 1313(j)(5). In lieu of the HTSUS will be equal to 99 percent of the lesser 3. HTSUS-Based Substitution Standards classification for unused merchandise of the amount of duties, taxes, and fees (a) TFTEA-Drawback substitution drawback claims, substitution may also paid with respect to the imported claims for most manufacturing and be based on the first 8 digits of the 10- merchandise and/or that would have unused merchandise have new digit Department of Commerce Schedule been paid on the substituted standards based on HTSUS B number (the code for exporting goods merchandise had it been imported. In classification. from the United States). See 19 U.S.C. all claims subject to the ‘‘lesser of’’ rule, Section 906(b) provides a new 1313(j)(6). it is incumbent on the claimant to standard for determining which Under the new substitution standards, properly calculate the proper amount of merchandise may be substituted for the correct HTSUS classification is a the claimed refund. imported merchandise as the basis for a critical aspect of the exercise of For manufacturing drawback claims, substitution claim. This standard reasonable care. Accordingly, importers the substituted merchandise is that generally requires that both the and drawback claimants should take which was used in manufacturing, in imported merchandise and the exported note that prospective rulings on lieu of the designated imported merchandise be classified or classifiable classification may be requested merchandise, and the ‘‘lesser of’’ within the same the 8-digit number in pursuant to 19 CFR 177.1(a)(1). comparison is based upon the amount of the Harmonized Tariff Schedule of the (b) The new standards do not apply to duties, taxes, and fees that would apply United States (HTSUS) classification. certain claims if substitution is based to the substituted merchandise if it were This standard replaces the ‘‘same kind upon alternative rules (source material imported (with this amount reduced by and quality’’ and ‘‘commercially for sought chemical elements, wine, and the value of the materials recovered interchangeable’’ standards that were finished petroleum derivatives) or if during destruction, if applicable). See applied, respectively, to substitution pursuant to NAFTA drawback. 19 U.S.C. 1313(l)(2)(C). For unused manufacturing drawback claims (19 Certain types of merchandise are merchandise drawback claims, the U.S.C. 1313(b)) and substitution unused exempt from the new substitution substituted merchandise is the exported merchandise drawback claims (19 standards discussed above. Substitution or destroyed merchandise and the
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‘‘lesser of’’ comparison is based upon the new language provided for by requires that the drawback claimant the amount of duties, taxes, and fees TFTEA. See 19 U.S.C. 1313(l)(2)(B). In calculate the per unit average value of that would apply to the exported or contrast, there was neither any pre- the designated imported merchandise destroyed merchandise if it were existing authority for refunds of taxes (i.e., the entered value for the applicable imported (with this amount reduced by and fees for claims involving rejected entry summary line item apportioned the value of the materials recovered merchandise nor did TFTEA otherwise equally over each unit covered by the during destruction, if applicable). See expand the scope of refunds beyond line item) and request a refund 99% of 19 U.S.C. 1313(l)(2)(B). TFTEA- duties by generally referencing 19 the amount of duties, taxes and fees Drawback claimants must provide the U.S.C. 1313(l). The provisions that applicable thereto. The legislative comparative value (i.e., the ‘‘lesser of’’ provide for refunds of duties, taxes, and history for Section 906(g) clarifies that comparison for either manufacturing fees are limited to unused merchandise CBP is authorized to utilize per unit drawback claims or for unused and manufacturing drawback claims in averaging solely to allow for the merchandise drawback claims), as part 19 U.S.C. 1313(l)(2)(B) and (C), simplification of drawback claims and of a substitution claim. respectively. CBP is not to allow for the (b) The TFTEA-Drawback ‘‘lesser of’’ There is also a noteworthy difference ‘‘manipulation of claims in order to rule does not apply to certain claims if regarding the statutory provisions for maximize refunds to the detriment of substitution is based upon alternative substitution manufacturing drawback the revenue of the United States.’’ See rules (wine and finished petroleum claims whereby the merchandise must H.R. Rep. no. 114–376, at 221 (2015). derivatives) or if pursuant to NAFTA be imported duty-paid. See 19 U.S.C. Accordingly, CBP is proposing in these drawback. 1313(b)(1). No such requirement exists regulations to allow the use of per unit The ‘‘lesser of’’ rule does not apply to for direct identification manufacturing averaging in the context of substitution claims for wine based on 19 U.S.C. claims. See 19 U.S.C. 1313(a). The result manufacturing drawback claims (19 1313(j)(2) or to claims for finished of this difference is that imported U.S.C. 1313(b)) and substitution unused petroleum products under 19 U.S.C. merchandise that is duty-free may be merchandise drawback claims (19 1313(p). See 19 U.S.C. 1313(l)(2)(D). designated as the basis for a direct U.S.C. 1313(j)(2)), but not for direct Claims under these provisions are identification manufacturing drawback identification manufacturing drawback subject to other specific limitations. It is claim, but not for a substitution claims (19 U.S.C. 1313(a)), rejected important to note that sought chemical manufacturing drawback claim. merchandise drawback claims (19 elements are not exempt from the (b) TFTEA-Drawback direct U.S.C. 1313(c)), or direct identification ‘‘lesser of’’ rule, even though there is a identification claim refunds will be unused merchandise drawback claims special rule for the substitution of calculated based on the invoice value of (19 U.S.C. 1313(j)(1)). source material. See 19 U.S.C. the designated imported merchandise, This determination was made only 1313(b)(4). NAFTA drawback allows for which is unchanged from the current after much internal consideration as substitution manufacturing claims requirements. well as outreach to various trade (under certain conditions) and these CBP currently requires all drawback stakeholders. A significant justification claims are not subject to the ‘‘lesser of’’ claimants, regardless of the type of for the use of per unit averaging rule discussed herein, but they remain claim, to calculate drawback refunds exclusively for substitution claims is subject to the discrete NAFTA drawback based on the invoice value of the that TFTEA imposed a ‘‘lesser of’’ rule ‘‘lesser of duty’’ rule regarding the designated imported merchandise. for drawback claims involving amount of duty owed as compared TFTEA-Drawback direct identification substitution that safeguards against risks between the relevant countries. See 19 claims will continue to be calculated to the revenue. Simply put, by U.S.C. 3333 and 19 CFR 181.44. based on the invoice value of the importing high and low value goods designated imported merchandise. This together on a single line, the claimant 5. Expanded Scope and Calculation includes all drawback claims that are could manipulate the drawback claim Methods for Refunds based upon direct identification (e.g., through per-unit averaging by (a) The scope of refunds for direct manufacturing, rejected merchandise, strategically exporting or destroying the identification and substitution and unused merchandise drawback low value goods, where the per-unit manufacturing drawback claims will be claims). It should also be noted that all average of duties, taxes, and fees to be expanded from duties to also include NAFTA drawback claims will continue refunded was greater than that taxes and fees. to be calculated based on the invoice associated with the low value goods. Section 906(g) of TFTEA provides for value of the designated imported The lesser of rule prevents this type of the refund of taxes and fees, along with merchandise. See 19 U.S.C. 3333 and 19 manipulation. No ‘‘lesser of’’ rule was duties, for manufacturing drawback CFR 181.44. authorized under TFTEA for direct claims. See 19 U.S.C. 1313(l)(2)(C). This (c) TFTEA-Drawback substitution identification claims. is an expansion of the scope of refunds claim refunds will be calculated based The application of per unit averaging available for manufacturing drawback on the per unit average value reported method of calculating drawback refunds claims (19 U.S.C. 1313(a) and (b)). on the line from the entry summary that requires the equal apportionment of the Previously, the statutory provisions for covered the designated imported amount of duties, taxes, and fees eligible direct identification and substitution merchandise. for drawback for all units covered by a manufacturing drawback specified only Section 906(g) of TFTEA authorized single line item on an entry summary to the refund of duties. This expansion is CBP to calculate refunds based upon the each unit of merchandise (and is specifically provided for claims with per unit average of the duties, taxes, and required for certain substitution respect to manufactured articles in fees reported on the entry summary line drawback claims). In this method, the paragraph (l)(2)(C) of 19 U.S.C. 1313. item that covered the designated ratio of the total value of imported units However, this expansion is not imported merchandise if this method as reported on a line item divided by the applicable to all drawback claim would result in simplification of the total quantity of imported units reported provisions. Refunds of duties, taxes, and drawback claims process for CBP on a line item is to be multiplied by the fees were already allowed for in claims without posing a risk to the revenue of quantity of units designated as the basis involving unused merchandise prior to the United States. Per unit averaging for the drawback claim to determine the
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average per unit value. The refund per duties to be refunded pursuant to the made against a specific entry summary unit of the designated imported ‘‘lesser of’’ methodology, the calculation line item in some situations. For merchandise is to be 99% of the duties, of drawback will be based on the per example, in some situations where taxes, and fees applicable to the average unit value of $180 for the substituted substitution claims using the per unit per unit value and this amount is merchandise rather than the value of average of the line item were to be calculated to two decimal places (and $200 for the designated imported claimed prior to a direct identification subject to the ‘‘lesser of’’ rule). merchandise. claim, the total amount of drawback The substituted merchandise has a remaining on the line may not be Example 1. Substitution Unused per unit value of $180. This applicable sufficient to pay the proper amount of Merchandise TFTEA-Drawback Claim duty rate (3.1%) is applied to the drawback tied to the high value goods. A substitution unused merchandise average per unit value ($180) to CBP has also chosen this proposed drawback claim is filed for 500 exported determine the amount of duties policy in expectation of the efficiencies articles with a value of $110 per unit. apportioned to each unit at $5.58. to be gained by both claimants and CBP The 500 units of designated imported The amount available for a drawback regarding calculating and verifying merchandise were reported on an entry refund is 99% of the duties paid per refunds. Accordingly, importers and summary line item that covered 1000 unit ($5.58), which is $5.52. This drawback claimants need to be aware of units with an entered value of $100,000 amount of refundable duties per unit the limitation on line item designations and a duty rate of 2.5%. Therefore, ($5.52) is multiplied by the quantity of prior to importing merchandise or regarding the amount of duties to be designated imported merchandise (600 receiving transferred merchandise, refunded pursuant to the ‘‘lesser of’’ units) to calculate the total amount because the first-filed claim on a line methodology, the calculation of available for the drawback refund, will dictate the type of claim available drawback will be based on the per unit which is $3,312. Similar calculations for any remaining merchandise of the value of $100 for the designated must be completed for applicable taxes same line. and fees as well. imported merchandise rather than the 6. Recordkeeping and Proof of Export value of $110 for the exported Per unit averaging facilitates merchandise. verification of the amounts of drawback (a) Congress, through TFTEA, The designated imported merchandise refunds claimed. CBP does not receive changed the starting date for the three- has a per unit value of $100. This invoice data that is usefully searchable year time period for maintaining applicable duty rate (2.5%) is applied to electronically. By moving to the per unit supporting records for drawback claims the average per unit value ($100) to averaging calculation methodology for from the date of payment to the date of determine the amount of duties substitution claims that is based on liquidation. apportioned to each unit at $2.50. entry summary line data, CBP will gain For all TFTEA-Drawback claims, The amount available for a drawback the ability to automate validations of section 906(o) replaced the previous refund is 99% of the duties paid per refund calculations made by the requirement to maintain supporting unit ($2.50), which is $2.48. This claimant. This should lead to faster and records for three years from the date of amount of refundable duties per unit more efficient processing of claims, payment of the claim with the new ($2.48) is multiplied by the quantity of which will benefit both drawback requirement to maintain records for designated imported merchandise (500 claimants and CBP. These efficiencies three years from the date of liquidation units) to calculate the total amount are gained through the use of entry of the claim. See 19 U.S.C. 1508(c)(3). available for the drawback refund, summary line item data, which is This extension of the recordkeeping which is $1,240. Similar calculations required for all TFTEA-Drawback time period provides CBP with more must be completed for applicable taxes claims, and will enable the per unit time to request documents needed to and fees as well. averaging calculation to take place as an verify or audit claims. This new automated verification rather than a timeframe requires claimants with Example 2. Substitution Manufacturing manual process. accelerated payment privileges to TFTEA-Drawback Claim (d) The imported merchandise maintain supporting records longer than A substitution manufacturing reported on a single entry summary line before TFTEA (because claims are paid drawback claim is filed for 200 exported item may not be the basis of a direct prior to liquidation for claimants that finished articles with a value of $400 identification and a substitution claim obtain the privilege of accelerated per unit.3 The designated imported under TFTEA-Drawback. payment). merchandise was reported on an entry A consequence of using per unit (b) Claimants for manufacturing summary line item that covered 800 averaging for substitution claims under drawback must provide a certification units with an entered value of $160,000 TFTEA-Drawback is that a single entry that they are in possession of the (averaging $200 per unit) and a duty rate summary line item cannot be used for relevant bill of materials or formula for of 3.1%. To manufacture the finished both direct identification and the manufactured goods, in lieu of articles, the manufacturer actually used substitution drawback claims. actual submission thereof, for each 600 units of substituted domestically Consequently, CBP proposes to limit claim filed. sourced merchandise that is classifiable each line on an entry summary to Currently, claimants for under the same 10-digit tariff provision. designation as the basis for either direct manufacturing drawback are required to The domestically sourced merchandise identification or substitution claims, but provide a bill of materials or formula to has a substituted value of $180 per unit. never both. Therefore, all associated CBP upon request, for any claim filed. Therefore, regarding the amount of imported merchandise on that line may CBP has and will continue to request only be designated as the basis for either these records for review in the context 3 It is noteworthy that the value of the exported direct identification or substitution of verifications, audits, and other (or destroyed) finished article is not germane to the claims under TFTEA-Drawback. If both administrative actions. The purpose of application of the ‘‘lesser of’’ rule for substitution types of claims were allowed on a single this requirement is to ensure that the manufacturing drawback claims. The comparison in value is between the value of the designated line on an entry summary, CBP would claims are consistent with the imported merchandise and the substituted be unable to issue full refunds for all applicable bill(s) of materials or merchandise. drawback claims that could lawfully be formula(s) that accompanied the
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claimant’s application to operate under certificates of manufacture and delivery designation shall so indicate to the the applicable general or specific are no longer required when drawback transferee. Notification of the manufacturing drawback ruling. TFTEA products or other drawback-eligible designation from the transferor to the expressly added a requirement for goods are transferred between parties, transferee must be documented in substitution manufacturing drawback although records of manufacture and records, which may include records claims that the person making the claim transfer must be provided and kept in the normal course of business. must submit the bill of materials or maintained to support the drawback Notwithstanding the designation made, formula identifying the drawback- claim. however, the type of the first drawback eligible merchandise and manufactured Section 906 removed the longstanding claim to be filed relating to that entry article(s) by the 8-digit HTSUS requirements for the submission of summary line item will dictate the type subheading numbers and the quantities Certificates of Delivery (CDs) and of any subsequent claims relating to that of merchandise with each claim. See 19 Certificates of Manufacture and Delivery same entry summary line item. U.S.C. 1313(b)(3)(A). For administrative (CMDs) by stating that no additional efficiency and consistency with how certificates of transfer or manufacture Because this notification requirement drawback claims are reviewed and shall be required 19 U.S.C. 1313(b), and is not effective until February 24, 2018, verified, rather than requiring the actual by stating that no additional certificates parties who anticipate making submission of these records with each of transfer are required in 19 U.S.C. substitution-based claims under TFTEA- claim, CBP will require a certification in 1313(c), (j), and (p). Section 906(l), Drawback designating imported ACE as to possession of these records. Drawback Certificates, removed the merchandise that was entered and This certification requirement applies to recordkeeping requirements relating to transferred prior to this date, should both direct identification and these certificates for drawback claims by consult with the transferor about substitution manufacturing claims. striking 19 U.S.C. 1313(t). Instead of whether the transferred merchandise (c) Congress, through TFTEA, permits CDs and CMDs, parties involved in potentially is eligible for substitution- the future use of an electronic export transfers of drawback products or other based claims under TFTEA-Drawback. system as automated proof of export for drawback-eligible goods must maintain Such eligibility only exists if the drawback claims, but no system will be records, which may include records transferred merchandise was not reliable for this purpose on February 24, kept in the normal course of business, previously used as the basis for any 2018; and, proof of export must be to evidence the transfers. non-TFTEA drawback claim, because all documented in records that are (b) The first drawback claim to be types of non-TFTEA drawback claims summarized for the drawback claim. filed that designates any portion of must be calculated based on invoice Claimants whose exported goods are imported merchandise from a given values, which conflicts with the use of the basis for a claim of drawback must entry summary line item will determine per unit averaging when determining provide proof that establishes fully the the type of drawback eligibility for all refunds for imported merchandise on a date and fact of exportation and the other imported merchandise covered by single entry summary line item. identity of the exporter. These that entry summary line item. requirements are provided for in As previously explained in part 5(d), It is important to note, again, that this proposed § 190.72. Under TFTEA- above, there is a limitation that notification of designation requirement Drawback, proof of exportation is imported merchandise on a single entry is proposed in an effort to better inform required in the form of export summary summary line item cannot be designated claimants of possible limitations on the data that is provided as part of a as the basis for both direct identification type of drawback claim that can be filed complete drawback claim filed with and substitution drawback claims under in situations involving transferred CBP. However, the underlying TFTEA, due to the different methods of merchandise. The designation, however, supporting records must fully prove the calculating refund amounts. Because the is not a guarantee of the type of claim exportation through records kept in the transferor can transfer the merchandise that can be filed. Drawback claimants normal course of business. TFTEA also covered by a specific line item to must remain aware that the first provides for proof of export to be different transferees, the transferees drawback claim to be filed on a given established via an electronic export might unwittingly attempt to file entry summary line item will control system of the United States, as different types of claims, which is not the type of claim that subsequently can determined by the Commissioner of permitted. In an effort to best inform be filed in the case of transferred CBP. See 19 U.S.C. 1313(i). Currently, transferees of the possible limitation, if merchandise. the Automated Export System (AES) is a transferor has already filed a certain (c) Importers are now jointly and not able to fully establish the required type of drawback claim designating a severally liable with drawback portion of merchandise from an entry elements. Accordingly, until such time claimants for refunds associated with summary line item, or otherwise has as the Commissioner of CBP announces their imported merchandise, when knowledge of an already-filed claim that the availability of a capable electronic designated on a drawback claim. system through a general notice in the does likewise, then the transferor must Customs Bulletin, records kept in the designate whether the merchandise is Section 906(f) established joint and normal course of business shall be used eligible for substitution or direct several liability for the drawback to establish fully the date and fact of identification claims and notify the claimant and the importer of the exportation and the identity of the transferee of that designation at the time imported merchandise that is exporter, and such records must be of transfer. This should help transferees designated as the basis of the claim. See maintained by claimants whose to avoid attempting to make drawback 19 U.S.C. 1313(k). Accordingly, exported goods are the basis for a claim claims for the transferred merchandise importers should be aware of this of drawback. under the mutually exclusive bases of liability when transferring imported direct identification and substitution. If, merchandise to other parties for 7. Transfers of Merchandise and at the time of transfer, the transferor is purposes of drawback. Therefore, it is Liability not aware of a particular type of proposed to amend § 113.62 to reflect (a) Specific formats for certificates of drawback claim already filed relating to this liability in the import entry bond delivery and specific formats for the entry summary line item, then the conditions.
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B. Filing a TFTEA-Drawback Claim ACE. And on February 9, 2018, CBP C. Required TFTEA-Drawback TFTEA-Drawback claims must be posted on its website a document Certifications for Existing filed electronically. A complete TFTEA- entitled Drawback: Interim Guidance for Manufacturing Rulings and Privileges Drawback claim will consist of the Filing TFTEA Drawback Claims (Interim While the processes regarding general successful transmission of the data Guidance), to further inform and and specific manufacturing rulings required for the TFTEA-Drawback entry provide guidance to the trading detailed in appendices A and B of the and the upload of all required community regarding the temporary proposed part 190 will be largely documents supporting the claim. When procedures for electronically filing unchanged from those described in the submitting the claim, the filer must TFTEA-Drawback claims during the appendices of part 191, TFTEA does provide, among other things, the interim period until the implementing have some impact on existing rulings. drawback entry number, filing port regulations are finalized and The existing rulings were issued based code, claimant ID number, drawback operational. This Interim Guidance was on the requirements of 19 CFR part 191, provision, total drawback claim amount subsequently twice updated, to provide which do not comport with the TFTEA- requested, the import entry summary(s) additional clarity. Drawback requirements (e.g., the new and line item number(s) for the substitution standard and timeframes). The Interim Guidance explained that designated imported merchandise, other Accordingly, in order to continue the provisional requirements for required line item data including the operating under an existing HTSUS subheading number at the 10- electronically-filed TFTEA-Drawback manufacturing ruling, a manufacturer or digit level, information on exportation claims that are reflected in the producer must file a supplemental or destruction, and, if applicable, the provisional CATAIR and described in application for a limited modification to NAFTA coding sheet. Proposed section the Interim Guidance document are that ruling. To ensure compliance with 190.51 provides detailed information placeholders only, and will not be used the TFTEA-Drawback requirements, the about specific data elements, to process the claims beyond their limited application must include certifications, and supporting initial acceptance in ACE. The actual revised parallel columns and a bill of documents that may be required final requirements for such claims will materials or formula, which must be depending on the particular type of be established once the rulemaking annotated with the applicable HTSUS drawback claim. process is complete and the new subheading numbers. In addition, a After transmission, the filer will regulations are implemented and certification must be provided to receive an automated message effective. To the extent that the final confirm that all TFTEA-Drawback indicating either that the electronic requirements established through claims made under the subject transmission has been accepted or rulemaking ultimately differ from the manufacturing ruling will be in rejected. In the case of a rejection, the provisional placeholders used to accept conformity with all of the applicable automated message will inform the filer TFTEA-Drawback claims in ACE prior statutory and regulatory requirements. regarding the reason(s) for the rejection. to the effective date of the final rule, the Any supplemental application to Uploads of required forms, and any Interim Guidance explained that modify a ruling issued under 19 CFR other supporting documentation should claimants will be permitted to perfect part 191 (so that it remains viable for be submitted through ACE, Document their claims in accordance with the new TFTEA-Drawback claims) must be Image System, after the successful requirements before the claims are submitted to CBP no later than February electronic transmission. Further, related 23, 2019, which is the close of the processed for payment. to filing claims electronically, as noted transition period for drawback below in the section explaining the The interim procedures outlined and claimants. Any ruling issued under 19 proposed regulations, a definition for explained in the Interim Guidance will CFR part 191 that is not modified by ‘‘drawback office’’ has been added to remain in place until this rulemaking is this deadline will not apply to TFTEA- § 190.2 clarifying that CBP has the complete and the final rule to Drawback claims; and, manufacturers authority to share or transfer work implement the regulatory changes and producers would need to apply for between drawback offices at its pending for TFTEA-Drawback claims is a new ruling under 19 CFR part 190. discretion. implemented and effective. Similar to manufacturing rulings, For the interim period between The programming specifics for drawback privileges granted under 19 February 24, 2018 and the date on CFR part 191 will not comport with electronic transmission are explained in which the new TFTEA-Drawback TFTEA-Drawback. The privileges are more detail in the TFTEA-Drawback regulations will become effective, CBP the waiver of prior notice of intent to CATAIR Guidelines, which can be developed interim procedures for export or destroy and accelerated accepting electronically filed TFTEA- accessed at: https://www.cbp.gov/trade/ payment. With each claim that is filed Drawback claims. Specifically, to enable ace/catair. Specific questions related to under 19 CFR part 190, a certification of ACE to recognize and accept such filing TFTEA-Drawback claims may be conformity with TFTEA-Drawback is claims, notwithstanding the absence of directed to a client representative or the required for claimants to continue to the necessary regulatory requirements ACE Account Service Desk at 1–866– operate under one or both privileges if for a complete TFTEA-Drawback claim, 530–4172 or [email protected]. granted pursuant to 19 CFR part 191. ACE was programed with provisional Filers should be aware that a delay of Unlike for manufacturing rulings, these placeholder requirements, modeled on more than 24 hours in uploading all certifications will be made the draft regulatory package then under required accompanying documentation electronically with each TFTEA- development. Corresponding after the transmission of the claim data Drawback claim. These certifications are provisional Customs and Trade will mean that the filing date will be limited to the drawback provisions Automated Interface Requirements tied to the uploading of documents under which they were originally (CATAIR) Guidelines were provided to rather than the date of transmitting the granted in accordance with 19 CFR part enable claimants to program their claim data. In some instances, this later 191, except that privileges granted systems to interface with these official date of filing could affect the under 19 U.S.C. 1313(j)(1) and 19 CFR provisional placeholder requirements in timeliness of a claim. 191 may be applied to TFTEA-Drawback
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claims made under 1313(j)(1) or ‘‘without payment of tax’’ for the 4. Federal Excise Taxes Have Been 1313(j)(2). purpose of export. 26 U.S.C. 5214(a), Improperly Refunded The certification processes described 5362(c), 5053(a). Although removed Under customs law, a form of above are designed to ease the from a TTB-bonded facility, the product drawback known as ‘‘substitution administrative burden on CBP while is still subject to bond and still carries drawback’’ also occurs when products minimizing the disruption to those a tax liability until the product is are imported into the United States and operating under existing manufacturing exported. 26 U.S.C. 5053, 5175, 5362. sufficiently similar products are rulings and/or privileges. However, Similarly, Title 19 also provides for exported or destroyed. 19 U.S.C. claimants are responsible for performing ‘‘drawback equal in amount to the tax 1313(j)(2). Treasury Department audits the requisite due diligence prior to filing found to have been paid or determined and analyses have revealed that for a any TFTEA-Drawback claims; and, the on . . . bottled spirits and wines number of years, CBP has received and consequences of false or inaccurate manufactured or produced in the United approved claims for substitution claims include, but are not limited to, States’’ upon exportation. 19 U.S.C. drawback under 19 U.S.C. 1313(j)(2) for the denial of drawback refunds and the 1313(d). Under these drawback imported bottled and bulk wine, even in associated privileges, noted above. provisions, a refund is made upon circumstances in which no excise tax D. Federal Excise Tax and Substitution exportation if tax has already been paid, was paid on the substituted exported Drawback Claims or if an unpaid tax liability exists, it is merchandise. CBP has not identified a extinguished upon exportation. The net record of the first time it granted a The Internal Revenue Code (IRC) of economic effect is identical. 1986, as amended, codified as title 26 of section 1313(j)(2) drawback claim for the United States Code (26 U.S.C.), is 2. Tobacco: Imposition of Federal Excise wine based on exported merchandise on the main body of domestic statutory tax Tax and Exemptions which tax had not been paid—a claim law of the United States and includes for ‘‘double drawback,’’ drawback of the laws covering Federal excise taxes. Under Chapter 52 of the IRC, a excise tax on both the imported product Federal excise taxes are imposed on the Federal excise tax is imposed on all and the exported product. manufacture and distribution of certain tobacco products and cigarette papers An example of a claim for ‘‘double consumer goods, including upon the and tubes manufactured in or imported drawback’’ of wine proceeds as follows: into the United States. 26 U.S.C. 5701. importation of distilled spirits, wines, A domestic winery imports 100 liters of beer, tobacco products, and certain The tax on domestically-produced wine, pays Federal excise tax on the wine, imported taxable fuel and petroleum tobacco products and cigarette papers and sells the imported wine in the United products. While there are also excise and tubes is imposed at the time of States. The domestic winery then exports 100 taxes on other products, it is these taxes, manufacture but generally is not paid or liters of its domestically-produced wine from determined until the products are TTB-bonded premises without payment of because of the structure of the tax and Federal excise tax. The domestic winery files the manner in which they are collected, removed from TTB-bonded premises. 26 U.S.C. 5702, 5703. Upon exportation of a § 1313(j)(2) drawback claim with CBP on that are eligible for drawback under 19 the basis that the 100 liters of domestically- U.S.C. 1313. tobacco products and cigarette papers produced wine are commercially and tubes upon which the tax has been interchangeable with the to the 100 liters of 1. Distilled Spirits, Wines, and Beer: paid, the IRC permits drawback of the imported wine. The domestic winery Imposition of Federal Excise Tax and tax paid. 26 U.S.C. 5706. In addition, receives a refund of 99 percent of the Federal Exemptions tobacco products and cigarette papers excise taxes that it paid on the 100 liters of Chapter 51 of the IRC sets forth excise and tubes may be removed from TTB- imported wine. tax collection and related provisions bonded premises, without the payment In this example, imported products applicable to distilled spirits, wines, of Federal excise tax, for export. 26 are introduced into the U.S. market, in and beer. In general, this chapter U.S.C. 5704. Under these provisions, the net effect, free of 99 percent of Federal provides that a Federal excise tax is excise tax liability is extinguished upon excise tax. As a result, in this example, imposed on all wines, distilled spirits, exportation. The net economic effect is the U.S. Treasury ultimately receives and beer produced in or imported into identical. only one percent of the Federal excise the United States. 26 U.S.C. 5001, 5041, 3. Other Excise Taxes tax on the imported products that are 5051. consumed in the United States. By Statutory exceptions to the required Chapter 32 of the IRC imposes various contrast, domestically-produced wine payment of Federal excise tax exist. For excise taxes, including taxes on consumed in the United States is fully example, when wine, distilled spirits, or gasoline, diesel fuel, and kerosene taxed. This practice results in revenue beer are exported after payment or (taxable fuel). For example, 26 U.S.C. loss from having untaxed goods determination of tax, the IRC provides 4081 imposes tax on the removal of circulating in commerce. It also has the for ‘‘drawback’’ in an amount equal to taxable fuel from any refinery or effect of giving imported wine a clear the tax paid. 26 U.S.C. 5055, 5062. terminal and on entry into the United tax advantage in the domestic market Under these provisions, the excise taxes States for consumption, use, or over domestically produced wine. are refunded upon exportation. warehousing. The IRC permits the Because the revenue loss (or tax break) Similarly, drawback is also available refund of this tax when taxable fuel is comes in the form of a reduction of tax when wine, distilled spirits, or beer are exported. 26 U.S.C. 6416, 6427. When on imported product, it puts exported from bonded premises the taxable fuel is imported into an IRS- domestically produced products at a regulated by the Alcohol and Tobacco registered facility, it is taxed upon disadvantage as compared to imports in Tax and Trade Bureau (TTB), where no removal from the facility and is not the U.S. market. tax has been paid, although tax liability eligible for drawback under 19 U.S.C. This result is inconsistent with the attached at the time of production or 1313. Some taxable fuel, however, is not broader statutory excise tax regime, import. While tax must ordinarily be imported into an IRS-registered facility, which (on net) generally imposes excise paid upon removal of wine, distilled in which case the tax is due upon taxes on all subject goods consumed in spirits, or beer from TTB-bonded importation and may be eligible for the United States, whether produced premises, the removal may occur drawback under 19 U.S.C. 1313. domestically or imported for domestic
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consumption. In the above example, by refund or remission of an excise tax that A contrary interpretation would contrast, the importer/exporter winery was paid, determined, or otherwise undermine the statutory scheme of has (on net) paid no Federal excise tax imposed by Federal law. The term is excise taxes that applies to imports and on the exported wine and virtually no often used to refer to the refund of taxes cause undue revenue loss. As just one Federal excise tax on the imported that have been paid previously. See, example, a contrary reading of the wine. In net effect, the winery has e.g., 19 U.S.C. 1313(a), (c)(1), (j)(1), (j)(2) statutory scheme would appear to introduced imported wine 99% free of (providing for taxes to be ‘‘refunded as permit an importer of distilled spirits to excise tax to compete with domestically drawback’’). But it is not limited to manufacture inexpensive liquor and produced wine that is fully taxed. refunds, as other provisions use the destroy it, without having paid the CBP currently permits this practice term more broadly to refer to an unpaid excise tax imposed on domestically- only with respect to wine. But as tax liability that is extinguished. See, produced liquor under 26 U.S.C. 5001. explained, the IRC imposes excise tax e.g., § 1313(d) (‘‘there shall be allowed The importer in this scenario could then and provides exemptions from such tax . . . a drawback equal in amount to the use the destruction of that domestically- for other goods, including distilled tax found to have been paid or produced liquor to seek a drawback spirits, beer, tobacco products, and determined’’) (emphasis added); under 19 U.S.C. 1313(j)(2) of the excise certain taxable fuel. Some producers sections 1313(n)(2), (n)(4), (o)(3) (using tax on liquor they import. Because the have already requested that CBP extend the phrase ‘‘refunded, waived, or excise tax per gallon may far exceed the its current treatment of wine to distilled reduced’’ to refer to the extinguishing of marginal cost of production of some spirits, and it is possible that firms tax liability under subsections (a), (b), types of liquor,4 these manufacturers dealing in these other goods may seek (f), (h), (p), and (q), each of which uses would receive a significant economic similar treatment. the phrase ‘‘drawback’’). Nor is section benefit, despite having never paid 5. Statutory Prohibition on Double 1313(v)’s use of the term ‘‘drawback’’ excise taxes on the domestically- Drawback limited to drawback of taxes imposed produced liquor. They would also have upon importation. Section 1313(v) refers avoided excise tax payment not once The allowance of substitution to ‘‘any’’ claim for drawback. That broad but twice—on both the domestically drawback claims in circumstances and inclusive language contrasts with produced liquor and the imported where internal revenue taxes have not the language Congress used when it liquor—without, on net, increasing been paid on the substituted product referred to only specific types of domestic production for consumption or results in imported product being drawback. See, e.g., sections 1313(j), export. The statutory framework that introduced into commerce with no net (k)(1), and (1)(2)(A), (B), and (C) imposes excise tax on the domestic payment of excise tax—a ‘‘double (referring to drawback ‘‘under this consumption of alcohol would have drawback’’ that is at odds with the section’’); section 1313(n)(2) (referring broader statutory schemes of both been almost wholly subverted. to ‘‘NAFTA drawback’’); section A contrary interpretation would also customs drawback and excise taxation. 1313(n)(4) (referring to ‘‘Chile FTA As noted above, the IRC generally seem to permit the following drawback’’). The fact that Congress hypothetical transaction: imposes excise taxes upon all covered expressly limited ‘‘drawback’’ in certain domestic products and products subsections of section 1313 but did not A distilled spirits importer imports 200 imported for domestic consumption. gallons of liquor into a TTB-bonded facility. do so when it referred to ‘‘any’’ It pays excise tax on 100 gallons and sells The Customs Modernization and drawback in subsection (v) indicates Informed Compliance Act (Mod Act), those in the United States. It then exports the that ‘‘drawback’’ is not so limited for remaining 100 gallons without payment of Public Law 103–182, 632, 107 Stat. 2057 purposes of this subsection. Federal excise tax. The importer files a (1993) (enacted as Title VI of the North Accordingly, when wine, distilled § 1313(j)(2) drawback claim with CBP on the American Free Trade Agreement spirits, beer, tobacco products, or other basis that the 100 gallons of imported liquor Implementation Act), added a clause to products subject to excise tax are sold in the United States is commercially 19 U.S.C. 1313(v) providing in relevant exported from TTB-bonded premises interchangeable with the 100 gallons of part that ‘‘[m]erchandise that is ‘‘without payment of tax,’’ pursuant to imported liquor exported without payment of exported or destroyed to satisfy any 26 U.S.C. 5214, 5362, 5053, or 5704, the excise tax. The importer receives a refund of 99 percent of the Federal excise taxes that it claim for drawback shall not be the extinguishment of tax liability upon basis of any other claim for drawback.’’ paid on the 100 imported gallons sold in the export is best understood as a form of United States. This provision is best read to preclude, drawback within the broad prohibition among other things, exported or of 19 U.S.C. 1313(v). In this hypothetical, too, imported destroyed merchandise from being used This interpretation is further products would be introduced into the as the basis for both a substitution supported by the broader statutory U.S. market, in net effect, free of 99 drawback claim and a drawback of scheme, which operates (in net effect) to percent of Federal excise tax. As a internal revenue taxes upon exportation subject all wine, distilled spirits, and result, the U.S. Treasury would receive or destruction. In other words, exported beer consumed in the United States, only one percent of the Federal excise merchandise on which excise taxes have whether produced domestically or tax on the imported products that are been paid can form the basis of a imported, to an excise tax. The evident consumed in the United States. Such substitution drawback claim, but purpose of section 1313(v) is to advance essentially tax-free treatment of exported products on which no excise that objective by preventing excessive domestically-consumed imported tax has been paid cannot be used to revenue loss through multiple claims for erase existing tax liability on imported drawback based on a single export. And 4 In 2006, the U.S. Department of Agriculture estimated that that the cost of production of neutral products. to the same end, the statutes that govern grain spirits at about $0.53 per proof gallon. See While Congress did not specifically withdrawal of wine, distilled spirits, ‘‘Economic Feasibility of Ethanol Production from define the term ‘‘drawback’’ in beer, or tobacco products from TTB- Sugar in the United States,’’ available at https:// § 1313(v), its meaning is clear in context bonded premises authorize regulations www.usda.gov/oce/reports/energy/EthanolSugar FeasibilityReport3.pdf. The excise tax on distilled and within the broader statutory scheme that may be necessary to protect spirits is $13.50 per proof gallon (see 26 U.S.C. governing drawback and excise taxes. In revenue. See 26 U.S.C. 5175, 5214(a)(4), 5001(a)(1)), or more than 25 times the cost of context, drawback encompasses the 5362(c), 5053(a), and 5704(b). production.
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alcohol does not comport with the analysis in this document, CBP has exports increased in response to double statutory drawback scheme in the IRC or denied these requests, but has not drawback. Second, a revenue analysis Title 19. corrected the treatment of wine through elucidates the incentives that double Because drawback under 19 U.S.C. a notice and comment process, as drawback creates for firms that deal in 1313 does not require CBP to verify required by 19 U.S.C. 1625(c). goods other than wine and provides whether substitute exported initial projections of U.S. Government merchandise is tax paid, CBP does not 6. Impact of Failing To Curtail Double Drawback revenue loss that could result if these have records that would identify firms were provided the same double instances of double drawback at issue For the reasons explained above, CBP drawback treatment currently available here. Treasury Department audits and believes that the phrase ‘‘any other only for substituted wine. analyses have revealed that CBP began claim for drawback’’ in section 1313(v), refunding excise taxes on wine under 19 read in context of the broader statutory 7. Analysis of Trade Statistics U.S.C. 1313(j)(2) in approximately 2004 scheme, encompasses the refund or Imported wine that benefits from when the San Francisco office permitted remission of an excise tax that was paid, double drawback enters the U.S. market drawback for such a claim. Some of determined, or otherwise imposed by with a substantial tax advantage over these drawback claims may have Federal law. To the extent section domestically produced wine. While this included a double refund. It is possible 1313(v) can be considered ambiguous, tax advantage exists for all imported that this change took place due to a however, CBP has determined that there wine benefiting from double drawback, misunderstanding of a 2004 amendment are compelling economic and fiscal it is largest for imported bulk wine. to the drawback statute designed to reasons to resolve any ambiguity to Because the customs value of imported provide for drawback of the Harbor preclude substitution drawback claims bulk wine is lower than the value for Maintenance Tax. See Miscellaneous for excise tax paid on imported bottled wine, excise tax levied by Trade and Technical Corrections Act of merchandise where no excise tax was volume comprises a greater percentage 2003, Public Law 108–429, 118 Stat. paid on the substituted merchandise. of its average price, meaning that 2433, 2579 at section 1557(a)(1) (2004). As explained below, firms dealing in producers have a stronger economic CBP has never issued a ruling or distilled spirits, beer, tobacco products, incentive to claim double drawback on regulation authorizing the current and certain taxable fuels have a strong bulk wine.5 treatment with respect to wine. economic incentive to seek the same U.S. import statistics are consistent Nevertheless, because CBP has double drawback treatment currently with these incentives. Import volumes approved substitution unused drawback afforded to wine. If CBP fails to adopt of wine have grown rapidly during the claims based on wine exports for which a uniform interpretation and application period double drawback has been no excise tax has been paid, its of section 1313(v), firms dealing in other available. In 2004, total U.S. imports of treatment of this issue must be changed products subject to Federal excise tax wine, either bottled or bulk, were 576 through a notice and comment process. could also pursue substitution drawback million liters by volume.6 See Table B. See 19 U.S.C. 1625(c). claims similar to those that have been By 2016, that figure had grown to 880 Because of the concern that the made for wine under section 1313(j)(2). million liters, an increase of over 50 statutory scheme was being subverted The statutory provisions governing percent. Id. Much of this increase in and because of concerns with revenue excise tax on other goods—beer, imports has been driven by bulk wine, losses both realized and potential, on distilled spirits, tobacco products, and which has made rapid gains in U.S. October 15, 2009, CBP proposed certain fuels—are substantially similar market share. In 2004, imported bulk amending title 19 of the Code of Federal (and in many material respects, wine accounted for 0.9 percent of Regulations to preclude the filing of identical) to those governing excise tax domestic wine consumption. By 2016, substitution drawback claims for on wine. Maintaining the current imported bulk wine accounted for 6.2 internal revenue excise tax paid on treatment of drawback claims for wine percent of domestic wine consumption. imported merchandise in situations risks a growth in future revenue loss See Table A. By volume, imports of bulk where no excise tax was paid upon the attributable to double drawback. wine grew by 875 percent over that While proponents of the double substituted merchandise or where the period. See Table B. Of course, other drawback practice argue that it substituted merchandise had been the factors affecting wine trade unrelated to promotes exports, the observed subject of a different claim for refund or drawback may also have affected this economic effects of the practice do not drawback of excise tax under any growth. support the view that it is an effective provision of the IRC. See Drawback of In contrast to the rapid growth of or efficient export promotion measure. Internal Revenue Excise Tax, 74 FR imports, the U.S. trade statistics provide Double drawback also places domestic 52928. The Alcohol and Tobacco Tax little evidence that total wine exports by products made for domestic and Trade Bureau (TTB) within the volume increased from 2004 to 2016. consumption, which are subject to Department of the Treasury published a The total volume of wine exports only excise tax across the board, at a relative related proposed rulemaking in the grew by 5.5 percent over that period. same October 15, 2009, edition of the disadvantage to products imported for Federal Register (Drawback of Internal domestic consumption, for which 99 5 For most imported wine, the tax is $0.282 per Revenue Taxes, 74 FR 52937). Both percent of the excise tax may be liter. 26 U.S.C. 5041(b). On a percentage of unit notices solicited public comments on refunded based on a double drawback value basis, the tax is larger for bulk wine than for the proposed amendments. claim. The interpretation of section bottled wine, because the average value of bulk Subsequently, the notices of proposed 1313(v) reflected in this proposed rule wine is less. The average value of imports of bulk wine hovered around $1.10 per liter in the years rulemaking were withdrawn as would avoid such market-distorting 2001 to 2016—much less than the average value per announced in the Federal Register (75 disparities. liter of imported bottled wines, which was about FR 9359) on March 2, 2010. A more detailed analysis follows in five times as great during the same period. See A number of importers of distilled two parts. First, the available trade data Table E. 6 CBP believes the practice of double drawback spirits have since sought the same suggest that double drawback promotes began in or around 2004. For that reason, this treatment for their products that wine imports. In contrast, the trade data analysis addresses trade statistics beginning in currently receives. Consistent with the provide little evidence that total wine 2004.
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See Table B. Disaggregating exports into trade data are consistent with the view greater the ratio of excise tax to product those eligible for drawback and those that double drawback may have value, the greater the incentive to avoid ineligible for drawback casts further promoted wine imports but that it has payment of the tax through means such doubt on the effect of drawback on total not been an effective export promotion as double drawback. The historical exports. Exports from the United States measure. experience with respect to wine bears to NAFTA countries, Canada and this out: Excise tax as a share of customs 8. Revenue Loss Analysis Mexico, are not eligible for substitution value has been about 5 percent for drawback. Therefore, they are not Maintaining the current double bottled wine and 25 percent for bulk subsidized through the double drawback treatment of wine and wine in recent years. See Table E. Based drawback mechanism. Yet the volume extending that treatment to other on differences in the tariff rates for of U.S. wine exports to these countries products subject to excise tax—distilled bottled and bulk wine that are reflected experienced a compound annual growth spirits, beer, tobacco products, and in the amounts of individual drawback rate (CAGR) of 3.3 percent, while export certain taxable fuels—would cause transactions, Treasury estimates the volumes to countries for which significant revenue loss to the U.S. takeup rate for double drawback of wine substitution drawback was available Government. to be 13 percent for bottled imports and experienced a 0.01 percent CAGR over (a) Data 24 percent for bulk imports. The the same period. See Table D. difference in these rates indicates that Although the value of U.S. bottled Because drawback claims have not tax as a share of value is an important wine exports has risen from 2004 to previously captured the tax-paid status determinant of takeup rate. For some 2016 (from $600 million to $1.05 on substituted exports, the exact amount products, such as beer, tax as a share of billion), the average unit value of the of revenue lost to double drawback customs value is similar to that of wine. exports also increased during that involving imported wine is not certain. For other products subject to excise tax, period (from $2.30 to $6.10). See Table Nevertheless, analysis of CBP import tax as a share of value is much higher B and Table E. At the same time, data and individual drawback claims at than it is for wine—sometimes volumes of bottled wine exports fell by the firm level permit a reasonable exceeding 100 percent. Indeed, for some a third. See Table B. U.S. wine export estimate of the historical revenue loss distilled spirits, excise tax can be many values grew substantially faster (5.2 from double drawback treatment of multiples the cost of production.10 7 percent CAGR) than did export volumes wine imports. Because CBP has not Excise tax as a share of tobacco (0.4 percent CAGR) from 2004 to 2016. kept drawback summary statistics based products’ value is also much higher See Table B and Table C. This suggests on tariff category and type of tax, this than it is as a share of the value of that the increase in bottled wine exports estimate with respect to wine is based wine.11 This dynamic creates a strong by value was driven by price increases on an analysis of individual drawback incentive for firms that deal in these in the average unit value of the exports, claims made by firms involved in wine other products to seek double drawback not by an increase in export volumes. trade and comparing the ratios of of excise taxes paid on imports by Because the excise tax on wine is levied drawback claimed for duties with those inexpensively manufacturing domestic by volume and not by value, this claimed for taxes to differentiate products for either export or suggests that the increase in the value of between shipments of bulk and bottled destruction. Because of the strength of exports is not directly connected to the wine. These firm-level data are this incentive, firms dealing in these availability of double drawback and is statutorily-protected from public products likely would take advantage of due to other factors. disclosure. See 26 U.S.C. 6103 double drawback at higher rates than While U.S. trade statistics do not (confidentiality of tax return the wine industry has historically if it indicate a significant increase in total information); 18 U.S.C. 1905 (Trade were available to them. wine exports, they do indicate a change Secrets Act). With respect to other A second factor of particular concern in the composition of exports while products, Treasury’s estimates are based is the market-distorting incentive for re- double drawback has been available. on current excise tax revenue for each routing shipments that an expansion of From 2004 to 2016, the share of product.8 The estimated rate at which double drawback would create. Double exported wine in bulk containers rose firms are projected to take advantage of drawback creates an incentive for firms from 20.8 percent to 50.6 percent by double drawback (‘‘takeup rate’’) is that both import and export to route a volume, consistent with the shift in informed by the economic incentives shipment destined for another country composition of imports discussed and data described below—chiefly, through the United States to claim above. See Table B. This growth in the excise tax as a share of product value, excise tax relief on imports into the share of bulk exports is only evident for and the potential growth in exports United States. Under this approach, exports to non-NAFTA countries, which resulting from the expansion of double first, a firm imports 200 units of, for rose from 16.2 percent to 55.2 percent. drawback treatment. example, distilled spirits. It removes See Table D. Exports to NAFTA (b) Theory, Assumptions, and Estimate 100 units from customs custody for countries, which are not eligible for domestic sale and pays excise tax for double drawback, show no shift toward Excise taxes on most products their import. It then imports the second bulk exports over that period. See id. In addressed in this rule are applied based 100 units into TTB bond, without addition, while U.S. exports of bulk on volume, not as a percentage of value. For example, the standard excise tax on wine have grown during the period from 10 For example, the average customs value of 9 2004 to 2016, growth in the volume of wine is $1.07 per wine gallon. The exported grain alcohol is $2.78 per proof gallon bulk wine imports has been much (USITC DataWeb, supra note 7) while the tax is 7 See U.S. International Trade Commission $13.50 per proof gallon (26 U.S.C. 5001(a)(1)). The greater. Overall, during the same period, Interactive DataWeb, available at https:// customs value includes profits and other expenses there has been an increase in the U.S. dataweb.usitc.gov/ (trade data by product in addition to the cost of production. In 2006, the trade deficit for wine—including for classification, volume, value, and country of origin, U.S. Department of Agriculture estimated the cost bulk wine. See Table C. retrieved from the U.S. Census Bureau). of production of neutral grain spirits at about $0.53 8 See IRS Statistics of Income Tax Stats—Excise per proof gallon. See ‘‘Economic Feasibility of In short, while it is not possible to say Tax Statistics, available at https://www.irs.gov/ Ethanol Production from Sugar in the United that double drawback is the primary statistics/soi-tax-stats-excise-tax-statistics/. States,’’ supra note 1. driver of the wine trade trends, available 9 26 U.S.C. 5041(b). 11 See Table E; infra note 19.
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having paid excise tax on their import revenue loss of $674 million to $3.3 than it is for wine, creating a and then exports the product from bond, billion on an average annual basis over significantly greater incentive to export and also uses that exportation to seek the next ten years, if double drawback to take advantage of double drawback. drawback under 19 U.S.C. 1313(j)(2) of treatment were extended to Further, as noted above, the tax is much the import tax paid on the first 100 commodities other than wine and not higher than the cost of production for units. The first 100 units of distilled eliminated.13 inexpensive distilled spirits.18 For this spirits would then have been consumed (c) Wine reason, Treasury expects strong domestically at 1 percent of the normal behavioral responses to generate tax rate, without increasing domestic In fiscal year 2015, CBP paid $54.9 substitution drawback claims if distilled production or net exports. Depending million in excise tax refunds and had spirits become eligible for double on the cost of shipping, firms would initial tax collections from wine imports drawback, including purposeful have an incentive to route shipments of $335 million, according to CBP destruction of inexpensive distilled destined for other countries through the data.14 As noted above, the tax as a spirits and routing of goods destined for United States—without increasing share of customs value is 5 percent for other countries through the United domestic production or exports—to bottled wine and 25 percent for bulk States when feasible. We estimate that claim double drawback on their U.S. wine. The estimated takeup rate—that up to 45 percent of imported spirits imports. In the analysis, we assume is, the rate of double drawback claims— would be commercially viable trade re-routing of all distilled spirits is 13 percent for bottled imports and 25 predicates for double drawback from Canada and Mexico bound for non- percent for bulk imports, demonstrating claims.19 Varying the projected takeup NAFTA countries is feasible. We also that tax as a share of value is an rate between 25 percent and 75 percent assume that trade re-routing of gin, important determinant of the takeup for these claims, annual U.S. vodka, and grain alcohol worldwide is rate. Assuming that double drawback Government revenue loss from allowing feasible, though the analysis does not continues to grow with real GDP, the double drawback on distilled spirits is rely on substantial rerouting of these current treatment of wine is estimated to estimated to range from $312 million to products. cause between $51 million and $69 $937 million annually over ten years. The following estimates also assume a million in revenue loss to the U.S. 7 percent reduction in revenue loss by Government annually over the next ten (e) Beer 15 comparison to the historical data years. With respect to beer, fiscal year 2016 concerning wine due to the Craft (d) Distilled Spirits excise tax revenue from imports was Beverage Modernization Act (CBMA), $542 million, according to TTB With respect to distilled spirits, fiscal Public Law 115–97, § 13801–13808 collections data. The tax of $18 per (2017). The CBMA provides lower year 2016 excise tax revenue from imports was $1.5 billion, according to barrel is 12.3 percent of the value of overall effective tax rates for smaller imports and 15.5 percent of the value of producers than for larger producers. TTB collections data. A large portion of 20 imports are, however, imported into exports, suggesting firms have a This assessment of the effects of the stronger incentive to claim double CBMA is based on the assumption that TTB bond and then are treated as domestic collections. U.S. Census drawback on beer than bottled wine. most double drawback claims would be However, qualifying, non-NAFTA taken by large multinational firms Bureau data suggest actual import excise tax revenue is closer to $2.6 billion.16 exports of beer amount to only 4 percent paying the full rate on marginal imports of imports, suggesting limited scope for above the limit identified in the CBMA. The tax as a share of customs value for distilled spirits—currently $13.50 per The transaction costs involved in 18 proof gallon 17—is 5 to 8 times higher See supra note 10. drawback support the view that 19 For the years 2014–2016, vodka, gin, and grain drawback most benefits larger firms that alcohol imports represented 34% of total spirits are involved in both exporting and 13 These estimates are in nominal U.S. dollars, imports. Because the cost of production for these whereas the figures in the Executive Orders 13563 importing. spirits is so low relative to the tax, we expect a and 12866 analysis are in undiscounted and strong behavioral response, including increased The following estimates further discounted 2016 U.S. dollars. Because of this exports, trade re-routing, and destruction, such that assume that double drawback of wine, difference, only a rough estimate of the total all imports could qualify for duty drawback. In distilled spirits, and beer would grow transfers from the rule and this alternate analysis contrast, brandy, liqueurs, and cordials are with real GDP. That is, Treasury can be determined. This estimate can be determined relatively high value spirits, making destruction by adding the revenue losses of extending double and increased exports less feasible. For these assumes that consumption of excise- drawback to the rule’s undiscounted net transfers products, we assume that opportunities to claim taxed beverages, and drawback on those from the U.S. Government to trade members. double drawback are limited by current exports, taxes, would grow with the overall 14 See id. Refunds or drawback paid in any given which amount to 2 percent of current spirits economy. Treasury uses the year may be paid for imports made in previous imports. Finally, we assume that all spirits exports years. The $54.9 million figure is a summation of from Canada and Mexico to non-NAFTA countries Administration’s forecast of taxable fuel individual drawback claims from CBP data that are could be re-routed through the United States to take and tobacco excise tax revenue to statutorily-protected from public disclosure. TTB advantage of double drawback. Using United estimate change over time. Both of these publishes the $335 million figure. See TTB Nations International Trade Statistics data for forecasts decrease slightly over time, Statistical Release, ‘‘Tax Collections Cumulative 2014–2016, we estimate that, at current trade levels, Summary, FY 2015,’’ available at https:// consistent with recent trends in excise this re-routing would generate double drawback www.ttb.gov/statistics/final15.pdf. claims for up to 8 percent of US spirits imports. 12 revenue. 15 These estimates are slightly different from the Adding these shares of imports together, without In total, the incentives for firms that wine double drawback estimates shown in Table 49 rounding, sums to 45 percent of US imports. deal in distilled spirits, beer, tobacco of the Executive Orders 13563 and 12866 analysis. 20 In 2016, the average customs value of imported products, and certain fuels—in addition This is because these estimates are in nominal U.S. beer was $145.98 per barrel while the average free dollars, whereas the figures in Table 49 are in to the continued double drawback alongside ship (FAS) value of exports was $116.06 undiscounted 2016 U.S. dollars. per barrel. See USITC DataWeb, supra note 7. The treatment of wine—could cause a 16 Accessed through the USITC DataWeb, supra U.S. Census Bureau defines ‘‘customs value’’ and note 7. ‘‘FAS export value’’ in their Guide to Foreign Trade 12 Excise Tax Statistics, supra note 8. From 2010 17 26 U.S.C. 5001(a)(1). The CBMA reduces the Statistics, § 8, available at https://www.census.gov/ to 2016, excise tax revenue for imported beer, wine, excise tax on a portion of imported goods. The foreign-trade/guide/sec2.html#customs_value. and distilled spirits grew much more quickly than estimates reported in this analysis assume the Treasury uses customs value and FAS value, revenue for tobacco products or taxable fuels. See CBMA is extended indefinitely, reducing the because data on cost of production are not id. revenue loss by roughly 7 percent. available.
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takeup of double drawback. Varying the overseas. It would also create a great importations eligible for drawback projected takeup rate between 10 incentive for importers to contract with under 19 U.S.C. 1313 and those that are percent and 30 percent on existing domestic producers to match imports not, it is quite difficult to estimate the imports and exports, and varying the and exports for drawback; the incentive takeup rate on substitution drawback for increase in qualifying exports between would be to import products for taxable fuels. Even a small takeup rate, 10 percent and 30 percent, annual U.S. domestic sale and export domestically however, could have a significant Government revenue loss from produced cigarettes. Because economic impact. Assuming, for extending double drawback to beer is domestically produced tobacco products example, that 1 percent to 5 percent of estimated to range from $9 million to account for 95 percent of domestic imported fuel receives double drawback $28 million annually over ten years. tobacco consumption, Treasury assumes of excise taxes, the U.S. Government that tobacco firms would gradually revenue loss would range between $20 (f) Tobacco Products respond by contracting with importers million and $98 million annually over With respect to tobacco products, and setting up foreign production ten years. fiscal year 2016 excise tax revenue on facilities. Accounting for this slow 9. Conclusion imports was $829 million according to ramp-up in drawback claims, Treasury TTB collections data. The tax incentives estimates that between 3 percent and 18 This proposed rule would protect the to claim double drawback are especially percent of excise revenue on tobacco integrity of excise tax revenue strong for tobacco products. For products would be lost due to an collections by ensuring that 19 U.S.C. instance, in 2016, the Federal excise tax extension of double drawback to 1313(j)(2) substitution drawback is not on a carton of cigarettes was 199 percent tobacco products over the next 10 years, employed to evade the statutory of the average customs value of a carton or between $332 million and $2.2 prohibition on using a single of imported cigarettes and 408 percent billion annually.22 In the long run, exportation as the basis for two of the average export value of a carton Treasury estimates that U.S. drawback claims. It would preclude the of cigarettes exported from the United Government revenue losses would be filing of substitution drawback claims States based on U.S. Census Bureau substantially higher, with increasing for excise tax paid on imported trade data.21 The tax rate by value is shifts of domestic production overseas. merchandise in situations where no about 40 times larger for cigarettes than excise tax was paid upon the substituted that for bottled wine, suggesting the (g) Taxable Fuels merchandise or limit the amount of incentive to claim drawback on Finally, with respect to taxable fuels, drawback allowable to the amount of cigarettes is considerably larger than the current annual excise tax revenue on taxes paid (and not returned by refund, incentive to claim drawback on wine. imports is roughly $2 billion according credit, or drawback) on the substituted Extending the double drawback to U.S. Census Bureau data on imports merchandise, and thus eliminate double treatment to tobacco products would of gasoline and diesel fuel.23 Due to the drawback. CBP invites comments from create significant incentives to shift lack of detailed data on fuel imports, interested members of the public on this production of tobacco products differentiating between those proposal.
TABLE A—IMPORT SHARES BY VOLUME OF TOTAL U.S. TABLE WINE CONSUMPTION 1
Imported wine container size 2 Year Two liters or Over four liters Imported sum less (bottles) (bulk) 3
2004 ...... 26.0 0.9 26.9 2005 ...... 26.8 1.8 28.6 2006 ...... 26.5 3.6 30.1 2007 ...... 27.2 3.8 30.9 2008 ...... 25.4 4.6 30.0 2009 ...... 24.5 8.7 33.2 2010 ...... 25.7 6.5 32.2 2011 ...... 24.6 7.7 32.3 2012 ...... 22.8 12.7 35.5 2013 ...... 23.5 8.9 32.4 2014 ...... 21.9 7.3 29.2 2015 ...... 22.9 6.6 29.5 2016 ...... 21.9 6.2 28.1 2004–2016: CAGR 4 (Pct) ...... ¥1.4 17.1 0.4 Total growth (Pct) ...... ¥15.7 567.2 4.5 Sources: U.S. International Trade Commission, ‘‘Interactive Tariff and Trade DataWeb,’’ accessed February 2, 2018. Alcohol and Tobacco Tax and Trade Bureau, ‘‘Tax Collections,’’ accessed March 2, 2018. 1. Total U.S. wine consumption is estimated using gross excise tax collections and tax rates for wine. 2. The ITC website explains that: ‘‘General Imports measure the total physical arrivals of merchandise from foreign countries, whether such merchandise enters consumption channels immediately or is entered into bonded warehouses under Customs custody or from Foreign Trade Zones.’’ 3. The amount of imported wine in containers between 2 and 4 liters in size is negligible and is omitted from the table.
21 In 2016, the average customs value of 1,000 excise tax on 1,000 cigarettes is $50.33. 26 U.S.C. Specifically, Treasury does not know how quickly imported cigarettes was $25.335 while the average 5701(b)(1). tobacco companies might set up new or use existing FAS value of 1,000 exported cigarettes was $12.345. 22 The range of possible outcomes is large, overseas production operations to serve the U.S. See USITC DataWeb, supra note 6. The Federal primarily due to uncertainty in the timing of firm market. responses rather than the magnitude of response. 23 Retrieved from USITC DataWeb, supra note 7.
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4. CAGR is compound annual growth rate. Note: Wine trade data in the table include Harmonized Tariff Schedule (HTS) 10-digit imports codes 2204215005, 2204215015, 2204215015, 2204215025, 2204215030, 2204215035, 2204215040, 2204215045, 2204215046, 2204215050, 2204215055, 2204215060, and 2204296000.
TABLE B—VOLUME OF U.S. TOTAL WINE EXPORTS AND GENERAL IMPORTS BY CONTAINER SIZE (ALL COUNTRIES) [Millions of liters of wine with not over 14 percent alcohol by volume]
Total exports 1 General imports 2 Container Size Container Size Pct share Exported Pct share Imported Year in large sum in large Two liters Over two sum containers Two liters Over containers or less liters or less four liters (bottles) (bulk) (bottles) (bulk) 3
2004 ...... 259 68 327 20.8 556 20 576 3.5 2005 ...... 177 100 278 36.2 602 40 642 6.2 2006 ...... 189 138 327 42.3 615 84 699 12.0 2007 ...... 207 169 376 45.0 661 92 753 12.2 2008 ...... 209 201 410 49.0 623 112 735 15.2 2009 ...... 177 171 349 49.2 612 218 830 26.3 2010 ...... 171 196 368 53.4 658 168 826 20.3 2011 ...... 185 190 375 50.8 673 211 884 23.9 2012 ...... 196 167 364 46.1 659 365 1024 35.6 2013 ...... 207 172 379 45.4 671 255 926 27.5 2014 ...... 195 176 371 47.5 655 219 874 25.1 2015 ...... 205 180 385 46.7 685 197 882 22.3 2016 ...... 171 175 345 50.6 685 195 880 22.2 2004–2016: CAGR 4 (Pct) ...... ¥3.4 8.2 0.4 7.7 1.8 20.9 3.6 16.7 Total growth (Pct) ..... ¥34.1 156.6 5.5 143.2 23.2 875.0 52.8 538.2 Source: U.S. International Trade Commission, ‘‘Interactive Tariff and Trade DataWeb,’’ accessed February 2, 2018. 1. The ITC describes total exports as ‘‘Domestic exports plus foreign exports’’ on their website. 2. The ITC website explains that ‘‘General Imports measure the total physical arrivals of merchandise from foreign countries, whether such merchandise enters consumption channels immediately or is entered into bonded warehouses under Customs custody or from Foreign Trade Zones.’’ 3. The amount of imported wine in containers between 2 and 4 liters in size is negligible and is omitted from the table. 4. CAGR is compound annual growth rate. Note: Wine trade data in the table include Harmonized Tariff Schedule (HTS) 10-digit exports codes 2204214000 and 2204290020. HTS im- ports codes used include 2204215005, 2204215015, 2204215025, 2204215030, 2204215035, 2204215040, 2204215045, 2204215046, 2204215050, 2204215055, 2204215060, and 2204296000.
TABLE C—VALUE OF U.S. TOTAL WINE EXPORTS AND GENERAL IMPORTS BY CONTAINER SIZE (ALL COUNTRIES) [Millions of U.S. dollars of wine with not over 14 percent alcohol by volume]
Total exports, free General imports, alongside ship (FAS) 1 general customs value 2 Container Size Exported Pct share Container Size Imported Pct share Year sum in large sum in large Two liters Over two containers Two liters Over four containers or less liters or less liters (bottles) (bulk) (bottles) (bulk) 3
2004 ...... 600 82 682 12.0 2,658 19 2,677 0.7 2005 ...... 452 91 543 16.8 2,891 35 2,926 1.2 2006 ...... 616 121 737 16.4 3,153 67 3,220 2.1 2007 ...... 635 151 786 19.2 3,494 77 3,571 2.2 2008 ...... 645 182 827 22.0 3,511 114 3,625 3.1 2009 ...... 549 202 751 26.9 3,029 157 3,186 4.9 2010 ...... 702 212 914 23.2 3,143 149 3,292 4.5 2011 ...... 869 213 1,082 19.7 3,420 225 3,645 6.2 2012 ...... 905 199 1,104 18.0 3,458 400 3,858 10.4 2013 ...... 1,037 235 1,272 18.5 3,652 281 3,933 7.1 2014 ...... 921 240 1,161 20.7 3,708 242 3,950 6.1 2015 ...... 1,035 227 1,262 18.0 3,709 202 3,911 5.2 2016 ...... 1,050 205 1,255 16.3 3,779 217 3,996 5.4 2004–2016: CAGR 4 (Pct) ...... 4.8 7.9 5.2 2.6 3.0 22.5 3.4 18.5 Total growth (Pct) ..... 75.0 150.0 84.0 35.9 42.2 1,042.1 49.3 665.1 Source: U.S. International Trade Commission, ‘‘Interactive Tariff and Trade DataWeb,’’ accessed February 15, 2018. The ITC describes total exports as ‘‘Domestic exports plus foreign exports’’ on their website. The U.S. Census Bureau provides definitions of FAS export value and customs value in their Guide to Foreign Trade Statistics, § 8, available at https://www.census.gov/foreign-trade/guide/ sec2.html#customs_value. 1. The ITC website explains that ‘‘General Imports measure the total physical arrivals of merchandise from foreign countries, whether such merchandise enters consumption channels immediately or is entered into bonded warehouses under Customs custody or from Foreign Trade Zones.’’
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2. The amount of imported wine in containers between 2 and 4 liters in size is negligible and is omitted from the table. 3. CAGR is compound annual growth rate. Note: Wine trade data in the table include Harmonized Tariff Schedule (HTS) 10-digit exports codes 2204214000 and 2204290020. HTS im- ports codes used include 2204215005, 2204215015, 2204215025, 2204215030, 2204215035, 2204215040, 2204215045, 2204215046, 2204215050, 2204215055, 2204215060, and 2204296000.
TABLE D—VOLUME OF U.S. TOTAL WINE EXPORTS 1 BY DESTINATION [Millions of liters of wine with not over 14 percent alcohol by volume]
Exports to Pct share in Exports to Pct share in Year NAFTA large non-NAFTA large countries containers 2 countries containers
2004 ...... 37 56.7 290 16.2 2005 ...... 35 50.7 243 34.1 2006 ...... 40 38.0 287 42.9 2007 ...... 50 37.2 325 46.2 2008 ...... 55 39.8 354 50.5 2009 ...... 48 29.4 301 52.3 2010 ...... 42 33.3 325 56.0 2011 ...... 46 33.4 329 53.2 2012 ...... 53 30.9 311 48.6 2013 ...... 50 18.0 330 49.6 2014 ...... 57 22.6 314 52.0 2015 ...... 61 27.0 324 50.4 2016 ...... 55 25.6 291 55.2 2004–2016: CAGR 3 (Pct) ...... 3.3 ¥6.4 0.0 10.8 Total growth (Pct) ...... 47.6 ¥54.8 0.2 240.6 Source: Treasury calculations based on import data from U.S. International Trade Commission, ‘‘Interactive Tariff and Trade DataWeb,’’ accessed March 2, 2018. 1. The ITC website describes total exports as ‘‘Domestic exports plus foreign exports.’’ 2. Large containers is defined here as containers over 2 liters in size. 3. CAGR is compound annual growth rate. Note: Wine trade data in the table include Harmonized Tariff Schedule (HTS) 10-digit exports codes 2204214000 and 2204290020.
TABLE E—AVERAGE VALUE OF U.S. TOTAL WINE EXPORTS AND GENERAL IMPORTS AND EFFECTIVE TAX RATES BY CONTAINER SIZE (ALL COUNTRIES) [U.S. dollars per liter of wine with not over 14 percent alcohol by volume]
Average value per liter of total exports 1 Average value per liter of general imports 2 Two liters or less Over two liters Two liters or less Over four liters Year (bottles) (bulk) (bottles) (bulk) 3 Value per Tax/value Value per Tax/value Value per Tax/value Value per Tax/value liter 4 (pct) liter (pct) liter (pct) liter (pct)
2004 ...... 2.3 12.2 1.2 23.5 4.8 5.9 1.0 29.8 2005 ...... 2.5 11.1 0.9 31.2 4.8 5.9 0.9 32.3 2006 ...... 3.3 8.7 0.9 32.2 5.1 5.5 0.8 35.4 2007 ...... 3.1 9.2 0.9 31.6 5.3 5.3 0.8 33.8 2008 ...... 3.1 9.1 0.9 31.2 5.6 5.0 1.0 27.8 2009 ...... 3.1 9.1 1.2 24.0 4.9 5.7 0.7 39.2 2010 ...... 4.1 6.9 1.1 26.2 4.8 5.9 0.9 31.9 2011 ...... 4.7 6.0 1.1 25.3 5.1 5.6 1.1 26.5 2012 ...... 4.6 6.1 1.2 23.8 5.2 5.4 1.1 25.8 2013 ...... 5.0 5.6 1.4 20.7 5.4 5.2 1.1 25.7 2014 ...... 4.7 6.0 1.4 20.7 5.7 5.0 1.1 25.6 2015 ...... 5.0 5.6 1.3 22.4 5.4 5.2 1.0 27.6 2016 ...... 6.1 4.6 1.2 24.1 5.5 5.1 1.1 25.4 2004–2016: CAGR 5 (Pct) ...... 8.5 ¥7.8 ¥0.2 0.2 1.2 ¥1.2 1.3 ¥1.3 Total growth (Pct) ..... 165.7 ¥62.4 ¥2.6 2.6 15.4 ¥13.3 17.1 ¥14.6 Source: U.S. International Trade Commission, ‘‘Interactive Tariff and Trade DataWeb,’’ accessed February 2–15, 2018. 1. The ITC describes total exports as ‘‘Domestic exports plus foreign exports’’ on their website. 2. The ITC website explains that ‘‘General Imports measure the total physical arrivals of merchandise from foreign countries, whether such merchandise enters consumption channels immediately or is entered into bonded warehouses under Customs custody or from Foreign Trade Zones.’’ 3. The amount of imported wine in containers between 2 and 4 liters in size is negligible and is omitted from the table. 4. The tax as a share of value is approximated by dividing the most common tax rate (28.266 cents per liter) by the average customs value per liter. 5. CAGR is compound annual growth rate. Note: Wine trade data in the table include Harmonized Tariff Schedule (HTS) 10-digit exports codes 2204214000 and 2204290020. HTS im- ports codes used include 2204215005, 2204215015, 2204215025, 2204215030, 2204215035, 2204215040, 2204215045, 2204215046, 2204215050, 2204215055, 2204215060, and 2204296000.
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III. Explanation of Proposed New part 190 is drafted with a scope Section 190.3 provides information Regulations section and a section regarding claims regarding the duties, taxes, and fees The following proposed regulatory filed under NAFTA followed by 19 subject or not subject to drawback. This amendments are generally based on 19 subparts: General Provisions; proposed regulation differs from the U.S.C. 1313, including the new Manufacturing Drawback; Unused corresponding regulation in part 191 in requirements, timeframes, and related Merchandise Drawback; Rejected that it generally provides for refunds of operational decisions necessitated by Merchandise; Completion of Drawback duties, taxes, and fees based on the TFTEA. When proposed regulatory Claims; Verification of Claims; changes to 19 U.S.C. 1313(l) stemming language is based, at least in part, on Exportation and Destruction; from TFTEA. This proposed regulation differs from the current corresponding authority other than 19 U.S.C. 1313, Liquidation and Protest of Drawback regulation in part 191 by allowing these instances are noted below. Entries; Waiver of Prior Notice of Intent to Export; Accelerated Payment of drawback on the merchandise A. Proposed New Part 190 Drawback; Internal Revenue Tax on processing fee (MPF) generally, whereas CBP based the regulatory structure of Flavoring Extracts and Medicinal or 19 CFR 191.3(a)(4) limits drawback on the proposed new part 190 on the Toilet Preparations (Including MPF to situations only involving claims current part 191 in order to ease the Perfumery) Manufactured From under 19 U.S.C. 1313(j) and 19 U.S.C. transition for drawback practitioners by Domestic Tax-Paid Alcohol; Supplies 1313(p)(2)(A)(iii) or (iv). Consistent with attempting to ensure, wherever possible, for Certain Vessels and Aircraft; Meats the Miscellaneous Trade and Technical that the numerical regulations in each Cured With Imported Salt; Materials for Corrections Act of 2004 (Pub. L. 108– part correspond with each other. In Construction and Equipment of Vessels 429), which amended 19 U.S.C. 1313 to some regulations, while the name of a and Aircraft Built for Foreign allow, inter alia, harbor maintenance section has changed, the content of the Ownership and Account; Foreign-Built taxes (HMT) refunds, this proposed proposed section generally aligns with Jet Aircraft Engines Processed in the regulation also allows drawback on the content of the corresponding section United States; Merchandise Exported HMT for claims under the provisions 24 in part 191. For example, § 191.10, From Continuous CBP Custody; which provide for drawback of tax. Certificate of delivery, deals with Distilled Spirits, Wines, or Beer Which Similarly, but subject to the transfers of merchandise and Are Unmerchantable or Do Not Conform limitations under 19 U.S.C. 1313 prior requirements related to certificates of to Sample or Specifications; to being amended by TFTEA, this delivery as evidence of the transfers. Substitution of Finished Petroleum document proposes to update 19 CFR However, proposed § 190.10, Transfer of Derivatives; Merchandise Transferred to 191.3 by creating a new paragraph (a)(5) merchandise, also deals with transfers a Foreign Trade Zone From CBP to allow drawback on HMT, but limited of merchandise but it is not called Custody; Drawback Compliance to situations involving only claims ‘‘certificate of delivery’’ because TFTEA Program. under 19 U.S.C. 1313(j) and 19 U.S.C. eliminated certificates of delivery (as Section 190.0 briefly describes the 1313(p)(2)(A)(iii) or (iv). In addition, 19 well as certificates of manufacture and scope of the new proposed part 190 CFR 191.3(b)(1) is revised to otherwise delivery). In other instances, it was dealing with drawback as amended by prohibit HMT refunds except under the necessary to reserve a section (e.g., TFTEA. provisions specified in proposed new § 190.76, Landing certificate) if the Section 190.0a states that claims paragraph (a)(5). Relatedly, section corresponding section in part 191 was involving NAFTA are provided for in 191.3 is retitled as ‘‘duties, taxes, and no longer required or to add a new part 181. This section contains only fees subject or not subject to drawback’’ section (e.g., § 190.63, Liability for grammatical changes from the for clarifying purposes. Section 190.4 provides information drawback claims) if there was no corresponding section in part 190. regarding drawback and merchandise in corresponding section in part 191. Subpart A—General Provisions which the U.S. Government has an However, for the most part, the interest. This section replicates the regulations in proposed part 190 Section 190.1 briefly describes the corresponding section in part 191. directly correspond with those in part authority of the Commissioner of CBP to Section 190.5 states that drawback is 191. Accordingly, when describing the prescribe, and of the Secretary of the available on goods shipped to proposed regulations, comparisons to Treasury to approve, rules and Guantanamo Bay and that drawback the corresponding section in part 191 regulations regarding drawback. It is under 1313(j)(1) is permitted on are included to facilitate the transition proposed to amend the corresponding merchandise shipped to certain insular to TFTEA-Drawback. Generally, these section in part 191 as well as to identify possessions and trust territories. This comparisons will note the major Treasury Department Order Number section differs from the corresponding differences between the proposed 100–16 and DHS Delegation Order section in the current part 191 because regulation and the corresponding 7010.3 as sources of authority. See 19 the Miscellaneous Trade and Technical regulation in part 191 (such as in CFR part 0. Corrections Act of 2004 (Pub. L. 108– regulations dealing with substitution Section 190.2 lists definitions used 429), amended 19 U.S.C. 1313 by adding which is now generally based on the throughout the proposed part 190. This paragraph (y) to allow drawback under HTSUS), or, in many cases, will indicate section differs from the corresponding 19 U.S.C. 1313(j)(1) on entries shipped that there are no differences (other than section in part 191 in that the from the customs territory of the United the references being to sections in part definitions for certificate of delivery, States to the U.S. Virgin Islands, 191) or that the differences are minor. certificate of manufacture and delivery, American Samoa, Wake Island, Midway These minor differences will usually and commercially interchangeable Islands, Kingman Reef, Guam, Canton include grammatical or stylistic edits merchandise have been removed and Island, Enderbury Island, Johnston (for example, changing ‘‘shall’’ to ‘‘will’’ the definitions for the following terms Island, and Palmyra Island. or ‘‘must’’) or nomenclature changes (for were added: Bill of materials; document; drawback office; formula; intermediate example, changing ‘‘Customs’’ to ‘‘CBP’’ 24 Title 19 of the Code of Federal Regulations may such as in ‘‘CBP custody’’ or ‘‘CBP party; per unit averaging; schedule B; also refer to the harbor maintenance tax as the supervision’’). sought chemical element; and wine. harbor maintenance fee (HMF).
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Accordingly, while this 2004 change Section 190.10 provides information manufacturing drawback claims. This was not previously made in part 191, regarding documenting and maintaining section differs from the corresponding this document proposes to clarify this records regarding transfers of regulation in part 191 in that it modification in proposed § 190.5 and in merchandise. This section contains incorporates changes such as the existing § 191.5. Further, consistent significant differences specific to amount of drawback provided for and with proposed § 190.5, it is proposed to TFTEA-Drawback, from the the limitation of drawback of duties amend § 191.5 to clarify that drawback corresponding section in part 191. regarding flour or by-products of is not allowable on merchandise Section 190.11 provides information imported wheat. shipped to Puerto Rico from elsewhere on the valuation of the designated Section 190.22 provides the general in the customs territory of the United imported merchandise for drawback rule regarding substitution States because Puerto Rico is part of the claims, as well as for the application of manufacturing drawback claims. This customs territory of the United States the ‘‘lesser of’’ rules for substitution section differs from the corresponding (see 19 CFR 101.1). claims (i.e., for exported or destroyed regulation in part 191 in that it Section 190.6 specifies who has the merchandise and articles, as well as incorporates changes to 19 U.S.C. authority to sign or electronically certify substituted merchandise used in 1313(b) brought about in Section 906 of drawback documents. This section manufacturing). The corresponding TFTEA such as the 8-digit HTSUS differs from the corresponding section regulation in part 191 deals with substitution standard and provides for in part 191 in that it provides for tradeoff, which was provided for in 19 the ‘‘lesser of’’ rule as it applies to electronic signatures, removes U.S.C. 1313(k) prior to the TFTEA TFTEA-Drawback and also contains references to Certificates of Delivery and amendments. TFTEA deleted the grammatical and nomenclature changes. Certificates of Manufacture and provision that authorized tradeoff in 19 This section also includes language Delivery, and includes additional U.S.C. 1313(k) and replaced it with an regarding the preclusion of claiming references to bill of materials and unrelated new provision establishing Federal excise taxes discussed in detail formulas. joint and several liability for drawback in the section titled Federal Excise Tax Section 190.7 provides information on claims. and Substitution Drawback Claims. general manufacturing drawback Section 190.12 provides information Section 190.23 details the methods rulings, states that the process to modify regarding situations when a claimant and requirements for claiming drawback these rulings is the same as provided for files under an incorrect provision and specific to manufacturing claims. This in § 190.8, and also clarifies the this section states that the claim may be section differs significantly from the longstanding CBP procedures for the deemed filed pursuant to any other corresponding section in part 191 in modification of these rulings. This provision if it is determined that that it is titled differently, it provides for section differs from the corresponding drawback is allowable under that a different methodology for claiming section in part 191 in that it makes provision but not under the provision as drawback (relative value) and it is TFTEA-conforming changes, such as originally filed. With the exception of slightly reordered. adding the requirement to provide the 8- cross-references, this section is Section 190.24 directs parties digit HTSUS number, and it contains generally unchanged from the involved in drawback-related grammatical and nomenclature changes. corresponding section in part 191. transactions to § 190.10, the general Section 190.8 provides information on Section 190.13 states that drawback is section dealing with transfers of specific manufacturing drawback available under 19 U.S.C. 1313(q) on merchandise. This section differs from rulings and establishes a process to imported packaging material when used the corresponding section in part 191 by modify these rulings to comply with to package or repackage merchandise or referencing the appropriate section in TFTEA-Drawback requirements by articles exported or destroyed pursuant the proposed part dealing with transfers providing the ability to annotate the to certain other provisions. This section of merchandise. ruling with the 8-digit HTSUS numbers differs from the corresponding section Section 190.25 directs parties for rulings issued prior to February 24, in part 191 due to grammatical changes. involved in the destruction of 2018, if accompanied by the relevant Section 190.14 provides for merchandise for drawback-related certification. This section differs from identification of merchandise or articles transactions to § 190.71, which contains the corresponding section in part 191 in through accounting methods in the procedures for destroying that it makes TFTEA-conforming situations not involving substitution, merchandise under CBP supervision. changes, such as adding the requirement which remain the same as in part 191 This section is nearly identical to the to provide the 8-digit HTSUS number, and are based on a standard of corresponding section in part 191. and it contains grammatical and fungibility. This section differs from the Section 190.26 provides information nomenclature changes. corresponding section in part 191 regarding recordkeeping requirements Section 190.9 provides information regarding the five-year time period and generally and specifically requires regarding agency relationships detailing generally due to minor clarifying edits documents enabling CBP to trace the how the owner of the identified as well as grammatical and articles manufactured or produced from merchandise, the designated imported nomenclature changes. importation, through any transfers, to merchandise, and/or the substituted Section 190.15 provides general exportation or destruction. This section merchandise used to produce an information regarding recordkeeping is substantially similar to the exported article may employ another requirements. With the exception of the corresponding section in part 191 but it person to do part, or all, of the recordkeeping time period, this section differs due to certain grammatical and manufacture or production under 19 is unchanged from the corresponding nomenclature changes and it contains U.S.C. 1313(a) or (b). This section is section in part 191. TFTEA-based modifications such as similar to the corresponding section in requiring the 8-digit HTSUS number part 191; however, it updates the Subpart B Contains Requirements rather than referencing same kind and language by removing references to Specific to Manufacturing Drawback quality. Certificates of Delivery and includes the Claims Section 190.27 provides general requirement to provide the 10-digit Section 190.21 provides the general information on the time limitations HTSUS number. rule regarding direct identification regarding manufacturing drawback. This
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section is substantially similar to the Section 190.33 details the parties involving goods that do not conform to corresponding section in part 191 but it entitled to claim in situations regarding sample or specifications, were shipped differs in that it contains certain unused merchandise drawback. This without consent of the consignee, or grammatical and nomenclature changes section differs from the corresponding determined to be defective at the time and TFTEA-based modifications such as regulation in part 191 in that it of importation. This section differs from changing the time period to 5 years after incorporates TFTEA-based changes such the corresponding section in part 191 in importation, from the 3-year time period as referencing records kept in the that it contains nomenclature changes after date of receipt by the manufacturer normal course of business; it does not and includes additional language or producer at the factory in § 191.27. reference terms such as commercially regarding goods sold at retail and Section 190.28 details the parties interchangeable and certificate of returned, removes certain language entitled to file a claim in situations delivery, which were eliminated for regarding satisfactory evidence and involving manufacturing drawback. TFTEA-Drawback; and it contains includes language regarding the amount This section differs from the grammatical and nomenclature changes. of drawback allowable. corresponding section in part 191 due Section 190.34 directs parties Section 190.42 sets forth the general only to a few grammatical changes. involved in drawback-related procedures for filing, documenting, and Section 190.29 requires a claimant transactions to § 190.10, the general certifying claims under rejected filing a manufacturing drawback claim section dealing with transfers of merchandise drawback. This regulation to make certifications regarding the merchandise. This section differs from differs from the corresponding availability of the applicable bill of the corresponding section in part 191 in regulation in part 191 in that it includes materials or formula including the that it merely directs to the general the expanded time frame of 5 years from HTSUS subheading number(s) and the section dealing with transfers of the date of importation for filing claims and directs claimants to § 190.71 for quantities of merchandise. This merchandise rather than detailing procedures regarding the destruction of regulation is new and does not have a specifics. Section 190.35 contains specific merchandise under CBP supervision. corresponding regulation in part 191; instructions regarding the required This regulation also differs from the however, the type of documentation notice of intent to export, destroy, or current corresponding regulation in part covered by this certification has return merchandise, and the process 191 (at § 191.42(a)), which requires that generally been required by CBP as part regarding CBP’s determination to the merchandise be in CBP custody of a manufacturing drawback claim. examine merchandise. The process prior to exportation or destruction. This Subpart C Provides Specific described in this section replicates the was rendered obsolete by the Requirements Dealing With Unused process as laid out in the corresponding Miscellaneous Trade and Technical Merchandise Drawback section in part 191, with only Corrections Act of 2004 (Pub. L. 108– grammatical and nomenclature changes. 429), which removed the requirement Section 190.31 provides the general Section 190.36 contains information that the merchandise be in CBP custody rule regarding direct identification regarding obtaining a one-time waiver of prior to exportation or destruction. unused merchandise drawback claims. the requirement to provide notice of Accordingly, it is proposed to update This section differs from the intent to export. The process described § 191.42(a) as well. corresponding regulation in part 191 in in this section replicates the process as Section 190.43 informs claimants of that it incorporates TFTEA-based laid out in the corresponding section in the possibility of filing a direct changes to 19 U.S.C. 1313(j)(1) such as part 191. identification unused merchandise the 5-year period for filing a claim and Section 190.37 directs parties claim under 19 U.S.C. 1313(j)(1) in lieu it contains grammatical and involved in the destruction of of a rejected merchandise claim, to the nomenclature changes. merchandise for drawback claims to extent that the merchandise qualifies. Section 190.32 provides the general § 190.71, which contains the procedures This section replicates the rule regarding substitution unused for destroying merchandise under CBP corresponding section in part 191; merchandise drawback claims. This supervision. The process described in however, the section title, unused section differs from the corresponding this section replicates the process as merchandise drawback claim, differs regulation in part 191 in that it laid out in the corresponding section in from the corresponding section title in incorporates TFTEA-based changes to part 191 and contains only one part 191, which is unused merchandise 19 U.S.C. 1313(j)(2) such as the 5-year nomenclature change. claim. period for filing a claim and HTSUS- Section 190.38 provides information Section 190.44 is reserved. The based substitution determinations, regarding recordkeeping requirements corresponding regulation in part 191 provides for the ‘‘lesser of’’ rule generally and specifically requires directs claimants to § 191.71 for the regarding allowable refunds, and documents enabling CBP to trace the procedures for destroying merchandise contains grammatical and nomenclature merchandise from importation, through under CBP supervision. This section is changes. This section also explains the any transfers, to exportation or unnecessary as a stand-alone regulation special substitution rule for wine, which destruction. This section is substantially because the citation to § 190.71, dealing is not provided for in the corresponding similar to the process as laid out in the with destruction under CBP section of part 191, and includes corresponding section in part 191 and supervision, is included in § 190.42, as language regarding the preclusion of contains grammatical and nomenclature discussed above. claiming Federal excise taxes discussed changes. Section 190.45 is a new regulation in detail in the section titled Federal regarding the special rule for Excise Tax and Substitution Drawback Subpart D Provides Specific substitution for returned retail Claims. As discussed further below in Requirements Regarding Rejected merchandise, a subset of rejected the section titled Amendments Merchandise Drawback Under 19 U.S.C. merchandise provided for in 19 U.S.C. Regarding Federal Excise Tax and 1313(c) 1313(c). This section includes Substitution Drawback Claims, this Section 190.41 provides for drawback requirements that have been in effect preclusion is also proposed as an claims under 19 U.S.C. 1313(c) since 2004, when the Miscellaneous amendment to § 191.32. regarding rejected merchandise Trade and Technical Corrections Act of
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2004 (Pub. L. 108–429), amended 19 in part 191 due only to nomenclature procedures (the relevant data elements U.S.C. 1313(c) regarding drawback on changes. from the export summary are now returned items sold at the retail level. incorporated into the drawback entry Subpart F Deals With the Verification of Specifically, this regulation provides for summary, as provided for in 19 CFR Drawback Claims a special rule going beyond mere 190.51(a)). HTSUS interchangeability for Section 190.61 provides information Section 190.76 is reserved as substitution involving returned retail regarding the verification of drawback corresponding section 191.76 provides merchandise by requiring the specific claims, including how verification is information regarding landing product identifier to be the same for done and its impact on liquidation. This certificates, which are now obsolete. both the returned retail merchandise section differs from the corresponding section in part 191 slightly due to Subpart H Deals With the Liquidation and the substituted exported or and Protest of Drawback Entries destroyed merchandise (e.g., SKU or simplification of the language related to part number). Therefore, it is proposed the electronic environment for TFTEA- Section 190.81 provides information to add a new § 191.45 as well. Drawback claims and grammatical and regarding the liquidation of drawback nomenclature changes. claims. The Miscellaneous Trade and Subpart E Deals With the Completion of Section 190.62 provides information Technical Corrections Act of 2004 (Pub. Drawback Claims regarding criminal and civil penalties L. 108–429), amended 19 U.S.C. 1504 to Section 190.51 provides information related to drawback claims. This section expressly impose limitations on the regarding what constitutes a complete replicates the corresponding section in liquidation of drawback entries. drawback claim and delineates those part 191. Pursuant to this 2004 amendment, supporting documents that must be Section 190.63 is a new regulation unless a claim for drawback is extended uploaded to complete a claim. This detailing the joint and several liability or suspended, an entry or claim for proposed section explains the of the importer of the merchandise drawback not liquidated within 1 year requirement that the successful designated as the basis of a drawback from the date of entry or claim will be electronic transmission of drawback claim and the party claiming drawback. deemed liquidated at the drawback claims in the CBP-authorized EDI Subpart G Deals With the Exportation amount asserted at the time of entry or system includes upload of supporting and Destruction of Articles Involved in claim. Accordingly, this document in documentation. This section, at Drawback Claims § 190.81 and in § 191.81 proposes to 190.51(a)(4), includes the prohibition clarify this 2004 modification regarding Section 190.71 provides procedures against designating imported drawback claims and deemed and requirements regarding obtaining merchandise from a line item on an liquidations. drawback on articles destroyed under entry summary as part of a TFTEA- Section 190.82 specifies who is CBP supervision. This section differs Drawback substitution claim under part entitled to claim drawback. This section from the corresponding section in part 190 if any other merchandise covered differs from the corresponding section 191 due to grammatical and on that entry summary has been in part 191 due only to grammatical nomenclature changes. designated as the basis of a claim under changes. Section 190.72 provides requirements Section 190.83 specifies who is part 191 (and the corresponding regarding proof of export in drawback entitled to receive drawback payments. regulation in part 191 is similarly claims. This section differs from the This section replicates the amended at 191.51(a)(3)). This section corresponding section in part 191 in corresponding section in part 191. also provides information regarding the that it lists the required summary data Section 190.84 provides information official date of filing, calculation of for establishing exportation and regarding protest procedures involving refunds relative to drawback-eligible references certain supporting drawback claims. This section differs duties, taxes, and fees, as well as documents to prove export. from the corresponding section in part information regarding the reporting of Section 190.73 states that records kept 191 due only to a grammatical change. the HTSUS classifications and through an electronic export system of Department of Commerce Schedule B the United States Government may be Subpart I Deals With Applications for commodity numbers applicable to considered as actual proof of Privileges Involving Drawback imported, substituted, exported, and exportation only if CBP has officially Section 190.91 provides procedures destroyed merchandise and articles. approved the use of that electronic regarding applying for and obtaining the This section also differs from the export system as proof of compliance. privilege of waiver of prior notice of corresponding section in part 191 due to The corresponding regulation in part intent to export. This section differs corrections of clerical errors in (b)(2)(i) 191 provided information regarding from the corresponding section in part regarding the mathematical calculations export summary procedures. 191 in that it references the need to included in the example. Section 190.74 provides information meet the standard for substitution rather Section 190.52 concerns rejecting, regarding exportation by mail and how than using the term commercially perfecting, or amending drawback to claim drawback. This section differs interchangeable, it discusses claims, including the applicable from the corresponding section in part grandfathering in existing privilege timeframes and limitations. This section 191 due to grammatical and holders relative to TFTEA-based differs from the corresponding section nomenclature changes. changes, and it contains grammatical in part 191 in that it includes the Section 190.75 provides information and nomenclature changes. TFTEA-based 5-year deadline and regarding exportation by the U.S. Section 190.92 provides procedures includes certain grammatical and Government and how to claim regarding applying for and obtaining the nomenclature changes. drawback. This section differs slightly privilege of accelerated payment in Section 190.53 details CBP’s authority from the corresponding section in part which payment of drawback claims may to require claimants to restructure 191 due to grammatical changes and it be obtained prior to liquidation. This claims if necessary to foster does not contain the reference to section section differs from the corresponding administrative efficiency. This section 191.73, which in part 191 provided section in part 191 due to grammatical differs from the corresponding section detailed information on export summary and nomenclature changes.
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Section 190.93 provides for the for accuracy, including updating the due to grammatical and nomenclature combined privileges of waiver of prior statutory citations to 26 U.S.C. 5111– changes. notice and accelerated payment and 5114, dealing with the Internal Revenue Subpart L Deals With Meats Cured With states that applications may be for one Code. This section also differs from the Imported Salt privilege, both privileges separately, or current corresponding section in part both privileges in a combined 191 due to grammatical and Section 190.121 states that 19 U.S.C. application. This section replicates the nomenclature changes. For the same 1313(f) provides for drawback corresponding section in part 191. reasons detailed here, it is proposed to allowance on meats cured with imported salt. This section replicates Subpart J Deals With Internal Revenue update § 191.103 as well. Section 190.104 provides information the corresponding section in part 191. Taxes on Flavoring Extracts and Section 190.122 provides procedures Medicinal or Toilet Preparations. regarding required certificates involving drawback and TTB. This regulation has regarding obtaining drawback in In addition to the proposed been updated for accuracy because, situations involving meats cured with regulations described immediately among other things, the relevant TTB imported salt. This section differs from below in subpart J (§§ 190.101— Form (5100.4), was updated in the corresponding section in part 191 in 190.106), the Department of the November of 2015. This section also that the organizational structure was Treasury and CBP are also considering differs from the current corresponding changed because paragraph (b), transferring the administration of section in part 191 due to grammatical regarding modifying a paper form, was drawback refunds provided for in and nomenclature changes. It is removed, and grammatical changes have subpart J from CBP to the Alcohol and proposed to update that section, been made. Tobacco Tax and Trade Bureau (TTB). § 191.104, as well. Section 190.123 provides that This part of the law solely involves Section 190.105 provides that the drawback will be refunded in aggregate drawback for the export of domestic drawback office must ascertain the final amounts of not less than $100 and will products, and such a transfer would amount of drawback due by reference to not be subject to the retention of 1 place with the agency with the specific manufacturing ruling under percent of duties paid for claims responsibility for taxation of domestic which drawback was claimed. This involving meats cured with imported products. It would also enable exporters salt. This section differs from the of flavoring extracts and medicinal or section differs from the corresponding section in part 191, which requires that corresponding section in part 191 due to toilet preparations to claim the full grammatical changes. amount of drawback available at a single the final amount be made in reference agency. CBP and TTB would greatly to the certificate of manufacture and Subpart M Deals With Materials for appreciate comments on this proposal. delivery, which is no longer required in Construction and Equipment for Vessels Section 190.101 states that 19 U.S.C. TFTEA-Drawback. and Aircraft for Foreign Ownership and 1313(d) provides for drawback for the Section 190.106 provides for the Account refund of internal revenue tax upon the limitation of drawback available in Section 190.131 states that 19 U.S.C. exportation of flavoring extracts and situations in which the declaration 1313(g) provides for drawback on medicinal or toilet preparations required by § 190.103 of this subpart materials for construction and (including perfumery) manufactured or shows that a claim has been or will be equipment for vessels and aircraft for produced in the United States in part filed and it states that drawback may not foreign ownership and account. This from the domestic tax-paid alcohol. This be granted absent receipt from TTB of a section replicates the corresponding section differs from the corresponding copy of TTB Form 5100.4 (Certificate of section in part 191. section in part 191 due only to Tax-Paid Alcohol). This section also Section 190.132 states that other grammatical changes. differs from the current corresponding provisions of this part relating to direct Section 190.102 provides that section in part 191 due to grammatical identification manufacturing drawback provisions relating to direct and nomenclature changes regarding will apply to claims for drawback filed identification drawback (contained in TTB. It is proposed to update that under 19 U.S.C. 1313(g) and this subpart subpart B of this part) will apply to section, § 191.106, as well. insofar as applicable to and not claims for drawback filed upon the Subpart K Deals With Supplies for inconsistent with the provisions of this exportation of flavoring extracts and Certain Vessels and Aircraft subpart. This section differs from the medicinal or toilet preparations corresponding section in part 191 due to (including perfumery) manufactured or Section 190.111 states that 19 U.S.C. grammatical changes. produced in the United States in part 1309 provides for drawback on articles Section 190.133 provides an from the domestic tax-paid alcohol. This laden as supplies on certain vessels or explanation of terms specific to this section differs from the corresponding aircraft of the United States or as subpart dealing with drawback on section in part 191 due to grammatical supplies including equipment upon, or materials for construction and and nomenclature changes and in used in the maintenance or repair of, equipment for vessels and aircraft for paragraph (e), which states that the time certain foreign vessels or aircraft. This foreign ownership and account. This period for completing claims is three section replicates the corresponding section differs from the corresponding years from the date of export. section in part 191. section in part 191 due to grammatical Section 190.103 details additional Section 190.112 provides procedures and nomenclature changes. requirements in situations where a regarding obtaining drawback in declaration of the manufacturer showing situations involving supplies for certain Subpart N Deals With Foreign-Built Jet whether a claim has been or will be vessels and aircraft and states that the Aircraft Engines Processed in the United filed by the manufacturer with the provisions of this subpart will override States regional Director, National Review other conflicting provisions of this part. Section 190.141 states that 19 U.S.C. Center, TTB, is necessary. TTB was This section differs from the 1313(h) provides for drawback on the previously referred to as the Bureau of corresponding section in part 191 due to exportation of jet aircraft engines Alcohol, Tobacco and Firearms. This TFTEA-based changes, such as the 5- manufactured or produced abroad that regulation has been updated throughout year time period for filing claims, and have been overhauled, repaired, rebuilt,
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or reconditioned in the United States followed to the extent possible when This section differs from the with the use of imported merchandise, merchandise is withdrawn from a corresponding section in part 191 due including parts. This section replicates warehouse for exportation. This section only to grammatical changes. the corresponding section in part 191. differs from the corresponding section Section 190.166 provides information Section 190.142 states that other in part 191 due to grammatical changes. regarding the destruction of provisions of this part relating to direct Section 190.156 provides information merchandise under this subpart. This identification manufacturing drawback regarding the filing of a bill of lading section differs from the corresponding will apply to claims for drawback filed and applicable timeframes. This section section in part 191 due only to under 19 U.S.C. 1313(h) and this differs from the corresponding section grammatical and nomenclature changes. subpart insofar as applicable to and not in part 191 due to grammatical and Section 190.167 states that no inconsistent with the provisions of this nomenclature changes. deduction of 1 percent of the internal subpart. This section differs from the Section 190.157 is reserved as the revenue taxes paid or determined will corresponding section in part 191 due to corresponding section in part 191 be made in allowing entries under 26 a grammatical change. directed readers to section 191.76 U.S.C. 5062(c), as amended. This Section 190.143 provides specifics regarding landing certificates, which are section differs from the corresponding relating to the filing of entry and the now obsolete. section in part 191 due only to contents of the entry regarding claims Section 190.158 provides for grammatical changes. filed under this subpart. This section procedures of liquidation for a complete Section 190.168 is reserved because differs from the corresponding section drawback claim in accordance with the 90-day time limit for exportation or in part 191 by removing the reference to § 190.81. This section differs from the destruction from the date of notification CBP Form 7551 (as this data will be corresponding section in part 191 due to of acceptance of the drawback entry it submitted through ACE) and due to grammatical changes. is contrary to the statutory requirement grammatical changes. Section 190.159 states that drawback that a claim be filed after exportation or Section 190.144 states that drawback due under this subpart will not be destruction. Accordingly, this section under this subpart will be refunded in subject to the deduction of 1 percent of differs from the corresponding section aggregate amounts of not less than $100 duties paid. This section differs from in part 191. and will not be subject to the deduction the corresponding section in part 191 Subpart Q Deals With the Substitution of 1 percent of duties paid. This section due to grammatical changes. of Finished Petroleum Derivatives differs from the corresponding section Subpart P Deals With Distilled Spirits, in part 191 due to grammatical changes. Section 190.171 states that 19 U.S.C. Wines, or Beer Which are 1313(p) provides for drawback on the Subpart O Deals With Merchandise Unmerchantable or do not Conform to basis of qualified articles including Exported From Continuous CBP Sample or Specifications petroleum derivatives imported or Custody Section 190.161 provides for the manufactured or produced in the United Section 190.151 states that 19 U.S.C. refund, remission, abatement or credit States (and qualified under 19 U.S.C. 1557(a) provides for drawback on regarding imported distilled spirits, 1313(a) or (b)). TFTEA permits MPF merchandise upon which duties have wines, or beer found after entry to be refunds for all claims under 19 U.S.C. been paid and which has remained unmerchantable or not to conform to 1313(p), therefore there is no limitation continuously in bonded warehouse or sample or specifications and which are on MPF refunds as there was in otherwise in CBP custody for a specified returned to CBP custody. This section paragraph (c) in part 191. Additionally, period of time, when exported to certain differs from the corresponding section there is a new paragraph (c) that locations. This section differs from the in part 191 due to nomenclature explains the calculation of drawback for corresponding section in part 191 due to changes. claims on petroleum derivatives. This grammatical and nomenclature changes. Section 190.162 states that export paragraph requires per unit averaging Section 190.152 provides specified procedures as provided for at § 190.42 for refunds, but clarifies that the refunds exceptions for when drawback will be apply, except that the claimant must be are not subject to the ‘‘lesser of’’ rule. allowed on merchandise released from the importer. This section differs from Finally, this paragraph includes the CBP custody. This section differs from the corresponding section in part 191 preclusion of claiming Federal excise the corresponding section in part 191 due to grammatical changes. taxes discussed in detail in the section due to grammatical and nomenclature Section 190.163 provides for the titled Federal Excise Tax and changes. required documentation in claims Substitution Drawback Claims. Section 190.153 provides information setting forth in detail the facts which Section 190.172 provides relevant regarding when merchandise is cause the merchandise to be definitions for purposes of this subpart. considered in continuous CBP custody unmerchantable and any additional This section replicates the in certain scenarios. This section differs evidence that the drawback office corresponding section in part 191. from the corresponding section in part requires to establish that the Section 190.173 provides specific 191 due to grammatical and merchandise is unmerchantable. This requirements for drawback when the nomenclature changes. section differs from the corresponding basis is 19 U.S.C. 1313(p) with no Section 190.154 provides information section in part 191 due to grammatical manufacture. This section replicates the regarding filing a direct export entry or and nomenclature changes. corresponding section in part 191. entry for merchandise transported to Section 190.164 states that there is no Section 190.174 provides specific another port for exportation. This time limit for the return to CBP custody requirements for drawback when the section differs from the corresponding for merchandise covered under this basis is 19 U.S.C. 1313(p) with a section in part 191 by not requiring the subpart. This section differs from the manufacture under 19 U.S.C. 1313(a) or filing of CBP Form 7551 (as the data will corresponding section in part 191 due (b). This section replicates the be transmitted through ACE) and due to only to nomenclature changes. corresponding section in part 191. grammatical and nomenclature changes. Section 190.165 states that Section 190.175 provides specific Section 190.155 states that the exportations by mail are not permitted requirements regarding the identity of regulations in 19 CFR part 18 will be for merchandise covered in this subpart. drawback claimants and maintenance of
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records under this subpart. This section modifications, and endorsement. This B. Other Conforming Amendments differs from the corresponding section section differs from the corresponding NAFTA drawback, which is in part 191 due to TFTEA-based changes section in part 191 due to grammatical separately provided for in subpart E of removing requirements related to and nomenclature changes, and to the part 181 of the CBP regulations (19 CFR certificates of delivery and certificates of electronic filing environment provisions part 181), provides for special manufacture and delivery. of section 906 of TFTEA. provisions in situations where goods Section 190.176 states that the general Section 190.186 provides information were imported into the United States procedures for filing claims are regarding which person may be and then subsequently exported to applicable to claims filed under 19 considered the transferor and states that either Canada or Mexico. While TFTEA U.S.C. 1313(p) unless otherwise drawback may be claimed by, and paid left NAFTA drawback unchanged, specified in this section. This section to, the transferor. This section differs minor conforming edits to part 181 are differs from the corresponding section from the corresponding section in part necessary to correct certain errors or to in part 191 due to the timeframe for 191 due only to grammatical changes. allow for interaction with both the recordkeeping being changed to 3 years proposed part 190 and existing part 191 from the date of liquidation (rather than Subpart S Deals With the Drawback during the transition period. For from the date of payment) and due to Compliance Program example, 19 CFR 181.50(a) includes an grammatical and nomenclature changes. Section 190.191 provides general inaccurate reference to subpart G of part Subpart R Deals With Merchandise information regarding the CBP 191, stating that it is for liquidation Transferred to a Foreign Trade Zone drawback compliance program. This procedures. However, it is subpart H of From Customs Territory section differs from the corresponding part 191 that deals with liquidation (and Section 190.181 states that drawback section in part 191 due only to protest) procedures while subpart G of is provided under 19 U.S.C. 81c for nomenclature changes. part 191 deals with exportation and merchandise transferred to a foreign Section 190.192 provides information destruction. Accordingly, it is proposed trade zone for the sole purpose of regarding obtaining certification for the to amend § 181.50(a) to update the exportation, storage, or destruction, compliance program. This section reference so it accurately cites to with certain exceptions. This section differs from the corresponding section subpart H of part 191 and to include an replicates the corresponding section in in part 191 due only to grammatical and accompanying reference to subpart H of part 191. nomenclature changes. part 190. Further, § 181.50(c) includes a Section 190.182 states that Section 190.193 provides the specific reference to § 191.92 addressing merchandise in a foreign trade zone for application procedure for the accelerated payment. Accordingly, it is purposes specified in § 190.181 will be compliance program. This section proposed to amend this regulation to given status as zone-restricted differs from the corresponding section also include a reference to the merchandise on proper application as in part 191 due only to grammatical and corresponding section of the proposed provided for in 19 CFR 146.44. This nomenclature changes. new part 190, i.e., § 190.92. CBP is amending sections 181.45, 181.46, section differs from the corresponding Section 190.194 describes the actions 181.47, 181.49, and 181.50 to conform section in part 191 due only to taken on the application to participate with proposed part 190 and existing grammatical changes. in the compliance program. This section part 191. Section 190.183 provides filing differs from the corresponding section As stated above, the existing procedures for certain articles in part 191 due only to grammatical and regulations in part 191 are mostly manufactured or produced in the United nomenclature changes. States, including transfers to a foreign unchanged with this rulemaking. trade zone. This section differs from the Section 190.195 relates to combined However, it is proposed to amend the corresponding section in part 191 due to applications for certification in the scope section of part 191, § 191.0, to grammatical and nomenclature changes, drawback compliance program and make reference to the drawback and due to changes related to the privileges regarding the waiver of prior provisions in proposed part 190 and to electronic filing provisions of section notice and/or accelerated payment of note that claims cannot be filed under 906 of TFTEA. drawback. This section replicates the part 191 on or after February 24, 2019. Section 190.184 states that the corresponding section in Part 191. Additionally, as noted above in the procedure described in subpart O of this Appendices A and B Deal With section detailing the differences part will be followed, as applicable, for Manufacturing Drawback Rulings between the sections in part 190 and the drawback on merchandise transferred to corresponding sections in part 191, a foreign trade zone from continuous Appendix A to Part 190 sets forth the some sections in part 191 are outdated CBP custody and provides information general manufacturing drawback for reasons other than TFTEA, such as on the drawback entry, required rulings, accompanied by instructions for those affected by the Miscellaneous certifications, modifications, and how to submit a letter of notification to Trade and Technical Corrections Act of endorsement. This section differs from operate thereunder. This appendix 2004. Therefore, as noted above in the the corresponding section in part 191 differs from Appendix A to part 191 due section detailing the proposed changes due to grammatical and nomenclature to grammatical and nomenclature to part 190, where changes were changes, and due to changes related to changes as well as changes to conform required due to non-TFTEA reasons, it the electronic filing environment of to TFTEA-Drawback requirements. is proposed to amend §§ 191.0, 191.1, TFTEA-Drawback. Appendix B to Part 190 provides the 191.3, 191.5, 191.42, 191.51, 191.81, Section 190.185 states that the sample formats for applications for 191.103, 191.104, and 191.106 and new procedure described in subparts C and specific manufacturing drawback § 191.45 to address returned retail D of this part will be followed, as rulings. This appendix differs from merchandise. applicable, for drawback on Appendix B to part 191 due to Finally, it is important to note that it merchandise under this subpart and grammatical and nomenclature changes is CBP’s intention to remove part 191 at provides information on the drawback as well as changes to conform to a future date, but not until after the entry, required certifications, TFTEA-Drawback requirements. completion of the transition period. The
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part 191 regulations will continue to be IV. Statutory and Regulatory requirements of Executive Order 13771. applicable for claims filed under that Requirements Most of the regulatory amendments proposed in this rule are the result of part before February 24, 2019, but will A. Executive Order 13563 (Improving the Trade Facilitation and Trade become increasingly less relevant over Regulation and Regulatory Review) and Enforcement Act of 2015 (P.L. 114–125), time; CBP will assess at what point in Executive Order 12866 (Regulatory time removal will be most appropriate Planning and Review) which amended 19 U.S.C. 1313, the to lessen burdens or confusion. This statute guiding CBP drawback Executive Orders 13563 and 12866 removal will be announced in the regulations, and required CBP to direct agencies to assess costs and Federal Register. promulgate regulations implementing benefits of available regulatory these changes by February 24, 2018. C. Amendments Regarding Federal alternatives and, if regulation is This rule includes both a regulatory Excise Tax and Substitution Claims necessary, to select regulatory action and a deregulatory action that approaches that maximize net benefits implement TFTEA’s requirements. For the reasons outlined above in the (including potential economic, Because these actions are related to section titled Federal Excise Tax and environmental, public health and safety drawback, CBP chose to include both Substitution Drawback Claims, this effects, distributive impacts, and actions in this rule instead of document proposes to amend: § 191.22 equity). Executive Order 13563 promulgating two separate rules. On by adding a new last sentence to emphasizes the importance of net, this rule imposes a regulatory paragraph (a); § 191.32 by adding a new quantifying both costs and benefits, of burden (and is thus a regulatory action) paragraph (b)(4); and, § 191.171 by reducing costs, of harmonizing rules, because its regulatory impacts exceed its adding a new paragraph (d). These and of promoting flexibility. This rule is deregulatory impacts. This rule’s amendments preclude drawback of an ‘‘economically significant regulatory regulatory impacts (i.e., costs) would internal revenue tax imposed under the action’’ under section 3(f) of Executive measure $8.3 million on an annualized Order 12866. Accordingly, this IRC in connection with a substitution basis, while its deregulatory impacts proposed rule has been reviewed by the drawback claim if no excise tax was (i.e., cost savings) would measure $1.3 Office of Management and Budget paid on the substituted exported million on an annualized basis (in 2016 (‘‘OMB’’). CBP and Treasury have U.S. dollars, using a 7 percent discount merchandise or if that merchandise was prepared an economic analysis of the subject to a claim for refund or rate). Together, these impacts would potential impacts of this rule for public introduce an annualized net regulatory drawback of tax under any provision of awareness. The analysis can be found in cost of $7.0 million. the IRC. In addition, this document the public docket for this rulemaking at proposes to amend § 113.62, which sets www.regulations.gov. C. Regulatory Flexibility Act forth basic importation and entry bond This section examines the impact of conditions, to add a new condition B. Executive Order 13771 (Reducing Regulation and Controlling Regulatory this proposed rule on small entities per under which the principal agrees not to Costs) the requirements of the Regulatory file, or transfer the right to file, a Flexibility Act (5 U.S.C. 601 et. substitution drawback claim that would Executive Order 13771 directs agencies to reduce regulation and seq.)(RFA), as amended by the Small be inconsistent with the terms of new Business Regulatory Enforcement § 191.32(b)(4). The consequences of control regulatory costs, and provides that ‘‘for every one new regulation Fairness Act of 1996 (SBREFA). A small default specified in newly re-designated entity may be a small business (defined paragraph (n) of § 113.62 would apply issued, at least two prior regulations be identified for elimination, and that the as any independently owned and in the case of a breach of this bond cost of planned regulations be prudently operated business not dominant in its 25 condition. managed and controlled through a field that qualifies as a small business These changes are intended to budgeting process.’’ 26 These per the Small Business Act); a small not- preclude the filing of substitution requirements only apply to rules for-profit organization; or a small drawback claims under 19 U.S.C. designated as ‘‘significant regulatory governmental jurisdiction (locality with 1313(b), 19 U.S.C. 1313(j)(2), and 19 actions’’ under section 3(f) of Executive fewer than 50,000 people). U.S.C. 1313(p) in circumstances in Order 12866. OMB’s implementation Under the RFA and SBREFA, if an agency can certify (typically through a which internal revenue taxes have not guidance explains that ‘‘Federal screening analysis) that a rule will not been paid on the substituted domestic spending regulatory actions that cause have a ‘‘significant economic impact on product, or where that merchandise is only income transfers between taxpayers and program beneficiaries a substantial number of small entities,’’ subject to a different claim for refund or a detailed assessment of the rule’s drawback of IRC taxes. The proposed .... are considered ‘transfer rules’ and are not covered by E.O. [Executive impact on small entities is not required. amendments still allow for the return of Otherwise, an agency must complete an 99 percent of the duties, taxes, and fees Order] 13771 . . . However . . . such regulatory actions may impose initial regulatory flexibility analysis paid on the imported merchandise upon requirements apart from transfers . . . (IRFA) exploring the impact of the export, or when IRC taxes have been In those cases, the actions would need proposed rulemaking on small entities. paid on substituted domestic product to be offset to the extent they impose Screening Analysis and the substituted merchandise is not more than de minimis costs.’’ 27 the subject of a separate claim for refund This rule is a significant regulatory The proposed Modernized Drawback or drawback of such taxes. action under section 3(f) of Executive rule would fundamentally change the Order 12866, and is hence subject to the drawback process and consequently 25 The amendment referenced here to § 113.62 of affect all trade members eligible for 28 this chapter is in addition to the previously 26 See 82 FR 9339 (February 3, 2017). drawback (i.e., drawback claimants). discussed proposed amendment to § 113.62, 27 See OMB’s memorandum titled, ‘‘Guidance proposing to add a new paragraph (a)(4) regarding Implementing Executive Order 13771, Titled 28 For more detailed information on the impacts the joint and several liability provisions of the ‘Reducing Regulation and Controlling Regulatory of this rule, see CBP and Treasury’s economic importer’s bond. Costs’ ’’ (April 5, 2017). Continued
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These trade members can include listed in internal CBP databases. Next, According to these findings, CBP importers, exporters, manufacturers, CBP assigned a random number to each assumes that the proposed rule would producers, and intermediate parties of the claimants in that list and sorted affect a substantial number of small representing a diverse array of the data in ascending order by the entities. CBP recognizes that this industries. CBP does not assess the random number assigned. Using public screening analysis may have excluded rule’s impact on customs brokers who and proprietary databases, CBP then some less established, potentially small file claims for trade members eligible for pulled information like the entity type entities due to market data availability. drawback in this RFA analysis because (subsidiary or parent company), primary To the extent that those excluded are they would presumably charge their line of business, employee size, and small, the portion of small entities clients a fee for any costs introduced revenue on the claimants in ascending affected by the rule would be higher with the rule (and thus not be affected order until the agency had market data than estimated. themselves). for 100 unique entities.29 30 Because the Small Business Table 1 shows the industries, Of the small drawback claimants Administration’s (SBA) guidelines on according to their North American sampled and included in Table 1, the small entities under the RFA do not Industrial Classification System average number of employees at these explicitly define small entity standards (NAICS) code, in the sample of entities entities ranged from 1 to 1,000 and their for the importers, exporters, affected by this rule and the SBA’s small annual revenue measured from less than manufacturers, producers, and entity size standards for these $0.5 million to $391.0 million (see Table intermediate parties potentially affected industries. For the most part, the SBA’s 2 and Table 3). Table 2 compares the by the rule, CBP used data on the size standards are the average annual low range average number of employees industries in which these parties receipts or the average employment of a at the small entities sampled and the operate to determine the number of firm.31 As shown, CBP finds that 69 overall average for the corresponding small entities potentially affected by percent (69) of the drawback claimants NAICS industry. Table 3 shows the this rule. CBP began by compiling a list sampled are considered ‘‘small’’ average annual revenue of the small of all 9,017 unique drawback claimants according to the SBA’s size standards, entities sampled by NAICS industry who filed claims between 2007 and including one non-profit organization. using the low range of annual revenue 2016 and matching the claimant CBP did not identify any small data available as well as the average identification number (‘‘claimant ID’’) to governmental jurisdictions affected by annual revenue for all U.S. entities in the operator/owner name and address the proposed rule in this sample. each industry.
TABLE 1—SUMMARY STATISTICS OF SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM SAMPLE
Number of Percent Number of Percent of SBA size small of small NAICS code NAICS description entities in entities in standard entities entities sample sample in sample in sample
311211 ...... Flour Milling ...... 1 1 1,000 Employees 1 1 311421 ...... Fruit and Vegetable Canning ...... 1 1 1,000 Employees 1 1 312140 ...... Distilleries ...... 1 1 1,000 Employees 1 1 313210 ...... Broadwoven Fabric Mills ...... 1 1 1,000 Employees 0 0 315220 ...... Men’s and Boys’ Cut and Sew Ap- 2 2 750 Employees... 2 2 parel Manufacturing. 315240 ...... Women’s, Girls’, and Infants’ Cut 1 1 750 Employees... 1 1 and Sew Apparel Manufacturing. 321911 ...... Wood Window and Door Manufac- 1 1 1,000 Employees 1 1 turing. 325180 ...... Other Basic Inorganic Chemical 2 2 1,000 Employees 2 2 Manufacturing. 325194 ...... Cyclic Crude, Intermediate, and 1 1 1,250 Employees 1 1 Gum and Wood Chemical Manu- facturing. 325199 ...... All Other Basic Organic Chemical 1 1 1,250 Employees 0 0 Manufacturing. 325998 ...... All Other Miscellaneous Chemical 1 1 500 Employees... 1 1 Product and Preparation Manufac- turing. 326199 ...... All Other Plastics Product Manufac- 1 1 750 Employees... 1 1 turing. 331410 ...... Nonferrous Metal (except Aluminum) 1 1 1,000 Employees 1 1 Smelting and Refining. 331491 ...... Nonferrous Metal (except Copper 1 1 750 Employees... 1 1 and Aluminum) Rolling, Drawing, and Extruding. 332999 ...... All Other Miscellaneous Fabricated 1 1 750 Employees... 1 1 Metal Product Manufacturing.
analysis in the public docket for this rulemaking at and 2016, CBP used a sample of 100 claimants with 31 The SBA’s calculation methods for average www.regulations.gov. market data to inform this screening analysis. This annual receipts and average employment of a firm 29 Only 13 of the entities researched (12 percent) sample size resulted in a statistically significant can be found in 13 CFR 121.104 and 13 CFR did not have market data available. sample using a 95 percent confidence level with a 121.106, respectively. 30 Out of a total population of 9,017 unique 10 percent margin of error. drawback claimants who filed claims between 2007
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TABLE 1—SUMMARY STATISTICS OF SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM SAMPLE—Continued
Number of Percent Number of Percent of SBA size small of small NAICS code NAICS description entities in entities in standard entities entities sample sample in sample in sample
334118 ...... Computer Terminal and Other Com- 1 1 1,000 Employees 0 0 puter Peripheral Equipment Manu- facturing. 334310 ...... Audio and Video Equipment Manu- 1 1 750 Employees... 1 1 facturing. 334513 ...... Instruments and Related Products 1 1 750 Employees... 0 0 Manufacturing for Measuring, Dis- playing, and Controlling Industrial Process Variables. 335221 ...... Household Cooking Appliance Man- 1 1 1,500 Employees 1 1 ufacturing. 336612 ...... Boat Building ...... 1 1 1,000 Employees 1 1 336991 ...... Motorcycle, Bicycle, and Parts Man- 1 1 1,000 Employees 0 0 ufacturing. 337920 ...... Blind and Shade Manufacturing ...... 1 1 1,000 Employees 0 0 339112 ...... Surgical and Medical Instrument 2 2 1,000 Employees 1 1 Manufacturing. 339920 ...... Sporting and Athletic Goods Manu- 1 1 750 Employees... 0 0 facturing. 339992 ...... Musical Instrument Manufacturing ... 1 1 1,000 Employees 1 1 339999 ...... All Other Miscellaneous Manufac- 1 1 500 Employees... 1 1 turing. 423210 ...... Furniture Merchant Wholesalers ...... 1 1 100 Employees ... 1 1 423220 ...... Home Furnishing Merchant Whole- 2 2 100 Employees... 1 1 salers. 423510 ...... Metal Service Centers and Other 2 2 200 Employees... 2 2 Metal Merchant Wholesalers. 423620 ...... Household Appliances, Electric 1 1 200 Employees... 1 1 Housewares, and Consumer Elec- tronics Merchant Wholesalers. 423690 ...... Other Electronic Parts and Equip- 1 1 250 Employees... 0 0 ment Merchant Wholesalers. 423910 ...... Sporting and Recreational Goods 3 3 100 Employees... 3 3 and Supplies Merchant Whole- salers. 423920 ...... Toy and Hobby Goods and Supplies 1 1 150 Employees... 1 1 Merchant Wholesalers. 423940 ...... Jewelry, Watch, Precious Stone, and 3 3 100 Employees... 3 3 Precious Metal Merchant Whole- salers. 423990 ...... Other Miscellaneous Durable Goods 1 1 100 Employees... 1 1 Merchant Wholesalers. 424310 ...... Piece Goods, Notions, and Other 2 2 100 Employees... 2 2 Dry Goods Merchant Wholesalers. 424330 ...... Women’s, Children’s, and Infants’ 1 1 100 Employees... 0 0 Clothing and Accessories Mer- chant Wholesalers. 424340 ...... Footwear Merchant Wholesalers ...... 3 3 200 Employees ... 2 2 424490 ...... Other Grocery and Related Products 1 1 250 Employees... 1 1 Merchant Wholesalers. 424610 ...... Plastics Materials and Basic Forms 2 2 150 Employees... 2 2 and Shapes Merchant Whole- salers. 424720 ...... Petroleum and Petroleum Products 1 1 200 Employees... 1 1 Merchant Wholesalers (except Bulk Stations and Terminals). 424910 ...... Farm Supplies Merchant Whole- 3 3 200 Employees... 3 3 salers. 424990 ...... Other Miscellaneous Nondurable 1 1 100 Employees... 1 1 Goods Merchant Wholesalers. 441120 ...... Used Car Dealers ...... 1 1 $25.0 Million ...... 1 1 448120 ...... Women’s Clothing Stores ...... 2 2 $27.5 Million ...... 2 2 448130 ...... Children’s and Infants’ Clothing 1 1 $32.5 Million...... 0 0 Stores. 448190 ...... Other Clothing Stores ...... 2 2 $20.5 Million ...... 2 2 451110 ...... Sporting Goods Stores ...... 1 1 $15.0 Million ...... 1 1 451130 ...... Sewing, Needlework, and Piece 1 1 $27.5 Million...... 1 1 Goods Stores. 452112 ...... Discount Department Stores ...... 1 1 $29.5 Million ...... 1 1
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TABLE 1—SUMMARY STATISTICS OF SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM SAMPLE—Continued
Number of Percent Number of Percent of SBA size small of small NAICS code NAICS description entities in entities in standard entities entities sample sample in sample in sample
453998 ...... All Other Miscellaneous Store Retail- 1 1 $7.5 Million...... 1 1 ers (except Tobacco Stores). 454113 ...... Mail-Order Houses ...... 1 1 $38.5 Million ...... 0 0 483112 ...... Deep Sea Passenger Transportation 1 1 1,500 Employees 0 0 493110 ...... General Warehousing and Storage .. 1 1 $27.5 Million ...... 1 1 525990 ...... Other Financial Vehicles ...... 1 1 $32.5 Million ...... 1 1 541380 ...... Testing Laboratories ...... 1 1 $15.0 Million ...... 0 0 541690 ...... Other Scientific and Technical Con- 1 1 $15.0 Million...... 0 0 sulting Services. 541990 ...... All Other Professional, Scientific, 1 1 $15.0 Million...... 1 1 and Technical Services. 561499 ...... All Other Business Support Services 2 2 $15.0 Million ...... 2 2 561621 ...... Security Systems Services (except 1 1 $20.5 Million...... 0 0 Locksmiths). 561990 ...... All Other Support Services ...... 5 5 $11.0 Million ...... 5 5 624110 ...... Child and Youth Services * ...... 1 1 $11.0 Million ...... 1 1 711510 ...... Independent Artists, Writers, and 1 1 $7.5 Million...... 1 1 Performers. 811310 ...... Commercial and Industrial Machin- 1 1 $7.5 Million...... 1 1 ery and Equipment (except Auto- motive and Electronic) Repair and Maintenance. 811490 ...... Other Personal and Household 1 1 $7.5 Million...... 1 1 Goods Repair and Maintenance...... Foreign Entity ...... 13 13 N/A ...... N/A N/A
Total ...... 100 100 ...... 69 69 * This sample corresponds to a non-profit organization. Source of drawback claimants sample: Internal CBP database; gathered through email correspondence with CBP’s Office of Trade on March 2, 2017. Source of descriptive entity information: Hoover’s. Online company reports. Available at http://www.hoovers.com/. Accessed April 20, 2017 and April 24, 2017; Manta. Online company reports. Available at http://www.manta.com/. Accessed April 20, 2017 and April 24, 2017. Source of SBA size standard information: U.S. Small Business Administration, ‘‘Table of Small Business Size Standards Matched to North American Industry Classification System Codes.’’ February 26, 2016. Available at https://www.sba.gov/sites/default/files/files/Size_Standards_ Table.pdf. Accessed April 17, 2017.
TABLE 2—EMPLOYMENT STATISTICS OF SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM SAMPLE AND INDUSTRY AVERAGES
Average Average Number number of number of of small employees at employees at NAICS code NAICS description entities in small entities all U.S. sample in sample-low entities in in- range value dustry
311211 ...... Flour Milling ...... 1 20 66 311421 ...... Fruit and Vegetable Canning ...... 1 540 74 312140 ...... Distilleries ...... 1 15 30 315220 ...... Men’s and Boys’ Cut and Sew Apparel Manufacturing ...... 2 40 31 315240 ...... Women’s, Girls’, and Infants’ Cut and Sew Apparel Manufacturing ...... 1 6 15 321911 ...... Wood Window and Door Manufacturing ...... 1 250 46 325180 ...... Other Basic Inorganic Chemical Manufacturing ...... 2 502 100 325194 ...... Cyclic Crude, Intermediate, and Gum and Wood Chemical Manufacturing .. 1 1,000 92 325998 ...... All Other Miscellaneous Chemical Product and Preparation Manufacturing 1 3 34 326199 ...... All Other Plastics Product Manufacturing ...... 1 2 60 331410 ...... Nonferrous Metal (except Aluminum) Smelting and Refining ...... 1 700 66 331491 ...... Nonferrous Metal (except Copper and Aluminum) Rolling, Drawing, and 1 65 69 Extruding. 332999 ...... All Other Miscellaneous Fabricated Metal Product Manufacturing ...... 1 65 20 334310 ...... Audio and Video Equipment Manufacturing ...... 1 350 19 335221 ...... Household Cooking Appliance Manufacturing ...... 1 67 110 336612 ...... Boat Building ...... 1 35 34 339112 ...... Surgical and Medical Instrument Manufacturing ...... 1 52 94 339992 ...... Musical Instrument Manufacturing ...... 1 625 20 339999 ...... All Other Miscellaneous Manufacturing ...... 1 20 10 423210 ...... Furniture Merchant Wholesalers ...... 1 5 12 423220 ...... Home Furnishing Merchant Wholesalers ...... 1 17 14 423510 ...... Metal Service Centers and Other Metal Merchant Wholesalers ...... 2 3 20
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TABLE 2—EMPLOYMENT STATISTICS OF SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM SAMPLE AND INDUSTRY AVERAGES—Continued
Average Average Number number of number of of small employees at employees at NAICS code NAICS description entities in small entities all U.S. sample in sample-low entities in in- range value dustry
423620 ...... Household Appliances, Electric Housewares, and Consumer Electronics 1 80 21 Merchant Wholesalers. 423910 ...... Sporting and Recreational Goods and Supplies Merchant Wholesalers ...... 3 18 11 423920 ...... Toy and Hobby Goods and Supplies Merchant Wholesalers ...... 1 12 15 423940 ...... Jewelry, Watch, Precious Stone, and Precious Metal Merchant Whole- 3 7 7 salers. 423990 ...... Other Miscellaneous Durable Goods Merchant Wholesalers ...... 1 20 10 424310 ...... Piece Goods, Notions, and Other Dry Goods Merchant Wholesalers ...... 2 2 9 424340 ...... Footwear Merchant Wholesalers ...... 2 17 17 424490 ...... Other Grocery and Related Products Merchant Wholesalers ...... 1 11 28 424610 ...... Plastics Materials and Basic Forms and Shapes Merchant Wholesalers ..... 2 14 13 424720 ...... Petroleum and Petroleum Products Merchant Wholesalers (except Bulk 1 7 15 Stations and Terminals). 424910 ...... Farm Supplies Merchant Wholesalers ...... 3 26 21 424990 ...... Other Miscellaneous Nondurable Goods Merchant Wholesalers ...... 1 1 7 441120 ...... Used Car Dealers ...... 1 1 6 448120 ...... Women’s Clothing Stores ...... 2 12 31 448190 ...... Other Clothing Stores ...... 2 23 14 451110 ...... Sporting Goods Stores ...... 1 1 14 451130 ...... Sewing, Needlework, and Piece Goods Stores ...... 1 7 11 452112 ...... Discount Department Stores ...... 1 20 15,091 453998 ...... All Other Miscellaneous Store Retailers (except Tobacco Stores) ...... 1 5 6 493110 ...... General Warehousing and Storage ...... 1 20 118 525990 ...... Other Financial Vehicles ...... 1 2 6 541990 ...... All Other Professional, Scientific, and Technical Services ...... 1 2 6 561499 ...... All Other Business Support Services ...... 2 29 17 561990 ...... All Other Support Services ...... 5 3 13 624110 ...... Child and Youth Services * ...... 1 20 21 711510 ...... Independent Artists, Writers, and Performers ...... 1 2 2 811310 ...... Commercial and Industrial Machinery and Equipment (except Automotive 1 28 10 and Electronic) Repair and Maintenance. 811490 ...... Other Personal and Household Goods Repair and Maintenance ...... 1 18 3 * This sample corresponds to a non-profit organization. Source of drawback claimants sample: Internal CBP database; gathered through email correspondence with CBP’s Office of Trade on March 2, 2017. Source of small entity employment information: Hoover’s. Online company reports. Available at http://www.hoovers.com/. Accessed April 20, 2017 and April 24, 2017; Manta. Online company reports. Available at http://www.manta.com/. Accessed April 20, 2017 and April 24, 2017. Source of industry employment information: U.S. Census Bureau. 2012 SUSB Annual Data Tables by Establishment Industry, ‘‘Number of Firms, Number of Establishments, Employment, Annual Payroll, and Estimated Receipts by Enterprise Employment Size for the United States, All Industries: 2012.’’ June 22, 2015. Available at https://www.census.gov/data/tables/2012/econ/susb/2012-susb-annual.html. Accessed May 30, 2018.
TABLE 3—REVENUE STATISTICS OF SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM SAMPLE AND INDUSTRY AVERAGES
Average an- nual Average an- Number of revenue of nual small small revenue of all NAICS code NAICS description entities in entities in U.S. sample sample-low entities in in- range value dustry (in millions) (in millions)
311211 ...... Flour Milling ...... 1 $5.0 $93.7 311421 ...... Fruit and Vegetable Canning ...... 1 178.1 41.7 312140 ...... Distilleries ...... 1 Unknown 39.6 315220 ...... Men’s and Boys’ Cut and Sew Apparel Manufacturing ...... 2 6.4 3.8 315240 ...... Women’s, Girls’, and Infants’ Cut and Sew Apparel Manufacturing ...... 1 1.1 2.8 321911 ...... Wood Window and Door Manufacturing ...... 1 48.0 9.2 325180 ...... Other Basic Inorganic Chemical Manufacturing ...... 2 90.7 94.2 325194 ...... Cyclic Crude, Intermediate, and Gum and Wood Chemical Manufacturing .. 1 391.0 161.8 325998 ...... All Other Miscellaneous Chemical Product and Preparation Manufacturing 1 5.0 22.2 326199 ...... All Other Plastics Product Manufacturing ...... 1 0.3 14.7 331410 ...... Nonferrous Metal (except Aluminum) Smelting and Refining ...... 1 228.9 93.2 331491 ...... Nonferrous Metal (except Copper and Aluminum) Rolling, Drawing, and 1 17.2 30.9 Extruding.
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TABLE 3—REVENUE STATISTICS OF SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM SAMPLE AND INDUSTRY AVERAGES—Continued
Average an- nual Average an- Number of revenue of nual small small revenue of all NAICS code NAICS description entities in entities in U.S. sample sample-low entities in in- range value dustry (in millions) (in millions)
332999 ...... All Other Miscellaneous Fabricated Metal Product Manufacturing ...... 1 13.5 4.2 334310 ...... Audio and Video Equipment Manufacturing ...... 1 29.0 6.1 335221 ...... Household Cooking Appliance Manufacturing ...... 1 9.4 47.2 336612 ...... Boat Building ...... 1 5.1 8.4 339112 ...... Surgical and Medical Instrument Manufacturing ...... 1 17.0 35.3 339992 ...... Musical Instrument Manufacturing ...... 1 115.1 3.2 339999 ...... All Other Miscellaneous Manufacturing ...... 1 4.3 2.4 423210 ...... Furniture Merchant Wholesalers ...... 1 1.6 7.4 423220 ...... Home Furnishing Merchant Wholesalers ...... 1 4.2 8.1 423510 ...... Metal Service Centers and Other Metal Merchant Wholesalers ...... 2 0.8 27.8 423620 ...... Household Appliances, Electric Housewares, and Consumer Electronics 1 23.0 40.2 Merchant Wholesalers. 423910 ...... Sporting and Recreational Goods and Supplies Merchant Wholesalers ...... 3 3.2 7.3 423920 ...... Toy and Hobby Goods and Supplies Merchant Wholesalers ...... 1 2.9 11.0 423940 ...... Jewelry, Watch, Precious Stone, and Precious Metal Merchant Whole- 3 1.2 8.3 salers. 423990 ...... Other Miscellaneous Durable Goods Merchant Wholesalers ...... 1 50.0 5.1 424310 ...... Piece Goods, Notions, and Other Dry Goods Merchant Wholesalers ...... 2 1.4 5.0 424340 ...... Footwear Merchant Wholesalers ...... 2 8.0 20.3 424490 ...... Other Grocery and Related Products Merchant Wholesalers ...... 1 14.6 28.4 424610 ...... Plastics Materials and Basic Forms and Shapes Merchant Wholesalers ..... 2 7.5 17.2 424720 ...... Petroleum and Petroleum Products Merchant Wholesalers (except Bulk 1 11.4 289.0 Stations and Terminals). 424910 ...... Farm Supplies Merchant Wholesalers ...... 3 49.2 29.2 424990 ...... Other Miscellaneous Nondurable Goods Merchant Wholesalers ...... 1 0.1 4.1 441120 ...... Used Car Dealers ...... 1 0.1 3.0 448120 ...... Women’s Clothing Stores ...... 2 1.9 3.5 448190 ...... Other Clothing Stores ...... 2 7.3 1.8 451110 ...... Sporting Goods Stores ...... 1 0.6 2.5 451130 ...... Sewing, Needlework, and Piece Goods Stores ...... 1 0.6 1.1 452112 ...... Discount Department Stores ...... 1 2.5 2,899.3 453998 ...... All Other Miscellaneous Store Retailers (except Tobacco Stores) ...... 1 0.5 1.2 493110 ...... General Warehousing and Storage ...... 1 0.5 6.0 525990 ...... Other Financial Vehicles ...... 1 0.2 2.8 541990 ...... All Other Professional, Scientific, and Technical Services ...... 1 0.2 1.0 561499 ...... All Other Business Support Services ...... 2 2.0 2.8 561990 ...... All Other Support Services ...... 5 0.2 1.9 624110 ...... Child and Youth Services * ...... 1 5.3 1.5 711510 ...... Independent Artists, Writers, and Performers ...... 1 0.3 0.7 811310 ...... Commercial and Industrial Machinery and Equipment (except Automotive 1 7.4 1.7 and Electronic) Repair and Maintenance. 811490 ...... Other Personal and Household Goods Repair and Maintenance ...... 1 2.0 0.3 * This sample corresponds to a non-profit organization. Source of drawback claimants sample: Internal CBP database; gathered through email correspondence with CBP’s Office of Trade on March 2, 2017. Source of small entity revenue information: Hoover’s. Online company reports. Available at http://www.hoovers.com/. Accessed April 20, 2017 and April 24, 2017; Manta. Online company reports. Available at http://www.manta.com/. Accessed April 20, 2017 and April 24, 2017. Source of industry revenue information: U.S. Census Bureau. 2012 SUSB Annual Data Tables by Establishment Industry, ‘‘Number of Firms, Number of Establishments, Employment, Annual Payroll, and Estimated Receipts by Enterprise Employment Size for the United States, All In- dustries: 2012.’’ June 22, 2015. Available at https://www.census.gov/data/tables/2012/econ/susb/2012-susb-annual.html. Accessed May 30, 2018.
Based on the share of drawback however, these costs would differ drawback claimants (69 percent of the claimants sampled, CBP assumes that 69 depending on their filing preferences estimated 290 total claimants) would percent of drawback claimants affected and claim review. modify their ACE filing systems in 2018 by this rule over the 2018 to 2027 period Each unique drawback claimant to comply with all of the new drawback of analysis, or 6,844 claimants, would would need to either modify its existing regulations outlined in 19 CFR part be small entities. These drawback drawback system, acquire add-on 190.32 These claimants could incur an claimants would incur costs related to drawback software, or hire a customs ACE system modifications, electronic broker to comply with this rule’s new 32 CBP based the estimate of drawback claimants claim submission requirements, drawback regulations outlined in 19 required to modify their ACE drawback systems consistent with this rule’s changes on the projected additional full desk reviews, and CFR part 190. CBP estimates that number of unique drawback claimants with this expanded recordkeeping requirements; approximately 200 small entity rule in 2018 (9,919) minus the 4,129 trade members
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estimated one-time cost of $90,000 that year, at an annual cost of $921 members, including the possibility of would translate to $9,000 per year of the according to the $307 customs broker decreased use of the United States as a analysis.33 However, because of the high filing fee.34 home base for a distribution facility cost of ACE system modifications, these All drawback claimants must also when coupled with other small claimants are more likely to retain drawback records for an extended considerations, less third-party choose a lower-cost option like period of time with this rule. CBP finds drawback, and less time to file purchasing add-on drawback software that all 6,844 small drawback claimants drawback claims as compared to the or hiring a customs broker to meet this would sustain $59.99 in expenses current process. rule’s requirements while lessening its between 2021 and 2027, or Table 4 outlines the rule’s different impact on their revenue. CBP projects approximately $4 each year over the 10- costs to small entities, while Table 5 that an additional 3,795 small drawback year period of analysis, to electronically shows this rule’s potential range of costs claimants (69 percent of the estimated store drawback claim documentation.35 to small entities. As shown, small 5,500 total claimants) would acquire In addition to these requirements, some entities could incur undiscounted add-on drawback software consistent drawback claimants may be subject to annual costs from this rule as low as with all of this rule’s requirements for this rule’s additional full desk reviews. $154 if a small claimant only incurs an a one-time cost of $1,500, or $150 over CBP estimates that this rule would affect added recordkeeping cost and add-on the 10-year period of analysis. CBP an estimated 355 small drawback drawback software cost and up to presumes that rather than acquire and claimants (69 percent of the estimated $9,022 if a small claimant experiences learn the software necessary to file a 515 total claimants) over the 10-year the rule’s high ACE drawback system drawback claim electronically and meet period of analysis, introducing an modification cost, full desk review cost the other submission requirements of average cost of $18 per year to these (once over the 10-year analysis), and this rule, an estimated 2,849 small claimants. CBP assumes that these 355 added recordkeeping cost. About 97 paper-based drawback claimants (69 claimants would each complete one full percent of small drawback claimants percent of the estimated 4,129 total desk review over the 10-year period, at would likely sustain a cost of $943 (Cost claimants) would hire a customs broker a cost of $181 per review (or $18 over C + Cost D + Cost E in Table 5) or less to file their claim as a result of the rule. 10 years). Besides these monetized per year from this rule, while the These claimants would likely file an costs, this rule would introduce non- remaining 3 percent could incur higher average of three drawback claims per monetized, non-quantified costs to trade annual cost measuring up to $9,022.
TABLE 4—COST OF RULE TO SMALL ENTITIES [Undiscounted 2016 U.S. dollars]
Number of small Share of small Annual cost Cost category entities entities per claimant affected affected (undiscounted)
A ...... ACE Drawback System Modification ...... 200 3 9,000 B ...... Add-On Drawback Software ...... 3,795 55 150 C ...... Customs Broker Claim Filing ...... 2,849 42 921 D ...... Added Recordkeeping ...... 6,844 100 4 E ...... Full Desk Review ...... 355 5 18 Note: Estimates may not sum to total due to rounding.
TABLE 5—RANGE OF ANNUAL COSTS OF RULE TO SMALL ENTITIES [Undiscounted 2016 U.S. dollars] Cost per claimant by category
ACE drawback Add-on Customs system modi- drawback broker claim Added Full desk Cost range fication software filing recordkeeping review Total [A] [B] [C] [D] [E]
Low ...... $150 ...... $4 ...... $154 Medium ...... 921 4 18 943
estimated to file by paper under the current 19 CFR under 19 U.S.C. 1313(b) and 19 U.S.C. 1313(j)(2); member over the 10-year period; 25 claims over 10- part 191 regulations in 2018 (and thus exempt from accounting methodologies used for direct year period/10 years = 3 (rounded) claims per an ACE drawback system modification cost), identification drawback claims (if applicable); unique trade member each year. multiplied by the 5 percent share of claimants unique identifiers linking imports to exports or 35 $59.99 electronic recordkeeping cost per year × anticipated to modify their ACE drawback systems destructions on each drawback claim; per-unit consistent with this rule’s changes: (9,919 unique averages for substitution claims; and ‘‘lesser of’’ 7-year period of recordkeeping = $419 (rounded) drawback claimants in 2018—4,129 paper-based rule calculations for substitution claims. total electronic recordkeeping cost over 7-year filers in 2018) x 5 percent anticipated to modify 34 From 2018 to 2027, CBP projects under its period; $419 storage cost over 7-year period of their ACE drawback systems = 290 (rounded) trade primary estimation method that 4,129 unique trade recordkeeping/10-year period of analysis = $42 members. members would file 101,642 drawback claims (rounded) electronic recordkeeping cost per year of 33 Such regulatory changes would include electronically instead of by paper as a result of this the 10-year period of analysis; $42 (rounded) providing line-item drawback claim data at the 10- rule, averaging about 3 claims per unique trade storage cost per year × 10 percent of unique digit HTSUS subheading level; consistent units of member each year over the 10-year period: 101,642 claimants incurring electronic recordkeeping cost measurement for claimed imports, exports, and drawback claims filed electronically instead of by per year = $4 (rounded) electronic recordkeeping destructions; exported, destroyed, or substituted paper over 10-year period/4,129 unique trade merchandise values for substitution claims filed members = 25 (rounded) claims per unique trade cost per unique trade member each year.
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TABLE 5—RANGE OF ANNUAL COSTS OF RULE TO SMALL ENTITIES—Continued [Undiscounted 2016 U.S. dollars] Cost per claimant by category
ACE drawback Add-on Customs system modi- drawback broker claim Added Full desk Cost range fication software filing recordkeeping review Total [A] [B] [C] [D] [E]
High ...... 9,000 ...... 4 18 9,022 Note: Estimates may not sum to total due to rounding.
CBP compares the rule’s low ($154), 66 percent (45) of the small entities requirements that would have minimal medium ($943), and high ($9,022) range sampled with revenue data available impacts on their annual revenue, as of monetized costs per year to the (see Table 8). The share of this rule’s assumed under the low- and medium- annual revenue of the small drawback $9,022 monetized cost on annual cost scenarios shown in Table 6 and claimants sampled. At the low range, revenue would measure between: 1 Table 7. this rule’s $154 monetized cost would percent and 3 percent for about 16 Under all three ranges, the share of represent less than 1 percent of annual percent (11) of the remaining small revenue for 100 percent (68) of the small entities, 3 percent and 5 percent for 4 this rule’s costs on the annual revenue entities sampled with revenue data percent (3) of the small entities of small entities is less than 1 percent available,36 as shown in Table 6. At the sampled, 5 percent and 10 percent for for the vast majority of entities sampled. medium range, this rule’s $943 10 percent (7) percent of small entities Small entities would experience an monetized cost would represent less sampled, and 10 percent or more for 3 impact of 3 percent or more only under than 1 percent of annual revenue for 97 percent (2) of the small entities sampled the high cost range of $9,022. Assuming percent (66) of the small entities (see Table 8). Note that because of the that the share of this rule’s total sampled with revenue data available. high cost of ACE system modifications annualized cost to small entities is equal This rule’s $943 monetized cost would included in the high range cost estimate, to the estimated share of drawback represent between 1 percent and 3 only a nominal number of small claimants affected by this rule over the percent of annual revenue for the claimants would likely incur this rule’s 2018 to 2027 period of analysis (69 remaining 3 percent (2) of the small high annual cost of $9,022. Instead, percent), the total annualized cost of entities, as Table 7 illustrates. Finally, at most claimants would probably choose this rule to all small entities would the high range, this rule’s $9,022 lower-cost options like purchasing add- equal $5.0 million under the primary monetized cost would represent less on drawback software or hiring a estimation method. than 1 percent of the annual revenue for customs broker to meet this rule’s
TABLE 6—COST IMPACTS AS A SHARE OF REVENUE FOR SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM SAMPLE—ASSUMING ANNUAL COST OF $154 PER UNIQUE DRAWBACK CLAIMANT
Number of Percent of Cost as a share of revenue range small entities small entities affected affected
0% ≤ Impact < 1% ...... 68 100% 1% ≤ Impact < 3% ...... 0 0 3% ≤ Impact < 5% ...... 0 0 5% ≤ Impact < 10% ...... 0 0 10% or More ...... 0 0
Total ...... 68 100 Note: Estimates may not sum to total due to rounding.
TABLE 7—COST IMPACTS AS A SHARE OF REVENUE FOR SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM SAMPLE- ASSUMING ANNUALIZED COST OF $943 PER UNIQUE DRAWBACK CLAIMANT
Number of Percent of Cost as a share of revenue range small entities small entities affected affected
0% ≤ Impact < 1% ...... 66 97% 1% ≤ Impact < 3% ...... 2 3 3% ≤ Impact < 5% ...... 0 0 5% ≤ Impact < 10% ...... 0 0 10% or More ...... 0 0
36 One of the small entities sampled did not have revenue data available, so CBP excluded this entity from the revenue impact calculation.
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TABLE 7—COST IMPACTS AS A SHARE OF REVENUE FOR SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM SAMPLE- ASSUMING ANNUALIZED COST OF $943 PER UNIQUE DRAWBACK CLAIMANT—Continued
Number of Percent of Cost as a share of revenue range small entities small entities affected affected
Total ...... 68 100 Note: Estimates may not sum to total due to rounding.
TABLE 8—COST IMPACTS AS A SHARE OF REVENUE FOR SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM SAMPLE- ASSUMING ANNUALIZED COST OF $9,022 PER UNIQUE DRAWBACK CLAIMANT
Number of Percent of Cost as a share of revenue range small entities small entities affected affected
0% ≤ Impact < 1% ...... 45 66 1% ≤ Impact < 3% ...... 11 16 3% ≤ Impact < 5% ...... 3 4 5% ≤ Impact < 10% ...... 7 10 10% or More ...... 2 3
Total ...... 68 100 Note: Estimates may not sum to total due to rounding.
This rule would also result in benefits analysis, saving a total of $68 per year.38 transfers if they make net payments to as well as net monetary transfers to Lastly, only a small number of claimants the U.S. Government. drawback claimants. This rule would would sustain benefits from forgone According to the results from this provide time and resource savings from ruling and predetermination requests. screening analysis, CBP believes that a forgone paper-based drawback claims, CBP estimates that 645 requests would substantial number of trade members form submissions, and ruling and be avoided during the period of analysis who could be considered ‘‘small’’ may predetermination requests that offset due to the rule and assumes that each be affected by this proposed rule.39 CBP some of the rule’s costs to small entities. forgone request corresponds to a unique cannot determine whether the economic CBP estimates that 2,849 small paper- drawback claimant. By applying the impact on these entities may be based drawback claimants (69 percent of previously discussed assumption that considered significant under the RFA. the estimated 4,129 total claimants) 69 percent of drawback claimants For these reasons, CBP cannot currently certify that the rule will not have a would enjoy $8 in cost savings for each affected by this rule over the 2018 to 2027 period of analysis are small significant economic impact on a paper claim avoided. These claimants entities, CBP finds that 445 small substantial number of small entities. would likely file an average of three drawback claimants would each save CBP has prepared the following IRFA drawback claims per year, at an annual assessing the rule’s potential effect on 37 $189 in costs related to ruling and cost saving of $24. CBP finds that all predeterminations requests. This would small entities. CBP welcomes public 6,844 small drawback claimants would translate to about $19 per year over the comments on the data and findings save $17 in printing and mailing costs 10-year period of analysis. included in this RFA analysis. related to forgone CBP Form 7552 This rule’s share of net monetary Comments that will provide the most submissions beginning in 2019. Before transfers to small entities is unknown. assistance to CBP will reference a 2019, the estimated 2,849 small paper- This rule would introduce $35.3 million specific portion of the RFA analysis, based claimants would not gain this to $42.4 million in annualized net explain the reason for any benefit because they would still submit transfers from the U.S. Government to recommended change, and include data, paper CBP Form 7552s. Based on the drawback claimants (using a 7 percent information, or authority that supports a total number of CBP Form 7552s discount rate). These transfers would recommended change. avoided over the period of analysis and average between $3,600 and $4,300 per Initial Regulatory Flexibility Analysis the total number of unique drawback claimant based on the projected 9,919 claimants, CBP estimates that each unique drawback claimants affected by This IRFA includes the following: claimant would forgo about four CBP this rule. Some small entities may 1. A description of the reasons why Form 7552 submissions each year of the receive more or less than this average, the action by the agency is being and potentially even negative net considered; 2. A succinct statement of the 37 From 2018 to 2027, CBP projects under its objectives of, and legal basis for, the primary estimation method that 4,129 unique trade 38 From 2018 to 2027, CBP projects under its members would file 101,642 drawback claims primary estimation method that 9,919 unique trade proposed rule; electronically instead of by paper as a result of this members would forgo 392,000 CBP Form 7552 rule, averaging about 3 claims per unique trade submissions as a result of this rule, averaging about 39 SBA publishes small business size standards member each year over the 10-year period: 101,642 4 forms per unique trade member each year over the for a variety of, though not all, economic activities drawback claims filed electronically instead of by 10-year period: 392,000 CBP Form 7552 and industries. SBA does not explicitly define size paper over 10-year period/4,129 unique trade submissions forgone over 10-year period/9,919 standards for the importers, exporters, members = 25 (rounded) claims per unique trade unique trade members = 40 (rounded) forms per manufacturers, producers, and intermediate parties member over the 10-year period; 25 claims over 10- unique trade member over the 10-year period; 40 potentially affected by this rule. See 13 CFR year period/10 years = 3 (rounded) claims per claims over 10-year period/10 years = 4 (rounded) 121.101–13 CFR 121.201 for information on SBA’s unique trade member each year. forms per unique trade member each year. size standards.
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3. A description—and, where feasible, make minor amendments to the DIS, thus not allowing for manual, an estimate of the number—of small drawback regulations in accordance paper-based claims.40 entities to which the proposed rule with TFTEA. • Submit additional data, including would apply; 2. A succinct statement of the exported, destroyed, or substituted 4. A description of the projected objectives of, and legal basis for, the merchandise values for substitution reporting, recordkeeping, and other proposed rule. claims filed under 19 U.S.C. 1313(b) and compliance requirements of the 19 U.S.C. 1313(j)(2); accounting proposed rule, including an estimate of TFTEA requires CBP to prescribe methodologies used for direct the classes of small entities that would drawback regulations in accordance identification drawback claims (if be subject to the requirement and the with the new statute and allows for a applicable); unique identifiers linking types of professional skills necessary for one-year transition period in which imports to exports or destructions; per- preparation of the report or record; trade members can follow either the old unit averages for substitution claims; 5. An identification, to the extent drawback statute and corresponding and ‘‘lesser of’’ rule calculations for practicable, of all relevant federal rules regulations as written prior to TFTEA or substitution claims. that may duplicate, overlap, or conflict the amended statute until February 23, Along with these reporting with the proposed rule; and 2019. CBP proposes to implement new requirements, CBP would change the 6. A description of any significant drawback regulations consistent with recordkeeping standards for all alternatives to the proposed rule which TFTEA in 2018. These new regulations drawback claimants filing under the accomplish the stated objectives of aim to modernize the current drawback new regulations in 19 CFR part 190. applicable statutes and which minimize process. Consistent with TFTEA, this rule would any significant economic impact of the 3. A description—and, where feasible, change the drawback recordkeeping proposed rule on small entities. an estimate of the number—of small timeframe for all drawback claimants 1. A description of the reasons why entities to which the proposed rule from three years from CBP’s date of the action by the agency is being would apply. payment of the drawback claim to three considered. As discussed in the screening analysis years from the liquidation of the claim. Section 906 of the Trade Facilitation CBP estimates that drawback claimants and Trade Enforcement Act of 2015 above, the proposed Modernized Drawback rule would fundamentally would generally have to retain records (P.L. 114–125) (TFTEA), signed into law for one extra year with this rule’s new on February 24, 2016, seeks to simplify change the drawback process and consequently affect all trade members recordkeeping requirement than under and modernize the current drawback the current three-year recordkeeping procedures through amendments to 19 eligible for drawback (i.e., drawback period, though some trade members U.S.C. 1313, the statute guiding CBP claimants). These trade members can may need to retain records for up to four drawback regulations. Section 906(q) of include importers, exporters, more years under this rule.41 TFTEA requires CBP to promulgate manufacturers, producers, and intermediate parties representing a This rule would also require parties regulations implementing these changes that split entry summary line items and allows for a one-year transition diverse array of industries. CBP estimates that 69 percent of drawback when transferring merchandise period (February 24, 2018–February 23, (transferors) to provide notification to 2019) in which trade members can claimants affected by this rule over the the recipients (transferees) as to whether follow either the old drawback statute 2018 to 2027 period of analysis, or 6,844 that merchandise is eligible for and corresponding regulations as claimants, would be small entities. substitution or direct identification written prior to TFTEA or the amended 4. A description of the projected drawback. Notification of this statute. reporting, recordkeeping, and other designation from the transferor to the To fulfill TFTEA’s requirements, CBP, compliance requirements of the transferee must be documented in through this rulemaking, proposes to proposed rule, including an estimate of records, which may include records add an entirely new part of drawback the classes of small entities that would kept in the normal course of business. regulations in proposed 19 CFR part 190 be subject to the requirement and the Furthermore, this rule would require that would replace the current drawback types of professional skills necessary for all drawback claimants filing regulations contained in 19 CFR part preparation of the report or record. manufacturing drawback claims under 191. Proposed 19 CFR part 190 would This rule proposes several new the new regulations in 19 CFR part 190 directly reflect the following major reporting, recordkeeping, and other (which would account for about 20 amendments made by TFTEA, as well as compliance requirements for all percent of all claims filed with this rule) another amendment required to protect drawback claimants, including those to maintain applicable BOMs and/or U.S. Government revenue: (1) Require considered small. Among these changes, formula records 42 identifying the the electronic filing of drawback claims; CBP proposes to require drawback imported and/or substituted (2) liberalize the standard for claimants filing under the new merchandise and the exported or substituting merchandise for drawback; drawback regulations outlined in 19 destroyed article(s) in their normal (3) generally require per-unit averaging CFR part 190 to: course of business. When filing a calculation for substitution drawback; • Submit new data elements with manufacturing drawback claim, trade (4) generally require substitution their claims, including Form 7551: members must also certify that they drawback claims to be calculated on a Drawback Entry summary data at the have these BOMs and/or formula ‘‘lesser of’’ basis; (5) expand the scope line, rather than header, level; claimed of drawback refunds; (6) establish joint merchandise data at the 10-digit HTSUS 40 Some drawback documentation constituting a and several liability for drawback subheading level; line designations; and complete drawback claim, such as privilege and claims; (7) modify the rulings process; ruling applications, would remain paper-based. consistent units of measurement for (8) standardize the timeframe for 41 Based on input from CBP and trade community claimed import, export, or destruction eligibility to claim drawback; (9) modify representative. Sources: Email correspondence with data beginning in 2018. CBP’s Office of Field Operations on April 5, 2017 recordkeeping requirements; and (10) • and email correspondence with trade community eliminate ‘‘double drawback’’ of excise File their complete drawback representative on February 22, 2017. taxes. The proposed rule would also claims electronically using ACE and 42 See 19 CFR 190.2.
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records by checking a box on their corresponding time, printing, and to drawback claimants. These benefits electronic drawback claim, and provide mailing costs) avoided. CBP did not would be slightly lower than the rule’s the documentation to CBP upon request. choose Alternative 1 because TFTEA benefits because drawback claimants 5. An identification, to the extent statutorily allows a one-year transition would continue to submit ruling and practicable, of all relevant federal rules period (February 24, 2018–February 23, predeterminations requests for that may duplicate, overlap, or conflict 2019) in which drawback claimants can substitution drawback claims with this with the proposed rule. follow either the old drawback statute alternative. CBP did not choose this CBP does not believe that any federal and corresponding regulations in 19 Alternative 2 because TFTEA statutorily rule duplicates, overlaps, or conflicts CFR part 191 as written prior to TFTEA requires CBP to liberalize the standard with the proposed rule. or the amended statute.44 for substituting merchandise for 6. A description of any significant drawback by generally basing it on alternatives to the proposed rule which b. Alternative 2 goods classifiable under the same 8-digit accomplish the stated objectives of The second regulatory alternative CBP HTSUS (or Schedule B) subheading.46 applicable statutes and which minimize considered would implement all of the Conclusion any significant economic impact of the proposed rule’s changes, except it proposed rule on small entities. would not change the current regulatory In conclusion, because the proposed CBP considered two other alternatives standard for substituting merchandise Modernized Drawback rule would in addition to the proposed rule. for drawback (i.e., no implementation of presumably affect all drawback claimants, it would likely impact a a. Alternative 1 Major Amendment 2). Under this alternative, CBP estimates that the substantial number of small entities in The first regulatory alternative CBP number of substitution drawback claim each industry submitting such claims. considered would implement all of the submissions and the number of CBP cannot certify whether the rule’s proposed rule’s changes in 2018 rather drawback claimants would be lower (negative) impact on these small entities than in 2019, offering no transition than under the proposed rule over the would be significant. CBP welcomes period. With this alternative, paper- period of analysis because this public comments on the data and based filers must begin filing their alternative would offer relatively fewer findings included in this RFA analysis. drawback claims electronically in 2018, new opportunities to claim drawback. In Comments that will provide the most but they would receive the benefits of fact, drawback claims would measure assistance to CBP will reference a drawback modernization in 2018 and about 548,000 from 2018 to 2027 under specific portion of the RFA analysis, beyond. With this alternative, paper- Alternative 2’s primary estimation explain the reason for any based filers, including those considered method and the number of unique recommended change, and include data, small, would begin to incur electronic drawback claimants would equal information, or authority that supports a filing costs in 2018 rather than 2019 like approximately 9,017. Because of its recommended change. If CBP does not under the rule. This alternative would narrower scope, Alternative 2 would receive comments contradicting the also lead to relatively more full desk introduce slightly lower costs to RFA analysis findings, CBP may certify reviews for claimants, including those drawback claimants, including those that this rule would not have a considering small, than under the rule. considered small, than the proposed significant economic impact on a Drawback claimants, including those rule’s cost. In particular, claimants substantial number of small entities at considered small, would sustain an would incur relatively fewer full desk the final rule stage. annualized cost of $8.0 million from reviews and associated costs with this D. Paperwork Reduction Act this alternative under the primary alternative. Drawback claimants, estimation method, which is slightly including those considered small, In accordance with the Paperwork higher than the proposed rule’s $7.6 would incur an annualized cost of $7.6 Reduction Act of 1995 (44 U.S.C. 3507), million annualized cost to trade million from this alternative under the an agency may not conduct, and a members (using a 7 percent discount primary estimation method, compared person is not required to respond to, a rate). On a per-claimant basis, to the proposed rule’s annualized cost of collection of information unless the Alternative 1 would cost $810 annually $7.6 million (using a 7 percent discount collection of information displays a over the period of analysis compared to rate). On a per-claimant basis, valid control number assigned by OMB. the rule’s nearly $770 cost per unique Alternative 2 would cost nearly $840 The collections of information for this claimant.43 Alternative 1 would also annually over the period of analysis, notice of proposed rulemaking are result in an annualized net transfer while the proposed rule would included in an existing collection for measuring between $42.8 million and introduce an average cost of almost $770 CBP Forms 7551, 7552, and 7553 (OMB $49.9 million from the U.S. Government cost per unique claimant.45 Alternative control number 1651–0075). This rule proposes, among other to drawback claimants, which would 2 would also result in annualized net things, to eliminate the submission average from $4,300 to $5,000 per transfers between $56.3 million and requirement for CBP Form 7552 for unique claimant based on the 9,919 $63.4 million from drawback claimants drawback claimants who file unique drawback claimants projected to the U.S. Government, which would electronically under the new, proposed under this alternative (using a 7 percent average $6,200 to $7,000 per unique drawback regulations in 19 CFR part discount rate). Like the proposed rule, claimant based on the 9,017 unique 190. Drawback claimants filing by paper Alternative 1 would introduce benefits drawback claimants projected under under the current drawback regulations to drawback claimants. These benefits to this alternative (using a 7 percent in 19 CFR part 191 would still be claimants, including those considered discount rate). Like the proposed rule, required to submit the paper CBP Form small, would be greater than the rule’s Alternative 2 would introduce benefits cost savings due to the relatively higher 7552 until this rule’s requirements become mandatory in 2019. Based on number of CBP Form 7552s (and 44 See Section 906 of the Trade Facilitation and Trade Enforcement Act of 2015 (P.L. 114–125). this change, CBP estimates a decrease in 43 $8,000,000/9,919 unique drawback claimants = 45 $7,600,000/9,017 unique drawback claimants = $810 (rounded); $7,600,000/9,919 unique drawback $840 (rounded); $7,600,000/9,919 unique drawback 46 See Section 906 of the Trade Facilitation and claimants = $770 (rounded). claimants = $770 (rounded). Trade Enforcement Act of 2015 (P.L. 114–125).
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CBP Form 7552 responses and burden applicable for drawback claims filed on ■ 2. In § 113.62, redesignate paragraphs hours. Additionally, CBP Form 7551 has or after 60 days from the date of (m) and (n) as paragraphs (o) and (p) and a decrease in burden hours based on publication of the final rule. add paragraphs (a)(4) and (m) to read as changes in the agency estimate. CBP CBP and Treasury invite interested follows: will submit to OMB for review the members of the public to comment on following adjustments to the previously these proposed effective and § 113.62 Basic importation and entry bond approved Information Collection under applicability dates. conditions. OMB control number 1651–0075 to VI. Signing Authority * * * * * account for the changes proposed in this (a) * * * rule. Furthermore, CBP expects to This proposed regulation is being submit a request to eliminate CBP Form issued in accordance with 19 CFR (4) If a person who is not the principal 7552 to OMB in 2019 prior to this rule’s 0.1(a)(1) pertaining to the authority of makes a drawback claim with respect to mandatory requirement date. the Secretary of the Treasury (or that of merchandise imported by the principal CBP Form 7551, Drawback Entry his or her delegate) to approve (see part 190 of this chapter), the (reduction in burden hours due to regulations pertaining to certain principal and surety (jointly and change in agency estimate) customs revenue functions. severally) agree to pay, as demanded by Estimated Number of Respondents: List of Subjects CBP, any erroneous drawback payment 2,516 in an amount not to exceed the lesser of: 19 CFR Part 113 Estimated Number of Responses per (i) The amount of duties, taxes, and Respondent: 22.2 Bonds, Copyrights, Counterfeit goods, fees that the person claimed with Estimated Number of Total Annual Customs duties and inspection, Imports, respect to the imported merchandise; or Responses: 55,772 Reporting and recordkeeping Estimated Time per Response: 35 requirements, Restricted merchandise, (ii) The amount of duties, taxes, and minutes Seizures and forfeitures. fees that the importer authorized the other person to claim with respect to the Estimated Total Annual Burden 19 CFR Part 181 Hours: 32,532 imported merchandise. CBP Form 7552, Delivery Certificate for Administrative practice and (iii) The amount of the erroneous Drawback (reduction in burden procedure, Canada, Customs duties and drawback payment. hours due to regulation) inspection, Exports, Mexico, Reporting and recordkeeping requirements, Trade * * * * * Estimated Number of Respondents: agreements. (m) Agreement to comply with CBP 400 regulations applicable to substitution Estimated Number of Responses per 19 CFR Part 190 drawback claims. In the case of Respondent: 20 Alcohol and alcoholic beverages, Estimated Number of Total Annual imported merchandise that is subject to Claims, Customs duties and inspection, internal revenue tax imposed under the Responses: 8,000 Exports, Foreign trade zones, Estimated Time per Response: 33 Internal Revenue Code of 1986, as Guantanamo Bay Naval Station, Cuba, amended (IRC), the principal agrees not minutes Packaging and containers, Reporting Estimated Total Annual Burden to file, or to transfer to a successor the and recordkeeping requirements, Trade right to file, a substitution drawback Hours: 4,400 agreements. CBP Form 7553, Notice of Intent to claim involving such tax if the Export, Destroy or Return 19 CFR Part 191 substituted merchandise has been, or Merchandise for Purposes of Alcohol and alcoholic beverages, will be, the subject of a removal from Drawback (no change) Claims, Customs duties and inspection, bonded premises without payment of Estimated Number of Respondents: Exports, Foreign trade zones, tax, or the subject of a claim for refund 150 Guantanamo Bay Naval Station, Cuba, or drawback of tax, under any provision Estimated Number of Responses per Packaging and containers, Reporting of the IRC. Respondent: 20 and recordkeeping requirements, Trade * * * * * Estimated Number of Total Annual agreements. PART 181—NORTH AMERICAN FREE Responses: 3,000 Proposed Amendments to the TRADE AGREEMENT Estimated Time per Response: 33 Regulations minutes Estimated Total Annual Burden For the reasons given above, it is ■ 3. The general authority citations for Hours: 1,650 proposed to amend 19 CFR chapter I as part 181 continue to read as follows: set forth below: V. Proposed Effective/Applicability Authority: 19 U.S.C. 66, 1202 (General Dates PART 113—CUSTOMS BONDS Note 3(i), Harmonized Tariff Schedule of the United States), 1624, 3314; To allow stakeholders immediate ■ 1. The general authority citations for * * * * * benefit from these proposed regulations part 113 continue and the specific (see 5 U.S.C. 553(d) and 808), they are authority for § 113.62 is added in § § 181.45, 181.46, 181.47, 181.49, and 181.50 proposed to be effective upon numerical order to read as follows: [Amended] publication of a rule adopting them as final, except that the regulations Authority: 19 U.S.C. 66, 1623, 1624. ■ 4. In the table below, for each section proposed in §§ 190.22(a)(1)(C), * * * * * indicated in the left column, remove the 190.32(b)(3), 191.22(a), 191.32(b)(4), and Section 113.62 is also issued under 19 words indicated in the middle column, 191.171(d) regarding the drawback of U.S.C. 1313(k). and add, in their place, the words excise taxes are proposed to become * * * * * indicated in the right column.
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Section Remove Add
181.45(b)(2)(i)(B) ...... § 191.14 of this chapter, as provided therein ...... §§ 190.14 or 191.14 of this chapter, as appropriate. 181.45(c) ...... Such a good must be returned to Customs custody for Such a good must be exported or destroyed within the exportation under Customs supervision within three statutory 5-year time period and in compliance with years after the release from Customs custody. the requirements set forth in subpart D of part 190 of this chapter or within the 3-year time period and in compliance with the requirements set forth in subpart D of part 191 of this chapter, as applicable. 181.46(b) ...... (see § 191.141(b)(3) (ii) and (iii) of this chapter) ...... (see §§ 190.35 or 191.35 of this chapter, as appro- priate). 181.47(a) ...... part 191 of this chapter; ...... part 190 or 191 of this chapter, as appropriate 181.49 ...... (see § 191.15 (see also §§ 191.26(f), 191.38, (see § 190.15 (see also §§ 190.26(f), 190.38, 191.175(c)) of this chapter). 190.175(c)) or § 191.15 (see also §§ 191.26(f), 191.38, 191.175(c)) of this chapter, as appropriate) 181.50(a) ...... subpart G of part 190 of this chapter ...... subpart H of part 190 or subpart H of part 191 of this chapter, as appropriate 181.50(c) ...... § 191.92 of this chapter ...... §§ 190.92 or 191.92 of this chapter, as appropriate.
■ 5. Add part 190 to read as follows: 190.35 Notice of intent to export; Subpart J—Internal Revenue Tax on examination of merchandise. Flavoring Extracts and Medicinal or Toilet PART 190—MODERNIZED DRAWBACK 190.36 Failure to file Notice of Intent to Preparations Including Perfumery) Export, Destroy, or Return Merchandise Manufactured From Domestic Tax-Paid Sec. for Purposes of Drawback. Alcohol 190.0 Scope. 190.37 Destruction under CBP supervision. 190.0a Claims filed under NAFTA. 190.101 Drawback allowance. 190.38 Recordkeeping for unused 190.102 Procedure. Subpart A—General Provisions merchandise drawback. 190.103 Additional requirements. 190.1 Authority of the Commissioner of Subpart D—Rejected Merchandise 190.104 Alcohol and Tobacco Tax and CBP. Trade Bureau certificates. 190.2 Definitions. 190.41 Rejected merchandise drawback. 190.105 Liquidation. 190.3 Duties, taxes, and fees subject or not 190.42 Procedures and supporting 190.106 Amount of drawback. subject to drawback. documentation. 190.4 Merchandise in which a U.S. 190.43 Unused merchandise claim. Subpart K—Supplies for Certain Vessels Government interest exists. 190.44 [Reserved] and Aircraft 190.5 Guantanamo Bay, insular 190.45 Returned retail merchandise. 190.111 Drawback allowance. possessions, trust territories. 190.6 Authority to sign drawback Subpart E—Completion of Drawback Claims 190.112 Procedure. documents. 190.51 Completion of drawback claims. Subpart L—Meats Cured With Imported Salt 190.7 General manufacturing drawback 190.52 Rejecting, perfecting or amending 190.121 Drawback allowance. ruling. claims. 190.8 Specific manufacturing drawback 190.122 Procedure. 190.53 Restructuring of claims. ruling. 190.123 Refund of duties. 190.9 Agency. Subpart F—Verification of Claims Subpart M—Materials for Construction and 190.10 Transfer of merchandise. Equipment of Vessels and Aircraft Built for 190.11 Valuation of merchandise. 190.61 Verification of drawback claims. Foreign Ownership and Account 190.12 Claim filed under incorrect 190.62 Penalties. provision. 190.63 Liability for drawback claims. 190.131 Drawback allowance. 190.13 Packaging materials. Subpart G—Exportation and Destruction 190.132 Procedure. 190.14 Identification of merchandise or 190.133 Explanation of terms. articles by accounting method. 190.71 Drawback on articles destroyed 190.15 Recordkeeping. under CBP supervision. Subpart N—Foreign-Built Jet Aircraft 190.72 Exportation procedures. Engines Processed in the United States Subpart B—Manufacturing Drawback 190.73 Electronic proof of exportation. 190.141 Drawback allowance. 190.21 Direct identification drawback. 190.74 Exportation by mail. 190.22 Substitution drawback. 190.142 Procedure. 190.75 Exportation by the Government. 190.143 Drawback entry. 190.23 Methods and requirements for 190.76 [Reserved] claiming drawback. 190.144 Refund of duties. 190.24 Transfer of merchandise. Subpart H—Liquidation and Protest of Subpart O—Merchandise Exported From 190.25 Destruction under CBP supervision. Drawback Entries Continuous CBP Custody 190.26 Recordkeeping for manufacturing 190.81 Liquidation. drawback. 190.151 Drawback allowance. 190.82 Person entitled to claim drawback. 190.27 Time limitations. 190.152 Merchandise released from CBP 190.83 Person entitled to receive payment. 190.28 Person entitled to claim custody. 190.84 Protests. manufacturing drawback. 190.153 Continuous CBP custody. Subpart C—Unused Merchandise Drawback Subpart I—Waiver of Prior Notice of Intent 190.154 Filing the entry. To Export; Accelerated Payment of 190.155 Merchandise withdrawn from 190.31 Direct identification drawback. Drawback 190.32 Substitution unused merchandise warehouse for exportation. drawback. 190.91 Waiver of prior notice of intent to 190.156 Bill of lading. 190.33 Person entitled to claim unused export. 190.157 [Reserved] merchandise drawback. 190.92 Accelerated payment. 190.158 Procedures. 190.34 Transfer of merchandise. 190.93 Combined applications. 190.159 Amount of drawback.
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Subpart P—Distilled Spirits, Wines, or Beer specialized provisions applicable to drawback authorized pursuant to Which Are Unmerchantable or Do Not specific types of drawback claims filed section 313(j)(1) of the Act, as amended Conform to Sample or Specifications under 19 U.S.C. 1313, as amended. For (19 U.S.C. 1313(j)(1)), on imported 190.161 Refund of taxes. drawback claims and specialized merchandise exported, or destroyed 190.162 Procedure. provisions applicable to specific types under CBP supervision, without having 190.163 Documentation. of drawback claims filed pursuant to 19 been used in the United States (see also 190.164 Return to CBP custody. U.S.C. 1313, as it was in effect on or sections 313(c), (e), (f), (g), (h), and (q)). 190.165 No exportation by mail. 190.166 Destruction of merchandise. before February 24, 2016, please see part Direct identification is involved in 190.167 Liquidation. 191 of this title. Additional drawback manufacturing drawback pursuant to 190.168 [Reserved] provisions relating to the North section 313(a) of the Act, as amended American Free Trade Agreement (19 U.S.C. 1313(a)), on imported Subpart Q—Substitution of Finished Petroleum Derivatives (NAFTA) are contained in subpart E of merchandise used to manufacture or part 181 of this chapter. produce an article which is either 190.171 General; drawback allowance. exported or destroyed. Merchandise or 190.172 Definitions. § 190.0a Claims filed under NAFTA. articles may be identified for purposes 190.173 Imported duty-paid derivatives (no Claims for drawback filed under the of direct identification drawback by use manufacture). provisions of part 181 of this chapter 190.174 Derivatives manufactured under 19 of the accounting methods provided for U.S.C. 1313(a) or (b). must be filed separately from claims in § 190.14. 190.175 Drawback claimant; maintenance filed under the provisions of this part. Document. In this part, document has of records. its normal meaning and includes 190.176 Procedures for claims filed under Subpart A—General Provisions information input to and contained 19 U.S.C. 1313(p). § 190.1 Authority of the Commissioner of within an electronic data field, and Subpart R—Merchandise Transferred to a CBP. electronic versions of hard-copy Foreign Trade Zone From Customs Pursuant to DHS Delegation number documents. Territory 7010.3, the Commissioner of CBP has Drawback. Drawback, as authorized 190.181 Drawback allowance. the authority to prescribe, and pursuant under 19 U.S.C. 1313, means the refund 190.182 Zone-restricted merchandise. to Treasury Order No. 100–16 (set forth or remission, in whole or in part, of the 190.183 Articles manufactured or produced in the appendix to part 0 of this duties, taxes, and/or fees paid on in the United States. chapter), the Secretary of the Treasury merchandise which were imposed 190.184 Merchandise transferred from under Federal law. It includes drawback continuous CBP custody. has the sole authority to approve, rules and regulations regarding drawback. paid upon the entry or importation of 190.185 Unused merchandise drawback the imported merchandise and the and merchandise not conforming to § 190.2 Definitions. refund or remission of internal revenue sample or specification, shipped without consent of the consignee, found to be For the purposes of this part: taxes paid on domestic alcohol as defective as of the time of importation, Abstract. Abstract means the prescribed in 19 U.S.C. 1313(d) (see also or returned after retail sale. summary of the actual production § 190.3). 190.186 Person entitled to claim drawback. records of the manufacturer. Drawback claim. Drawback claim means the drawback entry and related Subpart S—Drawback Compliance Program Act. Act, unless indicated otherwise, means the Tariff Act of 1930, as documents required by regulation 190.191 Purpose. amended. which together constitute the request for 190.192 Certification for compliance Bill of materials. Bill of materials drawback payment. All drawback program. 190.193 Application procedure for refers to a record that identifies each claims must be filed electronically compliance program. component incorporated into a through a CBP-authorized EDI system. 190.194 Action on application to manufactured or produced article. This Drawback entry. Drawback entry participate in compliance program. may include a record kept in the normal means the document containing a 190.195 Combined application for course of business. description of, and other required certification in drawback compliance Designated merchandise. Designated information concerning, the exported or program and waiver of prior notice and/ merchandise means either eligible destroyed article upon which a or approval of accelerated payment of imported duty-paid merchandise or drawback claim is based and the drawback. drawback products selected by the designated imported merchandise for Appendix A to Part 190—General Manufacturing Drawback Rulings drawback claimant as the basis for a which drawback of the duties, taxes, Appendix B to Part 190—Sample Formats drawback claim under 19 U.S.C. 1313(b) and fees paid upon importation is For Applications For Specific or (j)(2), as applicable, or qualified claimed. Drawback entries must be filed Manufacturing Drawback Rulings articles selected by the claimant as the electronically. Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 basis for drawback under 19 U.S.C. Drawback office. Drawback office (General Note 3(i), Harmonized Tariff 1313(p). means any of the locations where Schedule of the United States), 1313, 1624; Destruction. Destruction means the drawback claims and related §§ 190.2, 190.10, 190.15, 190.23, 190.38, destruction of articles or merchandise to applications or requests may be 190.51 issued under 19 U.S.C. 1508; § 190.84 the extent that they have no commercial submitted. CBP may, in its discretion, also issued under 19 U.S.C. 1514; §§ 190.111, value. For purposes of 19 U.S.C. transfer or share work between the 190.112 also issued under 19 U.S.C. 1309; 1313(a), (b), (c), and (j), destruction also different drawback offices even though §§ 190.151(a)(1), 190.153, 190.157, 190.159 includes a process by which materials that the submission may have been to a also issued under 19 U.S.C. 1557; §§ 190.182–190.186 also issued under 19 are recovered from imported particular office. U.S.C. 81c; §§ 190.191–190.195 also issued merchandise or from an article Drawback product. A drawback under 19 U.S.C. 1593a. manufactured from imported product means a finished or partially merchandise, as provided for in 19 finished product manufactured in the § 190.0 Scope. U.S.C. 1313(x). United States under the procedures in This part sets forth general provisions Direct identification drawback. Direct this part for manufacturing drawback. A applicable to all drawback claims and identification drawback includes drawback product may be exported, or
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destroyed under CBP supervision with a Fungible merchandise or articles. required by Chapter 4 of Title 19, claim for drawback, or it may be used Fungible merchandise or articles means United States Code, in connection with in the further manufacture of other merchandise or articles which for the filing of a drawback claim and drawback products by manufacturers or commercial purposes are identical and which may include records normally producers operating under the interchangeable in all situations. kept in the ordinary course of business procedures in this part for General manufacturing drawback (see 19 U.S.C. 1508). manufacturing drawback, in which case ruling. A general manufacturing Relative value. Relative value means, drawback may be claimed upon drawback ruling means a description of except for purposes of § 190.51(b), the exportation or destruction of the a manufacturing or production value of a product divided by the total ultimate product. Products operation for drawback and the value of all products which are manufactured or produced from regulatory requirements and necessarily manufactured or produced substituted merchandise (imported or interpretations applicable to that concurrently in the same operation. domestic) also become ‘‘drawback operation (see § 190.7). Relative value is based on the market products’’ when applicable substitution Intermediate party. Intermediate party value, or other value approved by CBP, requirements of the Act are met. For means any party in the chain of of each such product determined as of purposes of section 313(b) of the Act, as commerce leading to the exporter from the time it is first separated in the amended (19 U.S.C. 1313(b)), drawback the importer and who has acquired, manufacturing or production process. products may be designated as the basis purchased, or possessed the imported Market value is generally measured by for drawback or deemed to be merchandise (or any intermediate or the selling price, not including any substituted merchandise (see 19 U.S.C. finished article, in the case of packaging, transportation, or other 1313(b)). For a drawback product to be manufacturing drawback) as allowed identifiable costs, which accrue after the designated as the basis for a drawback under the applicable regulations for the product itself is processed. Drawback claim, any transfer of the product must type of drawback claimed, which must be apportioned to each such be properly documented (see § 190.24). authorize the transfer of the imported or product based on its relative value at the Exportation. Exportation means the other drawback eligible merchandise by time of separation. severance of goods from the mass of that intermediate party to another party. Schedule. A schedule means a Manufacture or production. document filed by a drawback claimant, goods belonging to this country, with Manufacture or production means a under section 313(a) or (b), as amended the intention of uniting them with the process, including, but not limited to, (19 U.S.C. 1313(a) or (b)), showing the mass of goods belonging to some foreign an assembly, by which merchandise is quantity of imported or substituted country. An exportation may be deemed either made into a new and different merchandise used in or appearing in to have occurred when goods subject to article having a distinctive name, each article exported or destroyed that drawback are admitted into a foreign character or use; or is made fit for a justifies a claim for drawback. trade zone in zone-restricted status, or particular use even though it is not Schedule B. Schedule B means the are laden upon qualifying aircraft or made into a new and different article. Department of Commerce Schedule B, vessels as aircraft or vessel supplies in Multiple products. Multiple products Statistical Classification of Domestic accordance with section 309(b) of the mean two or more products produced and Foreign Commodities Exported Act, as amended (19 U.S.C. 1309(b)) (see concurrently by a manufacture or from the United States. §§ 10.59 through 10.65 of this chapter). production operation or operations. Sought chemical element. A sought Exporter. Exporter means that person Per unit averaging. Per unit averaging chemical element, under section 313(b), who, as the principal party in interest in means the equal apportionment of the means an element listed in the Periodic the export transaction, has the power amount of duties, taxes, and fees eligible Table of Elements that is imported into and responsibility for determining and for drawback for all units covered by a the United States or a chemical controlling the sending of the items out single line item on an entry summary to compound (a distinct substance formed of the United States. In the case of each unit of merchandise (and is by a chemical union of two or more ‘‘deemed exportations’’ (see definition required for certain substitution elements in definite proportion by of exportation in this section), exporter drawback claims) (see § 190.51(b)). The weight) consisting of those elements, means that person who, as the principal value of the imported merchandise for either separately in elemental form or party in interest in the transaction which a claim is approved may not contained in source material. deemed to be an exportation, has the exceed the total value of the exported Specific manufacturing drawback power and responsibility for merchandise which forms the basis for ruling. A specific manufacturing determining and controlling the the claim (‘‘lesser of’’ rule) (see drawback ruling means a letter of transaction. In the case of aircraft or § 190.22(a)(1)(ii) and 190.32(b)). approval (or its electronic equivalent) vessel supplies under 19 U.S.C. 1309(b), Possession. Possession, for purposes issued by CBP Headquarters in response exporter means the party who has the of substitution unused merchandise to an application filed by a power and responsibility for lading drawback (19 U.S.C. 1313(j)(2)), means manufacturer or producer for a ruling on supplies on the qualifying aircraft or physical or operational control of the a specific manufacturing or production vessel. merchandise, including ownership operation for drawback, as described in Filing. Filing means the electronic while in bailment, in leased facilities, in the format in Appendix B of this part. delivery to CBP of any document or transit to, or in any other manner under Synopses of approved specific documentation, as provided for in this the operational control of, the party manufacturing drawback rulings are part. claiming drawback. published in the Customs Bulletin with Formula. Formula refers to records Records. Records include, but are not each synopsis being published under an that identify the quantity of each limited to, written or electronic business identifying CBP Decision. Specific element, material, chemical, mixture, or records, statements, declarations, manufacturing drawback rulings are other substance incorporated into a documents and electronically generated subject to the provisions in part 177 of manufactured article. This includes or machine readable data which pertain this chapter. records kept in the normal course of to a drawback claim or to the Substituted merchandise or articles. business. information contained in the records Substituted merchandise or articles
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means merchandise or articles that may having an alcoholic content not in drawback under 19 U.S.C. 1313(j)(1); be substituted as follows: excess of 14 percent by volume and (1) For manufacturing drawback pursuant to 27 CFR 4.21(a)(2)). (2) Tobacco otherwise meeting the pursuant to section 1313(b), substituted § 190.3 Duties, taxes, and fees subject or description of agricultural products in merchandise must be classifiable under this paragraph is eligible for drawback the same 8-digit HTSUS subheading not subject to drawback. (a) Drawback is allowable pursuant to under 19 U.S.C. 1313(j)(1) or 19 U.S.C. number as the imported designated 1313(a). merchandise; 19 U.S.C. 1313 of on duties, taxes, and (2) For direct identification drawback fees paid on imported merchandise § 190.4 Merchandise in which a U.S. pursuant to section 1313(c)(2), which were imposed under Federal law Government interest exists. substituted merchandise must be upon entry or importation, including: (a) Restricted meaning of Government. classifiable under the same 8-digit (1) Ordinary customs duties, A U.S. Government instrumentality HTSUS subheading number and have including: operating with nonappropriated funds is the same specific product identifier (i) Duties paid on an entry, or considered a Government entity within (such as part number, SKU, or product withdrawal from warehouse, for the meaning of this section. code) as the imported designated consumption for which liquidation has merchandise; become final; (b) Allowance of drawback. If the (3) For direct identification drawback (ii) Estimated duties paid on an entry, merchandise is sold to the U.S. pursuant to section 1313(j)(2), or withdrawal from warehouse, for Government, drawback will be available substituted merchandise must be consumption, for which liquidation has only to the: not become final, subject to the classifiable under the same 8-digit (1) Department, branch, agency, or conditions and requirements of HTSUS subheading number as the instrumentality of the U.S. Government § 190.81(b); and imported designated merchandise which purchased it; or except for wine which may also qualify (iii) Tenders of duties after liquidation of the entry, or withdrawal from (2) Supplier, or any of the parties pursuant to § 190.32(d), but when the 8- specified in § 190.82, provided the digit HTSUS subheading number under warehouse, for consumption for which claim is supported by documentation which the imported merchandise is the duties are paid, subject to the signed by a proper officer of the classified begins with the term ‘‘other,’’ conditions and requirements of department, branch, agency, or then the other merchandise may be § 190.81(c), including: (A) Voluntary tenders (for purposes of instrumentality concerned certifying substituted for imported merchandise this section, a ‘‘voluntary tender’’ is a that the right to drawback was reserved for drawback purposes if the other payment of duties on imported by the supplier or other parties with the merchandise and such imported merchandise in excess of duties knowledge and consent of the merchandise are classifiable under the included in the liquidation of the entry, department, branch, agency, or same 10-digit HTSUS statistical or withdrawal from warehouse, for instrumentality. reporting number and the article consumption, provided that the description for that 10-digit HTSUS (c) Bond. No bond will be required liquidation has become final and that statistical reporting number does not when a U.S. Government entity claims the other conditions of this section and begin with the term ‘‘other’’; and drawback. (4) For substitution drawback of § 190.81 are met); (B) Tenders of duties in connection § 190.5 Guantanamo Bay, insular finished petroleum derivatives pursuant with notices of prior disclosure under possessions, trust territories. to section 1313(p), a substituted article 19 U.S.C. 1592(c)(4); and Guantanamo Bay Naval Station is must be of the same kind and quality as (C) Duties restored under 19 U.S.C. the qualified article for which it is considered foreign territory for 1592(d). drawback purposes and, accordingly, substituted, that is, the articles must be (2) Marking duties assessed under drawback may be permitted on articles commercially interchangeable or section 304(c), Tariff Act of 1930, as shipped there from the customs territory described in the same 8-digit HTSUS amended (19 U.S.C. 1304(c)); subheading number (see § 190.172(b)). (3) Internal revenue taxes which of the United States. Drawback is not Verification. Verification means the attach upon importation (see § 101.1 of allowed, except on claims made under examination of any and all records, this chapter); 19 U.S.C. 1313(j)(1), on articles shipped maintained by the claimant, or any (4) Merchandise processing fees (see from the customs territory of the United party involved in the drawback process, § 24.23 of this chapter); and States to the U.S. Virgin Islands, which are required by the appropriate (5) Harbor maintenance taxes (see American Samoa, Wake Island, Midway CBP officer to render a meaningful § 24.24 of this chapter). Islands, Kingman Reef, Guam, Canton recommendation concerning the (b) Drawback is not allowable on Island, Enderbury Island, Johnston drawback claimant’s conformity to the antidumping and countervailing duties Island, or Palmyra Island. See 19 U.S.C. law and regulations and the which were imposed on any 1313(y). Puerto Rico, which is part of determination of supportability, merchandise entered, or withdrawn the customs territory of the United correctness, and validity of the specific from warehouse, for consumption (see States, is not considered foreign claim or groups of claims being verified. 19 U.S.C. 1677h). territory for drawback purposes and, Wine. Wine, for purposes of (c) Drawback is not allowed when the accordingly, drawback may not be substitution unused merchandise identified merchandise, the designated permitted on articles shipped there from drawback under 19 U.S.C. 1313(j)(2) and imported merchandise, or the elsewhere in the customs territory of the pursuant to the alternative standard for substituted merchandise (when United States. For refunds of duties, substitution (see 19 CFR 190.32(d)), applicable), consists of an agricultural taxes, or fees paid on merchandise refers to table wine. Consistent with product which is duty-paid at the over- imported into Puerto Rico and exported Alcohol and Tobacco Tax and Trade quota rate of duty established under a outside of the customs territory of the Bureau (TTB) regulations, table wine is tariff-rate quota, except that: United States, claims must be filed a ‘‘Class 1 grape wine’’ that satisfies the (1) Agricultural products as described separately from other claims filed under requirements of 27 CFR 4.21(a)(1) and in this paragraph are eligible for the provisions of this part.
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§ 190.6 Authority to sign or electronically drawback ruling may submit a letter of (viii) IRS (Internal Revenue Service) certify drawback documents. notification of intent to operate under number (with suffix) of the (a) Documents listed in paragraph (b) that general ruling. Where a separately- manufacturer or producer. of this section must be signed or incorporated subsidiary of a parent (c) Review and action by CBP. The electronically certified only by one of corporation is engaged in manufacture drawback office to which the letter of the following: or production for drawback, the notification of intent to operate under a (1) The president, a vice president, subsidiary is the proper party to submit general manufacturing drawback ruling secretary, treasurer, or any other the letter of notification, and cannot was submitted will review the letter of employee legally authorized to bind the operate under a letter of notification notification of intent. corporation; submitted by the parent corporation. (1) Acknowledgment. The drawback (2) A full partner of a partnership; (b) Procedures—(1) Publication. office will promptly issue a letter (3) The owner of a sole General manufacturing drawback acknowledging receipt of the letter of proprietorship; rulings are contained in Appendix A to intent and authorizing the person to (4) Any employee of the business this part. As deemed necessary by CBP, operate under the identified general entity with a power of attorney; new general manufacturing drawback manufacturing drawback ruling, subject (5) An individual acting on his or her rulings will be issued as CBP Decisions to the requirements and conditions of own behalf; or and added to the appendix thereafter. that general manufacturing drawback ruling and the law and regulations, to (6) A licensed customs broker with a (2) Submission. Letters of notification the person who submitted the letter of power of attorney to sign the applicable of intent to operate under a general notification if: drawback document. manufacturing drawback ruling must be (b) The following documents require (i) The letter of notification is submitted to any drawback office where execution in accordance with paragraph complete (i.e., contains the information drawback entries will be filed, (a) of this section: required in paragraph (b)(3) of this concurrent with or prior to filing a (1) Drawback entries; section); claim, provided that the general (2) Notices of Intent to Export, (ii) The general manufacturing manufacturing drawback ruling will be Destroy, or Return Merchandise for drawback ruling identified by the followed without variation. If there is Purposes of Drawback; manufacturer or producer is applicable (3) Certifications of exporters on bills any variation from the general to the manufacturing or production of lading or evidence of exportation (see manufacturing drawback ruling, the process; §§ 190.28 and 190.82); and manufacturer or producer must apply (iii) The general manufacturing (4) Abstracts, schedules and extracts for a specific manufacturing drawback drawback ruling identified by the from monthly abstracts, and bills of ruling under § 190.8. manufacturer or producer will be materials and formulas, if not included (3) Information required. Each followed without variation; and as part of a drawback claim. manufacturer or producer submitting a (iv) The described manufacturing or (c) The following documents (see also letter of notification of intent to operate production process is a manufacture or part 177 of this chapter) may be under a general manufacturing production as defined in § 190.2 of this executed by one of the persons drawback ruling under this section must subpart. described in paragraph (a) of this provide the following specific detailed (2) Computer-generated number. With section or by any other individual information: the letter of acknowledgment the legally authorized to bind the person (or (i) Name and address of manufacturer drawback office will include the unique entity) for whom the document is or producer (if the manufacturer or computer-generated number assigned to executed: producer is a separately-incorporated the acknowledgment of the letter of (1) A letter of notification of intent to subsidiary of a corporation, the notification of intent to operate. This operate under a general manufacturing subsidiary corporation must submit a number must be stated when the person drawback ruling under § 190.7; letter of notification in its own name); files manufacturing drawback claims (2) An application for a specific (ii) In the case of a business entity, the with CBP under the general manufacturing drawback ruling under names of the persons listed in manufacturing drawback ruling. § 190.8; § 190.6(a)(1) through (6) who will sign (3) Non-conforming letters of (3) An application for waiver of prior drawback documents; notification of intent. If the letter of notice under § 190.91; (iii) Locations of the factories which notification of intent to operate does not (4) An application for approval of will operate under the letter of meet the requirements of paragraph accelerated payment of drawback under notification; (c)(1) of this section in any respect, the drawback office will promptly and in § 190.92; and (iv) Identity (by T.D. or CBP Decision (5) An application for certification in writing specifically advise the person of number and title) of the general this fact and why this is so. A letter of the Drawback Compliance Program manufacturing drawback ruling under under § 190.193. notification of intent to operate which is which the manufacturer or producer not acknowledged may be resubmitted § 190.7 General manufacturing drawback will operate; to the drawback office to which it was ruling. (v) Description of the merchandise initially submitted with modifications (a) Purpose; eligibility. General and articles, unless specifically and/or explanations addressing the manufacturing drawback rulings are described in the general manufacturing reasons CBP may have given for non- designed to simplify drawback for drawback ruling, and the applicable 8- acknowledgment, or the matter may be certain common manufacturing digit HTSUS subheading number(s); referred (by letter from the manufacturer operations but do not preclude or limit (vi) Description of the manufacturing or producer) to CBP Headquarters the use of applications for specific or production process, unless (Attention: Entry Process and Duty manufacturing drawback rulings (see specifically described in the general Refunds Branch, Regulations and § 190.8). A manufacturer or producer manufacturing drawback ruling; Rulings, Office of Trade). engaged in an operation that falls within (vii) Basis of claim used for (d) Procedure to modify a general a published general manufacturing calculating drawback; and manufacturing drawback ruling.
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Modifications are allowed under the Regulations and Rulings, Office of producer, be in the form of the original same procedure terms as provided for in Trade). Applications may be physically application, or it may identify the § 190.8(g) for specific manufacturing delivered (in triplicate) or submitted via specific manufacturing drawback ruling drawback rulings. email. Claimants must indicate if to be modified (by T.D. or CBP Decision (e) Duration. Acknowledged letters of drawback claims are to be filed under number, if applicable, and unique notification under this section will the ruling at more than one drawback computer-generated number) and remain in effect under the same terms office. include only those paragraphs of the as provided for in § 190.8(h) for specific (e) Review and action by CBP. CBP application that are to be modified, with manufacturing drawback rulings. Headquarters will review each a statement that all other paragraphs are application for a specific manufacturing unchanged and are incorporated by § 190.8 Specific manufacturing drawback drawback ruling. reference in the supplemental ruling. (1) Approval. If the application is application. (a) Applicant. Unless operating under consistent with the drawback law and (2) Limited modifications. (i) A a general manufacturing drawback regulations, CBP Headquarters will supplemental application for a specific ruling (see § 190.7), each manufacturer issue a letter of approval to the manufacturing drawback ruling must be or producer of articles intended to be applicant and will forward 1 copy of the submitted to the drawback office where claimed for drawback must apply for a application for the specific the original claims was filed if the specific manufacturing drawback ruling. manufacturing drawback ruling to the modifications are limited to: Where a separately-incorporated appropriate drawback office(s) with a (A) The location of a factory, or the subsidiary of a parent corporation is copy of the letter of approval. Each addition of one or more factories where engaged in manufacture or production specific manufacturing drawback ruling the methods followed and records for drawback, the subsidiary is the will be assigned a unique manufacturing maintained are the same as those at proper party to apply for a specific number which will be included in the another factory operating under the manufacturing drawback ruling, and letter of approval to the applicant from existing specific manufacturing cannot operate under any specific CBP Headquarters, which must be used drawback ruling of the manufacturer or manufacturing drawback ruling when filing manufacturing drawback producer; approved in favor of the parent claims. (B) The succession of a sole corporation. (2) Disapproval. If the application is proprietorship, partnership or (b) Sample application. Sample not consistent with the drawback law corporation to the operations of a formats for applications for specific and regulations, CBP Headquarters will manufacturer or producer; manufacturing drawback rulings are promptly and in writing inform the (C) A change in name of the contained in Appendix B to this part. applicant that the application cannot be manufacturer or producer; (c) Content of application. The approved and will specifically advise (D) A change in the persons who will application of each manufacturer or the applicant why this is so. A sign drawback documents in the case of producer must include the following disapproved application may be a business entity; information as applicable: resubmitted with modifications and/or (E) A change in the basis of claim (1) Name and address of the explanations addressing the reasons used for calculating drawback; applicant; given for disapproval, a disapproval (F) A change in the decision to use or (2) Internal Revenue Service (IRS) may be appealed to CBP Headquarters not to use an agent under § 190.9 of this number (with suffix) of the applicant; (Attention: Entry Process and Duty chapter, or a change in the identity of (3) Description of the type of business Refunds Branch, Regulations and an agent under that section; in which engaged; Rulings, Office of Trade). (G) A change in the drawback office (4) Description of the manufacturing (f) Schedules and supplemental where claims will be filed under the or production process, which shows schedules. When an application for a ruling (see paragraph (g)(2)(iii) of this how the designated and substituted specific manufacturing drawback ruling section); merchandise is used to make the article states that drawback is to be based upon (H) An authorization to continue that is to be exported or destroyed; a schedule, as defined in 190.2, filed by operating under a ruling approved (5) In the case of a business entity, the the manufacturer or producer, the under 19 CFR part 191 (see paragraph names of persons listed in § 190.6(a)(1) schedule will be reviewed by CBP (g)(2)(iv) of this section); or through (6) who will sign drawback Headquarters. The application may (I) Any combination of the foregoing documents; include a request for authorization for changes. (6) Description of the imported the filing of supplemental schedules (ii) A limited modification, as merchandise including specifications with the drawback office where claims provided for in this paragraph (g)(2), and applicable 8-digit HTSUS are filed. must contain only the modifications to subheading(s); (g) Procedure to modify a specific be made, in addition to identifying the (7) Description of the exported article manufacturing drawback ruling—(1) specific manufacturing drawback ruling and applicable 8-digit HTSUS Supplemental application. Except as and being signed by an authorized subheadings; provided for limited modifications in person. To effect a limited modification, (8) How manufacturing drawback is paragraph (g)(2) of this section, a the manufacturer or producer must file calculated; manufacturer or producer desiring to with the drawback office(s) where (9) Summary of the records kept to modify an existing specific claims were originally filed a letter support claims for drawback; and manufacturing drawback ruling may stating the modifications to be made. (10) Identity and address of the submit a supplemental application for The drawback office will promptly recordkeeper if other than the claimant. such modification to CBP Headquarters acknowledge acceptance of the limited (d) Submission of Application. An (Attention: Entry Process and Duty modifications. application for a specific manufacturing Refunds Branch, Regulations and (iii) To transfer a claim to another drawback ruling must be submitted to Rulings, Office of Trade). Such a drawback office, the manufacturer or CBP Headquarters (Attention: Entry supplemental application may, at the producer must file with the second Process and Duty Refunds Branch, discretion of the manufacturer or drawback office where claims will be
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filed, a written application to file claims the manufacturing records of both (or drawback ruling (see § 190.8), as at that office, with a copy of the all) parties, compliance with all appropriate. application and approval letter under requirements of this part (see, in (d) Certificate—(1) Contents of which claims are currently filed. The particular, § 190.26). certificate. The principal for whom manufacturer or producer must provide (b) Requirements—(1) Contract. The processing is conducted under this a copy of the written application to file manufacturer must establish that it is section must file, with any drawback claims at the new drawback office to the the principal in a contract between it claim, a certificate, subject to the drawback office where claims are and its agent who actually does the recordkeeping requirements of §§ 190.15 currently filed. work on either the designated or and 190.26, certifying that upon request (iv) To file a claim under this part substituted merchandise, or both, for the by CBP it can establish the following: based on a ruling approved under 19 principal. The contract must include: (i) Quantity of merchandise CFR part 191, the manufacturer or (i) Terms of compensation to show transferred from the principal to the producer must file a supplemental that the relationship is an agency rather agent; application for a limited modification than a sale; (ii) Date of transfer of the merchandise no later than February 23, 2019, which (ii) How transfers of merchandise and from the principal to the agent; provides the following: articles will be recorded by the (iii) Date of manufacturing or (A) Revised parallel columns with the principal and its agent; production operations performed by the required annotations for the applicable (iii) The work to be performed on the agent; 8-digit HTSUS subheading number(s); merchandise by the agent for the (iv) Total quantity, description, and (B) Revised bill of materials or principal; 10-digit HTSUS classification of formula with the required annotations (iv) The degree of control that is to be merchandise appearing in or used in for the applicable 8-digit HTSUS exercised by the principal over the manufacturing or production operations subheading number(s); and agent’s performance of work; performed by the agent; (C) A certification of continued (v) The party who is to bear the risk (v) Total quantity, description, and compliance, which states: ‘‘The of loss on the merchandise while it is in 10-digit HTSUS classification of articles undersigned acknowledges the current the agent’s custody; and produced in manufacturing or statutory requirements under 19 U.S.C. (vi) The period that the contract is in production operations performed by the 1313 and the regulatory requirements in effect. agent; 19 CFR part 190, and hereby certifies its (2) Ownership of the merchandise by (vi) Quantity and 10-digit HTSUS continuing eligibility for operating the principal. The records of the classification of articles transferred from under the manufacturing drawback principal and/or the agent must the agent to the principal; and ruling in compliance therewith.’’ establish that the principal had legal (vii) Date of transfer of the articles (h) Duration. Subject to 19 U.S.C. and equitable title to the merchandise from the agent to the principal. 1625 and part 177 of this chapter, a before receipt by the agent. The right of (2) Blanket certificate. The certificate specific manufacturing drawback ruling the agent to assert a lien on the required under paragraph (d)(1) of this under this section will remain in effect merchandise for work performed does section may be a blanket certificate for indefinitely unless: not derogate the principal’s ownership a stated period. interest under this section. (1) No drawback claim is filed under § 190.10 Transfer of merchandise. the ruling for a period of 5 years and (3) Sales prohibited. The relationship (a) Ability to transfer merchandise. (1) notice of termination is published in the between the principal and agent must A party may transfer drawback eligible Customs Bulletin; or not be that of a seller and buyer. If the merchandise or articles to another party, (2) The manufacturer or producer to parties’ records show that, with respect provided that the transferring party: whom approval of the ruling was issued to the merchandise that is the subject of (i) Imports and pays duties, taxes, files a request to terminate the ruling, in the principal-agent contract, the and/or fees on such imported writing, with CBP Headquarters merchandise is sold to the agent by the principal, or the articles manufactured merchandise; (Attention: Entry Process and Duty (ii) Receives such imported by the agent are sold to the principal by Refunds Branch, Regulations and merchandise; Rulings, Office of Trade). the agent, those records are inadequate (iii) In the case of 19 U.S.C. 1313(j)(2), to establish existence of a principal- § 190.9 Agency. receives such imported merchandise, agency relationship under this section. substituted merchandise, or any (a) General. An owner of the (c) Specific manufacturing drawback combination of such imported and identified merchandise, the designated rulings; general manufacturing imported merchandise and/or the substituted merchandise; or drawback rulings—(1) Owner. An owner (iv) Receives an article manufactured substituted merchandise that is used to who intends to operate under the or produced under 19 U.S.C. 1313(a) produce the exported articles may principal-agent procedures of this and/or (b). employ another person to do part, or all, section must state that intent in any (2) The transferring party must of the manufacture or production under letter of notification of intent to operate maintain records that: 19 U.S.C. 1313(a) or (b) and as defined under a general manufacturing (i) Document the transfer of that in § 190.2 of this subpart. For purposes drawback ruling filed under § 190.7 or merchandise or article; of this section, such owner is the in any application for a specific (ii) Identify such merchandise or principal and such other person is the manufacturing drawback ruling filed article as being that to which a potential agent. Under 19 U.S.C. 1313(b), the under § 190.8. right to drawback exists; and principal will be treated as the (2) Agent. Each agent operating under (iii) Assign such right to the transferee manufacturer or producer of this section must have filed a letter of (see § 190.82). merchandise used in manufacture or notification of intent to operate under a (b) Required records. The records that production by the agent. The principal general manufacturing drawback ruling support the transfer must include the must be able to establish by its (see § 190.7), for an agent, covering the following information: manufacturing records, the articles manufactured or produced, or (1) The party to whom the manufacturing records of its agent(s), or have obtained a specific manufacturing merchandise or articles are delivered;
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(2) Date of physical delivery; reported on that same entry summary declared for the EEI including any (3) Import entry number and entry line item. adjustments and exclusions required by line item number; (d) Retention period. The records 15 CFR 30.6(a) (e.g., the market price, if (4) Quantity delivered and, for listed in paragraph (b) of this section the goods are shipped on consignment). substitution claims, total quantity must be retained by the issuing party for (For special types of transactions where attributable to the relevant import entry 3 years from the date of liquidation of certain unusual conditions are involved, line item number; the related claim or longer period if the value for the EEI is determined (5) Total duties, taxes, and fees paid required by law (see 19 U.S.C. pursuant to 15 CFR part 30 subpart C.) on, or attributable to, the delivered 1508(c)(3)). If no EEI is required (see, 15 CFR part merchandise, and, for substitution (e) Submission to CBP. If the records 30 subpart D for a complete list of claims, total duties, taxes, and fees paid required under paragraph (b) of this exemptions), then the claimant must on, or attributable to, the relevant section or additional records requested provide the value that would have been import entry line item number; by CBP are not provided by the set forth on the EEI when the (6) Date of importation; claimant, the part of the drawback claim exportation took place, but for the (7) Port where import entry filed; dependent on those records will be exemption from the requirement for an (8) Person from whom received; denied. EEI. (9) Description of the merchandise (f) Warehouse transfer and (c) Destroyed merchandise or articles. delivered; withdrawals. The person in whose name The value of the destroyed merchandise (10) The 10-digit HTSUS merchandise is withdrawn from a or articles eligible for drawback is the classification for the designated bonded warehouse will be considered value at the time of destruction, imported merchandise (such HTSUS the importer for drawback purposes. No determined as if the merchandise had number must be from the entry records are required to document prior been exported in its condition at the summary line item and other entry transfers of merchandise while in a time of its destruction and an EEI had documentation for the merchandise); bonded warehouse. been required. (d) Substituted merchandise for and § 190.11 Valuation of merchandise. (11) If the merchandise transferred is manufacturing drawback claims. The The values declared to CBP as part of value of the substituted merchandise for substituted for the designated imported a complete drawback claim pursuant to merchandise under 19 U.S.C. 1313(j)(2), manufacturing drawback claims § 190.51 must be established as pursuant to 19 U.S.C. 1313(b) is the cost the 10-digit HTSUS classification of the provided below. If the drawback eligible substituted merchandise (as if it had of acquisition or production for the merchandise or articles are destroyed, manufacturer or producer who used the been imported). then the value of the imported (c) Transferor notification for line substituted merchandise in merchandise and any substituted manufacturing or production. item designation. (1) Pursuant to merchandise must be reduced by the § 190.51(a)(3) and for transfers that do value of materials recovered during § 190.12 Claim filed under incorrect not cover the entire quantity of the destruction in accordance with 19 provision. merchandise reported on a specific line U.S.C. 1313(x). A drawback claim filed pursuant to item from an entry summary, the (a) Designated imported merchandise. any provision of section 313 of the Act, transferring party (transferor) must The value of the imported merchandise as amended (19 U.S.C. 1313) may be provide notice to the transferee(s) of the is determined as follows: deemed filed pursuant to any other following: (1) Direct identification claims. The provision thereof should the drawback (i) Whether the transferor has claimed value of the imported merchandise is office determine that drawback is not or will claim drawback relating to any the customs value of the imported allowable under the provision as merchandise reported on the entry merchandise upon entry into the United originally filed, but that it is allowable summary line item (specifying either States (see subpart E of part 152 of this under such other provision. To be direct identification or substitution as chapter); or, if the merchandise is allowable under such other provision, the basis for the claim); identified pursuant to an approved the claim must meet each of the (ii) Whether the transferor has accounting method, then the value of requirements of such provision. The previously transferred any merchandise the imported merchandise is the claimant may raise alternative reported on the entry summary line item customs value that is properly provisions prior to liquidation and by and whether the transferor has attributable to the imported protest (see part 174 of this chapter). knowledge regarding a drawback claim merchandise as identified by the being filed relating that transferred appropriate recordkeeping (see § 190.14, § 190.13 Packaging materials. merchandise (specifying either direct varies by accounting method). (a) Imported packaging material. identification or substitution); and (2) Substitution claims. The value of Drawback of duties is provided in (iii) Whether the transferor has not the designated imported merchandise is section 313(q)(1) of the Act, as amended previously transferred any merchandise the per unit average value, which is the (19 U.S.C. 1313(q)(1)), on imported reported on the entry summary line entered value for the applicable entry packaging material used to package or item. summary line item apportioned equally repackage merchandise or articles (2) Notification of this designation over each unit covered by the line item. exported or destroyed pursuant to from the transferor to the transferee(s) (b) Exported merchandise or articles. section 313(a), (b), (c), or (j) of the Act, must be documented in records. The value of the exported merchandise as amended (19 U.S.C. 1313(a), (b), (c), (3) Notwithstanding the designation or articles eligible for drawback is the or (j)). The amount of drawback payable made, the basis for the first-filed claim selling price as declared for the on the packaging material is determined relating to merchandise reported on that Electronic Export Information (EEI), pursuant to the particular drawback entry summary line item (either direct including any adjustments and provision to which the packaged goods identification or substitution) will be exclusions required by 15 CFR 30.6(a)). themselves are subject. The packaging the exclusive basis for any subsequent If there is no selling price for the EEI, material must be separately identified claims for any other merchandise then the value is the other value as on the claim, and all other information
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and documents required for the merchandise or articles under this methods for a period of at least one year, particular drawback provision under section, subject to each of the following unless approval is given by CBP for a which the claim is made must be conditions and criteria: shorter period. provided for the packaging material. (1) The lots of merchandise or articles (c) Approved accounting methods. (b) Packaging material manufactured to be so identified must be fungible as The following accounting methods are in United States from imported defined in § 190.2; approved for use in the identification of materials. Drawback of duties is (2) The person using the identification merchandise or articles for drawback provided in section 313(q)(2) of the Act, method must be able to establish that purposes under this section. If a claim as amended (19 U.S.C. 1313(q)(2)), on inventory records (for example, material is eligible for the use of any accounting packaging material that is manufactured control records), prepared and used in method, the claimant must indicate on or produced in the United States from the ordinary course of business, account the drawback entry whether an imported materials and used to package for the lots of merchandise or articles to accounting method was used, and if so, or repackage articles that are exported or be identified as being received into and which accounting method was used, to destroyed under section 313(a) or (b) of withdrawn from the same inventory. identify the merchandise as part of the the Act, as amended (19 U.S.C. 1313(a) Even if merchandise or articles are complete claim (see § 190.51). or (b)). The amount of drawback payable received or withdrawn at different (1) First-in, first-out (FIFO)—(i) on the packaging material is determined geographical locations, if such inventory General. The FIFO method is the pursuant to the particular records treat receipts or withdrawals as method by which fungible merchandise manufacturing drawback provision to being from the same inventory, those or articles are identified by which the packaged articles themselves inventory records may be used to recordkeeping on the basis of the first are subject, either 19 U.S.C. 1313(a) or identify the merchandise or articles merchandise or articles received into (b), as applicable. The packaging under this section, subject to the the inventory. Under this method, material and the imported merchandise conditions of this section. If any such withdrawals are from the oldest (first-in) used in the manufacture or production inventory records (that is, inventory merchandise or articles in the inventory of the packaging material must be records prepared and used in the at the time of withdrawal. separately identified on the claim, and ordinary course of business) treat (ii) Example. If the beginning all other information and documents receipts and withdrawals as being from inventory is zero, 100 units with $1 required for the particular drawback different inventories, those inventory drawback attributable per unit are provision under which the claim is records must be used and receipts into received in inventory on the 2nd of the made must be provided for the or withdrawals from the different month, 50 units with no drawback packaging material as well as the inventories may not be accounted for attributable per unit are received into imported merchandise used in its together. If units of merchandise or inventory on the 5th of the month, 75 manufacture or production, for purposes articles can be specifically identified units are withdrawn for domestic (non- of determining the applicable drawback (for example, by serial number), the export) shipment on the 10th of the payable. merchandise or articles must be month, 75 units with $2 drawback specifically identified and may not be attributable per unit are received in § 190.14 Identification of merchandise or identified by accounting method, unless inventory on the 15th of the month, 100 articles by accounting method. it is established that inventory records, units are withdrawn for export on the (a) General. This section provides for prepared and used in the ordinary 20th of the month, and no other receipts the identification of merchandise or course of business, treat the or withdrawals occurred in the month, articles for drawback purposes by the merchandise or articles to be identified the drawback attributable to the 100 use of accounting methods. This section as being received into and withdrawn units withdrawn for export on the 20th applies to identification of merchandise from the same inventory (subject to the is a total of $75 (25 units from the or articles in inventory or storage, as above conditions); receipt on the 2nd with $1 drawback well as identification of merchandise (3) Unless otherwise provided in this attributable per unit, 50 units from the used in manufacture or production, as section or specifically approved by CBP receipt on the 5th with no drawback defined in § 190.2. This section is not (by a binding ruling under part 177 of attributable per unit, and 25 units from applicable to situations in which the this chapter), all receipts (or inputs) into the receipt on the 15th with $2 drawback law authorizes substitution and all withdrawals from the inventory drawback attributable per unit). The (substitution is allowed in specified must be recorded in the accounting basis of the foregoing and the effects on situations under 19 U.S.C. 1313(b), record; the inventory of the receipts and 1313(j)(2), 1313(k), and 1313(p); this (4) The records which support any withdrawals, and balance in the section does apply to situations in these identification method under this section inventory thereafter are as follows: On subsections in which substitution is not are subject to verification by CBP (see the 2nd of the month the receipt of 100 allowed, as well as to the subsections of § 190.61). If CBP requests such units ($1 drawback/unit) results in a the drawback law under which no verification, the person using the balance of that amount; the receipt of 50 substitution is allowed). When identification method must be able to units ($0 drawback/unit) on the 5th substitution is authorized, merchandise demonstrate how, under Generally results in a balance of 150 units (100 or articles may be substituted without Accepted Accounting Procedures with $1 drawback/unit and 50 with $0 reference to this section, under the (GAAP), the records which support the drawback/unit); the withdrawal on the criteria and conditions specifically identification method used account for 10th of 75 units ($1 drawback/unit) authorized in the statutory and all merchandise or articles in, and all results in a balance of 75 units (25 with regulatory provisions providing for the receipts into and withdrawals from, the $1 drawback/unit and 50 with $0 substitution. inventory, and the drawback per unit for drawback/unit); the receipt of 75 units (b) Conditions and criteria for each receipt and withdrawal; and ($2 drawback/unit) on the 15th results identification by accounting method. (5) Any accounting method which is in a balance of 150 units (25 with $1 Manufacturers, producers, claimants, or used by a person for drawback purposes drawback/unit, 50 with $0 drawback/ other appropriate persons may identify under this section must be used unit, and 75 with $2 drawback/unit); the for drawback purposes lots of exclusively, without using other withdrawal on the 20th of 100 units (25
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with $1 drawback/unit, 50 with $0 requirements are applicable to $42.50 (the March 10 receipt), the drawback/unit, and 25 with $2 withdrawn merchandise or articles as drawback attributable to the March 21 drawback unit) results in a balance of 50 identified (for example, if the withdrawal for domestic shipment (no units (all 50 with $2 drawback/unit). merchandise or articles identified were drawback) is $52.50 (the February 25 (2) Last-in, first out (LIFO)—(i) attributable to an import more than 5 receipt), and the drawback attributable General. The LIFO method is the years before the claimed export, no to the March 31 withdrawal for export method by which fungible merchandise drawback could be granted). is $98.00 (the March 25 and March 5 or articles are identified by (ii) Ordinary Low–to-High—(A) receipts). Remaining in inventory is the recordkeeping on the basis of the last Method. Under the ordinary low-to-high March 20 receipt of 50 units ($1.08 merchandise or articles received into method, all receipts into and all drawback/unit). Total drawback the inventory. Under this method, withdrawals from the inventory are attributable to withdrawals for export in withdrawals are from the newest (last- recorded in the accounting record and this example would be $391.00. in) merchandise or articles in the accounted for so that each withdrawal, (iii) Low-to-high method with inventory at the time of withdrawal. whether for export or domestic established average inventory turn-over (ii) Example. In the example in shipment, is identified by recordkeeping period—(A) Method. Under the low-to- paragraph (c)(1)(ii) of this section, the on the basis of the lowest drawback high method with established average drawback attributable to the 100 units amount per unit of the merchandise or inventory turn-over period, all receipts withdrawn for export on the 20th is a articles available in the inventory. into and all withdrawals for export are total of $175 (75 units from the receipt (B) Example. (1) In this example, the recorded in the accounting record and on the 15th with $2 drawback beginning inventory is zero, and accounted for so that each withdrawal is attributable per unit and 25 units from receipts into and withdrawals from the identified by recordkeeping on the basis the receipt on the 2nd with $1 drawback inventory are as follows: of the lowest drawback amount per attributable per unit). The basis of the available unit of the merchandise or foregoing and the effects on the Date Receipt Withdrawals articles received into the inventory in inventory of the receipts and ($ per unit) the established average inventory turn- withdrawals, and balance in the over period preceding the withdrawal. inventory thereafter are as follows: On Jan. 2 ..... 100 (zero). (B) Accounting for withdrawals (for the 2nd of the month the receipt of 100 Jan. 5 ..... 50 ($1.00). domestic shipments and for export). Jan. 15 ...... 50 (export). units ($1 drawback/unit) results in a Jan. 20 ... 50 ($1.01). Under the low to-high method with balance of that amount; the receipt of 50 Jan. 25 ... 50 ($1.02). established average inventory turn-over units ($0 drawback/unit) on the 5th Jan. 28 ...... 50 (domestic). period, domestic withdrawals results in a balance of 150 units (100 Jan. 31 ... 50 ($1.03). (withdrawals for domestic shipment) are with $1 drawback/unit and 50 with $0 Feb. 5 ...... 100 (export). not accounted for and do not affect the drawback/unit); the withdrawal on the Feb. 10 ... 50 ($.95). available units of merchandise or 10th of 75 units (50 with $0 drawback/ Feb. 15 ...... 50 (export). articles. All withdrawals for export must unit and 25 with $1 drawback/unit) Feb. 20 ... 50 (zero). be accounted for whether or not results in a balance of 75 units (all with Feb. 23 ...... 50 (domestic). drawback is available or claimed on the $1 drawback/unit); the receipt of 75 Feb. 25 ... 50 ($1.05). withdrawals. Once a withdrawal for Feb. 28 ...... 100 (export). units ($2 drawback/unit) on the 15th Mar. 5 ..... 50 ($1.06). export is made and accounted for under results in a balance of 150 units (75 with Mar. 10 ... 50 ($.85). this method, the merchandise or articles $1 drawback/unit and 75 with $2 Mar. 15 ...... 50 (export). withdrawn are no longer available for drawback/unit); the withdrawal on the Mar. 21 ...... 50 (domestic). identification. 20th of 100 units (75 with $2 drawback/ Mar. 20 ... 50 ($1.08). (C) Establishment of inventory turn- unit and 25 with $1 drawback/unit) Mar. 25 ... 50 ($.90). over period. For purposes of the low to- results in a balance of 50 units (all 50 Mar. 31 ...... 100 (export). high method with established average with $1 drawback/unit). inventory turn-over period, the average (3) Low-to-high—(i) General. The low- (2) The drawback attributable to the inventory turn-over period is based on to-high method is the method by which January 15 withdrawal for export is zero the rate of withdrawal from inventory fungible merchandise or articles are (the available receipt with the lowest and represents the time in which all of identified by recordkeeping on the basis drawback amount per unit is the the merchandise or articles in the of the lowest drawback amount per unit January 2 receipt), the drawback inventory at a given time must have of the merchandise or articles in attributable to the January 28 been withdrawn based on that rate. To inventory. Merchandise or articles with withdrawal for domestic shipment (no establish an average of this time, at least no drawback attributable to them (for drawback) is zero (the remainder of the 1 year, or 3 turn-over periods (if example, domestic merchandise or January 2 receipt), the drawback inventory turns over fewer than 3 times duty-free merchandise) must be attributable to the February 5 per year), must be averaged. The accounted for and are treated as having withdrawal for export is $100.50 (the inventory turn-over period must be that the lowest drawback attributable to January 5 and January 20 receipts), the for the merchandise or articles to be them. Under this method, withdrawals drawback attributable to the February 15 identified, except that if the person are from the merchandise or articles withdrawal for export is $47.50 (the using the method has more than one with the least amount of drawback February 10 receipt), the drawback kind of merchandise or articles with attributable to them, then those with the attributable to the February 23 different inventory turn-over periods, next higher amount, and so forth. If the withdrawal for domestic shipment (no the longest average turn-over period same amount of drawback is attributable drawback) is zero (the February 20 established under this section may be to more than one lot of merchandise or receipt), the drawback attributable to the used (instead of using a different articles, withdrawals are from the oldest February 28 withdrawal for export is inventory turn-over period for each kind (first-in) merchandise or articles among $102.50 (the January 25 and January 31 of merchandise or article). those lots with the same amount of receipts), the drawback attributable to (D) Example. In the example in drawback attributable. Drawback the March 15 withdrawal for export is paragraph (c)(3)(ii)(B) of this section
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(but, as required for this method, entered more than 180 days after the (C) Is applied to the withdrawal, so without accounting for domestic date of the claimed export or if the that the withdrawal consists of a withdrawals, and with an established claimed export was more than 180 days proportionate quantity of units from average inventory turn-over period of 30 after the close of the manufacturing each particular receipt and each receipt days), the drawback attributable to the period attributable to an import). is correspondingly decreased. January 15 withdrawal for export is zero (B) Accounting for withdrawals (for Withdrawals and corresponding (the available receipt in the preceding domestic shipments and for export). decreases to receipts are rounded to the 30 days with the lowest amount of Under the low-to-high blanket method, nearest whole number. drawback is the January 2 receipt, of domestic withdrawals (withdrawals for (ii) Example. In the example in which 50 units will remain after the domestic shipment) are not accounted paragraph (c)(1)(ii) of this section, the withdrawal), the drawback attributable for and do not affect the available units drawback attributable to the 100 units to the February 5 withdrawal for export of merchandise or articles. All withdrawn for export on the 20th is a is $101.50 (the January 20 and January withdrawals for export must be total of $133 (50 units from the receipt 25 receipts), the drawback attributable accounted for whether or not drawback on the 15th with $2 drawback to the February 15 withdrawal for is available or claimed on the attributable per unit, 33 units from the export is $47.50 (the February 10 withdrawals. Once a withdrawal for receipt on the 2nd with $1 drawback receipt), the drawback attributable to the export is made and accounted for under attributable per unit, and 17 units from February 28 withdrawal for export is this method, the merchandise or articles the receipt on the 5th with $0 drawback $51.50 (the February 20 and January 31 withdrawn are no longer available for attributable per unit). The basis of the receipts), the drawback attributable to identification. foregoing and the effects on the the March 15 withdrawal for export is (C) Example. In the example in inventory of the receipts and $42.50 (the March 10 receipt), and the paragraph (c)(3)(ii)(B) of this section withdrawals, and balance in the drawback attributable to the March 31 (but, as required for this method, inventory thereafter are as follows: On withdrawal for export is $98.00 (the without accounting for domestic the 2nd of the month the receipt of 100 March 25 and March 5 receipts). No withdrawals), the drawback attributable units ($1 drawback/unit) results in a drawback may be claimed on the basis to the January 15 withdrawal for export balance of that amount; the receipt of 50 of the January 5 receipt or the February is zero (the available receipt in the units ($0 drawback/unit) on the 5th 25 receipt because in the case of each, inventory with the lowest amount of results in a balance of 150 units (100 there were insufficient withdrawals for drawback is the January 2 receipt, of with $1 drawback/unit and 50 with $0 export within the established average which 50 units will remain after the drawback/unit); the withdrawal on the inventory turn-over period; the 50 units withdrawal), the drawback attributable 10th of 75 units (50 with $1 drawback/ to the February 5 withdrawal for export remaining from the January 2 receipt unit (applying the ratio of 100 units is $50.00 (the remainder of the January after the January 15 withdrawal are not from the receipt on the 2nd to the total 2 receipt and the January 5 receipt), the identified for a withdrawal for export of 150 units at the time of withdrawal) drawback attributable to the February 15 because there is no other withdrawal for and 25 with $0 drawback/unit (applying withdrawal for export is $47.50 (the export (other than the January 15 the ratio of 50 units from the receipt on February 10 receipt), the drawback withdrawal) within the established the 5th to the total of 150 units at the attributable to the February 28 average inventory turn-over period; the time of withdrawal)) results in a balance withdrawal for export is $50.50 (the of 75 units (with 50 with $1 drawback/ March 20 receipt (50 units at $1.08) is February 20 and January 20 receipts), unit and 25 with $0 drawback/unit, on not yet attributed to withdrawals for the drawback attributable to the March the basis of the same ratios); the receipt export. Total drawback attributable to 15 withdrawal for export is $42.50 (the of 75 units ($2 drawback/unit) on the withdrawals for export in this example March 10 receipt), and the drawback 15th results in a balance of 150 units (50 would be $341.00. attributable to the March 31 withdrawal with $1 drawback/unit, 25 with $0 (iv) Low-to-high blanket method—(A) for export is $96.00 (the March 25 and drawback/unit, and 75 with $2 Method. Under the low-to-high blanket January 25 receipts). Receipts not drawback/unit); the withdrawal on the method, all receipts into and all attributed to withdrawals for export are 20th of 100 units (50 with $2 drawback/ withdrawals for export are recorded in the January 31 (50 units at $1.03), unit (applying the ratio of the 75 units the accounting record and accounted February 25 (50 units at $1.05), March from the receipt on the 15th to the total for. Each withdrawal is identified on the 5 (50 units at $1.06), and March 20 (50 of 150 units at the time of withdrawal), basis of the lowest drawback amount units at $1.08) receipts. Total drawback 33 with $1 drawback/unit (applying the per available unit of the merchandise or attributable to withdrawals for export in ratio of the 50 units remaining from the articles received into inventory in the this example would be $286.50. receipt on the 2nd to the total of 150 applicable statutory period for export (4) Average—(i) General. The average units at the time of withdrawal, and 17 preceding the withdrawal (e.g., 180 days method is the method by which fungible with $0 drawback/unit (applying the under 19 U.S.C. 1313(p) and 5 years for merchandise or articles are identified on ratio of the 25 units remaining from the other types of drawback claims pursuant the basis of the calculation by receipt on the 5th to the total of 150 to 19 U.S.C. 1313(r)). Drawback recordkeeping of the amount of units at the time of withdrawal)) results requirements are applicable to drawback that may be attributed to each in a balance of 50 units (25 with $2 withdrawn merchandise or articles as unit of merchandise or articles in the drawback/unit, 17 with $1 drawback/ identified (for example, no drawback inventory. In this method, the ratio of: unit, and 8 with $0 drawback/unit, on could be granted generally if the (A) The total units of a particular the basis of the same ratios). merchandise or articles identified were receipt of the fungible merchandise in (5) Inventory turn-over for limited attributable to an import made more the inventory at the time of a purposes. A properly established than 5 years before the claimed export; withdrawal to; average inventory turn-over period, as and, for claims pursuant to 19 U.S.C. (B) The total units of all receipts of provided for in paragraph (c)(3)(iii)(C) of 1313(p), no drawback could be granted the fungible merchandise (including this section, may be used to determine: if the merchandise or articles identified each receipt into inventory) at the time (i) The fact and date(s) of use in were attributable to an import that was of the withdrawal; manufacture or production of the
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imported designated merchandise and imported merchandise, provided that the value of materials recovered during other (substituted) merchandise (see 19 those articles have not been used in the destruction as provided in 19 U.S.C. U.S.C. 1313(b)); or United States prior to such exportation 1313(x)). (ii) The fact and date(s) of or destruction. The amount of drawback (C) Federal excise tax. For purposes of manufacture or production of the allowable shall not exceed 99 percent of drawback of internal revenue tax exported or destroyed articles (see 19 the amount of duties, taxes, and fees imposed under Chapters 32, 38, 51, and U.S.C. 1313(a) and (b)). paid with respect to the imported 52 of the Internal Revenue Code of 1986, (d) Approval of other accounting merchandise. However, duties may not as amended (IRC), drawback granted on methods. (1) Persons proposing to use be refunded upon the exportation or the export or destruction of substituted an accounting method for identification destruction of flour or by-products merchandise will be limited to the of merchandise or articles for drawback produced from imported wheat. Where amount of taxes paid (and not returned purposes which has not been previously two or more products result, drawback by refund, credit, or drawback) on the approved for such use (see paragraph (c) must be distributed among the products substituted merchandise. of this section), or which includes in accordance with their relative values, (2) Special rule for sought chemical modifications from the methods listed as defined in § 190.2, at the time of elements—(i) Substitution standard. A in paragraph (c) of this section, may separation. Merchandise may be sought chemical element, as defined in seek approval by CBP of the proposed identified for drawback purposes under § 190.2, may be considered imported accounting method under the provisions 19 U.S.C. 1313(a) in the manner merchandise, or merchandise for obtaining an administrative ruling provided for and prescribed in § 190.14. classifiable under the same 8-digit (see part 177 of this chapter). The HTSUS subheading number as such conditions applied and the criteria used § 190.22 Substitution manufacturing drawback. imported merchandise, used in the by CBP in approving such an alternative manufacture or production of an article (a)(1) General—(i) Substitution accounting method, or a modification of as described in paragraph (a)(1)(i) of this standard. If imported, duty-paid one of the approved accounting section, and it may be substituted for merchandise or merchandise classifiable methods, will be the criteria in source material containing that sought under the same 8-digit HTSUS paragraph (b) of this section, as well as chemical element, without regard to subheading number as the imported those in paragraph (d)(2) of this section. whether the sought chemical element merchandise is used in the manufacture (2) In order for a proposed accounting and the source material are classifiable or production of articles within a period method to be approved by CBP for under the same 8-digit HTSUS not to exceed 5 years from the date of purposes of this section, it must meet subheading number, and apportioned importation of such imported the following criteria: quantitatively, as appropriate (see merchandise, then upon the (i) For purposes of calculations of § 190.26(b)(4)). exportation, or destruction under CBP drawback, the proposed accounting (ii) Allowable refund. The amount of supervision, of any such articles, method must be either revenue neutral drawback allowable will be determined without their having been used in the or favorable to the Government; and in accordance with paragraph (a)(1)(ii) United States prior to such exportation (ii) The proposed accounting method of this section. The value of the or destruction, drawback is provided for should be: substituted source material must be in section 313(b) of the Act, as amended (A) Generally consistent with determined based on the quantity of the (19 U.S.C. 1313(b)). Drawback is commercial accounting procedures, as sought chemical element present in the allowable even though none of the applicable for purposes of drawback; source material, as calculated per imported, duty-paid merchandise may (B) Consistent with inventory or § 190.26(b)(4). actually have been used in the material control records used in the (b) Use by same manufacturer or manufacture or production of the ordinary course of business by the producer at different factory. Duty-paid exported or destroyed articles. person proposing the method; and merchandise or drawback products used (C) Easily administered by CBP. (ii) Allowable refund—(A) Exportation. In the case of an article that at one factory of a manufacturer or § 190.15 Recordkeeping. is exported, the amount of drawback producer within 5 years after the date on which the material was imported Pursuant to 19 U.S.C. 1508(c)(3), all allowable will not exceed 99 percent of the lesser of: may be designated as the basis for records which pertain to the filing of a drawback on articles manufactured or drawback claim or to the information (1) The amount of duties, taxes, and fees paid with respect to the imported produced in accordance with these contained in the records required by 19 regulations at other factories of the same U.S.C. 1313 in connection with the merchandise; or (2) The amount of duties, taxes, and manufacturer or producer. filing of a drawback claim must be (c) Designation. A manufacturer or retained for 3 years after liquidation of fees that would apply to the substituted merchandise if the substituted producer may designate any eligible such claims or longer period if required imported merchandise or drawback by law (under 19 U.S.C. 1508, the same merchandise were imported. (B) Destruction. In the case of an product which it has used in records may be subject to a different manufacture or production. period for different purposes). article that is destroyed, the amount of drawback allowable will not exceed 99 (d) Designation by successor—(1) Subpart B—Manufacturing Drawback percent of the lesser of: General rule. Upon compliance with the (1) The amount of duties, taxes, and requirements in this section and under § 190.21 Direct identification fees paid with respect to the imported 19 U.S.C. 1313(s), a drawback successor manufacturing drawback. merchandise (reduced by the value of as defined in paragraph (d)(2) of this Section 313(a) of the Act, as amended materials recovered during destruction section may designate merchandise or (19 U.S.C. 1313(a)), provides for as provided in 19 U.S.C. 1313(x)); or drawback product used by a predecessor drawback upon the exportation, or (2) The amount of duties, taxes, and before the date of succession as the basis destruction under CBP supervision, of fees that would apply to the substituted for drawback on articles manufactured articles manufactured or produced in merchandise if the substituted or produced by the successor after the the United States with the use of merchandise were imported (reduced by date of succession.
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(2) Drawback successor. A ‘‘drawback definition of relative value in § 190.2). or appearing in all articles produced successor’’ is a manufacturer or Manufacturing periods in excess of one during the period covered by the producer to whom another entity month may not be used without specific abstract. A schedule shows the quantity (predecessor) has transferred, by written approval of CBP. of material actually used in producing, agreement, merger, or corporate (3) Recordkeeping. Records must be or appearing in, each unit of product. resolution: maintained showing the relative value Manufacturers or producers submitting (i) All or substantially all of the rights, of each product at the time of letters of notification of intent to operate privileges, immunities, powers, duties, separation. under a general manufacturing and liabilities of the predecessor; or drawback ruling (see § 190.7) and (ii) The assets and other business § 190.23 Methods and requirements for claiming drawback. applicants for approval of specific interests of a division, plant, or other manufacturing drawback rulings (see business unit of such predecessor, Claims must be based on one or more § 190.8) must state whether the abstract provided that the value of the of the methods specified in paragraph or schedule method is used; if no such transferred assets and interests (realty, (a) of this section and comply with all statement is made, drawback claims personalty, and intangibles, exclusive of other requirements specified in this must be based upon the abstract the drawback rights) exceeds the value section. method. (a) Method of claiming drawback.—(1) of such drawback rights, whether vested (c) Claim for waste.—(1) Valuable Used in. Drawback may be paid based or contingent. waste. When the waste has a value and on the amount of the imported or (3) Certifications and required the drawback claim is not limited to the substituted merchandise used in the evidence—(i) Records of predecessor. quantity of imported or substituted manufacture of the exported article, The predecessor or successor must merchandise or drawback products where there is no waste or the waste is certify that the successor is in appearing in the exported or destroyed valueless or unrecoverable. This method possession of the predecessor’s records articles claimed for drawback, the must be used when multiple products which are necessary to establish the manufacturer or producer must keep also necessarily and concurrently result right to drawback under the law and records to show the market value of the from the manufacturing process, and regulations with respect to the merchandise or drawback products used there is no valuable waste (see merchandise or drawback product. to manufacture or produce the exported (ii) Merchandise not otherwise paragraph (a)(2) of this section). or destroyed articles, as well as the designated. The predecessor or (2) Used in less valuable waste. market value of the resulting waste, successor must certify in an attachment Drawback is allowable under this under the used in less valuable waste to the claim, that the predecessor has method based on the quantity of method (as provided for in the not designated and will not designate, merchandise or drawback products used to manufacture the exported or definition of relative value in § 190.2). nor enable any other person to (2) If claim for waste is waived. If destroyed article, reduced by an amount designate, such merchandise or product claim for waste is waived, only the equal to the quantity of this as the basis for drawback. ‘‘appearing in’’ basis may be used (see (iii) Value of transferred property. In merchandise that the value of the waste paragraph (a)(4) of this section). Waste instances in which assets and other would replace. This method must be records need not be kept unless required business interests of a division, plant, or used when multiple products also to establish the quantity of imported other business unit of a predecessor are necessarily and concurrently result from duty-paid merchandise or drawback transferred, the predecessor or successor the manufacturing process, and there is products appearing in the exported or must specify, and maintain supporting valuable waste. destroyed articles claimed for drawback. records to establish, the value of the (3) Relative value. Drawback is also drawback rights and the value of all allowable under this method when two § 190.24 Transfer of merchandise. other transferred property. or more products result from Evidence of any transfers of (iv) Review by CBP. The written manufacturing or production. The merchandise (see § 190.10) must be agreement, merger, or corporate relative value method must be used evidenced by records, as defined in resolution, provided for in paragraph when multiple products also necessarily § 190.2. (d)(2) of this section, and the records and concurrently result from the and evidence provided for in paragraph manufacturing process, and drawback § 190.25 Destruction under CBP (d)(3)(i) through (iii) of this section, must be distributed among the products supervision. must be retained by the appropriate in accordance with their relative values A claimant may destroy merchandise party(s) for 3 years from the date of (as defined in § 190.2) at the time of and obtain drawback by complying with liquidation of the related claim and are separation. the procedures set forth in § 190.71 subject to review by CBP upon request. (4) Appearing in. Drawback is relating to destruction. (e) Multiple products—(1) General. allowable under this method based only Where two or more products are on the amount of imported or § 190.26 Recordkeeping. produced concurrently in a substitution substituted merchandise that appears in (a) Direct identification. (1) Records manufacturing operation, drawback will (is contained in) the exported articles. required. Each manufacturer or be distributed to each product in The appearing in method may not be producer under 19 U.S.C. 1313(a) must accordance with its relative value (see used if there are multiple products also keep records to allow the verifying CBP § 190.2) at the time of separation. necessarily and concurrently resulting official to trace all articles manufactured (2) Claims covering a manufacturing from the manufacturing process. or produced for exportation or period. Where the claim covers a (b) Abstract or schedule. A drawback destruction with drawback, from manufacturing period rather than a claimant may use either the abstract or importation, through manufacture or manufacturing lot, the entire period schedule method to show the quantity production, to exportation or covered by the claim is the time of of material used or appearing in the destruction. To this end, these records separation of the products and the value exported or destroyed article. An must specifically establish: per unit of product is the market value abstract is the summary of records (i) The date or inclusive dates of for the period (as provided for in the which shows the total quantity used in manufacture or production;
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(ii) The quantity, identity, and 8-digit § 190.2, that was contained in imported titanium is available to be designated as HTSUS subheading number(s) of the material and a substitution drawback the basis for drawback. As the per unit imported duty-paid merchandise or claim is made based on that chemical duty paid on the synthetic rutile is drawback products used in or appearing element: calculated by dividing the duty paid in (see § 190.23) the articles (i) The duty paid on the imported ($600) by the amount of imported manufactured or produced; material must be apportioned among its synthetic rutile (30,000 pounds), the per (iii) The quantity, if any, of the non- constituent components. The claim on unit duty is two cents of duty per pound drawback merchandise used, when the chemical element that is the of the imported synthetic rutile ($600 ÷ these records are necessary to determine designated merchandise must be limited 30,000 = $0.02). The duty on the the quantity of imported duty-paid to the duty apportioned to that element titanium is calculated by multiplying merchandise or drawback product used on a unit-for-unit attribution using the the amount of titanium contained in the in the manufacture or production of the unit of measure set forth in the HTSUS imported synthetic rutile by two cents exported or destroyed articles or that is applicable to the imported of duty per pound (16,486.7 × $0.02 = appearing in them; material. If the material is a compound $329.73 duty apportioned to the (iv) The quantity and description of with other constituents, including titanium). The product is then the articles manufactured or produced; impurities, and the purity of the multiplied by 99% to determine the (v) The quantity of waste incurred, if compound in the imported material is maximum amount of drawback applicable; and shown by satisfactory analysis, that available ($329.73 × .99 = $326.44). If an (vi) That the articles on which purity, converted to a decimal exported titanium alloy ingot weighs drawback is claimed were exported or equivalent of the percentage, is 17,000 pounds, in which 16,000 pounds destroyed within 5 years after the multiplied against the entered amount of titanium was used to make the ingot, importation of the duty-paid of the material to establish the amount drawback is determined by multiplying merchandise, without having been used of pure compound. The amount of the the duty per pound ($0.02) by the in the United States prior to such element in the pure compound is to be weight of the titanium contained in the exportation or destruction. (If the determined by use of the atomic weights ingot (16,000 pounds) to calculate the articles were commingled after of the constituent elements and duty available for drawback ($0.02 × manufacture or production, their converting to the decimal equivalent of 16,000 = $320.00). Because only 99% of identity may be maintained in the their respective percentages and the duty can be claimed, drawback is manner prescribed in § 190.14.) multiplying that decimal equivalent determined by multiplying this (2) Accounting. The merchandise and against the above-determined amount of available duty amount by 99% (.99 × articles to be exported or destroyed will pure compound. $320.00 = $316.80). As the oxygen be accounted for in a manner which will (ii) The amount claimed as drawback content of the titanium dioxide is 45% enable the manufacturer, producer, or based on the sought chemical element of the synthetic rutile, if oxygen is the claimant: must be deducted from the duty paid on designated merchandise on another (i) To determine, and the CBP official the imported material that may be drawback claim, 45% of the duty to verify, the applicable import entry claimed on any other drawback claim. claimed on the synthetic rutile would be and any transfers of the merchandise Example to paragraph (b)(4): available for drawback based on the associated with the claim; and Synthetic rutile that is shown by substitution of oxygen. (ii) To identify with respect to that appropriate analysis in the entry papers (c) Valuable waste records. When import entry, and any transfers of the to be 91.7% pure titanium dioxide is waste has a value and the manufacturer, merchandise, the imported merchandise imported and dutiable at a 5% ad producer, or claimant, has not limited or drawback products used in valorem duty rate. The amount of the claims based on the quantity of manufacture or production. imported synthetic rutile is 30,000 imported or substituted merchandise (b) Substitution. The records of the pounds with an entered value of appearing in the articles exported or manufacturer or producer of articles $12,000. The total duty paid is $600. destroyed, the manufacturer or producer manufactured or produced in Titanium in the synthetic rutile is must keep records to show the market accordance with 19 U.S.C. 1313(b) must designated as the basis for a drawback value of the merchandise used to establish the facts in paragraph (a)(1)(i), claim under 19 U.S.C. 1313(b). The manufacture or produce the exported or (iv) through (vi) of this section, and: amount of titanium dioxide in the destroyed article, as well as the quantity (1) The quantity, identity, and synthetic rutile is determined by and market value of the waste incurred specifications of the merchandise converting the purity percentage (as provided for in the definition of designated (imported duty-paid, or (91.7%) to its decimal equivalent (.917) relative value in § 190.2). In such drawback product); and multiplying the entered amount of records, the quantity of merchandise (2) The quantity, identity, and synthetic rutile (30,000 pounds) by that identified or designated for drawback, specifications of the substituted decimal equivalent (.917 × 30,000 = under 19 U.S.C. 1313(a) or 1313(b), merchandise before its use to 27,510 pounds of titanium dioxide respectively, must be based on the manufacture or produce (or appearing contained in the 30,000 pounds of quantity of merchandise actually used in) the exported or destroyed articles; imported synthetic rutile). The titanium, to manufacture or produce the exported (3) That, within 5 years after the date based on atomic weight, represents or destroyed articles. The waste of importation of the imported duty- 59.93% of the constituents in titanium replacement reduction will be paid merchandise, the manufacturer or dioxide. Multiplying that percentage, determined by reducing from the producer used the designated converted to its decimal equivalent, by quantity of merchandise actually used merchandise in manufacturing or the amount of titanium dioxide by the amount of merchandise which production and that during the same 5- determines the titanium content of the the value of the waste would replace. year period it manufactured or imported synthetic rutile (.5993 × (d) Purchase of manufactured or produced the exported or destroyed 27,510 pounds of titanium dioxide = produced articles for exportation. articles; and 16,486.7 pounds of titanium contained Where the claimant purchases articles (4) If the designated merchandise is a in the imported synthetic rutile). from the manufacturer or producer and sought chemical element, as defined in Therefore, up to 16,486.7 pounds of exports them, the claimant must
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maintain records to document the (3) The completed articles must be Subpart C—Unused Merchandise manufacture or production and transfer exported or destroyed under CBP Drawback of those articles (see § 190.51(a)(1)). supervision within 5 years of the date of (e) Multiple claimants—(1) General. importation of the designated § 190.31 Direct identification unused merchandise drawback. Multiple claimants may file for merchandise, or within 5 years of the drawback with respect to the same earliest date of importation associated (a) General. Section 313(j)(1) of the export (for example, if an automobile is with a drawback product. Act, as amended (19 U.S.C. 1313(j)(1)), exported, where different parts of the provides for drawback upon the (c) Drawback claims filed before automobile have been produced by exportation or destruction under CBP specific or general manufacturing different manufacturers under drawback supervision of imported merchandise conditions and the exporter waives the drawback ruling approved or upon which was paid any duty, tax, or right to claim drawback and assigns acknowledged. Drawback claims may be fee imposed under Federal law upon such right to the manufacturers under filed before the letter of notification of entry or importation, if the merchandise § 190.82). intent to operate under a general has not been used within the United (2) Procedures—(i) Submission of manufacturing drawback ruling States before such exportation or letter. Each drawback claimant must file covering the claims is acknowledged destruction. The total amount of a separate letter, as part of the claim, (§ 190.7), or before the specific drawback allowable will not exceed 99 describing the component article on the manufacturing drawback ruling percent of the amount of duties, taxes, export bill of lading to which each claim covering the claims is approved and fees paid with respect to the will relate. Each letter must show the (§ 190.8), but no drawback will be paid imported merchandise. name of the claimant and bear a until such acknowledgement or (b) Time of exportation or destruction. statement that the claim will be limited approval, as appropriate. Drawback will be allowable on imported to its respective component article. The merchandise if, before the close of the exporter must endorse the letters, as § 190.28 Person entitled to claim 5-year period beginning on the date of required, to show the respective manufacturing drawback. importation and before the drawback interests of the claimants. The exporter (or destroyer) will be claim is filed, the merchandise is (ii) Blanket waivers and assignments entitled to claim drawback, unless the exported from the United States or of drawback rights. Exporters may waive exporter (or destroyer), by means of a destroyed under CBP supervision. and assign their drawback rights for all, certification, assigns the right to claim (c) Operations performed on imported or any portion, of their exportations drawback to the manufacturer, merchandise. The performing of any with respect to a particular commodity producer, importer, or intermediate operation or combination of operations, for a given period to a drawback party. Such certification must also not amounting to manufacture or claimant. affirm that the exporter (or destroyer) production under the provisions of the (f) Retention of records. Pursuant to has not and will not itself claim manufacturing drawback law as provided for in 19 U.S.C. 1313(j)(3)(A), 19 U.S.C. 1508(c)(3), all records drawback or assign the right to claim on imported merchandise is not a use of required to be kept by the manufacturer, drawback on the particular exportation producer, or claimant with respect to that merchandise for purposes of this or destruction to any other party. The section. drawback claims, and records kept by certification provided for under this others to complement the records of the section may be a blanket certification for § 190.32 Substitution unused merchandise manufacturer, producer, or claimant a stated period. Drawback is paid to the drawback. with respect to drawback claims must be retained for 3 years after the date of claimant, who may be the manufacturer, (a) General. Section 313(j)(2) of the liquidation of the related claims (under producer, intermediate party, importer, Act, as amended (19 U.S.C. 1313(j)(2)), 19 U.S.C. 1508, the same records may be or exporter (or destroyer). provides for drawback of duties, taxes, and fees paid on imported merchandise subject to a different retention period for § 190.29 Certification of bill of materials or different purposes). based on the export or destruction formula. under CBP supervision of substituted § 190.27 Time limitations for At the time of filing a claim under 19 merchandise (as defined in § 190.2, manufacturing drawback. U.S.C. 1313(a) or (b), the claimant must pursuant to 19 U.S.C. 1313(j)(2)), before (a) Direct identification. Drawback certify the following: the close of the 5-year period beginning on the date of importation of the will be allowed on imported (a) The claimant is in possession of merchandise used to manufacture or imported merchandise and before the the applicable bill of materials or produce articles that are exported or drawback claim is filed, and before such formula for the exported or destroyed destroyed under CBP supervision exportation or destruction the article(s), which will be promptly within 5 years after importation of the substituted merchandise is not used in merchandise identified to support the provided upon request; the United States (see paragraph (e) of claim. (b) The bill of materials or formula this section) and is in the possession of (b) Substitution. Drawback will be identifies the imported and/or the party claiming drawback. allowed on the imported merchandise if substituted merchandise and the (b) Allowable refund. (1) Exportation. the following conditions are met: exported or destroyed article(s) by their In the case of an article that is exported, (1) The designated merchandise is 8-digit HTSUS subheading numbers; subject to paragraph (3) below, the total used in manufacture or production and amount of drawback allowable will not within 5 years after importation; (c) The bill of materials or formula exceed 99 percent of the lesser of: (2) Within the 5-year period described identifies the manufactured quantities (i) The amount of duties, taxes, and in paragraph (b)(1) of this section, the of the imported and/or substituted fees paid with respect to the imported merchandise; or exported or destroyed articles, or merchandise and the exported or drawback products, were manufactured destroyed article(s). (ii) The amount of duties, taxes, and or produced; and fees that would apply to the exported
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article if the exported article were (A) The imported wine and the successor must certify in an attachment imported. exported wine are a Class 1 grape wine to the drawback claim, that the (2) Destruction. In the case of an (as defined in 27 CFR 4.21(a)(1)) of the predecessor has not and will not article that is destroyed, subject to same color (i.e., red, white, or rose´); designate, nor enable any other person paragraph (3) below, the total amount of (B) The imported wine and the to designate, the imported and/or drawback allowable will not exceed 99 exported wine are table wines (as substituted merchandise as the basis for percent of the lesser of: defined in 27 CFR 4.21(a)(2)) and the drawback. (i) The amount of duties, taxes, and alcoholic content does not exceed 14 (iii) Value of transferred property. In fees paid with respect to the imported percent by volume; and instances in which assets and other merchandise (reduced by the value of (C) The price variation between the business interests of a division, plant, or materials recovered during destruction imported wine and the exported wine other business unit of a predecessor are as provided in 19 U.S.C. 1313(x)); or does not exceed 50 percent. transferred, the predecessor or successor (ii) The amount of duties, taxes, and (e) Operations performed on must specify, and maintain supporting fees that would apply to the destroyed substituted merchandise. The records to establish, the value of the article if the destroyed article had been performing of any operation or drawback rights and the value of all imported (reduced by the value of combination of operations, not other transferred property. materials recovered during destruction amounting to manufacture or (iv) Review by CBP. The written as provided in 19 U.S.C. 1313(x)). production as provided for in 19 U.S.C. agreement, merger, or corporate (3) Federal excise tax. For purposes of 1313(j)(3)(B), on the substituted resolution, provided for in paragraph drawback of internal revenue tax merchandise is not a use of that (f)(2) of this section, and the records and imposed under Chapters 32, 38, 51, and merchandise for purposes of this evidence provided for in paragraph 52 of the Internal Revenue Code of 1986, section. (f)(3)(i) through (iii) of this section, must as amended (IRC), drawback granted on (f) Designation by successor; 19 U.S.C. be retained by the appropriate party(s) the export or destruction of substituted 1313(s). (1) General rule. Upon for 3 years from the date of liquidation merchandise will be limited to the compliance with the requirements of of the related claim and are subject to amount of taxes paid (and not returned this section and under 19 U.S.C. review by CBP upon request. 1313(s), a drawback successor as by refund, credit, or drawback) on the § 190.33 Person entitled to claim unused substituted merchandise. defined in paragraph (f)(2) of this section may designate either of the merchandise drawback. (c) Determination of HTSUS (a) Direct identification. (1) Under 19 classification for substituted following as the basis for drawback on merchandise possessed by the successor U.S.C. 1313(j)(1), as amended, the merchandise. Requests for binding exporter or destroyer will be entitled to rulings on the classification of imported, after the date of succession: (i) Imported merchandise which the claim drawback. substituted, or exported merchandise predecessor, before the date of (2) The exporter or destroyer may may be submitted to CBP pursuant to succession, imported; or waive the right to claim drawback and the procedures set forth in part 177. (ii) Imported and/or substituted assign such right to the importer or any (d) Claims for wine. (1) Alternative merchandise that was transferred to the intermediate party. A drawback substitution standard. In addition to 8- predecessor from the person who claimant under 19 U.S.C. 1313(j)(1) digit HTSUS substitution standard in imported and paid duty on the imported other than the exporter or destroyer § 190.2, drawback of duties, taxes, and merchandise. must secure and retain a certification fees, paid on imported wine as defined (2) Drawback successor. A ‘‘drawback signed by the exporter or destroyer in § 190.2 may be allowable under 19 successor’’ is an entity to which another waiving the right to claim drawback, U.S.C. 1313(j)(2) with respect to wine if entity (predecessor) has transferred, by and did not and will not authorize any the imported wine and the exported written agreement, merger, or corporate other party to claim the exportation or wine are of the same color and the price resolution: destruction for drawback (see § 190.82 variation between the imported wine (i) All or substantially all of the rights, of this part). The certification provided and the exported wine does not exceed privileges, immunities, powers, duties, for under this section may be a blanket 50 percent. and liabilities of the predecessor; or certification for a stated period. The (2) Allowable refund. For any (ii) The assets and other business claimant must file such certification at drawback claim for wine (as defined in interests of a division, plant, or other the time of, or prior to, the filing of the § 190.2) based on subsection (j)(2), the business unit of such predecessor, claim(s) covered by the certification. total amount of drawback allowable will provided that the value of the (b) Substitution. (1) Under 19 U.S.C. be equal to 99 percent of the duties, transferred assets and interests (realty, 1313(j)(2), as amended, the following taxes, and fees paid with respect to the personalty, and intangibles, exclusive of parties may claim drawback: imported merchandise, without regard the drawback rights) exceeds the value (i) In situations where the exporter or to the limitations in paragraph (b). of such drawback rights, whether vested destroyer of the substituted (3) Required certification. When the or contingent. merchandise is also the importer of the basis for substitution for wine drawback (3) Certifications and required imported merchandise, that party will claims under 19 U.S.C. 1313(j)(2) is the evidence—(i) Records of predecessor. be entitled to claim drawback. alternative substitution standard rule set The predecessor or successor must (ii) In situations where the person forth in (d)(1), claims under this subpart certify in an attachment to the drawback who imported and paid the duty on the may be paid and liquidated if: claim that the successor is in possession imported merchandise transfers the (i) The claimant specifies on the of the predecessor’s records which are imported merchandise, substituted drawback entry that the basis for necessary to establish the right to merchandise, or any combination of substitution is the alternative drawback under the law and regulations imported and substituted merchandise substitution standard for wine; and with respect to the imported and/or to the person who exports or destroys (ii) The claimant provides a substituted merchandise. that merchandise, the exporter or certification, as part of the complete (ii) Merchandise not otherwise destroyer will be entitled to claim claim (see 190.51(a)), stating that: designated. The predecessor or drawback. (Any such transferred
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merchandise, regardless of its origin, notice must provide the bill of lading (A) Name, address, and Internal will be treated as imported merchandise number, if known, the name and Revenue Service (IRS) number (with for purposes of drawback under 19 telephone number, mailing address, suffix) of applicant; U.S.C. 1313(j)(2), and any retained and, if available, fax number and email (B) Name, address, and IRS number(s) merchandise will be treated as domestic address of a contact person, and the (with suffix(es)) of exporter(s), if merchandise.) location of the merchandise. applicant is not the exporter; (iii) In situations where the (c) Decision to examine or to waive (C) Export period covered by this transferred merchandise described in examination. Within 2 working days application; paragraph (b)(1)(ii) of this section is the after receipt of the Notice of Intent to (D) Commodity/product lines of subject of further transfer(s), such Export, Destroy, or Return Merchandise imported and exported merchandise transfer(s) must be documented by for Purposes of Drawback (see paragraph covered in this application (and the records, including records kept in the (a) of this section), CBP will notify the applicable HTSUS numbers); normal course of business, and the party designated on the Notice in (E) The origin of the above exporter or destroyer will be entitled to writing of CBP’s decision to either merchandise; claim drawback (multiple substitutions examine the merchandise to be (F) Estimated number of export are not permitted). exported, or to waive examination. If transactions covered in this application; (G) Estimated number of drawback (2) The exporter or destroyer may CBP timely notifies the designated claims and estimated time of filing those waive the right to claim drawback and party, in writing, of its decision to claims to be covered in this application; assign such right to the importer or to examine the merchandise (see (H) The port(s) of exportation; any intermediate party, provided that paragraph (d) of this section), but the (I) Estimated dollar value of potential the claimant had possession of the merchandise is exported without having drawback claims to be covered in this substituted merchandise prior to its been presented to CBP for examination, application; exportation or destruction. A drawback any drawback claim, or part thereof, (J) The relationship between the claimant under 19 U.S.C. 1313(j)(2) based on the Notice will be denied. If parties involved in the import and other than the exporter or destroyer CBP notifies the designated party, in export transactions; and must secure and retain a certification writing, of its decision to waive (K) Provision(s) of drawback covered signed by the exporter or destroyer that examination of the merchandise, or, if under the application; such party waived the right to claim timely notification of a decision by CBP (ii) Written declarations regarding: drawback, and did not and will not to examine or to waive examination has (A) The reason(s) that CBP was not authorize any other party to claim the not been received, the merchandise may notified of the intent to export; and exportation or destruction for drawback be exported without delay. (B) Whether the applicant, to the best (see § 190.82). The certification (d) Time and place of examination. If of its knowledge, will have future provided for under this section may be CBP gives timely notice of its decision exportations on which unused a blanket certification for a stated to examine the export merchandise, the merchandise drawback might be period. The claimant must file such merchandise to be examined must be claimed; and certification at the time of, or prior to, promptly presented to CBP. CBP must (iii) A certification that the following the filing of the claim(s) covered by the examine the merchandise within 5 documentary evidence will be made certification. working days after presentation of the available for CBP to review upon merchandise. The merchandise may be request: § 190.34 Transfer of merchandise. exported without examination if CBP (A) For the purpose of establishing Any transfer of merchandise (see fails to timely examine the merchandise that the imported merchandise was not § 190.10) must be recorded in records, after presentation to CBP. If the used in the United States (for purposes which may include records kept in the examination is completed at a port other of drawback under 19 U.S.C. 1313(j)(1)) normal course of business, as defined in than the port of actual exportation, the or that the exported merchandise was § 190.2. merchandise must be transported in- not used in the United States and satisfied the requirements for § 190.35 Notice of intent to export; bond to the port of exportation. examination of merchandise. (e) Extent of examination. The substitution with the imported appropriate CBP office may permit merchandise (for purposes of drawback (a) Notice. A notice of intent to export release of merchandise without under 19 U.S.C. 1313(j)(2)), and, as merchandise which may be the subject examination, or may examine, to the applicable: of an unused merchandise drawback extent determined to be necessary, the (1) Records; claim (19 U.S.C. 1313(j)) must be items exported or destroyed. (2) Any laboratory records prepared in provided to CBP to give CBP the the ordinary course of business; and/or opportunity to examine the § 190.36 Failure to file Notice of Intent to (3) Inventory records prepared in the merchandise. The claimant, or the Export, Destroy, or Return Merchandise for ordinary course of business tracing all exporter, must file at the port of Purposes of Drawback. relevant movements and storage of the intended examination a Notice of Intent (a) General; application. Merchandise imported merchandise, substituted to Export, Destroy, or Return which has been exported without merchandise, and/or exported Merchandise for Purposes of Drawback complying with the requirements of merchandise; and on CBP Form 7553 at least 2 working § 190.35(a) or § 190.91 may be eligible (B) Evidence establishing compliance days prior to the date of intended for unused merchandise drawback with all other applicable drawback exportation unless CBP approves under 19 U.S.C. 1313(j) subject to the requirements. another filing period or the claimant has following conditions: (2) One-Time Use. The procedure been granted a waiver of prior notice (1) Application. The claimant must provided for in this section may be used (see § 190.91). file a written application with the by a claimant only once, unless good (b) Required information. The notice drawback office where the drawback cause is shown (for example, must certify that the merchandise has claims will be filed. Such application successorship). not been used in the United States must include the following: (3) Claims filed pending disposition of before exportation. In addition, the (i) Required information. application. Drawback claims may be
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filed under this section pending prior to each such exportation, in drawback of internal revenue taxes for disposition of the application. However, accordance with § 190.35. unmerchantable or nonconforming those drawback claims will not be distilled spirits, wines, or beer. processed or paid until the application § 190.37 Destruction under CBP supervision. is approved by CBP. § 190.42 Procedures and supporting (b) CBP action. In order for CBP to A claimant may destroy merchandise documentation. evaluate the application under this and obtain unused merchandise (a) Time limit for exportation or section, CBP may request, and the drawback by complying with the destruction. Drawback will be denied on applicant must provide, any of the procedures set forth in § 190.71 relating merchandise that is exported or information listed in paragraph to destruction. destroyed after the statutory 5-year time (a)(1)(iii)(A)(1) through (3) of this period. § 190.38 Recordkeeping. (b) Required documentation. The section. In making its decision to (a) Maintained by claimant; by others. approve or deny the application under claimant must submit documentation to Pursuant to 19 U.S.C. 1508(c)(3), all CBP as part of the complete drawback this section, CBP will consider factors records which are necessary to be such as, but not limited to, the claim (see § 190.51) to establish that the maintained by the claimant under this merchandise did not conform to sample following: part with respect to drawback claims, (1) Information provided by the or specification, was shipped without and records kept by others to claimant in the written application; the consent of the consignee, or was (2) Any of the information listed in complement the records of the claimant, defective as of the time of importation paragraphs (a)(1)(iii)(A)(1) through (3) of which are essential to establish (see § 190.45 for additional this section and requested by CBP under compliance with the legal requirements requirements for claims made on paragraph (b); and of 19 U.S.C. 1313(j)(1) or (j)(2), as rejected retail merchandise under 19 (3) The applicant’s prior record with applicable, and this part with respect to U.S.C. 1313(c)(1)(C)(ii)). If the claimant CBP. drawback claims, must be retained for 3 was not the importer, the claimant must (c) Time for CBP action. CBP will years after liquidation of such claims also: notify the applicant in writing within 90 (under 19 U.S.C. 1508, the same records (1) Submit a statement signed by the days after receipt of the application of may be subject to a different retention importer and every other person, other its decision to approve or deny the period for different purposes). than the ultimate purchaser, that owned (b) Accounting for the merchandise. application, or of CBP’s inability to the goods, that no other claim for Merchandise subject to drawback under approve, deny or act on the application drawback was made on the goods by 19 U.S.C. 1313(j)(1) and (j)(2) must be and the reason therefor. any other person; and (d) Appeal of denial of application. If accounted for in a manner which will (2) Certify that records are available to CBP denies the application, the enable the claimant: support the statement required in (1) To determine, and CBP to verify, applicant may file a written appeal with paragraph (b)(1) of this section. the applicable import entry or transfer(s) the drawback office which issued the (c) Notice. A notice of intent to export of drawback-eligible merchandise; denial, provided that the applicant files or destroy merchandise which may be (2) To determine, and CBP to verify, this appeal within 30 days of the date the subject of a rejected merchandise the applicable exportation or of denial. If CBP denies this initial drawback claim (19 U.S.C. 1313(c)) destruction; and appeal, the applicant may file a further (3) To identify, with respect to the must be provided to CBP to give CBP written appeal with CBP Headquarters, import entry or any transfer(s) of the opportunity to examine the Office of Trade, Trade Policy and drawback-eligible merchandise, the merchandise. The claimant, or the Programs, provided that the applicant imported merchandise designated as the exporter (for destruction under CBP files this further appeal within 30 days basis for the drawback claim. supervision, see § 190.71), must file at of the denial date of the initial appeal. the port of intended redelivery to CBP CBP may extend the 30-day period for Subpart D—Rejected Merchandise custody a Notice of Intent to Export, appeal to the drawback office or to CBP Destroy, or Return Merchandise for Headquarters, for good cause, if the § 190.41 Rejected merchandise drawback. Purposes of Drawback on CBP Form applicant applies in writing for such Section 313(c) of the Act, as amended 7553 at least 5 working days prior to the extension within the appropriate 30-day (19 U.S.C. 1313(c)), provides for date of intended return to CBP custody. period above. drawback upon the exportation or Waiver of prior notice for exportations (e) Future intent to export unused destruction under CBP supervision of under 19 U.S.C. 1313(j) (see § 190.91) is merchandise. If an applicant states it imported merchandise which has been inapplicable to exportations under 19 will have future exportations on which entered, or withdrawn from warehouse, U.S.C. 1313(c). unused merchandise drawback may be for consumption, duty-paid, and which: (d) Required information. The notice claimed (see paragraph (a)(1)(ii)(B) of Does not conform to sample or must provide the bill of lading number, this section), the applicant will be specifications; has been shipped if known, the name and telephone informed of the procedures for waiver of without the consent of the consignee; or number, mailing address, and, if prior notice (see § 190.91). If the has been determined to be defective as available, fax number and email address applicant seeks waiver of prior notice of the time of importation; or ultimately of a contact person, and the location of under § 190.91, any documentation sold at retail by the importer or the the merchandise. submitted to CBP to comply with this person who received the merchandise (e) Decision to waive examination. section will be included in the request from the importer, and for any reason Within 2 working days after receipt of under § 190.91. An applicant that states returned to and accepted by the the Notice of Intent to Export, Destroy, that it will have future exportations on importer or the person who received the or Return Merchandise for Purposes of which unused merchandise drawback merchandise from the importer. The Drawback (see paragraph (c) of this may be claimed (see paragraph total amount of drawback allowable will section), CBP will notify, in writing, the (a)(1)(ii)(B) of this section) and which be 99 percent of the amount of duties party designated on the Notice of CBP’s does not obtain waiver of prior notice paid with respect to the imported, duty- decision to either examine the must notify CBP of its intent to export paid merchandise. See subpart P for merchandise to be exported or
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destroyed, or to waive examination. If § 190.44 [Reserved] authorized electronic system and must CBP timely notifies the designated include the following: § 190.45 Returned retail merchandise. party, in writing, of its decision to (i) Claimant identification number, examine the merchandise (see (a) Special rule for substitution. name, and address; paragraph (f) of this section), but the Section 313(c)(1)(C)(ii) of the Tariff Act (ii) Broker identification number, merchandise is exported or destroyed of 1930, as amended (19 U.S.C. name, and address (if applicable); without having been presented to CBP 1313(c)(1)(C)(ii)), provides for drawback (iii) Surety code, bond type, and for such examination, any drawback upon the exportation or destruction amount of bond; claim, or part thereof, based on the under CBP supervision of imported (iv) Port code for the drawback office Notice of Intent to Export, Destroy, or merchandise which has been entered, or that will review the claim; Return Merchandise for Purposes of withdrawn from warehouse, for (v) Drawback entry number and Drawback, must be denied. If CBP consumption, duty-paid and ultimately provision(s) under which drawback is notifies the designated party, in writing, sold at retail by the importer, or the claimed; (vi) Statement of eligibility for of its decision to waive examination of person who received the merchandise applicable privileges (as provided for in the merchandise, or, if timely from the importer, and for any reason returned to and accepted by the subpart I of this part); notification of a decision by CBP to (vii) Amount of refund claimed for examine or to waive examination is importer, or the person who received the merchandise from the importer. each of relevant duties, taxes, and fees absent, the merchandise may be (calculated to two decimal places); exported or destroyed without delay (b) Eligibility requirements. (1) Drawback is allowable pursuant to (viii) For each designated import and will be deemed to have been entry line item, the entry number and returned to CBP custody. compliance with all requirements set forth in this subpart; and the line item number designating the (f) Time and place of examination. If merchandise, a description of the CBP gives timely notice of its decision (2) The claimant must also show by evidence satisfactory to CBP that merchandise, a unique import tracing to examine the merchandise to be identification number(s) (ITIN) (used to exported or destroyed, the merchandise drawback may be claimed by— (i) Designating an entry of associate the imported merchandise and to be examined must be promptly any substituted merchandise with any presented to CBP. CBP must examine merchandise that was imported within 1 year before the date of exportation or intermediate products (if applicable) the merchandise within 5 working days and the drawback-eligible exported or after presentation of the merchandise. destruction of the merchandise described in paragraph (a) under CBP destroyed merchandise or finished The merchandise may be exported or article(s)), as well as the following destroyed without examination if CBP supervision. (ii) Certifying that the same 8-digit information for the merchandise fails to timely examine the merchandise designated as the basis for the drawback after presentation to CBP, and in such HTSUS subheading number and specific product identifier (such as part number, claim: The 10-digit HTSUS case the merchandise will be deemed to classification and associated duty have been returned to CBP custody. If SKU, or product code) apply to both the merchandise designated for drawback rate(s), amount of duties paid, the examination is completed at a port applicable entered value (see 19 CFR other than the port of actual exportation (in the import documentation) and the returned merchandise. 190.11(a)), quantity and unit of measure or destruction, the merchandise must be (using the unit(s) of measure required transported in-bond to the port of (c) Allowable refund. The total amount of drawback allowable will not under the HTSUS, if applicable), as well exportation or destruction. as the types, rates, and amounts of any (g) Extent of examination. The exceed 99 percent of the amount of other duties, taxes, or fees for which a appropriate CBP office may permit duties paid with respect to the imported refund is requested; release of merchandise without merchandise. (d) Denial of claims. No drawback (ix) For manufacturing claims under examination, or may examine, to the 19 U.S.C. 1313(a) or (b), the basis of the extent determined to be necessary, the will be refunded if CBP is not satisfied that the claimant has provided, upon claim (as provided for in § 190.23), the items exported or destroyed. ruling number, the factory location, the (h) Drawback claim. When filing the request, the documentation necessary to date(s) of use of the imported and/or drawback claim, the drawback claimant support the certification required in substituted merchandise in must correctly calculate the amount of paragraph (b)(2)(ii). manufacturing/processing, the 10-digit drawback due (see § 190.51(b)). The HTSUS classification for the imported procedures for restructuring a claim (see Subpart E—Completion of Drawback merchandise and/or which would have § 190.53) apply to rejected merchandise Claims been applicable to the substituted drawback if the claimant has an ongoing § 190.51 Completion of drawback claims. merchandise had it been imported, the export program which qualifies for this (a) General—(1) Complete claim. quantity and unit of measure (using the type of drawback. (i) Exportation. Claimants must Unless otherwise specified, a complete unit(s) of measure required under the provide documentary evidence of drawback claim under this part will HTSUS, if applicable) of the imported exportation (see subpart G of this part). consist of the successful electronic and/or substituted merchandise in The claimant may establish exportation transmission to CBP of the drawback manufacturing/processing, unique by mail as set out in § 190.74o. entry (as described in subparagraph (2)), manufacture tracing identification applicable Notice(s) of Intent to Export, number(s) (MTIN) (used to associate the § 190.43 Unused merchandise drawback Destroy, or Return Merchandise for manufactured merchandise, including claim. Purposes of Drawback on CBP Form any intermediate products, with the Rejected merchandise may be the 7553, applicable import entry data, and drawback-eligible exported or destroyed subject of an unused merchandise evidence of exportation or destruction finished article(s)), and a certification drawback claim under 19 U.S.C. as provided for under subpart G of this from the claimant that provides as 1313(j)(1), in accordance with subpart C part. follows: ‘‘The article(s) described above of this part, to the extent that the (2) Drawback entry. The drawback were manufactured or produced and merchandise qualifies therefor. entry is to be filed through a CBP- disposed of as stated herein in
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accordance with the drawback ruling on § 190.32(b)), and a certification from the a single line on an entry summary may file with CBP and in compliance with claimant, if applicable, that provides as not be split for purposes of claiming applicable laws and regulations.’’; follows: ‘‘The undersigned hereby drawback under both direct (x) Indicate whether the designated certifies that, for the destroyed identification and substitution claims. imported merchandise, other merchandise herein described, the value The first complete drawback claim substituted merchandise, or finished of recovered materials (including the accepted by CBP which designates article (for manufacturing claims) was value of any tax benefit or royalty merchandise on a line on an entry transferred to the drawback claimant payment) that accrues to the drawback summary establishes this designation prior to the exportation or destruction of claimant has been deducted from the for any remaining merchandise on that the eligible merchandise, and for value of the imported (or substituted) same line. For claims involving unused merchandise drawback claims merchandise designated by the transferred merchandise, please see under 19 U.S.C. 1313(j), provide a claimant, in accordance with 19 U.S.C. § 190.10(c) regarding required certification from the client that 1313(x).’’; notifications concerning whether the provides as follows: ‘‘The undersigned (xiv) For substitution unused merchandise should be eligible for hereby certifies that the merchandise merchandise drawback claims under 19 direct identification or substitution herein described is unused in the U.S.C. 1313(j)(2), a certification from the claims. United States and further certifies that claimant that provides as follows: ‘‘The (4) Limitation on line item eligibility this merchandise was not subjected to undersigned hereby certifies that the for imported merchandise. Claimants any process of manufacture or other substituted merchandise is unused in are prohibited from filing substitution operation except the allowable the United States and that the drawback claims under part 190 for operations as provided for by substituted merchandise was in our imported merchandise associated with a regulation.’’; possession prior to exportation or line item on an entry summary if any (xi) Indicate whether the eligible destruction.’’; other merchandise covered on that entry merchandise was exported or destroyed (xv) For NAFTA drawback claims summary has been designated as the and provide the applicable 10-digit provided for in subpart E of part 181, basis of a claim under part 191. HTSUS or Department of Commerce the foreign entry number and date of (b) Drawback due—(1) Claimant Schedule B classification, quantity, and entry, the HTSUS classification for the required to calculate drawback. unit of measure (the unit of measure foreign entry, the amount of duties paid Drawback claimants are required to specified must be the same as that for the foreign entry and the applicable correctly calculate the amount of which was required under the HTSUS exchange rate, and, if applicable, a drawback due. The amount of drawback for the designated imported certification from the claimant that requested on the drawback entry is merchandise) and, for claims under 19 provides as follows: ‘‘Same condition to generally to be 99 percent of the duties, U.S.C. 1313(c), specify the basis as one NAFTA countries—The undersigned taxes, and fees eligible for drawback. of the following: certifies that the merchandise herein (For example, if $1,000 in import duties (A) Merchandise does not conform to described is in the same condition as are eligible for drawback less 1 percent sample or specifications; when it was imported under the above ($10), the amount claimed on the (B) Merchandise was defective at time import entry(s) and further certifies that drawback entry should be for $990.) of importation; this merchandise was not subjected to Claims exceeding 99 percent (or 100% (C) Merchandise was shipped without any process of manufacture or other when 100% of the duty is available for consent of the consignee; or operation except the allowable drawback) will not be paid until the (D) Merchandise sold at retail and operations as provided for by calculations have been corrected by the returned to the importer or the person regulation.’’; and claimant. Claims for less than 99 who received the merchandise from the (xvi) All certifications required in this percent (or 100% when 100% of the importer; part and as otherwise deemed necessary duty is available for drawback) will be (xii) For eligible merchandise that was by CBP to establish compliance with the paid as filed, unless the claimant exported, the unique export identifier applicable laws and regulations, as well amends the claim in accordance with (the number used to associate the export as the following declaration: ‘‘The § 190.52(c). The amount of duties, taxes, transaction with the appropriate undersigned acknowledges statutory and fees eligible for drawback is documentary evidence of exportation), requirements that all records supporting determined by whether a claim is based bill of lading number, export the information on this document are to upon direct identification or destination, name of exporter, the be retained by the issuing party for a substitution, as provided for below: applicable comparative value pursuant period of 3 years from the date of (i) Direct identification. The amounts to 19 CFR 190.11(b) (see liquidation of the drawback claim. All eligible for drawback for a unit of § 190.22(a)(1)(ii), § 190.22(a)(2)(ii), or required documentation that must be merchandise consists of those duties, § 190.32(b)) for substitution claims, and uploaded in accordance with 19 CFR taxes, and fees that were paid for that a certification from the claimant that 190.51 will be provided to CBP within unit of the designated imported provides as follows: ‘‘I declare, to the 24 hours of the filing of the drawback merchandise. This may be the amount best of my knowledge and belief, that all claim. The undersigned acknowledges of duties, taxes, and fees actually of the statements in this document are that a false certification of the foregoing tendered on that unit or those correct and that the exported article is renders the drawback claim incomplete attributable to that unit, if identified not to be relanded in the United States and subject to denial. The undersigned pursuant to an approved accounting or any of its possessions without paying is fully aware of the sanctions provided method (see 19 CFR 190.14). duty.’’; in 18 U.S.C. 1001, and 18 U.S.C. 550, (ii) Substitution. The amount of (xiii) For eligible merchandise that and 19 U.S.C. 1593a.’’ duties, taxes, and fees eligible for was destroyed, the name of the (3) Election of line item designation drawback pursuant to 19 U.S.C. 1313(b) destroyer and, if substituted, the for imported merchandise. Merchandise or 19 U.S.C. 1313(j)(2) is determined by applicable comparative value pursuant on a specific line on an entry summary per unit averaging, as defined in 19 CFR to 19 CFR 190.11(c) (see may be designated for either direct 190.2. The amount that may be refunded § 190.22(a)(1)(ii), § 190.22(a)(2)(ii), or identification or substitution claims but is also subject to the limitations set forth
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in 19 CFR 190.22(a)(1)(ii) cap of $485 is assumed; see 19 CFR (ii) Line item 2—15,000 articles (manufacturing claims) and 19 CFR 24.23 for the current amount valued at $100 each (total value 190.32(b) (unused merchandise claims), consistent with 19 U.S.C. $1,500,000) as applicable. 58c(a)(9)(B)(i)) (iii) Line item 3—10,000 duty-free (2) Merchandise processing fee (i) Line item relative value ratios. The articles valued at $50 each (total value apportionment calculation. Where a relative value ratio for line item 1 is $500,000) drawback claimant requests a refund of calculated by dividing the value of that (iv) The relative value ratios are a merchandise processing fee paid line item by the total value ($50,000 ÷ calculated using line items 2 and 3 only, pursuant to 19 U.S.C. 58c(a)(9)(A), the 340,000 = .1471). The relative value as there is no merchandise processing claimant is required to correctly ratio for line item 2 is .2647. The fee imposed by reason of importation on apportion the fee to that imported line item 1. relative value ratio for line item 3 is ÷ merchandise for which drawback is .5882. (2)(i) Line item 2—1,500,000 claimed when calculating the amount of (ii) Merchandise processing fee 2,000,000 = .75 (line items 2 and 3 form drawback requested on the drawback apportioned to each line item. The the total value of the merchandise entry. This is determined as follows: amount of fee attributable to each line subject to the merchandise processing (i) Relative value ratio for each line item is calculated by multiplying $485 fee). (ii) Line item 3—500,000 ÷ 2,000,000 item. The value of each line item of by the applicable relative value ratio. = .25. entered merchandise subject to a The amount of the $485 fee attributable merchandise processing fee is × (iii) If the total merchandise to line item 1 is $71.3435 (.1471 $485 processing fee paid was $485, the calculated (to four decimal places) by = $71.3435). The amount of the fee dividing the value of the line item amount of the fee attributable to line attributable to line item 2 is $128.3795 item 2 is $363.75 (.75 × $485 = $363.75). subject to the fee by the total value of (.2647 × $485 = $128.3795). The amount entered merchandise subject to the fee. The amount of the fee attributable to of the fee attributable to line item 3 is line item 3 is $121.25 (.25 × $485 = The result is the relative value ratio. $285.2770 (.5882 × $485 = $285.2770). (ii) Merchandise processing fee $121.25). (iii) Amount of merchandise (iv) The amount of merchandise apportioned to each line item. To processing fee eligible for drawback per apportion the merchandise processing processing fee eligible for drawback for line item. The amount of merchandise line item 2 is $360.1125 (.99 × $363.75). fee to each line item, the relative value processing fee eligible for drawback for ratio for each line item is multiplied by × The amount of fee eligible for line item line item 1 is $70.6301 (.99 $71.3435). 3 is $120.0375 (.99 × $121.25). the merchandise processing fee paid. The amount of fee eligible for drawback (iii) Amount of merchandise (v) The amount of drawback on the for line item 2 is $127.0957 (.99 × processing fee eligible for drawback per merchandise processing fee attributable $128.3795). The amount of fee eligible line item. The amount of merchandise to each unit of line item 2 is $.0240 for drawback for line item 3 is processing fee apportioned to each line ($360.1125 ÷ 15,000 = $.0240). The $282.4242 (.99 × $285.2770). item is multiplied by 99 percent to amount of drawback on the (iv) Amount of merchandise calculate that portion of the fee merchandise processing fee attributable processing fee eligible for drawback per attributable to each line item that is to each unit of line item 3 is $.0120 unit of merchandise. The amount of eligible for drawback. ($120.0375 ÷ 10,000 = $.0120). (iv) Amount of merchandise merchandise processing fee eligible for (vi) If 1,000 units of line item 2 were processing fee eligible for drawback per drawback per unit of merchandise is exported, the drawback attributable to unit of merchandise. To calculate the calculated by dividing the amount of fee the merchandise processing fee is amount of a merchandise processing fee eligible for drawback for the line item $24.00 ($.0240 × 1,000 = $24.00). eligible for drawback per unit of by the number of units in the line item. (3) Calculations for all other duties, merchandise, the line item amount that For line item 1, the amount of taxes, and fees. merchandise processing fee eligible for (i) General. Where a drawback is eligible for drawback is divided by ÷ the number of units covered by that line drawback per unit is $.0141 ($70.6301 claimant requests a refund of any other item (to two decimal places). 5,000 = $.0141). If 1,000 widgets form duties, taxes, and fees allowable in (v) Limitation on amount of the basis of a claim for drawback under accordance with § 190.3, the claimant is merchandise processing fee eligible for 19 U.S.C. 1313(j), the total amount of required to accurately calculate drawback for substitution claims. The drawback attributable to the (including apportionment using per unit merchandise processing fee is $14.10 averaging or inventory management amount of a merchandise processing fee × eligible for drawback per unit of (1,000 .0141 = $14.10). For line item methods, as appropriate) the duties, merchandise for drawback claims based 2, the amount of fee eligible for taxes, and fees attributable to the drawback per unit is $.0212 ($127.0957 designated imported merchandise for upon substitution is subject to the ÷ limitations set forth in §§ 190.22(a)(1)(ii) 6,000 = $.0212). For line item 3, the which drawback is being claimed when amount of fee eligible for drawback per calculating the amount of drawback (manufacturing claims) and 190.32(b) ÷ (unused merchandise claims), as unit is $.0282 ($282.4242 10,000 = requested on the drawback entry applicable. $.0282). (generally 99% of the duties, taxes, and (vi)(A) Example 1: (B) Example 2. This example fees paid on the imported merchandise). (1) Line item 1—5,000 articles valued at illustrates the treatment of dutiable (ii) Examples. As illustrated in the $10 each total $50,000 merchandise that is exempt from the examples in this paragraph, in the case (2) Line item 2—6,000 articles valued at merchandise processing fee and duty- of customs duties, the type of $15 each total $90,000 free merchandise that is subject to the calculation required to determine the (3) Line item 3—10,000 articles valued merchandise processing fee. amount of duties available for refund at $20 each total $200,000 (1)(i) Line item 1—700 meters of (generally 99% of the duties paid on the (4) Total units = 21,000 printed cloth valued at $10 per meter imported merchandise) will vary (5) Total value = $340,000 (total value $7,000) that is exempt from depending on whether the duty (6) Merchandise processing fee = $485 the merchandise processing fee under involved is ad valorem, specific, or (for purposes of this example, the fee 19 U.S.C. 58c(b)(8)(B)(iii) compound.
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(1) Example 1: Ad valorem duty rate. (A) if the substituted merchandise the drawback claim was imported and Apportionment of the duties paid (and was imported, the HTSUS classification in compliance with all other applicable available for refund) will be based on applicable at the time of entry (e.g., as deadlines under this part. the application of the duty rates to the required to be reported on the (i) Official date of filing. The official per unit values of the imported applicable entry summary(s) and other date of filing is the date upon which merchandise. The per unit values are entry documentation); or, CBP receives a complete claim, as based on the invoice values unless the (B) if the substituted merchandise was provided in paragraph (a) of this method of refund calculation is per unit not imported, the HTSUS classification section, via transmission through a CBP- averaging, which would require equal that would have been reported to CBP authorized system, including the apportionment of the duties paid over for the applicable entry summary(s) and uploading of all required supporting the quantity of imported merchandise other entry documentation, for the documentation. covered by the line item upon which the domestically produced substituted (ii) Abandonment. Claims not imported merchandise was reported on merchandise, at the time of entry of the completed within the 5-year period after the import entry summary. As a result, designated imported merchandise. the date on which the merchandise the amount of duties available for (iii) Exported merchandise or articles. designated as the basis for the drawback refund will vary depending on the For exported merchandise or articles, claim was imported will be considered method used to calculate refunds. the HTSUS classification or Schedule B abandoned. Except as provided in (2) Example 2: Specific duty rate. No commodity number(s) must be from the paragraph (e)(2) of this section, no Electronic Export Information (EEI), apportionment of the duties paid is extension will be granted unless it is when required. If no EEI is required required to determine the amount established that CBP was responsible for (see, 15 CFR part 30 subpart D for a available for refund. A fixed duty rate is the untimely filing; and applicable to each unit of the imported complete list of exemptions), then the (iii) Special timeframes. For merchandise based on quantity. This claimant must provide the Schedule B substitution claims, the exportation or fixed rate will not vary based on the per commodity number(s) or HTSUS destruction of merchandise shall not unit values of the imported merchandise number(s) that the exporter would have have preceded the date of importation of and, as a result, there is no impact on set forth on the EEI when the the designated imported merchandise, the amount of duties available for exportation took place, but for the and/or the exportation or destruction of refunds (regardless of whether the exemption from the requirement for an merchandise shall not otherwise be refunds are calculated based on invoice EEI. outside of the timeframes specified in values or per unit averaging). (iv) Destroyed merchandise or (3) Example 3: Compound duty rate. articles. For destroyed merchandise or 19 U.S.C. 1313(c)(2)(C) and 19 U.S.C. A compound duty rate is a combination articles, the HTSUS classification or 1313(p)(2), if applicable. of an ad valorem duty rate and a specific Schedule B commodity number(s) must (2) Major disaster. The 5-year period duty rate, with both rates applied to the be reported, subject to the following: for filing a complete drawback claim same imported merchandise. As a (A) if the HTSUS classification is provided for in paragraph (e)(1) of this result, a combination of the calculations reported, then it must be the HTSUS section may be extended for a period discussed in paragraphs (a) and (b) of classification that would have been not to exceed 18 months if: this section will apply when calculating applicable to the destroyed merchandise (i) The claimant establishes to the the amount of duties paid that are or articles if they had been entered for satisfaction of CBP that the claimant available for refund. consumption at the time of destruction; was unable to file the drawback claim (b) Limitation. The amount of duties, or because of an event declared by the taxes, and fees eligible for drawback per (B) if the Schedule B commodity President to be a major disaster, within unit of merchandise for drawback number is reported, then it must be the the meaning given to that term in 42 claims based upon substituted Schedule B commodity number that U.S.C. 5122(2), on or after January 1, merchandise is subject to the limitations would have been reported for the 1994; and set forth in 19 CFR 190.22(a)(1)(ii) destroyed merchandise or articles if the (ii) The claimant files a request for (manufacturing claims) and 19 CFR EEI had been required for an exportation such extension with CBP no later than 190.32(b) (unused merchandise claims), at the time of destruction. 1 year from the last day of the 5-year as applicable. (2) Changes to classification. If the 10- period referred to in paragraph (e)(1) of (c) HTSUS classification or Schedule digit HTSUS classification or the this section. B commodity number(s)—(1) General. Schedule B commodity number(s) (3) Record retention. If an extension is Drawback claimants are required to reported to CBP for the drawback claim granted with respect to a request filed provide, on all drawback claims they are determined to be incorrect or under paragraph (e)(2)(ii) of this section, submit, the 10-digit HTSUS otherwise in controversy after the filing the periods of time for retaining records classification or the Schedule B of the drawback entry, then the claimant under 19 U.S.C. 1508(c)(3) will be commodity number(s), for the following: must notify the drawback office where extended for an additional 18 months. (i) Designated imported merchandise. the drawback claim was filed of the For imported merchandise designated correct HTSUS classification or § 190.52 Rejecting, perfecting or amending on drawback claims, the HTSUS Schedule B commodity number or the claims. classification applicable at the time of nature of the controversy before the (a) Rejecting the claim. Upon review entry (e.g., as required to be reported on liquidation of the drawback entry. of a drawback claim, if the claim is the applicable entry summary(s) and (d) Method of filing. All drawback determined to be incomplete (see other entry documentation). claims must be submitted through a § 190.51(a)(1)) or untimely (see (ii) Substituted merchandise on CBP-authorized system. § 190.51(e)), the claim will be rejected manufacturing claims. For merchandise (e) Time of filing—(1) General. A and CBP will notify the filer. The filer substituted on manufacturing drawback complete drawback claim is timely filed will then have the opportunity to claims, the HTSUS classification if it is successfully transmitted not later complete the claim subject to the numbers provided must be the same as than 5 years after the date on which the requirement for filing a complete claim either— merchandise designated as the basis for within 5 years of the date of importation
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of the merchandise designated as the (2) The value of the claims; Specific manufacturing drawback basis for the drawback claim. (3) The frequency of claims; ruling; action by CBP. If verification of (b) Perfecting the claim; additional (4) The product or products being a drawback claim filed under a specific evidence required. If CBP determines claimed; and manufacturing drawback ruling (see that the claim is complete according to (5) For 19 U.S.C. 1313(a) and 1313(b) § 190.8) reveals errors or deficiencies in the requirements of § 190.51(a)(1), but claims, the provisions, as applicable, of the drawback ruling or application that additional evidence or information the general manufacturing drawback therefor, the verifying CBP official will is required, CBP will notify the filer. ruling or the specific manufacturing promptly inform CBP Headquarters The claimant must furnish, or have the drawback ruling. (Attention: Entry Process and Duty appropriate party furnish, the evidence (b) Exemption from restructuring; Refunds Branch, Regulations and or information requested within 30 days criteria. In order to be exempt from a Rulings, Office of Trade). of the date of notification by CBP. CBP restructuring, a claimant must (2) General manufacturing drawback may extend this 30-day period if the demonstrate an inability or ruling. If verification of a drawback claimant files a written request for such impracticability in restructuring its claim filed under a general extension within the 30-day period and claims as required by CBP and must manufacturing drawback ruling (see provides good cause. The evidence or provide a mutually acceptable § 190.7) reveals errors or deficiencies in information required under this alternative. Criteria used in such a general manufacturing drawback paragraph may be filed more than 5 determination will include a ruling, the letter of notification of intent years after the date of importation of the demonstration by the claimant of one or to operate under the general merchandise designated as the basis for more of the following: manufacturing drawback ruling, or the (1) Complexities caused by multiple the drawback claim. Such additional acknowledgment of the letter of commodities or the applicable general evidence or information may include, notification of intent, the verifying CBP manufacturing drawback ruling or the but is not limited to: official will promptly inform CBP (1) Records or other documentary specific manufacturing drawback ruling; (2) Variable and conflicting Headquarters (Attention: Entry Process evidence of exportation, as provided for manufacturing and inventory periods and Duty Refunds Branch, Regulations in § 190.72, which shows that the (for example, financial, accounting and and Rulings, Office of Trade). articles were shipped by the person (3) Action by CBP Headquarters. CBP manufacturing records maintained are filing the drawback entry, or a letter of significantly different); Headquarters will review the stated endorsement from exporter which must (3) Complexities caused by multiple errors or deficiencies and take be attached to such bill of lading, manufacturing locations; appropriate action (see 19 U.S.C. 1625; showing that the party filing the entry (4) Complexities caused by difficulty 19 CFR part 177). is authorized to claim drawback and in adjusting accounting and inventory § 190.62 Penalties. receive payment (the claimant must records (for example, records (a) Criminal penalty. Any person who have on file and make available to CBP maintained—financial or accounting— knowingly and willfully files any false upon request, the endorsement from the are significantly different); and/or exporter assigning the right to claim (5) Complexities caused by or fraudulent entry or claim for the drawback); significantly different methods of payment of drawback upon the (2) A copy of the import entry and operation. exportation or destruction of invoice annotated for the merchandise merchandise or knowingly or willfully identified or designated; Subpart F—Verification of Claims makes or files any false document for (3) A copy of the export invoice the purpose of securing the payment to annotated to indicate the items on § 190.61 Verification of drawback claims. himself or others of any drawback on which drawback is being claimed; and (a) Authority. All claims are subject to the exportation or destruction of (4) Records documenting the transfer verification by CBP. merchandise greater than that legally of the merchandise including records (b) Method. CBP personnel will verify due, will be subject to the criminal kept in the normal course of business compliance with the law and this part, provisions of 18 U.S.C. 550, 1001, or upon which the claim is based (see the accuracy of the related general any other appropriate criminal § 190.10). manufacturing drawback ruling or sanctions. (c) Amending the claim; supplemental specific manufacturing drawback ruling (b) Civil penalty. Any person who filing. Amendments to claims for which (as applicable), and the selected seeks, induces or affects the payment of the drawback entries have not been drawback claims. Verification may drawback, by fraud or negligence, or liquidated must be made within 5 years include an examination of all records attempts to do so, is subject to civil of the date of importation of the relating to the transaction(s). penalties, as provided under 19 U.S.C. merchandise designated as the basis for (c) Liquidation. When a claim has 1593a. A fraudulent violation is subject the drawback claim. Liquidated been selected for verification, to a maximum administrative penalty of drawback entries may not be amended; liquidation will be postponed only on 3 times the total actual or potential loss however, they may be protested as the drawback entry for the claim of revenue. Repetitive negligent provided for in § 190.84 and part 174 of selected for verification. Postponement violations are subject to a maximum this chapter. will continue in effect until the penalty equal to the actual or potential verification has been completed and a loss of revenue. § 190.53 Restructuring of claims. report is issued, subject to the limitation (a) General. CBP may require in 19 CFR 159.12(f). In the event that a § 190.63 Liability for drawback claims. claimants to restructure their drawback substantial error is revealed during the (a) Liability of claimants. Any person claims in such a manner as to foster verification, CBP may postpone making a claim for drawback will be administrative efficiency. In making this liquidation of all related product line liable for the full amount of the determination, CBP will consider the claims, or, in CBP’s discretion, all drawback claimed. following factors: claims made by that claimant. (b) Liability of importers. An importer (1) The number of transactions of the (d) Errors in specific or general will be liable for any drawback claim claimant (imports and exports); manufacturing drawback rulings—(1) made by another person with respect to
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merchandise imported by the importer destruction (see § 190.51(a)). If CBP has drawback entry, and must be retained in an amount equal to the lesser of: not attended the destruction, the by the claimant and submitted as part of (1) The amount of duties, taxes, and claimant must provide the evidence that the drawback claim (see § 190.51(a)). fees that the person claimed with destruction took place in accordance respect to the imported merchandise; or with the approved CBP Form 7553, as § 190.75 Exportation by the Government. (2) The amount of duties, taxes, and provided for in paragraph (b) of this (a) Claim by U.S. Government. When fees that the importer authorized the section, as part of the completed a department, branch, agency, or other person to claim with respect to the drawback claim based on the instrumentality of the U.S. Government imported merchandise. destruction (see § 190.51(a)). exports products with the intention of (c) Joint and several liability. Persons claiming drawback, it may establish the described in paragraphs (a) and (b) will § 190.72 Proof of Exportation. exportation in the manner provided in be jointly and severally liable for the (a) Required export data. Proof of § 190.72 of this subpart (see § 190.4). amount described in paragraph (b). exportation of articles for drawback (b) Claim by supplier. When a purposes must establish fully the date supplier of merchandise to the Subpart G—Exportation and and fact of exportation and the identity Government or any of the parties Destruction of the exporter by providing the specified in § 190.82 claims drawback, following summary data as part of a § 190.71 Drawback on articles destroyed exportation must be established under under CBP supervision. complete claim (see § 190.51) (in § 190.72 of this subpart. addition to providing prior notice of (a) Procedure. At least 7 working days intent to export if applicable (see § 190.76 [Reserved] before the intended date of destruction §§ 190.35, 190.36, 190.42, and 190.91)): of merchandise or articles upon which Subpart H—Liquidation and Protest of (1) Date of export; Drawback Entries drawback is intended to be claimed, a (2) Name of exporter; Notice of Intent to Export, Destroy, or (3) Description of the goods; § 190.81 Liquidation. Return Merchandise for Purposes of (4) Quantity and unit of measure; (a) Time of liquidation. Drawback Drawback on CBP Form 7553 must be (5) Schedule B number or HTSUS filed by the claimant with the CBP port entries may be liquidated after: number; and (1) Liquidation of the designated where the destruction is to take place, (6) Country of ultimate destination. giving notification of the date and import entry or entries becomes final (b) Supporting documentary evidence. pursuant to paragraph (e); or specific location where the destruction Exportation may be established by (2) Deposit of estimated duties on the is to occur. Within 4 working days after providing the following: imported merchandise and before receipt of the CBP Form 7553, CBP will (1) Records or other documentary liquidation of the designated import advise the filer in writing of its evidence of exportation (originals or entry or entries. determination to witness or not to copies) issued by the exporting carrier, (b) Claims based on estimated duties. witness the destruction. If the filer of such as a bill of lading, air waybill, (1) Drawback may be paid upon the notice is not so notified within 4 freight waybill, Canadian Customs liquidation of a claim based on working days, the merchandise may be manifest, and/or cargo manifest; estimated duties if one or more of the destroyed without delay and will be (2) Records from a CBP-approved designated import entries have not been deemed to have been destroyed under electronic export system of the United liquidated, or the liquidation has not CBP supervision. Unless CBP States Government (§ 190.73); become final (because of a protest being determines to witness the destruction, (3) Official postal records (originals or filed) (see also § 173.4(c) of this the destruction of the articles following copies) which evidence exportation by chapter), only if the drawback claimant timely notification on CBP Form 7553 mail (§ 190.74); and any other party responsible for the will be deemed to have occurred under (4) Notice of lading for supplies on payment of liquidated import duties CBP supervision. If CBP attends the certain vessels or aircraft (§ 190.112); or destruction, CBP will certify on CBP (5) Notice of transfer for articles each files a written request for payment Form 7553. manufactured or produced in the United of each drawback claim, waiving any (b) Evidence of destruction. When States which are transferred to a foreign right to payment or refund under other CBP does not attend the destruction, the trade zone (§ 190.183). provisions of law, to the extent that the claimant must submit evidence that estimated duties on the unliquidated destruction took place in accordance § 190.73 Electronic proof of exportation. import entry are included in the with the Notice of Intent to Export, Records kept through an electronic drawback claim for which drawback on Destroy, or Return Merchandise for export system of the United States estimated duties is requested under this Purposes of Drawback on CBP Form Government may be considered as paragraph. The drawback claimant 7553. The evidence must be issued by actual proof of exportation only if CBP must, to the best of its knowledge, a disinterested third party (for example, has officially approved the use of that identify each import entry that has been a landfill operator). The type of electronic export system as proof of protested and that is included in the evidence depends on the method and compliance for drawback claims. drawback claim. A drawback entry, place of destruction, but must establish Official approval will be published as a once finally liquidated on the basis of that the merchandise was, in fact, general notice in the Customs Bulletin. estimated duties pursuant to paragraph destroyed within the meaning of (e)(2), will not be adjusted by reason of ‘‘destruction’’ in § 190.2. § 190.74 Exportation by mail. a subsequent final liquidation of the (c) Completion of drawback entry. If the merchandise on which import entry. After destruction, the claimant must drawback is to be claimed is exported (2) However, if final liquidation of the provide CBP Form 7553, certified by the by mail or parcel post, the official postal import entry discloses that the total CBP official witnessing the destruction records (original or copies) which amount of import duty is different from in accordance with paragraph (a) of this describe the mail shipment will be the total estimated duties deposited, section, to CBP as part of the completed sufficient to prove exportation. The except in those cases when drawback is drawback claim based on the postal record must be identified on the 100% of the duty, the party responsible
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for the payment of liquidated duties, as completed by the filing of the entry and exporter (or destroyer) has not and will applicable, will: other required documents, and not assign the right to claim drawback (i) Be liable for 1 percent of all exportation (or destruction) of the on the particular exportation or increased duties found to be due on that merchandise or articles has been destruction to any other party. The portion of merchandise recorded on the established, CBP will determine certification provided for in this section drawback entry; or drawback due on the basis of the may be a blanket certification for a (ii) Be entitled to a refund of 1 percent complete drawback claim, the stated period. of all excess duties found to have been applicable general manufacturing paid as estimated duties on that portion § 190.83 Person entitled to receive drawback ruling or specific payment. of the merchandise recorded on the manufacturing drawback ruling, and Drawback is paid to the claimant (see drawback entry. any other relevant evidence or § 190.82). (c) Claims based on voluntary tenders information. Notice of liquidation will or other payments of duties—(1) be given electronically as provided in § 190.84 Protests. General. Subject to the requirements in §§ 159.9 and 159.10(c)(3). Procedures to protest the denial, in paragraph (2) of this section, drawback (2) Liquidation by operation of law. (i) whole or in part, of a drawback entry may be paid upon liquidation of a claim Liquidated import entries. A drawback must be in accordance with part 174 of based on voluntary tenders of the claim that satisfies the requirements of this chapter (19 CFR part 174). unpaid amount of lawful ordinary paragraph (d) that is not liquidated customs duties or any other payment of within one year from the date of the Subpart I—Waiver of Prior Notice of lawful ordinary customs duties for an drawback claim (see § 190.51(e)(1)(i)) Intent to Export; Accelerated Payment entry, or withdrawal from warehouse, will be deemed liquidated for the of Drawback for consumption (see § 190.3(a)(1)(iii)), purpose of the drawback claim at the provided that: drawback amount asserted by the § 190.91 Waiver of prior notice of intent to export. (i) The tender or payment is claimant or claim, unless the time for specifically identified as duty on a liquidation is extended in accordance (a) General—(1) Scope. The specifically identified entry, or with § 159.12 or if liquidation is requirement in § 190.35 for prior notice withdrawal from warehouse, for suspended as required by statute or of intent to export merchandise which consumption; court order. may be the subject of an unused (ii) Liquidation of the specifically (ii) Unliquidated import entries. A merchandise drawback claim under identified entry, or withdrawal from drawback claim that satisfies the § 313(j) of the Act, as amended (19 warehouse, for consumption became requirements of paragraphs (b) or (c) of U.S.C. 1313(j)), may be waived under final prior to such tender or payment; this section will be deemed liquidated the provisions of this section. and upon the deposit of estimated duties on (2) Effective date for claimants with (iii) Liquidation of the drawback entry the unliquidated imported merchandise existing approval. For claimants approved for waiver of prior notice in which that specifically identified (see § 190.81(b)). import entry, or withdrawal from (f) Relative value; multiple products— before February 24, 2019, and under 19 warehouse, for consumption is (1) Distribution. Where two or more CFR 191, such approval of waiver of designated has not become final. products result from the manufacture or prior notice will remain in effect, but (2) Written request and waiver. production of merchandise, drawback only if the claimant provides the Drawback may be paid on claims based will be distributed to the several following certification as part of each on voluntary tenders or other payments products in accordance with their complete claim filed on or after that of duties under this subsection only if relative values at the time of separation. date, pursuant to 19 CFR the drawback claimant and any other (2) Values. The values to be used in 190.51(a)(2)(xvi): ‘‘The undersigned party responsible for the payment of the computing the distribution of drawback acknowledges the current statutory voluntary tenders or other payments of where two or more products result from requirements under 19 U.S.C. 1313 and duties each files a written request for the manufacture or production of the regulatory requirements in 19 CFR payment of each drawback claim based merchandise under drawback part 190, and hereby certifies continuing on such voluntary tenders or other conditions must be the market value (as eligibility for the waiver of prior notice payments of duties, waiving any claim provided for in the definition of relative (granted prior to February 24, 2019) in to payment or refund under other value in § 190.2), unless other values are compliance therewith.’’ This provisions of law, to the extent that the approved by CBP. certification may only be made for voluntary tenders or other payment of (g) Payment. CBP will authorize the waiver of prior notice for the specific duties under this paragraph are amount of the refund due as drawback type of drawback claim for which the included in the drawback claim for to the claimant. application was previously approved which drawback on the voluntary under 19 CFR 191, except that tenders or other payment of duties is § 190.82 Person entitled to claim applications approved under 19 U.S.C. requested under this paragraph. drawback. 1313(j)(1) will also be applicable to (d) Claims based on liquidated duties. Unless otherwise provided in this part claims for the same type of merchandise Drawback will be based on the final (see §§ 190.42(b), 190.162, 190.175(a), if made under 19 U.S.C. 1313(j)(2). liquidated duties paid that have been 190.186), the exporter (or destroyer) will (3) Limited successorship for waiver made final by operation of law (except be entitled to claim drawback, unless of prior notice. When a claimant in the case of the written request for the exporter (or destroyer), by means of (predecessor) is approved for waiver of payment of drawback on the basis of a certification, waives the right to claim prior notice under this section and all estimated duties, voluntary tender of drawback and assigns such right to the of the rights, privileges, immunities, duties, and other payments of duty, and manufacturer, producer, importer, or powers, duties and liabilities of the waiver, provided for in paragraphs (b) intermediate party (in the case of claimant are transferred by written and (c) of this section). drawback under 19 U.S.C. 1313(j)(1) and agreement, merger, or corporate (e) Liquidation procedure. (1) General. (2), see § 190.33(a) and (b)). Such resolution to a successor, such approval When the drawback claim has been certification must also affirm that the of waiver of prior notice will remain in
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effect for a period of 1 year after such § 190.36, and whether such request was (i) The presence or absence of transfer. The approval of waiver of prior approved or denied; and unresolved CBP charges (duties, taxes, notice will terminate at the end of such (iii) A certification that the following or other debts owed CBP); 1-year period unless the successor documentary evidence will be made (ii) The accuracy of the claimant’s applies for waiver of prior notice under available for CBP review upon request: past drawback claims; this section. If such successor applies (A) For the purpose of establishing (iii) Whether waiver of prior notice for waiver of prior notice under this that the imported merchandise was not was previously revoked or suspended; section within such 1-year period, the used in the United States (for purposes and successor may continue to operate of drawback under 19 U.S.C. 1313(j)(1)) (iv) The presence or absence of any under the predecessor’s waiver of prior or that the exported merchandise was failure to present merchandise to CBP notice until CBP approves or denies the not used in the United States and for examination after CBP had timely successor’s application for waiver of satisfies the requirements for notified the party filing a Notice of prior notice under this section, subject substitution with the imported Intent to Export, Destroy, or Return to the provisions in this section (see, in merchandise (for purposes of drawback Merchandise for Purposes of Drawback particular, paragraphs (d) and (e) of this under 19 U.S.C. 1313(j)(2)), and, as on CBP Form 7553 of CBP’s intent to section). applicable: examine the merchandise (see § 190.35). (b) Application—(1) Who may apply. (1) Records; (2) Approval. The approval of an A claimant for unused merchandise (2) Laboratory records prepared in the application for waiver of prior notice of drawback under 19 U.S.C. 1313(j) may ordinary course of business; and/or intent to export, under this section, will (3) Inventory records prepared in the apply for a waiver of prior notice of operate prospectively, applying only to ordinary course of business tracing all intent to export merchandise under this those export shipments occurring after relevant movements and storage of the section. the date of the waiver. It will be subject (2) Contents of application. An imported merchandise, substituted to a stay, as provided in paragraph (d) applicant for a waiver of prior notice merchandise, and/or exported of this section. (3) Denial. If an application for waiver under this section must file a written merchandise; and (B) Any other evidence establishing of prior notice of intent to export, under application (which may be physically compliance with other applicable this section, is denied, the applicant delivered or delivered via email) with drawback requirements, upon CBP’s will be given written notice, specifying the drawback office where the claims request under paragraph (b)(2)(iii) of the grounds therefor, together with what will be filed. Such application must this section. corrective action may be taken, and include the following: (3) Samples of records to accompany informing the applicant that the denial (i) Required information: application. To expedite the processing (A) Name, address, and Internal may be appealed in the manner of applications under this section, the Revenue Service (IRS) number (with prescribed in paragraph (g) of this application should contain at least one suffix) of applicant; section. The applicant may not reapply (B) Name, address, and Internal sample of each of the records to be used for a waiver until the reason for the Revenue Service (IRS) number (with to establish compliance with the denial is resolved. suffix) of current exporter(s) (if more applicable requirements (that is, sample (d) Stay. An approval of waiver of than 3 exporters, such information is of import document (for example, CBP prior notice may be stayed, for a required only for the 3 most frequently Form 7501, or its electronic equivalent), specified reasonable period, should CBP used exporters), if applicant is not the sample of export document (for desire for any reason to examine the exporter; example, bill of lading), and samples of merchandise being exported with (C) Export period covered by this business, laboratory, and inventory drawback prior to its exportation for application; records certified, under paragraph purposes of verification. CBP will (D) Commodity/product lines of (b)(2)(iii)(A)(1) through (3) of this provide written notice, by registered or imported and exported merchandise section, to be available to CBP upon certified mail, of such a stay to the covered by this application; request). person for whom waiver of prior notice (E) Origin of merchandise covered by (c) Action on application—(1) CBP was approved. CBP will specify the this application; review. The drawback office will review reason(s) for the stay in such written (F) Estimated number of export and verify the information submitted on notice. The stay will take effect 2 transactions during the next calendar and with the application. CBP will working days after the date the person year covered by this application; notify the applicant in writing within 90 signs the return post office receipt for (G) Port(s) of exportation to be used days of receipt of the application of its the registered or certified mail. The stay during the next calendar year covered decision to approve or deny the will remain in effect for the period by this application; application, or of CBP’s inability to specified in the written notice, or until (H) Estimated dollar value of potential approve, deny, or act on the application such earlier date as CBP notifies the drawback during the next calendar year and the reason therefor. In order for CBP person for whom waiver of prior notice covered by this application; to evaluate the application, CBP may was approved in writing that the reason (I) The relationship between the request any of the information listed in for the stay has been satisfied. After the parties involved in the import and paragraph (b)(2)(iii)(A)(1) through (3) of stay is lifted, operation under the waiver export transactions; and this section. Based on the information of prior notice procedure may resume (J) Provision(s) of drawback covered submitted on and with the application for exports on or after the date the stay by the application. and any information so requested, and is lifted. (ii) A written declaration whether or based on the applicant’s record of (e) Proposed revocation. CBP may not the applicant has previously been transactions with CBP, the drawback propose to revoke the approval of an denied a waiver request, or had an office will approve or deny the application for waiver of prior notice of approval of a waiver revoked, by any application. The criteria to be intent to export, under this section, for other drawback office, and whether the considered in reviewing the applicant’s good cause (such as, noncompliance applicant has previously requested a 1- record with CBP include, but are not with the drawback law and/or time waiver of prior notice under limited to: regulations). CBP will give written
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notice of the proposed revocation of a this section on drawback claims under (see, in particular, paragraph (f) of this waiver of prior notice of intent to this part, unless specifically excepted section). export. The notice will specify the from such accelerated payment. (b) Application for approval; contents. reasons for CBP’s proposed action and Accelerated payment of drawback A person who wishes to apply for provide information regarding the consists of the payment of estimated accelerated payment of drawback must procedures for challenging CBP’s drawback before liquidation of the file a written application (which may be proposed revocation action as drawback entry. Accelerated payment of physically delivered or delivered via prescribed in paragraph (g) of this drawback is only available when CBP’s email) with the drawback office where section. The written notice of proposed review of the request for accelerated claims will be filed. revocation may be included with a payment of drawback does not find (1) Required information. The notice of stay of approval of waiver of omissions from, or inconsistencies with application must contain: prior notice as provided under the requirements of the drawback law (i) Company name and address; paragraph (d) of this section. The and part 190 (see, especially, subpart E (ii) Internal Revenue Service (IRS) revocation of the approval of waiver of of this part). Accelerated payment of a number (with suffix); prior notice will take effect 30 days after drawback claim does not constitute (iii) Identity (by name and title) of the the date of the proposed revocation if liquidation of the drawback entry. person in claimant’s organization who not timely challenged under paragraph (2) Effective date for claimants with will be responsible for the drawback (g) of this section. If timely challenged, existing approval. For claimants program; the revocation will take effect after approved for accelerated payment of (iv) Description of the bond coverage completion of the challenge procedures drawback before February 24, 2019, and the applicant intends to use to cover in paragraph (g) of this section unless under 19 CFR part 191, such approval accelerated payments of drawback (see the challenge is successful. of accelerated payment will remain in paragraph (d) of this section), including: (f) Action by drawback office effect, but only if the claimant provides (A) Identity of the surety to be used; controlling. Action by the drawback the following certification as part of (B) Dollar amount of bond coverage office to approve, deny, stay, or revoke each complete claim filed after that for the first year under the accelerated waiver of prior notice of intent to date, pursuant to 19 CFR payment procedure; and export, unless reversed by CBP 190.51(a)(2)(xvi): ‘‘The undersigned (C) Procedures to ensure that bond Headquarters, will govern the acknowledges the current statutory coverage remains adequate (that is, applicant’s eligibility for this procedure requirements under 19 U.S.C. 1313 and procedures to alert the applicant when in all CBP drawback offices. If the the regulatory requirements in 19 CFR and if its accelerated payment potential application for waiver of prior notice of part 190, and hereby certifies continuing liability exceeds its bond coverage); intent to export is approved, the eligibility for accelerated payment (v) Description of merchandise and/or claimant must refer to such approval in (granted prior to February 24, 2019) in articles covered by the application; the first drawback claim filed after such compliance therewith.’’ This (vi) Provision(s) of drawback covered approval in the drawback office certification may only be made for by the application; and approving waiver of prior notice and accelerated payment for the specific (vii) Estimated dollar value of must submit a copy of the approval type of drawback claim for which the potential drawback during the next 12- letter with the first drawback claim filed application was previously approved month period covered by the in any drawback office other than the under 19 CFR 191, except that application. approving office, when the export upon applications approved under 19 U.S.C. (2) Previous applications. In the which the claim is based was without 1313(j)(1) will also be applicable to application, the applicant must state prior notice, under this section. claims for the same type of merchandise whether or not the applicant has (g) Appeal of denial or challenge to if made under 19 U.S.C. 1313(j)(2). previously been denied an application proposed revocation. An appeal of a (3) Limited successorship for approval for accelerated payment of drawback, or denial of an application under this of accelerated payment. When a had an approval of such an application section, or challenge to the proposed claimant (predecessor) is approved for revoked by any drawback office. revocation of an approved application accelerated payment of drawback under (3) Certification of compliance. In or under this section, may be made by this section and all of the rights, with the application, the applicant must letter to the drawback office issuing the privileges, immunities, powers, duties also submit a certification, signed by the denial or proposed revocation and must and liabilities of the claimant are applicant, that all applicable statutory be filed within 30 days of the date of transferred by written agreement, and regulatory requirements for denial or proposed revocation. A denial merger, or corporate resolution to a drawback will be met. of an appeal or challenge made to the successor, such approval of accelerated (4) Description of claimant’s drawback office may itself be appealed payment will remain in effect for a drawback program. With the to CBP Headquarters, Office of Trade, period of 1 year after such transfer. The application, the applicant must submit Trade Policy and Programs, and must be approval of accelerated payment of a description (with sample documents) filed within 30 days of the denial date drawback will terminate at the end of of how the applicant will ensure of the initial appeal or challenge. The such 1-year period unless the successor compliance with its certification that 30-day period for appeal or challenge to applies for accelerated payment of the statutory and regulatory drawback the drawback office or to CBP drawback under this section. If such requirements will be met. This Headquarters may be extended for good successor applies for accelerated description may be in the form of a cause, upon written request by the payment of drawback under this section booklet. The detail contained in this applicant or holder for such extension within such 1-year period, the successor description should vary depending on filed with the appropriate office within may continue to operate under the the size and complexity of the the 30-day period. predecessor’s approval of accelerated applicant’s accelerated drawback payment until CBP approves or denies program (for example, if the dollar § 190.92 Accelerated payment. the successor’s application for amount is great and there are several (a) General—(1) Scope. Accelerated accelerated payment under this section, kinds of drawback involved, with payment of drawback is available under subject to the provisions in this section differing inventory, manufacturing, and
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shipping methods, greater detail in the with the application and any effect 30 days after the date of the description will be required). The information so requested, and based on proposed revocation if not timely description must include at least: the applicant’s record of transactions challenged under paragraph (h) of this (i) The name of the official in the with CBP, the drawback office will section. If timely challenged, the claimant’s organization who is approve or deny the application. The revocation will take effect after responsible for oversight of the criteria to be considered in reviewing completion of the challenge procedures claimant’s drawback program; the applicant’s record with CBP include, in paragraph (h) of this section unless (ii) The procedures and controls but are not limited to (as applicable): the challenge is successful. demonstrating compliance with the (i) The presence or absence of (g) Action by drawback office statutory and regulatory drawback unresolved CBP charges (duties, taxes, controlling. Action by the drawback requirements; fees, or other debts owed CBP); office to approve, deny, or revoke (iii) The parameters of claimant’s (ii) The accuracy of the claimant’s accelerated payment of drawback will drawback recordkeeping program, past drawback claims; and govern the applicant’s eligibility for this including the retention period and (iii) Whether accelerated payment of procedure in all CBP drawback offices. method (for example, paper, electronic, drawback or waiver of prior notice of If the application for accelerated etc.); intent to export was previously revoked payment of drawback is approved, the (iv) A list of the records that will be or suspended. claimant must refer to such approval in maintained, including at least sample (2) Notification to applicant. CBP will the first drawback claim filed after such import documents, sample export notify the applicant in writing within 90 approval in the drawback office documents, sample inventory and days of receipt of the application of its approving accelerated payment of transportation documents (if decision to approve or deny the drawback and must submit a copy of the applicable), sample laboratory or other application, or of CBP’s inability to approval letter with the first drawback documents establishing the qualification approve, deny, or act on the application claim filed in a drawback office other of merchandise or articles for and the reason therefor. than the approving office. substitution under the drawback law (if (3) Approval. The approval of an (h) Appeal of denial or challenge to applicable), and sample manufacturing application for accelerated payment, proposed revocation. An appeal of a documents (if applicable); under this section, will be effective as denial of an application under this (v) The procedures that will be used of the date of CBP’s written notification section, or challenge to the proposed to notify CBP of changes to the of approval under paragraph (e)(2) of revocation of an approved application claimant’s drawback program, variances this section. Accelerated payment of under this section, may be made in from the procedures described in this drawback will be available under this writing to the drawback office issuing application, and violations of the section to unliquidated drawback claims the denial or proposed revocation and statutory and regulatory drawback filed before and after such date. For must be filed within 30 days of the date requirements; and claims filed before such date, of denial or proposed revocation. A (vi) The procedures for an annual accelerated payment of drawback will denial of an appeal or challenge made review by the claimant to ensure that its be paid only if the claimant furnishes a to the drawback office may itself be drawback program complies with the properly executed single transaction appealed to CBP Headquarters, Office of statutory and regulatory drawback bond covering the claim, in an amount Trade, Trade Policy and Programs, and requirements and that CBP is notified of sufficient to cover the amount of must be filed within 30 days. The 30- any modifications from the procedures accelerated drawback to be paid on the day period for appeal or challenge to the described in this application. claim. drawback office or to CBP Headquarters (c) Sample application. The drawback (4) Denial. If an application for may be extended for good cause, upon office, upon request, will provide accelerated payment of drawback under written request by the applicant or applicants for accelerated payment with this section is denied, the applicant will holder for such extension filed with the a sample letter format to assist them in be given written notice, specifying the appropriate office within the 30-day preparing their submissions. grounds therefor, together with what period. (d) Bond required. If approved for corrective action may be taken, and (i) Payment. The drawback office accelerated payment, the claimant must informing the applicant that the denial approving a drawback claim in which furnish a properly executed bond in an may be appealed in the manner accelerated payment of drawback was amount sufficient to cover the estimated prescribed in paragraph (i) of this requested will certify the drawback amount of drawback to be claimed section. The applicant may not reapply claim for payment. After liquidation, the during the term of the bond. If for accelerated payment of drawback drawback office will certify the claim outstanding accelerated drawback until the reason for the denial is for payment of any amount due or claims exceed the amount of the bond, resolved. demand a refund of any excess amount the drawback office will require (f) Revocation. CBP may propose to paid. Any excess amount of duty the additional bond coverage as necessary revoke the approval of an application subject of accelerated payment that is before additional accelerated payments for accelerated payment of drawback not repaid to CBP within 30 days after are made. under this section, for good cause (such the date of liquidation of the related (e) Action on application—(1) CBP as, noncompliance with the drawback drawback entry will be considered review. The drawback office will review law and/or regulations). In case of such delinquent (see §§ 24.3a and 113.65(b) and verify the information submitted in proposed revocation, CBP will give of this chapter). and with the application. In order for written notice, by registered or certified CBP to evaluate the application, CBP mail, of the proposed revocation of the § 190.93 Combined applications. may request additional information approval of accelerated payment. The An applicant for the procedures (including additional sample notice will specify the reasons for CBP’s provided for in §§ 190.91 and 190.92 of documents) and/or explanations of any proposed action and the procedures for this subpart may apply for only one of the information provided for in challenging CBP’s proposed revocation procedure, both procedures separately, paragraph (b)(4) of this section. Based action as prescribed in paragraph (h) of or both procedures in one application on the information submitted on and this section. The revocation will take package (see also § 190.195 regarding
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combined applications for certification (c) Additional information required be filed with TTB for domestic in the drawback compliance program on the manufacturer’s application for a drawback on medicinal preparations or and waiver of prior notice and/or specific manufacturing drawback ruling. flavoring extracts, the manufacturer approval of accelerated payment of The manufacturer’s application for a must submit a statement, in duplicate, drawback). In the latter instance, the specific manufacturing drawback ruling, setting forth that fact to the Director, intent to apply for both procedures must under § 190.8, must state the quantity of National Revenue Center, TTB. be clearly stated. In all instances, all of domestic tax-paid alcohol contained in (2) Contents of the statement. The the requirements for the procedure(s) each product on which drawback is statement must show the: applied for must be met (for example, in claimed. (i) Quantity and description of the a combined application for both (d) Variance in alcohol content—(1) exported products; procedures, all of the information Variance of more than 5 percent. If the (ii) Identity of the alcohol used by required for each procedure, all required percentage of alcohol contained in an serial number of package or tank car; sample documents for each procedure, exported medicinal preparation, (iii) Name and registry number of the and all required certifications must be flavoring extract or toilet preparation distilled spirits plant from which the included in and with the application). varies by more than 5 percent from the alcohol was withdrawn; percentage of alcohol in the total (iv) Date of withdrawal; Subpart J—Internal Revenue Tax on volume of the product as stated in a Flavoring Extracts and Medicinal or previously approved application for a (v) Serial number of the applicable Toilet Preparations (Including specific manufacturing drawback ruling, record of tax determination (see 27 CFR Perfumery) Manufactured From the manufacturer must apply for a new 17.163(a) and 27 CFR 19.626(c)(7); and Domestic Tax-Paid Alcohol specific manufacturing drawback ruling (vi) Drawback office where the claim pursuant to § 190.8. If the variation will be filed. § 190.101 Drawback allowance. differs from a previously filed schedule, (3) Verification of receipt of the (a) Drawback. Section 313(d) of the the manufacturer must file a new statement. The Director, National Act, as amended (19 U.S.C. 1313(d)), schedule incorporating the change. Revenue Center, TTB, will verify receipt provides for drawback of internal (2) Variance of 5 percent or less. of this statement, and transmit a revenue tax upon the exportation of Variances of 5 percent or less of the verification of receipt of the statement flavoring extracts and medicinal or volume of the product must be reported with a copy of that document to the toilet preparations (including to the drawback office where the drawback office designated. perfumery) manufactured or produced drawback entries are liquidated. In such in the United States in part from § 190.104 Alcohol and Tobacco Tax and cases, the drawback office may allow Trade Bureau (TTB) certificates. domestic tax-paid alcohol. drawback without specific authorization (b) Shipment to Puerto Rico, the from CBP Headquarters. (a) Request. The drawback claimant or Virgin Islands, Guam, and American (e) Time period for completing claims. manufacturer must request the Director, Samoa. Drawback of internal revenue Drawback claims under this subpart National Revenue Center, TTB, to tax on articles manufactured or must be completed within 3 years after provide the CBP office where the produced under this subpart and the date of exportation of the articles drawback claim will be processed with shipped to Puerto Rico, the Virgin upon which drawback is claimed. a tax-paid certificate on TTB Form Islands, Guam, or American Samoa will (f) Filing of drawback entries on duty- 5100.4 (Certificate of Tax-Paid Alcohol). be allowed in accordance with section paid imported merchandise and tax- (b) Contents. The request must state 7653(c) of the Internal Revenue Code paid alcohol. When the drawback claim the: (26 U.S.C. 7653(c)). However, there is no covers duty-paid imported merchandise (1) Quantity of alcohol in proof authority of law for the allowance of in addition to tax-paid alcohol, the gallons; drawback of internal revenue tax on claimant must file one set of entries for (2) Serial number of each package; flavoring extracts or medicinal or toilet drawback of customs duty and another (3) Amount of tax paid on the alcohol; preparations (including perfumery) set for drawback of internal revenue tax. (4) Name, registry number, and manufactured or produced in the United (g) Description of the alcohol. The location of the distilled spirits plant; States and shipped to Wake Island, description of the alcohol that is the (5) Date of withdrawal; Midway Islands, Kingman Reef, Canton subject of the drawback entry may be (6) Name of the manufacturer using Island, Enderbury Island, Johnston obtained from the description on the the alcohol in producing the exported Island, or Palmyra Island. package containing the tax-paid alcohol. articles; § 190.102 Procedure. § 190.103 Additional requirements. (7) Address of the manufacturer and (a) General. Other provisions of this (a) Manufacturer claims domestic its manufacturing plant; and part relating to direct identification drawback. In the case of medicinal (8) Customs drawback office where drawback (see subpart B of this part) preparations and flavoring extracts, the the drawback claim will be processed. will apply to claims for drawback filed claimant must file with the drawback (c) Extract of TTB certificate. If a under this subpart insofar as applicable entry, a declaration of the manufacturer certification of any portion of the to and not inconsistent with the stating whether a claim has been or will alcohol described in the TTB Form provisions of this subpart. be filed by the manufacturer with the 5100.4 is required for liquidation of (b) Manufacturing record. The Alcohol and Tobacco Tax and Trade drawback entries processed in another manufacturer of flavoring extracts or Bureau (TTB) for domestic drawback on drawback office, the drawback office, on medicinal or toilet preparations on alcohol under §§ 5111, 5112, 5113, and written application of the person who which drawback is claimed will record 5114, Internal Revenue Code, as requested its issuance, will transmit a the products manufactured, the quantity amended (26 U.S.C. 5111, 5112, 5113, copy of the extract from the certificate of waste, if any, and a full description and 5114). for use at that drawback office. The of the alcohol. These records must be (b) Manufacturer does not claim drawback office will note that the copy available at all times for inspection by domestic drawback—(1) Submission of of the extract was prepared and CBP officers. statement. If no claim has been or will transmitted.
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§ 190.105 Liquidation. (3) A description of the articles and (i) The identity of the vessel or The drawback office will ascertain the their weight (net), gauge, measure, or aircraft; final amount of drawback due by number; and (ii) A description of the fuel supplies reference to the specific manufacturing (4) The name of the exporter. laden; (e) Declaration of Master or other drawback ruling under which the (iii) The quantity laden; and drawback claimed is allowable. officer—(1) Requirement. The master or an authorized representative of the (iv) The date of lading. § 190.106 Amount of drawback. vessel or aircraft having knowledge of (3) Declaration of owner or operator. (a) Claim filed with TTB. If the the facts must provide the following An authorized vessel or airline declaration required by § 190.103(a) of declaration on the notice of lading ‘‘I representative having knowledge of the this subpart shows that a claim has been declare that the information given above facts must complete the ‘‘Declaration of or will be filed with TTB for domestic is true and correct to the best of my Master or other officer’’(see paragraph drawback, drawback under § 313(d) of knowledge and belief; that I have (e) of this section). the Act, as amended (19 U.S.C. 1313(d)), knowledge of the facts set forth herein; (i) Desire to land articles covered by will be limited to the difference between that the articles described in this notice notice of lading. The master of the the amount of tax paid and the amount of lading were received in the quantities vessel or commander of the aircraft of domestic drawback claimed. stated, from the person, and on the date, desiring to land in the United States (b) Claim not filed with TTB. If the indicated above; that said articles were articles covered by a notice of lading declaration and statement required by laden on the vessel (or aircraft) named must apply for a permit to land those § 190.103(a) and (b) show that no claim above for use on said vessel (or aircraft) articles under CBP supervision. All has been or will be filed by the as supplies (or equipment), except as articles landed, except those transferred manufacturer with TTB for domestic noted below; and that at the time of under the original notice of lading to drawback, the drawback will be the full lading of the articles, the said vessel (or another vessel or aircraft entitled to amount of the tax on the alcohol used. aircraft) was engaged in the business or drawback, will be considered imported Drawback under this provision may not trade checked below: (It is not necessary merchandise for the purpose of § 309(c) be granted absent receipt from TTB of a for a foreign vessel to show its class of of the Act, as amended (19 U.S.C. copy of TTB Form 5100.4 (Certificate of trade.).’’ 1309(c)). Tax-Paid Alcohol) indicating that taxes (2) Filing. The drawback claimant have been paid on the exported product must file with the drawback office both Subpart L—Meats Cured With Imported for which drawback is claimed. the drawback entry and the notice of Salt (c) No deduction of 1 percent. No lading or separate document containing deduction of 1 percent may be made in the declaration of the master or other § 190.121 Drawback allowance. drawback claims under § 313(d) of the officer or representative. Section 313(f) of the Act, as amended Act, as amended (19 U.S.C. 1313(d)). (f) Information concerning class or (19 U.S.C. 1313(f)), provides for the (d) Payment. The drawback due will trade. Information about the class of allowance of drawback upon the be paid in accordance with § 190.81(f). business or trade of a vessel or aircraft exportation of meats cured with is required to be furnished in support of imported salt. Subpart K—Supplies for Certain the drawback entry if the vessel or Vessels and Aircraft aircraft is American. § 190.122 Procedure. § 190.111 Drawback allowance. (g) Articles laden or installed on Other provisions of this part relating aircraft as equipment or used in the Section 309 of the Act, as amended to direct identification manufacturing maintenance or repair of aircraft. The (19 U.S.C. 1309), provides for drawback drawback will apply to claims for drawback office where the drawback on articles laden as supplies on certain drawback under this subpart insofar as claim is filed will require a declaration vessels or aircraft of the United States or applicable to and not inconsistent with or other evidence showing to its as supplies including equipment upon, the provisions of this subpart. satisfaction that articles have been laden or used in the maintenance or repair of, or installed on aircraft as equipment or § 190.123 Refund of duties. certain foreign vessels or aircraft. used in the maintenance or repair of Drawback allowed under this subpart § 190.112 Procedure. aircraft. will be refunded in aggregate amounts (a) General. The provisions of this (h) Fuel laden on vessels or aircraft as of not less than $100 and will not be subpart will override conflicting supplies—(1) Composite notice of subject to the retention of 1 percent of provisions of this part, such as the lading. In the case of fuel laden on duties paid. export procedures in § 190.72. vessels or aircraft as supplies, the (b) Notice of lading. The drawback drawback claimant may file with the Subpart M—Materials for Construction claimant must file with the drawback drawback office a composite notice of and Equipment of Vessels and Aircraft office a notice of lading. lading for each calendar month. The Built for Foreign Account and (c) Time of filing notice of lading. In composite notice of lading must Ownership describe all of the drawback claimant’s the case of drawback in connection with § 190.131 Drawback allowance. 19 U.S.C. 1309(b), the notice of lading deliveries of fuel supplies during the must be filed within 5 years after the one calendar month at a single port or Section 313(g) of the Act, as amended date of importation of the imported airport to all vessels or airplanes of one (19 U.S.C. 1313(g)), provides for merchandise. vessel owner or operator or airline. This drawback on imported materials used in (d) Contents of notice. The notice of includes fuel laden for flights or voyages the construction and equipment of lading must show: between the contiguous United States vessels and aircraft built for foreign (1) The name of the vessel or identity and Hawaii, Alaska, or any U.S. account and ownership, or for the of the aircraft on which articles were or possessions (see § 10.59 of this chapter). government of any foreign country, are to be laden; (2) Contents of composite notice. notwithstanding that these vessels or (2) The number and kind of packages Composite notice must show for each aircraft may not be exported within the and their marks and numbers; voyage or flight: strict meaning of the term.
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§ 190.132 Procedure. engines must show that the entry covers are subsequently exported or destroyed Other provisions of this part relating jet aircraft engines processed under pursuant to statute and regulations to direct identification manufacturing § 313(h) of the Act, as amended (19 prescribed by the Secretary of the drawback will apply to claims for U.S.C. 1313(h)). Treasury; or drawback filed under this subpart (b) Contents of entry. The drawback (c) When articles entered under bond insofar as applicable to and not entry must indicate the country in are destroyed within the bonded period, inconsistent with the provisions of this which each engine was manufactured as provided in 19 U.S.C. 1557(c), or subpart. and describe the processing performed destroyed within the bonded period by thereon in the United States. death, accidental fire, or other casualty, § 190.133 Explanation of terms. and satisfactory evidence of destruction § 190.144 Refund of duties. (a) Materials. Section 313(g) of the is furnished to CBP (see § 190.71), in Act, as amended (19 U.S.C. 1313(g)), Drawback allowed under this subpart which case any accrued duties will be applies only to materials used in the will be refunded in aggregate amounts remitted or refunded and any condition original construction and equipment of of not less than $100, and will not be in the bond that the articles must be vessels and aircraft, or to materials used subject to the deduction of 1 percent of exported will be deemed satisfied (see in a ‘‘major conversion,’’ as defined in duties paid. 19 U.S.C. 1558). this section, of a vessel or aircraft. Section 313(g) does not apply to Subpart O—Merchandise Exported § 190.153 Continuous CBP custody. materials used for alteration or repair, or From Continuous CBP Custody (a) Merchandise released under an to materials not required for safe § 190.151 Drawback allowance. importer’s bond and returned. operation of the vessel or aircraft. (a) Eligibility of entered or withdrawn Merchandise released to an importer (b) Foreign account and ownership. merchandise—(1) Under 19 U.S.C. under a bond prescribed by § 142.4 of Foreign account and ownership, as used 1557(a). Section 557(a) of the Act, as this chapter and later returned to the in § 313(g) of the Act, as amended (19 amended (19 U.S.C. 1557(a)), provides public stores upon requisition of the U.S.C. 1313(g)), means only vessels or for drawback on the exportation to a appropriate CBP office will not be aircraft built or equipped for the foreign country, or the shipment to the deemed to be in the continuous custody account of an owner or owners residing Virgin Islands, American Samoa, Wake of CBP officers. in a foreign country and having a bona Island, Midway Islands, Kingman Reef, (b) Merchandise released under fide intention that the vessel or aircraft, Johnston Island, or Guam, of Chapter 98, Subchapter XIII, when completed, will be owned and merchandise upon which duties have Harmonized Tariff Schedule of the operated under the flag of a foreign been paid which has remained United States (HTSUS). Merchandise country. continuously in bonded warehouse or released as provided for in Chapter 98, (c) Major conversion. For purposes of Subchapter XIII, HTSUS (19 U.S.C. this subpart, a ‘‘major conversion’’ otherwise in CBP custody for a period not to exceed 5 years from the date of 1202), will not be deemed to be in the means a conversion that substantially continuous custody of CBP officers. changes the dimensions or carrying importation. (2) Under 19 U.S.C. 1313. Imported (c) Merchandise released from capacity of the vessel or aircraft, merchandise that has not been regularly warehouse. For the purpose of this changes the type of the vessel or aircraft, entered or withdrawn for consumption, subpart, in the case of merchandise substantially prolongs the life of the will not satisfy any requirement for use, entered for warehouse, CBP custody vessel or aircraft, or otherwise so importation, exportation or destruction, will be deemed to cease when estimated changes the vessel or aircraft that it is and will not be available for drawback, duty has been deposited and the essentially a new vessel or aircraft, as under § 313 of the Act, as amended (19 appropriate CBP office has authorized determined by CBP (see 46 U.S.C. U.S.C. 1313) (see 19 U.S.C. 1313(u)). the withdrawal of the merchandise. 2101(14a)). (b) Guantanamo Bay. Guantanamo (d) Merchandise not warehoused, examined elsewhere than in public Subpart N—Foreign-Built Jet Aircraft Bay Naval Station will be considered foreign territory for drawback purposes stores—(1) General rule. Except as Engines Processed in the United stated in paragraph (d)(2) of this section, States under this subpart and merchandise shipped there is eligible for drawback. merchandise examined elsewhere than § 190.141 Drawback allowance. Imported merchandise which has at the public stores, in accordance with Section 313(h) of the Act, as amended remained continuously in bonded the provisions of § 151.7 of this chapter, (19 U.S.C. 1313(h)), provides for warehouse or otherwise in CBP custody will be considered released from CBP drawback on the exportation of jet since importation is not entitled to custody upon completion of final aircraft engines manufactured or drawback of duty when shipped to examination for appraisement. produced abroad that have been Puerto Rico, Canton Island, Enderbury (2) Merchandise upon the wharf. overhauled, repaired, rebuilt, or Island, or Palmyra Island. Merchandise which remains on the reconditioned in the United States with wharf by permission of the appropriate § 190.152 Merchandise released from CBP CBP office will be considered to be in the use of imported merchandise, custody. including parts. CBP custody, but this custody will be No remission, refund, abatement, or deemed to cease when the CBP officer § 190.142 Procedure. drawback of duty will be allowed under in charge accepts the permit and has no Other provisions of this part will this subpart because of the exportation other duties to perform relating to the apply to claims for drawback filed or destruction of any merchandise after merchandise, such as measuring, under this subpart insofar as applicable its release from Government custody, weighing, or gauging. to and not inconsistent with the except in the following cases: § 190.154 Filing the entry. provisions of this subpart. (a) When articles are exported or destroyed on which drawback is (a) Direct export. At least 6 working § 190.143 Drawback entry. expressly provided for by law; hours before lading the merchandise on (a) Filing of entry. Drawback entries (b) When prohibited articles have which drawback is claimed under this covering these foreign-built jet aircraft been regularly entered in good faith and subpart, the importer or the agent
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designated by him or her in writing (e) Extracts of bills of lading. requires to establish that the must file a direct export drawback entry. Drawback offices may issue extracts of merchandise is unmerchantable. (b) Merchandise transported to bills of lading filed with drawback another port for exportation. The claims. § 190.164 Return to CBP custody. importer of merchandise to be There is no time limit for the return transported to another port for § 190.157 [Reserved] to CBP custody of distilled spirits, wine, exportation must file an entry naming § 190.158 Procedures. or beer subject to refund of taxes under the transporting conveyance, route, and the provisions of this subpart. The When the drawback claim has been claimant must return the merchandise port of exit. The drawback office will completed and the bill of lading filed, certify one copy and forward it to the to CBP custody prior to exportation or together with the landing certificate, if destruction and claims are subject to the CBP office at the port of exit. A bonded required, the reports of inspection and carrier must transport the merchandise filing deadline set forth in 19 U.S.C. lading made, and the clearance of the 1313(r)(1). in accordance with the applicable exporting conveyance established by the regulations. Manifests must be prepared record of clearance in the case of direct § 190.165 No exportation by mail. and filed in the manner prescribed in exportation or by certificate in the case § 144.37 of this chapter. Merchandise covered by this subpart of transportation and exportation, the must not be exported by mail. § 190.155 Merchandise withdrawn from drawback office will verify the warehouse for exportation. importation by referring to the import § 190.166 Destruction of merchandise. The regulations in part 18 of this records to ascertain the amount of duty (a) Action by the importer. A chapter concerning the supervision of paid on the merchandise exported. To drawback claimant who proposes to lading and certification of exportation of the extent appropriate and not destroy rather than export the distilled merchandise withdrawn from inconsistent with the provisions of this spirits, wine, or beer must state that fact warehouse for exportation without subpart, drawback entries will be on the drawback entry. payment of duty will be followed to the liquidated in accordance with the (b) Action by CBP. Distilled spirits, extent applicable. provisions of § 190.81. wine, or beer returned to CBP custody at the place approved by the drawback § 190.156 Bill of lading. § 190.159 Amount of drawback. office where the drawback entry was (a) Filing. In order to complete the Drawback due under this subpart will filed must be destroyed under the claim for drawback under this subpart, not be subject to the deduction of 1 supervision of the CBP officer who will a bill of lading covering the percent. certify the destruction on CBP Form merchandise described in the drawback 7553. Subpart P—Distilled Spirits, Wines, or entry must be filed within 2 years after Beer Which Are Unmerchantable or Do § 190.167 Liquidation. the merchandise is exported. (b) Contents. The bill of lading must Not Conform to Sample or No deduction of 1 percent of the either show that the merchandise was Specifications internal revenue taxes paid or shipped by the person making the claim § 190.161 Refund of taxes. determined will be made in allowing entries under § 5062(c), Internal or bear an endorsement of the person in Section 5062(c), Internal Revenue whose name the merchandise was Revenue Code, as amended (26 U.S.C. Code, as amended (26 U.S.C. 5062(c)), 5062(c)). shipped showing that the person provides for the refund, remission, making the claim is authorized to do so. abatement or credit to the importer of § 190.168 [Reserved] (c) Limitation of the bill of lading. The internal revenue taxes paid or terms of the bill of lading may limit and determined incident to importation, Subpart Q—Substitution of Finished define its use by stating that it is for upon the exportation, or destruction Petroleum Derivatives customs purposes only and not under CBP supervision, of imported § 190.171 General; drawback allowance. negotiable. distilled spirits, wines, or beer found (d) Inability to produce bill of lading. after entry to be unmerchantable or not (a) General. Section 313(p) of the Act, When a required bill of lading cannot be to conform to sample or specifications as amended (19 U.S.C. 1313(p)), produced, the person making the and which are returned to CBP custody. provides for drawback for duties, taxes, drawback entry may request the and fees paid on qualified articles (see drawback office, within the time § 190.162 Procedure. definition below) which consist of required for the filing of the bill of The export procedure will be the either petroleum derivatives that are lading, to accept a statement setting same as that provided in § 190.42 for imported, duty-paid, and qualified for forth the cause of failure to produce the rejected merchandise, except that the drawback under the unused bill of lading and such evidence of claimant must be the importer and must merchandise drawback law (19 U.S.C. exportation and of that person’s right to comply with all other provisions in this 1313(j)(1)), or petroleum derivatives that make the drawback entry as may be subpart. are manufactured or produced in the available. The request will be granted if United States, and qualified for the drawback office is satisfied by the § 190.163 Documentation. drawback under the manufacturing evidence submitted that the failure to (a) Entry. A drawback entry must be drawback law (19 U.S.C. 1313(a) or (b)). produce the bill of lading is justified, filed to claim drawback under this (b) Allowance of drawback. Drawback that the merchandise has been exported, subpart. may be granted under 19 U.S.C. 1313(p): and that the person making the (b) Documentation. The drawback (1) In cases where there is no drawback entry has the right to do so. entry for unmerchantable merchandise manufacture, upon exportation of the If the drawback office is not so satisfied, must be accompanied by a certificate of imported article, an article of the same such office will transmit the request and the importer setting forth in detail the kind and quality, or any combination its accompanying evidence to the Office facts which cause the merchandise to be thereof; or of Trade, CBP Headquarters, for final unmerchantable and any additional (2) In cases where there is a determination. evidence that the drawback office manufacture or production, upon
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exportation of the manufactured or petroleum derivatives (that is, not manufactured or produced in a specific produced article, an article of the same articles manufactured under 19 U.S.C. petroleum refinery or production kind and quality, or any combination 1313(a) or (b)), the requirements for facility which must be identified; thereof. drawback are as follows: (e) Time of export. The exported (c) Calculation of drawback. For (a) Imported duty-paid merchandise. article must be exported either: drawback of finished petroleum The imported duty-paid merchandise (1) During the period provided for in derivatives pursuant to § 1313(p), the designated for drawback must be a the manufacturer’s or producer’s claimant is required to calculate the ‘‘qualified article’’ as defined in specific manufacturing drawback ruling total amount of drawback due, for § 190.172(a) of this subpart; (see § 190.8) in which the qualified purposes of 190.51(b), which will not (b) Exported article. The exported article is manufactured or produced; or exceed 99 percent of the allowable article on which drawback is claimed (2) Within 180 days after the close of duties, taxes, and fees, subject to the must be an ‘‘exported article’’ as defined the period in which the qualified article following: in § 190.172(c) of this subpart; is manufactured or produced; and (1) Per unit averaging calculation. The (c) Exporter. The exporter of the (f) Amount of drawback. The amount amount of duties, taxes, and fees eligible exported article must have either: of drawback payable may not exceed the for drawback is determined by per unit (1) Imported the qualified article in at amount of drawback which would be averaging, as defined in 19 CFR 190.2, least the quantity of the exported article; attributable to the article manufactured for any drawback claim based on 19 or U.S.C. 1313(p) pursuant to the standards (2) Purchased or exchanged (directly or produced under 19 U.S.C. 1313(a) or set forth in 19 CFR 190.172(b) and or indirectly) from an importer an (b) which serves as the basis for without respect to the limitations set imported qualified article in at least the drawback. forth in subparagraphs (B) and (C) of 19 quantity of the exported article; § 190.175 Drawback claimant; U.S.C. 1313(l). (d) Time of export. The exported maintenance of records. article must be exported within 180 (2) Limitations. The amount of duties, (a) Drawback claimant. A drawback taxes, and fees eligible for drawback is days after the date of entry of the claimant under 19 U.S.C. 1313(p) must not subject to the limitations set out in designated imported duty-paid be the exporter of the exported article, 19 U.S.C. 1313(p)(4) for unused merchandise; and or the refiner, producer, or importer of merchandise claims (no manufacture) (e) Amount of drawback. The amount either the qualified article or the and manufacturing claims (see of drawback payable may not exceed the exported article. Any of these persons 190.173(e) and 190.174(f)). amount of drawback which would be (3) Federal excise tax. For purposes of attributable to the imported qualified may designate another person to file the drawback of internal revenue tax article under 19 U.S.C. 1313(j)(1) which drawback claim. imposed under Chapters 32 and 38 of serves as the basis for drawback. (b) Transfer of merchandise—(1) the Internal Revenue Code of 1986, as General. A drawback claimant under 19 § 190.174 Derivatives manufactured under U.S.C. 1313(p) must maintain records amended (IRC), drawback granted on 19 U.S.C. 1313(a) or (b). the export of substituted merchandise (which may be records kept in the When the exported article which is will be limited to the amount of taxes normal cause of business) to support the the basis for a drawback claim under 19 paid (and not returned by refund, credit, receipt of transferred merchandise and U.S.C. 1313(p) is petroleum derivatives or drawback) on the substituted the party transferring the merchandise which were manufactured or produced merchandise. must maintain records to demonstrate in the United States and qualify for the transfer. § 190.172 Definitions. drawback under the manufacturing (2) Article substituted for the qualified The following are definitions for drawback law (19 U.S.C. 1313(a) or (b)), article. (i) Subject to paragraph (b)(2)(iii) purposes of this subpart only: the requirements for drawback are as of this section, the manufacturer, (a) Qualified article. Qualified article follows: producer, or importer of a qualified means an article described in headings (a) Merchandise. The merchandise article may transfer to the exporter an 2707, 2708, 2710 through 2715, 2901, which is the basis for drawback under article of the same kind and quality as 2902, 2909.19.14, or 3901 through 3914 19 U.S.C. 1313(p) must: the qualified article in a quantity not of the Harmonized Tariff Schedule of (1) Have been manufactured or greater than the quantity of the qualified the United States (HTSUS). In the case produced as described in 19 U.S.C. article. 1313(a) or (b) from crude petroleum or of an article described in headings 3901 (ii) Subject to paragraph (b)(2)(iii) of through 3914, the definition covers the a petroleum derivative; and (2) Be a ‘‘qualified article’’ as defined this section, any intermediate party in article in its primary forms as provided the chain of commerce leading to the in Note 6 to chapter 39 of the HTSUS. in § 190.172(a) of this subpart; (b) Exported article. The exported exporter from the manufacturer, (b) Same kind and quality article. producer, or importer of a qualified Same kind and quality article means an article on which drawback is claimed must be an ‘‘exported article’’ as defined article may also transfer to the exporter article which is referred to under the or to another intermediate party an same 8-digit classification of the HTSUS in § 190.172(c) of this subpart; (c) Exporter. The exporter of the article of the same kind and quality as as the article to which it is compared. the article purchased or exchanged from (c) Exported article. Exported article exported article must have either: the prior transferor (whether the means an article which has been (1) Manufactured or produced the manufacturer, producer, importer, or exported and is a qualified article, an qualified article in at least the quantity another intermediate transferor) in a article of the same kind and quality as of the exported article; or quantity not greater than the quantity of the qualified article, or any combination (2) Purchased or exchanged (directly the article purchased or exchanged. thereof. or indirectly) from a manufacturer or producer described in 19 U.S.C. 1313(a) (iii) Under either paragraph (b)(2)(i) or § 190.173 Imported duty-paid derivatives or (b) the qualified article in at least the (b)(2)(ii) of this section, the article (no manufacture). quantity of the exported article; transferred, regardless of its origin When the basis for drawback under 19 (d) Manufacture in specific facility. (imported, manufactured, substituted, or U.S.C. 1313(p) is imported duty-paid The qualified article must have been any combination thereof), will be the
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qualified article eligible for drawback U.S.C. 1313(a) or (b) are filed with the substituted merchandise, and on for purposes of section 1313(p). claim; flavoring extracts or medicinal or toilet (c) Maintenance of records. The (3) The claim identifies the specific preparations (including perfumery) manufacturer, producer, importer, refinery or production facility at which manufactured or produced with the use transferor, exporter and drawback the derivatives were manufactured or of domestic tax-paid alcohol. claimant of the qualified article and the produced; (b) Notice of transfer—(1) Evidence of exported article must all maintain their (4) The claim states the period of export. The notice of zone transfer on appropriate records required by this manufacture for the derivatives; and CBP Form 214 (Application for Foreign- part. (5) The claimant provides a Trade Zone Admission and/or Status certification stating the basis (such as Designation) or its electronic equivalent § 190.176 Procedures for claims filed company records or a customer’s will be in place of the documents under under 19 U.S.C. 1313(p). written certification), for the subpart G of this part to establish the (a) Applicability. The general information contained therein and exportation. procedures for filing drawback claims certifying that: (2) Filing procedures. The notice of will be applicable to claims filed under (i) The exported merchandise was transfer (CBP Form 214) will be filed not 19 U.S.C. 1313(p) unless otherwise exported during the manufacturing later than 3 years after the transfer of the specifically provided for in this section. period for the qualified article or within articles to the zone. A notice filed after (b) Administrative efficiency, 180 days after the close of that period; the transfer will state the foreign trade frequency of claims, and restructuring of (ii) The qualified article and the zone lot number. claims. The procedures regarding exported article are commercially (3) Contents of notice. Each notice of administrative efficiency, frequency of interchangeable or both articles are transfer must show the: claims, and restructuring of claims (as classifiable under the same 8-digit (i) Number and location of the foreign applicable, see § 190.53) will apply to HTSUS subheading number; trade zone; claims filed under this subpart. (iii) To the best of the claimant’s (ii) Number and kind of packages and (c) Imported duty-paid derivatives (no knowledge, the designated imported their marks and numbers; manufacture). When the basis for merchandise, the qualified article and (iii) Description of the articles, drawback under 19 U.S.C. 1313(p) is the exported article have not and will including weight (gross and net), gauge, imported duty-paid petroleum (not not serve as the basis of any other measure, or number; and articles manufactured under 19 U.S.C. drawback claim; (iv) Name of the transferor. 1313(a) or (b)), claims under this (iv) Evidence in support of the (c) Action of foreign trade zone subpart may be paid and liquidated if: certification will be retained by the operator. After articles have been (1) The claim is filed on the drawback person providing the certification for 3 received in the zone, the zone operator entry; and years after liquidation of the claim; and must certify on a copy of the notice of (2) The claimant provides a (v) Such evidence will be available for transfer (CBP Form 214) the receipt of certification stating the basis (such as verification by CBP. the articles (see § 190.184(d)(2)) and company records, or customer’s written forward the notice to the transferor or certification), for the information Subpart R—Merchandise Transferred the person designated by the transferor. contained therein and certifying that: to a Foreign Trade Zone from Customs The transferor must verify that the (i) The exported merchandise was Territory notice has been certified before filing it exported within 180 days of entry of the § 190.181 Drawback allowance. with the drawback claim. (d) Drawback entries. Drawback designated, imported merchandise; The fourth proviso of § 3 of the (ii) The qualified article and the entries must indicate that the Foreign Trade Zones Act of June 18, exported article are commercially merchandise was transferred to a foreign 1934, as amended (19 U.S.C. 81c), interchangeable or both articles are trade zone. The ‘‘Declaration of provides that merchandise transferred to subject to the same 8-digit HTSUS Exportation’’ must be modified as a foreign trade zone for the sole purpose subheading number; follows: of exportation, storage or destruction (iii) To the best of the claimant’s (except destruction of distilled spirits, Declaration of Transfer to a Foreign knowledge, the designated imported wines, and fermented malt liquors), will Trade Zone merchandise, the qualified article and be considered to be exported for the the exported article have not and will I, llllllll (member of firm, purpose of drawback, provided there is not serve as the basis of any other officer representing corporation, agent, compliance with the regulations of this drawback claim; or attorney), of llll, declare that, to subpart. (iv) Evidence in support of the the best of my knowledge and belief, the certification will be retained by the § 190.182 Zone-restricted merchandise. particulars of transfer stated in this entry, the notices of transfer, and person providing the certification for 3 Merchandise in a foreign trade zone receipts are correct, and that the years after liquidation of the claim; and for the purposes specified in § 190.181 merchandise was transferred to a foreign (v) Such evidence will be available for will be given status as zone-restricted trade zone for the sole purpose of verification by CBP. merchandise on proper application (see exportation, destruction, or storage, not (d) Derivatives manufactured under § 146.44 of this chapter). 19 U.S.C. 1313(a) or (b). When the basis to be removed from the foreign trade for a claim for drawback under 19 § 190.183 Articles manufactured or zone for domestic consumption. U.S.C. 1313(p) is articles manufactured produced in the United States. Dated: lllllllllllllll under 19 U.S.C. 1313(a) or (b), claims (a) Procedure for filing documents. lllllllllllllllllll under this section may be paid and Except as otherwise provided, the Transferor or agent liquidated if: drawback procedures prescribed in this (1) The claim is filed on the drawback part must be followed when claiming § 190.184 Merchandise transferred from entry; drawback under this subpart on articles continuous CBP custody. (2) All documents required to be filed manufactured or produced in the United (a) Procedure for filing claims. The with a manufacturing claim under 19 States with the use of imported or procedure described in subpart O of this
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part will be followed as applicable, for damage excepted, as it was at the time (Name and title) drawback on merchandise transferred to of importation; that no allowance nor (3) Transferor’s declaration. The a foreign trade zone from continuous reduction of duties has been made for transferor must certify, with respect to CBP custody. damage or other cause except as the drawback entry, as follows: (b) Drawback entry. Before the specified in this entry; and that no part transfer of merchandise from of the duties paid has been refunded by Transferor’s Declaration continuous CBP custody to a foreign drawback or otherwise. I, llllllll of the firm of trade zone, the importer or a person Dated: lllllllllllllll lllll, declare that the designated in writing by the importer Transferor merchandise described in the within for that purpose must file with the entry was duly entered at the drawback office a direct export § 190.185 Unused merchandise drawback customhouse on arrival at this port; that drawback entry. CBP will notify the and merchandise not conforming to sample the duties thereon have been paid as zone operator at the zone. or specification, shipped without consent of specified in this entry; and that it was the consignee, found to be defective as of (c) Certification by zone operator. transferred to Foreign Trade Zone No. After the merchandise has been received the time of importation, or returned after retail sale. ll, located at llll (City and State) in the zone, the zone operator must for the sole purpose of exportation, (a) Procedure for filing claims. The certify the receipt of the merchandise destruction, or storage, not to be procedures described in subpart C of (see paragraph (d)(2) of this section) and removed from the foreign trade zone for this part relating to unused merchandise notify the transferor or the person domestic consumption. I further declare drawback, and in subpart D of this part designated by the transferor. After that to the best of my knowledge and relating to rejected merchandise, must executing the declaration provided for belief, said merchandise is the same in be followed with respect to drawback in paragraph (d)(3) of this section, the quantity, quality, value, and package as under this subpart for unused transferor must resubmit the drawback specified in this entry; that no merchandise drawback and entry to the drawback office in place of allowance nor reduction in duties has merchandise that does not conform to the bill of lading required by § 190.156. been made; and that no part of the sample or specification, is shipped (d) Modification of drawback entry— duties paid has been refunded by without consent of the consignee, or is (1) Indication of transfer. The drawback drawback or otherwise. found to be defective as of the time of entry must include a certification to Dated: lllllllllllllll indicate that the merchandise is to be importation. transferred to a foreign trade zone. (b) Drawback entry. Before transfer of Transferor (2) Endorsement. The transferor or the merchandise to a foreign trade zone, the importer or a person designated in § 190.186 Person entitled to claim person designated by the transferor and drawback. writing by the importer for that purpose the foreign trade zone operator must The person named in the foreign trade certify transfer to the foreign trade zone, must file the drawback entry. CBP will notify the zone operator at the zone. zone operator’s certification on the with respect to the drawback entry, as notice of transfer or the drawback entry, follows: (c) Certification by zone operator. After the merchandise has been received as applicable, will be considered to be Certification by Foreign Trade Zone in the zone, the zone operator at the the transferor. Drawback may be Operator zone must certify, with respect to the claimed by, and paid to, the transferor. drawback entry, the receipt of the The merchandise described in the Subpart S—Drawback Compliance merchandise and notify the transferor or entry was received from llllll Program on llll; 20ll; in Foreign Trade the person designated by the transferor. Zone No. ll, (City and State) After executing the declaration provided § 190.191 Purpose. Exceptions lllllllllllll for in paragraph (d)(3) of this section, This subpart sets forth the the transferor must resubmit the (Name and title) requirements for the drawback drawback entry in place of the bill of compliance program in which claimants By lllllllllllllllll lading required by § 190.156. and other parties in interest, including (Name of operator) (d) Modification of drawback entry— customs brokers, may participate after (3) Transferor’s declaration. The (1) Indication of transfer. The drawback being certified by CBP. Participation in transferor must declare, with respect to entry must indicate that the the program is voluntary. Under the the drawback entry, as follows: merchandise is to be transferred to a program, CBP is required to inform foreign trade zone. Transferor’s Declaration potential drawback claimants and (2) Endorsement. The transferor or related parties clearly about their rights I, llllllll of the firm of person designated by the transferor and and obligations under the drawback law llll, declare that the merchandise the foreign trade zone operator must and regulations. Reduced penalties and/ described in this entry was duly entered certify transfer to the foreign trade zone, or warning letters may be issued once a at the customhouse on arrival at this with respect to the drawback entry, as party has been certified for the program, port; that the duties thereon have been follows: and is in general compliance with the paid as specified in this entry; and that Certification by Foreign Trade Zone appropriate procedures and it was transferred to Foreign Trade Zone Operator requirements thereof. No. ll, located at llll, (City and State) for the sole purpose of The merchandise described in this § 190.192 Certification for compliance exportation, destruction, or storage, not entry was received from llllllon program. to be removed from the foreign trade llll, 20 ll, in Foreign Trade (a) General. A party may be certified zone for domestic consumption. I Zone No. ll, llll(City and State). as a participant in the drawback further declare that to the best of my Exceptions: lllllllllllll compliance program after meeting the knowledge and belief, this merchandise lllllllllllllllllll core requirements established under the is in the same quantity, quality, value, (Name of operator) program, or after negotiating an and package, unavoidable wastage and By lllllllllllllllll alternative drawback compliance
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program suited to the needs of both the § 190.193 Application procedure for manufacturers should explain how party and CBP. Certification compliance program. much manufacturing they are engaged requirements will take into account the (a) Who may apply. Claimants and in for drawback, such as the quantity of size and nature of the party’s drawback other parties in interest may apply for drawback product produced on an program, the type of drawback claims participation in the drawback annual basis, as established by the filed, and the volume of claims filed. compliance program. This includes any certificates of manufacture and delivery Whether the party is a drawback person, corporation or business entity they have executed. claimant, a broker, or one that provides that provides supporting information or (d) Application package. Along with data and documentation on which a documentation to one who files the letter of application as prescribed in drawback claim is based, will also be drawback claims, as well as customs paragraph (c) of this section, the considered. brokers who assist claimants in filing for application package must include a (b) Core requirements of program. In drawback. Program participants may description of how the applicant will order to be certified as a participant in further consist of importers, ensure compliance with statutory and the drawback compliance program or manufacturers or producers, agent- regulatory drawback requirements. This negotiated alternative drawback manufacturers, complementary description may be in the form of a compliance program, the party must recordkeepers, subcontractors, booklet or set forth otherwise. The demonstrate that it: intermediate parties, and exporters. description must include at least the (1) Understands the legal (b) Place of filing. An application in following: requirements for filing claims, including letter format containing the information (1) The name and title of the official the nature of the records that are as prescribed in paragraphs (c) and (d) in the applicant’s organization who is required to be maintained and produced of this section may be submitted to any responsible for oversight of the and the time periods involved; drawback office. applicant’s drawback program, and the (2) Has in place procedures that (c) Letter of application; contents. A name and title, with mailing address explain the CBP requirements to those party requesting certification to become and, if available, fax number and email employees involved in the preparation a participant in the drawback address, of the person(s) in the of claims, and the maintenance and compliance program must file with the applicant’s organization responsible for production of required records; drawback office a written application, the actual maintenance of the (3) Has in place procedures regarding signed by an authorized individual (see applicant’s drawback program; the preparation of claims and § 190.6(c) of this part). The detail (2) If the applicant is a manufacturer maintenance of required records, and required in the application must take and the drawback involved is the production of such records to CBP; into account the size and nature of the manufacturing drawback, a copy of the (4) Has designated a dependable applicant’s drawback program, the type letter of notification of intent to operate individual or individuals who will be of drawback claims filed, and the dollar under a general manufacturing responsible for compliance under the value and volume of claims filed. drawback ruling or the application for a program, and maintenance and However, the application must contain specific manufacturing drawback ruling production of required records; at least the following information: (see §§ 190.7 and 190.8), as appropriate; (5) Has in place a record maintenance (1) Name of applicant, address, IRS (3) A description of the applicant’s program approved by CBP regarding number (with suffix), and the type of drawback record-keeping program, original records, or if approved by CBP, business in which engaged, as well as including the retention period and alternative records or recordkeeping the name(s) of the individual(s) method (for example, paper, and formats for other than the original designated by the applicant to be electronic.); records; and responsible for compliance under the (4) A list of the records that will be (6) Has procedures for notifying CBP program; maintained, including at least sample of variances in, or violations of, the (2) A description of the nature of the import documents, sample export drawback compliance program or other applicant’s drawback program, documents, sample inventory and alternative negotiated drawback including the type of drawback in transportation documents (if compliance program, and for taking which involved (such as, applicable), sample laboratory or other corrective action when notified by CBP manufacturing, or unused or rejected documents establishing the qualification of violations and problems regarding merchandise), and the applicant’s of merchandise or articles for such program. particular role(s) in the drawback claims substitution under the drawback law (if (c) Broker certification. A customs process (such as claimant and/or applicable), and sample manufacturing broker may be certified as a participant importer, manufacturer or producer, documents (if applicable); in the drawback compliance program agent-manufacturer, complementary (5) A description of the applicant’s only on behalf of a given claimant (see recordkeeper, subcontractor, specific procedures for: § 190.194(b)). To do so, a customs intermediate party (possessor or (i) How drawback claims are prepared broker who assists a claimant in filing purchaser), or exporter (destroyer)); and (if the applicant is a claimant); and for drawback must be able to (3) Size of applicant’s drawback (ii) How the applicant will fulfill any demonstrate, for and on behalf of such program. For example, if the applicant requirements under the drawback law claimant, conformity with the core is a claimant, the number of claims filed and regulations applicable to its role in requirements of the drawback over the previous 12-month period the drawback program; compliance program as set forth in should be included, along with the (6) A description of the applicant’s paragraph (b) of this section. The broker number estimated to be filed over the procedures for notifying CBP of must ensure that the claimant has the next 12-month period, and the variances in, or violations of, its necessary documentation and records to estimated amount of drawback to be drawback compliance program or support the drawback compliance claimed annually. Other parties should negotiated alternative drawback program established on its behalf, and describe the extent to which they are compliance program, and procedures for that claims to be filed under the involved in drawback activity, based taking corrective action when notified program are reviewed by the broker for upon their particular role(s) in the by CBP of violations or other problems accuracy and completeness. drawback process; for example, in such program; and
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(7) A description of the applicant’s requirements of the program commits a of this section and either no appeal has procedures for annual review to ensure violation of 19 U.S.C. 1593a(a) (see been filed within the time limit that its drawback compliance program § 190.62(b)), CBP will, in the absence of prescribed in paragraph (f)(2) of this meets the statutory and regulatory fraud or repeated violations, and in lieu section or all appeal procedures have drawback requirements and that CBP is of a monetary penalty as otherwise been concluded by a decision that notified of any modifications from the provided under § 1593a, issue a written upholds the removal action. Removal of procedures described in this notice of the violation to the party. certification may subject the affected application. Repeated violations by a participant, person to penalties. including a customs broker, may result (f) Appeal of certification denial or § 190.194 Action on application to in the issuance of penalties and the removal—(1) Appeal of certification participate in compliance program. removal of certification under the denial. A party may challenge a denial (a) Review by drawback office—(1) program until corrective action, of an application for certification as a General. It is the responsibility of the satisfactory to CBP, is taken. participant in the drawback compliance drawback office to coordinate its (d) Denial. If certification as a program by filing a written appeal, decision making on the package with participant in the drawback compliance within 30 days of issuance of the notice CBP Headquarters and other CBP offices program is denied, the applicant will be of denial, with the drawback office. A as appropriate. CBP processing of the given written notice by the drawback denial of an appeal may itself be package will consist of the review of the office, specifying the grounds for such appealed to CBP Headquarters, Trade information contained therein as well as denial, together with any action that Policy and Programs, Office of Trade, any additional information requested may be taken to correct the perceived within 30 days after issuance of the (see paragraph (a)(2) of this section). deficiencies, and informing the drawback office’s appeal decision. This (2) Criteria for CBP review. The applicant that such denial may be office will review the appeal and will drawback office will review and verify appealed to the drawback office that respond with a written decision within the information submitted in and with issued the notice of denial and then 30 days after receipt of the appeal the application. In order for CBP to appealed to CBP Headquarters. unless circumstances require a delay in evaluate the application, CBP may (e) Certification removal—(1) Grounds issuance of the decision. If the decision request additional information for removal. The certification for cannot be issued within the 30-day (including additional sample participation in the drawback period, the officewill advise the documents) and/or explanations of any compliance program by a party may be appellant of the reasons for the delay of the information provided for in removed when any of the following and of any further actions which will be § 190.193(c) and (d) of this subpart. conditions are discovered: carried out to complete the appeal Based on the information submitted on (i) The certification privilege was review and of the anticipated date for and with the application and any obtained through fraud or mistake of issuance of the appeal decision. information so requested, and based on fact; (2) Appeal of certification removal. A the applicant’s record of transactions (ii) The program participant is no party who has received a CBP notice of with CBP, the drawback office will longer in compliance with the customs removal of certification for participation approve or deny the application. The laws and CBP regulations, including the in the drawback compliance program criteria to be considered in reviewing requirements set forth in § 190.192; may challenge the removal by filing a the applicant’s record with CBP will (iii) The program participant has written appeal, within 30 days after include (as applicable): repeatedly filed false drawback claims issuance of the notice of removal, with (i) The presence or absence of or false or misleading documentation or the drawback office. A denial of an unresolved customs charges (duties, other information relating to such appeal may itself be appealed to CBP taxes, fees, or other debts owed CBP); claims; or Headquarters, Trade Policy and (iv) The program participant is (ii) The accuracy of the claimant’s Programs, Office of Trade, within 30 convicted of any felony or has past drawback claims; and days after issuance of the drawback (iii) Whether accelerated payment of committed acts which would constitute office’s appeal decision. This office will drawback or waiver of prior notice of a misdemeanor or felony involving consider the allegations upon which the intent to export was previously revoked theft, smuggling, or any theft-connected removal was based and the responses or suspended. crime. (b) Approval. Certification as a (2) Removal procedure. If CBP made to those allegations by the participant in the drawback compliance determines that the certification of a appellant and will render a written program will be given to applicants program participant should be removed, decision on the appeal within 30 days whose applications are approved under the drawback office will send the after receipt of the appeal. the criteria in paragraph (a)(2) of this program participant a written notice of § 190.195 Combined application for section. The drawback office will give the removal. Such notice will inform the certification in drawback compliance written notification to an applicant of its program participant of the grounds for program and waiver of prior notice and/or certification as a participant in the the removal and will advise the program approval of accelerated payment of drawback compliance program. A participant of its right to file an appeal drawback. customs broker obtaining certification of the removal in accordance with An applicant for certification in the for a drawback claimant will be sent paragraph (f) of this section. drawback compliance program may written notification on behalf of such (3) Effect of removal. The removal of also, in the same application, apply for claimant, with a copy of the notification certification will be effective waiver of prior notice of intent to export also being sent to the claimant. immediately in cases of willfulness on and accelerated payment of drawback, (c) Benefits of participation in the part of the program participant or under subpart I of this part. program. When a party that has been when required by public health, Alternatively, an applicant may certified as a participant in the interest, or safety. In all other cases, the separately apply for certification in the drawback compliance program and is removal of certification will be effective drawback compliance program and generally in compliance with the when the program participant has either or both waiver of prior notice and appropriate procedures and received notice under paragraph (e)(2) accelerated payment of drawback. In the
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former instance, the intent to apply for 2. IRS (Internal Revenue Service) number exported articles upon which drawback certification and waiver of prior notice (with suffix) of manufacturer or producer; claims will be based. 3. Location[s] of factory[ies] which will and/or approval of accelerated payment B. Exported Articles on Which Drawback Will of drawback must be clearly stated. In operate under the general ruling; 4. If a business entity, names of persons be Claimed all instances, all of the requirements for who will sign drawback documents (see Exported articles on which drawback will certification and the procedure applied § 190.6); be claimed will be manufactured in the for must be met (for example, in a 5. Identity (by T.D. number and title, as United States using imported merchandise or combined application for certification in stated in this Appendix) of general drawback products. the drawback compliance program and manufacturing drawback ruling under which C. General Statement both procedures, all of the information the manufacturer or producer intends to operate; The manufacturer or producer required for certification and each manufactures or produces for its own procedure, all required sample 6. Description of the merchandise and articles, unless specifically described in the account. The manufacturer or producer may documents for certification and each general manufacturing drawback ruling, and manufacture or produce articles for the procedure, and all required 8-digit HTSUS subheading number, and the account of another or another manufacturer certifications must be included with the quantity of the merchandise; or producer may manufacture or produce for application). 7. Only for General Manufacturing the account of the manufacturer or producer Drawback Ruling Under 19 U.S.C. 1313(b) for under contract within the principal and Appendix A to Part 190—General Petroleum or Petroleum Derivatives, the agency relationship outlined in T.D.s Manufacturing Drawback Rulings name of each article to be exported or, if the 55027(2) and 55207(1) (see § 190.9). Table of Contents identity of the product is not clearly evident D. Process of Manufacture or Production by its name, what the product is, and the I. General Instructions abstract period to be used for each refinery The imported merchandise or drawback II. General Manufacturing Drawback Ruling (monthly or other specified period (not to products will be used to manufacture or Under 19 U.S.C. 1313(a) (T.D. 81–234; exceed 1 year)), subject to the conditions in produce articles in accordance with § 190.2. T.D. 83–123) the General Manufacturing Drawback Ruling E. Multiple Products III. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) for Petroleum or 1. Relative Values Under 19 U.S.C. 1313(a) or 1313(b) for Petroleum Derivatives, I. Procedures and Agents (T.D. 81–181) Records Maintained, 4(a) or (b); Drawback law mandates the assignment of IV. General Manufacturing Drawback Ruling 8. Basis of claim used for calculating relative values when two or more products Under 19 U.S.C. 1313(a) for Burlap or drawback; and necessarily are produced concurrently in the Other Textile Material (T.D. 83–53) 9. Description of the manufacturing or same operation. If multiple products are V. General Manufacturing Drawback Ruling production process, unless specifically produced records, which may include Under 19 U.S.C. 1313(b) for Component described in the general manufacturing records kept in the normal course of Parts (T.D. 81–300) drawback ruling. business, will be maintained of the market VI. General Manufacturing Drawback Ruling For the General Manufacturing Drawback value of each product at the time it is first Under 19 U.S.C. 1313(a) for Flaxseed Ruling under § 1313(a), the General separated in the manufacturing process. (T.D. 83–80) Manufacturing Drawback Ruling Under 19 2. Appearing-in Method VII. General Manufacturing Drawback Ruling U.S.C. 1313(b) for Component Parts, and the The appearing-in basis may not be used if Under 19 U.S.C. 1313(a) for Fur Skins or General Manufacturing Drawback Ruling multiple products are produced. Fur Skin Articles (T.D. 83–77) Under 19 U.S.C. 1313(a) or 1313(b) for VIII. General Manufacturing Drawback Agents, if the drawback office has doubts as F. Loss or Gain Ruling Under 19 U.S.C. 1313(b) for to whether there is a manufacture or Records, which may include records kept Orange Juice (T.D. 85–110) production, as defined in § 190.2, the IX. General Manufacturing Drawback Ruling in the normal course of business, will be manufacturer or producer will be asked to maintained showing the extent of any loss or Under 19 U.S.C. 1313(b) for Petroleum or provide details of the operation purported to Petroleum Derivatives (T.D. 84–49) gain in net weight or measurement of the be a manufacture or production. imported merchandise, caused by X. General Manufacturing Drawback Ruling 10. For the General Manufacturing Under 19 U.S.C. 1313(b) for Piece Goods atmospheric conditions, chemical reactions, Drawback Ruling where substituted or other factors. (T.D. 83–73) merchandise will be used, the bill of XI. General Manufacturing Drawback Ruling materials and/or formulas annotated with the G. [Reserved] Under 19 U.S.C. 1313(b) for Raw Sugar 8-digit HTSUS classifications. H. Stock in Process (T.D. 83–59) B. These general manufacturing drawback XII. General Manufacturing Drawback Ruling rulings supersede general ‘‘contracts’’ Stock in process does not result; or if it Under 19 U.S.C. 1313(b) for Steel (T.D. previously published under the following does result, details will be given in claims as 81–74) Treasury Decisions (T.D.s): 81–74, 81–92, 81– filed, and it will not be included in the XIII. General Manufacturing Drawback 181, 81–234, 81–300, 83–53, 83–59, 83–73, computation of the merchandise used to Ruling Under 19 U.S.C. 1313(b) for Sugar 83–77, 83–80, 83–84, 83–123, 84–49, and 85– manufacture the finished articles on which (T.D. 81–92) 110. Anyone currently operating under any drawback is claimed. XIV. General Manufacturing Drawback of the above-listed Treasury Decisions will I. Waste Ruling Under 19 U.S.C. 1313(a) for automatically be covered by the superseding Woven Piece Goods (T.D. 83–84) general ruling, including all privileges of the No drawback is payable on any waste which results from the manufacturing I. General Instructions previous ‘‘contract’’. operation. Unless the claim for drawback is A. There follow various general II. General Manufacturing Drawback Ruling based on the quantity of merchandise manufacturing drawback rulings which have Under 19 U.S.C. 1313(a) (T.D. 81–234; T.D. appearing in the exported articles, records been designed to simplify drawback 83–123) will be maintained to establish the value, the procedures. Any person that can comply quantity, and the disposition of any waste A. Imported Merchandise or Drawback with the conditions of any one of these that results from manufacturing the exported Products 1 rulings may notify a CBP drawback office in Used articles. If no waste results, records will be writing of its intention to operate under the Imported merchandise or drawback maintained to establish that fact. ruling (see § 190.7). Such a letter of products are used in the manufacture of the notification must include the following J. Procedures and Records Maintained information: 1 Drawback products are those produced in the Records, which may include records kept 1. Name and address of manufacturer or United States in accordance with the drawback law in the normal course of business, will be producer; and regulations. maintained to establish:
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1. That the exported articles on which section 1313, part 190 of the CBP Regulations all officials and employees concerned to drawback is claimed were produced with the and this general ruling. familiarize themselves with the provisions of use of the imported merchandise, and this general ruling; and III. General Manufacturing Drawback 2. The quantity of imported merchandise 2 6. Issue instructions to help ensure proper used in producing the exported articles. (To Ruling Under 19 U.S.C. 1313(a) or 1313(b) compliance with title 19, United States Code, obtain drawback the claimant must establish for Agents (T.D. 81–181) section 1313, part 190 of the CBP Regulations that the completed articles were exported Manufacturers or producers operating and this general ruling. within 5 years after importation of the under this general manufacturing drawback IV. General Manufacturing Drawback imported merchandise. Records establishing ruling must comply with T.D.s 55027(2) and Ruling Under 19 U.S.C. 1313(a) for Burlap compliance with these requirements must be 55207(1), and 19 U.S.C. 1313(b), if or Other Textile Material (T.D. 83–53) available for audit by CBP during business applicable, as well as 19 CFR part 190 (see hours. Drawback is not payable without proof particularly, § 190.9). Drawback may be allowed under 19 U.S.C. of compliance). 1313(a) upon the exportation of bags or meat A. Name and Address of Principal wrappers manufactured with the use of K. Inventory Procedures B. Process of Manufacture or Production imported burlap or other textile material, subject to the following special requirements: The inventory records of the manufacturer The imported merchandise or drawback or producer must show how the drawback products or other substituted merchandise A. Imported Merchandise or Drawback recordkeeping requirements set forth in 19 will be used to manufacture or produce Products 1 Used U.S.C. 1313(a) and part 190 of the CBP articles in accordance with § 190.2. Regulations will be met, as discussed under Imported merchandise or drawback the heading ‘‘Procedures And Records C. Procedures and Records Maintained products (burlap or other textile material) are Maintained’’. If those records do not establish Records, which may include records kept used in the manufacture of the exported satisfaction of those legal requirements, in the normal course of business, will be articles upon which drawback claims will be drawback cannot be paid. maintained to establish: based. L. Basis of Claim for Drawback 1. Quantity, kind, quality, and 8-digit B. Exported Articles on Which Drawback Will HTSUS subheading number of merchandise Be Claimed Drawback will be claimed on the full transferred from the principal to the agent; Exported articles on which drawback will quantity of merchandise used in producing 2. Date of transfer of the merchandise from be claimed will be manufactured in the the exported articles only if there is no waste the principal to the agent; United States using imported merchandise or or valueless or unrecovered waste in the 3. Date of manufacturing or production drawback products. manufacturing operation. A drawback claim operations performed by the agent; may be based on the quantity of eligible 4. Total quantity and description of C. General Statement merchandise that appears in the exported merchandise (including 8-digit HTSUS articles, regardless of whether there is waste, The manufacturer or producer subheading number) appearing in or used in manufactures or produces for its own and no records of waste need be maintained. manufacturing or production operations If there is valuable waste recovered from the account. The manufacturer or producer may performed by the agent; manufacture or produce articles for the manufacturing operation and records are kept 5. Total quantity and description of articles which show the quantity and value of the account of another, or another manufacturer (including 8-digit HTSUS subheading or producer may manufacture or produce for waste, drawback may be claimed on the number) produced in manufacturing or quantity of eligible material used to produce the account of the manufacturer or producer production operations performed by the under contract within the principal and the exported articles less the amount of that agent; merchandise which the value of the waste agency relationship outlined in T.D.s 6. Quantity, kind, quality, and 8-digit 55027(2) and 55207(1) (see § 190.9). would replace. HTSUS subheading number of articles transferred from the agent to the principal; D. Process of Manufacture or Production M. General Requirements and The imported merchandise or drawback The manufacturer or producer must: 7. Date of transfer of the articles from the products will be used to manufacture or 1. Comply fully with the terms of this agent to the principal. produce articles in accordance with § 190.2. general ruling when claiming drawback; 2. Open its factory and records for D. General Requirements E. Multiple Products examination at all reasonable hours by The manufacturer or producer will: Not applicable. authorized Government officers; 1. Comply fully with the terms of this 3. Keep its drawback related records and general ruling when manufacturing or F. Loss or Gain supporting data for at least 3 years from the producing articles for account of the Not applicable. date of liquidation of any drawback claim principal under the principal’s general predicated in whole or in part upon this manufacturing drawback ruling or specific G. Waste general ruling; manufacturing drawback ruling, as No drawback is payable on any waste 4. Keep its letter of notification of intent to appropriate; which results from the manufacturing operate under this general ruling current by 2. Open its factory and records for operation. Unless the claim for drawback is reporting promptly to the drawback office examination at all reasonable hours by based on the quantity of merchandise which liquidates its claims any changes in authorized Government officers; appearing in the exported articles, records the information required by the General 3. Keep its drawback related records and will be maintained to establish the value, the Instructions of this Appendix to be included supporting data for at least 3 years from the quantity, and the disposition of any waste therein (I. General Instructions, 1 through 10) date of liquidation of any drawback claim that results from manufacturing the exported or the corporate name or corporate predicated in whole or in part upon this articles. If no waste results, records will be organization by succession or general ruling; maintained to establish that fact. reincorporation; 4. Keep its letter of notification of intent to 5. Keep a copy of this general ruling on file operate under this general ruling current by H. Procedures and Records Maintained for ready reference by employees and require reporting promptly to the drawback office Records, which may include records kept all officials and employees concerned to which liquidates the claims any changes in in the normal course of business, will be familiarize themselves with the provisions of the information required by the General maintained to establish: this general ruling; and Instructions of this Appendix to be included 1. That the exported articles on which 6. Issue instructions to insure proper therein (I. General Instructions, 1 through 10) drawback is claimed were produced with the compliance with title 19, United States Code, or the corporate name or corporate use of the imported merchandise; and organization by succession or 2 If claims are to be made on an ‘‘appearing in’’ reincorporation; 1 Drawback products are those produced in the basis, the remainder of the sentence should read 5. Keep a copy of this general ruling on file United States in accordance with the drawback law ‘‘appearing in the exported articles.’’ for ready reference by employees and require and regulations.
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2. The quantity of imported merchandise 2 All bags or meat wrappers manufactured or 3. Keep its drawback related records and used in producing the exported articles. produced for the account of the same supporting data for at least 3 years from the To obtain drawback the claimant must exporter during a specified period may be date of liquidation of any drawback claim establish that the completed articles were designated as one manufacturing lot. All predicated in whole or in part upon this exported within 5 years after importation of exported bags or meat wrappers must be general ruling; identified by the exporter. the imported merchandise. Records 4. Keep its letter of notification of intent to establishing compliance with these J. Basis of Claim for Drawback operate under this general ruling current by requirements will be available for audit by Drawback will be claimed on the quantity reporting promptly to the drawback office CBP during business hours. Drawback is not of merchandise used in producing the which liquidates its claims any changes in payable without proof of compliance. exported articles only if there is no waste or the information required by the General I. Inventory Procedures valueless or unrecovered waste in the Instructions of this Appendix to be included manufacturing operation. Drawback may be The inventory records of the manufacturer therein (I. General Instructions, 1 through 10) claimed on the quantity of eligible or the corporate name or corporate or producer must show how the drawback merchandise that appears in the exported organization by succession or recordkeeping requirements set forth in 19 articles, regardless of whether there is waste, U.S.C. 1313(a) and part 190 of the CBP and no records of waste need be maintained. reincorporation. Regulations will be met, as discussed under If there is valuable waste recovered from the 5. Keep a copy of this general ruling on file the heading ‘‘Procedures and Records manufacturing operation and records are kept for ready reference by employees and require Maintained’’. If those records do not establish which show the quantity and value of the all officials and employees concerned to compliance with those legal requirements, waste, drawback may be claimed on the familiarize themselves with the provisions of drawback cannot be paid. Each lot of quantity of eligible material used to produce this general ruling; and imported material received by a the exported articles, less the amount of that 6. Issue instructions to help ensure proper manufacturer or producer must be given a lot merchandise which the value of the waste compliance with 19, United States Code, would replace. number and kept separate from other lots § 1313, part 190 of the CBP Regulations and until used. The records of the manufacturer K. General Requirements this general ruling. or producer must show, as to each The manufacturer or producer must: V. General Manufacturing Drawback Ruling manufacturing lot or period of manufacture, 1. Comply fully with the terms of this Under 19 U.S.C. 1313(b) for Component the 8-digit HTSUS classification, the quantity general ruling when claiming drawback; Parts (T.D. 81–300) of material used from each imported lot and 2. Open its factory and records for the number of each kind and size of bags or examination at all reasonable hours by A. Same 8-Digit HTSUS Classification meat wrappers obtained. authorized Government officers; (Parallel Columns)
Imported merchandise or drawback products 1 Duty-paid, duty-free or domestic merchandise classifiable under the to be designated as the same 8-digit HTSUS subheading number as that designated which will basis for drawback on the exported products be used in the production of the exported products
Component parts identified by individual part numbers and 8-digit Component parts classifiable under the same 8-digit HTSUS sub- HTSUS subheading number. heading number and identified with the same individual part numbers as those in the column immediately to the left hereof.
The designated components will have been or producer may manufacture or produce for G. [Reserved] manufactured in accordance with the same the account of the manufacturer or producer H. Procedures and Records Maintained specifications and from the same materials, under contract within the principal and and identified by the same 8-digit HTSUS agency relationship outlined in T.D.s Records, which may include records kept classification, and part number as the 55027(2) and 55207(1) (see § 190.9). in the normal course of business, will be substituted components. Further, the maintained to establish: designated and substituted components are D. Process of Manufacture or Production 1. The identity, specifications, and 8-digit used interchangeably in the manufacture of The components described in the parallel HTSUS classification of the designated the exported articles upon which drawback columns will be used to manufacture or merchandise; will be claimed. Specifications or drawings 2. The quantity of merchandise classifiable produce articles in accordance with § 190.2. will be maintained and made available for under the same 8-digit HTSUS classification CBP officers. Fluctuations in market value E. Multiple Products as the designated merchandise 2 used to resulting from factors other than quality will Not applicable. produce the exported articles; not affect the drawback. 3. That, within 5 years after the date of B. Exported Articles on Which Drawback Will F. Waste importation of the designated merchandise, Be Claimed No drawback is payable on any waste the manufacturer or producer used the merchandise to produce articles. During the The exported articles will have been which results from the manufacturing same 5-year period, the manufacturer or manufactured in the United States using operation. Unless the claim for drawback is producer produced 3 the exported articles. To components described in the parallel based on the quantity of components columns above. obtain drawback the claimant must establish appearing in the exported articles, records that the completed articles were exported C. General Statement will be maintained to establish the value (or within 5 years after the importation of the The manufacturer or producer the lack of value), the quantity, and the imported merchandise. Records establishing manufactures or produces for its own disposition of any waste that results from compliance with these requirements will be account. The manufacturer or producer may manufacturing the exported articles. If no available for audit by CBP during business manufacture or produce articles for the waste results, records will be maintained to hours. Drawback is not payable without proof account of another or another manufacturer establish that fact. of compliance.
2 If claims are to be made on an ‘‘appearing in’’ and regulations. Such products have ‘‘dual status’’ 2 If claims are to be made on an ‘‘appearing in’’ basis, the remainder of the sentence should read under section 1313(b). They may be designated as basis, the remainder of this sentence should read ‘‘appearing in the exported articles.’’ the basis for drawback and also may be deemed to ‘‘appearing in the exported articles produced.’’ 1 Drawback products are those produced in the be domestic merchandise. 3 The date of production is the date an article is United States in accordance with the drawback law completed.
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I. Inventory Procedures A. Imported Merchandise or Drawback 1. That the exported articles on which 1 The inventory records of the manufacturer Products Used drawback is claimed were produced with the use of the imported merchandise; and or producer must show how the drawback Imported merchandise or drawback 2. The quantity of imported merchandise 2 products (flaxseed) are used in the recordkeeping requirements set forth in 19 used in producing the exported articles. manufacture of the exported articles upon U.S.C. 1313(b) and part 190 of the CBP To obtain drawback the claimant must Regulations will be met, as discussed under which drawback claims will be based. establish that the completed articles were the heading ‘‘Procedures And Records B. Exported Articles on Which Drawback Will exported within 5 years after importation of Maintained’’. If those records do not establish Be Claimed the imported merchandise. Records establishing compliance with these satisfaction of those legal requirements, Exported articles on which drawback will drawback cannot be paid. requirements will be available for audit by be claimed will be manufactured in the CBP during business hours. Drawback is not J. Basis of Claim for Drawback United States using imported merchandise or payable without proof of compliance. drawback products. Drawback will be claimed on the quantity I. Inventory Procedures C. General Statement of eligible components used in producing the The inventory records of the manufacturer exported articles only if there is no waste or The manufacturer or producer or producer must show how the drawback valueless or unrecovered waste in the manufactures or produces for its own recordkeeping requirements set forth in 19 manufacturing operation. Drawback may be account. The manufacturer or producer may U.S.C. 1313(a) and part 190 of the CBP claimed on the quantity of eligible manufacture or produce articles for the Regulations will be met, as discussed under components that appear in the exported account of another or another manufacturer the heading ‘‘Procedures and Records articles, regardless of whether there is waste, or producer may manufacture or produce for Maintained’’. If those records do not establish and no records of waste need be maintained. the account of the manufacturer or producer satisfaction of those legal requirements, If there is valuable waste recovered from the under contract within the principal and drawback cannot be paid. The inventory records of the manufacturer manufacturing operation and records are kept agency relationship outlined in T.D.s 55027(2) and 55207(1) (see § 190.9). or producer will show the inclusive dates of which show the quantity and value of the manufacture; the quantity, identity, value, waste, drawback may be claimed on the D. Process of Manufacture or Production and 8-digit HTSUS classification of the quantity of eligible components used to The imported merchandise or drawback imported flaxseed or screenings, scalpings, produce the exported articles less the amount products will be used to manufacture or chaff, or scourings used; the quantity by of those components which the value of the produce articles in accordance with § 190.2. actual weight and value, if any, of the waste would replace. material removed from the foregoing by E. Multiple Products screening prior to crushing; the quantity and K. General Requirements Drawback law mandates the assignment of kind of domestic merchandise added, if any; The manufacturer or producer will: relative values when two or more products the quantity by actual weight or gauge and 1. Comply fully with the terms of this necessarily are produced concurrently in the value of the oil, cake, and meal obtained; and general ruling when claiming drawback; same operation. If multiple products are the quantity and value, if any, of the waste 2. Open its factory and records for produced records will be maintained of the incurred. The quantity of imported flaxseed, examination at all reasonable hours by market value of each product at the time it screenings, scalpings, chaff, or scourings authorized Government officers; is first separated in the manufacturing used or of material removed will not be estimated nor computed on the basis of the 3. Keep its drawback related records and process (when a claim covers a quantity of finished products obtained, but manufacturing period, the entire period supporting data for at least 3 years from the will be determined by actually weighing the covered by the claim is the time of separation date of liquidation of any drawback claim said flaxseed, screenings, scalpings, chaff, of the products and the value per unit of predicated in whole or in part upon this scourings, or other material; or, at the option general ruling; product is the market value for the period of the crusher, the quantities of imported 4. Keep its letter of notification of intent to (see §§ 190.2, 190.22(e)). The ‘‘appearing in’’ materials used may be determined from CBP operate under this general ruling current by basis may not be used if multiple products weights, as shown by the import entry reporting promptly to the drawback office are produced. covering such imported materials, and the which liquidates its claims any changes in F. Loss or Gain Government weight certificate of analysis issued at the time of entry. The entire period the information required by the General Records will be maintained showing the Instructions of this Appendix to be included covered by an abstract will be deemed the extent of any loss or gain in net weight or time of separation of the oil and cake covered therein (I. General Instructions, 1 through 10) measurement of the imported merchandise, or the corporate name or corporate thereby. caused by atmospheric conditions, chemical If the records of the manufacturer or organization by succession or reactions, or other factors. producer do not show the quantity of oil cake reincorporation; G. Waste used in the manufacture or production of the 5. Keep a copy of this general ruling on file exported oil meal and the quantity of oil for ready reference by employees and require No drawback is payable on any waste meal obtained, the net weight of the oil meal all officials and employees concerned to which results from the manufacturing exported will be regarded as the weight of the familiarize themselves with the provisions of operation. Unless the claim for drawback is oil cake used in the manufacture thereof. this general ruling; and based on the quantity of merchandise If various tanks are used for the storage of 6. Issue instructions to insure proper appearing in the exported articles, records imported flaxseed, the mill records must compliance with title 19, United States Code, will be maintained to establish the value, the establish the tank or tanks in which each lot section 1313, part 190 of the CBP Regulations quantity, and the disposition of any waste or cargo is stored. If raw or processed oil that results from manufacturing the exported and this general ruling. manufactured or produced during different articles. If no waste results, records will be periods of manufacture is intermixed in VI. General Manufacturing Drawback maintained to establish that fact. storage, a record must be maintained Ruling Under 19 U.S.C. 1313(a) for Flaxseed H. Procedures and Records Maintained showing the quantity, identity, kind, and 8- (T.D. 83–80) digit HTSUS classification of oil so Records, which may include records kept Drawback may be allowed under the intermixed. Identity of merchandise or in the normal course of business, will be articles in either instance must be in provision of 19 U.S.C. 1313(a) upon the maintained to establish: accordance with § 190.14. exportation of linseed oil, linseed oil cake, and linseed oil meal, manufactured or 1 Drawback products are those produced in the 2 If claims are to be made on an ‘‘appearing in’’ produced with the use of imported flaxseed, United States in accordance with the drawback law basis, the remainder of the sentence should read subject to the following special requirements: and regulations. ‘‘appearing in the exported articles.’’
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J. Basis of Claim for Drawback B. Exported Articles on Which Drawback Will U.S.C. 1313(a) and part 190 of the CBP Drawback will be claimed on the quantity Be Claimed Regulations will be met, as discussed under of merchandise used in producing the Exported articles on which drawback will the heading ‘‘Procedures and Records exported articles only if there is no waste or be claimed will be manufactured in the Maintained’’. If those records do not establish valueless or unrecovered waste in the United States using imported merchandise or satisfaction of those legal requirements, manufacturing operation. Drawback may be drawback products. drawback cannot be paid. claimed on the quantity of eligible The records of the manufacturer or merchandise that appears in the exported C. General Statement producer must show, as to each lot of fur articles, regardless of whether there is waste, The manufacturer or producer skins and/or fur skin articles used in the and no records of waste need be maintained. manufactures or produces for its own manufacture or production of articles for If there is valuable waste recovered from the account. The manufacturer or producer may exportation with benefit of drawback, the lot manufacturing operation and records are kept manufacture or produce articles for the number and date or inclusive dates of which show the quantity and value of the account of another or another manufacturer manufacture or production, the quantity, waste, drawback may be claimed on the or producer may manufacture or produce for identity, description, and 8-digit HTSUS quantity of eligible material used to produce the account of the manufacturer or producer classification of the imported merchandise the exported articles, less the amount of that under contract within the principal and used, the condition in which imported, the merchandise which the value of the waste agency relationship outlined in T.D.s process or processes applied thereto, the would replace. 55027(2) and 55207(1) (see § 190.9). quantity, description, and 8-digit HTSUS classification of the finished articles K. General Requirements D. Process of Manufacture or Production obtained, and the quantity of imported pieces The manufacturer or producer will: The imported merchandise or drawback rejected, if any, or spoiled in manufacture or 1. Comply fully with the terms of this products will be used to manufacture or production. general ruling when claiming drawback; produce articles in accordance with § 190.2. J. Basis of Claim for Drawback 2. Open its factory and records for Drawback will not be allowed under this examination at all reasonable hours by general manufacturing drawback ruling when Drawback will be claimed on the quantity authorized Government officers; the process performed results only in the of merchandise used in producing the 3. Keep its drawback related records and restoration of the merchandise to its exported articles only if there is no waste or supporting data for at least 3 years from the condition at the time of importation. valueless or unrecovered waste in the date of liquidation of any drawback claim manufacturing operation. Drawback may be predicated in whole or in part upon this E. Multiple Products claimed on the quantity of eligible general ruling; Not applicable. merchandise that appears in the exported 4. Keep its letter of notification of intent to articles, regardless of whether there is waste, operate under this general ruling current by F. Loss or Gain and no records of waste need be maintained. reporting promptly to the drawback office Records will be maintained showing the If there is valuable waste recovered from the which liquidates its claims any changes in extent of any loss or gain in net weight or manufacturing operation and records are kept the information required by the General measurement of the imported merchandise, which show the quantity and value of the Instructions of this Appendix to be included caused by atmospheric conditions, chemical waste, drawback may be claimed on the therein (I. General Instructions, 1 through 10) reactions, or other factors. quantity of eligible material used to produce or the corporate name or corporate the exported articles, less the amount of that organization by succession or G. Waste merchandise which the value of the waste reincorporation. No drawback is payable on any waste would replace. (If rejects and/or spoilage are 5. Keep a copy of this general ruling on file which results from the manufacturing incurred, the quantity of imported for ready reference by employees and require operation. Unless the claim for drawback is merchandise used will be determined by all officials and employees concerned to based on the quantity of merchandise deducting from the quantity of fur skins or familiarize themselves with the provisions of appearing in the exported articles, records fur skin articles put into manufacture or this general ruling; and will be maintained to establish the value, the production the quantity of such rejects and/ 6. Issue instructions to insure proper quantity, and the disposition of any waste or spoilage.) compliance with 19, United States Code, that results from manufacturing the exported K. General Requirements § 1313, part 190 of the CBP Regulations and articles. If no waste results, records will be this general ruling. maintained to establish that fact. The manufacturer or producer will: 1. Comply fully with the terms of this VII. General Manufacturing Drawback H. Procedures and Records Maintained general ruling when claiming drawback; Ruling Under 19 U.S.C. 1313(a) for Fur Records, which may include records kept 2. Open its factory and records for Skins or Fur Skin Articles (T.D. 83–77) in the normal course of business, will be examination at all reasonable hours by Drawback may be allowed under 19 U.S.C. maintained to establish: authorized Government officers; 1313(a) upon the exportation of dressed, 1. That the exported articles on which 3. Keep its drawback related records and redressed, dyed, redyed, bleached, blended, drawback is claimed were produced with the supporting data for at least 3 years from the or striped fur skins or fur skin articles use of the imported merchandise; and date of liquidation of any drawback claim manufactured or produced by any one or a 2. The quantity of imported merchandise 2 predicated in whole or in part upon this combination of the foregoing processes with used in producing the exported articles. general ruling; the use of fur skins or fur skin articles, such To obtain drawback the claimant must 4. Keep its letter of notification of intent to as plates, mats, sacs, strips, and crosses, establish that the completed articles were operate under this general ruling current by imported in a raw, dressed, or dyed exported within 5 years after importation of reporting promptly to the drawback office condition, subject to the following special the imported merchandise. Records which liquidates its claims any changes in requirements: establishing compliance with these the information required by the General requirements will be available for audit by Instructions of this Appendix to be included A. Imported Merchandise or Drawback therein (I. General Instructions, 1 through 10) 1 CBP during business hours. Drawback is not Products Used payable without proof of compliance. or the corporate name or corporate Imported merchandise or drawback organization by succession or products (fur skins or fur skin articles) are I. Inventory Procedures reincorporation. used in the manufacture of the exported The inventory records of the manufacturer 5. Keep a copy of this general ruling on file articles upon which drawback claims will be or producer must show how the drawback for ready reference by employees and require based. recordkeeping requirements set forth in 19 all officials and employees concerned to familiarize themselves with the provisions of 1 Drawback products are those produced in the 2 If claims are to be made on an ‘‘appearing in’’ this general ruling; and United States in accordance with the drawback law basis, the remainder of the sentence should read 6. Issue instructions to insure proper and regulations. ‘‘appearing in the exported articles.’’ compliance with 19, United States Code,
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§ 1313, part 190 of the CBP Regulations and VIII. General Manufacturing Drawback this general ruling. Ruling Under 19 U.S.C. 1313(b) for Orange Juice (T.D. 85–110) A. Same 8-Digit HTSUS Classification (Parallel Columns)
Duty-paid, duty-free or domestic merchandise classifiable under the Imported merchandise or drawback products 1 to be designated as the same 8-digit HTSUS subheading number as that designated which will basis for drawback on the exported products be used in the production of the exported products
Concentrated orange juice for manufacturing (of not less than 55° Brix) Concentrated orange juice for manufacturing as described in the left- as defined in the standard of identity of the Food and Drug Adminis- hand parallel column. tration (21 CFR 146.53) which meets the Grade A standard of the U.S. Dept. of Agriculture (7 CFR 52.1557, Table IV).
The imported merchandise designated on ii. The concentrate is blended with components were blended with the drawback claims must be classifiable under essential oils and flavoring components and concentrated orange juice for manufacturing. the same 8-digit HTSUS classification as the water. If those records do not establish satisfaction merchandise used in producing the exported 3. Bulk concentrated orange juice. of those legal requirements drawback cannot articles on which drawback is claimed. Concentrated orange juice for manufacturing be paid. Fluctuations in the market value resulting is blended with essential oils and flavoring from factors other than quality will not affect components which would enable another I. Basis of Claim for Drawback the drawback. processor such as a dairy to prepare finished The basis of claim for drawback will be the frozen concentrated orange juice or orange B. Exported Articles on Which Drawback Will juice from concentrate by merely adding quantity of concentrated orange juice for Be Claimed water to the (intermediate) bulk concentrated manufacturing used in the production of the 1. Orange juice from concentrate orange juice. exported articles. It is understood that when (reconstituted juice). fresh orange juice is used as ‘‘cutback’’, it 2. Frozen concentrated orange juice. E. Multiple Products, Waste, Loss or Gain will not be included in the ‘‘pound solids’’ 3. Bulk concentrated orange juice. Not applicable. when computing the drawback due. C. General Statement F. [Reserved] J. General Requirements The manufacturer or producer G. Procedures and Records Maintained The manufacturer or producer will: manufactures or produces for its own account. The manufacturer or producer may Records, which may include records kept 1. Comply fully with the terms of this manufacture or produce articles for the in the normal course of business, will be general ruling when claiming drawback; account of another or another manufacturer maintained to establish: 2. Open its factory and records for or producer may manufacture or produce for 1. The 8-digit HTSUS classification, examination at all reasonable hours by the account of the manufacturer or producer identity, and specifications of the designated authorized Government officers; merchandise; under contract within the principal and 3. Keep its drawback related records and 2. The quantity of merchandise classifiable agency relationship outlined in T.D.s supporting data for at least 3 years from the 55027(2) and 55207(1) (see § 190.9). under the same 8-digit HTSUS classification as the designated merchandise 2 used to date of liquidation of any drawback claim D. Process of Manufacture or Production produce the exported articles; predicated in whole or in part upon this 1. Orange juice from concentrate 3. That, within 5 years after the date of general ruling; (reconstituted juice). Concentrated orange importation of the designated merchandise, 4. Keep its letter of notification of intent to juice for manufacturing is reduced to a the manufacturer or producer used the operate under this general ruling current by desired 11.8° Brix by a blending process to designated merchandise to produce articles. reporting promptly to the drawback office produce orange juice from concentrate. The During the same 5-year period, the which liquidates its claims any changes in 3 following optional blending processes may manufacturer or producer produced the the information required by the General be used: exported articles. Instructions of this Appendix to be included To obtain drawback it must be established i. The concentrate is blended with fresh therein (I. General Instructions, 1 through 10) that the completed articles were exported orange juice (single strength juice); or or the corporate name or corporate ii. The concentrate is blended with within 5 years after the importation of the organization by succession or essential oils, flavoring components, and imported merchandise. Records establishing water; or compliance with these requirements must be reincorporation; iii. The concentrate is blended with water available for audit by CBP during business 5. Keep a copy of this general ruling on file and is heat treated to reduce the enzymatic hours. No drawback is payable without proof for ready reference by employees and require activity and the number of viable of compliance. all officials and employees concerned to microorganisms. H. Inventory Procedures familiarize themselves with the provisions of 2. Frozen concentrated orange juice. this general ruling; and The inventory records of the manufacturer Concentrated orange juice for manufacturing 6. Issue instructions to insure proper or producer must show how the drawback is reduced to a desired degree Brix of not less compliance with title 19, United States Code, ° recordkeeping requirements set forth in 19 than 41.8 Brix by the following optional section 1313, part 190 of the CBP Regulations blending processes: U.S.C. 1313(b) and part 190 of the CBP and this general ruling. i. The concentrate is blended with fresh Regulations will be met, as discussed under orange juice (single strength juice); or the heading ‘‘Procedures And Records IX. General Manufacturing Drawback Maintained’’, and will show what Ruling Under 19 U.S.C. 1313(b) for 1 Drawback products are those produced in the Petroleum or Petroleum Derivatives (T.D. 2 United States in accordance with the drawback law If claims are to be made on an ‘‘appearing in’’ 84–49) and regulations. Such products have ‘‘dual status’’ basis, the remainder of this sentence should read under section 1313(b). They may be designated as ‘‘appearing in the exported articles produced.’’ A. Same 8-Digit HTSUS Classification the basis for drawback and also may be deemed to 3 The date of production is the date an article is (Parallel Columns) be domestic merchandise. completed.
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Imported merchandise or drawback products 1 to be designated as the Duty-paid, duty-free or domestic merchandise classifiable under the basis for drawback on the exported products. same 8-digit HTSUS subheading number as that designated which will be used in the production of the exported products.
B. Exported Articles Produced From 2. Producibility 4(a). The manufacturer or producer agrees Fractionation The manufacturer or producer can vary the to use a 28–31 day period (monthly) abstract 1. Motor Gasoline proportionate quantity of each product. The period for each refinery covered by this general manufacturing drawback ruling, or 2. Aviation Gasoline manufacturer or producer understands that (b). The manufacturer or producer agrees to 3. Special Naphthas drawback is payable on exported products only to the extent that these products could use an abstract period (not to exceed 1 year) 4. Jet Fuel for each refinery covered by this general 5. Kerosene & Range Oils have been produced from the designated merchandise. The records of the manufacturing drawback ruling. The 6. Distillate Oils manufacturer or producer certifies that if it 7. Residual Oils manufacturer or producer must show that all of the products exported for which drawback were to file abstracts covering each 8. Lubricating Oils manufacturing period of not less than 28 9. Paraffin Wax will be claimed under this general manufacturing drawback ruling could have days and not more than 31 days (monthly) 10. Petroleum Coke been produced concurrently on a practical within the longer period, in no such monthly 11. Asphalt operating basis from the designated abstract would the quantity of designated 12. Road Oil merchandise. merchandise exceed the material introduced 13. Still Gas The manufacturer or producer agrees to into the manufacturing process during that 14. Liquified Petroleum Gas establish the amount to be designated by monthly period. (Select (a) or (b), and state 15. Petrochemical Synthetic Rubber reference to the Industry Standards of which is selected in the application, and, if 16. Petrochemical Plastics & Resins Potential Production published in T.D. 66– (b) is selected, specify the length of the 17. All Other Petrochemical Products 16.2 particular abstract period chosen (not to exceed 1 year (see General Instruction C. Exported Articles on Which Drawback Will There are no valuable wastes as a result of the processing. I.A.7.)).) Be Claimed 5. On each abstract of production the See the General Instructions, I.A.7., for this G. Loss or Gain manufacturer or producer agrees to show the general drawback ruling. Each article to be Because the manufacturer or producer value per barrel to five decimal places. exported must be named. When the identity keeps records on a volume basis rather than 6. The manufacturer or producer agrees to of the product is not clearly evident by its a weight basis, it is anticipated that the file claims in the format set forth in exhibits name, there must be a statement as to what material balance will show a volume gain. A through F which are attached to this the product is, e.g., a herbicide. For the same reason, it is possible that general manufacturing drawback ruling. The occasionally the material balance will show manufacturer or producer realizes that to D. General Statement a volume loss. Fluctuations in type of crude obtain drawback the claimant must establish The manufacturer or producer used, together with the type of finished that the completed articles were exported manufactures or produces for its own product desired make an estimate of an within 5 years after importation of the account. The manufacturer or producer may average volume gain meaningless. However, imported merchandise. Records establishing manufacture or produce articles for the records will be kept to show the amount of compliance with these requirements will be account of another or another manufacturer loss or gain with respect to the production of available for audit by CBP during business or producer may manufacture or produce for export products. hours. It is understood that drawback is not the account of the manufacturer or producer payable without proof of compliance. under contract within the principal and H. Exchange Records will be kept in accordance with T.D. agency relationship outlined in T.D.s The use of any domestic merchandise 84–49, as amended by T.D. 95–61. 55027(2) and 55207(1) (see § 190.9). acquired in exchange for imported J. Residual Rights merchandise that meets the same kind and E. Process of Manufacture or Production quality specifications contained in the It is understood that the refiner can reserve Heated crude oil is charged to an parallel columns of this general ruling shall as the basis for future payment the right to atmospheric distillation tower where it is be treated as use of the imported drawback only on the number of barrels of raw material computed by subtracting from subjected to fractionation. The charge to the merchandise. Line E the larger of Lines A or B, of a given distillation tower consists of a single crude I. Procedures and Records Maintained Exhibit E. It is further understood that this oil, or of commingled crudes which are fed right to future payment can be claimed only to the tower simultaneously or after blending Records, which may include records kept in the normal course of business, will be against products concurrently producible in a tank. During fractionation, components with the products listed in Column 21, in the of different boiling ranges are separated. maintained to establish: 1. The identity, specifications, and 8-digit quantities shown in Column 22 of such F. Multiple Products HTSUS classification of the merchandise Exhibit E. Such residual right can be transferred to another refinery of the same 1. Relative Values designated; 2. The quantity of merchandise classifiable refiner only when Line B of Exhibit E is Fractionation results in 17 products. In under the same 8-digit HTSUS classification larger than Line A. Unless the number of order to insure proper distribution of as the designated merchandise used to residual barrels is specifically computed and drawback to each of these products, the produce the exported articles. rights thereto are expressly reserved on manufacturer or producer agrees to record 3. That, within 5 years after importation, Exhibit E, such residual rights will be the relative values at the time of separation. the manufacturer or producer used the deemed waived. The procedure the The entire period covered by an abstract is designated merchandise to produce articles. manufacturer or producer must follow in to be treated as the time of separation. The During the same 5-year period, the preparing drawback entries claiming this value per unit of each product will be the manufacturer or producer produced the residual right is illustrated in the attached average market value for the abstract period. exported articles. sample Exhibit E–1. It is understood that claims involving residual rights must be filed only at the port where the Exhibit E reserving 1 Drawback products are those produced in the 2 A manufacturer who proposes to use standards United States in accordance with the drawback law other than those in T.D. 66–16 must state the such right was filed. and regulations. Such products have ‘‘dual status’’ proposed standards and provide sufficient K. Inventory Procedures under section 1313(b). They may be designated as information to CBP in order for those proposed the basis for drawback and also may be deemed to standards to be verified in accordance with The manufacturer or producer realizes that be domestic merchandise. T.D. 84–49. inventory control is of major importance. In
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accordance with the normal accounting refinery and covered by a drawback entry predicated in whole or in part upon this procedures of the manufacturer or producer, must not exceed the quantity of such raw application; each refinery prepares a monthly stock and material used at the refinery during the 4. Keep this application current by yield report, which accounts for inventories, abstract period or periods from which the reporting promptly to the drawback office production and disposals from time of exported products were produced. The which liquidates its claims any changes in receipt to time of disposition. This provides quantity of raw material to be designated as the information required by the General an audit trail of all products. the basis for drawback on exported products The above-noted records will provide the must be at least as great as the quantity of Instructions of this Appendix to be included required audit trail from the initial source raw material which would be required to therein (I. General Instructions, 1 through 10) documents to the drawback claims of the produce the exported products in the or the corporate name or corporate manufacturer or producer and will support quantities exported. organization by succession or adherence with the requirements discussed reincorporation; M. Agreements under the heading PROCEDURES AND 5. Keep a copy of this general ruling on file The manufacturer or producer specifically RECORDS MAINTAINED. for ready reference by employees and require agrees that it will: all officials and employees concerned to L. Basis of Claim for Drawback 1. Comply fully with the terms of this The amount of raw material on which general ruling when claiming drawback; familiarize themselves with the provisions of drawback may be based will be computed by 2. Open its refinery and records for this general ruling; and multiplying the quantity of each product examination at all reasonable hours by 6. Issue instructions to insure proper exported by the drawback factor for that authorized Government officers; compliance with title 19, United States Code, product. The amount of raw material which 3. Keep its drawback related records and section 1313, part 190 of the CBP Regulations may be designated as the basis for drawback supporting data for at least 3 years from the and this general ruling. on the exported products produced at a given date of liquidation of any drawback claim
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EXHIBIT C—INVENTORY CONTROL SHEET: ABC OIL CO., INC.; BEAUMONT, TEXAS REFINERY, PERIOD FROM JANUARY 1, 2019 TO JANUARY 31, 2019 [All quantities exclude non-petroleum additives]
Aviation gasoline Residual oils Lubricating oils Petrochemicals, all other Drawback Drawback Drawback Drawback Bbls. factor Bbls. factor Bbls. factor Bbls. factor
(10) Opening Inventory ...... 11,218 1.00126 21,221 .45962 9,242 4.52178 891 1.00244 (11) Production ...... 108,269 1.01300 308,002 .43642 292,492 4.64041 7,996 1.07895 (11–A) Receipts ...... (12) Exports ...... 11,218 1.00126 21,221 .45962 8,774 4.52178 195 1.00244 176 1.01300 104,397 .43642 (13) Drawback Deliveries ...... 696 1.00244 319 1.07895 (14) Domestic Shipments ...... 97,863 1.01300 180,957 .43642 468 4.52178 6,867 1.07895 278,286 4.64041 (15) Closing Inventory ...... 10,230 1.01300 22,648 .43642 14,206 4.64041 810 1.07895 Line (10)—Opening inventory from previous period’s closing inventory. Line (11)—From production period under consideration. Line (11–A)—Product received from other sources. Line (12)—From earliest on hand (inventory or production). Totals from drawback entry or entries recapitulated (see column 18). Line (13)—Deliveries for export or for designation against further manufacture—earliest on hand after exports are deducted. Line (14)—From earliest on hand after lines (12) and (13) are deducted. Line (15)—Balance on hand.
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EXHIBITD RECAPITULATION OF DRAWBACK ENTRY ABC OIL CO., INC -BEAUMONT, TEXAS REFINERY PERIOD FROM JANUARY 1, 2019 TO JANUARY 31, 2019
Duty paid on raw material selected for designation - $.1050 per bbl. (class III crude) Amount of drawback claimed - gross - 106,594 x .1 050 = $11,192 Less 1% - 112 Amount of drawback claimed- net $11,080
Col. (16) Lists only products exported. Col. (17) Quantities in condition as shown on the notices of exportation and notices of lading. Col. (18) Quantities in condition as shown on the abstract (i.e., less additives if any). These quantities will appear in line 12. Col. (19) The drawback factor(s) shown on line 12. Col (20) Raw material (crude or derivatives) allowable, determined by multiplying column 18 by 19. Col (20a) Raw material (crude or derivatives) allowable, for drawback deliveries determined by multiplying column 18 by column 19.
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EXHIBITE PRODUCIBILITY TEST FOR PRODUCTS EXPORTED (INCLUDING DRAWBACK DELIVERIES) ABC OIL CO., INC -BEAUMONT, TEXAS REFINERY PERIOD FROM JANUARY 1, 2019 TO JANUARY 31, 2019
Type and Class of Raw Material Designated - Crude, Class III
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EXHIBIT E-1 PRODUCIBILITY TEST FOR PRODUCTS ON WHICH RESIDUAL RIGHT TO DRAWBACK IS NOW CLAIMED AND PRODUCTS COVERED BY ABSTRACTS ON WHICH RAW MATERIALS COVERED WERE PREVIOUSLY DESIGNATED ABC OIL CO., INC - TULSA, OKLAHOMA REFINERY PERIOD FROM JANUARY 1, 2019 TO JANUARY 31, 2019
Type and Class of Raw Material Designated - Cmde. Class III
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EXHIBIT E (COMBINATION)—PRODUCIBILITY TEST FOR PRODUCTS EXPORTED (INCLUDING DRAWBACK DELIVERIES) ABC OIL CO., INC.; BEAUMONT, TEXAS REFINERY, PERIOD FROM JANUARY 1, 2019 TO JANUARY 31, 2019 [Type and Class of Raw Material Designated—Crude, Class III]
Quantity of raw material of type and class Quantity in Industry designated Crude allowed Product barrels standard needed to Drawback factor for drawback (%) produce product per barrel
(21) (22) (23) (24) (19) (20)
Aviation Gasoline 1 ...... 1 11,218 40 28,045 1.00126 11,232 1 176 40 440 1.01300 178 Residual Oils 1 ...... 1 21,221 83 25,567 .45962 9,754 1 104,397 83 125,780 .43642 45,561 Lubricating Oils 1 ...... 1 8,774 50 17,548 4.52178 39,674 Petrochemicals, Other 1 ...... 1 195 29 672 1.00244 195 Petrochemicals, Other 2 ...... 2 696 29 2,400 1.00244 698 Petrochemicals, Other 2 ...... 2 319 29 1,100 1.07895 344
Total ...... 146,996 ...... 107,636 1 Exports. 2 Drawback deliveries. A—Crude allowed (column 20: 107,636 bbls. (106,594 for export, plus 1,042 for drawback deliveries)). B—Total quantity exported (including drawback deliveries) (column 22): 146,996. C—Largest quantity of raw material needed to produce an individual exported product (see column 24): 151,347. D—The excess of raw material over the largest of lines A, B, or C, required to produce concurrently on a practical operating basis, using the most efficient processing equipment existing within the domestic industry, the exported articles (including drawback deliveries) in the quantities exported (or delivered): None. E—Minimum quantity of raw material required to be designated (which is A, B, or C, whichever is largest, plus D, if applicable): 151,347 bbs. I hereby certify that all the above drawback deliveries and products exported by the Beaumont refinery of ABC Oil Co., Inc. during the period from January 1, 1995 to January 31, 1995, could have been produced concurrently on a practical operating basis from 151,347 barrels of im- ported Class III crude against which drawback is claimed.
EXHIBIT F—DESIGNATIONS FOR DRAWBACK CLAIM, ABC OIL CO., INC.; BEAUMONT, TEXAS REFINERY [Period From January 1, 2019 to January 31, 2019]
Quantity of Entry No. Date of Kind of materials in Date Date Rate of importation materials barrels received consumed duty
26192 ...... 04/13/17 Class III Crude ...... 75,125 04/13/17 May 2017 ...... $.1050 23990 ...... 08/04/18 ...... do ...... 37,240 08/04/18 Oct. 2018...... 1050 22517 ...... 10/05/18 ...... do ...... 38,982 10/05/18 Nov. 2018...... 1050
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X. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) for Piece Goods (T.D. 83–73) A. Same 8-Digit HTSUS Classification (Parallel Columns)
1 Duty-paid, duty-free or domestic merchandise classifiable under the Imported merchandise or drawback products to be designated as the same 8-digit HTSUS subheading number as that designated which will basis for drawback on the exported products be used in the production of the exported products
Piece goods. Piece goods.
The piece goods used in manufacture will C. General Statement H. [Reserved] be classifiable under the same 8-digit HTSUS The manufacturer or producer classification as the piece goods designated I. Procedures and Records Maintained manufactures or produces for its own as the basis of claim for drawback, and are Records, which may include records kept used interchangeably without change in account. The manufacturer or producer may in the normal course of business, will be manufacturing processes or resultant manufacture or produce articles for the maintained to establish: products (including, if applicable, multiple account of another or another manufacturer 1. The identity, specifications, and 8-digit products), or wastes. Some tolerances or producer may manufacture or produce for HTSUS classification of the designated between imported-designated piece goods the account of the manufacturer or producer merchandise; and the used-exported piece goods will be under contract within the principal and 2. The quantity of merchandise classifiable permitted to accommodate variations which agency relationship outlined in T.D.s. under the same 8-digit HTSUS classification as the designated merchandise 2 used to are normally found in piece goods. These 55027(2) and 55207(1) (see § 190.9). tolerances are no greater than the tolerances produce the exported articles; generally allowed in the industry for piece D. Process of Manufacture or Production 3. That, within 5 years after the date of goods classifiable under the same 8-digit importation of the designated merchandise, Piece goods are subject to any one of the HTSUS classification as follows: the manufacturer or producer used the 1. A 4% weight tolerance so that the piece following finishing productions: merchandise to produce articles. During the goods used in manufacture will be not more 1. Bleaching, same 5-year period, the manufacturer or than 4% lighter or heavier than the imported 2. Mercerizing, producer produced 3 the exported articles. piece goods which will be designated; 3. Dyeing, To obtain drawback the claimant must 2. A tolerance of 4% in the aggregate 4. Printing, establish that the completed articles were thread count per square inch so that the piece 5. A combination of the above, or exported within 5 years after the importation goods used in manufacture will have an 6. Any additional finishing processes. of the imported merchandise. Records aggregate thread count within 4%, more or establishing compliance with these less of the aggregate thread count of the E. Multiple Products requirements will be available for audit by imported piece goods which will be Not applicable. CBP during business hours. Drawback is not designated. In each case, the average yarn payable without proof of compliance. number of the domestic piece goods will be F. Waste J. Inventory Procedures the same or greater than the average yarn Rag waste may be incurred. No drawback number of the imported piece goods The inventory records of the manufacturer is payable on any waste which results from designated, and in each case, the substitution or producer must show how the drawback and tolerance will be employed only within the manufacturing operation. Unless the recordkeeping requirements set forth in 19 the same family of fabrics, i.e., print cloth for claim for drawback is based on the quantity U.S.C. 1313(b) and part 190 of the CBP print cloth, gingham for gingham, greige for of merchandise appearing in the exported Regulations will be met, as discussed under greige, dyed for dyed, bleached for bleached, articles, the records of the manufacturer or the heading ‘‘Procedures And Records etc. The piece goods used in manufacture of producer must show the quantity of rag Maintained’’. If those records do not establish the exported articles will be designated as waste, if any, and its value. In instances satisfaction of those legal requirements, containing the identical percentage of where rag waste occurs and it is impractical drawback cannot be paid. identical fibers as the piece goods designated to account for the actual quantity of rag waste K. Basis of Claim for Drawback as the basis for allowance of drawback; for incurred, it may be assumed that such rag example, piece goods containing 65% cotton Drawback will be claimed on the quantity waste constituted 2% of the piece goods put and 35% dacron will be designated against of eligible piece goods used in producing the the use of piece goods shown to contain 65% into the finishing processes. If necessary to exported articles only if there is no waste or cotton and 35% dacron. The actual fiber establish the quantity of merchandise valueless or unrecovered waste in the composition may vary slightly from that (eligible piece goods) appearing in the manufacturing operation. Drawback may be described on the invoice or other acceptance exported articles, such waste records must claimed on the quantity of eligible piece of the fabric as having the composition also be kept. goods that appears in the exported articles, described on documents in accordance with regardless of whether there is waste, and no trade practices. Differences in value resulting G. Shrinkage, Gain, and Spoilage records of waste need be maintained. If there from factors other than quality, as for Unless the claim for drawback is based on is valuable waste recovered from the manufacturing operation and records are kept example, price fluctuations, will not the quantity of merchandise appearing in the preclude an allowance of drawback. which show the quantity and value of the exported articles, the records of the waste from each lot of piece goods, drawback B. Exported Articles on Which Drawback Will manufacturer or producer must show the may be claimed on the quantity of eligible Be Claimed yardage lost by shrinkage or gained by piece goods used to produce the exported Finished piece goods. stretching during manufacture or production, articles less the amount of piece goods which and the quantity of remnants resulting and of the value of the waste would replace. 1 Drawback products are those produced in the spoilage incurred, if any. If necessary to United States in accordance with the drawback law establish the quantity of merchandise 2 If claims are to be made on an ‘‘appearing in’’ and regulations. Such products have ‘‘dual status’’ (eligible piece goods) appearing in the basis, the remainder of this sentence should read under 19 U.S.C. 1313(b). They may be designated exported articles, such records for shrinkage, ‘‘appearing in the exported articles produced.’’ as the basis for drawback and also may be deemed 3 The date of production is the date an article is to be domestic merchandise. gain and spoilage will also be kept. completed.
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L. General Requirements E. For the purpose of distributing the the drawback office immediately after such The manufacturer or producer will: drawback, relative values must be established marking a statement showing the date of 1. Comply fully with the terms of this between hard refined (granulated) sugar, soft manufacture, the refinery manufacture general ruling when claiming drawback; refined (various grades) sugar, and sirups at number, the number of packages marked, and 2. Open its factory and records for the time of separation. The entire period the quantity of sugar or sirup contained examination at all reasonable hours by covered by an abstract will be deemed the therein. No drawback will be allowed in such authorized Government officers; time of separation of the sugars and sirups case on any sugar or sirup in excess of the 3. Keep its drawback related records and covered by such abstract. quantity shown on the statement as having supporting data for at least 3 years from the F. The sucrose allowance per pound on been marked. If any packages of sugar or date of liquidation of any drawback claim hard refined (granulated) sugar established sirup so marked are repacked into other predicated in whole or in part upon this by an abstract, as provided for in this general containers, the new containers must be general ruling; ruling, will be applied to hard refined sugar marked with the marks which appeared on 4. Keep its letter of notification of intent to commercially known as loaf, cut loaf, cube, the original containers and a revised operate under this general ruling current by pressed, crushed, or powdered sugar statement covering such repacking and reporting promptly to the drawback office manufactured from the granulated sugar remarking must be filed with the drawback which liquidates its claims any changes in covered by the abstract. office. If sirups from more than one lot are the information required by the General G. The sucrose allowance per gallon on stored in the same tank, the refinery records Instructions of this Appendix to be included sirup established by an abstract, as provided must show the refinery manufacture number therein (I. General Instructions, 1 through 10) for in this general ruling, will be applied to and the quantity of sirup from each lot or the corporate name or corporate sirup further advanced in value by filtration contained in such tank. organization by succession or or otherwise, unless such sirup is the subject N. An abstract from the foregoing records reincorporation; of a special manufacturing drawback ruling. covering manufacturing periods of not less 5. Keep a copy of this general ruling on file H. As to each lot of imported or domestic than 1 month nor more than 3 months, unless for ready reference by employees and require sugar used in the manufacture of refined a different period will have been authorized, all officials and employees concerned to sugar or sirup on which drawback is to be must be filed when drawback is to be familiarize themselves with the provisions of claimed, the raw stock records must show the claimed on any part of the refined sugar or this general ruling; and refiner’s raw lot number, the number and sirup manufactured during such period. Such 6. Issue instructions to insure proper character of the packages, the settlement abstract must be filed by each refiner with compliance with title 19, United States Code, weight in pounds, the settlement the drawback office where drawback claims section 1313, part 190 of the CBP Regulations polarization, and the 8-digit HTSUS are filed on the basis of this general ruling. and this general ruling. classification. Such records covering Such abstract must consist of: (1) A raw stock XI. General Manufacturing Drawback imported sugar must show, in addition to the record (accounting for Refiner’s raw lot No., Ruling Under 19 U.S.C. 1313(b) for Raw foregoing, the import entry number, date of Import entry No., Packages No. and kind, Sugar (T.D. 83–59) importation, name of importing carrier, Pounds, Polarization, By whom imported or country of origin, the Government weight, withdrawn, Date of importation, Date of Drawback may be allowed under 19 U.S.C. and the Government polarization. 1313(b) upon the exportation of hard or soft receipt by refiner, Date of melt, Importing I. The melt records must show the date of carrier, Country of origin); (2) A melt record refined sugars and sirups manufactured from melting, the number of pounds of each lot of raw sugar, subject to the following special [number of pounds in each lot melted] raw sugar melted, and the full analysis at (accounting for Lot No. Pounds, and requirements: melting. A. The drawback allowance must not Polarization degrees and pounds sucrose); (3) J. There must be kept a daily record of final Sirup stock records (accounting for Date of exceed an amount calculated pursuant to products boiled showing the date of the melt, regulations prescribed by the Secretary of the boiling, Refinery serial manufacture No., the date of boiling, the magma filling serial Quantity of sirup in gallons, and Pounds Treasury, of the duties, taxes, and fees paid number, the number of the vacuum pan or on a quantity of raw sugar designated by the sucrose contained therein); (4) Refined sugar crystallizer filling, the date worked off, and refiner which contains a quantity of sucrose stock record (accounting for Refinery serial the sirup filling serial number. not in excess of the quantity required to production No., Date of manufacture, Hard or K. The sirup manufacture records must manufacture the exported sugar or sirup, soft refined, Polarization and No., Net weight show the date of boiling, the period of the ascertained as provided in this general rule. in pounds); (5) Recapitulation (consisting of B. The refined sugars and sirups must have melt, the sirup filling serial number, the (in pounds): (a) Sucrose in process at been manufactured with the use of duty-paid, number of barrels in the filling, the magma beginning of period, (b) sucrose melted duty-free, or domestic sugar, or combinations filling serial number, the quantity of sirup, its during period, (c) sucrose in process at end thereof, within 5 years after the date of disposition in tanks or barrels and the of period, (d) sucrose used in manufacture, importation, and must have been exported refinery serial manufacture number. and (e) sucrose contained in manufacture, in within 5 years from the date of importation L. The refined sugar stock records must which item (a) plus item (b), minus item (c), of the designated sugar. show the refinery serial manufacture number, should equal item (d)); and (6) A statement C. All granulated sugar testing by the the period of the melt, the date of as follows: polariscope 99.5 [degrees] and over will be manufacture, the grade of sugar produced, its I, lllll, the lll refiner at the deemed hard refined sugar. All refined sugar polarization, the number and kind of lll refinery of lll, located at lll, testing by the polariscope less than 99.5 packages, and the net weight. When soft do solemnly and truly declare that each of [degrees] will be deemed soft refined sugar. sugars are manufactured, the commercial the statements contained in the foregoing All ‘‘blackstrap,’’ ‘‘unfiltered sirup,’’ and grade number and quantity of each must be abstract is true to the best of my knowledge ‘‘final molasses’’ will be deemed sirup. shown. and belief and can be verified by the refinery D. The imported duty-paid sugar selected M. Each lot of hard or soft refined sugar records, which have been kept in accordance by the refiner as the basis for the drawback and each lot of sirup manufactured, with Treasury Decision 83–59 and Appendix claim (designated sugar) must be classifiable regardless of the character of the containers A of 19 CFR part 190 and which are at all under the same 8-digit HTSUS classification or vessels in which it is packed or stored, times open to the inspection of CBP. must be marked immediately with the date as that used in the manufacture of the Date llllllllllllllllll exported refined sugar or sirup and must of manufacture and the refinery manufacture have been used within 5 years after the date number applied to it in the refinery records Signature llllllllllllllll of importation. Duty-paid sugar which has provided for and shown in the abstract, as O. The refiner must file with each abstract been used at a plant of a refiner within 5 provided for in this general ruling, from such a statement, showing the average market years after the date on which it was imported records. If all the sugar or sirup contained in values of the products specified in the by such refiner may be designated as the any lot manufactured is not intended for abstract and including a statement as follows: basis for the allowance of drawback on exportation, only such of the packages as are I, lllll, (Official capacity) of the refined sugars or sirups manufactured at intended for exportation need be marked as lll (Refinery), do solemnly and truly another plant of the same refiner. prescribed above, provided there is filed with declare that the values shown above are true
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to the best of my knowledge and belief, and Signature llllllllllllllll To obtain drawback the claimant must can be verified by our records. T. General Statement. The refiner establish that the completed articles were Date llllllllllllllllll manufactures or produces for its own exported within 5 years after the importation Signature llllllllllllllll account. The refiner may manufacture or of the imported merchandise. Records establishing compliance with these P. At the end of each calendar month the produce articles for the account of another or requirements will be available for audit by refiner must furnish to the drawback office a another manufacturer or producer may CBP during business hours. Drawback is not statement showing the actual sales of sirup manufacture or produce for the refiner’s payable without proof of compliance. and the average market values of refined account under contract within the principal sugars for the calendar month. and agency relationship outlined in T.D.s Y. General requirements. The refiner will: Q. The sucrose allowance to be applied to 55027(2) and 55207(1) (see § 190.9). 1. Comply fully with the terms of this the various products based on the abstract U. Waste. No drawback is payable on any general ruling when claiming drawback; and statement provided for in this general waste which results from the manufacturing 2. Open its factory and records for ruling will be in accordance with the operation. Unless drawback claims are based examination at all reasonable hours by authorized Government officers; example set forth in Treasury Decision 83– on the ‘‘appearing in’’ method, records will 3. Keep its drawback related records and 59. be maintained to establish the value (or the supporting data for at least 3 years from the R. [Reserved.] lack of value), the quantity, and the date of liquidation of any drawback claim S. Drawback entries under this general disposition of any waste that results from predicated in whole or in part upon this ruling must state the polarization in degrees manufacturing the exported articles. If no and the sucrose in pounds for the designated general ruling; waste results, records to establish that fact 4. Keep its letter of notification of intent to imported sugar. Drawback claims under this will be maintained. general ruling must include a statement as operate under this general ruling current by V. Loss or Gain. The refiner will maintain follows: reporting promptly to the drawback office records showing the extent of any loss or gain I, lllll, the lll of lll, located which liquidates its claims any changes in in net weight or measurement of the sugar at lll declare that the sugar (or sirup) the information required by the General described in this entry, was manufactured by caused by atmospheric conditions, chemical Instructions of this Appendix to be included said company at its refinery at lll and is reactions, or other factors. therein (I. General Instructions, 1 through 10) part of the sugar (or sirup) covered by W. [Reserved] or the corporate name or corporate abstract No. ll, filed at the port of ll; X. Procedures and Records Maintained. organization by succession or that, subject to 19 U.S.C. 1508 and 1313(t), Records, which may include records kept reincorporation; the refinery and other records of the in the normal course of business, will be 5. Keep a copy of this general ruling on file company verifying the statements contained maintained to establish: for ready reference by employees and require in said abstract are now and at all times 1. The identity, specifications, and 8-digit all officials and employees concerned to hereafter will be open to inspection by CBP. HTSUS classification of the designated familiarize themselves with the provisions of I further declare that the above-designated merchandise; this general ruling; and imported sugar (upon which the duties have 2. The quantity of merchandise classifiable 6. Issue instructions to insure proper been paid) was received by said company on under the same 8-digit HTSUS classification compliance with title 19, United States Code, l and was used in the manufacture of sugar as the designated merchandise 1 used to section 1313, part 190 of the CBP Regulations and sirup during the period covered by produce the exported articles; and and this general ruling. abstract No. ll, CBP No. ll, on file with 3. That, within 5 years of the date of XII. General Manufacturing Drawback the port director at lll. importation of the designated merchandise, Ruling Under 19 U.S.C. 1313(b) for Steel I further declare that the sugar or sirup the refiner used the designated merchandise (T.D. 81–74) specified therein was exported as stated in to produce articles. During the same 5-year the entry. period, the refiner produced 2 the exported A. Same 8-Digit HTSUS Classification Date llllllllllllllllll articles. (Parallel Columns)
Duty-paid, duty-free or domestic merchandise classifiable under the Imported merchandise or drawback products 1 to be designated as the same 8-digit HTSUS subheading number as that designated which will basis for drawback on the exported products be used in the production of the exported products.
Steel of one general class, e.g., an ingot, falling within on SAE, AISI, or Steel of the same general class, specification, and grade as the steel ASTM 2 specification and, if the specification contains one or more in the column immediately to the left hereof. grades, falling within one grade of the specification.
1. The duty-paid, duty-free, or domestic (e.g., chrome content). If such variances set forth in the parallel columns, the base- steel used instead of the imported, duty-paid occur, designation will be by ‘‘price extra’’, metal coating or plating on the duty-paid, steel (or drawback products) will be and in no case will drawback be claimed in duty-free, or domestic steel used in place of interchangeable for manufacturing purposes a greater amount than that which would have the duty-paid steel (or drawback products) with the duty-paid steel. To be accrued to that steel used in manufacture of will have the same composition and interchangeable a steel must be able to be or appearing in the exported articles. Price thickness as the coating or plating on the used in place of the substituted steel without extra is not available for coated or plated any additional processing step in the steel, covered in paragraph 4, infra, insofar as duty-paid steel. If the coated or plated duty- manufacture of the article on which the coating or plating is concerned. paid steel is within an SAE, AISI, ASTM drawback is to be claimed. 3. Any fluctuation in market value caused specification, then any duty-paid, duty-free, 2. Because the duty-paid steel (or drawback by a factor other than quality does not affect or domestic coated or plated steel must be products) that is to be designated as the basis drawback. covered by the same specification and grade for drawback is dutiable according to its 4. If the steel is coated or plated with a (if two or more grades are in the value, the amount of duty can vary with its base metal, in addition to meeting the specification). size (gauge, width, or length) or composition requirements for uncoated or unplated steel
1 If claims are to be made on an ‘‘appearing in’’ 1 Drawback products are those produced in the 2 Standards set by the Society of Automotive basis, the remainder of this sentence should read United States in accordance with the drawback law Engineers (SAE), the American Iron and Steel ‘‘appearing in the exported articles produced.’’ and regulations. Such products have ‘‘dual status’’ Institute (AISI), or the American Society for Testing under section 1313(b). They may be designated as 2 The date of production is the date an article is and Materials (ASTM). the basis for drawback and also may be deemed to completed. be domestic merchandise.
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B. Exported Articles on Which Drawback Will H. [Reserved] recovered from the manufacturing operation Be Claimed and records are kept which show the I. Procedures and Records Maintained The exported articles will have been quantity and value of the waste from each lot Records, which may include records kept manufactured in the United States using of steel, drawback may be claimed on the in the normal course of business, will be steels described in the parallel columns quantity of eligible steel used to produce the maintained to establish: above. exported articles less the amount of that steel 1. The identity, specifications, and 8-digit which the value of the waste would replace. C. General Statement HTSUS classification of the designated The manufacturer or producer merchandise; L. General Requirements 2. The quantity of merchandise of the manufactures or produces for its own The manufacturer or producer will: designated merchandise 3 used to produce account. the exported articles; 1. Comply fully with the terms of this The manufacturer or producer may 3. That, within 5 years of the date of general ruling when claiming drawback; manufacture or produce articles for the importation of the designated merchandise, 2. Open its factory and records for account of another or another manufacturer the manufacturer or producer used the examination at all reasonable hours by or producer may manufacture or produce for merchandise to produce articles. During the authorized Government officers; the account of the manufacturer or producer same 5-year period, the manufacturer or 3. Keep its drawback related records and under contract within the principal and producer produced 4 the exported articles. supporting data for at least 3 years from the agency relationship outlined in T.D.s To obtain drawback the claimant must date of liquidation of any drawback claim 55027(2) and 55207(1) (see § 190.9). establish that the completed articles were predicated in whole or in part upon this D. Process of Manufacture or Production exported within 5 years after the importation general ruling; of the imported merchandise. Records 4. Keep its letter of notification to operate The steel described in the parallel columns establishing compliance with these will be used to manufacture or produce under this general ruling current by reporting requirements will be available for audit by promptly to the drawback office which articles in accordance with § 190.2. CBP during business hours. Drawback is not liquidates its claims any changes in the payable without proof of compliance. E. Multiple Products information required by the General Not applicable. J. Inventory Procedures Instructions of this Appendix to be included therein (I. General Instructions, 1 through 10) F. Waste The inventory records of the manufacturer or producer must show how the drawback or the corporate name or corporate No drawback is payable on any waste recordkeeping requirements set forth in 19 organization by succession or which results from the manufacturing U.S.C. 1313(b) and part 190 of the CBP reincorporation; operation. Unless the claim for drawback is Regulations will be met, as discussed under 5. Keep a copy of this general ruling on file based on the quantity of steel appearing in the heading ‘‘Procedures And Records for ready reference by employees and require the exported articles, records will be Maintained’’. If those records do not establish all officials and employees concerned to maintained to establish the value (or the lack satisfaction of those legal requirements, familiarize themselves with the provisions of of value), the quantity, and the disposition of drawback cannot be paid. this general ruling; and any waste that results from manufacturing the exported articles. If no waste results, K. Basis of Claim for Drawback 6. Issue instructions to insure proper records to establish that fact will be Drawback will be claimed on the quantity compliance with title 19, United States Code, maintained. of steel used in producing the exported section 1313, part 190 of the CBP Regulations articles only if there is no waste or valueless and this general ruling. G. Loss or Gain or unrecovered waste in the manufacturing XIII. General Manufacturing Drawback The manufacturer or producer will operation. Drawback may be claimed on the Ruling Under 19 U.S.C. 1313(b) for Sugar maintain records showing the extent of any quantity of eligible steel that appears in the (T.D. 81–92) loss or gain in net weight or measurement of exported articles, regardless of whether there the steel caused by atmospheric conditions, is waste, and no records of waste need be A. Same 8-Digit HTSUS Classification chemical reactions, or other factors. maintained. If there is valuable waste (Parallel Columns)
1 Duty-paid, duty-free or domestic merchandise classifiable under the Imported merchandise or drawback products to be designated as the same 8-digit HTSUS subheading number as that designated which will basis for drawback on the exported products be used in the production of the exported products
1. Granulated or liquid sugar for manufacturing, containing sugar solids 1. Granulated or liquid sugar for manufacturing, containing sugar solids of not less than 99.5 sugar degrees. of less than 99.5 sugar degrees. 2. Granulated or liquid sugar for manufacturing, containing sugar solids 2. Granulated or liquid sugar for manufacturing, containing sugar solids of not less than 99.5 sugar degrees. of less than 99.5 sugar degrees.
The sugars listed above test within three- B. Exported Articles on Which Drawback Will or producer may manufacture or produce for tenths of a degree on the polariscope. Sugars Be Claimed the account of the manufacturer or producer in each column are completely Edible substances (including under contract within the principal and agency relationship outlined in T.D.s interchangeable with the sugars directly confectionery) and/or beverages and/or 55027(2) and 55207(1) (see § 190.9). opposite and designation will be made on ingredients therefor. this basis only. The designated sugar on D. Process of Manufacture or Production C. General Statement which claims for drawback will be based will The sugars are subjected to one or more of be classifiable under the same 8-digit HTSUS The manufacturer or producer the following operations to form the desired classification. Differences in value resulting manufactures or produces for its own product(s): from factors other than quality, such as account. The manufacturer or producer may 1. Mixing with other substances, market fluctuation, will not affect the manufacture or produce articles for the 2. Cooking with other substances, allowance of drawback. account of another or another manufacturer 3. Boiling with other substances,
3 If claims are to be made on an ‘‘appearing in’’ 4 The date of production is the date an article is and regulations. Such products have ‘‘dual status’’ basis, the remainder of this sentence should read completed. under section 1313(b). They may be designated as ‘‘appearing in the exported articles produced.’’ 1 Drawback products are those produced in the the basis for drawback and also may be deemed to United States in accordance with the drawback law be domestic merchandise.
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4. Baking with other substances, exported articles regardless of whether there account of another or another manufacturer 5. Additional similar processes. is waste, and no records of waste need be or producer may manufacture or produce for maintained. If there is valuable waste the account of the manufacturer or producer E. Multiple Products recovered from the manufacturing operation under contract within the principal and Not applicable. and records are kept which show the agency relationship outlined in T.D.s F. Waste quantity and value of the waste, drawback 55027(2) and 55207(1) (see § 190.9). may be claimed on the quantity of eligible No drawback is payable on any waste material used to produce the exported D. Process of Manufacture or Production which results from the manufacturing articles less the amount of that sugar which The imported merchandise or drawback operation. Unless the claim for drawback is the value of the waste would replace. products will be used to manufacture or based on the quantity of sugar appearing in produce articles in accordance with § 190.2. the exported articles, records will be L. General Requirements The piece goods used in manufacture or maintained to establish the value (or the lack The manufacturer or producer will: production under this general manufacturing of value), the quantity, and the disposition of 1. Comply fully with the terms of this drawback ruling may also be subjected to one any waste that results from manufacturing general ruling when claiming drawback; or more finishing processes. Drawback will the exported articles. If no waste results, 2. Open its factory and records for not be allowed under this general records to establish that fact will be examination at all reasonable hours by manufacturing drawback ruling when the maintained. authorized Government officers; process performed results only in the G. Loss or Gain 3. Keep its drawback related records and restoration of the merchandise to its supporting data for at least 3 years from the condition at the time of importation. The manufacturer or producer will date of liquidation of any drawback claim maintain records showing the extent of any predicated in whole or in part upon this E. Multiple Products loss or gain in net weight or measurement of general ruling; Not applicable. the sugar caused by atmospheric conditions, 4. Keep its letter of notification of intent to F. Waste chemical reactions, or other factors. operate under this general ruling current by H. [Reserved] reporting promptly to the drawback office Rag waste may be incurred. No drawback which liquidates its claims any changes in is payable on any waste which results from I. Procedures And Records Maintained the information required by the General the manufacturing operation. Unless the Records, which may include records kept Instructions of this Appendix to be included claim for drawback is based on the quantity in the normal course of business, will be therein (I. General Instructions, 1 through 10) of merchandise appearing in the exported maintained to establish: or the corporate name or corporate articles, the records of the manufacturer or 1. The identity, specifications, and 8-digit organization by succession or producer must show the quantity of rag HTSUS classification of the designated reincorporation; waste, if any, its value, and its disposition. merchandise; 5. Keep a copy of this general ruling on file If no waste results, records will be 2. The quantity of merchandise classifiable for ready reference by employees and require maintained to establish that fact. In instances under the same 8-digit HTSUS classification all officials and employees concerned to where rag waste occurs and it is impractical as the designated merchandise 2 used to familiarize themselves with the provisions of to account for the actual quantity of rag waste produce the exported articles; this general ruling; and incurred, it may be assumed that such rag 3. That, within 5 years of the date of 6. Issue instructions to insure proper waste constituted 2% of the woven piece importation of the designated merchandise, compliance with title 19, United States Code, goods put into process. If necessary to the manufacturer or producer used the section 1313, part 190 of the CBP Regulations establish the quantity of merchandise merchandise to produce articles. During the and this general ruling. (eligible piece goods) appearing in the same 5-year period, the manufacturer or exported articles, such waste records will XIV. General Manufacturing Drawback producer produced 3 the exported articles. also be kept. Ruling Under 19 U.S.C. 1313(a) for Woven To obtain drawback the claimant must Piece Goods (T.D. 83–84) G. Shrinkage, Gain, and Spoilage establish that the completed articles were exported within 5 years after the importation Drawback may be allowed under 19 U.S.C. Unless the claim for drawback is based on of the imported merchandise. Records 1313(a) upon the exportation of bleached, the quantity of merchandise appearing in the establishing compliance with these mercerized, printed, dyed, or redyed piece exported articles, the records of the requirements will be available for audit by goods manufactured or produced by any one manufacturer or producer must show the CBP during business hours. Drawback is not or a combination of the foregoing processes yardage lost by shrinkage or gained by payable without proof of compliance. with the use of imported woven piece goods, stretching during manufacture, and the subject to the following special requirements: quantity of remnants resulting and of J. Inventory Procedures spoilage incurred, if any. If necessary to A. Imported Merchandise or Drawback The inventory records of the manufacturer establish the quantity of merchandise Products 1 or producer, will show how the drawback Used (eligible piece goods) appearing in the recordkeeping requirements set forth in 19 Imported merchandise or drawback exported articles, such records for shrinkage, U.S.C. 1313(b) and part 190 of the CBP products (woven piece goods) are used in the gain, and spoilage will also be kept. Regulations will be met, as discussed under manufacture of the exported articles upon H. Procedures and Records Maintained the heading ‘‘Procedures And Records which drawback claims will be based. Maintained’’. If those records do not establish Records, which may include records kept B. Exported Articles on Which Drawback Will satisfaction of those legal requirements, in the normal course of business, will be Be Claimed drawback cannot be paid. maintained to establish: Exported articles on which drawback will 1. That the exported articles on which K. Basis of Claim for Drawback be claimed will be manufactured in the drawback is claimed were produced with the Drawback will be claimed on the quantity United States using imported merchandise or use of the imported merchandise; and of sugar used in producing the exported drawback products. 2. The quantity of imported merchandise 2 articles only if there is no waste or valueless used in producing the exported articles. C. General Statement or unrecovered waste in the manufacturing To obtain drawback the claimant must operation. Drawback may be claimed on the The manufacturer or producer establish that the completed articles were quantity of eligible sugar that appears in the manufactures or produces for its own exported within 5 years after importation of account. The manufacturer or producer may the imported merchandise. Records 2 If claims are to be made on an ‘‘appearing in’’ manufacture or produce articles for the establishing compliance with these basis, the remainder of this sentence should read ‘‘appearing in the exported articles produced.’’ 1 Drawback products are those produced in the 2 If claims are to be made on an ‘‘appearing in’’ 3 The date of production is the date an article is United States in accordance with the drawback law basis, the remainder of the sentence should read completed. and regulations. ‘‘appearing in the exported articles.’’
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requirements will be available for audit by reporting promptly to the drawback office of articles intended for exportation with the CBP during business hours. Drawback is not which liquidates its claims any changes in benefit of drawback must apply for a specific payable without proof of compliance. the information required by the General manufacturing drawback ruling, unless Instructions of this Appendix to be included operating under a general manufacturing I. Inventory Procedures therein (I. General Instructions, 1 through 10) drawback ruling under § 190.7 of the CBP The inventory records of the manufacturer or the corporate name or corporate Regulations. CBP will not approve an or producer must show how the drawback organization by succession or application which shows an unincorporated recordkeeping requirements set forth in 19 reincorporation. division or company as the applicant (see U.S.C. 1313(a) and part 190 of the CBP 5. Keep a copy of this general ruling on file § 190.8(a)).) Regulations will be met, as discussed under for ready reference by employees and require the heading ‘‘Procedures and Records all officials and employees concerned to LOCATION OF FACTORY Maintained’’. If those records do not establish familiarize themselves with the provisions of (Give the address of the factory(s) where satisfaction of those legal requirements, this general ruling; and the process of manufacture or production drawback cannot be paid. 6. Issue instructions to insure proper will take place. If the factory is a different The records of the manufacturer or compliance with 19, United States Code, legal entity from the applicant, so state and producer must show, as to each lot of piece § 1313, part 190 of the CBP Regulations and indicate if operating under an Agent’s general goods manufactured or produced for this general ruling. manufacturing drawback ruling.) exportation with benefit of drawback, the lot PERSONS WHO WILL SIGN DRAWBACK number and the date or inclusive dates of Appendix B to Part 190—Sample DOCUMENTS manufacture or production, the quantity, Formats for Applications for Specific identity, value, and 8-digit HTSUS Manufacturing Drawback Rulings (List persons legally authorized to bind the classification of the imported (or drawback corporation who will sign drawback product) piece goods used, the condition in Table of Contents documents. Section 190.6 of the CBP which imported or received (whether in the Regulations permits only the president, vice I. General gray, bleached, dyed, or mercerized), the president, secretary, treasurer, or any II. Format for Application for Specific working allowance specified in the contract employee legally authorized to bind the Manufacturing Drawback Ruling Under under which they are received, the process corporation to sign for a corporation. In 19 U.S.C. 1313(a) and 1313(b) or processes applied thereto, and the quantity addition, a person within a business entity (Combination) and description of the piece goods obtained. with a customs power of attorney for the III. Format for Application for Specific The records must also show the yardage lost company may sign. A customs power of Manufacturing Drawback Ruling Under by shrinkage or gained by stretching during attorney may also be given to a licensed 19 U.S.C. 1313(b) manufacture or production, and the quantity customs broker. This heading should be IV. Format for Application for Specific of remnants resulting and of spoilage changed to Names of Partners or Proprietor Manufacturing Drawback Ruling Under incurred. in the case of a partnership or sole 19 U.S.C. 1313(d) proprietorship, respectively (see footnote at J. Basis of Claim for Drawback V. Format for Application for Specific end of this sample format for persons who Drawback will be claimed on the quantity Manufacturing Drawback Ruling Under may sign applications for specific of merchandise used in producing the 19 U.S.C. 1313(g) manufacturing drawback rulings).) exported articles only if there is no waste or I. General CBP OFFICE WHERE DRAWBACK CLAIMS valueless or unrecovered waste in the WILL BE FILED manufacturing operation. Drawback may be Applications for specific manufacturing claimed on the quantity of eligible drawback rulings using these sample formats (The four offices where drawback claims merchandise that appears in the exported must be submitted to and reviewed and can be filed are located at: New York, NY; articles, regardless of whether there is waste, approved by CBP Headquarters. See 19 CFR Houston, TX; Chicago, IL; San Francisco, and no records of waste need be maintained. 190.8. A specific manufacturing drawback CA.) If there is valuable waste recovered from the ruling consists of the letter of approval that (An original application and two copies manufacturing operation and records are kept CBP issues to the applicant. In these must be filed. If the applicant intends to file which show the quantity and value of the application formats, remarks in parentheses drawback claims at more than one drawback waste, drawback may be claimed on the and footnotes are for explanatory purposes office, one additional copy of the application quantity of eligible material used to produce only and should not be copied. Other must be furnished for each additional office the exported articles, less the amount of that material should be quoted directly in the indicated.) applications. merchandise which the value of the waste GENERAL STATEMENT would replace. (If remnants and/or spoilage II. Format for Application for Specific occur during manufacture or production, the (The following questions must be Manufacturing Drawback Ruling Under 19 answered:) quantity of imported merchandise used will U.S.C. 1313(a) and 1313(b) (Combination) be determined by deducting from the 1. Who will be the importer of the quantity of piece goods received and put into COMPANY LETTERHEAD (Optional) designated merchandise? manufacture or production the quantity of U.S. Customs and Border Protection, Entry (If the applicant will not always be the such remnants and/or spoilage. The Process and Duty Refunds, Regulations and importer of the designated merchandise, does remaining quantity will be reduced by the Rulings, Office of Trade, 90 K Street NE— the applicant understand its obligations to quantity thereof which the value of the rag 10th Floor (Mail Stop 1177), Washington, DC maintain records to support the transfer waste, if any, would replace.) 20229–1177. under § 190.10, and its liability under Dear Sir or Madam: We, (Applicant’s § 190.63?) K. General Requirements Name), a (State, e.g., Delaware) corporation 2. Will an agent be used to process the The manufacturer or producer will: (or other described entity) submit this designated or the substituted merchandise 1. Comply fully with the terms of this application for a specific manufacturing into articles? general ruling when claiming drawback; drawback ruling that our manufacturing (If an agent is to be used, the applicant 2. Open its factory and records for operations qualify for drawback under title must state it will comply with T.D.s 55027(2) examination at all reasonable hours by 19, United States Code, §§ 1313 (a) & (b), and and 55207(1) and § 190.9, as applicable, and authorized Government officers; part 190 of the CBP Regulations. We request that its agent will submit a letter of 3. Keep its drawback related records and that CBP authorize drawback on the basis of notification of intent to operate under the supporting data for at least 3 years from the this application. general manufacturing drawback ruling for date of liquidation of any drawback claim agents (see § 190.7 and Appendix A) or an predicated in whole or in part upon this NAME AND ADDRESS AND IRS NUMBER application for a specific manufacturing general ruling; (WITH SUFFIX) OF APPLICANT drawback ruling (see § 190.8 and this 4. Keep its letter of notification of intent to (Section 190.8(a) of the CBP Regulations Appendix B).) operate under this general ruling current by provides that each manufacturer or producer 3. Will the applicant be the exporter?
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(If the applicant will not be the exporter in the right to claim drawback with the PROCEDURES UNDER SECTION 1313(b) every case but will be the claimant, the knowledge and written consent of the (PARALLEL COLUMNS—‘‘SAME 8-DIGIT manufacturer must state that it will reserve exporter (19 CFR 190.82).) CLASSIFICATION’’)
1 Duty-paid, duty-free or domestic merchandise of the same 8-digit Imported merchandise or drawback products to be designated as the HTSUS subheading number as that designated which will be used in basis for drawback on the exported products the production of the exported products
1. 1. 2. 2. 3. 3.
(Following the items listed in the parallel chemical, state the chemical’s generic name (This section should contain a description columns, a statement will be made, by the as well as its trade name plus any generally of the process by which each item of applicant, that affirms the same 8-digit recognized identifying number, e.g., CAS merchandise listed in the parallel columns HTSUS classification of the merchandise. number; Color Index Number, etc.) (In order above is used to make or produce every This statement should be included in the to expedite the specific manufacturing article that is to be exported.) application exactly as it is stated below:) drawback ruling process, it will be helpful if MULTIPLE PRODUCTS The imported merchandise which we will you provide copies of technical standards/ designate in our claims will be classifiable specifications (particularly industry 1. Relative Values under the same 8-digit HTSUS classification standards such as ASTM standards) referred (Some processes result in the separation of as the merchandise used in producing the to in your application.) the merchandise used in the same operation exported articles on which we claim (The descriptions of the ‘‘the same 8-digit into two or more products. List all of the drawback. HTSUS subheading number’’ merchandise Fluctuations in the market value resulting should be formatted in the parallel columns. products. State that you will record the from factors other than quality will not affect The left-hand column will consist of the market value of each product at the time it the drawback. name and specifications of the designated is first separated in the manufacturing (In order to successfully claim drawback it imported merchandise under the heading set process. If this section is not applicable to is necessary to prove that the duty-paid, forth above. The right-hand column will you, then state so.) duty-free or domestic merchandise which is consist of the name, specifications, and 8- (Drawback law mandates the assignment of to be substituted for the imported digit HTSUS subheading number for the relative values when two or more products merchandise is ‘‘classifiable under the same duty-paid, duty-free or domestic necessarily are produced concurrently in the 8-digit HTSUS classification’’. In order to merchandise under the heading set forth same operation. For instance, the refining of enable CBP to rule on ‘‘the same 8-digit above. Amendments to rulings will be flaxseed necessarily produces linseed oil and HTSUS classification’’, the application must required if any changes to the HTSUS linseed husks (animal feed), and drawback include a detailed description of the classifications occur.) must be distributed to each product in designated imported merchandise and of the EXPORTED ARTICLES ON WHICH accordance with its relative value. However, substituted duty-paid, duty-free or domestic the voluntary election of a steel fabricator, for merchandise to be used to produce the DRAWBACK WILL BE CLAIMED instance, to use part of a lot of imported steel exported articles, as well as provide the Bill (Name each article to be exported. When to produce automobile doors and part of the of Materials and/or formulas annotated with the identity of the product is not clearly lot to produce automobile fenders does not the HTSUS classifications.) evident by its name state what the product (It is essential that all the characteristics is, e.g., a herbicide. There must be a match call for relative value distribution.) which determine the quality of the between each article described under the (The relative value of a product is its value merchandise are provided in the application PROCESS OF MANUFACTURE OR divided by the total value of all products, in order to substantiate that the merchandise PRODUCTION section below and each article whether or not exported. For example, 100 meets the ‘‘the same 8-digit HTSUS listed here.) gallons of drawback merchandise are used to produce 100 gallons of products, including classification’’ statutory requirement. These PROCESS OF MANUFACTURE OR 60 gallons of product A, 20 gallons of characteristics should clearly distinguish PRODUCTION merchandise of different qualities. For product B, and 20 gallons of product C. At example, USDA standards; FDA standards; (Drawback under § 1313(b) is not allowable the time of separation, the unit values of industry standards, e.g., ASTM; except where a manufacture or production products A, B, and C are $5, $10, and $50 concentration; specific gravity; purity; luster; exists. Manufacture or production is defined, respectively. The relative value of product A for drawback purposes, in § 190.2. In order to melting point, boiling point; odor; color; is $300 divided by $1500 or 1⁄5. The relative obtain drawback under § 1313(b), it is grade; type; hardness; brittleness; etc. Note value of B is 2⁄15 and of product C is 2⁄3, that these are only a few examples of essential for the applicant to show use in calculated in the same manner. This means manufacture or production by giving a characteristics and that each kind of that 1⁄5 of the drawback product payments thorough description of the manufacturing merchandise has its own set of specifications will be distributed to product A, 2⁄15 to process. This description should include the that characterizes its quality. If specifications product B, and 2⁄3 to product C.) name and exact condition of the merchandise are given with a minimum value, be sure to (Drawback is allowable on exports of any listed in the Parallel Columns, a complete include a maximum value. The converse is of multiple products, but is not allowable on also true. Often characteristics are given to explanation of the processes to which it is subjected in this country, the effect of such exports of valuable waste. In making this CBP on attached specification sheets. These distinction between a product and valuable specifications should not include Material processes, the name and exact description of the finished article, and the use for which the waste, the applicant should address the Safety Data sheets or other descriptions of the following significant elements: (1) The nature merchandise that do not contribute to the finished article is intended. When applicable, give equations of the chemical reactions. The of the material of which the residue is ‘‘same 8-digit HTSUS subheading number’’ composed; (2) the value of the residue as determination. When the merchandise is a attachment of a flow chart in addition to the description showing the manufacturing compared to the value of the principal process is an excellent means of illustrating manufactured product and the raw material; 1 Drawback products are those produced in the whether or not a manufacture or production (3) the use to which it is put; (4) its status United States in accordance with the drawback law under the tariff laws, if imported; (5) whether and regulations. Such products have ‘‘dual status’’ has occurred. Flow charts can clearly under section 1313(b). They may be designated as illustrate if and at what point during the it is a commodity recognized in commerce; the basis for drawback and also may be deemed to manufacturing process by-products and (6) whether it must be subjected to some be domestic merchandise. wastes are generated.) process to make it saleable.)
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2. Producibility Stock in process may exist when residual the importation of the imported merchandise. (Some processes result in the separation of material resulting from a manufacturing or Our records establishing our compliance fixed proportions of each product, while processing operation is reintroduced into a with these requirements will be available for other processes afford the opportunity to subsequent manufacturing or processing audit by CBP during business hours. We increase or decrease the proportion of each operation; e.g., trim pieces from a cast article. understand that drawback is not payable product. An example of the latter is The effect of stock in process on a drawback without proof of compliance. petroleum refining, where the refiner has the claim is that the amount of drawback for the INVENTORY PROCEDURES option to increase or decrease the production period in which the stock in process was withdrawn from the manufacturing or (Describe your inventory records and state of one or more products relative to the others. how those records will meet the drawback State under this heading whether you can or processing operation (or the manufactured article, if manufacturing or processing recordkeeping requirements set forth in 19 cannot vary the proportionate quantity of U.S.C. 1313(b) and part 190 of the CBP each product.) (The MULTIPLE PRODUCTS periods are not used) is reduced by the quantity of merchandise or drawback Regulations as discussed under the heading section consists of two sub-sections: Relative PROCEDURES AND RECORDS Values and Producibility. If multiple products used to produce the stock in process if the ‘‘used in’’ or ‘‘used in less MAINTAINED. To insure compliance the products do not result from your operation following areas, as applicable, should be state ‘‘not applicable’’ for the entire section. valuable waste’’ methods are used (if the included in your discussion:) If multiple products do result from your ‘‘appearing in’’ method is used, there will be operation Relative Values will always apply. no effect on the amount of drawback), and RECEIPT AND STORAGE OF DESIGNATED However, Producibility may or may not the quantity of merchandise or drawback MERCHANDISE apply. If Producibility does not apply to your products used to produce the stock in process is added to the merchandise or RECORDS OF USE OF DESIGNATED multiple product operation state ‘‘Not MERCHANDISE Applicable’’ for this sub-section.) drawback products used in the subsequent manufacturing or production period (or the BILLS OF MATERIALS WASTE subsequently produced article)). (Many processes result in residue materials (If stock in process occurs and claims are MANUFACTURING RECORDS which, for drawback purposes, are treated as to be based on stock in process, the WASTE RECORDS wastes. Describe any residue materials which application must include a statement to that you believe should be so treated. If no waste effect. The application must also include a RECORDS OF USE OF DUTY-PAID, DUTY- results, include a positive statement to that statement that merchandise is considered to FREE OR DOMESTIC MERCHANDISE OF effect under this heading.) be used in manufacture at the time it was THE REQUIRED SAME 8-DIGIT HTSUS (If waste occurs, state: (1) Whether or not originally processed so that the stock in SUBHEADING NUMBER WITHIN 5 YEARS it is recovered, (2) whether or not it is process will not be included twice in the AFTER THE DATE OF IMPORTATION valueless, and (3) what you do with it. This computation of the merchandise used to information is required whether claims are manufacture the finished articles on which FINISHED STOCK STORAGE RECORDS made on a ‘‘used in’’ or ‘‘appearing in’’ basis drawback is claimed.) SHIPPING RECORDS and regardless of the amount of waste LOSS OR GAIN (Separate and distinct from (Proof of time frames may be specific or incurred.) WASTE) (Irrecoverable wastes are those consisting inclusive, e.g., within 120 days, but specific of materials which are lost in the process. (Some manufacturing processes result in proof is preferable. Separate storage and Valueless wastes are those which may be an intangible loss or gain of the net weight identification of each article or lot of recovered but have no value. These or measurement of the merchandise used. merchandise usually will permit specific irrecoverable and valueless wastes do not This loss or gain is caused by atmospheric proof of exact dates. Proof of inclusive dates reduce the drawback claim provided the conditions, chemical reactions, or other of use, production or export may be claim is based on the quantity of imported factors. State the approximate usual acceptable, but in such cases it is best to material used in manufacturing. If the claim percentage or quantity of such loss or gain. describe very specifically the data you intend is based upon the quantity of imported Note that percentage values will be to use to establish each legal requirement, merchandise appearing in the exported considered to be measured ‘‘by weight’’ thereby avoiding misunderstandings at the article, irrecoverable and valueless waste will unless otherwise specified. Loss or gain does time of audit.) (If you do not describe the cause a reduction in the amount of not occur during all manufacturing inventory records that you will use, a drawback.) processes. If loss or gain does not apply to statement that the legal requirements will be (Valuable wastes are those recovered your manufacturing process, state ‘‘Not met by your inventory procedures is wastes which have a value either for sale or Applicable.’’) acceptable. However, it should be noted that without a detailed description of the for use in a different manufacturing process. PROCEDURES AND RECORDS inventory procedures set forth in the However, it should be noted that this MAINTAINED standard applies to the entire industry and is application a judgment as to the adequacy of not a selection on your part. An option by We will maintain records to establish: such a statement cannot be made until a you not to choose to sell or use the waste in 1. The identity, specifications, and 8-digit drawback claim is verified. Approval of this some different operation does not make it HTSUS subheading number of the application for a specific manufacturing valueless if another manufacturer can use the merchandise we designate; drawback ruling merely constitutes approval waste. State what you do with the waste. If 2. The quantity of merchandise classifiable of the ruling application as submitted; it does you have to pay someone to get rid of it, or under the same 8-digit HTSUS subheading not constitute approval of the applicant’s 2 if you have buyers for the waste, you must number as the designated merchandise we record keeping procedures if, for example, state so in your application regardless of used to produce the exported articles; those procedures are merely described as what ‘‘Basis’’ you are using.) 3. That, within 5 years after the date of meeting the legal requirements, without (If you recover valuable waste and if you importation, we used the designated specifically stating how the requirements choose to claim on the basis of the quantity merchandise to produce articles. During the will be met. Drawback is not payable without of imported or substituted merchandise used same 5-year period, we produced 3 the proof of compliance.) exported articles. in producing the exported articles (less BASIS OF CLAIM FOR DRAWBACK valuable waste), state that you will keep We realize that to obtain drawback the records to establish the quantity and value of claimant must establish that the completed (There are three different bases that may be the waste recovered. See ‘‘Basis of Claim for articles were exported within 5 years after used to claim drawback: (1) Used in; (2) Drawback’’ section below.) appearing in; and (3) used in less valuable 2 waste.) STOCK IN PROCESS If claims are to be made on an ‘‘appearing in’’ basis, the remainder of this sentence should read (The ‘‘used in’’ basis may be employed (Some processes result in another type of ‘‘appearing in the exported articles we produce.’’ only if there is either no waste or valueless residual material, namely, stock in process, 3 The date of production is the date an article is or unrecovered waste in the operation. which affects the allowance of drawback. completed. Irrecoverable or valueless waste does not
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reduce the amount of drawback when claims ‘‘appearing in’’ as set forth in the above (If the merchandise used under § 1313(a) is are based on the ‘‘used in’’ basis. Drawback examples.) not also used under § 1313(b), the sections is payable in the amount of 99 percent of the (Two methods exist for the manufacturer to entitled PROCESS OF MANUFACTURE OR duties, taxes, and fees paid on the quantity show the quantity of material used or PRODUCTION, BY-PRODUCTS, LOSS OR of imported material designated as the basis appearing in the exported article: (1) GAIN, and STOCK IN PROCESS should be for the allowance of drawback on the Schedule or (2) Abstract.) included here to cover merchandise used exported articles. The designated quantity (A ‘‘schedule’’ shows the quantity of under § 1313(a). However, if the merchandise may not exceed the quantity of material material used in producing each unit of used under § 1313(a) is also used under actually used in the manufacture of the product. The schedule method is usually § 1313(b) these sections need not be repeated exported articles.) employed when a standard line of unless they differ in some way from the (For example, if 100 pounds of material, merchandise is being produced according to § 1313(b) descriptions.) valued at $1.00 per pound, were used in fixed formulas. Some schedules will show PROCEDURES AND RECORDS manufacture resulting in 10 pounds of the quantity of merchandise used to MAINTAINED irrecoverable or valueless waste, the 10 manufacture or produce each article and pounds of irrecoverable or valueless waste others will show the quantity appearing in We will maintain records to establish: 1. That the exported articles on which would not reduce the drawback. In this case each finished article. Schedules may be drawback is claimed were produced with the drawback would be payable on 99% of the prepared to show the quantity of use of the imported merchandise, and duties, taxes, and fees paid on the 100 merchandise either on the basis of 2. The quantity of imported merchandise 4 pounds of designated material used to percentages or by actual weights and we used in producing the exported articles. produce the exported articles.) measurements. A schedule determines the We realize that to obtain drawback the (The ‘‘appearing in’’ basis may be used amount that will be needed to produce a unit claimant must establish that the completed regardless of whether there is waste. If the of product before the material is actually articles were exported within 5 years after ‘‘appearing in’’ basis is used, the claimant used in production.) importation of the imported merchandise. does not need to keep records of waste and (An ‘‘abstract’’ is the summary of the We understand that drawback is not payable its value. However, the manufacturer must records which shows the total quantity used without proof of compliance. establish the identity and quantity of the in producing all products during the period merchandise appearing in the exported covered by the abstract. The abstract looks at INVENTORY PROCEDURES product and provide this information. Waste a period of time, for instance 3 months, in (This section must be completed separately reduces the amount of drawback when which the quantity of material has been used. from that set forth under the § 1313(b) claims are made on the ‘‘appearing in’’ basis. An abstract looks back at how much material portion of your application. The legal Drawback is payable on 99 percent of the was actually used after a production period requirements under § 1313(a) differ from duties, taxes, and fees paid on the quantity has been completed.) those under § 1313(b).) of material designated, which may not (An applicant who fails to indicate the (Describe your inventory procedures and exceed the quantity of eligible material that ‘‘schedule’’ choice must base its claims on state how you will identify the imported appears in the exported articles. ‘‘Appearing the ‘‘abstract’’ method. State which Basis and merchandise from date of importation until in’’ may not be used if multiple products are Method you will use. An example of Used In it is incorporated in the articles to be involved.) by Schedule follows:) exported. Also describe how you will (Based on the previous example, drawback We will claim drawback on the quantity of identify the finished articles from the time of would be payable on the 90 pounds of (specify material) used in manufacturing manufacture until shipment.) merchandise which actually went into the (exported article) according to the schedule BASIS OF CLAIM FOR DRAWBACK exported product (appearing in) rather than set forth below. (Section 190.8(f) of the CBP the 100 pounds used in as set forth Regulations requires submission of the (See section with this title for procedures previously.) schedule with the application for a specific under § 1313(b). Either repeat the same basis (The ‘‘used in less valuable waste’’ basis manufacturing drawback ruling. An of claim or use a different basis of claim, as may be employed when the manufacturer applicant who desires to file supplemental described above, specifically for drawback recovers valuable waste, and keeps records of schedules with the drawback office whenever claimed under § 1313(a).) the quantity and value of waste from each lot there is a change in the quantity or material AGREEMENTS of merchandise. The value of the waste used should state:) The Applicant specifically agrees that it reduces the amount of drawback when We request permission to file supplemental will: claims are based on the ‘‘used in less schedules with the drawback office covering 1. Operate in full conformance with the valuable waste’’ basis. When valuable waste changes in the quantities of material used to terms of this application for a specific is incurred, the drawback allowance on the produce the exported articles, or different manufacturing drawback ruling when exported article is based on the duties, taxes, styles or capacities of containers of such claiming drawback; and fees paid on the quantity of merchandise exported merchandise. (Neither the 2. Open its factory and records for used in the manufacture, reduced by the ‘‘appearing in’’ basis nor the ‘‘schedule’’ examination at all reasonable hours by quantity of such merchandise which the method for claiming drawback may be used authorized Government officers; value of the waste would replace. Thus in where the relative value procedure is 3. Keep its drawback related records and this case, drawback is claimed on the required.) supporting data for at least 3 years from the quantity of eligible material actually used to PROCEDURES UNDER SECTION 1313(a) date of liquidation of any drawback claim produce the exported product, less the predicated in whole or in part upon this amount of such material which the value of IMPORTED MERCHANDISE OR application; the waste would replace. Note section DRAWBACK PRODUCTS USED UNDER 4. Keep this application current by 190.26(c) of the CBP Regulations.) 1313(a) reporting promptly to the drawback office (Based on the previous examples, if the 10 (List the imported merchandise or which liquidates its claims any changes in pounds of waste had a value of $.50 per drawback products.) the number or locations of its offices or pound, then the 10 pounds of waste, having factories, the corporate name, the persons a total value of $5.00, would be equivalent EXPORTED ARTICLES ON WHICH who will sign drawback documents, the basis in value to 5 pounds of the designated DRAWBACK WILL BE CLAIMED of claim used for calculating drawback, the material. Thus the value of the waste would (Name each article to be exported. When decision to use or not to use an agent under replace 5 pounds of the merchandise used, the identity of the product is not clearly § 190.9 or the identity of an agent under that and drawback is payable on 99 percent of the evident by its name state what the product section, or the corporate organization by duties, taxes, and fees paid on the 95 pounds is, e.g., a herbicide. There must be a match succession or reincorporation; of imported material designated as the basis between each article described under the for the allowance of drawback on the PROCESS OF MANUFACTURE AND 4 If claims are to be made on an ‘‘appearing in’’ exported article rather than on the 100 PRODUCTION section below and each article basis, the remainder of the sentence should read pounds ‘‘used in’’ or the 90 pounds listed here.) ‘‘appearing in the exported articles we produce.’’
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5. Keep this application current by operations qualify for drawback under title CBP OFFICE WHERE DRAWBACK CLAIMS reporting promptly to CBP Headquarters all 19, United States Code, section 1313(b), and WILL BE FILED other changes affecting information part 190 of the CBP Regulations. We request (The four offices where drawback claims contained in this application; that CBP authorize drawback on the basis of can be filed are located at: New York, NY; 6. Keep a copy of this application and the this application. Houston, TX; Chicago, IL; San Francisco, letter of approval by CBP Headquarters on NAME AND ADDRESS AND IRS NUMBER CA.) file for ready reference by employees and (WITH SUFFIX) OF APPLICANT (An original application and two copies require all officials and employees concerned must be filed. If the applicant intends to file to familiarize themselves with the provisions (Section 190.8(a) of the CBP Regulations of this application and that letter of approval; provides that each manufacturer or producer drawback claims at more than one drawback and of articles intended for exportation with the office, one additional copy of the application 7. Issue instructions to insure proper benefit of drawback will apply for a specific must be furnished for each additional office compliance with title 19, United States Code, manufacturing drawback ruling, unless indicated.) section 1313, part 190 of the CBP Regulations operating under a general manufacturing GENERAL STATEMENT and this application and letter of approval. drawback ruling under § 190.7 of the CBP Regulations. CBP will not approve an (The following questions must be DECLARATION OF OFFICIAL application which shows an unincorporated answered:) I declare that I have read this application division or company as the applicant (see 1. Who will be the importer of the for a specific manufacturing drawback ruling; § 190.8(a)).) designated merchandise? (If the applicant will not always be the that I know the averments and agreements LOCATION OF FACTORY contained herein are true and correct; and importer of the designated merchandise, does that my signature on this ll day of (Give the address of the factory(s) where the applicant understand its obligations to llll 20l, makes this application the process of manufacture or production maintain records to support the transfer binding on will take place. If the factory is a different under § 190.10, and its liability under lllllllllllllllllllll legal entity from the applicant, so state and § 190.63?) (Name of Applicant Corporation, Partnership, indicate if operating under an Agent’s general 2. Will an agent be used to process the or Sole Proprietorship) manufacturing drawback ruling.) designated or the substituted merchandise into articles? By 5 llllllllllllllllll PERSONS WHO WILL SIGN DRAWBACK (If an agent is to be used, the applicant (Signature and Title) DOCUMENTS must state it will comply with T.D.s 55027(2) lllllllllllllllllllll (List persons legally authorized to bind the and 55207(1), and § 190.9, as applicable, and (Print Name) corporation who will sign drawback that its agent will submit a letter of documents. Section 190.6 of the CBP III. Format for Application for Specific notification of intent to operate under the Regulations permits only the president, vice Manufacturing Drawback Ruling Under 19 general manufacturing drawback ruling for president, secretary, treasurer, or any U.S.C. 1313(b) agents (see § 190.7 and Appendix A), or an employee legally authorized to bind the application for a specific manufacturing COMPANY LETTERHEAD (Optional) corporation to sign for a corporation. In drawback ruling (see § 190.8 and this U.S. Customs and Border Protection, Entry addition, a person within a business entity Appendix B).) Process and Duty Refunds Branch, with a customs power of attorney for the 3. Will the applicant be the exporter? Commercial and Trade Facilitation Division, company may sign. A customs power of (If the applicant will not be the exporter in Regulations and Rulings, Office of Trade, 90 attorney may also be given to a licensed every case but will be the claimant, the K Street NE—10th Floor (Mail Stop 1177), customs broker. This heading should be Washington, DC 20229–1177. changed to NAMES OF PARTNERS or manufacturer must state that it will reserve Dear Sir or Madam: We, (Applicant’s PROPRIETOR in the case of a partnership or the right to claim drawback with the Name), a (State, e.g., Delaware) corporation sole proprietorship, respectively (see footnote knowledge and written consent of the (or other described entity) submit this at end of this sample format for persons who exporter (19 CFR 190.82).) application for a specific manufacturing may sign applications for specific PARALLEL COLUMNS—‘‘SAME 8-DIGIT drawback ruling that our manufacturing manufacturing drawback rulings).) HTSUS CLASSIFICATION’’)
Imported Merchandise or Drawback Products 1 Duty-Paid, Duty-Free or Domestic Merchandise of the to be Designated as the Same 8-Digit HTSUS Subheading Number as that Designated Which Basis for Drawback on the Exported Products Will be Used in the Production of the Exported Products
1. 1. 2. 2. 3. 3.
(Following the items listed in the parallel number as to the merchandise used in (In order to successfully claim drawback it columns, a statement will be made, by the producing the exported articles on which we is necessary to prove that the duty-paid, applicant, that affirms the ‘‘same 8-digit claim drawback, such that the merchandise duty-free or domestic merchandise which is HTSUS subheading number’’ of the used would, if imported, be subject to the to be substituted for the imported merchandise. This statement should be same rate of duty as the imported designated merchandise is ‘‘classifiable under the same included in the application exactly as it is merchandise. 8-digit HTSUS subheading number’’. In order stated below:) Fluctuations in the market value resulting to enable CBP to rule on ‘‘same 8-digit The imported merchandise which we will from factors other than quality will not affect HTSUS subheading number’’, the application designate on our claims will be classifiable the drawback. must include a detailed description of the under the same 8-digit HTSUS subheading designated imported merchandise and of the
5 Section 190.6(a) requires that applications for corporation. In addition, any employee of a 1 Drawback products are those produced in the specific manufacturing drawback rulings be signed business entity with a customs power of attorney United States in accordance with the drawback law by any individual legally authorized to bind the filed with the CBP port for the drawback office and regulations. Such products have ‘‘dual status’’ person (or entity) for whom the application is which will liquidate your drawback claims may under section 1313(b). They may be designated as signed or the owner of a sole proprietorship, a full sign such an application, as may a licensed customs the basis for drawback and also may be deemed to partner in a partnership, or, if a corporation, the broker with a customs power of attorney. You president, a vice president, secretary, treasurer or should state in which CBP port your customs be domestic merchandise. employee legally authorized to bind the power(s) of attorney is/are filed.
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substituted duty-paid, duty-free or domestic thorough description of the manufacturing (6) whether it must be subjected to some merchandise to be used to produce the process. This description should include the process to make it saleable.) exported articles, as well as provide the Bill name and exact condition of the merchandise 2. Producibility of Materials and/or formulas annotated with listed in the Parallel Columns, a complete the HTSUS classification.) explanation of the processes to which it is (Some processes result in the separation of (It is essential that all the characteristics subjected in this country, the effect of such fixed proportions of each product, while which determine the quality of the processes, the name and exact description of other processes afford the opportunity to merchandise are provided in the application the finished article, and the use for which the increase or decrease the proportion of each in order to substantiate that the merchandise finished article is intended. When applicable, product. An example of the latter is meets the ‘‘same 8-digit HTSUS subheading give equations of the chemical reactions. The petroleum refining, where the refiner has the number’’ statutory requirement. These attachment of a flow chart in addition to the option to increase or decrease the production characteristics should clearly distinguish description showing the manufacturing of one or more products relative to the others. merchandise of different qualities. For process is an excellent means of illustrating State under this heading whether you can or example, USDA standards; FDA standards; whether or not a manufacture or production cannot vary the proportionate quantity of industry standards, e.g., ASTM; has occurred. Flow charts can clearly each product.) concentration; specific gravity; purity; luster; illustrate if and at what point during the (The MULTIPLE PRODUCTS section melting point, boiling point; odor; color; manufacturing process by-products and consists of two sub-sections: Relative Values grade; type; hardness; brittleness; etc. Note wastes are generated.) and Producibility. If multiple products do that these are only a few examples of (This section should contain a description not result from your operation state ‘‘Not characteristics and that each kind of of the process by which each item of Applicable’’ for the entire section. If multiple merchandise has its own set of specifications merchandise listed in the parallel columns products do result from your operation that characterizes its quality. If specifications above is used to make or produce every Relative Values will always apply. However, are given with a minimum value, be sure to article that is to be exported.) Producibility may or may not apply. If include a maximum value. The converse is MULTIPLE PRODUCTS Producibility does not apply to your multiple also true. Often characteristics are given to product operation state ‘‘Not Applicable’’ for CBP on attached specification sheets. These 1. Relative Values this sub-section.) specifications should not include Material (Some processes result in the separation of WASTE Safety Data sheets or other descriptions of the the merchandise used in the same operation merchandise that do not contribute to the into two or more products. List all of the (Many processes result in residue materials ‘‘same 8-digit HTSUS subheading number’’ products. State that you will record the which, for drawback purposes, are treated as determination. When the merchandise is a market value of each product or by-product waste. Describe any residue materials which chemical, state the chemical’s generic name at the time it is first separated in the you believe should be so treated. If no waste as well as its trade name plus any generally manufacturing process. If this section is not results, include a positive statement to that recognized identifying number, e.g., CAS applicable to you, then state so.) effect under this heading.) number; Color Index Number, etc.) (Drawback law mandates the assignment of (If waste occurs, state: (1) whether or not (In order to expedite the specific relative values when two or more products it is recovered, (2) whether or not it is manufacturing drawback ruling review necessarily are produced concurrently in the valueless, and (3) what you do with it. This process, it will be helpful if you provide same operation. For instance, the refining of information is required whether claims are copies of technical standards/specifications flaxseed necessarily produces linseed oil and made on a ‘‘used in’’ or ‘‘appearing in’’ basis (particularly industry standards such as linseed husks (animal feed), and drawback and regardless of the amount of waste ASTM standards) referred to in your must be distributed to each product in incurred.) application.) accordance with its relative value. However, (Irrecoverable wastes are those consisting (The descriptions of the ‘‘same 8-digit the voluntary election of a steel fabricator, for of materials which are lost in the process. HTSUS subheading number’’ merchandise instance, to use part of a lot of imported steel Valueless wastes are those which may be should be formatted in the parallel columns. to produce automobile doors and part of the recovered but have no value. These The left-hand column will consist of the lot to produce automobile fenders does not irrecoverable and valueless wastes do not name and specifications of the designated call for relative value distribution.) reduce the drawback claim provided the imported merchandise under the heading set (The relative value of a product is its value claim is based on the quantity of imported forth above. The right-hand column will divided by the total value of all products, material used in manufacturing. If the claim consist of the name, specifications, and 8- whether or not exported. For example, 100 is based upon the quantity of imported digit HTSUS subheading number for the gallons of drawback merchandise are used to merchandise appearing in the exported duty-paid, duty-free or domestic produce 100 gallons of products, including article, irrecoverable and valueless waste will merchandise under the heading set forth 60 gallons of product A, 20 gallons of cause a reduction in the amount of above. Amendments to rulings will be product B, and 20 gallons of product C. At drawback.) required if any changes to the HTSUS the time of separation, the unit values of (Valuable wastes are those recovered classifications occur.) products A, B, and C are $ 5, $ 10, and $ 50 wastes which have a value either for sale or EXPORTED ARTICLES ON WHICH respectively. The relative value of product A for use in a different manufacturing process. DRAWBACK WILL BE CLAIMED is $ 300 divided by $ 1500 or 1⁄5. The relative However, it should be noted that this 2 2 (Name each article to be exported. When value of B is ⁄15 and of product C is ⁄3, standard applies to the entire industry and is the identity of the product is not clearly calculated in the same manner. This means not a selection on your part. An option by 1 evident by its name state what the product that ⁄5 of the drawback product payments you not to choose to sell or use the waste in 2 is, e.g., a herbicide. There must be a match will be distributed to product A, ⁄15 to some different operation does not make it 2 between each article described under the product B, and ⁄3 to product C.) valueless if another manufacturer can use the PROCESS OF MANUFACTURE AND (Drawback is allowable on exports of any waste. State what you do with the waste. If PRODUCTION section below and each article of multiple products, but is not allowable on you have to pay someone to get rid of it, or listed here.) exports of valuable waste. In making this if you have buyers for the waste, you must distinction between a product and valuable state so in your application regardless of PROCESS OF MANUFACTURE OR waste, the applicant should address the what ‘‘Basis’’ you are using.) PRODUCTION following significant elements: (1) the nature (If you recover valuable waste and if you (Drawback under § 1313(b) is not allowable of the material of which the residue is choose to claim on the basis of the quantity except where a manufacture or production composed; (2) the value of the residue as of imported or substituted merchandise used exists. Manufacture or production is defined, compared to the value of the principal in producing the exported articles less for drawback purposes, in § 190.2. In order to manufactured product and the raw material; valuable waste, state that you will keep obtain drawback under § 1313(b), it is (3) the use to which it is put; (4) its status records to establish the quantity and value of essential for the applicant to show use in under the tariff laws, if imported; (5) whether the waste recovered. See ‘‘Basis of Claim for manufacture or production by giving a it is a commodity recognized in commerce; Drawback’’ section below.)
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STOCK IN PROCESS same 5-year period, we produced 3 the BASIS OF CLAIM FOR DRAWBACK (Some processes result in another type of exported articles; (There are three different bases that may be residual material, namely, stock in process, We realize that to obtain drawback the used to claim drawback: (1) used in; (2) which affects the allowance of drawback. claimant must establish that the completed appearing in; and (3) used in less valuable Stock in process may exist when residual articles were exported within 5 years after waste.) the importation of the imported merchandise. material resulting from a manufacturing or (The ‘‘used in’’ basis may be employed Our records establishing our compliance processing operation is reintroduced into a only if there is either no waste or valueless with these requirements will be available for subsequent manufacturing or processing or unrecovered waste in the operation. audit by CBP during business hours. We operation; e.g., trim pieces from a cast article. Irrecoverable or valueless waste does not understand that drawback is not payable The effect of stock in process on a drawback reduce the amount of drawback when claims without proof of compliance. are based on the ‘‘used in’’ basis. Drawback claim is that the amount of drawback for the is payable in the amount of 99 percent of the period in which the stock in process was INVENTORY PROCEDURES duties, taxes, and fees paid on the quantity withdrawn from the manufacturing or (Describe your inventory records and state of imported material designated as the basis processing operation (or the manufactured how those records will meet the drawback for the allowance of drawback on the article, if manufacturing or processing recordkeeping requirements set forth in 19 exported articles. The designated quantity periods are not used) is reduced by the U.S.C. 1313(b) and part 190 of the CBP may not exceed the quantity of material quantity of merchandise or drawback Regulations as discussed under the heading actually used in the manufacture of the products used to produce the stock in PROCEDURES AND RECORDS exported articles.) process if the ‘‘used in’’ or ‘‘used in less MAINTAINED. To help ensure compliance (For example, if 100 pounds of material, valuable waste’’ methods are used (if the the following areas, as applicable, should be valued at $1.00 per pound, were used in ‘‘appearing in’’ method is used, there will be included in your discussion:) manufacture resulting in 10 pounds of no effect on the amount of drawback), and RECEIPT AND STORAGE OF DESIGNATED irrecoverable or valueless waste, the 10 the quantity of merchandise or drawback MERCHANDISE pounds of irrecoverable or valueless waste products used to produce the stock in would not reduce the drawback. In this case process is added to the merchandise or RECORDS OF USE OF DESIGNATED drawback would be payable on 99% of the drawback products used in the subsequent MERCHANDISE duties, taxes, and fees paid on the 100 manufacturing or production period (or the BILLS OF MATERIALS pounds of designated material used to subsequently produced article)). produce the exported articles.) (If stock in process occurs and claims are MANUFACTURING RECORDS (The ‘‘appearing in’’ basis may be used regardless of whether there is waste. If the to be based on stock in process, the WASTE RECORDS application must include a statement to that ‘‘appearing in’’ basis is used, the claimant effect. The application must also include a RECORDS OF USE OF DUTY-PAID, DUTY- does not need to keep records of waste and its value. However, the manufacturer must statement that merchandise is considered to FREE OR DOMESTIC MERCHANDISE OF establish the identity and quantity of the be used in manufacture at the time it was THE REQUIRED SAME 8-DIGIT HTSUS merchandise appearing in the exported originally processed so that the stock in SUBHEADING WITHIN 5 YEARS AFTER IMPORTATION OF THE DESIGNATED product and provide this information. Waste process will not be included twice in the MERCHANDISE reduces the amount of drawback when computation of the merchandise used to claims are made on the ‘‘appearing in’’ basis. manufacture the finished articles on which FINISHED STOCK STORAGE RECORDS Drawback is payable on 99 percent of the drawback is claimed.) SHIPPING RECORDS duties, taxes, and fees paid on the quantity LOSS OR GAIN (Separate and distinct from of material designated, which may not (Proof of time frames may be specific or WASTE) exceed the quantity of eligible material that inclusive, e.g., within 120 days, but specific appears in the exported articles. ‘‘Appearing (Some manufacturing processes result in proof is preferable. Separate storage and in’’ may not be used if multiple products are an intangible loss or gain of the net weight identification of each article or lot of involved.) or measurement of the merchandise used. merchandise usually will permit specific (Based on the previous example, drawback This loss or gain is caused by atmospheric proof of exact dates. Proof of inclusive dates would be payable on the 90 pounds of conditions, chemical reactions, or other of use, production or export may be merchandise which actually went into the factors. State the approximate usual acceptable, but in such cases it is better to exported product (appearing in) rather than percentage or quantity of such loss or gain. describe very specifically the data you intend the 100 pounds used in as set forth Note that percentage values will be to use to establish each legal requirement, previously.) considered to be measured ‘‘by weight’’ thereby avoiding misunderstandings at the (The ‘‘used in less valuable waste’’ basis unless otherwise specified. Loss or gain does time of audit.) may be employed when the manufacturer not occur during all manufacturing (If you do not describe the inventory recovers valuable waste, and keeps records of processes. If loss or gain does not apply to records that you will use, a statement that the the quantity and value of waste from each lot your manufacturing process, state ‘‘Not legal requirements will be met by your of merchandise. The value of the waste Applicable.’’) inventory procedures is acceptable. However, reduces the amount of drawback when it should be noted that without a detailed claims are based on the ‘‘used in less PROCEDURES AND RECORDS description of the inventory procedures set MAINTAINED valuable waste’’ basis. When valuable waste forth in the application, a judgment as to the is incurred, the drawback allowance on the We will maintain records to establish: adequacy of such a statement cannot be made exported article is based on the duties, taxes, 1. The identity, specifications, and 8-digit until a drawback claim is verified. Approval and fees paid on the quantity of merchandise HTSUS subheading number of the of this application for a specific used in the manufacture, reduced by the merchandise we designate; manufacturing drawback ruling merely quantity of such merchandise which the 2. The quantity of merchandise classifiable constitutes approval of the ruling application value of the waste would replace. Thus in under the same 8-digit HTSUS subheading as submitted; it does not constitute approval this case, drawback is claimed on the number as the designated merchandise 2 we of the applicant’s record keeping procedures quantity of eligible material actually used to used to produce the exported articles; if, for example, those procedures are merely produce the exported product, less the 3. That, within 5 years after the date of described as meeting the legal requirements, amount of such material which the value of importation, we used the designated without specifically stating how the the waste would replace. Note section merchandise to produce articles. During the requirements will be met. Drawback is not 190.26(c) of the CBP Regulations.) payable without proof of compliance.) (Based on the previous examples, if the 10 2 If claims are to be made on an ‘‘appearing in’’ pounds of waste had a value of $.50 per basis, the remainder of this sentence should read 3 The date of production is the date an article is pound, then the 10 pounds of waste, having ‘‘appearing in the exported articles we produce.’’ completed. a total value of $ 5.00, would be equivalent
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in value to 5 pounds of the designated 2. Open its factory and records for Dear Sir or Madam: We, (Applicant’s material. Thus the value of the waste would examination at all reasonable hours by Name), a (State, e.g., Delaware) corporation replace 5 pounds of the merchandise used, authorized Government officers; (or other described entity) submit this and drawback is payable on 99 percent of the 3. Keep its drawback related records and application for a specific manufacturing duties, taxes, and fees paid on the 95 pounds supporting data for at least 3 years from the drawback ruling that our manufacturing of imported material designated as the basis date of liquidation of any drawback claim operations qualify for drawback under title for the allowance of drawback on the predicated in whole or in part upon this 19, United States Code, section 1313(d), and exported article rather than on the 100 application; part 190 of the CBP Regulations. We request pounds ‘‘used in’’ or the 90 pounds 4. Keep this application current by that CBP authorize drawback on the basis of ‘‘appearing in’’ as set forth in the above reporting promptly to the drawback office this application. examples.) which liquidates its claims any changes in NAME AND ADDRESS AND IRS NUMBER (Two methods exist for the manufacturer to the number or locations of its offices or (WITH SUFFIX) OF APPLICANT show the quantity of material used or factories, the corporate name, the persons who will sign drawback documents, the basis (Section 190.8(a) of the CBP Regulations appearing in the exported article: (1) of claim used for calculating drawback, the provides that each manufacturer or producer Schedule or (2) Abstract.) decision to use or not to use an agent under of articles intended for exportation with the (A ‘‘schedule’’ shows the quantity of § 190.9 or the identity of an agent under that benefit of drawback must apply for a specific material used in producing each unit of section, or the corporate organization by manufacturing drawback ruling, unless product. The schedule method is usually succession or reincorporation; operating under a general manufacturing employed when a standard line of 5. Keep this application current by drawback ruling under § 190.7 of the CBP merchandise is being produced according to reporting promptly to CBP Headquarters, all Regulations. CBP will not approve an fixed formulas. Some schedules will show other changes affecting information application which shows an unincorporated the quantity of merchandise used to contained in this application; division or company as the applicant (see manufacture or produce each article and 6. Keep a copy of this application and the § 190.8(a)).) others will show the quantity appearing in letter of approval by CBP Headquarters on LOCATION OF FACTORY each finished article. Schedules may be file for ready reference by employees and (Give the address of the factory(s) where prepared to show the quantity of require all officials and employees concerned the process of manufacture or production merchandise either on the basis of to familiarize themselves with the provisions will take place. If the factory is a different percentages or by actual weights and of this application and that letter of approval; legal entity from the applicant, so state and measurements. A schedule determines the and indicate if operating under an Agent’s general amount that will be needed to produce a unit 7. Issue instructions to insure proper manufacturing drawback ruling.) of product before the material is actually compliance with title 19, United States Code, used in production.) section 1313, part 190 of the CBP Regulations PERSONS WHO WILL SIGN DRAWBACK (An ‘‘abstract’’ is the summary of the and this application and letter of approval. DOCUMENTS records which shows the total quantity used Declaration of Official (List persons legally authorized to bind the in producing all products during the period corporation who will sign drawback covered by the abstract. The abstract looks at I declare that I have read this application documents. Section 190.6 of the CBP a period of time, for instance 3 months, in for a specific manufacturing drawback ruling; Regulations permits only the president, vice which the quantity of material has been used. that I know the averments and agreements president, secretary, treasurer, or any An abstract looks back at how much material contained herein are true and correct; and employee legally authorized to bind the was actually used after a production period that my signature on this ll day of ll corporation to sign for a corporation. In l has been completed.) 20 , makes this application binding on addition, a person within a business entity lllllllllllllllllllll (An applicant who fails to indicate the with a customs power of attorney for the ‘‘schedule’’ choice must base its claims on (Name of Applicant Corporation, Partnership, company may sign. A customs power of the ‘‘abstract’’ method. State which Basis and or Sole Proprietorship) attorney may also be given to a licensed Method you will use. An example of Used In By 4 llllllllllllllllll customs broker. This heading should be changed to NAMES OF PARTNERS or by Schedule would read:) (Signature and Title) PROPRIETOR in the case of a partnership or We will claim drawback on the quantity of lllllllllllllllllllll sole proprietorship, respectively (see footnote (specify material) used in manufacturing (Print Name) (exported article) according to the schedule at end of this sample format for persons who set forth below. IV. Format for Application for Specific may sign applications for specific (Section 190.8(f) of the CBP Regulations Manufacturing Drawback Ruling Under 19 manufacturing drawback rulings). requires submission of the schedule with the U.S.C. 1313(d) CBP OFFICE WHERE DRAWBACK CLAIMS application for a specific manufacturing COMPANY LETTERHEAD (Optional) WILL BE FILED drawback ruling. An applicant who desires to U.S. Customs and Border Protection, Entry (The four offices where drawback claims file supplemental schedules with the Process and Duty Refunds Branch, can be filed are located at: New York, NY; drawback office whenever there is a change Commercial and Trade Facilitation Division, Houston, TX; Chicago, IL; San Francisco, in the quantity or material used should state:) Regulations and Rulings, Office of Trade, 90 CA.) We request permission to file supplemental K Street NE—10th Floor (Mail Stop 1177), (An original application and two copies schedules with the drawback office covering Washington, DC 20229–1177. must be filed. If the applicant intends to file changes in the quantities of material used to drawback claims at more than one drawback produce the exported articles, or different 4 Section 190.6(a) requires that applications for office, one additional copy of the application styles or capacities of containers of such specific manufacturing drawback rulings be signed must be furnished for each additional office exported merchandise. by any individual legally authorized to bind the indicated.) (Neither the ‘‘appearing in’’ basis nor the person (or entity) for whom the application is GENERAL STATEMENT ‘‘schedule’’ method for claiming drawback signed or the owner of a sole proprietorship, a full may be used where the relative value partner in a partnership, or, if a corporation, the (The exact material placed under this procedure is required.) president, a vice president, secretary, treasurer or heading in individual cases will vary, but it employee legally authorized to bind the should include such information as the type AGREEMENTS corporation. In addition, any employee of a of business in which the manufacturer is The Applicant specifically agrees that it business entity with a customs power of attorney engaged, whether the manufacturer is will: filed with the CBP port for the drawback office manufacturing for its own account or is which will liquidate your drawback claims may 1. Operate in full conformance with the sign such an application, as may a licensed customs performing the operation on a toll basis terms of this application for a specific broker with a customs power of attorney. You (including commission or conversion basis) manufacturing drawback ruling when should state in which CBP port your customs for the account of others, whether the claiming drawback; power(s) of attorney is/are filed. manufacturer is a direct exporter of its
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products or sells or delivers them to others waste. State what you do with the waste. If use of a particular lot (or lots) of domestic for export, and whether drawback will be you have to pay someone to get rid of it, or tax-paid alcohol, and claimed by the manufacturer or by others.) if you have buyers for the waste, you must 2. The quantity of domestic tax-paid (If an agent is to be used, the applicant state so in your application regardless of alcohol1 we used in producing the exported must state it will comply with T.D.s 55027(2) what ‘‘Basis’’ you are using.) articles. and 55207(1), and § 190.9, as applicable, and (If you recover valuable waste and if you We realize that to obtain drawback the that its agent will submit a letter of choose to claim on the basis of the quantity claimant must establish that the completed notification of intent to operate under the of domestic tax-paid alcohol used in articles were exported within 5 years after general manufacturing drawback ruling for producing the exported articles (less valuable the tax has been paid on the domestic agents (see § 190.7 and Appendix A), or an waste), state that you will keep records to alcohol. Our records establishing our application for a specific manufacturing establish the quantity and value of the waste compliance with these requirements will be drawback ruling (see § 190.8 and this recovered. See ‘‘Basis of Claim for Drawback’’ available for audit by CBP during business Appendix B).) section below.) hours. We understand that drawback is not (Regarding drawback operations conducted STOCK IN PROCESS payable without proof of compliance. under § 1313(d), the data may describe the INVENTORY PROCEDURES flavoring extracts, medicinal, or toilet (Some processes result in another type of preparations (including perfumery) residual material, namely, stock in process, (Describe your inventory records and state manufactured with the use of domestic tax- which affects the allowance of drawback. how those records will meet the drawback paid alcohol; and where such alcohol is Stock in process may exist when residual recordkeeping requirements set forth in 19 obtained or purchased.) material resulting from a manufacturing or U.S.C. 1313(d) and part 190 of the CBP processing operation is reintroduced into a Regulations as discussed under the heading TAX-PAID MATERIAL USED UNDER subsequent manufacturing or processing PROCEDURES AND RECORDS SECTION 1313(d) operation; e.g., trim pieces from a cast article. MAINTAINED. To help ensure compliance (Describe or list the tax-paid material) The effect of stock in process on a drawback the following areas should be included in claim is that the amount of drawback for the your discussion:) EXPORTED ARTICLES ON WHICH period in which the stock in process was DRAWBACK WILL BE CLAIMED RECEIPT AND RAW STOCK STORAGE withdrawn from the manufacturing or RECORDS (Name each article to be exported) processing operation (or the manufactured article, if manufacturing or processing MANUFACTURING RECORDS PROCESS OF MANUFACTURE OR periods are not used) is reduced by the FINISHED STOCK STORAGE RECORDS PRODUCTION quantity of merchandise or drawback (Drawback under § 1313(d) is not allowable products used to produce the stock in BASIS OF CLAIM FOR DRAWBACK except where a manufacture or production process if the ‘‘used in’’ or ‘‘used in less (There are three different bases that may be exists. ‘‘Manufacture or production’’ is valuable waste’’ methods are used (if the used to claim drawback: (1) used in; (2) defined, for drawback purposes, in § 190.2. In ‘‘appearing in’’ method is used, there will be appearing in; and (3) used in less valuable order to obtain drawback under § 1313(d), it no effect on the amount of drawback), and waste.) is essential for the applicant to show use in the quantity of merchandise or drawback (The ‘‘used in’’ basis may be employed manufacture or production by giving a products used to produce the stock in only if there is either no waste or valueless thorough description of the manufacturing process is added to the merchandise or or unrecovered waste in the operation. process. Describe how the tax-paid material drawback products used in the subsequent Irrecoverable or valueless waste does not is processed into the export article.) manufacturing or production period (or the reduce the amount of drawback when claims WASTE subsequently produced article)). are based on the ‘‘used in’’ basis. Drawback (If stock in process occurs and claims are is payable in the amount of 100% of the tax (Many processes result in residue materials to be based on stock in process, the which, for drawback purposes, are treated as paid on the quantity of domestic alcohol application must include a statement to that used in the manufacture of flavoring extracts wastes. Describe any residue materials which effect. The application must also include a you believe should be so treated. If no waste and medicinal or toilet preparation statement that the domestic tax-paid alcohol (including perfumery).) results, include a positive statement to that is considered to be used in manufacture at effect under this heading.) (If waste occurs, (For example, if 100 gallons of alcohol, the time it was originally processed so that valued at $ 1.00 per gallon, were used in state: (1) whether or not it is recovered, (2) the stock in process will not be included whether or not it is valueless, and (3) what manufacture resulting in 10 gallons of twice in the computation of the domestic tax- irrecoverable or valueless waste, the 10 you do with it. This information is required paid alcohol used to manufacture the whether claims are made on a ‘‘used in’’ or gallons of irrecoverable or valueless waste finished articles on which drawback is would not reduce the drawback. In this case ‘‘appearing in’’ basis and regardless of the claimed.) amount of waste incurred.) drawback would be payable on 100% of the (Irrecoverable wastes are those consisting LOSS OR GAIN (Separate and distinct from tax paid on the 100 gallons of domestic of materials which are lost in the process. WASTE) alcohol used to produce the exported Valueless wastes are those which may be (Some manufacturing processes result in articles.) recovered but have no value. These an intangible loss or gain of the net weight The ‘‘appearing in’’ basis may be used irrecoverable and valueless wastes do not or measurement of the merchandise used. regardless of whether there is waste. If the reduce the drawback claim provided the This loss or gain is caused by atmospheric ‘‘appearing in’’ basis is used, the claimant claim is based on the quantity of domestic conditions, chemical reactions, or other does not need to keep records of waste and tax-paid alcohol used in manufacturing. If factors. State the approximate usual its value. However, the manufacturer must the claim is based upon the quantity of percentage or quantity of such loss or gain. establish the identity and quantity of the domestic tax-paid alcohol appearing in the Note that percentage values will be merchandise appearing in the exported exported article, irrecoverable and valueless considered to be measured ‘‘by weight’’ product and provide this information. Waste waste will cause a reduction in the amount unless otherwise specified. Loss or gain does reduces the amount of drawback when of drawback.) not occur during all manufacturing claims are made on the ‘‘appearing in’’ basis. (Valuable wastes are those recovered processes. If loss or gain does not apply to Drawback is payable on 100% of the tax paid wastes which have a value either for sale or your manufacturing process, state ‘‘Not on the quantity of domestic alcohol which for use in a different manufacturing process. Applicable.’’) appears in the exported articles. However, it should be noted that this (Based on the previous example, drawback standard applies to the entire industry and is PROCEDURES AND RECORDS would be payable on the 90 gallons of not a selection on your part. An option by MAINTAINED you not to choose to sell or use the waste in We will maintain records to establish: 1 If claims are to be made on an ‘‘appearing in’’ some different operation, does not make it 1. That the exported articles on which basis, the remainder of this sentence should read valueless if another manufacturer can use the drawback is claimed were produced with the ‘‘appearing in the exported articles we produce.’’
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domestic alcohol which actually went into changes in the quantities of material used to (Signature and Title) the exported product (appearing in) rather produce the exported articles, or different lllllllllllllllllllll than the 100 gallons used in as set forth styles or capacities of containers of such (Print Name) previously.) exported merchandise. (The ‘‘used in less valuable waste’’ basis (Neither the ‘‘appearing in’’ basis nor the V. Format for Application for Specific may be employed when the manufacturer ‘‘schedule’’ method for claiming drawback Manufacturing Drawback Ruling Under 19 recovers valuable waste, and keeps records of may be used where the relative value U.S.C. 1313(g). the quantity and value of waste from each lot procedure is required.) COMPANY LETTERHEAD (Optional) of domestic tax-paid alcohol. The value of AGREEMENTS U.S. Customs and Border Protection, Entry the waste reduces the amount of drawback The Applicant specifically agrees that it Process and Duty Refunds Branch, when claims are based on the ‘‘used in less Commercial and Trade Facilitation Division, valuable waste’’ basis. When valuable waste will: Regulations and Rulings, Office of Trade, 90 is incurred, the drawback allowance on the 1. Operate in full conformance with the K Street NE—10th Floor (Mail Stop 1177), exported article is based on the quantity of terms of this application for a specific Washington, DC 20229–1177. tax-paid alcohol used to manufacture the manufacturing drawback ruling when Dear Sir or Madam: We, (Applicant’s exported articles, reduced by the quantity of claiming drawback; such alcohol which the value of the waste 2. Open its factory and records for Name), a (State, e.g., Delaware) corporation would replace.) examination at all reasonable hours by (or other described entity) submit this (Based on the previous examples, if the 10 authorized Government officers; application for a specific manufacturing gallons of waste had a value of $.50 per 3. Keep its drawback related records and drawback ruling that our manufacturing gallon, then the 10 gallons of waste, having supporting data for at least 3 years from the operations qualify for drawback under title a total value of $ 5.00, would be equivalent date of liquidation of any drawback claim 19, United States Code, section 1313(g), and in value to 5 gallons of the tax-paid alcohol. predicated in whole or in part upon this part 190 of the CBP Regulations. We request Thus the value of the waste would replace 5 application; that CBP authorize drawback on the basis of gallons of the alcohol used, and drawback is 4. Keep this application current by this application. payable on 100% of the tax paid on 95 reporting promptly to the drawback office NAME AND ADDRESS AND IRS NUMBER gallons of alcohol rather than on the 100 which liquidates its claims any changes in (WITH SUFFIX) OF APPLICANT gallons ‘‘used in’’ or the 90 gallons the number or locations of its offices or (Section 190.8(a) of the CBP Regulations ‘‘appearing in’’ as set forth in the above factories, the corporate name, the persons provides that each manufacturer or producer examples.) (Two methods exist for the who will sign drawback documents, the basis of articles intended for exportation with the manufacturer to show the quantity of of claim used for calculating drawback, the material used or appearing in the exported decision to use or not to use an agent under benefit of drawback must apply for a specific article: (1) Schedule or (2) Abstract.) § 190.9 or the identity of an agent under that manufacturing drawback ruling, unless (A ‘‘schedule’’ shows the quantity of section, the drawback office where claims operating under a general manufacturing material used in producing each unit of will be filed under the ruling, or the drawback ruling under § 190.7 of the CBP product. The schedule method is usually corporate organization by succession or Regulations. CBP will not approve an employed when a standard line of reincorporation; application which shows an unincorporated merchandise is being produced according to 5. Keep this application current by division or company as the applicant (see fixed formulas. Some schedules will show reporting promptly to CBP Headquarters, all § 190.8(a).) the quantity of merchandise used to other changes affecting information LOCATION OF FACTORY OR SHIPYARD contained in this application; manufacture or produce each article and (Give the address of the factory(s) or 6. Keep a copy of this application and the others will show the quantity appearing in shipyard(s) at which the construction and letter of approval by CBP Headquarters on each finished article. Schedules may be equipment will take place. If the factory or file for ready reference by employees and prepared to show the quantity of shipyard is a different legal entity from the require all officials and employees concerned merchandise either on the basis of applicant, so state and indicate if operating to familiarize themselves with the provisions percentages or by actual weights and under an Agent’s general manufacturing measurements. A schedule determines the of this application and that letter of approval; drawback ruling.) amount that will be needed to produce a unit and of product before the material is actually 7. Issue instructions to insure proper PERSONS WHO WILL SIGN DRAWBACK used in production.) compliance with title 19, United States Code, DOCUMENTS (An ‘‘abstract’’ is the summary of the section 1313, part 190 of the CBP Regulations (List persons legally authorized to bind the records which shows the total quantity used and this application and letter of approval. corporation who will sign drawback in producing all products during the period DECLARATION OF OFFICIAL documents. Section 190.6 of the CBP covered by the abstract. The abstract looks at I declare that I have read this application Regulations permits only the president, vice a period of time, for instance 3 months, in president, secretary, treasurer, or any which the quantity of material has been used. for a specific manufacturing drawback ruling; that I know the averments and agreements employee legally authorized to bind the An abstract looks back at how much material corporation to sign for a corporation. In was actually used after a production period contained herein are true and correct; and l llll addition, a person within a business entity has been completed.) that my signature on this day of l with a customs power of attorney for the (An applicant who fails to indicate the 20 , makes this application binding on lllllllllllllllllllll company may sign. A customs power of ‘‘schedule’’ choice must base its claims on attorney may also be given to a licensed (Name of Applicant Corporation, Partnership, the ‘‘abstract’’ method. State which Basis and customs broker. This heading should be or Sole Proprietorship) Method you will use. An example of Used In changed to NAMES OF PARTNERS or by schedule follows:) By 2 llllllllllllllllll PROPRIETOR in the case of a partnership or We will claim drawback on the quantity of sole proprietorship, respectively (see footnote (specify material) used in manufacturing 2 Section 190.6(a) requires that applications for at end of this sample format for persons who (exported article) according to the schedule specific manufacturing drawback rulings be signed may sign applications for specific set forth below. by any individual legally authorized to bind the manufacturing drawback rulings).) (Section 190.8(f) of the CBP Regulations person (or entity) for whom the application is requires submission of the schedule with the signed or the owner of a sole proprietorship, a full CBP OFFICE WHERE DRAWBACK CLAIMS application for a specific manufacturing partner in a partnership, or, if a corporation, the WILL BE FILED drawback ruling. An applicant who desires to president, a vice president, secretary, treasurer or (The four offices where drawback claims employee legally authorized to bind the file supplemental schedules with the corporation. In addition, any employee of a can be filed are located at: New York, NY; drawback office whenever there is a change business entity with a customs power of attorney in the quantity or material used should state:) filed with the CBP port for the drawback office broker with a customs power of attorney. You We request permission to file supplemental which will liquidate your drawback claims may should state in which CBP port your customs schedules with the drawback office covering sign such an application, as may a licensed customs power(s) of attorney is/are filed.
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Houston, TX; Chicago, IL; San Francisco, valueless, and (3) what you do with it. This audit by CBP during business hours. We CA.) information is required whether claims are understand that drawback is not payable (An original application and two copies made on a ‘‘used in’’ or ‘‘appearing in’’ basis without proof of compliance. must be filed. If the applicant intends to file and regardless of the amount of waste INVENTORY PROCEDURES drawback claims at more than one drawback incurred.) office, one additional copy of the application (Irrecoverable wastes are those consisting (Describe your inventory records and state must be furnished for each additional office of materials which are lost in the process. how those records will meet the drawback indicated.) Valueless wastes are those which may be recordkeeping requirements set forth in 19 U.S.C. 1313 and part 190 of the CBP GENERAL STATEMENT recovered but have no value. These irrecoverable and valueless wastes do not Regulations as discussed under the heading (The following questions must be reduce the drawback claim provided the PROCEDURES AND RECORDS answered: claim is based on the quantity of imported MAINTAINED. To help ensure compliance 1. Who will be the importer of the material used in manufacturing. If the claim the following should be included in your merchandise? (If the applicant will not is based upon the quantity of imported discussion:) always be the importer, does the applicant merchandise appearing in the exported RECEIPT AND RAW STOCK STORAGE understand its obligations to maintain article, irrecoverable and valueless waste will RECORDS records to support the transfer under 19 CFR cause a reduction in the amount of 190.10, and its liability under 19 CFR drawback.) CONSTRUCTION AND EQUIPMENT 190.63?) (Valuable wastes are those recovered RECORDS 2. Who is the manufacturer? wastes which have a value either for sale or (Is the applicant constructing and FINISHED STOCK STORAGE RECORDS for use in a different manufacturing process. equipping for his own account or merely SHIPPING RECORDS performing the operation on a toll basis for However, it should be noted that this others?) standard applies to the entire industry and is BASIS OF CLAIM FOR DRAWBACK not a selection on your part. An option by (If an agent is to be used, the applicant (There are three different bases that may be must state it will comply with T.D.s 55027(2) you not to choose to sell or use the waste in some different operation does not make it used to claim drawback: (1) Used in; (2) and 55207(1), and § 190.9, as applicable, and appearing in; and (3) used in less valuable that its agent will submit a letter of valueless if another manufacturer can use the waste. State what you do with the waste. If waste.) notification of intent to operate under the (The ‘‘used in’’ basis may be employed general manufacturing drawback ruling for you have to pay someone to get rid of it, or if you have buyers for the waste, you must only if there is either no waste or valueless agents (see § 190.7 and Appendix A), or an or unrecovered waste in the operation. application for a specific manufacturing state so in your application regardless of what ‘‘Basis’’ you are using.) Irrecoverable or valueless waste does not drawback ruling (see § 190.8 and this reduce the amount of drawback when claims Appendix B).) (If you recover valuable waste and if you choose to claim on the basis of the quantity are based on the ‘‘used in’’ basis. Drawback 3. Will the applicant be the drawback is payable in the amount of 99 percent of the claimant? of imported or substituted merchandise used in producing the exported articles (less duties, taxes, and fees paid on the quantity (State how the vessel will qualify for of imported material used to construct and drawback under 19 U.S.C. 1313(g). Who is valuable waste), state that you will keep records to establish the quantity and value of equip the exported article.) the foreign person or government for whom (For example, if 100 pounds of material, the vessel is being made or equipped?) the waste recovered. See ‘‘Basis of Claim for Drawback’’ section below.) valued at $ 1.00 per pound, were used in (There must be included under this manufacture resulting in 10 pounds of heading the following statement: LOSS OR GAIN (Separate and distinct from irrecoverable or valueless waste, the 10 We are particularly aware of the terms of WASTE) pounds of irrecoverable or valueless waste § 190.76(a)(1) of and subpart M of part 190 (Some manufacturing processes result in would not reduce the drawback. In this case of the CBP Regulations, and will comply with an intangible loss or gain of the net weight drawback would be payable on 99% of the these sections where appropriate.) or measurement of the merchandise used. duties, taxes, and fees paid on the 100 IMPORTED MERCHANDISE OR This loss or gain is caused by atmospheric pounds of imported material used in DRAWBACK PRODUCTS USED conditions, chemical reactions, or other constructing and equipping the exported (Describe the imported merchandise or factors. State the approximate usual articles.) drawback products.) percentage or quantity of such loss or gain. (The ‘‘appearing in’’ basis may be used Note that percentage values will be regardless of whether there is waste. If the ARTICLES CONSTRUCTED AND EQUIPPED considered to be measured ‘‘by weight’’ ‘‘appearing in’’ basis is used, the claimant FOR EXPORT unless otherwise specified. Loss or gain does does not need to keep records of waste and (Name the vessel or vessels to be made not occur during all manufacturing its value. However, the manufacturer must with imported merchandise or drawback processes. If loss or gain does not apply to establish the identity and quantity of the products.) your manufacturing process, state ‘‘Not merchandise appearing in the exported PROCESS OF CONSTRUCTION AND Applicable.’’) product and provide this information. Waste reduces the amount of drawback when EQUIPMENT PROCEDURES AND RECORDS claims are made on the ‘‘appearing in’’ basis. (What is required here is a clear, concise MAINTAINED Drawback is payable on 99 percent of the description of the process of construction We will maintain records to establish: duties, taxes, and fees paid on the quantity and equipment involved. The description 1. That the exported article on which of imported material which appears in the should also trace the flow of materials drawback is claimed was constructed and exported articles. ‘‘Appearing in’’ may not be through the manufacturing process for the equipped with the use of a particular lot (or used if multiple products are involved.) purpose of establishing physical lots) of imported material; and (Based on the previous example, drawback identification of the imported merchandise or 2. The quantity of imported merchandise 1 would be payable on the 90 pounds of drawback products and of the articles we used in producing the exported article. imported material which actually went into resulting from the processing.) We realize that to obtain drawback the the exported product (appearing in) rather WASTE claimant must establish that the completed than the 100 pounds used in as set forth (Many processes result in residue materials articles were exported within 5 years after previously.) which, for drawback purposes, are treated as the importation of the imported merchandise. (The ‘‘used in less valuable waste’’ basis wastes. Describe any residue materials which Our records establishing our compliance may be employed when the manufacturer you believe should be so treated. If no waste with these requirements will be available for recovers valuable waste, and keeps records of results, include a positive statement to that the quantity and value of waste from each lot effect under this heading.) 1 If claims are to be made on an ‘‘appearing in’’ of merchandise. The value of the waste (If waste occurs, state: (1) whether or not basis, the remainder of this sentence should read reduces the amount of drawback when it is recovered, (2) whether or not it is ‘‘appearing in the exported articles we produce.’’ claims are based on the ‘‘used in less
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valuable waste’’ basis. When valuable waste produce the exported articles, or different (Signature and Title) is incurred, the drawback allowance on the styles or capacities of containers of such lllllllllllllllllllll exported article is based on the duties, taxes, exported merchandise. and fees paid on the quantity of imported (Neither the ‘‘appearing in’’ basis nor the PART 191—DRAWBACK material used to construct and equip the ‘‘schedule’’ method for claiming drawback exported product, reduced by the quantity of may be used where the relative value ■ 6. The general authority citations for such material which the value of the waste procedure is required.) part 191 continues to read as follows: would replace. Thus in this case, drawback AGREEMENTS Authority: 5 U.S.C. 301; 19 U.S.C. 66, is claimed on the quantity of eligible material The Applicant specifically agrees that it 1202 (General Note 3(i), Harmonized Tariff actually used to produce the exported Schedule of the United States), 1313, 1624; product, less the amount of such material will: which the value of the waste would replace. 1. Operate in full conformance with the * * * * * Note section 190.26(c) of the CBP terms of this application for a specific ■ 7. Revise § 191.0 to read as follows: Regulations.) manufacturing drawback ruling when § 191.0 Scope. (Based on the previous examples, if the 10 claiming drawback; pounds of waste had a value of $.50 per 2. Open its factory and records for This part sets forth general provisions pound, then the 10 pounds of waste, having examination at all reasonable hours by applicable to drawback claims and a total value of $5.00, would be equivalent authorized Government officers; specialized provisions applicable to 3. Keep its drawback related records and in value to 5 pounds of the imported specific types of drawback claims filed material. Thus the value of the waste would supporting data for at least 3 years from the date of liquidation of any drawback claim under 19 U.S.C. 1313, prior to the replace 5 pounds of the merchandise used, February 24, 2016, amendments to the and drawback is payable on 99 percent of the predicated in whole or in part upon this application; duties, taxes, and fees paid on the 95 pounds U.S. drawback law. Drawback claims 4. Keep this application current by of imported material rather than on the 100 may not be filed under this part after reporting promptly to the drawback office pounds ‘‘used in’’ or the 90 pounds February 23, 2019. For drawback claims which liquidates its claims any changes in ‘‘appearing in’’ as set forth in the above filed under 19 U.S.C. 1313, as amended, the number or locations of its offices or examples.) see part 190. Additional drawback factories, the corporate name, the persons (Two methods exist for the manufacturer to who will sign drawback documents, the basis provisions relating to the North show the quantity of material used or of claim used for calculating drawback, the American Free Trade Agreement appearing in the exported article: (1) decision to use or not to use an agent under (NAFTA) are contained in subpart E of Schedule or (2) Abstract.) § 190.9 or the identity of an agent under that part 181 of this chapter. (A ‘‘schedule’’ shows the quantity of section, the drawback office where claims ■ 8. Revise § 191.1 to read as follows: material used in producing each unit of will be filed under the ruling, or the product. The schedule method is usually corporate organization by succession or § 191.1 Authority of the Commissioner of employed when a standard line of reincorporation; CBP. merchandise is being produced according to 5. Keep this application current by Pursuant to DHS Delegation number fixed formulas. Some schedules will show reporting promptly to CBP Headquarters, all 7010.3, the Commissioner of CBP has the quantity of merchandise used to other changes affecting information manufacture or produce each article and the authority to prescribe, and pursuant contained in this application; to Treasury Department Order No. 100– others will show the quantity appearing in 6. Keep a copy of this application and the each finished article. Schedules may be letter of approval by CBP Headquarters on 16 (set forth in the appendix to part 0 prepared to show the quantity of file for ready reference by employees and of this chapter), the Secretary of the merchandise either on the basis of require all officials and employees concerned Treasury has the sole authority to percentages or by actual weights and to familiarize themselves with the provisions approve, rules and regulations regarding measurements. A schedule determines the of this application and that letter of approval; drawback. amount that will be needed to produce a unit and ■ 9. In § 191.3: of product before the material is actually 7. Issue instructions to help ensure proper ■ a. Revise the section heading; used in production.) compliance with title 19, United States Code, ■ b. Amend paragraph (a)(3) by (An ‘‘abstract’’ is the summary of the section 1313, part 190 of the CBP Regulations removing the word ‘‘and’’ at the end of records which shows the total quantity used and this application and letter of approval. in producing all products during the period the paragraph; DECLARATION OF OFFICIAL ■ covered by the abstract. The abstract looks at c. Amend paragraph (a)(4) by a period of time, for instance 3 months, in I declare that I have read this application removing the ‘‘(iv).’’ and adding in its which the quantity of material has been used. for a specific manufacturing drawback ruling; place the words ‘‘(iv); and’’; An abstract looks back at how much material that I know the averments and agreements ■ d. Add paragraph (a)(5). was actually used after a production period contained herein are true and correct; and ■ e. Revise paragraph (b). has been completed.) that my signature on this ll day of The revisions and additions read as (An applicant who fails to indicate the llll 20 l, makes this application follows: ‘‘schedule’’ choice must base its claims on binding on the ‘‘abstract’’ method. State which Basis and lllllllllllllllllllll § 191.3 Duties, taxes, and fees subject or Method you will use. An example of Used In (Name of Applicant Corporation, Partnership, not subject to drawback. by Schedule would read:) or Sole Proprietorship) (a) * * * We will claim drawback on the quantity of By 2 llllllllllllllllll (5) Harbor maintenance taxes (see (specify material) used in manufacturing § 24.24 of this chapter) for unused (exported article) according to the schedule 2 Section 190.6(a) requires that applications for merchandise drawback pursuant to 19 set forth below. specific manufacturing drawback rulings be signed U.S.C. 1313(j), and drawback for (Section 190.8(f) of the CBP Regulations by any individual legally authorized to bind the requires submission of the schedule with the person (or entity) for whom the application is substitution of finished petroleum application for a specific manufacturing signed or the owner of a sole proprietorship, a full derivatives pursuant to 19 U.S.C. drawback ruling. An applicant who desires to partner in a partnership, or, if a corporation, the 1313(p)(2)(A)(iii) or (iv). file supplemental schedules with the president, a vice president, secretary, treasurer or (b) Duties and fees not subject to drawback office whenever there is a change employee legally authorized to bind the corporation. In addition, any employee of a drawback include: in the quantity or material used should state:) business entity with a customs power of attorney We request permission to file supplemental filed with the CBP port for the drawback office broker with a customs power of attorney. You schedules with the drawback office covering which will liquidate your drawback claims may should state in which CBP port your customs changes in the quantities of material used to sign such an application, as may a licensed customs power(s) of attorney is/are filed.
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(1) Harbor maintenance taxes (see § 191.32 Substitution drawback. number, mailing address, and, if § 24.24 of this chapter) except where * * * * * available, fax number and email address unused merchandise drawback pursuant (b) * * * of a contact person, and the location of to 19 U.S.C. 1313(j) or drawback for (4) For purposes of drawback of the merchandise. substitution of finished petroleum internal revenue tax imposed under (e) Decision to waive examination. derivatives pursuant to 19 U.S.C. Chapters 32, 38, 51, and 52 of the Within 2 working days after receipt of 1313(p)(2)(A)(iii) or (iv) is claimed; Internal Revenue Code of 1986, as the Notice of Intent to Export, Destroy, (2) Merchandise processing fees (see amended (IRC), drawback granted on or Return Merchandise for Purposes of § 24.23 of this chapter), except where the export or destruction of substituted Drawback (see paragraph (c) of this unused merchandise drawback pursuant merchandise will be limited to the section), CBP will notify, in writing, the to 19 U.S.C. 1313(j) or drawback for amount of taxes paid (and not returned party designated on the Notice of CBP’s substitution of finished petroleum by refund, credit, or drawback) on the decision to either examine the derivatives pursuant to 19 U.S.C. substituted merchandise. merchandise to be exported or 1313(p)(2)(A)(iii) or (iv) is claimed; and * * * * * destroyed, or to waive examination. If (3) Antidumping and countervailing ■ 13. Section 191.42 is revised to read CBP timely notifies the designated duties on merchandise entered, or as follows: party, in writing, of its decision to examine the merchandise (see withdrawn from warehouse, for § 191.42 Procedures and supporting consumption on or after August 23, documentation. paragraph (f) of this section), but the merchandise is exported or destroyed 1988. (a) Time limit for exportation or * * * * * without having been presented to CBP destruction. Drawback will be denied on for such examination, any drawback ■ 10. Section 191.5 is revised to read as merchandise that is exported or claim, or part thereof, based on the follows: destroyed after the statutory 3-year time Notice of Intent to Export, Destroy, or period. Return Merchandise for Purposes of § 191.5 Guantanamo Bay, insular (b) Required documentation. The possessions, trust territories. Drawback, must be denied. If CBP claimant must submit documentation to notifies the designated party, in writing, Guantanamo Bay Naval Station is CBP as part of the complete drawback of its decision to waive examination of considered foreign territory for claim (see § 191.51) to establish that the the merchandise, or, if timely drawback purposes and, accordingly, merchandise did not conform to sample notification of a decision by CBP to drawback may be permitted on articles or specification, was shipped without examine or to waive examination is shipped there. Drawback is not allowed, the consent of the consignee, or was absent, the merchandise may be except on claims made under 19 U.S.C. defective as of the time of importation exported or destroyed without delay 1313(j)(1), on articles shipped to the (see § 191.45 for additional and will be deemed to have been U.S. Virgin Islands, American Samoa, requirements for claims made with returned to CBP custody. Wake Island, Midway Islands, Kingman respect to rejected retail merchandise Reef, Guam, Canton Island, Enderbury under 19 U.S.C. 1313(c)(1)(C)(ii)). If the (f) Time and place of examination. If Island, Johnston Island, or Palmyra claimant was not the importer, the CBP gives timely notice of its decision Island. Puerto Rico is not considered claimant must also: to examine the merchandise to be foreign territory for drawback purposes (1) Submit a statement signed by the exported or destroyed, the merchandise and, accordingly, drawback may not be importer and every other person, other to be examined must be promptly permitted on articles shipped there from than the ultimate purchaser, that owned presented to CBP. CBP must examine elsewhere in the customs territory of the the goods that no other claim for the merchandise within 5 working days United States. drawback was made on the goods by after presentation of the merchandise. The merchandise may be exported or ■ 11. In § 191.22, paragraph (a) is any other person; and destroyed without examination if CBP amended by adding a new sentence to (2) Certify that records are available to fails to timely examine the merchandise the end of the paragraph to read as support the statement required in after presentation to CBP, and in such follows: paragraph (b)(1) of this section. (c) Notice. A notice of intent to export case the merchandise will be deemed to § 191.22 Substitution drawback. or destroy merchandise which may be have been returned to CBP custody. If (a) * * * For purposes of drawback of the subject of a rejected merchandise the examination is completed at a port internal revenue tax imposed under drawback claim (19 U.S.C. 1313(c)) other than the port of actual exportation Chapters 32, 38, 51, and 52 of the must be provided to CBP to give CBP or destruction, the merchandise must be Internal Revenue Code of 1986, as the opportunity to examine the transported in-bond to the port of amended (IRC), drawback granted on merchandise. The claimant, or the exportation or destruction. the export or destruction of substituted exporter (for destruction under CBP (g) Extent of examination. The merchandise will be limited to the supervision, see § 191.71), must file at appropriate CBP office may permit amount of taxes paid (and not returned the port of intended redelivery to CBP release of merchandise without by refund, credit, or drawback) on the custody a Notice of Intent to Export, examination, or may examine, to the substituted merchandise. Destroy, or Return Merchandise for extent determined to be necessary, the items exported or destroyed. * * * * * Purposes of Drawback on CBP Form 7553 at least 5 working days prior to the (h) Drawback claim. When filing the ■ 12. In § 191.32: date of intended return to CBP custody. drawback claim, the drawback claimant ■ a. Remove the word ‘‘and’’ at the end Waiver of prior notice for exportations must correctly calculate the amount of of paragraph (b)(2); under 19 U.S.C. 1313(j) (see § 191.91) is drawback due (see § 191.51(b)). The ■ b. Remove ‘‘.’’ and adding, in its place, inapplicable to exportations under 19 procedures for restructuring a claim (see ‘‘; and’’; at the end of paragraph (b)(3) U.S.C. 1313(c). § 191.53) apply to rejected merchandise and; (d) Required information. The notice drawback if the claimant has an ongoing ■ c. Add paragraph (b)(4) to read as must provide the bill of lading number, export program which qualifies for this follows: if known, the name and telephone type of drawback.
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(i) Exportation. Claimants must designated as the basis of a drawback the unpaid amount of lawful ordinary provide documentary evidence of substitution claim under part 190. customs duties or any other payment of exportation (see subpart G of this part). * * * * * lawful ordinary customs duties for an The claimant may establish exportation ■ 16. Section 191.81 is revised to read entry, or withdrawal from warehouse, by mail as set out in § 191.74 of this as follows: for consumption (see § 191.3(a)(1)(iii)), part. provided that: ■ 14. Section 191.45 is added to read as § 191.81 Liquidation. (i) The tender or payment is follows: (a) Time of liquidation. Drawback specifically identified as duty on a entries may be liquidated after: specifically identified entry, or § 191.45 Returned retail merchandise. (1) Liquidation of the designated withdrawal from warehouse, for (a) Special rule for substitution. import entry or entries becomes final consumption; Section 313(c)(1)(C)(ii) of the Tariff Act pursuant to paragraph (e) of this section; (ii) Liquidation of the specifically of 1930, as amended (19 U.S.C. or identified entry, or withdrawal from 1313(c)(1)(C)(ii)), provides for drawback (2) Deposit of estimated duties on the warehouse, for consumption became upon the exportation or destruction imported merchandise and before final prior to such tender or payment; under CBP supervision of imported liquidation of the designated import and merchandise which has been entered, or entry or entries. (iii) Liquidation of the drawback entry withdrawn from warehouse, for (b) Claims based on estimated duties. in which that specifically identified consumption, duty-paid and ultimately (1) Drawback may be paid upon import entry, or withdrawal from sold at retail by the importer, or the liquidation of a claim based on warehouse, for consumption is person who received the merchandise estimated duties if one or more of the designated has not become final. from the importer, and for any reason designated import entries have not been (2) Written request and waiver. returned to and accepted by the liquidated, or the liquidation has not Drawback may be paid on claims based importer, or the person who received become final (because of a protest being on voluntary tenders or other payments the merchandise from the importer. filed) (see also § 173.4(c) of this of duties under this subsection only if chapter), only if the drawback claimant the drawback claimant and any other (b) Eligibility requirements. (1) and any other party responsible for the party responsible for the payment of the Drawback is allowable, subject to payment of liquidated import duties voluntary tenders or other payments of compliance with all requirements set each files a written request for payment duties each files a written request for forth in this subpart; and of each drawback claim, waiving any payment of each drawback claim based (2) The claimant must also show by right to payment or refund under other on such voluntary tenders or other evidence satisfactory to CBP that provisions of law, to the extent that the payments of duties, waiving any claim drawback may be claimed by— estimated duties on the unliquidated to payment or refund under other (i) Designating an entry of import entry are included in the provisions of law, to the extent that the merchandise that was imported within drawback claim for which drawback on voluntary tenders or other payment of 1 year before the date of exportation or estimated duties is requested under this duties under this paragraph are destruction of the merchandise paragraph. The drawback claimant included in the drawback claim for described in paragraph (a) of this must, to the best of its knowledge, which drawback on the voluntary section under CBP supervision. identify each import entry that has been tenders or other payment of duties is (ii) Certifying that the same 8-digit protested and that is included in the requested under this paragraph. HTSUS subheading number and specific drawback claim. A drawback entry, (d) Claims based on liquidated duties. product identifier (such as part number, once finally liquidated on the basis of Drawback will be based on the final SKU, or product code) apply to both the estimated duties pursuant to paragraph liquidated duties paid that have been merchandise designated for drawback (e)(2), will not be adjusted by reason of made final by operation of law (except (in the import documentation) and the a subsequent final liquidation of the in the case of the written request for returned merchandise. import entry. payment of drawback on the basis of (c) Allowable refund. The amount of (2) However, if final liquidation of the estimated duties, voluntary tender of drawback allowable will be equal to 99 import entry discloses that the total duties, and other payments of duty, and percent of the amount of duties, taxes, amount of import duty is different from waiver, provided for in paragraphs (b) and fees paid with respect to the the total estimated duties deposited, and (c) of this section). imported merchandise. except in those cases when drawback is (e) Liquidation procedure. (1) General. (d) Denial of claims. No drawback 100% of the duty, the party responsible When the drawback claim has been will be refunded if CBP is not satisfied for the payment of liquidated duties, as completed by the filing of the entry and that the claimant has provided, upon applicable, will: other required documents, and request, the documentation necessary to (i) Be liable for 1 percent of all exportation (or destruction) of the support the certification required in increased duties found to be due on that merchandise or articles has been paragraph (b)(2)(ii) of this section. portion of merchandise recorded on the established, CBP will determine ■ 15. Amend § 191.51 by adding a new drawback entry; or drawback due on the basis of the paragraph (a)(3) to read as follows: (ii) Be entitled to a refund of 1 percent complete drawback claim, the of all excess duties found to have been applicable general manufacturing § 191.51 Completion of drawback claims. paid as estimated duties on that portion drawback ruling or specific (a) * * * of the merchandise recorded on the manufacturing drawback ruling, and (3) Limitation on eligibility for drawback entry. any other relevant evidence or imported merchandise. Claimants are (c) Claims based on voluntary tenders information. Notice of liquidation will prohibited from filing any drawback or other payments of duties—(1) be given electronically as provided in claims under part 191 for imported General. Subject to the requirements in §§ 159.9 and 159.10(c)(3). merchandise associated with an entry paragraph (c)(2) of this section, (2) Liquidation by operation of law. (i) summary if any other merchandise drawback may be paid upon liquidation Liquidated import entries. A drawback covered on that entry summary has been of a claim based on voluntary tenders of claim that satisfies the requirements of
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paragraph (d) that is not liquidated amended (26 U.S.C. 5111, 5112, 5113, drawback office, the drawback office, on within one year from the date of the and 5114). written application of the person who drawback claim (see § 190.51(e)(1)(i)) (b) Manufacturer does not claim requested its issuance, will transmit a will be deemed liquidated for the domestic drawback—(1) Submission of copy of the extract from the certificate purposes of the drawback claim at the statement. If no claim has been or will for use at that drawback office. The drawback amount asserted by the be filed with TTB for domestic drawback office will note that the copy claimant or claim, unless the time for drawback on medicinal preparations or of the extract was prepared and liquidation is extended in accordance flavoring extracts, the manufacturer transmitted. with § 159.12 or if liquidation is must submit a statement setting forth ■ 19. Section 191.103 is revised to read suspended as required by statute or that fact to the Director, National as follows: court order. Revenue Center, TTB. (ii) Unliquidated import entries. A (2) Contents of the statement. The § 191.106 Amount of drawback. drawback claim that satisfies the statement must show the: (a) Claim filed with TTB. If the requirements of paragraphs (b) or (c) of (i) Quantity and description of the declaration required by § 191.103 of this this section will be deemed liquidated exported products; subpart shows that a claim has been or upon the deposit of estimated duties on (ii) Identity of the alcohol used by will be filed with TTB for domestic the unliquidated imported merchandise serial number of package or tank car; drawback, drawback under § 313(d) of (see § 191.81(b)). (iii) Name and registry number of the the Act, as amended (19 U.S.C. 1313(d)), (iii) Applicability. The provisions of distilled spirits plant from which the will be limited to the difference between paragraphs (e)(2)(i) of this section will alcohol was withdrawn; the amount of tax paid and the amount apply to drawback entries made on or (iv) Date of withdrawal; of domestic drawback claimed. after December 3, 2004. An entry or (v) Serial number of the applicable (b) Claim not filed with TTB. If the claim for drawback filed before record of tax determination (see 27 CFR declaration and verified statement December 3, 2004, the liquidation of 17.163(a) and 27 CFR 19.626(c)(7); and required by § 191.103 show that no which was not final as of December 3, (vi) CBP office where the claim will claim has been or will be filed by the 2004, will be deemed liquidated on the be filed. manufacturer with TTB for domestic date that is 1 year after December 3, (3) Verification of the statement. The drawback, the drawback will be the full 2004, at the drawback amount asserted Director, National Revenue Center, TTB, amount of the tax on the alcohol used. by the claimant at the time of the entry will verify receipt of this statement, Drawback under this provision may not or claim. forward the original of the document to be granted absent receipt from TTB of a (f) Relative value; multiple products— the drawback office designated, and copy of TTB Form 5100.4 (Certificate of (1) Distribution. Where two or more retain the copy. Tax-Paid Alcohol) indicating that taxes ■ 18. Section 191.104 is revised to read products result from the manufacture or have been paid on the exported product as follows: production of merchandise, drawback for which drawback is claimed. will be distributed to the several § 191.104 Alcohol and Tobacco Tax and (c) No deduction of 1 percent. No products in accordance with their Trade Bureau (TTB) certificates. deduction of 1 percent will be made in relative values at the time of separation. (a) Request. The drawback claimant or drawback claims under § 313(d) of the (2) Values. The values to be used in manufacturer must request the Director, Act, as amended (19 U.S.C. 1313(d)). computing the distribution of drawback National Revenue Center, TTB, provide (d) Payment. The drawback due will where two or more products result from the CBP office where the drawback be paid in accordance with § 191.81(f). the manufacture or production of claim will be processed with a tax-paid ■ 20. In § 191.171, add paragraph (d) to merchandise under drawback certificate on TTB Form 5100.4 read as follows: conditions must be the market value (as (Certificate of Tax-Paid Alcohol). § 191.171 General; drawback allowance. provided for in the definition of relative (b) Contents. The request must state value in § 191.2(u)), unless other values the: * * * * * are approved by CBP. (1) Quantity of alcohol in proof (d) Federal excise tax. For purposes of (g) Payment. CBP will authorize gallons; drawback of internal revenue tax payment of the amount of the refund (2) Serial number of each package; imposed under Chapters 32 and 38 of due as drawback to the claimant. (3) Amount of tax paid on the alcohol; the Internal Revenue Code of 1986, as ■ 17. Section 191.103 is revised to read (4) Name, registry number, and amended (IRC), drawback granted on as follows: location of the distilled spirits plant; the export of substituted merchandise (5) Date of withdrawal; will be limited to the amount of taxes § 191.103 Additional requirements. (6) Name of the manufacturer using paid (and not returned by refund, credit, (a) Manufacturer claims domestic the alcohol in producing the exported or drawback) on the substituted drawback. In the case of medicinal articles; merchandise. preparations and flavoring extracts, the (7) Address of the manufacturer and Kevin K. McAleenan, claimant must file with the drawback its manufacturing plant; and entry, a declaration of the manufacturer (8) CBP drawback office where the Commissioner, U.S. Customs and Border Protection. showing whether a claim has been or drawback claim will be processed. will be filed by the manufacturer with (c) Extract of TTB certificate. If a Approved: the Alcohol and Tobacco Tax and Trade certification of any portion of the Timothy E. Skud, Bureau (TTB) for domestic drawback on alcohol described in the TTB Form Deputy Assistant Secretary of the Treasury. alcohol under §§ 5111, 5112, 5113, and 5100.4 is required for liquidation of [FR Doc. 2018–16279 Filed 7–27–18; 11:15 am] 5114, Internal Revenue Code, as drawback entries processed in another BILLING CODE 9111–14–P
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Part III
The President
Proclamation 9771—To Take Certain Actions Under the African Growth and Opportunity Act and for Other Purposes
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Federal Register Presidential Documents Vol. 83, No. 149
Thursday, August 2, 2018
Title 3— Proclamation 9771 of July 30, 2018
The President To Take Certain Actions Under the African Growth and Op- portunity Act and for Other Purposes
By the President of the United States of America
A Proclamation 1. In Proclamation 7350 of October 2, 2000, the President designated the Republic of Rwanda (‘‘Rwanda’’) as a beneficiary sub-Saharan African country for purposes of section 506A(a)(1) of the Trade Act of 1974 (the ‘‘1974 Act’’) (19 U.S.C. 2466a(a)(1)), as added by section 111(a) of the African Growth and Opportunity Act (the ‘‘AGOA’’). 2. Sections 506A(d)(4)(C) (19 U.S.C. 2466a(d)(4)(C)) and 506A(c)(1) (19 U.S.C. 2466a(c)(1)) of the 1974 Act authorize the President to suspend the applica- tion of duty-free treatment provided for any article described in section 506A(b)(1) of the 1974 Act (19 U.S.C. 2466a(b)(1)) or section 112 of the AGOA (19 U.S.C. 3721) with respect to a beneficiary sub-Saharan African country if the President determines that the beneficiary country is not meeting the requirements described in section 506A(a)(1) of the 1974 Act, and that suspending such duty-free treatment would be more effective in promoting compliance by the country with those requirements than terminating the designation of the country as a beneficiary sub-Saharan African country for purposes of section 506A of the 1974 Act. 3. Pursuant to section 506A(c)(1) of the 1974 Act, I have determined that Rwanda is not meeting the requirements described in section 506A(a)(1) of the 1974 Act and that suspending the application of duty-free treatment to certain goods would be more effective in promoting compliance by Rwanda with such requirements than terminating the designation of Rwanda as a beneficiary sub-Saharan African country. Accordingly, I have decided to suspend the application of duty-free treatment for all AGOA-eligible goods in the apparel sector from Rwanda for purposes of section 506A of the 1974 Act. 4. Proclamation 8039 of July 27, 2006, implemented the United States- Bahrain Free Trade Agreement (‘‘USBFTA’’) with respect to the United States and, pursuant to section 101(a) of the United States-Bahrain Free Trade Agreement Implementation Act (the ‘‘USBFTA Implementation Act’’) (19 U.S.C. 3805 note), incorporated in the Harmonized Tariff Schedule of the United States (HTS) the rules of origin necessary or appropriate to carry out the USBFTA. 5. Section 1206(a) of the Omnibus Trade and Competitiveness Act of 1988 (the ‘‘1988 Act’’) (19 U.S.C. 3006(a)) authorizes the President to proclaim modifications to the HTS based on the recommendations of the United States International Trade Commission (the ‘‘Commission’’) under section 1205 of the 1988 Act (19 U.S.C. 3005) if he determines that the modifications are in conformity with United States obligations under the International Convention on the Harmonized Commodity Description and Coding System (the ‘‘Convention’’) and do not run counter to the national economic interest of the United States. 6. In Proclamation 9549 of December 1, 2016, pursuant to the authority provided in section 1206(a) of the 1988 Act, the President modified the HTS to reflect amendments to the Convention. Bahrain is a party to the
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Convention and likewise implemented the amendments to the Convention in its tariff schedule. 7. Because of these changes in the national tariff schedules of the parties to the USBFTA, the rules of origin set out in Annexes 3–A and 4–A of the USBFTA must be changed to ensure that the tariff and certain other treatment accorded under the USBFTA to originating goods will continue to be provided under the tariff categories that were modified in Proclamation 9549. The USBFTA parties have agreed to make these changes in a protocol to the USBFTA that went into effect on November 30, 2017. 8. Section 202 of the USBFTA Implementation Act provides certain rules for determining whether a good is an originating good for purposes of implementing tariff treatment under the USBFTA. Section 202(j)(1) of the USBFTA Implementation Act authorizes the President to proclaim the rules of origin set out in the USBFTA and any subordinate categories necessary to carry out the USBFTA, subject to certain exceptions set out in section 202(j)(2)(A). 9. I have determined that modifications to the HTS proclaimed pursuant to section 1206(a) of the 1988 Act are necessary or appropriate to ensure the continuation of treatment accorded originating goods under tariff cat- egories modified in Proclamation 9549. 10. Following the amendments to the Convention reflected by the modifica- tions to the HTS made in Proclamation 9549, the World Customs Organization issued a small number of conforming amendments to the Convention that should have been included in the amendments that were implemented on January 1, 2017, pursuant to Proclamation 9549. The Commission then rec- ommended additional modifications to the HTS pursuant to section 1205 of the 1988 Act to conform the HTS to these most recent amendments to the Convention. I have determined that these recommended modifications to the HTS proclaimed in this proclamation pursuant to section 1206(a) of the 1988 Act are in conformity with United States obligations under the Convention and do not run counter to the national economic interest of the United States. 11. Proclamation 9693 of January 23, 2018, implemented action in the form of a safeguard measure under section 203 of the 1974 Act (19 U.S.C. 2253) with respect to certain crystalline silicon photovoltaic cells, whether or not partially or fully assembled into other products (such as modules). 12. The safeguard measure imposed a tariff-rate quota, for a period of 4 years, on imports of solar cells that are not partially or fully assembled into other products, and an increase in duties on imports of modules, as defined by Note 18(g) in subchapter III of chapter 99 of the HTS, also for a period of 4 years. 13. Section 604 of the 1974 Act (19 U.S.C. 2483) authorizes the President to embody in the HTS the substance of the relevant provisions of that Act, and of other Acts affecting import treatment, and actions thereunder, including removal, modification, continuance, or imposition of any rate of duty or other import restriction. 14. Proclamation 9693 modified chapter 99 of the HTS to implement the safeguard measure described in paragraphs 11 and 12 of this proclamation. Those modifications included certain technical errors, and I have determined, pursuant to section 604 of the 1974 Act, that modifications to the HTS are necessary to correct them. 15. Section 1206(c) of the 1988 Act provides that modifications proclaimed by the President under section 1206(a) may not take effect before the thirtieth day after the date on which the text of the proclamation is published in the Federal Register. NOW, THEREFORE, I, DONALD J. TRUMP, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States of America, including but not limited
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to sections 506A(d)(4)(C) and 506A(c)(1) of the 1974 Act; section 1206(a) of the 1988 Act; and sections 203 and 604 of the 1974 Act, do proclaim that: (1) The application of duty-free treatment for all AGOA-eligible goods in the apparel sector from Rwanda is suspended for purposes of section 506A of the 1974 Act, effective July 31, 2018. (2) In order to reflect in the HTS that, beginning on July 31, 2018, the application of duty-free treatment for all AGOA-eligible goods in the apparel sector from Rwanda shall be suspended, the HTS is modified as set forth in Annex I to this proclamation. (3) In order to reflect in the HTS the modifications to the rules of origin under the USBFTA, general note 30 to the HTS is modified as provided in Annex II to this proclamation. (4) The modifications to the HTS set forth in Annex II shall be effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after the date that is 30 days after the date of publication of this proclamation in the Federal Register. (5) In order to conform the HTS to the most recent amendments to the Convention, the HTS is modified as set forth in Annex III to this proclama- tion. (6) The modifications to the HTS set forth in Annex III shall be effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after the later of (i) the date that is 30 days after the date of publication of this proclamation in the Federal Register, or (ii) the first day of the month that follows after such thirtieth day. (7) In order to correct technical errors in the annex to Proclamation 9693, Note 18(c)(iii) in subchapter III of chapter 99 of the HTS is modified by deleting the phrase ‘‘Subheadings 9903.45.21 and 9903.45.22 shall likewise’’ and by inserting in lieu thereof the phrase ‘‘Subheading 9903.45.25 shall’’; and Note 18(g) is modified by deleting ‘‘For purposes of’’ and by inserting in lieu thereof ‘‘Subject to the provisions of subdivision (c)(iii) of this note, for purposes of’’. (8) Any provisions of previous proclamations and Executive Orders that are inconsistent with the actions taken in this proclamation are superseded to the extent of such inconsistency. IN WITNESS WHEREOF, I have hereunto set my hand this thirtieth day of July, in the year of our Lord two thousand eighteen, and of the Independ- ence of the United States of America the two hundred and forty-third.
Billing code 3295–F8–P
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ANNEX I
TO MODIFY PROVISIONS OF THE HARMONIZED TARIFF SCHEDULE OF THE ~ITED STATES
Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after July 31, 2018, subchapter XIX of chapter 98 of the Harmonized Tariff Schedule of the United States is modified as follows:
~-U.S. note 2(d) to subchapter XIX of chapter 98 is modified by deleting "Republic of Rwanda".
2. The article descriptions of subheadings 9819.11.03 through 9819.11.24, inclusive, and subheading 9819.11.30 are each modified by inserting after the first or the sole appearance (as the case may be) of the word "countries" the expression "(except the Republic of Rwanda)".
3. The article description of subheading 9819.11.27 is modified by inserting after the word "articles" the expression "(except apparel articles the product of the Republic of Rwanda)".
4. The superior text to subheadings 9819.15.10 through 9819.15.42 is. modified by inserting after the word "countries" the expression "(exce.pt the Republic· of Rwanda)".
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ANNEX II
TO MODIFY PROVISIONS OF THE HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES
Effective with respect to goods of Bahrain, under the terms of general note 30 to the Harmonized Tariff Schedule (HTS) of the United States, that are entered for consumption, or withdrawn from warehouse fo~ consumption, on or after the date that is thirty days after the date of publication of this proclamation in the Federal Register, subdivisi0n (h) of such general note 30 is hereby modified as follows:
1. Chapter rule 1 for chapter 61 is deleted and the following new chapter rule is inserted in lieu thereof:
"Chapter Rule 1: Except for fabrics classified in tariff items 5408.22.10, 5408.23.11, 5408.23.21 and 5408.24.10, the fabrics identified in the following subheadings and headings, when used as visible lining material in certain men's and women's suits, suit-type jackets, skirts, overcoats, carcoats, anoraks, windbreakers and similar articles, must be both formed from yarn and finished in the territory of.Bahrain or of the United States:
5111 through 5112~ 5208.31 through 5208.59, 5209.31 through 5209.59, 5210.31 through 5210.59, 5211.31 through 5211.59, 5212.13 through 5212.15, 5212.23 through 5212.25, 5407.42 through 5407.44, 5407.52 through 5407.54, 5407.61, 5407.72 through 5407.74, 5407.82 through 5407.84, 5407.92 through 5407.94, 5408.22 through 5408.24, 5408.32 through 5408.34, 5512.19, 5512.29, 5512.99, 5513.21 through 5513.49, .5514.21 through 5515.99, 5516.12 through 5516.14, 5516.22 through 5516.24, 5516.32 through 5516.34, 5516.42 through 5516.44, 5516.92 through 5516.94, 6001.10, 6001.92, 6005.35 through 6005.44 or 6006.10 through 6006.44."
2. Chapter rule 1 for chapter 62 is deleted and the following new chapter rule is inserted in lieu thereof:
"Chapter Rule 1: Except for fabrics classified in tariff items 5408.22.10, 5408.23.11, 5408.23.21 and 5408.24.10, the fabrics identified in the following subheadings and headings, when used as visible lining material in certain men's and women's suits, suit-type jackets, skirts, overcoats, carcoats, anoraks, windbreakers and similar articles, must be both formed ~rom yarn
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and finished in ·the territory of Bahrain or of the United States:
5111 through 5112, 5208.31 through 5208.59, 5209.31 through 5209.59, 5210.31 through 5210.59, 5211.31 through 5211.59, 5212.13 through 5212.15, 5212.23 through 5212.25, 5407.42 through 5407.44, 5407.52 through 5407.54, 5407.61, 5407.72 through 5407.74, 5407.82 through 5407.84, 5407.92 through 5407.94, 5408.22 through 5408.24, 5408.32 through 5408.34, 5512.19, 5512.29, 5512.99, 5513.21 through 5513.49, 5514.21 through 5515.99, 5516.12 through 5516.14, 5516.22 through 5516.24, 5516.32 through 5516.34, 5516.42 through 5516.44, 5516.92 through 5516.94, 6001.10, 6001.92, 6005.35 through 6005.44 or 6006.10 through 6006.44."
3. Tariff classification rule (TCR) 1 for chapter 21 is deleted and the following new TCR is inserted in lieu thereof:
"1. A change to concentrated juice of any single fruit or vegetable fortified with vitamins or minerals of subheading 2106.90 from any other chapter, except from heading 0805, subheadings 2009.11 through 2009.39, subheading 2202.91 or subheading 2202.99." ·
4. Following the TCR for chapter 94, a new designation for chapter 96 and accompanying heading rule and TCR are inserted as follows:
"Chapter 96
Heading Rule: For purposes of determining whether a good of this heading other than of textile wadding is originating, the rule applicable to that good shall only apply to the component that determines the tariff classification of the good and such component must satisfy the tariff change requirements set out in the rule for that good.
1. (A) A change to sanitary towels (pads) and tampons and similar.articles of textile wadding of heading 9619 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311 or chapters 54 through 55; or
(B) A change to a good of textile materials other than of wadding, knitted or crocheted, of heading 9619 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311,
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chapter 54 or headings 5508 through 5516 or 6001 through 6006, provided that the good is cut or knit to shape, or both, and sewn or otherwise assembled in the territory of Bahrain or of the United States, or both; or
' (C) A change to a good of textile materials other than of wadding, not knitted or crocheted, of heading 9619 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, chapter 54, or headings 5508 through 5516, 5801 through 5802 or 6001 through 6006, provided that the good is both cut and sewn·or otherwise assembled in the territory of Bahrain or of the United States; or both."
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ANNEX III
MODIFICATIONS TO THE HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES
Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after the later of {1) the date that is thirty days after the date of publication of this proclamation in the Federal Register, or {2) the first day of the month that follows after such thirtieth day, chapters 44 and 63 of the Harmonized Tariff Schedule {HTS) of the United States are modified as set forth herein, with the material inserted in the HTS in the respective columns shown in each table below:
1. {a) Additional u.s. note 3 to chapter 44 is redesignated as note 4.
{b) Additional u.s. note 4 to chapter 44 is redesignated as note 5.
{c) New additional u.s. note 3 to chapter 44 is inserted as follows:
"3. Subheadings 4407.19.05 and 4407.19.06 cover combinations of the named species whose proportions are not readily identifiable."
2. Subheading 4401.10.00 is deleted and the following new subheadings and superior text are inserted in lieu thereof:
Heading/ Rates of Duty Subheading Article description 1 2 General Special [4401 Fuel wood, in logs, in billets, in twigs, in faggots or in similar forms; ... :] "Fuel wood, in logs, in billets, in twigs, in faggots or in similar forms: 4401.11. 0 Coniferous Free 20% 0 ...... 4401.12.0 Nonconiferous Free 20%" 0 ......
3. {a) The superior text immediately preceding subheading 4401.31.00 is deleted and the following new superior text is inserted in lieu thereof:
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"Sawdust and wood waste and scrap, agglomerated in logs, briquettes, pellets or similar forms:".
(b) Subheading 4401.39.40 is redesignated as subheading 4401.39.41.
4. New subheading 4401.40.00 is inserted in numerical sequence:
Rates of Duty Heading/ 1 2 Subheading Article description Genera Special 1 [4401 Fuel wood, in logs, in billets, in twigs, in faggots or in similar forms; ... : ] "4401. 40. Sawdust and wood.waste and scrap, 00 not agglomerated ...... Free Free
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5. Subheadings 4403.10.00 and 4403.20.00 are deleted and the following new subheadings and superior texts are inserted in lieu thereof:
Rates of Duty Heading/ Article description 1 Subheading 2 General Special [4403 Wood in the rough, whether or not stripped of bark or sapwood, or roughly squared:] "Treated with paint, stain, creosote or other preservatives: 4403.11.00 Coniferous Free Free
4403.12.00 Nonconiferous Free Free
Other, coniferous: 4403.21.00 Of pine (Pinus spp.), of which any cross-sectional dimension is 15 em or more Free Free 4403.22.00 Of pine (Pinus spp.), Free Free other
4403.23.00 Of fir (Abies spp.) and spruce (Picea spp.), of which any cross-sectional dimension is 15 em or more Free Free 4403.24.00 Of fir (Abies spp.) and spruce (Picea spp.), other Free Free 4403.25.00 Other, of which any cross sectional dimension is 15 em or more Free Free 4403.26.00 Other Free Free"
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6. (a) Subheading 4403.92.00 is deleted and the following new subheadings are inserted in lieu thereof:
Rates of Duty Heading/ Article descriptio~ 1 2 Subheading General Special [4403 Wood in the rough, whether or not stripped of bark or sapwood, or roughly squared: Other:] 11 4403.93.0 Of beech (Fagus spp.), of 0 whic.h any cross-sectional dimension is 15 em or more Free Free 4403.94.00 Of beech (Fagus spp.), Free Free other
4403.95.00 Of .birch (Betula spp.), of which any cross-sectional dimension is 15 em or more Free Free 4403.96.00 Of birch (Betula spp.), Free Free other
4403.97.00 Of poplar and aspen (Populus Free Free spp.)
4403.98.00 Of eucalyptus (Eucalyptus Free Free spp.) II
(b) Subheading 4403.99.00 is redesignated as subheading 4403.99.01.
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7. Subheadings 4406.10.00 and 4406.90.00 are deleted and the following· new subheadings and superior texts are inserted in lieu thereof:
Rates of Duty Heading/ Article description Subheading 1 2 General Special [4406 Railway or tramway sleepers (cross-ties) of wood:] "Not impregnated: 4406.11.00 Coniferous Free Free ...... 4406.12.00 Nonconiferous Free Free
•••••••••••••• '!' •••••••••••• Other: 4406.91.00 Coniferous Free Free ...... 4406.92.00 Nonconiferous Free Free ...... II
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8. ·subheading 4407.10.01 is deleted and the following new subheadings and superior texts are inserted in lieu thereof:
Rates of Duty Heading/ Article description Subheading 1 2 General Special [4407 Wood sawn or chipped lengthwise, siiced or peeled, whether or not planed, sanded or end-jointed, of a thickness exceeding 6 mm:] "Coniferous: 4407.11.00 Of pine {Pinus Free $1. 70/m3 spp.)
4407.12.00 Of fir {Abies spp.) and spruce {Picea spp.) Free $1. 70/m3 4407.19.00 Other: 4407.19.05 Mixtures of spruce, pine and fir {"S-P-F"), not treated with paint, stain, creosote or other preservative Free $1. 70/m3 4407.19.06 Mixtures of western hemlock and amabilis fir {"hem fir"), not treated with paint, stain, creosote or other preservative Free $1. 70/m3 4407.19.10 Other $1. 70/m3 " Free
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9. (a) New subheadings 4407.96.00 and 4407.97.00 are inserted in numerical order:
Rates of Duty Heading/ Article description Subheading 1 2 ·General Special [4407 Wood sawn or chipped lengthwise, sliced or peeled, whether or not planed, sanded or end-jointed, of a thickness exceeding 6 mm: Other:] "4407.96.0 Of birch (Betula Free $1.27/m3 0 spp.) ...... Of poplar and aspen Free $1.27/m3 4407.97.00 (Po:eulus spp.) " . .; ......
{b) Subheading 4407.99.01 is redesignated as subheading 4407.99.02.
10. {a) Subheadings 4412.32 through 4412.32.57 are deleted and the following new subheadings and superior texts are inserted in lieu thereof:
Rates of Duty Heading/ Article description Subheading 1 2 General Special [4412 Plywood, veneered panels and similar laminated wood: Other plywood consisting solely of sheets of wood (other than bamboo), each ply not exceeding 6 mm in thickness: 4412.33 Other, with at least one oute·r ply of nonconiferous wood of the species alder (Alnus spp . ) , ash (Fraxinus spp.), beech (Fagus spp.), birch (Betula spp.), cherry (Prunus spp.), chestnut (Castanea spp.), elm (Ulmus spp.), eucalyptus (EUCalyptus spp.), hickory (Carya spp.), horse chestnut (Aesculus spp.), lime (Tilia spp.), maple (Acer spp.), oak (Quercus spp.), plane tree (Platanus .spp.), poplar an~ aspen (Populus spp.),
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Rates of Duty Heading/ Article description 1 Subheading 2 General S.pecial robinia (Robinia spp.), tulipwood (Liriodendron spp.) or walnut (Juglans spp.): Not surface covered, or surface covered with a clear or transparent material which does not obscure the grain, texture or markings of the face ply: 4412.33.06 With a face ply of birch (Betula spp.) ...... Free 50%"
[4412 Plywood, veneered panels and similar laminated wood: Other plywood consisting solely of sheets of wood (other than bamboo), each ply not exceeding 6 mm in thickness:] "4412.33 Other, with at least one outer ply of nonconiferous wood of the species alder (Alnus spp.), ash (Fraxinus spp.), beech (Fagus spp.), birch (Betula spp.), cherry (Prunus spp.), chestnut (Castanea spp.), elm (Ulmus spp.), eucalyptus (Eucalyptus spp.), hickory (Carya s·pp.), horse chestnut (Aesculus spp.), lime (Tilia spp.), maple (Acer spp.), oak (Quercus spp.), plane tree (Platanus spp.), poplar and aspen (Populus spp.), robinia (Robinia spp.), tU:lipwood (Liriodendron spp.) or walnut (Juglans spp.) :· Not surface covered, or surface covered with a clear or transparent material which doe.s not obscure the grain, texture or markings of the face ply:]
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4412.33.26 With a face ply of walnut (Juglans spp.) 5.1% Free 40% (A* ,AU,B H, CA,CL,CO ,D,E,IL, JO,MA,MX ,OM, P,PA,PE, SG) 1.5% (KR) 4412.33.32 Other 8% Free 40% (A*,AU,B H, CA,CL,CO ,D,E,IL, JO,MA,MX ,OM, P,PA,PE, SG) 2.4% (KR) 4412.33.57 Other 8% Free 40%" (A*,AU,B H, CA,CL,CO ,D,E,IL, JO,MA,MX ,OM, P,PA,PE, SG) 2.4% (KR)
[4412 Plywood, veneered panels and similar laminated wood: Other plywood consisting solely of sheets of wood (other than bamboo), each ply not exceeding 6 mm in thickness:] "4412.34 Other, with at least one outer ply of nonconiferous wood not specified under subheading 4412.33: Not surface covered, or surface covered with a clear or transparent material which does not obscure the grain, texture or markings of the face ply: 4412.34.26 With a face ply of Spanish cedar 5.1% 40%
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(Cedrela Free spp.) (A*,AU,B H, CA,CL,CO ,D,E,IL, JO,MA,MX ,OM, P,PA,PE, SG) 1.5% (KR) 4412.34.32 Other 8%" Free 40% (A* ,AU,B. H, CA,CL,CO ,D,E,IL, JO,MA,MX ,OM, P,PA,PE, SG) 2.4% (KR) 4412.34.57 Other 8% Free 40%" (A*,AU,B H, CA,CL,"CO ,D,E,IL, JO,MA,MX ,OM, P,PA,PE, SG) 2 .4%· (KR)
(b) General note 4(d) to the HTS is modified by-
(i) deleting the following subheadings and the country set out opposite such subheadings:
4412.32.26 Brazil 4412.32.32 Brazil 4412.32.57 Brazil
(ii) adding, in numerical sequence, the following subheadings and the country set out opposite such subheadings:
4412.33.26 Brazil 4412.33.32 Brazil 4412.33.57 Brazil 4412.34.26 Brazil 4412.34.32 Brazil 4412.34.57 Brazil
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11. New subheading note 1 to chapter 63 and a subheading note title are inserted after the chapter notes. "Subheading Note
1. Subheading 6304.20 covers articles made from warp knit fabrics, impregnated or coated with alpha
cyperrnethrin (ISO) I chlorfenapyr (ISO) I deltamethrin (INN, ISO), lambda-cyhalothrin (ISO), permethrin (ISO) or pirimiphosmethyl (ISO).".
12. (a) New subheading 6304.20.00 is inserted in numerical order:
Rates of Duty Heading/ Subheading Article description 1 2 General Special [6304 Other furnishing articles, excluding those of heading 9404:] "6304.20.0 Bed nets specified in subheading 0 note 1 to this chapter 5.8% Free 90%". (AU, BH,CA,C L, CO,E*,I L, JO,KR,M A;MX,OM ,P, PA,PE,S G)
(b) Subheading 6304.91.00 is redesignated as subheading 6304.91.01.
[FR Doc. 2018–16725
Filed 8–1–18; 11:15 am] Billing code 7020–02–C
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