FEDERAL REGISTER VOLUME 31 • NUMBER 226

Tuesday, November 22, 1966 • Washington, D.C. Pages 14767—14820 (Part II begins on page 14807)

Agencies in this issue— Agricultural Stabilization and Conservation Service Atomic Energy Commission Civil Aeronautics Board Consumer and Marketing Service Customs Bureau Federal Aviation Agency Federal Communications Commission Federal Maritime Commission Federal Power Commission Federal Reserve System Federal Trade Commission Fish and Wildlife Service Food and Drug Administration Foreign Assets Control Office Health, Education, and Welfare Department Internal Revenue Service Interstate Commerce Commission Land Management Bureau Labor Department Public Health Service Securities and Exchange Commission Social Security Administration Veterans Administration Detailed list of Contents appears inside.

No. 226—Pt. I---- 1 Current White Bouse Releases

WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS

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FISH AND WILDLIFE SERVICE agricultural stabilization FEDERAL COMMUNICATIONS AND CONSERVATION SERVICE COMMISSION Rules and Regulations Notices Crescent Lake and North Platte Notices National Wildlife Refuges, Domestic noncommon carrier Nebr.; sport fishing------14776 Members of Adm inistrator’s im ­ communications-satellite facili­ Flint Hills National Wildlife Ref­ mediate staff; delegations of ties; establishment by nongov­ uge, Kans.; hunting (2 docu­ authority------— ----- 14789 ernmental entities------14792 ments) ______-■— 14775,14776 Sugarcane in Puerto Rico; 1967— Hearings, etc.: Necedah National Wildlife Ref­ fi8 cron proportionate shares; Martorell, Luis Prado and Au­ uge, Wis.; sport fishing— ------14776 notice of hearing------— ------14789 gustine L. Cavallaro, Jr—- — 14792 Meroco Broadcasting Co------14792 Notices Loan applications: AGRICULTURE DEPARTMENT FEDERAL MARITIME Allen, Lome M------— 14789 See Agricultural Stabilization and COMMISSION Crowley, Jack E., and Winni- Conservation Service; Con­ fred V------14789 sumer and Marketing Service. Notices Middle Atlantic Ports Dockage FOOD AND DRUG Association; agreements filed ADMINISTRATION ATOMIC ENERGY COMMISSION for approval------14792 Notices FEDERAL POWER COMMISSION Notices Central Soya Co.; hearing; cor­ Armed Forces Radiobiology Re­ Proposed Rule Making search Institute; issuance of rection______14790 facility license amendment----- 14790 Municipal electric utilities; an­ nual report form— ------14786 FOREIGN ASSETS CONTROL CIVIL AERONAUTICS BOARD Notices OFFICE Hearings, etc.: Rules and Regulations Notices Algonquin Gas Transmission Cassia from Indonesia and Sabah, Hearings, etc.: C o ______14795 Malaysia------14775 Lineas Aereas Costarricenses, S. Atlantic Richfield Co., et al— 14799 Chevron Oil Co., Western Divi­ A. (LACSA)— ------— ------14791 HEALTH, EDUCATION, AND RealAire, et al_.------— ------14791 sion______14793 Columbia Gulf Transmission WELFARE DEPARTMENT Co ______14795 CONSUMER AND MARKETING Hugoton Production Co------14795 See also Food and Drug Admin­ SERVICE Manufacturers Light and Heat istration; Public Health Serv­ Co ______14796 ice; Social Security Administra­ Rules and Regulations Pecos Co______14796 tion. Cotton research and promotion Rudman, M. B. et al------14797 Notices orders; agencies through which South Texas Natural Gas Air pollution in New York-New a referendum shall be con­ Gathering Co., and Trunkline Jersey area; conference of con­ ducted ______14771 Gas Co------14798 Southeastern Indiana Natural trol agencies------14790 Proposed Rule Making Gas Co., Inc., and Texas Gas Transmission Corp------14798 INTERIOR DEPARTMENT Milk in Northwestern Ohio mar­ See Fish and Wildlife Service; keting area; decision------14777 Texas Eastern Transmission Corp ______14799 Land Management Bureau. Notices Town of Brooklyn, Iowa and INTERNAL REVENUE SERVICE La Grange Stockyards, Inc., et al.; Natural Gas Pipeline Com­ changes in names of posted pany of America------14799 Rules and Regulations Town of Montezuma, Iowa and stockyards______14790 Natural Gas Pipeline Com­ Inducements furnished to retail­ pany of America------14799 ers; window and other interior CUSTOMS BUREAU Yuronka, John et al------14796 displays by industry members to retail liquor dealers------14773 Rules and Regulations FEDERAL RESERVE SYSTEM Statement of procedural rules; miscellaneous excise taxes col­ Sugar, molasses, and sirup; re­ Notices tests ______14772 lected by returns; correction— 14773 Bank holding companies; annual Proposed Rule Making report form revision------14800 INTERSTATE COMMERCE Importation of spruce and pine COMMISSION lumber; additional invoice re­ FEDERAL TRADE COMMISSION quirements ______14787 Rules and Regulations Notices Administrative opinions and rul­ California, Arizona, New Mexico, ings; three-party promotional and Texas; increased rates and FEDERAL AVIATION A GEN CY and merchandising assistance charges------14803 Rules and Regulations plan available to direct and in- Fourth section application for direct purchasers______14772 relief------14802 Airworthiness directives; Lear Jet Motor carrier temporary author­ Model 23 and 24 airplanes____ 14771 Notices ity applications------14802 Transition area; designation (2 Softwood lumber; grading and (Continued on next page) documents) ______14771 grademarking______- 14800 14769 14770 CONTENTS

LAND MANAGEMENT BUREAU PUBLIC HEALTH SERVICE TREASURY DEPARTMENT Notices Proposed Rule Making See Customs Bureau; Foreign As­ North Dakota; proposed classifi­ Air pollution from Federal Gov­ sets Control Office; Internal cation of public lands______14788 ernment activities; prevention, Revenue Service. control, and abatement______14785 LABOR DEPARTMENT VETERANS ADMINISTRATION SECURITIES AND EXCHANGE Rules and Regulations Rules and Regulations COMMISSION Farm labor contractor registra­ Delegation of authority to pro­ Notices vide relief on account of admin­ tion; miscellaneous am end­ istrative error. ments______!_____ 14773 Hearings, etc.: _____ »______14775 Allegheny Power System, Inc., et al______14800 First Springfield Corp______14801 Madison Fund, Inc., and Mis- souri-Kansas-Texas Railroad Co------14801 Westec Corp______14802 SOCIAL SECURITY ADMINISTRATION Rules and Regulations Federal health insurance for the aged; principles of reimburse­ ment for provider costs and for services by hospital-based physicians ______14808

List of CFR Parts Affected (Codification Guide)

The following numerical guide is a list of the parts of each title of the Code of Federal Regulations affected by documents published in today's issue. A cumulative list of parts affected, covering the current month to date appears at the end of each issue beginning with the second issue of the month. A cumulative guide is published separately at the end of each month. The guide lists the parts and sections affected by documents published since January 1, 1966, and specifies how they are affected.

7 CFR 19 CFR 29 CFR 1205______14771 13------14772 40------... 14773 P roposed R ules : P roposed R ules : * 1041__— ______14777 8------14787 31 CFR 500______14775 14 CFR 20 CFR 39— ------14771 405— ______j.___ _ 14808 38 CFR 71 (2 documents)______14771 2— — ...... — ...... 14775 26 CFR 16 CFR 601— ______*■_.______14773 42 CFR 15 ------14772 P roposed R ules: 27 CFR 76______14785 18 CFR 6------14773 50 CFR P roposed R ules : 32 (2 documents)______14775,14776 141------14786 33 (2 documents)______14776 14771 Rules and Regulations

[Airspace Docket No. 66-EA-41] Title 7— AGRICULTURE Title 14— AERONAUTICS AND PART 71— DESIGNATION OF FEDERAL Chapter XI— Consumer and Market­ SPACE AIRWAYS, CONTROLLED AIRSPACE, ing Service (Marketing Agreements AND REPORTING POINTS and Orders; Miscellaneous Com­ Chapter I—Federal Aviation Agency Designation of Transition Area (Docket No. 7390; Arndt. 39-312] modities), Department of Agricul­ On pages 11759 and 11760 of the F ed­ ture PART 39— AIRWORTHINESS eral R egister for September 8, 1966, the DIRECTIVES Federal Aviation Agency published pro­ PART 1205— COTTON RESEARCH posed regulations which would designate AND PROMOTION ORDERS Lear Jet Model 23 and 24 Airplanes a 700-foot floor transition area for Subpart— Procedure for the Conduct AD 66-14-2 (amendments 39-242 and Dunkirk, N.Y. 39-271) requires certain modifications of Interested parties were given 30 days of Referenda in Connection With after publication in which to submit Cotton Research and Promotion the electrical system of Lear Jet Model 23 and 24 airplanes. This amendment written data or views. No objections to Orders revises that airworthiness directive in the proposed regulations have been Agencies T hrough Which a R eferendum order to reference the Lear Jet Engineer­ received. S hall be Conducted ing data covering these modifications. In view of the foregoing, the proposed As this amendment imposes no addi­ regulations are hereby adopted effective The regulations governing the proce­ tional burden on any person, compliance 0001 e.s.t., January 5, 1967. dure for the conduct of referenda in con­ with the notice and public procedure pro­ (Sec. 307(a), Federal Aviation Act of 1958 nection with cotton research and promo­ visions of the Administrative Procedure (72 Stat. 749; 49 U.S.C. 1348)) tion orders issued pursuant to the Cotton Act is not required and good cause ex­ Research and Promotion Act (80 Stat. Issued in Jamaica, N.Y., on Novem­ 279) are hereby amended as follows: ists for making the amendment effective ber 3, 1966. In § 1205.202(a) (4), subdivision (iii) in less than 30 days. Wayne H endershot, is amended by deleting the words in line In consideration of the foregoing, and Deputy Director. 12 thereof reading “prior to the begin­ pursuant to the authority delegated to Amend § 71.181 of Part 71 of the Fed­ ning of the referendum,” and substi­ me by the Administrator (25 F-R. 6489), eral Aviation Regulations so as to desig­ tuting therefor the words "prior to the expiration of the referendum period,”. § 39.13 of Part 39 of the Federal Aviation nate a 700-foot floor transition area for As so amended, § 1205.202(a) (4) (iii) Regulations, amendment 39-242, AD 66- Dunkirk, N.Y., as follows: reads as follows: 14-2, as amended by amendment 39-271, Du n k ir k , N.Y. § 1205.202 Agencies through which a is further amended as follows: That airspace extending upward from 700 referendum shall be conducted. Paragraph (c) of AD 66-14-2 (amend­ feet above the surface within a 5 -mile ra­ ment 39-242 as amended by amendment dius of the center, 42°29'35" N., 79°16'20" (a) Consumer and Marketing Service. W., of Dunkirk Municipal Airport, Dunkirk, * * * 39-271) is amended to read as follows: N.Y.; within 2 miles northwest and 5 miles (4) * * * (c) Modify the electrical system on Model southeast of the Dunkirk, N.Y. VOR 046° (iii) If an eligible voter is engaged in 23 airplanes, and on Model 24 airplanes S/N radial extending from the VOR to 12 miles production of upland cotton on more 24-100 through 24-129, in accordance with NE of the VOR; and within 2 miles each Lear Jet Engineering Change Record No. side of the Runway 15 centerline extended than one farm he is entitled to only one 340, 227, 230, or 233 (as applicable) or equiv­ from the 5-mile radius area to 10 miles vote but any vote cast by such voter shall alent data approved by the Chief, Engineer­ southeast of the lift-off end of the runway. represent the total amount of upland ing and Manufacturing Branch, Central Re­ [F.R. Doc. 66-12568; Filed, Nov. 21, 1966; cotton that is his share of the crop, or gion within the next 550 hours’ time in proceeds thereof, on all such farms: service after the effective date of this Air­ 8:45 ajn.] Provided, That only farms for which worthiness Directive. The affected airplanes records are maintained by the ASCS and applicable data are as follows: [Airspace Docket No. 66-EA—52] county office designated as the voter’s (1) S/N 23-012 and 23-031, Engineering Change Record No. 340. polling place shall be considered unless (2) S/N 23-003 through 23-011, 23-013 PART 71— DESIGNATION OF FEDERAL the voter, prior to the expiration of the through 23-030, and 23-032 through 23-099, AIRWAYS, CONTROLLED AIRSPACE, referendum period, establishes to the Engineering Change Record No. 340, 227, 230 satisfaction of such county office his or 233. AND REPORTING POINTS share of the crop, or proceeds thereof, (3) S/N 24-100 through 24-129, Engineer­ on any additional farm or farms. ing Change Record No. 340. Designation of Transition Area ***** This amendment becomes effective On page 11616 of the F ederal R egister (Sec. 15, 80 Stat. 285) November 22,1966. for September 2, 1966, the Federal Avia­ Effective date. This amendment shall (Secs. 313(a), 601, 603, Federal Aviation Act tion Agency published proposed regula­ become effective on the date of its publi­ of 1958; 49 U.S.C. 1354(a), 1421, 1423) tions which would designate a Pittsfield, cation in the F ederal R egister. Issued in Washington, D.C., on Novem­ Maine, 700-foot floor transition area. Interested parties were given 45 days Dated: November 17, 1966. ber 16,1966. C. W. W alker, after publication in which to submit G eorge L. Mehren, written data or views. No objections to Assistant Secretary. Director, Flight Standards Service. the proposed regulations have been [F.R. Doc. 66-12616; Filed, Nov. 21, 1966; [F.R. Doc. 66-12567; Filed, Nov. 21, 1966; 8:49 a.m.) 8:45 a.m.] received.

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 14772 RULES AND REGULATIONS

In view of the foregoing, the proposed (c) In addition, retailers could, at regulations are hereby adopted effective their option, buy or rent in-store sound Title 19— CUSTOMS DUTIES 0001 e.s.t., February 2, 1967. equipment and pin-chase a background (Sec. 307(a), Federal Aviation Act of 1958 music service from the promoter. The Chapter I— Bureau of Customs, De (72 Stat. 749; 49 U.S.C. 1348)) speakers could be used for in-store an­ partment of the Treasury nouncements by the retailers; however, [T.D. 66-258] Issued in Jamaica, N.Y., on November participating suppliers’ advertisements 3, 1966. would not be broadcast over the network PART 13— EXAMINATION, MEAS- W ayne Hendershot, Deputy Director, Eastern Region. stores. The charges to the retailers for UREMENT, AND TESTING OF CER the sound system and music would be TAIN PRODUCTS Amend § 71.181 of Part 71 of the Fed­ applied monthly or quarterly to promo­ eral Aviation Regulations so as to desig­ tional assistance payments earned for Retests of Sugar, Molasses, and Sirup nate 8, 700-foot floor transition area for participation in the plan (i.e. the 2 per­ Pittsfield, Maine, as follows: The purpose of this amendment of cent of purchases). Any excess of earn­ the regulations is to eliminate the provi­ That airspace extending upward from 700 ings over charges would be paid to the retailers in cash. sion under which an importer may re­ feet above the surface within a 5-mile radius quest a retest of raw sugar cargoes and, of the center, 44°46'05" N., 69°22'40" W., (d) At the outset and every 6 months of Pittsfield Municipal Airport, Pittsfield, thereafter, the plan would be offered by in lieu thereof, establish a procedure* Maine and within 2 miles each side of the letter from the promoter to all drug and whereby an importer m^jt request a re> Burnham, Maine, RBN (44°41'50” N., 69°- view of Customs average test. Accord­ 21'30" W.) 350° and 170° bearings extending grocery outlets listed in the yellow pages ing to available records, no importer has from the 5-mile radius area to 8 miles south of the telephone book, which list would requested retests of sugar in the past 15 of the RBN. be supplemented by participating sup­ pliers’ lists of competing customers sell­ years. Occasionally, minor differences (F.R. Doc. 66-12569; Filed, Nov, 21, 1966; ing the promoted product. have been resolved by a review of the 8:45 a.m.] pertinent records. It is believed that (e) Participating retailers would agree such a review would be adequate to to allow the promoter’s representatives reconcile significant differences between to check on performance and submit re­ the separate tests made by the Govern­ Title 16-COMMERCIAL ports to suppliers. The reports would ment and the importer should such dif­ contain information regarding the shelf ferences arise. space given the supplier’s promoted PRACTICES product, the prices at which it is sold, its Notice of the proposed amendment of Chapter I— Federal Trade shelf position (eye, waist, or bottom the regulations was published in the F ederal R egister on March 3, 1966 (31 Commission level) and the like. F.R. 3347), at which time the submission (f) With regard to the admonitions, PART 15— ADMINISTRATIVE of comments in writing was invited. the Commission expressed the view that: Upon consideration of the comments re­ OPINIONS AND RULINGS (1) In addition to the letter at the ceived, it has been determined to adopt outset and every 6 months to each com­ Three-Party Promotional and Mer­ the regulation as proposed. However, peting reseller of promoted products of the proposed language of § 13.8(b) is re­ chandising Assistance Plan Avail­ the supplier, new, competing customers able to Direct and Indirect vised to make clear that the procedure should be offered the plan when the first for review in the case of retests of Purchasers sale of the promoted product is made to molasses and sirups is not being changed. them. The reason is that such new cus­ In addition, references to customs officers § 15.103 Three-party promotional and tomers are entitled to be offered the as­ merchandising assistance plan avail­ sistance promptly. are being changed to reflect the recent able to direct and indirect purchas­ reorganization of the Customs Service. ers. (2) The reports the promoter submits Accordingly, § 13.8 is amended to read to suppliers should not contain informa­ as follows: (a) The Commission advised the tion which may be used for price fixing promoter of the three-party promotional purposes. § 13.8 Review of tests of sugar, molasses, assistance plan outlined below that, sub­ (3) Prospective participants in the and sirup. ject to the admonitions indicated, the plan should be told: (i) The fact that plan would not violate Commission ad­ (a) When the test of the sugar has ministered law. the promoter is positioned between the been determined, the importer shall be supplier and the supplier’s customers— immediately notified on customs Form (b) The promoter proposes to provide the retailers—does not affect applicabil­ promotional and merchandising assist­ 6463 of the average test of the importa­ ance to suppliers of products normally ity of sections 2 (d) and (e) of the Rob- tion and also the quantity and test of sold in grocery and drug stores. In re­ inson-Patman Act and section 5 of the each lot from which such average test is turn for in-store promotion of participat­ Federal Trade Commission Act to the obtained. If the importer, within 2 days, ing suppliers' products by (1) providing plan; (ii) even though the promoter is exclusive of Saturdays, Sundays, and shelf space at least equal to that given employed, it is the supplier’s responsibil­ holidays, after such notice has been sent competing products selling in the same ity to make certain that each of his cus­ to him, claims an error in the test so re­ volume (2) installing shelf markers or tomers who compete with one another in ported, he may request a review of the other in-store signs furnished by the selling the promoted product is offered average test, submitting such evidence promoter advertising the promoted pro­ the opportunity to participate. If op­ that may be in his possession to support ducts, (3) maintaining adequate sup­ portunity is not offered, or an illegal dis­ his claim. Settlement tests of the sugar plies (i.e. what the retailer decides he crimination results, the supplier, the re­ in question together with any informa­ needs to avoid a sellout) of promoted tailer and the promoter may be acting tion required by the district director shall products and (4) periodic (1 week in in violation of section 2 (d) or (e) of the be furnished by the importer. The dis­ each quarter) off shelf displays (aisle Robinson-Patman amendment to the trict director shall arrive at a final deter­ end or other than normal shelf position), Clayton Act and/or section 5 of the Fed­ mination based upon a review of the in­ the retailer would earn an amount equal eral Trade Commission Act. formation available. In no instance to 2 percent of his net purchases of pro­ (38 Stat. 717, as amended; 15 U.S.C. 41-58; 49 shall a request for review be granted moted products, subject to a maximum Stat. 1526; 15 U.S.C. 13, as amended) when the difference between the Customs average test and the settlement test is monthly payment of $40 per store. Issued: November 21,1966. Earnings would be computed on a store- less than 0.4° S. by-store basis. The amount earned By direction of the Commission. (b) In the case of molasses and sirup, would be based on purchases of pro­ a retest shall be granted by the district [seal] J oseph W. S hea, director when the information in his moted products regardless of whether the Secretary. retailer purchased directly from the sup­ possession indicates a strong probability plier or through a wholesaler. [F.R. Doc. 66-12602; Filed, Nov. 21, 1966; of an error and the difference between 8:48 a.m.] the Customs test and the settlement test

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 RULES AND REGULATIONS 14773 is shown to be not less than 2 percent § 6.23a (which related to distilled spirits purchase of distilled spirits, wine, or malt total sugars. In general, before grant­ only) to permit displays (for use in win­ beverages. ing a retest, the review procedures set dows or elsewhere in the interior of a This amendment shall become effective forth in paragraph (a) of this section retail establishment) to include items 30 days after the date of publication in shall be followed. The district director having utilitarian or secondary-use value the F ederal R egister. to the retailer, if such items are an in­ shall arrive at a final determination (49 Stat. 981, as amended; 27 U.S.C. 205) based upon a review of the information tegral part of the display and their cost submitted and the retest (77A Stat. 14; does not exceed $3 (this amount subject [seal] S heldon S. Cohen, 19 U.S.C. 1202 (Gen. Hdnote. 12) ). to increase or decrease on the basis of Commissioner of Internal Revenue. (RS 161, as amended, 251, sec. 624, 46 Stat. evidence submitted at the hearing), and Approved: November 16,1966. 759; 5 U.S.C. 22, 19 U.S.C. 66, 1624) such cost is included in the overall cost of the display. Only one such item would S tanley S. Surrey, These regulations shall become effec­ be permitted in any one display. Assistant Secretary of tive 30 days after the date of publication The evidence submitted failed to estab­ the Treasury. in the Federal R egister. lish that proposal No. 2 is in accordance [F.R. Doc. 66-12603; Filed, Nov. 21, 1966; [seal] Lester D. J ohnson, with established trade customs or that 8:48 a.m.] Commissioner of Customs. its adoption would be in the public in­ terest and in accordance with the pur­ Approved: November 10,1966. poses of 27 U.S.C. 205(b)(3), since it True Davis, would authorize the inducement of pur­ Title 29— LABOR Assistant Secretary of chases through supplying the retailer the Treasury. with items of utilitarian value not con­ Subtitle A— Office of the Secretary of Labor [P.R. Doc. 66-12599; Filed, Nov. 21, 1966; nected with his business and is not sup­ 8:48 a.m.] ported by a showing that its allowance PART 40— FARM LABOR CONTRAC­ is now reasonably necessary to legitimate merchandising requirements. TOR REGISTRATION 2. It had been proposed (proposal No. Miscellaneous Amendments Title 26— INTERNAL REVENUE 3 in the notice of hearing) to amend § 6.28 with respect to distilled spirits In the October 12, 1966, issue of the Chapter I— Internal Revenue Service, only, so as to increase from $10 to $25 F ederal R egister (31 F.R. 13174), there Department of the Treasury (or to some intermediate amount) the was published a proposal to amend 29 limitation contained therein on the ag­ CFR Part 40. Interested persons were SUBCHAPTER H— INTERNAL REVENUE PRACTICE gregate annual cost of retailer advertis­ given 15 days in which to file written ing specialties in any one retail estab­ statements of data, views, or argument PART 601— STATEMENT OF in regard to the proposal. None was re­ PROCEDURAL RULES lishment. ceived. Accordingly, effective December The evidence of record failed to estab­ Miscellaneous Excise Taxes 19, 1966,1 have decided to and do hereby lish a need for this increase in the limit adopt the proposal to read as set forth Collected by Return on the cost of retailer advertising spe­ below. The amendment differs from the Correction cialties which may be furnished retailers proposal only in that the words “Certif­ regardless of inducement effect or that icate of Insurance” are substituted for In F.R. Doc. 66-12060, appearing at such an increase would be in accordance page 14351 of the issue for Tuesday, No­ the word “Policy” where it appears on with established trade customs. In view the 10th line of § 40.4(c) (2), vember 8, 1966, the following correction of the likelihood that inducement effect is made in § 601.403(c) (1): The phrase may increase in direct proportion to the Signed at Washington D.C., this 15th reading “Returns of the tax on wages” value of the specialties which may be day of November 1966. should read “Returns of the tax on furnished, adoption of the proposal at R obert C. G oodwin, wagers”. this time appears not to be in the public Administrator, interest or in accordance with the pur­ Bureau of Employment Security. poses of the controlling statute. There­ fore, the proposal is rejected. 1. Section 40.3 is amended to read as Title 27— INTOXICATING 3. It had been proposed (proposal No. follows : 1 in the notice of hearing) to amend § 40.3 Certificate of Registration re­ LIQUORS § 6.21 by changing the proviso therein to quired. Chapter I— Internal Revenue Service, read as follows: “Provided, That, except for the inside signs and displays covered (a) On or after January 1, 1965, the Department of the Treasury by § 6.23(a) such furnishing is not con­ effective date of the Farm Labor Con­ [T.D. 6901] ditioned, directly or indirectly, on the tractor Registration Act of 1963, any per­ purchase of distilled spirits, wine, or malt son who desires to engage in activities as PART 6— INDUCEMENTS FURNISHED beverages.” a farm labor contractor, as defined in the TO RETAILERS Act, must first obtain a Certificate of The record of the hearing indicated Registration. Furnishing of Window and Other In­ a need for clarification of the regulations (b) A farm labor contractor who holds terior Displays by Industry Mem­ as they now exist so as to negate any a valid Certificate of Registration is re­ implication that a supplier, furnishing a bers to Retail Liquor Dealers sponsible for assuring that his full-time window or other interior display under or regular employees have filed applica­ Notice of public hearing to be held in the regulations may not, at the same tions for Farm Labor Contractor Em­ Washington, D.C., on January 11, 1966, time, sell the retailer a reasonable quan­ ployee Identification Cards before they with respect to certain proposals to tity of merchandise to fill out the display. participate in any of the activities enu­ amend 27 CFR Part 6, Inducements For purposes of clarification, 27 CFR merated in section 3(b) of the Act. Furnished to Retailers was published in 6.21 is amended by revising the proviso the Federal R egister on December 16, therein to read: 2. Section 40.4 is amended to read as follows: 1965 (30 F.R. 15470). Upon the conclu­ § 6.21 General. sion of the said hearing and after a § 40.4 Application for Certificate of thorough study of the proposals in the * * * Provided, That, except for such Registration. light of relevant material submitted by alcoholic beverages as may reasonably interested persons thereat, the following be required to complete a window or other (a) The application for a Certificate conclusions have been reached: interior display furnished pursuant to of Registration on Form ES-410 is avail­ 1. It had been proposed (proposal No. § 6.23 or § 6.23a, such furnishing is not able and must be executed and filed in 2 in the notice of hearing) to amend conditioned directly or indirectly on the any office of the Employment Service of

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 14774 RULES AND REGULATIONS

the various States, except that in States Pension Plan Disclosure Act, as amend­ § 40.5_ Corporations, partnerships, asso, requiring licensing or registration of ed. Treasury Department Circular 570 ciations, and other organizations. farm labor contractors under State law, may be obtained from the U.S. Treasury such application shall be available and Department, Bureau of Accounts, Divi­ Any corporation, partnership, associa­ shall be filed at the Employment Service sion of Deposit and Investments, Surety tion, or other organization which is a office of such State or the same office farm labor contractor within the mean­ Bonds Branch, Washington, D.C. 20226. ing of the Act must obtain a Certificate where the State registration or license is (d) The foregoing provisions of para­ of Registration. If any officer, director, filed, whichever may be designated by the graph (c) of this section must be com­ Governor of such State. partner, or member of a corporation! plied with, except to the extent that partnership, association, or other or­ (b) The application shall set forth the other arrangements have been approved ganization, engages in afty of the covered information required thereon, shall be by the Secretary. subscribed and sworn to by the applicant farm labor contracting activities as a (e) Any insurance policy or liability full-time or regular employee of such and shall have attached the applicant’s bond which is obtained pursuant to this business organization, he must comply fingerprints on a completed Form FD- Act should provide the required cover­ 258. with the requirements for obtaining a age for the full period during which the Farm Labor Contractor Employee Iden­ (c) Before any person may transport, applicant for a Certificate of Registra­ tification Card. within the meaning of the Act, migrant tion shall be engaged in transporting workers and their property in any vehicle migrant workers within the meaning of 4. Section 40.6 is amended to read as which he owns, operates, or causes to be the Act during a calendar year. If a follows: operated, he shall have complied with the policy or liability bond shall expire § 40.6 Farm Labor Contractor Employee insurance or financial responsibility re­ within 30 days of the date of filing an Identification Cards, Applications. quirements of the Act by having sub­ application for a Certificate of Registra­ mitted the following: tion, such Certificate will not be issued (a) Any person who intends to be em­ (1) A completed Farm Labor Con­ unless the applicant shall have submitted ployed as a full-time or regular employee tractor Automobile Liability Certificate written evidence of renewal or exten­ in any of the covered farm labor con­ of Insurance, showing that the pas­ sion of said policy or liability bond for tracting activities by a farm labor con­ senger hazard is included (as evidence the period of time during which migrant tractor who is a holder of a valid Certifi­ of liability insurance which covers the workers will be transported. In the cate of Registration must obtain a Farm workers while being transported). Such event that a policy or liability bond shall Labor Contractor Employee Identifica­ certificate represents that an automobile expire on a date which exceeds 30 days tion Card. This can be obtained by sub­ liability insurance policy including a from the date of application for a Cer­ mitting Form ES-412, Application for Farm Labor Contractor Liability En­ tificate of Registration, proof of renewal Farm Labor Contractor Employee Iden­ dorsement provides insurance in an or extension of a policy or of a liability tification Card, which shall be subscribed amount not less than that required under bond must be submitted promptly to the and sworn to by the applicant. The ap­ the law or regulation of any State in Regional Administrator who has issued plicant shall submit a completed Form which such applicant operates a vehicle the Certificate of Registration. The re­ FD-258, Fingerprint Card. These forms in connection with his business, activi­ quirements of this paragraph do not are available at any local office of the ties, or operations as a farm labor con­ excuse compliance with the provisions Employment Service of the various tractor; but in no event less than $5,000 hereinafter set forth in § 40.11. States or any office designated by the for bodily injuries to or death of one (f) Before any person may transport Governor of the State pursuant to sec­ person; $20,000 for bodily injuries to or migrant workers within the meaning of tion 40.4. death of all persons injured or killed in the Act, he shall submit evidence satis­ (b) An application for a Farm Labor any one accident; $5,000 for the loss or factory to the Regional Administrator Contractor Employee Identification Card damage in any one accident to property that he is in compliance with the rules shall be acknowledged by the Regional of others, and that it was obtained from and regulations promulgated by the Administrator. Until a determination an insurance carrier licensed or other­ Interstate Commerce Commission that Is made upon the application, such wise authorized to do business in the are applicable to his activities and op­ acknowledgment shall authorize the ap­ State in which the insurance is obtained; erations in interstate commerce. plicant to engage in any of the covered or activities of a farm labor contractor, as (g) The holder of a valid Certificate (2) Proof of financial responsibility of Registration may request the renewal defined in the Act, in behalf of any holder evidenced by (i) a completed Farm of his Certificate of Registration by of a valid Certificate of Registration. Labor Contractor Standard Accident executing and filing with a local office While engaging in such activities, the Policy Certificate of Insurance, as evi­ of the Employment Service of the various employee must have in, his possession dence of the issuance of a Farm Labor States or any office designated by the either the letter of acknowledgment, Contractor Standard Accident Policy, Governor of a State pursuant to section which shall not be effective for more than in addition to a completed Farm Labor 40.4 the following;. (1) An application 30 days, or a Farm Labor Contractor Contractor Automobile Liability Certifi­ which shall set forth the information re­ Employee Identification Card where cate of Insurance, if the Farm Labor quired thereon; (2) proof of insurance such has been issued. Such employee Contractor Automobile Liability Cer­ coverage as required in paragraph (c)(1) shall not be engaged as a driver of a bus tificate of Insurance shows that the pas­ of this section or proof of financial re­ or truck for transportation of migrant senger hazard has been excluded; or (ii) sponsibility as required in paragraph workers in connection with the business, a liability bond executed by the appli­ (c) (2) of this section; (3) upon request, activities, or operations of a farm labor cant, identified in the instrument as the a completed Form FD-258 Fingerprint contractor subject to the Act, unless he “principal,” together with a third party, Card; and (4) upon request, evidence shall comply with rules and regulations identified in the instrument as the of compliance with applicable rules and promulgated by the Interstate Commerce “surety,” to assure payment of any regulations promulgated by the Inter­ Commission that are applicable to his liability up to $50,000 for damages to state Commerce Commission. activities and operations in interstate persons or property arising out of the commerce. applicant’s ownership of, operation of, (h) If a Certificate of Registration is (c) If a Farm Labor Contractor Em­ or his causing to be operated any ve­ lost or destroyed, a duplicate Certificate ployee Identification Card is lost or de­ hicle for the transportation of migrant of Registration may be obtained by sub­ stroyed, a duplicate Farm Labor Con­ workers in connection with his business, mission to any Regional Office of the Bu­ tractor Employee Identification Card activities, or operations as a farm labor reau of Employment Security of a writ­ may be obtained by submitting to any contractor. The “surety” shall be one ten statement explaining its loss or de­ Regional Office of the Bureau of Employ­ which appears on the list contained in struction, indicating where the original ment Security a written statement ex­ Treasury Department Circular 570, with application was filed and requesting that plaining its loss or destruction, indicat­ an underwriting limit of not less than a duplicate be issued. ing where the original application was $50,000 or which has been approved by 3. Section 40.5 is amended to read asfiled, and requesting that a duplicate be the Secretary under the Welfare and follows; issued.

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 RULES AND REGULATIONS 14775

' (d) The Farm Labor Contractor Em­ during such period in which the insur­ ployee Identification Card authorizes ance or liability bond is required by the Title 38— PENSIONS, BONUSES, the employee to engage in activities as a Act to be effective, except by the expira­ farm labor contractor within the mean­ tion of the term for which it is written, AND VETERANS’ RELIEF ing of the Act in behalf of any holder of or until the company or the named in­ a valid Certificate of Registration. sured, in the case of an insurance policy, Chapter I— Veterans Administration (e) A holder of a valid Farm Labor or the “surety” or the “principal,” in PART 2— DELEGATIONS OF Contractor Employee Identification Card the case of a liability bond, shall have AUTHORITY may request renewal of such card by first given thirty (30) days’ notice in executing and filing at a local office of writing by registered mail to the Director Delegation of Authority To Provide the Employment Service of the various of the Office of Farm Labor Service, Bu­ Relief on Account of Administrative reau of Employment Security, U.S. De­ States or to any office designated by the Error Governor of a State pursuant to section partment of Labor, Washington, D.C., 40.4 the following: (1) An application said thirty (30) days’ notice to com­ In Part 2, § 2.7 is added to read as fol­ for renewal; (2) upon request, a Form mence to run from the date notice is lows : FD-258, Fingerprint Card; and (3) upon actually received. § 2.7 Delegation of authority to provi de request, a Form ES-415, Doctor’s Cer­ (b) Any change in the membership or relief on account of administrative tificate. officers of a holder of a valid Certificate error. of Registration from that most recently 5. Paragraphs (a), (b), and (c) (9) (a) Section 210(c) (2), title 38, United and (15) of § 40.10 are amended to read reported shall within twenty (20) days of the change be reported in writing by States Code, as added by section 301, as follows: registered mail to the Regional Admin­ Public Law 89-785, provides that if the § 40.10 Terms of Certificates of Regis­ istrator who issued the Certificate of Administrator determines that benefits tration, other conditions and obliga­ Registration. administered by the Veterans Adminis­ tions. tration have not been provided by reason (a) Certificates of Registration and § 40.27 [Revoked] of administrative error on the part of the Farm Labor Contractor Employee Iden­ 7. Section 40.27 is revoked. Federal Government or any of its em­ ployees, he is authorized to provide such tification Cards shall expire on each De­ (Sec. 14, 78 Stat. 924; 7 U.S.C. 2053) cember 31. In any case in which an relief on account of such error as he de­ application for renewal of a valid Cer­ [F.R. Doc. 66-12590; Filed, Nov. 21, 1966; termines equitable, including the pay­ tificate of Registration submitted in ac­ 8:47 a.m.] ment of moneys, to any person whom he cordance with the requirements of § 40.4 determines equitably entitled thereto. or employee identification card submitted (b) The authority to grant the equi­ in accordance with the requirements of table relief, referred to in paragraph (a) §40.6 has been made on or before No­ Title 31— MONEY AND of this section, has not been delegated vember 30 of the year preceding the year and is reserved to the Administrator. for which renewal is sought, the author­ FINANCE; TREASURY Recommendation for the correction of ity to operate as a farm labor contractor Chapter V— Office of Foreign Assets administrative error and for appropriate equitable relief therefrom will be sub­ or employee of a certificate holder shall Control, Department of the Treas­ not expire until the application shall have mitted to the Administrator, through the been finally determined by the Admin­ ury General Counsel, by the department istrator. PART 500— FOREIGN ASSETS head or staff official concerned. (b) [Revoked] CONTROL REGULATIONS This VA Regulation is effective No­ (c) Certificates of Registration and vember 7,1966. Farm Labor Contractor Employee Iden­ Cassia From Indonesia and tification Cards may be revoked or sus­ Sabah, Malaysia By direction of the Administrator. pended, or issuance or renewal thereof Approved: November 14,1966. refused, if the applicant or registrant: 1. A definition of cassia subject to [seal] Cyril F. B rickfield, ♦ * . * * * § 500.204(a) (2) is being added to the list of definitions in the Appendix. The Deputy Administrator. (9) Knowingly employs or continues definition reads as follows: {F.R. Doc. 66-12604; Filed, Nov. 21, 1966; to employ any person, to whom subsec­ 8:48 a.m.] tion (b) of section 4 of the Act applies, (30) Cassia includes all species of the who has taken any action, except for genus cinnamomum except cinnamomum that listed in subparagraph (15) of this zeylanicum. paragraph, which could be used by the 2. The Office of Foreign Assets Control Administrator to refuse to issue a Cer­ has determined to its satisfaction that Title 50— WILDLIFE AND tificate of Registration or a Farm Labor cassia from Indonesia and from Sabah, Contractor Employee Identification Malaysia, subject to § 500.204(a) (2Y~of FISHERIES Card. - the regulations, can be reliably deter­ * * * * * mined by physical examination not to be Chapter I— Bureau of Sport Fisheries (15) Has failed to obtain or maintain of Communist Chinese, North Korean, or and Wildlife, Fish and Wildlife in effect, or, has had canceled or ter­ North Viet-Namese origin. Licenses to Service, Department of the Interior minated, any insurance policy or liabil­ import this commodity will henceforth ity bond required by the Act and this be issued subject to physical examina­ PART 32— HUNTING part and cannot demonstrate financial tion at the time of entry. Accordingly, section (105) of the Appendix to Flint Hills National Wildlife Refuge, responsibility acceptable to the Secretary Kans. or his representative. § 500.204 is hereby amended by the addi­ tion of the following commodity: Cassia The following special regulation is is­ from Indonesia and Sabah, Malaysia. 6. Section 40.11 is amended to read as sued and is effective on date of publica­ The above ruling does not affect cassia tion in the F ederal R egister. follows : imported directly Jrom. Indonesia which § 40.11 Cancellation of insurance, re § 32.22 Special regulations; upland is specifically exempt from § 500.204 game; for individual wildlife refuge view of financial responsibility (a )(2). change of ownership. areas. [seal] Margaret W. S chwartz, K ansas (a) Any insurance policy or liabilit; Director, bond required by the Act or this par Office of Foreign Assets Control. FLINT HILLS NATIONAL WILDLIFE REFUGE shall provide that it shall not be can celed, rescinded, or suspended, nor be [F.R. Doc. 66-12601; Filed, Nov. 21, 1966; The public hunting of squirrels, cot­ come void for any reason whatsoeve 8:48 a.m.] tontail rabbits and bobwhite quail on the

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 No. 226—Pt. I- 2 14776 RULES AND REGULATIONS

Mint Hills National Wildlife Refuge, (1) Vehicle access shall be restrictedMinneapolis, Minn. 55408. Sport fish­ Kans., is permitted from November 21, to designated parking areas and existing ing shall be in accordance with all ap­ 1966, through September 1, 1967, inclu­ roads. plicable State regulations subject to the sive, but only on the area designated by The provisions of this special regula­ following special conditions: signs as open to hunting. This open tion supplement the regulations which (1) The open season for sport fishing area, comprising 2,906 acres, is delineated govern hunting on wildlife refuge areas on the refuge extends from January l on maps available at refuge headquar­ generally which are set forth in Title 50, through September 30, 1967, inclusive, ters, Burlington, Kans., and from the Code of Federal Regulations, Part 32, and (2) Boats, motorboats and other float­ Regional Director, Bureau of Sport Msh- are effective through December 9, 1966. ing craft may be used. eries and Wildlife, Post Office Box 1306, J ohn C. Gatlin, The provisions of this special regula­ Albuquerque, N. Mex. 87103. Hunting tion supplement the regulations which shall be in accordance with all applicable Regional Director, Albuquerque, N. Mex. govern fishing on wildlife refuge areas State regulations governing the hunting generally which are set forth in Title 50, of squirrels, cottontáil rabbits, arid bob- N ovember 15, 1966. Part 33, and are effective through Sep­ white quail subject to the following spe­ [F.R. Doc. 66-12585; Filed, Nov. 21, 1966; tember 30,1967. cial conditions: 8:46 a.m:] (1) The use of rifles is prohibited on J ohn E. W ilbrecht, the refuge. Refuge Manager, Crescent Lake (2) Vehicle access shall be restricted PART 33— SPORT FISHING National Wildlife Refuge, to designated parking areas and exist­ Ellsworth, Nebr. ing roads. Crescent Lake and North Platte Na­ N ovember 14,1966. (3) Dogs—Not to exceed two per tional Wildlife Refuges, Nebr. hunter may be used only to retrieve [F.R. Doc. 66—12587; Filed, Nov. 21, 1966; wounded or dead squirrels, cottontail The following special regulation is is­ 8:47 a.m.] rabbits and bobwhite quail. sued and is effective on date of publica­ tion in the F ederal R egister. The provisions of this special regula­ PART 33— SPORT FISHING tion supplement the regulations which § 33.5 Special regulations; sport fishing; govern hunting on wildlife refuge areas for individual wildlife refuge areas. Necedah National Wildlife Refuge, generally which are set forth in Title N ebraska Wis. 50, Code of Federal Regulations, Part 32, and are effective through September 1, crescent lake national wildlife refuge The following special regulation is is­ 1967. sued and is effective on date of publica­ Sport fishing on the Crescent Lake Na­ tion in the F ederal R egister. J ohn C. G atlin, tional Wildlife Refuge, Nebr., is per­ Regional Director, mitted only on the areas designated by § 33.5 Special regulations; sport fishing; Albuquerque, N. Mex. signs as open to fishing. These open for individual wildlife refuge areas. N ovember 15,1966. areas, comprising 1,330 acres, are de­ Wisconsin lineated on maps available at refuge [F.R. Doc. 66-12586; Filed, Nov. 21, 1966; necedah national wildlife refuge 8:46 ajn.] headquarters and from the office of the Regional Director, Bureau of Sport Fish­ Sport fishing on the Necedah National eries and Wildlife, 1006 West Lake Street, Wildlife Refuge, Wis., an area compris­ PART 32— HUNTING Minneapolis, Minn. 55408. Sport fishing ing approximately 10 percent of the total shall be in accordance with all applicable water area of this refuge is permitted Flint Hills National Wildlife Refuge, State regulations subject to the following only on the areas designated by signs as Kans. special conditions: open to fishing. The open area is de­ The following special regulation is is­ (1) The open season for sport fishing lineated on a map available at the refuge sued and is effective on date of publica­ on the refuge extends from January 1 headquarters and from the office of the tion in the F ederal R egister. through September 30, 1967, inclusive. Regional Director, Bureau of Sport Fish­ (2) Boats, without motors, may be eries and Wildlife, 1006 West Lake Street, § 32.32 Special regulations; big game; used for fishing. Minneapolis, Minn. 55408. Sport fish­ for individual wildlife refuge areas. (3) No person shall use minnows, fish, ing shall be in accordance with all appli­ K ansas or parts thereof, for bait, nor have in cable State regulations subject to the possession any minnows or seine or net following conditions: flint hills national wildlife refuge for capturing minnows. The provisions (1) Open season: Daylight hours De­ Public hunting of deer with bow and of this special regulation supplement the cember 15, 1966, through March 15,1967. arrows on the Flint Hills National Wild­ regulations which govern fishing on wild­ The provisions of this special regula­ life Refuge, Kans., is permitted from No­ life refuge areas generally which are set tion supplement the regulations which vember 21 through December 9, 1966, forth in Title 50, Part 33, and are effective govern fishing on wildlife areas gen­ inclusive, but only on the area designated through September 30, 1967. erally, which are set forth in Title 50, by signs as open to hunting. This open NORTH PLATTE NATIONAL WILDLIFE REFUGE Code of Federal Regulations, Part 33, area, comprising 2,906 acres, is delineated and are effective through March 15, on maps available at refuge headquar­ Sport fishing on the North Platte Na­ 1967. ters, Burlington, Kans., and fiom the Re­ tional Wildlife Refuge, Nebr., is per­ Edward J. Collins, gional Director, Bureau of Sport mitted only on the areas designated by Refuge Manager, Necedah Na­ Fisheries and Wildlife, Post Office Box signs as open to fishing. This open tional Wildlife Refuge, Nece­ 1306, Albuquerque, N. Mex. 87103. Hunt­ area, comprising 3,300 acres, is delineated dah, Wis. ing shall be in accordance with all appli­ on maps available at the refuge head­ cable State regulations covering the quarters and from the office of the Re­ N ovember 15,1966. hunting of deer subject to the following gional Director, Bureau of Sport Fish­ [F.R. Doc. 66-12588; Filed, Nov. 21, 1966; special condition: eries and Wildlife, 1006 West Lake Street, 8:47 a.m.]

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 14777 Proposed Rule Making

(6) The level and seasonality of the were admitted difficulties in determin­ DEPARTMENT OF AGRICULTURE Class I price. ing actual sales volumes, the survey Consumer and Marketing Service (7) The application of location differ­ results were substantially in agreement. entials. It was shown that all regulated handlers [ 7 CFR Part 1041 1 (8) Time and method of reporting re­ (including those regulated under the [Docket No. AO-72—A29] ceipts and utilization of milk and of pay­ Columbus and Northwestern Ohio or­ ing producers. ders) distribute between 40 and 45 MILK IN NORTHWESTERN OHIO Findings and conclusions. The fol­ percent of the total fluid milk sales in the ' MARKETING AREA lowing findings and conclusions on the four counties and the unregulated han­ material issues are based on evidence dlers distribute between 55 and 60 per­ Decision on Proposed Amendments presented at the hearing and the record cent of such sales. to Tentative Marketing Agreement thereof : In support of their proposal, producers and to Order ( 1 ) The Northwestern Ohio marketing contended that ’ unregulated handlers area should not be expanded at this time. have a competitive advantage over regu­ Pursuant to the provisions of the The proposal to include in the marketing lated handlers both in the procurement Agricultural Marketing Agreement Act area the Ohio counties of Erie, Huron, of milk supplies and in the sale of milk of 1937, as amended (7 U.S.C. 601 et seq.), and Ottawa, and the unregulated por­ in the proposed area. They pointed out and the applicable rules of practice and tion of Sandusky County therefore is that unregulated handlers purchase milk procedure governing the formulation of denied. on a “flat price” basis without regard to marketing agreements and marketing The proposal to expand the marketing the utilization in their plants. orders (7 CFR Part 900), a public hear­ area was submitted by the Northwestern Although specific data were not pre­ ing was held at Stony Ridge, Ohio, on Cooperative Sales Association, a co­ July 6 and 7, 1966, pursuant to notice sented at the hearing, producers claimed operative representing about 85 per­ that the unregulated handlers are able thereof issued on June 13, 1966 (31 F.R. cent of the producers in the market. It to maintain a high Class I utilization 8496). was supported also by the principal co­ aided by the purchase of supplemental Upon the basis of the evidence intro­ operative in the Northeastern Ohio duced at the hearing and the record milk supplies from regulated handlers market and a Northwestern Ohio reg­ during the summer tourist season when thereof, the Associate Administrator on ulated handler. The nine unregulated supplies from their regular dairy farm­ October 6, 1966 (31 F.R. 13136; F.R. Doc. handlers distributing milk in the four- 66-11050) filed with the Hearing Clerk, ers are insufficient, sometimes even less county area and their approximately 100 than their Class I sales. The fact of a U.S. Departmènt of Agriculture, his rec­ dairy farmer suppliers opposed expan­ ommended decision containing notice of high Class I utilization paid for on a flat sion. price basis, it was stated, gives them a the opportunity to file written'exceptions The present estimated population of competitive advantage over regulated thereto. the proposed area is about 220,000. Be­ The material issues, findings, and con­ handlers in the procurement of milk in cause of its proximity to Lake Erie, there a common supply area and results in the clusions, rulings, and general findings of is a substantial population increase Northwestern Ohio market carrying the the recommended decision (31 F.R. during the summer tourist season of reserve supply for such counties. 13136; F.R. Doc. 66-11050) are hereby June, July, and August. Fluid milk is approved and adopted and are set forth distributed in the area by regulated han­ It is not clear from this record that in full herein subject to the following dlers in the Columbus, Northwestern unregulated handlers do, in fact, have modifications: Ohio, and Northeastern Ohio Federal or­ any substantial advantage in the pro­ 1. In the “marketing area” discussion der markets and by the nine unregulated curement and sale of milk in the four- (Issue No. 1), the first sentence of the handlers, seven of which have their county area and, if so, whether this has ninth paragraph is revised. plants located in such counties. had adverse affect upon the orderly mar­ 2. The 1st, 5th, 6th, and 10th para­ The area in question has been proposed keting of milk by Northwestern Ohio graphs of the discussion on the pricing for inclusion in a Federal order on pre­ producers. While certain of the unreg­ of diverted milk (Issue No. 3), are revised vious occasions. As late as 1964, when ulated handlers do rely on regulated and the seventh paragraph is deleted. the North Central Ohio and Toledo or­ markets for supplemental milk supplies 3. In the discussion relating to the ders were merged, the four counties were during the tourist season, it is evident definition of “route disposition” (Issue proposed for regulation. Official notice that at least some do not. It was No. 4), the second sentence of the first is taken of the Under Secretary’s decision brought out also that most of them have paragraph and the last paragraph are of November 13, 1964 (29 F.R. 15416) in some uses in their plants equivalent to revised. this regard. The Under Secretary found Class II milk under the order and that 4. In the Class I price discussion (Is­ in the 1964 decision that the unregulated it is not unusual for them to have con­ sue No. 6), the seventh paragraph is territory in the four counties did not con­ siderable quantities of surplus milk. revised and a new paragraph is added stitute a primary distribution area for A representative of dairy farmers de­ immediately thereafter. Northwestern Ohio handlers and, hence, livering to plants in the proposed area 5. In the discussion on location dif­ should not be included in the marketing testified that at least some of the un­ ferentials (issue No. 7), the 15th para­ area at that time. regulated handlers do not rely heavily graph and the 4th sentence of the 17th The situation has not changed appre­ on regulated markets for the area’s in­ Paragraph are revised and a new para- ciably. The primary distributors in the creased fluid needs during the tourist paph is added immediately following four counties still are the unregulated season. He stated that local farmers the 19th paragraph. handlers. While Northwestern Ohio have attempted over the years to tailor The material issues on the record of the handlers are the principal regulated per­ their production as closely as possible hearing relate to: sons doing business in these counties, to the needs of their market. Dairy (1) Expansion of the marketing area. their distribution is less than one-third farmers have been encouraged to in­ (2) Requirements for pool participa­ of the total. crease production in the early summer tion. Proponents and opponents of the mar­ months rather than during the normally (3) Pricing diverted milk. keting area expansion both presented re­ short production months in the fall of It! <

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 14778 PROPOSED RULE MAKING

milk supply from their own farm re­ The 50 percent route distribution re­ form price to such producer is reduced sources for the tourist season needs. quirement is a reasonable standard for by a location differential. Regulated handlers have maintained differentiating between plants that are Similarly, when the milk of a distant their proportion of sales in the four- primarily engaged in the distribution of producer Is diverted to an outlying non­ county area, and have had little diffi­ fluid milk and those that are primarily pool plant, full transportation cost to culty in procuring milk supplies in manufacturing plants but such require­ market is not incurred and a location competition with the unregulated han­ ment need not be so rigid as to impede price should apply to such milk. dlers. This makes difficult the conclu­ orderly marketing. The additional re­ With respect to milk so diverted there sion that marketing conditions for quirement that to be pooled a distrib­ ordinarily is a significant saving in the Northwestern Ohio producers have been, uting plant must also sell at least 15 per­ farm-to-plant haul as compared .to de­ adversely affected by the competitive cent of its dairy farmer receipts as Class livering the milk to a marketing area situation in these counties. It is note­ I milk on routes in the marketing area plant. To price such milk at the plant worthy also that handlers under the is a reasonable basis for establishing its from which diverted creates undue in­ Northeastern Ohio and Columbus orders, association with this market and there centive to attach producer milk to the who purchase Class I milk at somewhat is no indication in the record that this Northwestern Ohio market for the sole higher Class I prices than Northwestern requirement should be changed. purpose of receiving the marketing area Ohio handlers, have continued to com­ Failure of a distributing plant to meet blended price without necessarily ship­ pete in these counties. the prescribed pooling standards could ping a substantial proportion of the It may not be concluded from the rec­ have serious consequences for producers milk to the market for fluid uses. Thus, ord that the four counties are part of as well as for any supply plant shipping the blend price could be reduced by the the primary distribution area of North­ milk to such distributing plant. In view attachment of milk receiving a market­ western Ohio regulated handlers. Class of the high possibility that failure to meet ing area price but not readily available I sales of Northwestern Ohio handlers in the 50 percent route disposition require­ for fluid purposes in the market. Ac­ the proposed area represent only about ment for a given month can be in­ cordingly, such incentive should be elimi­ 4 percent of their total Class 1 distribu­ advertent, the proposed modification is nated by providing that producer milk tion and, as previously stated, less than appropriate. diverted from a pool plant to a plant one-third of the total sales in such area. Since the revised provision will permit at some distance from the market shall The unregulated handlers involved dis­ a distributing plant to continue its pool receive a price for the location of the tribute no fluid milk products in the status for up to 2 consecutive months plant to which it is physically delivered. present marketing area but compete without meeting the 50 percent route dis­ The principal cooperative excepted to with regulated handlers only in the un­ tribution requirement, interested per­ the failure of the recommended decision regulated territory. Marketing condi­ sons could be unaware of the fact that to provide that diversions to plants lo­ tions do not justify the inclusion of this the plant was in danger of losing its cated within 150 miles of Toledo be priced territory in the marketing area at this pool status. In this situation the corol­ at the location of the pool plant from time. lary proposal that whenever a plant drops which diverted. In support of its posi­ (2) The pooling requirements for dis­ below the 50 percent requirement the tion the association referred to the fact tributing plants should be modified. market administrator shall make it that under current market practice the The principal cooperative association known publicly should be adopted also. cooperative diverts producer milk to non­ proposed that one of the standards for The information thus would be available pool plants within 150 miles of Toledo on pooling a distributing plant be modified. to any cooperative with members de­ a regular basis in order to accommodate The proposal would allow such a plant livering to such plant as well as to un­ the day-to-day fluctuations in the bot­ to retain pool status even though it dis­ affiliated producers and supply plant tling requirements of regulated handlers. tributed, during thè month, less than operators shipping milk to such plant. This is done at a hauling cost equal to or 50 percent of its Grade A milk receipts (3) The order should be amended toexceeding that incurred when milk is on routes, provided it had met such re­ price producer milk diverted from a pool delivered to bottling plants. quirement in 5 of the 6 preceding months. plant to a plant located more than 150 The cooperative stated that changing The proposal was supported by handlers. miles from Toledo, Ohio, at the location the pricing point on such diversions, as Proponents pointed out that under the of the plant to which it is diverted. This proposed in the recommended decision, present provisions it is possible for a modifies the recommended decision would create iniquities among producers, distributing plant to lose its pool status, which proposed, as to nonpool plants, thereby making it difficult to continue however unintentionally, if it drops even that all producer milk diverted thereto this essential balancing function and slightly below the minimum 50 percent would be priced at the location of the would add to the administrative problems route distribution percentage require­ nonpool plant, regardless of its distance in accounting to its producers whenever ment for the month. Several handlers from Toledo. Diversions to plants, pool more than one price is applicable to their qualify in some months by only a very or nonpool, within 150 miles of Toledo deliveries during the month. There are small amount over the present minimum would be priced at the pool plant from ample surplus disposal facilities within requirement. In this market it is not which diverted, except that a limit should a 150-mile radius from Toledo. unusual for large wholesale accounts to be provided on diversions between pool In consideration of hauling costs in be switched from one handler to another plants in order to insure that such milk this market, the incentive to associate on short notice which can cause a han­ will be priced at the plant at which it is milk with a nearby plant and then divert dler to fall below the 50 percent require­ generally received. to manufacturing facilities is reduced ment. At least once in the last 18 The present order prices all producer substantially when the manufacturing months a handler has found himself in milk diverted to nonpool plants^ at the facilities are located within 150 miles of the position of inadvertently failing by a location of the pool plant from which it Toledo. The possibility of abuse is fur­ small margin to meet such requirement. is diverted. Producers contend that this ther reduced since the cooperative as­ pricing arrangement could enable pro­ sumes responsibility for the diversion of Producers further requested that the ducers distant frpm the market to en­ order contain a provision requiring the a large proportion of all milk associated hance their returns unduly at the ex­ with nearby plants. In these circum­ market administrator to notify any co­ pense of nearby producers. operative associations with milk delivered stances it is concluded that the coopera­ to a plant of the failure of the plant to The marketing area uniform price tive’s proposal should be adopted in order meet the 50 percent requirement even establishes the vaiue of milk delivered that the market balancing function may though such plant is continued in the f.o.b. plants in the marketing area. be facilitated. pool as proposed. It was stated that Lower prices, adjusted to reflect the cost Presently, producer milk diverted from such a requirement would allow a co­ of transporting milk to market from one pool plant, to another is priced at operative sufficient time to make other various locations, apply at outlying the second plant. The major associa­ arrangements for its member milk supply plants. Thus, when a producer’s milk is tion requested the privilege of diverting delivered to an outlying pool plant and in the event the plant subsequently lost milk between pool plants with the milk the full cost of transportation to the priced at the plant from which it is its pool status. marketing area is not incurred, the uni­ diverted.

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 PROPOSED RULE MAKING 14779

The association has practiced the constitute route disposition. Delivery consumers of maintaining an adequate diversion of milk within the market to from the distribution point to a retail or milk supply for fluid requirements. achieve the most advantageous use of wholesale outlet does constitute route A question was raised at the hearing available milk. However, under the disposition and such disposition is at­ concerning the classification of milk used present order when the milk must be tributable to the processing plant of in the production of yogurt. In this moved to a plant in a lower-priced zone, origin. market cultured sour cream mixtures the producer whose milk is moved re­ The present definition is intended to which are not labeled Grade A are classi­ ceives the lower price while producers as include Class I milk which is disposed of fied and priced as Class II. Yogurt which a whole benefit from the action. The to retail and wholesale customers at the does not carry a Grade A label should be producers involved understandably ob­ dock of the handler’s processing plant. included in the same category as cultured ject to the lower price received. Furthermore, the present definition is sour cream mixtures and therefore priced While the problem is greatly reduced intended to include as a disposition from at the Class.II price level. by- the elimination of location differ­ the processing and packaging plant milk (6) The Class I price level should not entials within the marketing area, there which is custom-packaged for another be increased. The Class I differentials may be occasions when the proposed person provided such milk is not then should be modified, however, to com­ change in point of pricing will enhance moved to another milk plant. In view pensate for a change in the application the ability of the cooperative to channel of the questions raised at the hearing, of location differentials. This change is milk from one handler to another within the language has been modified in order discussed in conjunction with the con­ the market as handler bottling require­ to eliminate any uncertainty as to the sideration of location differentials. ments change. Marketing efficiency manner of coverage of these types of The principal cooperative in the mar­ should be improved. It also will simplify operations. ket proposed to retain seasonal Class I the accounting with respect to such (5) The “fluid milk product” defini­differentials but at higher levels. They diverted milk. Thus, diversions between tion should not be changed except for proposed Class I differentials of $1.73 for pool plants within 150 miles of Toledo clarification. A regulated handler pro­ August through March and $1.50 for also should be priced at the plant from posed an amendment which would ex­ April through July, an average increase which diverted. clude from Class I any milk product con­ of about 40 cents over present differen­ A limit should be provided, however, taining more than 6 percent butterfat, tials. The cooperative contended that on the number of days that a producer’s concentrated milk, all cultured prod­ these amounts are necessary to halt the deliveries may be diverted to another ucts except buttermilk, and eggnog. recent decline in production in the mar­ pool plant and still receive the price ap­ With the exception of sour cream mix­ ket and to insure an adequate supply of plicable at the plant from which di­ tures which are not labeled Grade A, milk for area consumers. verted. If location differentials are to these products presently are classified The cooperative proposed also to re­ carry out their function of equating the as Class I. The amendment was opposed tain the present tie to the Northeastern order prices at the various plant loca­ by producers. Ohio order Class I price on the basis that tions in the market, there must be pro­ Proponent’s testimony was based pri­ there has been insufficient experience vision for recognizing a specific plant marily on the competitive difficulties with the relatively new order from which location to which the milk is delivered arising from the introduction in the to develop a supply-demand mechanism for the purpose of applying order prices. market of nondairy product substitutes based on local production and utilization This may be accomplished by pricing such as imitation cream and imitation figures. milk diverted between pool plants at the sour cream. It was noted also that some A regulated handler with plants in both location of the plant from which diverted of the nearby Federal orders provide Toledo and Mansfield proposed a year- if at least 15 days’ milk production of the Class H pricing for certain specialty round Class I differential of $1.25. His producer is physically received at such products which are priced as Class I in purpose was to improve Class I price plant or at other plants in the same or the Northwestern Ohio market. alignment with competing markets which a higher price zone as the diverting The order classifies as Class I all fluid have flat Class I differentials. He further plant. If more than 15 days’ production milk products which require the use of proposed a supply-demand adjustor is diverted to a plant in a lower price Grade A milk. It also fixes the class based on production arid Class I utiliza­ zone than that of the diverting plant prices at levels designed to assure an ade­ tion figures for the Northwestern Ohio then the diverted milk should be priced quate supply of milk for use in such prod­ market. at the plant (s) where physically re­ ucts. Milk which is in excess of the mar­ A regulated handler with a plant at ceived. ket’s fluid needs generally is processed Marion, Ohio, also supported a flat Class (4) The definition of “route disposi­into manufactured dairy products such I differential for the purpose of improv­ tion” should be clarified.A s the defini­ as ice cream, cottage cheese, butter, and ing Class I price alignment with the tion is now phrased it has not been en­ nonfat dry milk. The latter uses of pro­ Columbus market, pointing out that he tirely clear to the trade whether route ducer milk are designated Class II and sells a high proportion of his milk in disposition is intended to include Class are priced at the level of manufacturing competition with Columbus handlers. I milk that moves from a processing and grade milk since all manufactured milk In support of an increase in the Class packaging plant through an intermedi­ products generally compete in a common I price the cooperative stated that milk ate distribution point en route to retail market whether made from Grade A milk supplies have tightened significantly in or wholesale outlets. Also, clarification or ungraded milk. the market in recent months. For the is needed as to whether route disposition The products included in Class I are first 6 months of 1966 producer receipts is to be credited to the handler process­ those that in this market must be made declined an average 5.8 percent from ing and packaging the Class I milk in from milk meeting Grade A inspection this period a year earlier. During the cases where the milk is custom-packaged requirements. Applicable health regu­ same 6-month period Class I sales in­ for another person. Also, some doubt lations require that such products sold creased an average of 1.7 percent from was raised as to whether route disposi­ in the Northwestern Ohio marketing area 1965. Because of these factors, the per­ tion includes milk that is delivered to a be labeled Grade A. Consequently, they centage of producer milk used in Class I retail or wholesale customer at a plant’s continue to require a regular supply of averaged 5.6 percent higher for the first loading dock. Grade A milk. In this respect such prod­ 6 months of 1966 over the comparable It is intended that the definition in ucts are quite different from butter or period in 1965.1 this order include Class I milk that other Class II products which may be The fact of shorter supplies in Federal moves through a distribution point en made from manufacturing grade milk. order markets was taken into account, route to retail or wholesale outlets but To reduce the price for fluid milk prod­ not until it is, in fact, disposed of to such ucts simply to allow handlers to compete 1 The month of May 1966 was the latest month for which complete statistical infor­ outlets. For determining route disposi­ more effectively with nondairy products mation was available at the hearing. In tion the distribution point is, in effect, would fail to recognize the value of the order to complete the analysis through the an “extension” of the processing and Grade A milk so used. Permitting Grade first 6 months of 1966, official notice is Packaging plant. Consequently, delivery A milk to be priced at the Class II level taken of the price statistics of the market to the distribution point in itself does not would add to the burden on fluid milk administrator for June 1966.

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 14780 PROPOSED RULE MAKING however, in the increase in prices which term aspects of Class I pricing in the ducers affected have been reluctant to became effective July 5, 1966, in all Fed­ Northwestern Ohio market, it is now accept the resulting lower net return for eral order markets. The amendment to appropriate to establish the revised Class their milk. Also, it would provide simi­ the Northwestern Ohio order placed a I price differentials from their effective lar prices to handlers who compete $4 floor under the basic formula price date through March 1968. Interested throughout the marketing area for bot­ through March 1967. It also increased parties then would have the opportunity tled milk sales. the July 1966 Class I differential 22 cents. to review the pricing provisions at a A Lima, Ohio, handler opposed changes The increases resulting from these public hearing on the basis of market in the location adjustment provisions. changes were made to encourage the pro­ statistics covering a period of 3 years He contended that the present zone lo­ duction of an adequate supply of milk under the consolidated order. cation adjustments are necessary to in­ for the market. The proposed price in­ The proposal for a flat Class I price sure that an adequate supply of milk- crease was denied in the recommended differential should not be adopted at this is shipped to handlers in the northern decision. time. and eastern portions of the market. He Producers excepted to the failure of the While some handlers are concerned said that his plant, which is located in recommended decision to provide for the with competition from markets where the $—0.09 zone, has been able to ob­ proposed increase. In this regard it may flat differentials are applicable year- tain an adequate supply of milk under be noted that while the record of this round, there is supply competition with the present provisions. hearing does not support an increase in the Northeastern Ohio market where The present location adjustment pro­ Class I price, the Department, since is­ seasonably variable Class I pricing is visions divide the marketing area into suance of the recommended decision, has used. five zones. The location adjustments called a separate hearing on this and At the present time milk production in applicable to plants in principal cities other Federal orders to consider appro­ the Northwestern Ohio market is not within the market are as follows: $0.00 priate levels of Class I prices. Changes highly seasonal. Average daily produc­ for Mansfield, $—0.03 for Bucyrus, in marketing conditions in this market tion in the market in 1965 ranged from $—0.04 for Toledo and Marion, $—0.07 since the hearing on which this decision a high of 1,041 pounds in May to a low for Findlay and $—0.09 for Lima. of 899 pounds in July, about a 16 per­ is based were considered at the more The farms of most producers who regu­ recent hearing. cent change. However, producers testi­ larly supply handlers in each of the The proposal of a regulated handler fied that abandoning seasonal Class I major cities in the market are located, that a supply-demand adjustor be devised pricing without an appropriate substir tute method of encouraging continued however, at relatively short distances using Northwestern Ohio production and from the plant either in the same county Class I sales figures is denied. Experi­ level, production could change the sea­ as the plant or in an adjacent county. ence under the merged order has not been sonal production pattern and cause other marketing problems for producers and The distances to market outlets for most sufficient to permit development of such producers do not differ greatly. Hauling a mechanism with any assurance of handlers. In all other markets competing for rates on most of the producer milk di­ satisfactory operation. The present rect-shipped to the principal cities thus order has been in effect only since Janu­ supply there is some type of seasonal are very similar. ary 1, 1965, when it was formed by the production incentive plan in operation. merger of the Toledo and North Central Instituting a flat Class I price differen­ As plants expand their area of dis­ Ohio orders. The intervening time tial in Northwestern Ohio without a tribution, there is an increasing amount period has not been sufficient to reflect method of varying producer returns of route competition that has little rela­ typical production and Class I sales seasonally could result in uniform prices tionship with the pattern of location patterns in the market. For example, in Northwestern Ohio being unduly out adjustments. The routes of handlers sales data were affected by the milk strike of line with uniform prices in nearby in the several pricing zones now Overlap which occurred in May and June of 1965 markets during some part of each year. extensively throughout the marketing depressing Class I utilization significantly The evidence in this record does not sup­ area. Toledo handlers, for example, dis­ during that 2-month period. port the adoption of any alternate plan tribute milk in the Lima and Findlay for adjusting blend prices seasonally. area in competition with handlers who Moreover, several major revisions, in­ purchase Class I milk 3 to 5 cents per cluding changes in the marketing area, (7) a. The location adjustment pro­ visions should be modified to establish hundredweight less than the price ap­ pricing and pooling provisions were made plicable at Toledo. With the passage when the orders were merged. The identical price levels in the first five zones where location adjustments from of uniform health regulations in the va­ pooling change involved substituting a rious cities in the marketing area on marketwide pooling plan for the handler­ zero up to 9 cents now apply. To accomplish the change in the location July 1, 1966, this interhandler competi­ pooling provisions of the previous orders. tion may be expected to intensify. Some additional supplies have been at­ differential rates without changing the average Class I price for the market, the The problem of the cooperative in tracted to the market under the new assigning milk among handlers in ac­ order. A supply plant at Defiance, Ohio, stated Class I price differentials (to ap­ ply throughout the marketing area) cordance with their needs has been most not associated with either of the previous acute in the Lima area where the $—0.09 orders, pooled under the new order in should be reduced 4 cents (from $1.36 to 1965. $1.32 in August through March and from location adjustment prevails. Last fall $1.13 to $1.09 in April through July). when milk supplies shortened, certain The present tie to the Northeastern The principal cooperative proposed to Lima handlers needed additional milk. Ohio supply-demand adjustor provides a eliminate all location adjustments for The cooperative, which allocates some basis for varying the Class I price in this plants located within the marketing area. 85 percent of the milk supplies in the market in response to changes in the As part of this proposal, the cooperative market, moved to assign additional pro­ regional supply and demand situation. would eliminate the city of Napoleon as ducers-to these handlers on a temporary In these circumstances it would be appro­ a basing point for computing location basis. However, the producers to be priate to provide additional experience adjustments to apply to plants located shifted, who normally supply plants in with the new provisions, and in particu­ outside the marketing area. hi&her-priced zones, were reluctant to lar with marketwide pooling, before a They gave two primary reasons for accept the lower net return from ship­ supply-demand mechanism based on eliminating location adjustments within ping milk to the Lima area. Northwestern Ohio market figures alone the marketing area. First, it would Also, Lima handlers have had some dif­ is developed. facilitate the shifting of milk from plants ficulty in holding their regular supplies An amendment effective July 5, 1966, in one pricing zone to plants in other of producer milk in competition with extended the Class I price differentials zones to meet handlers’ demands for bot­ Toledo handlers. Lima and Toledo han­ through March 1967, the same period for tling milk. They stated that it has dlers compete for supplies in the inter­ which a basic formula “floor” price was been difficult to move milk from plants vening counties. Their procurement established in this and other Federal in the higher-priced zones to those in areas overlap, for example, in Hancock, milk orders. In view of the considera­ lower-priced zones within the marketing Putnam and Henry Counties which lie tion given at this hearing to the longer- area on a regular basis because the pro­ between the two cities.

FEDERAL REGISTER, VOL. 31, NO. 226-—TUESDAY, NOVEMBER 22, 1966 PROPOSED RULE MAKING 14781

The Toledo blend price is 5 cents higher adjustments for plants located beyond rate of 1.5 cents for each 10 miles. In than at Lima. Yet in much of this inter­ the 18-county area. Under the present this situation we may not reasonably vening area, hauling costs are very simi­ order, five cities serve as basing points. conclude that Lima handlers will be dis­ lar, generally about 30 cents per hun­ They are, in addition to Napoleon, To­ advantaged with respect to competition dredweight, whether the milk is hauled ledo, Lima, Mansfield, and Marion. from Fort Wayne handlers in the Lima to Toledo or Lima, making the net re­ The cities which are retained as bas­ area. turn to producers shipping to Lima plants ing points are the largest urban centers b. Provision also should be made to about 5 cents lower. The added amount in the market. Handlers in these cities define a “reload point” at which a loca­ afforded them under the location adjust­ are those most likely to receive supplies tion adjustment would apply with re­ ment schedule has enabled Toledo han­ of milk additional to regular producer spect to milk transferred at such point dlers to solicit producers from the Lima deliveries from the farm. It is appro­ from one bulk tank truck to another in handlers. priate, therefore, to compute location the course of movement from the farm The milk procurement problems of the adjustments from these points. to a milk plant. handlers in the lower-priced zones may The latter revision will provide an ap­ The principal cooperative proposed a be remedied by establishing the same propriate location adjustment for the definition of “reload point” for the pur­ blend price for the five zones within the market’s only supply plant which is lo­ pose of providing location adjustments market. This would tend to equate net cated at Defiance, Ohio. Presently this on all bulk tank milk assembled and re­ returns to all producers who supply han­ plant receives a $0.03 location adjust­ loaded at outlying locations. By this dlers in the major cities in the market. ment based on its distance from Napo­ means milk received at a reload point There would be little price incentive leon. With this location adjustment the from farm tanks and assembled with for the individual producer to prefer an milk is priced only $0.03 below the To­ other similar milk, to be shipped in larger outlet in one city rather than another. ledo level. Under the new provision, the tank trucks to pool or nonpool plants, The cooperative would be assisted in location adjustment for this plant will be would be treated, for pricing purposes, moving milk about within the market computed on the basis of its distance in a manner similar to milk received at since producers would receive similar from Lima (the closest basing point). a pool supply plant in a location differen­ prices regardless of the destination of It will receive a location adjustment of tial zone. their milk. about $0,075 which should be more in Proponent pointed out that under re­ Such an amendment should not make line with the cost of moving milk to the cently adopted Ohio health regulations, it more difficult for handlers in the pres­ market. standards have been established for in­ ent higher-priced zones to obtain ade­ The average Class I price (taking into stallations at which such intertruck quate milk supplies. Since hauling costs consideration the present value of loca­ transfers of bulk tank milk may be made. throughout the market are fairly tion differential adjustments within the These include, among other things, a similar and available supplies of milk marketing area) is approximately 4 cents covered building, cement floor, tight are quite evenly distributed throughout per hundredweight less than the an­ walls, and tank washing facilities. the counties of the marketing area, loca­ nounced Class I price f.o.b. Mansfield. Health inspection of the milk will be tion adjustments within the marketing With a single Class I price applicable made at the transfer point. Identifica­ area should not be necessary to insure throughout the 18 counties, it is appro­ tion of the reload location and the oper­ the shipment of adequate supplies of priate to reduce the stated Class I differ­ milk to any given segment of the area as entials by a like amount in order to main­ ator thereof are required. compared to other segments. It is in the tain total producer returns at their same While milk is considered direct- interest of the cooperative and the pro­ level. shipped when brought into the pool dis­ ducers to see that all handlers receive The proposed Class I price f.o.b. market tributing plant in the farm pickup tank, sufficient milk for their Class I needs. will be the same as the Class I price which it was contended that the conditions of It was contended that there would be now applies at Toledo. Since a major transfer make the assembly function of no incentive under the new provision for portion of the milk is priced at the To­ the reload point very similar to that pro­ producers to ship their milk to Mansfield ledo Class I price level, the relationship vided by any receiving station or country on the eastern edge of the market to sup­ of the Northwestern Ohio Class I price plant. ply any handler in that city who became with Class I prices in surrounding mar­ Milk moved to the marketing area short of milk. This should not create a kets will not change significantly. The through a reload point should be priced problem since there are farm milk routes change in location pricing therefore, at the location of the reload point. originating in the area southeast of Tole­ should not disrupt intermarket price Bulk tank handling methods permit do which could be directed to this alignment. delivery of milk to distributing plants at area without an increase in hauling costs Exception was taken to the elimination farms without receipt at an intermediate to the producers involved. of the location differential in the Lima plant. Transfer of producer milk in the The area to which similar Class I and area. Exceptor’s concern results from country from farm pickup tanks to larger blend prices should apply under the re­ the fact that Port Wayne regulated han­ tank trucks facilitates the economical vised order provisions is slightly differ­ dlers distribute Class I products in the handling and movement of such milk ent from that proposed by producers. Lima area. It was stated that elimina­ where substantial distances are involved. Producers proposed that the same prices tion of the location differential (which Such milk has a high degree of mobility apply to all plants in the marketing increases the Class I price at Lima 5 cents and may be delivered to a plant in the area rather than in the 18 counties in­ per hundredweight) upsets the histori­ marketing area or at times to other cluded in the five price zones previously cal Class I price relationship between plants distantly located from the mar­ discussed, an area which does not pre­ Port Wayne and Lima. keting area. cisely coincide with the marketing area. The average Class I price which has The function of a reload point approxi­ Under the revision similar prices will pre­ prevailed at Lima since the consolida­ mates that of a supply plant in that milk vail throughout the 18 counties in order tion of the North Central and Toledo is assembled at such place for movement to preserve intramarket price align­ Ohio milk orders has been very near the to the market. It serves for a distrib­ ment. At least one regulated plant and comparable average Class I price under uting plant an essential function that is two or more partially regulated plants the Fort Wayne order for milk received customarily performed by a supply plant. are located near the market but in coun­ at Fort Wayne. For the year 1965 the However, facilities at a reload point do ties which are not included in the mar­ Lima Class I price averaged 3 cents above not have the permanence of a supply keting area. Prices applicable to these the f.o.b. Fort Wayne Class I price. Also plant since they are only for the transfer 4+u Wou^ n°t be appropriately aligned based on 1965, elimination of the Lima of milk from farm pickup tank trucks to Wh those at nearby plants located in- location differential would have provided larger tank trucks. Reload operations siae the marketing area if the same prices an average 8-cent difference in Class I do not have the full line of receiving aid not apply in all 18 counties. prices. The latter difference is still sub­ facilities and holding tanks that supply As proposed by producers, the city of stantially less, however, than a per hun­ plants must have. Hence, they cannot apoleon, Ohio, should be eliminated as dredweight hauling cost from Fort be expected to perform as a supply plant basing point for computing location Wayne to Lima computed at the order in all respects and consequently should

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 14782 PROPOSED RULE MAKING

not be treated for all order purposes on later than the close of business on the of the producer-settlement fund and for the same basis as supply plants. 7th day of the month. The date for the payment of administrative and market­ The nature of the assembly function announcement of the uniform price for ing service assessments. as described and the mobility factor, the preceding month should be changed b. The order should be amended to however, make reloaded milk appropri­ from the 12th to the 11th day of the provide a partial payment to producers ately subject to location pricing in this Current month, and payments to pro­ at not less than the uniform price for market. Providing for the reload point, ducers should be advanced to the 16 th the preceding month minus 75 cents for as well as the supply plant, to be the day of the current month. Presently milk delivered during the first 15 days point of pricing will promote uniformity the uniform price is announced by the of the month. The partial payment of treatment to all producers similarly 12th of the month and payments to pro­ rate should also be adjusted, for the ap­ situated. ducers are due by the 17th day of the propriate months, by the amount of the Moreover, distant whole milk brought month. seasonal change in the Class I differen­ in for Class II purposes should cost the Producers proposed that handlers be tial. The present order provides for a handler approximately the Class II, or required to submit their monthly reports partial payment to producers at not less manufacturing, price at the point of ori­ of receipts and utilization to the market than the Class II price for the preceding gin plus the cost of transporting the milk administrator no later than the 5th day month. to the market for processing. This is of the month (excluding Sundays) rather The proposal for an increase in the the case with respect to milk for Class II than the 7th as now provided. They amounts paid to producers in the form purchased from a supply plant in a loca­ further proposed that the date for an­ of a partial payment was submitted by tion price zone. However, since the out­ nouncing the uniform price and the date the major cooperative association. They lying bulk tank producer currently re­ for paying producers be moved up 2 days. stated that the present rate of partial ceives the uniform price f.o.b. marketing Their purpose was to achieve an advance payment returns to the producer a rela­ area even when his milk is handled in the date producers receive payment tively low proportion of the value of the through a reload point, he normally pays for their milk. The proposals were op­ producer milk delivered during the first the full hauling cost to market regard­ posed by handlers. 15 days of the month, and results in less of final use made of the milk by the Producers understandably desire to undue delay as to a portion of the pay­ handler. receive full payment for their milk as ment for such milk. The purchasing handler therefore may early as possible. However, the process Partial payments to producers, made be provided a significant advantage on of preparing and submitting monthly on or before the last day of the month, distant milk so assembled for Class II reports to the market administrator and apply to milk which was delivered to purposes as compared to the handler the time necessarily consumed in com­ handlers during the first 15 days of the buying distant milk through a country puting the uniform price are limiting month. The costs of producing such “supply plant for similar use. This occurs factors in any advance in the producer milk have been incurred by producers, because the handler buying from a sup­ payment dates. and the milk has been sold by the han­ ply plant is not allowed location credit Under the producers’ proposal han­ dler, at least Several days before any from the pool on milk for Class II use dlers would be required to file receipts payment is required. While the final but only on such milk shipped to market and utilization reports 2 days earlier value of such milk is not known before and allocated to Class I under normal than is now required. Handlers testi­ the uniform price is computed, it is rea­ allocation procedures. Establishing the fied that reporting by the 5th day of sonable for the producer to expect par­ reload point as the point of pricing would the month would be difficult, if not im­ tial payment at a rate which more reduce the incentive to move distant milk possible, to comply with. This would be nearly approaches its true value than to market for Class II use at producer particularly true, they stated, when a does the Class II price. The proposed expense and promote uniformity of prices weekend or a holiday occurs during the provision should contribute to the or­ first 5 days of the month, as frequently derly marketing of producer milk by to handlers. Also, uniform prices to pro­ reducing financing problems for pro­ ducers would be enhanced since milk happens. The hearing disclosed that the market ducers. moved through the reload point and so Had the proposed rate been in effect used would be priced at the reload point administrator could announce the uni­ form price earlier than the 12th of the during 1965 it would have increased the and the consequent savings on transpor­ partial payment 25 cents per hundred­ tation as to the Class II portion of such month if all handlers’ reports were actually received by the 7th day of the weight. For the first 6 months of 1966 milk would be reflected in the uniform it would have resulted in a 51 cents per price. month. While there was no suggestion that handlers have been lax in meeting hundredweight increase. It was proposed that any reload point their reporting obligation, it neverthe­ Certain handlers expressed concern located on or at the premises of a pool less is likely that reports mailed on the that under a higher rate of partial pay­ plant should be considered as part of the 7th, as presently permissible, will not ment a low utilization handler might be operations of such plant. To reduce reach the market administrator’s office required to pay producers more than the problems of identification and account­ until at least the following day, tend­ classification value of the first 15 days’ ing any reload point located on the prem­ ing to cut down the time available to milk supply. They were concerned also ises of a pool plant should be considered compute the uniform price. that such an overpayment might result as part of such plant’s operation. The Provision that handlers’ reports must because of money owed the handler by handler operating the pool plant which be postmarked no later than the 6th day the producer for the purchase of sup­ receives milk through a reload point of the month if mailed, or actually re­ plies and equipment. should be the responsible person under ceived by the market administrator no At the partial payment rate proposed the reporting and payment provisions later than the 7th day of the month if herein it would be extremely unlikely with respect to milk so received. otherwise delivered, should put little, if that any pool distributing plant’s utili­ Since the purpose of defining a reload any, additional burden on handlers. It zation would be such that this could point is to provide a location adjustment will assist, however, in insuring that all occur. Based on average prices for on milk assembled for movement to dis­ such reports will be in the market ad­ 1965, a plant’s utilization would have to tributing plants, the definition adopted ministrator’s office on the 7th, allowing be substantially below 50 percent Class excludes any reloading operation that sufficient time to compute and announce I to result in a partial payment of more takes place within the area to which the uniform price I day earlier. This than the actual value of the milk at the the f.o.b. market price applies. will make it possible to move ahead by order’s class prices. In view of the or­ (8) a. The order'should be amended1 day the dates for payment to pro­ der’s 50 percent route distribution re­ to provide that a handler’s regular ducers and cooperative associations. quirement for such plants to qualify as monthly report of receipts and utiliza­ Corollary changes are made in other pool plants the proposed provision should tion must be postmarked no later than payment sections of the order so as to present no difficulty in this regard. It the 6th day of the month if mailed, or, if conform to the earlier announcement should be noted also that at the time otherwise delivered, be actually received of the uniform price. Such changes in­ the partial payment is made the re* at the market administrator’s office no clude the dates for payments in and out mainder of the month’s milk supply will

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 PROPOSED RULE MAKING 14783 have been delivered and the amount of From review of the colloquy on this decided upon as the detailed and appro­ the partial payment on the first 15 days’ matter it is concluded that the ruling of priate means of effectuating the fore­ jYiiik supply will fall far short of the ac­ the Hearing Examiner was appropriate going conclusions. tual value of the full month’s deliveries. in the circumstances and such ruling is It is hereby ordered, That all of this Partial payment should not be re­ affirmed. decision, except the attached marketing quired, however, in instances where the Same counsel also offered in evidence agreement, be published in the F édérai. producer has discontinued shipping to a a letter containing aggregate sales figures R egister. The regulatory provisions of handler during the month. At the date of unregulated distributors made in the said marketing agreement are identical of partial payment there could be con­ four counties proposed for inclusion in with those contained in the order as siderable uncertainty as to the exact the marketing area.. Following an ob­ hereby proposed to be amended by the amount due a producer who has not jection, the letter was ruled inadmissible attached order which will be published shipped the full month. In the latter and an offer of proof concerning it was with this decision. case it would be preferable to permit made. Determination of representative pe­ a handler to make final settlement in the The ruling of the Hearing Examiner as riod. The month of September 1966 is form of a single payment after the uni­ to the admissibility of the letter in the tive period for the purpose of ascertain­ form price for the current month is an­ circumstances is affirmed. * ing whether the issuance of the attached nounced. General findings. The findings and order, as amended and as hereby pro­ For timely computation of its producer determinations hereinafter set forth are posed to be amended, regulating the payroll a cooperative association receiv­ supplementary and in addition to the handling of milk in the Northwestern ing payment from handlers on mem­ findings and determinations previously Ohio marketing area, is approved or ber milk needs information concerning made in connection with the issuance of favored by producers, as defined under daily and total pounds, and the average the aforesaid order and of the previously the terms of the order, as amended and butterfat content, for each such producer issued amendments thereto; and all of as hereby proposed to be amended, and prior to the date on which payment is said previous findings and determina­ who, during such representative period, received from handlers. Presently the tions are hereby ratified and affirmed, were engaged in the production of milk order does not require handlers to sub­ except insofar as such findings and de­ for sale within the aforesaid marketing mit this information before the date on terminations may be in conflict with the area. which payment actually is made to the findings and determinations set forth Signed at Washington, D.C., on No­ cooperative. Although cooperatives ad­ herein. vember 17,1966. mitted no difficulty in getting this infor­ (a) The tentative marketing agree­ G eorge L. Mehren, mation in a timely manner, considerable ment and the order, as hereby proposed Assistant Secretary. difficulty could result if it were not sub­ to be amended, and all of the terms and mitted prior to the payment date. conditions thereof, will tend to effectuate Order1 Amending the Order Regulating The order should be amended to re­ the declared policy of the Act; the Handling of Milk in the North­ quire the submission of such information (b) The parity prices of milk as de­ western Ohio Marketing Area in time to assure that a cooperative will termined pursuant to section 2 of the Act § 1041.0 Findings and determinations. be able to compute its payroll and make are not reasonable in view of the price prompt payment to its members. While of feeds, available supplies of feeds, and The findings and determinations here­ the cooperative requested that the in­ other economic conditions which affect inafter set forth are supplementary and formation be submitted as early as the market supply and demand for milk in in addition to the findings and determin­ 7th of the month, they stated it was not the marketing area, and the minimum ations previously made in connection needed quite that early in the month prices specified in the proposed market­ with the issuance of the aforesaid order and would not object if the submission ing agreement and the order, as hereby and of the previously issued amendments date was made the 10th. Handlers were proposed to be amended, are such prices thereto; and all of said previous findings not opposed to the latter date. It should as will reflect the aforesaid factors, in­ and determinations are hereby ratified be adopted. sure a sufficient quantity of pure and and affirmed, except insofar as such find­ Rulings on proposed findings and con­ wholesome milk, and be in the public ings and determinations may be in con­ clusions and motions. Briefs and pro­ interest; and flict with the findings and determinations posed findings and conclusions were filed (c) The tentative marketing agree­ set forth herein. on behalf of certain interested parties. ment and the order, as hereby proposed (a) Findings upon the basis of the These briefs, proposed findings and con­ to be amended, will regulate the han­ hearing record. Pursuant to the provi­ clusions and the evidence in the record dling of milk in the same manner as, and sions of the Agricultural Marketing were considered in making the findings will be applicable only to persons in Agreement Act of 1937, as amended (7 and conclusions set forth above. To the the respective classes of industrial and U.S.C. 601 et seq.), and the applicable extent that the suggested findings and commercial activity specified in, a mar­ rules of practice and procedure govern­ conclusions filed by interested parties keting agreement upon which a hearing ing the formulation of marketing agree­ are inconsistent with the findings and has been held. ments and marketing orders (7 CFR Part conclusions set forth herein, the requests Rulings on exceptions. In arriving at 900), a public hearing was held upon cer­ to make such findings or reach such con­ tain proposed amendments to the tenta­ the findings and conclusions, and the tive marketing agreement and to the clusions are denied for the reasons pre­ regulatory provisions of this decision, order regulating the handling of milk viously stated in this decision. each of the exceptions received was care­ in the Northwestern Ohio marketing During the course of the hearing fully and fully considered in conjunction area. Upon the basis of the evidence in­ counsel for a group of milk distributors with the record evidence pertaining troduced at such hearing and the record not regulated by the order requested that thereto. To the extent that the findings thereof, it is found that: official notice be taken of certain portions and conclusions, and the regulatory pro­ (1) The said order as hereby amended, of the record of the original promulga­ visions of this decision are at variance and all of the terms and conditions tion hearing on the Northwestern Ohio with any of the exceptions, such excep­ thereof, will tend to effectuate the de­ marketing order held in February 1964. tions are hereby overruled for the reasons clared policy of the Act: Such hearing was concerned, in part, previously stated in this decision. <2) The parity prices of milk, as de­ with the proposed inclusion of the four Marketing agreement and order. An­ termined pursuant to section 2 of the additional counties proposed for inclu­ nexed hereto and made a part hereof are Act, are not reasonable in view of the sion in the marketing area. Following two documents entitled respectively, objection, the Hearing Examiner denied “Marketing Agreement Regulating the * This order shall not become effective un­ official notice as to any part of the evi­ Handling of Milk in the Northwestern less and until the requirements of § 900.14 dence of such hearing, but indicated that Ohio Marketing Area,” and “Order of the rules of practice and procedure gov­ the request for official notice was in the Amending the Order Regulating the erning proceedings to formulate marketing record and subject to consideration by Handling of Milk in the Northwestern agreements and marketing orders have been the Department. Ohio Marketing Area,” which have been met.

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 No. 226—Pt. I---- 3 14784 PROPOSED RULE MAKING price of feeds, available supplies of feeds, at least 15 days’ production of the pro­ in a tank truck is transferred to another and other economic conditions which af­ ducer is delivered during the month to tank truck and is commingled with other fect market supply and demand for milk such plant or to other plants at which such milk before entering a plant, ex­ in the said marketing area, and the mini­ the same or a higher price applies and be cept that reloading operations on the mum prices specified in the order as priced at such location; otherwise milk premises of a plant shall be considered hereby amended, are such prices as will diverted to other pool plants shall be to be part of such plant’s operation. deemed to be received at the plant to reflect the aforesaid factors, insure a 5. In § 1041.27, paragraphs (g) and sufficient quantity of pure and whole­ which diverted and be priced thereat. (j) (2) are revised to read as follows: some milk, and be in the public interest; (2) If producer milk is diverted to a ( 3 ) The said order as hereby amended, pool plant more than 150 miles from the § 1041.27 Duties. regulates the handling of milk in the Toledo, Ohio, City Hall, by the shortest ♦ * * * * same manner as, and is applicable only hard-surfaced highway distance so de­ (g) He shall publicly announce (by to persons in the respective classes of termined by the market administrator, posting in a conspicuous place in his industrial or commercial activity speci­ it shall be priced at the location of the office and by such means as he deems fied in, a marketing agreement upon plant to which diverted. appropriate), at his discretion and un­ which a hearing has been held. (c) * * * less otherwise directed by the Secretary, Order relative to handling. It is there­ (3) Milk diverted to a nonpool plant the name of any handler with respect fore ordered, that on and after the effec­ located more than 150 miles from the to a pool plant under § 1041.13(a) from tive date hereof, the handling of milk in Toledo, Ohio, City Hall, by the shortest which route disposition during the month the Northwestern Ohio marketing area hard-surfaced highway distance as de­ is less than 50 percent of receipts as shall be in conformity to and in compli­ termined by the market administrator, specified in such paragraph, and the ance with the terms and conditions of for the account of a handler operating a name of any handler the value of whose the aforesaid order, as amended and as pool plant or for the account of a coop­ fluid milk products is not included in the erative association shall be priced at the computation of the uniform price be­ hereby amended, as follows: location of the nonpool plant to which The provisions of the proposed mar­ cause of failure to make reports pur­ diverted. Milk so diverted to a nor~>ool suant to §§ 1041.30 and 1041.32, or pay­ keting agreement and order amending plant located within such 150-mile dis­ the order contained in the recommended ments pursuant to §§ 1041.80, 1041.82, tance shall be priced at the location of 1041.84, 1041.85, and 1041.86. decision issued by the Associate Admin­ the pool plant from which diverted. istrator, on October 6, 1966, and pub­ * * * * * lished in the F ederal R egister on 2. Section 1041.16 is revised to read as (j ) * * * October 11, 1966 (31 F.R. 13136; F.R. follows: (2) By the 11th day after the end of Doc. 66-11050), shall be and are the § 1041.16 Fluid milk product. each month, the uniform price computed terms and provisions of this order, and pursuant to § 1041.71 and the butter- are set forth in full herein subject to the “Fluid milk product” means milk, skim fat differential computed pursuant to following revisions: §§ 1041.15 (b) and milk, flavored or cultured milk or skim § 1041.72. milk, buttermilk, concentrated milk, egg­ (c), 1041.18, 1041.20, and 1041.53(b) are ***** changed. nog, sweet or sour cream, and any mix­ ture of fluid cream and milk or skim 6. The introductory text of § 1041.30 1. Section 1041.13(a) is revised to is revised to read as follows: read as follows : milk. Cultured sour mixtures disposed of as other than sour cream and yogurt § 1041.30 Reports of receipts and utiliz­ § 1041.13 Pool plant. shall be considered as fluid milk products ation. * * * * * only if disposed of under a Grade A label. The term includes these products Each handler for each of his pool (a) A distributing plant with route in fluid, frozen (except cream), fortified plants, and a cooperative association with disposition during the month, or in 5 of or reconstituted form, but does not in­ respect to milk for which it is the han­ the immediately preceding 6 months, clude sterilized products in hermetically dler, shall report to the market adminis­ of not less than 50 percent of the total sealed containers, and such products as trator each month. If mailed, such re­ Grade A milk received at such plant from milkshake mix, ice cream mix, and other port shall be postmarked on or before the dairy farmers (excluding any such milk frozen dessert mixes, aerated cream 6th day after the end of such month; received by diversion from a plant products, frozen cream, cultured sour or if otherwise delivered, it must be re­ at which such milk is fully subject to mixtures (disposed of as other than sour ceived at the office of the market ad­ pricing and pooling under the terms and cream and not disposed of under a Grade ministrator on or before the 7th day after provisions of another order issued pur­ A label), pancake mixes, and evaporated the end of such month. The report shall suant to the Act).pool supply plants and or sweetened condensed milk, or skim be in the detail and on forms prescribed through reload points, and with at milk in either plain or sweetened form. by the market administrator and shall least 15 percent of such route disposition reflect the quantities of skim milk and made within the marketing area during 3. Section 1041.18 is revised to read as butterfat contained in: the month. follows: * * * * * * * * * ♦ § 1041.18 Route disposition. 7. In § 1041.51, the introductory text la. In §1041.15 paragraphs (a), (b), “Route disposition” means a delivery and subparagraph (1) of paragraph (a) and (c) (3) are revised to read as follows: of Class I milk pursuant to § 1041.41(a) are revised to read as follows: (including that custom-packaged for an­ § 1041.15 Producer milk. other person and disposition from a § 1041.51 Class prices. * * * $ * plant’s dock, plant store, vendor, or vend­ * * * * * (a) Received during the month at one ing machine) at retail or wholesale either (a) Class I milk vrice. For the period or more pool plants from the producer, directly or through any distribution point from the effective date of this paragraph either directly or through a reload other than a plant. through March 1968, the monthly Class point, or caused to be delivered from the 4. A new § 1041.20 is added to read as I milk price shall be the basic formula producer’s farm to a pool plant(s) by a follows: price for the preceding month, plus the cooperative association. sum of the amounts specified under sub- (b) (1) Subject to the conditions set §1041.20 Reload point. paragraphs (1) and (2) of this para­ forth in subparagraph (2) of this para­ “Reload point” means any location graph: graph, diverted by a handler from a pool which is outside the Ohio counties speci­ (1) The amount set forth below for plant to another pool plant for any num­ fied in § 1041.53 and which is both 40 the applicable month, subject to adjust­ ber of days of the month. Milk so di­ miles from the City Hall of Toledo, Ohio, ment for location pursuant to § 1041.53: verted shall be deemed to be received by and more than 15 miles from the City August through March______$1.32 the diverting handler at the location of Halls of Mansfield, Marion, and Lima, April through July______..____ $1.09 the plant from which it is diverted, if Ohio, at which milk moved from the farm * * * * *

FEDERAL REGISTER, VOL. 31; NO. 226— TUESDAY, NOVEMBER 22, 1966 PROPOSED RULE MAKING 14785

8. Section 1041.53 is revised to readamount that the Class I differential pur­ other than payments to himself and to as follows: suant to § 1041.51(a) for the preceding any producer who is a member of a co­ month is greater or lesser than such dif­ operative association which the Secre­ § 1041.53 Location adjustments to han­ ferential for the current month, for the tary determines is performing the serv­ dlers. producer milk received during the first ices specified in paragraph (b) of this (a) The price for Class I milk at a 15 days of the month: section, each handler shall deduct 6 cents plant or reload point located outside the (2) On or before the 16th day after per hundredweight, or such lesser Ohio Counties of Allen, Auglaize, Craw­ the end of each month, at not less than amount as the Secretary shall determine ford, Erie, Pulton, Hancock, Hardin, the uniform price adjusted pursuant to to be sufficient, for marketing services. Henry, Huron, Lucas, Marion, Morrow, §§ 1041.72, 1041.73, and 1041.85, less any The handler shall pay the amount de­ Ottawa, Richland, Sandusky, Seneca, payment made pursuant to subpara­ ducted to the market administrator on Wood, and Wyandot, which is both more graph (1) of this paragraph, for pro­ or before the 13th day after the end of than 40 miles from the City Hall of To­ ducer milk received during such month. the month. ledo, Ohio, and more than 15 miles from If by such date the handler has not re­ ♦ * * ♦ * the City Halls of Mansfield, Marion, and ceived full payment from the market 14. Section 1041.86 is revised to read Lima, Ohio, shall be the price computed administrator pursuant to § 1041.83 for as follows: pursuant to § 1041.51(a) reduced at the such month, he may reduce pro rata his rate of 1.5 cents for each 10 miles or payments to producers by not more than § 1041.86 Expense of administration. fraction thereof that such plant or re­ the amount of such underpayment. On or before the 13th day after the load point is from the nearest of the City Payment to producers shall be completed end of each month, each handler shall Halls of Toledo, Mansfield, Marion, or thereafter not later than the date for make payment to the market admistra- Lima, Ohio. No location adjustment making payments pursuant to this par­ tor as his pro rata share of the expense of shall apply, however, at a plant or reload agraph next following receipt of the administration of this part. The pay­ point which is nearer to the Public balance due from the market adminis­ ment shall be at the rate of 3 cents per Square in Cleveland, Ohio, than the dis­ trator; and hundredweight or such lesser amount as tance between such Cleveland location ♦ * * * * the Secretary may prescribe. The pay­ point and the City Hall at Mansfield, (c) In making payments for producer ment shall apply to all of the handler’s Ohio. receipts during the month of skim milk (b) Fluid milk products received by a milk pursuant to this section, each han­ dler shall furnish a supporting state­ and butterfat contained in (a) producer handler at a pool plant from another milk (including a handler’s own farm pool plant or reload point shall be as­ ment to each producer, or cooperative association in the case of member pro­ production) ; and (b) other source milk signed for Class I location adjustment at a pool plant which is allocated to Class credit, at the appropriate distance rate ducers for whom payment is made pur­ suant to paragraph (b) of this section. I milk pursuant to § 1041.46 (a)(3), as set forth in paragraph (a) of this sec­ (a)(7) and the corresponding steps of tion, to the extent that Class I milk (ex­ Such statement shall be furnished at the time payments are made pursuant § 1041.46(b). The payment shall apply clusive of producer milk diverted as Class also to the quantity of route disposition I milk to nonpool plants) at the trans­ to this section, except that the informa­ tion included in subparagraphs (1) and in the marketing area during the month feree-plant exceeds the sum of receipts of other source milk from a partially at such plant directly from producers (2) of this paragraph shall be furnished a cooperative association for whom pay­ regulated distributing plant that ex­ and any Class I milk assigned to receipts ceeds Class I milk received during the from other order plants and unregulated ment is made pursuant to paragraph (b) of this section on or before the 10th day month at such plant from pool plants supply plants. Such assignment shall be and other order plants. made first to transferor-plants at which after the end of the month during which no location adjustment credit is appli­ the producer milk was received. The [F.R. Doc. 66-12618; Filed, Nov. 21, 1966; cable and then in sequence beginning supporting statement shall be in such 8:49 a.m.] with the plant or reload point at which form that it may be retained by the re­ the least location adjustment would cipient and shall show: apply. ♦ * * * * (c) For the purpose of this section 11. The introductory text of § 1041.82 DEPARTMENT OF HEALTH, EDUCA­ and § 1041.73, the distances to be com­ is revised to read as follows: TION, AND WELFARE puted shall be on the basis of the short­ § 1041.82 Payments to the producer- est hard-surfaced highway distances as settlement fund. Public Health Service determined by the market administra­ tor. On or before the 13th day after the [ 42 CFR Part 76 1 end of the month each handler shall pay 9. In § 1041.73, paragraph (a) is re­to the market administrator the amount, PREVENTION, CONTROL AND ABATE­ vised to read as follows: if any, by which the total amounts spec­ MENT OF AIR POLLUTION FROM 8 1041.73 Location differentials to pro­ ified in paragraph (a) of this section FEDERAL GOVERNMENT ACTIVI­ ducers and on nonpool milk. exceed the amounts specified in para­ graph (b) of this section: TIES; PERFORMANCE STANDARDS (a) For the purposes of § 1041.80, the AND TECHNIQUES OF MEASURE­ ♦ * * * * uniform price at a plant or a reload point MENT may be reduced on the basis of the ap­ 12. Section 1041.83 is revised to read as plicable amount or rate for the loca­ follows: Notice of Proposed Sulfur Oxides tion of such plant or reload point pur­ § 1041.83 Payment out of the producer- Emission Limits and Control Meas­ suant to § 1041.53; settlement fund. ures * * * • * On or before the 14th day after the In accordance with the provisions of 10. In § 1041.80, paragraph (a) (1) end of each month the market adminis­ § 76.5(c), notice is hereby given that the and (2) and the introductory text of par­ trator shall pay to each handler the Secretary of Health, Education, and agraph (c) are revised to read as follows: amount, if any, by which the amount Welfare intends to adopt the limits on computed pursuant to § 1041.82(b) ex­ the emission of sulfur oxides and the § 1041.80 Time and method of payment, ceeds the amount computed pursuant to control measures set out in the following (a) * * * § 1041.82(a). revision of § 76.5(c), 30 days after the (1) On or before the last day of each 13. In § 1041.85 paragraph (a) is re­ publication of this notice. The limita­ month to each producer who had not vised to read as follows: tions and control measures will be effec­ discontinued shipping milk to such han- tive October 1, 1968, and will be appli­ mer during the month, at not less than § 1041.85 Marketing service deductions. cable as indicated to Federal facilities lo­ »« .Vnlfonn Price for the preceding (a) In making the payments required cated in the New York and Chicago month minus 75 cents, adjusted by any by § 1041.80 (a) (2) and (b) to producers, Standard Consolidated Areas and in

FEDERAL REGISTER. VOL. 31. NO. 226— TUESDAY, NOVEMBER 22, 1966 14786 PROPOSED RULE MAKING

Philadelphia Standard Metropolitan tions are met and shall provide for ade­ through 441 in the current Form No. 1. Statistical Area, as defined by the Bu­ quate tests to ascertain that delivered Attachment A hereto indicates the reau of the Budget. fuel meets the applicable specifications. change in the contents of the form which These limitations and control meas­ If removal of sulfur oxides from flue would be effected by the proposed revi­ ures are intended to assure that emissions gases is used to control emissions, the sion. The propsed replacement of cer­ of sulfur oxides from Federal facilities facility shall provide for continuous tain of the Form No. 1-M schedules by in the designated areas are minimized to monitoring and recording of the sulfur schedules similar to those in Form No. 1 the extent practicable, as required by oxide content of flue gases emitted. The will require, as well, editorial and other section 4(c) of Executive Order 11282, sulfur content of fuels shall be deter­ conforming changes. We are proposing May 26, 1966. mined in accordance with current recog­ also to require an additional copy of the The limits to be established take cogni­ nized testing procedures of the American report for use in the Commission’s re­ zance of the varying severity of the sul­ Society for Testing Materials. The sul­ gional offices. Finally, we are proposing fur oxide problem in the designated fur content of the flue gases shall be to add an instruction explaining the areas, which requires more restrictive determined in accordance with current significance of the references to the measures in the New York Standard Con­ recognized testing procedures of the Commission’s uniform system of ac­ solidated Area than in the other areas. American Society of Mechanical Engi­ counts in some of the schedules. We Such limits and the related measures will neers. recognize that the reporting municipali­ be subject to review and revision in the (3) The limitations and measures es­ ties are not required to keep their ac­ light of changing circumstances and tablished in subparagraph (1) shall be counts in accordance with the uniform technology. revised or amended only after consulta­ system of accounts but believe that the It is also proposed to correct the num­ tion with appropriate Federal, State, and value of the information will be en­ ber of the Bureau of Mines Circular local officials and affected parties. Not hanced by reporting, to the extent possi­ referred to in § 76.1(c). less than 30 days prior to prescribing ble, within its overall frame of Teference. Interested persons are invited to sub­ such revised or amended limits or meas­ Attachment B 2 contains all the pages mit written comments, suggestions or ob­ ures, the Secretary will publish in the of the form which we are proposing to jections (in duplicate) regarding the pro­ F ederal R egister notice of his intention add or revise. No changes are proposed posed revisions to the Secretary of to adopt such limits or measures, and on pages 2 through 7, or on pages 13 and Health, Education, and Welfare, Wash­ will thereafter publish in the F ederal 14. ington, D.C. 20201, within 20 days after R egister the limits or measures estab­ 2. The revision being proposed would publication of this notice in the F ederal lished. The Secretary may at any time (a) place the production expenses and R egister. Federal, State, and local offi­ designate other urban areas which suffer other operating data of the large munici­ cials and affected parties who desire con­ from extremely high air pollution levels, pals on a comparable basis with that of sultation in addition to, or in lieu of, and after similar consultation, and pub­ the privately owned company; (b) re­ the submission of written comments, lication in the F ederal R egister, pre­ sult in a uniformity of reporting; and suggestions or objections, will be ar­ scribe such limits or measures as he de­ (c) provide a more complete source of in­ ranged upon written request filed with termines are necessary to carry out the formation for the interested public, the the Secretary not later than 7 days after intent of Executive Order 11282. Commission’s own use and in Com­ publication of this notice in the F ederal (Sec. 5, E.O. 11282) mission publications: “Steam-Electric Register. Data and information sup­ Plant Construction Cost and Annual porting the proposed revisions are avail­ Dated: November 17,1966. Production Expenses, and Hydroelectric able upon request from the Division of J ohn W. Gardner, Plant Construction Cost and Annual Pro­ Air Pollution, Public Health Service, Secretary. duction Expenses.” DHEW, Washington, D.C. 20201. [F.R. Doc. 66-12661; Filed, Nov. 21, 1966; 3. Although the proposed revision of Part 76 would be revised as follows: 8:50 a.m.] Form 1-M would appear to require more 1. Section 76.1(c) would be amended detail and recordkeeping, we believe that to read: less time and effort would be required foj (c) “Ringelmann Scale” means the most of the utilities, particularly the Ringelmann Scale as published in the FEDERAL POWER COMMISSION smaller systems, to complete the required U.S. Bureau of Mines Information Cir­ schedules. Our latest information in­ cular 7718. E18 CFR Part 141 1 dicates that about one-half of the re­ 2. Section 76.5(c) would be amended [Docket No. R-310] spondents having generating capacity to read:. would report generating plant statistics (c) (1) Combustion units of all Fed­ ANNUAL REPORTS OF MUNICIPAL on the new “small plants” schedule (p. eral facilities or buildings located in the ELECTRIC UTILITIES 13) which requires only a single line following areas shall comply with the Notice of Proposed Rule Making entry for each plant. Several of the applicable emission limitations and con­ larger respondents, including the federal trol measures set out below: November 15,1966. agencies and a few REA cooperatives are (1) In the New York Standard Con­ 1. Notice is given pursuant to sectionalready using the Form No. 1 schedules solidated Area, the emission rate of sulfur 4 of the Administrative Procedure Act as permitted by the proviso in paragraph oxides (calculated as sulfur dioxide) that the Commission proposes to revise, (a) of § 141.7, the regulation prescribing from fuels used in combustion units shall effective for the reporting year 1967, the the form. We, therefore, believe that not exceed a maximum emission rate of annual report FPC Form No. 1-M, pre­ the proposed revision will not, on the 0.35 pounds per million B.t.u. (gross scribed by § 141.7 of the Commission’s whole, result in increasing the reporting value). regulations for use by municipal electric burden on the respondent municipalities (ii) In the Chicago Standard Con­ utilities having annual operating reve­ unreasonably in view of the more than solidated Area and in the Philadelphia nues of $250,000 or more. The ultimate compensating uniformity of reporting Standard Metropolitan Statistical Area, purpose of the revision is to make the which would result from the proposed the emission rate of sulfur oxides (cal­ information supplied in this form uni­ revision. culated as sulfur dioxide) from fuels used form for statistical purposes with that 4. The revision of FPC Form 1-M and in combustion units shall not exceed a reported by the privately owned com­ the conforming revision of § 141.7 of the maximum emission rate of 0.65 pounds panies in FPC Form No. 1. -Commission’s regulations, under which per million B.t.u. (gross value). Basically, the revision proposed would it is prescribed, are proposed to be issued (2) If compliance with the above be accomplished by replacing the sched­ under the authority granted by the Fed­ emission standard is to be accomplished ules on pages 8 through 12 of the existing eral Power Act, as amended, particularly by means of controlled fuel quality, the Form 1-M 1 with those on pages 432 sections 309 and 311 thereof (49 Stat. 858, agency responsible for each Federal fa­ 859; 16 U.S.C. 825h, 825j). cility in the designated areas shall estab­ 1 Generating Station Statistics, p. 8 ; Steam lish appropriate fuel specifications to Generating Stations, pp. 9-10; Hydroelectric 2 Attachment B filed as part of original insure that the above emission limita- Generating Stations, pp. 11-12. document.

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 PROPOSED RULE MAKING 14787

5. Accordingly, it is proposed— regard to the proposal should be ad­ such written submissions before acting a. To revise, effective for a reporting dressed and whether the person filing on the proposed amendments. year ending during the calendar year them requests a conference at the Fed­ By direction of the Commission. 1967, the Annual Report for Municipal eral Power Commission to discuss the Electric Utilities, PPC Form No. 1-M, proposed revision of the annual report J oseph H. Gutride, prescribed by § 141.7, Subchapter D, form. The Commission will consider all Secretary. Chapter I, Title 18 of the Code of Federal Attachment A—Summary op P roposed Revisions Regulations by revising page 1 thereof; by deleting pages 8 through 12 and, in Old page New page Title lieu thereof, • inserting new pages 8 No. No. through 20; and by adding a new page Identification/General Instructions/ 1.—. ■ Identification/General Instructions/Exeerpts 23 all as set out in Attachment B Excerpts From the Law/Verifica- From the Law/General Information. hereto;3 tion/General Information. Generating Station Statistics______8- 9... Steam-Electric Generating Plant Statistics b. To revise the several dates appear­ (Large Plants). 10.... Steam-Electric Generating Plant Statistics ing in paragraphs (a) and (b) of the (Large Plants) Average Annual Heat Rates and Corresponding N et Kwh Output for said § 141.7 as may be appropriate to the Most Efficient Generating Units. effective date of any final order which 11- 12. Hydroelectric Generating Plant Statistics (Large Plants). may be issued herein. 13.. . Generating Plant Statistics (Small Plants). 14. . . . Changes Made or Scheduled To Be Made in c. To delete from the said paragraph Generating Plant Capacities. (b) the words “an original and two con­ 9- 10. Steam Generating Stations------15- 16. Steam-Electric Generating Plants. 11-42 Hydroelectric Generating Stations___ 17- 18. Hydroelectric Generating'Plants. formed copies all properly filled out and 19- 20. Internal-Combustion Engine and Gas-Turbine verified.” and to insert, in lieu thereof, Generating Plants. 13. . . Transmission Line Statistics/Trans- 21.. ..Same titles. “ah original and three conformed copies mission Lines Added During the Year. all properly filled out and attested.” 14. . . . Electric Energy Account______22.... Same title. d. To revise paragraph (c) of the said 1 .. ... Verification_____L______... _____ 23.... Attestation. § 141.f by deleting from the list of sched­ [F.R. Doc. 66-12571; Filed, Nov. 21,1966; 8:45 a.m.] ules the titles reading “Verification,” “Generating Station Statistics,” “Steam Section 8.13(h) is amended by insert­ Generating Stations,” and “Hydroelec­ DEPARTMENT OF THE TREASURY ing in the listing of classes of merchan­ tric Generating Stations” and inserting dise, in proper alphabetic order, the in lieu thereof the following: Bureau of Customs following: Steam-Electric Generating Plant Statistics [ 19 CFR Part 8 1 § 8.13 Contents of invoices; incomplete (Large Plants). IMPORTATION OF SPRUCE AND invoices; general requirements sup­ Hydroelectric Generating Plant Statistics plem ented. (Large Plants). PINE LUMBER Generating Plant Statistics (Small Plants). * * * * * Changes Made or Scheduled to be Made in Additional Invoice Requirements Generating Plant Capacities. (h) * * * Steam-Electric Generating Plants. Under the authority vested in the Sec­ Lumber, spruce (also termed Western white Hydroelectric Generating Plants. retary of the Treasury with respect to spruce) (Picea) and pine classifiable respec­ Internal-Combustion Engine and Gas-Tur­ any facts deemed necessary to a proper tively under item 202.03 and item 202.09, bine Generating Plants. appraisement, examination and classifi­ Tariff Schedules of the United States. (1) Attestation. A declaration by the shipper or other person cation of merchandise by section 481(a) having actual knowledge as to the quantity 6. Any interested person may submit (10) of the Tariff Act of 1930, as amend­ of spruce and the quantity of pine in the to the Federal Power Commission, Wash­ ed (19 U.S.C. 1481(a) (10)), additional shipment. ington, D.C. 20426, not later than Janu­ information may be required on the in­ ♦ * * * * ary 6, 1967, data, views and comments voices of merchandise to be imported in writing concerning the proposed re­ into the United States. These require­ Prior to final action on the proposal, visions. An original and 14 conformed ments and the Treasury decisions in consideration will be given to any data, copies should be filed with the Commis- which they appear are listed in § 8.13(h) views, or arguments pertaining thereto of the Customs Regulations. which are submitted in writing to the mision. In addition, interested persons Because of the difficulty in identifica­ wishing to have their comments consid­ tion and classification of shipments of Commissioner of Customs, Washington, ered in the clearance of the proposed spruce and pine lumber provided for D.C. 20226, and received within a period revisions under provisions of the Federal under items 202.03 and 202.09, Tariff of 30 days from the date of the publica­ Reports Act of 1942 may at the same Schedules of the United States (19 U.S.C. tion of this notice in the F ederal time submit a conformed copy of their 1202 (items 202.03, 202.09)), it is con­ R egister. No hearings will be held. sidered necessary to require that invoices comments directly to the Clearance Offi­ for such shipments contain, in addition [seal] Lester D. J ohnson, cer, Office of Statistical Standards, Bu­ to all the other information required by Commissioner of Customs. reau of the Budget, Washington, D.C. law or regulations, a declaration by the Approved: November 15,1966. 20503. Submissions to the Commission shipper or other person having actual should indicate the name and address of knowledge of the facts, as to the species T rue D avis, the person to whom correspondence in of the lumber. Assistant Secretary Accordingly, it is proposed to amend of the Treasury. 2 Attachment B filed as part of original § 8.13(h) as set forth in tentative form [F.R. Doc. 66-12600; Filed, Nov. 21, 1966; document. below : 8:48 a.m.]

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 14788 Notices

T. 155 Ng B. 75 W., PIERCE COUNTT DEPARTMENT OF THE INTERIOR Sec. 6, SE^NE^; T. 157 N., R. 72 W„ Sec. 19, Lot 3; Sec. 23, Lot 5. Bureau of Land Management Sec. 23, sy2NW%, NE^SW ^, and NW>/4 T. 152 N., R. 73 W„ SE»4; [Montana 498 (ND) ] Sec. 5, Lot 10. Sec. 29, Ny.SW ^. T. 152 N., R. 74 W., NORTH DAKOTA T. 155 N„ B. 76 W„ Sec. 8, Lots 1, 5, and 6. Sec. 23, N14NW&, and NW^SE1^. T. 154 N., B. 74 W„ Notice of Proposed Classification of T. 152 N., B. 77 W., Sec. 30, NE14SW&. Sec. 23, SW ^NE^. Public Lands T. 153 N„ B. 77 W., BARNES COUNTY November 14, I960. Sec. 23, SW14SE14; Sec. 25, Ey2SW%. T. 143 N„ R. 60 W., Pursuant to the Act of September 19, T. 156 N., B. 77 W., Sec. 12, Lots 1 and 2. 1964 (43 U.S.C. 1411-18), and to the Sec. 10, NW % SW î4. BURLEIGH COUNTY regulations in 43 CFR Parts 2410 and T. 151 N., B. 78 W., T. 142 N„ R. 75 W., 2411, it is proposed to classify the public Sec. 23, NE1/4SEV4; Sec. 12, sy.SW%; lands described below, for retention for Sec. 24, NWÎ4NWV4. T. 152 N„ B. 78 W., Sec. 14, sy2SWV4. and Ey2SE^; multiple use management. Publication Sec. 15, SE^SWi/i, and SW ^SE^; Sec. 22, Ny2NE%; of this notice segregates the described Sec. 22, N%, and N%SE}4. Sec. 26, NW ^NE^, and NE&NWÎ4. public lands from appropriation under T. 144 N., R. 77 W., the homestead, desert land, and allot­ MCLEAN COUNTY Sec. 22, NE 14. ment laws (43 U.S.C. ch. 7, 43 U.S.G. ch. 9, T. 149 N„ B. 84 W„ EMMONS COUNTY and 25 U.S.C. 331), and from sale under Sec. 11, Ey2SW^. T. 135 N„ R. 74 W., section 2455 of the revised statutes (43 T. 150 N„ B. 84 W., Sec. 27, NWV4SE%. Sed. 6, Lot 1. U.S.C. 1171). T. 150 N„ B. 86 W., T. 136 N., R. 74 W., For a period of 60 days from the date Sec. 21, NE % SE , Sec. 32, sy2Ny2, and sy2. of publication of this notice in the F ed­ Sec. 22, sy2NW^4, and NW^SWVi. KIDDER COUNTY eral R egister, all persons who wish to MOUNTRAIL COUNTY T. 137 N., R. 71 W., submit comments, suggestions, or objec­ Sec. 24, Lot 5. tions in connection with the proposed T. 155 N., B .8: W., T. 140 N., R. 71 W., classification may present their views in Sec. 20, Lot 4. Sec. 6, SE^NEi/4, and SE14. writing to the district manager, Bureau T. 156 N., B. 88 W., Sec. 17, SW^NEi/4. T. 144 N., R. 71 W., of Land Management, Miles City, Mont. T. 156 N., B. 89 W., Sec. 28, Lot 3. The public lands proposed for classifi­ Sec. 3, SEÌ4NWÌ4; T. 138 N., B. 72 W., cation are located as described below and Sec. 7, Lots 1 and 2. Sec. 4, NE 14, sy2NWÎ4. and SW^; T. 157 N„ B. 89 W., Sec. 8, NE % NE 14 ; are shown on maps on file in the office Sec. 18, NWy4. of the State Outdoor Recreation Agency, Sec. 29, Lot 1. T. 156 N., B. 90 W., T. 140 N., R. 72 W., 107 South Fifth Street, Bismarck, Sec. 20, SE^SWV4, and SW&SEÌ4. Sec. 14, Lots 1 and 2; N.Dak.: T. 158 N., B. 90 W., Sec. 22, SE14NE14, and SE%. T. 141 N., R. 72 W„ F i f t h P r i n c i p a l M e r i d i a n , N o r t h D a k o t a Sec. 18.SE14NEV4. T. 156 N., B. 91 W., Sec. 22, Lot 1. DIVIDE COUNTY Sec. 5, Lot 4; T. 142 N„ B. 72 W., Sec. 13,wy2NE%. Sec. 34, NE^SEVi- T. 163 N„ R. 95 W., T. 143 N., R. 72 W., Sec. 25, SW&SW^; T. 157N..B. 91 W., Sec. 34, Lot 2. Sec. 6, Lot 3. Sec. 26, SE14SEV4; T. 138 N., R. 73 W„ Sec. 27, SW%SE%. SHERIDAN COUNTY Sec. 12, NWV4NE14, and SE^SE^; T. 160 N., B. 99 W., Sec. 5, SW%SEi4. T. 145 N., B. 74 W., sec. 14, sy2Ny2. T. 160 N., B. 100 W.. Sec. 26, SE%NEV4. and NE&SEV4. T. 143 N., R. 74 W., Sec. 22, SW%NE&, and NW&SE14. T. 150 N., B. 75 W.f Sec. 4, Lots 1 and 2. T. 162 N., B. 102 W., Sec. 14,Sy2NW%. LOGAN COUNTY Sec. 8, SW14NW&, and N&SW&; T. 149 N..R.77 W.. Sec. 17,NE%NW^; Sec. 2, Lot 7. T. 136 N., R. 68 W., Sec. 20, SW%NEV4, S%NW%, and SW%; T. 150 N., B. 77 W., Sec. 30, NW14NE14. Sec. 29, NW*4; Sec. 13, Lot 1; T. 134 N., R. 69 W., Sec. 30, SE^NE%, and NEJ4SE&. Sec. 17,SW^SW^J Sec. 14, NW14NWx/\ , and wy2SWí4; T. 163 N., B. 102 W., Sec. 20, Lots 1 and 2; Sec. 34, NW^NE1^, and NE^NW^. Sec. 26, SE14NE14, and SW%NW^. Sec. 28, Lot 2; T. 135 N., R. 69 W., T. 160 N., B. 103 W., Sec. 35, Lot 2. Sec. 28, N14 NE ^4 ; Sec. 32, NE V4. Sec. 15, W^NW%, and NW^SW^; WARD COUNTY Sec. 21,NE%NWi4; T. 136 N., R. 69 W„ Sec. 33, Lot 1. T. 151 N., B. 84IV., Sec. 8, SWy4NEi4. T. 161 N„ B. 103 W., Sec. 29, NE*4SW}4. MC INTOSH COUNTY Sec. 23, NE1/4NE&, and SE14SEJ4 ; T. 153 N., B. 86 W., Sec. 24, SW^SWV4- Sec. 5, Lots 1 and 5. T. 129 N., R. 68 W., T. 162 N., B. 103 W., T. 152 N„ B. 87 W., Sec. 12, NWy.NE^4. Sec. 1, Lot 6; T. 130 N., R. 68 W.. Sec. 3, Lots 1, 2, 3, and 4, and S%NB%, Sec. 24, Lot 6, SW ^NE^, and NW&SE1/*. T. 163 N., B. 103 W., Sec. 4, SE 14SW14; Sec. 11, SE14SE14; Sec.9,NEi,4NWi4. T. 132 N., R. 68 W., Sec. 14, Sy2SE^. T. 155 N., B. 87 W„ Sec. 20, NE 14 NE Sec. 8, N W V. S W %,. STUTSMAN COUNTY MCHENRY COUNTY WILLIAMS COUNTY T. 153 N., B. 75 W., T. 138 N., R. 67 W., Sec. 3, Lot 6; T. 159 N., B. 100 W., Sec. 8 , NE1/4 NW14. Sec. 25, NE^SW^; Sec. 22, SE^NE^, SE 14NW 14, NE%SWÎ4, T. 138 N., B. 68 W., Sec. 31, Lots 2 and 4 sy2swy4, N SE 14, and SW%SEÎ4 . Sec. 10, SW>4 SE}4 .

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 NOTICES 14789

The public lands in the areas described Fisheries, Fish and Wildlife Service, De­ SUGARCANE IN PUERTO RICO aggregate approximately 7,914.09 acres. partment of the Interior,. Washington, A public hearing will be held, with a D.C. 20240. Any person desiring to sub­ 1967—68 Crop Proportionate Shares; time and place to be announced, if the mit evidence that the contemplated op­ Notice of Hearing authorized officer determines that there eration of such vessel will cause eco­ is sufficient-public interest to warrant nomic hardship or injury to efficient ves­ Notice is hereby given that the Secre­ such a hearing. sel operators already operating in that tary of Agriculture, acting pursuant to Harold T ysk, fishery must submit such evidence in the Sugar Act of 1948, as amended, is State Director. writing to the Director, Bureau of Com­ preparing to conduct a public hearing to receive views and recommendations from [F.R. Doc. 66-12589; Filed, Nov. 21, 1966; mercial Fisheries, within 30 days from 8:47 a.m.] the date of publication of this notice. all interested persons on the possible If such evidence is received it will be need for establishing proportionate evaluated along with such other evi­ shares for the 1967-68 sugarcane crop Fish and Wildlife Service dence as may be available before making in Puerto Rico. [Docket No. A-414] a determination that the contemplated In accordance with the provisions of operations of the vessel will or will not paragraph (1), subsection (b) of section JACK E. AND WINNIFRED V. cause such economic hardship or injury. 302 of the Sugar Act of 1948, as amended, CROWLEY the Secretary must determine for each J. L. M cHugh, crop year whether'the production of Notice of Loan Application Acting Director, sugar from any crop of sugarcane in Bureau of Commercial Fisheries. Jack E. and Winnifred V. Crowley, 400 Puerto Rico will, in the absence of pro­ East Street, Juneau, Alaska 99801, have N ovember 17,1966. portionate shares, be greater than the applied for a loan from the Fisheries [F.R. Doc. 66-12610; Filed, Nov. 21, 1966; quantity needed to enable the area to Loan Fund to aid in financing the pur­ 8:49 a.m.] meet its quota and provide a normal chase of a used 53.1-foot wood vessel to carryover inventory, as estimated by the engage in the fishery for halibut, sable- Secretary for such area for the calendar fish, shrimp, and albacore. year during which the larger part of the Notice is hereby given pursuant to the DEPARTMENT OF AGRICULTURE sugar from such crop normally would be marketed. Such determination may be provisions of Public Law 89-85 and Fish­ Agricultural Stabilization and eries Loan Fund Procedures (50 CFR Part made only after due notice and opportu­ 250, as revised Aug. 11, 1965) that the Conservation Service nity for an informal public hearing. above-entitled application is being con­ The hearing on this matter will be ORGANIZATION, FUNCTIONS, AND conducted in Room 2W, Administration sidered by the Bureau of Commercial DELEGATIONS OF AUTHORITY Fisheries, Fish and Wildlife Service, De­ Building, U.S. Department of Agricul­ partment of the Interior, Washington, Members of Administrator’s ture, Washington, D.C., beginning at 10 D.C. 20240. Any person desiring to sub­ Immediate Staff a.m. on December 15, 1966. mit evidence that the contemplated op­ Views and recommendations are de­ eration of such vessel will cause economic The delegations of authority set forth sired on all phases of the proportionate hardship or injury to efficient vessel in Division V of the statement of Or­ share program. They may be submitted operators already operating in that fish­ ganization, Functions and Delegations of Authority of Agricultural Stabilization in writing, in triplicate, at the hearing, ery must submit such evidence in writing or may be mailed to the Director, Sugar to the Director, Bureau of Commercial and Conservation Service published in Fisheries, within 30 days from the date the F ederal R egister on May 2, 1963 (28 Policy Staff, Agricultural Stabilization of publication of this notice. If such F.R. 4368) is amended by adding a new and Conservation Service, U.S. Depart­ evidence is received it will be evaluated sentence as follows at the end of the ment of Agriculture, Washington, D.C. along with such other evidence as may be first paragraph under the heading, B. 20250, postmarked not later than De­ Members of the Administrator’s im­ available before making a determination cember 30, 1966. Interested persons will that the contemplated operations of the mediate staff. vessel will or will not cause such eco­ V. Delegations of authority. * * * be given the opportunity at the hearing nomic hardship or injury. B. Members of the Administrator’s to appear and submit orally data, views, immediate staff. * * * The authority and arguments in regard to the estab­ J. L. McHugh, , Acting Director, delegated herein to the Deputy Adminis­ lishment of proportionate shares. Bureau of Commercial Fisheries. trator, State and County Operations in­ Restrictions on thé marketing of cludes the authority to promulgate by sugarcane in Puerto Rico have not been November 17,1966. publication in the F ederal R egister, in effect since the 1955-56 crop. The [F.R. Doc. 66-12597; Filed, Nov. 21, 1966; determinations made by ASC State or 8:47 a.m.] County committees, the Executive Di­ area has not marketed all of its mainland rector of the Hawaii Agricultural Stabi­ basic sugar quota in recent years. Pros­ lization and Conservation Service State pects for the 1966-67 crop indicate that [Docket No. S-376] Office, and the Director, Agricultural production will again fall short of the LORNE M. ALLEN Stabilization and Conservation Service area’s mainland basic quota. Caribbean Area Office, designating local Notice of Loan Application producing areas for purposes of con­ All written submissions made pursuant to this notice will be made available for Lome M. Allen, Post Office Box 72, sidering eligibility of producers for Agate Beach, Oreg. 97320, has applied for abandonment or crop deficiency pay­ public inspection at such times and a loan from the Fisheries Loan Fund to ment, or for prevented acreage credit places in a manner convenient to the 111 *n financing the purchase of a used under the Sugar Act of 1948, as amended, public business (7 CFR 1.27 (b) ). and regulations issued pursuant thereto. 37.1-foot registered length wood vessel Signed at Washington, D.C., on No­ to engage in the fishery for salmon, tuna, Signed at Washington, D.C., Novem­ vember 15, 1966. and crab. ber 17, 1966. E. A. Jaenke, Notice is hereby given pursuant to the H. D. Godfrey, Provisions of Public Law 89-85 and Fish­ Administrator, Agricultural Acting Administrator, Agricul­ eries Loan Fund Procedures (50 CFR Stabilization and Conserva­ tural Stabilization and Con­ fh u50, as revised Aug- 11. 1965) that tion Service. servation Service. .^eve-entitled application is being [F.R. Doc. 66-12614; Filed, Nov. 21, 1966; [F.R. Doc. 66-12615; Filed, Nov. 21, 1966; considered by the Bureau of Commercial 8:49 a.m.] 8:49 a.m.]

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 14790 NOTICES

Consumer and Marketing Service Whereas, officials of the State of New York and of the State of New Jersey have LA GRANGE STOCKYARDS, INC., ET AL. been consulted pursuant to section 105 (c) (1) (C) of the Clean Air Act (42 U.S.C. Notice of Changes in Names of Posted Stockyards 1857d(c)(1) (C)), It has been ascertained, and notice is hereby given, that the names of the live­ Now, therefore, pursuant to sections stock markets referred to herein, which were posted on the respective dates specified 105(c)(1)(A) and 105(c)(1)(C) of the below as being subject to the provisions of the Packers and Stockyards Act, 1921, as Clean Air Act, I hereby give formal noti­ amended (7 U.S.C. 181 et seq.), have been changed as indicated below. fication of the air pollution described Original name of stockyard, location, and Current name of stockyard and date of above to, and call a conference of, the air date of posting change in name pollution control agencies of the follow­ Georgia ing: State of New Jersey—New Jersey State La Grange Stockyards, Inc., La Grange, June 16, La Grange Stockyards, July 1,1966. Health Department. 1959. v ' State of New York—New York State Air Montana Pollution Control Board. Shelby Stockyards Company, Shelby, Feb. 18, 1956_ Shelby Stockyards Company, Inc., July 1, The Interstate Sanitation Commission. All municipalities, as defined in section 1966. 302(f) of the Clean Air Act (42 U.S.C. 1857b New York (f)), located in the following named coun­ Amsterdam Livestock Sales, Inc., Amsterdam, County Livestock Sales, Inc., Aug. 26, ties: New York—Nassau, Rockland and West­ Aug. 16, 1960. 1966. chester; North Carolina New Jersey—Bergen, Essex, Hudson, Mid­ dlesex, Monmouth, Morris, Passaic, Somer­ Dedmons Livestock Yards, Shelby, Apr. 2, 1959___ Dedmon’s Livestock Yards, July 12, 1966. set and Union; and Winfield Livestock Auction Market, Chocowinity, Winfield Stockyards, Inc., Oct. 25, 1966. The city of New York. July 9,1959. Mr. S. Smith Griswold of the Depart­ Oklahoma ment of Health, Education, and Welfare Altus Stockyards, Inc., Altus, Oct. 24, 1949._____ Altus Stockyards, July 1,1966. is hereby designated as Presiding Officer of the Conference, and Mr. William H. . South Dakota Megonnell is hereby designated as the Platte Livestock Sales Company, Platte, Oct. 13, Platte Livestock Auction Company, official conference participant of the De­ 1951. Aug. 1, 1966. partment of Health, Education, and T ennessee Welfare. The first session of the con­ ference, which will be concerned pri­ Macon County Livestock Market, Inc., Lafayette, Macon County Livestock Market, May 4, marily with air pollution caused by sul- May 6,1959. , 1966. Texas furous compounds and carbon monoxide, will be convened at a time and place to Graham Livestock Commission Company, Graham, Graham Livestock Commission, Inc., be fixed by the Presiding Officer after Nov. 13,1956. Sept. 1. 1966. consultation with air pollution control Gulf Coast Stockyards, Inc., Bay City, May 1, 1957- Gulf Coast Stockyards, Aug. 26, 1966. officials of the States of New York and New Jersey. Done at Washington, D.C., this 16th day of November 1966. Any municipality desiring to make a Charles G. Cleveland, formal presentation at the conference Chief, Registrations, Bonds and Reports Branch, should file 5 copies of a notice of such Packers and Stockyards Division, Consumer and Marketing Service. intention with Mr. S. Smith Griswold, [F.R. Doc, 66-12617; Filed, Nov. 21,1966; 8:49 a.m.] Room 2432, South Building, Department of Health, Education, and Welfare, Washington, D.C. 20201, not later than DEPARTMENT OF HEALTH, EDU­ Office of the Secretary December 16,1966. AIR POLLUTION CONTROL; INTER­ The agencies called to attend such conference may bring such persons as CATION, AND WELFARE STATE AIR POLLUTION IN THE NEW they desire to the conference. YORK-NEW JERSEY METROPOLI­ Food and Drug Administration TAN AREA Dated: November 17,1966. [Docket No. FDC-D-97; NDA No. 31-406V] [seal] J ohn W. Gardner, Notice of Conference of Air Pollution Secretary. CENTRAL SOYA CO. Control Agencies [F.R. Doc. 66-12662; Filed, Nov. 21, 1966; Master Mix Broiler Concentrate “A” Whereas, the Governor of the State of 8:50 a.m.] 377A-13C; Notice of Opportunity New York has made a written request, for Hearing pursuant to section 105(c) (1) (A) of the Clean Air Act (42 U.S.C. 1857d(c) (1) Correction (A)), that a conference be called regard­ ATOMIC ENERGY COMMISSION In F.R. Doc. 66-12465 appearing in the ing air pollution originating in the State [Docket No. 50-170] issue for Thursday, November 17, 1966, of New Jersey which is alleged to en- ARMED FORCES RADIOBIOLOGY at page 14658, in the center column, the c’-Jiger the health or welfare of persons RESEARCH INSTITUTE ninth line of the first paragraph which in the State of New York, and reads “ ‘A’ 337A-13C” should read “ ‘A’ Whereas, on the basis of reports, sur­ Notice of Issuance of Facility 377A-13C”. In the second paragraph, veys or studies, I ha/ve reason to believe License Amendment the third line from the bottom which that air pollution originating in the State Please take notice that the Atomic now reads “unsafe residues of the drug of of New York is endangering the health Energy Commission has issued, effective metabolites" should read “unsafe resi­ or welfare of persons in the State of New as of the date of issuance, Amendment dues of the drug or metabolites". Jersey, and No. 11, set forth below, to Facility W-

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 NOTICES 14791 cense No. R-84 to the Armed Forces License No. R-84, issued to Armed Forces Order Approving Control and I nterlocking Radiobiology Research Institute (AF- Radiobiology Research Institute, is hereby R elationships amended in the following respects: Issued under delegated authority: RRI), Bethesda, Md. The amendment 1. Paragraph 3.C. (3) is revised in its en­ authorizes AFRRI (1) to use, for startup Application of RealAire and Ralph S. New­ tirety to read as follows: comer, Docket 17820, for approval of inter­ of the reactor, an Americium-Beryllium “3.C. Pursuant to the Act and Title 10, locking relationships pursuant to section 409 neutron source to replace two sources CFR, Chapter I, Part 30 ‘Rules of General of the Federal Aviation Act of 1958, as previously used for that purpose, and (2) Applicability to Licensing of Byproduct Ma­ amended. to remove the present water fission prod­ terial’, to receive, possess, and use a 3 curie By application filed October 17, 1966, Real­ ucts monitor from the reactor system, sealed Americium-Beryllium neutron source Aire, a California corporation, and Ralph S. for reactor start-up; and to possess, but not Newcomer request the Board to approve, pur­ as described in the licensee’s application to separate such byproduct material as may for license amendment dated May 27, suant to section 409 of the Federal Aviation be produced by operation of the reactor.” Act of 1958, as amended (the Act), the in­ 1966. Action on a third item concern­ 2. Armed Forces Radiobiology Research terlocking relationships arising from the ing an authorization of 1 megawatt Institute is authorized to remove the pres­ holding by Mr. Newcomer of the positions as steady state operations subject to the re­ ent water fission products monitor from the president and director of RealAire and as sults of environmental film badge mon­ reactor system. principal operations officer, general manager, itoring, is being deferred until additional This amendment is effective as of the date and sole owner of Real Transportation Co., an requested information has been submit­ of issuance. unincorporated company under which style ted by AFRRI. Date of issuance: November 14, 1966. and firm name Mr. Newcomer does business. It further appears from the application Within 15 days from the date of pub­ For the Atomic Energy Commission. that Mr. Newcomer, besides being the sole lication of this notice in the Federal Director, owner of Real Transportation Co„ is also the Register, the applicant may file a re­ Division of Reactor Licensing. sole stockholder of RealAire. Mr. Newcomer’s quest for a hearing, and any person ownership and control both of RealAire and whose interest may be affected by this [F.R. Doc. 66-12570; Filed, Nov. 21, 1966; Real Transportation is, of course, subject to proceeding may file a petition for leave 8:45 a.m.] section 408 of the Act. Although the appli­ to intervene. Requests for a hearing and cation does not include a specific request for approval of such affiliation, the Board petitions to intervene shall be filed in will act on the matter on its own motion. accordance with the provisions of the RealAire is an applicant for domestic and Commission’s regulations (10 CFR Part CIVIL AERONAUTICS BOARD international airfreight forwarder authori­ 2) . If a request for a hearing or a peti­ [Docket No. 17655] zation and for the purpose of this proceeding tion for leave to intervene is filed within is considered to be an air carrier. Real the time prescribed in this notice, the LINEAS AEREAS COSTARRICENSES, Transportation Co. is an intrastate surface Commission will issue a notice of hearing S.A. (LACSA) carrier by motor vehicle. It is proposed that the company will serve as pickup and de­ or an appropriate order. Notice of Postponement of livery agent in the Los Angeles basin area for For further details with respect to this Prehearing Conference RealAire on a nonexclusive basis. amendment, see (1) the licensee’s ap­ No comments relative to the joint applica­ plication for license amendment dated Notice is hereby given that the pre- tion or request for a hearing have been May 27, 1966, and (2) a related Safety hearing conference on the above-entitled received. Evaluation prepared by the Test and application now assigned to be held on Notice of intent to dispose of the applica­ Power Reactor Safety Branch of the Di­ November 29, 1966, is postponed to De­ tion without a hearing has been published cember 13, 1966. The conference will in the F ederal Register, and a copy of such vision of Reactor Licensing, both of notice has been furnished by the Board to which are available for public inspection be held at 10 a.m., e.s.t., in Room 911, the Attorney General not later than the day at the Commission’s Public Document Universal Building, 1825 Connecticut following the date of such publication, both Room, 1717 H Street NW., Washington, Avenue NW., Washington, D.C., before in accordance with the requirements of sec­ D.C. A copy of item (2) above may be Examiner Herbert K. Bryan. tion 408(b) of the Act. obtained at the Commission’s Public Doc­ Upon, consideration of the joint applica­ Dated at Washington, D.C., November tion, it is concluded that Real Transporta­ ument Room or upon request addressed 17, 1966. to the Atomic Energy Commission, tion Co. is a common carrier within the [seal! F rancis B rown, meaning of section 408 of the Act, and that Washington, D.C. 20545, Attention: Di­ W. the common control of Real Transportation rector, Division of Reactor Licensing. * Chief Examiner. Co. and RealAire by Mr. Newcomer is subject [F.R. Doc. 66-12605; Filed, Nov. 21, 1966; to that section. Dated at Bethesda, Md., this 14th day 8:48 a.m.] However, it has been further concluded of November 1966. that such control relationships do not affect a carrier directly engaged in the operation For the Atomic Energy Commission. [Docket No. 17820] of aircraft in air transportation, do not result in creating a monopoly, and do not restrain P eter A. M orris, REALAIRE, ET AL. competition. Furthermore, no person dis­ Director, closing a substantial interest in the proceed­ Notice of Proposed Approval Division of Reactor Licensing. ing is currently requesting a hearing and it Application of RealAire et al., for ap­ is found that the public interest does not re­ [License No. R-84; Amdt. 11] quire a hearing. The control relationships proval of control and interlocking rela­ are similar to others which have been ap­ The Atomic Energy Commission (herein­ tionships pursuant to sections 408 and after referred to as “the Commission”) hav­ proved by the Board and essentially do not ing found that: 409 of the Federal Aviation Act of 1958, present any new substantive issues.1 It a. The application for amendment dated as amended, Docket 17820. therefore appears that approval of the control May 27, 1966, complies with the requirements Notice is hereby given, pursuant to the relationships would not be inconsistent with of the Atomic Energy Act of 1954, as amend­ statutory requirements of section 408(b), the public interest. However, should the that the undersigned intends to issue the drayage services now operated by Mr. New­ ed, and the Commission’s regulations set comer, doing business as Real Transportation forth in Title 10, Chapter I, CFR; order set forth below under delegated Co., be expanded, new issues would be raised h. Operations of the reactor in accord­ authority. Interested parties are hereby which could only be resolved upon the filing ance with the license, as amended, will not afforded a period of 15 days from the present undue hazard to the health and of a further application for prior approval safety of the public and will not be inimical date of service within which to file com­ by the Board. Accordingly, approval of the to the common defense and security; ments or request a hearing with respect instant relationships will be conditioned so c. Prior public notice of proposed issuance to the action proposed in the order. that such approval shall be effective only so of this amendment is not required since the long as the operation of motor vehicles by amendment does not involve significant Dated at Washington, D.C., Novem­ hazards considerations different from those ber 16,1966. 1 Cf. Mark IV Air Freight, Inc., et al., Docket previously evaluated. J. W. R osenthal, 16233, Order E-22451, July 19, 1965. See also On the basis described in the application Director, Trans-Pacific Air Cargo, et al., Docket 16029, for license amendment dated May 27, 1966, Bureau of Operating Rights. Order E-22158, May 13, 1965.

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 No. 226—Pt. I-----4 14792 NOTICES Mr. Newcomer, doing business as Real Trans­ the original notice of inquiry in this mat­ uled for December 19, 1966, to a date portation Co., is limited to the State of ter and the Commission’s supplemental early in January 1967; (2) cablegram California. notice in this matter and also for an ex­ from Luis Prado Martorell received No­ It is also found that interlocking relation­ vember 8, 1966, which requests an in­ ships within the scope of section 409 of the tension until February 1, 1967, of the Act will result from Mr. Newcomer being the time for filing reply comments. terview in Washington, D.C., as soon as sole owner of Real Transportation Co., while 2. In support of its motion, Comsat possible for discussion of matters relat­ concurrently he is sole stockholder, director alleges: ing to the proceeding; and (3) petition and president of RealAire. However, it is (a) Adequate comment on the previ­ for further prehearing conference filed concluded that a due showing has been made ous submissions requires thorough con­ November 15, 1966, by Luis Prado Mar­ in the form and manner prescribed by Part sideration of various legal, technical, and torell; and 251 of the Board’s Economic Regulations It appearing, that a further session of that the interlocking relationships will not economic factors; adversely affect the public interest. (b) That the questions raised in the prehearing conference would be useful Pursuant to authority duly delegated by supplemental notice of inquiry are of in resolving the procedure in view of the the Board in the Board’s regulations, 14 CFR major significance; present circumstances of this proceed­ 385.13, it is found that the foregoing control (c) That the recommendations of the ing; relationships should be approved under sec­ Carnegie Commission on Educational It is, therefore, ordered, This 16th day tion 408(b) of the Act without a hearing, Television expected early in January of November 1966, that a further session and that the interlocking relationships 1967, will contain recommendations on of prehearing conference in this proceed­ should be approved under section 409. ing will be held at 10 a.m., on Decem­ Accordingly, it is ordered: the future organization, scope, funding, 1. That the control relationships resulting and programing of American noncom­ ber 1, 1966, in the offices of the Commis­ from the common control by Mr. Newcomer mercial television which should be sion, Washington, D.C.; and of RealAire and Real Transportation Co. be studied and considered in the reply com­ It is further ordered, That the hearing and they hereby are approved; ments; and now scheduled for December 19, 1966, 2. That, subject to the provisions of Part (d) That unanticipated problems re­ and the dates for exchange of exhibits 251 of the Board’s Economic Regulations, as lated to the recent launch of Intelsat II and for notification as to witnesses, now in effect or as hereafter amended, the heretofore fixed, are continued to dates interlocking relationships resulting from the have placed a heavy burden on the staff ownership by Mr. Newcomer of Real Trans­ of Comsat and thus will make it difficult to be fixed at such further session of the portation Co. and his holding of the posi­ to complete preparation of its submission prehearing conference. tions above described in RealAire be and they by November 30, 1966. Released: November 16, 1966. hereby are approved; and 3. It appearing to the Commission that 3. That the approvals herein shall be effec­ good cause has been shown for a post­ F ederal Communications tive only so long as the operation of motor ponement as requested by Comsat and Commission, vehicles by Mr. Newcomer is limited to the that more thorough and meaningful re­ [seal] B en F. W aple, State of California. Secretary. Persons entitled to petition the Board for sponses will be available to the Com­ review of this order pursuant to the Board’s mission if the dates for filing comments [F.R. Doc. 66-12620; Filed, Nov. 21, 1966; regulations, 14 CFR 385.50, may file such and replies are postponed as requested by 8:49 a.m.] petitions within 5 days after the date of serv­ Comsat: ice of this order. It is ordered, That the motion of Com­ This order shall be effective and become the sat is granted and that the date for filing [Docket No. 16869; FCC 66M-1542] action of the Civil Aeronautics Board upon comments responsive to the submissions expiration of the above period unless within MEROCO BROADCASTING CO. such period a petition for review thereof is made to the original notice of inquiry filed, or the Board gives notice that it will and the Commission’s supplemental no­ Order Canceling Hearing Date review this order on it6 own motion. tice is postponed from November 30, In re application of Meroco Broad­ By: J.W.Rosenthal, 1966, to December 16, 1966, and the time casting Co., Greeley, Colo., Docket No. Director, for filing reply comments is postponed 16869, File No. BPH-5266; for construc­ Bureau of Operating Rights. from December 30, 1966, to February 1, 1967. tion permit. [seal] H arold R. Sanderson, Inasmuch as the hearing in the above- Secretary. Released: November 17,1966. entitled matter, presently scheduled for [F.R. Doc. 66-12606; Filed, Nov. 21, 1966; F ederal Communications November 21,1966, was advanced on oral 8:48 a.m.] Commission,1 motion of Meroco to October 27,1966, at [seal] B en F. Waple, which time the hearing was held: It is Secretary. ordéred, This 16th day of November 1966, that the hearing in the above matter [F.R. Doc. 66-12619; Filed, Nov. 21, 1966; presently scheduled for November 21, FEDERAL COMMUNICATIONS 8:49 a.m.] 1966, be, and the same is, hereby COMMISSION canceled. [Docket Nos. 16890,16891; FCC 66M-1534] Released: November 17, 1966. [Docket No. 16495; FCC 66-1040] LUIS PRADO MARTORELL AND F ederal Communications DOMESTIC NONCOMMON CARRIER AUGUSTINE L. CAVALLARO, JR. Commission, COMMUNICATION-SATELLITE FA­ [ seal] B en F. W aple, CILITIES Order Regarding Procedural Dates Secretary. Establishment by Nongovernmental In re applications of Luis Prado Mar- [F.R. Doc. 66-12622; Filed, Nov. 21, 1966; Entities; Order Extending Time for torell, Loiza, P.R., Docket No. 16890, File 8:50 a.m.] No. BP-16000; Augustine L. Cavallaro, Filing Comments and Reply Com­ Jr., Bayamon, P.R., Docket No. 16891, ments File No. BP-16182; for construction At a session of the Federal Communi­ permits. FEDERAL MARITIME COMMISSION cations Commission held at its offices in The Hearing Examiner having under MIDDLE ATLANTIC PORTS DOCKAGE Washington, D.C., on the 16th day of consideration the procedural status of ASSOCIATION November 1966: the above-styled proceeding and, in par­ 1. The Commission has under con­ticular, (1) petition to change hearing Notice of Agreement Filed for sideration a motion of the Communica­ date filed November 1, 1966, by counsel Approval tions Satellite Corporation (Comsat) for Augustine L. Cavallaro, Jr., request­ filed November 16, 1966, for an exten­ ing continuance of hearing now sched- Noticé is hereby given that the follow­ sion of time until December 16,1966, for ing agreement has been filed with tne the filing by it and others of comments 1 Chairman Hyde absent; Commissioners Commission for approval pursuant w responsive to the submissions filed to Bartley and Johnson dissenting. section 15 of the Shipping Act, 1916, as

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 NOTICES 14793 amended (39 Stat. 733, 75 Stat. 763, 46 cedure (18 CFR 1.8 or 1.10) on or before pretations, Chapter I of Title 18 of the U.S.C. 814). December 5, 1966. Code of Federal Regulations, as amend­ Interested parties may inspect arid ob­ Take further notice that, pursuant to ed, all permanent certificates of public tain a copy of the agreement at the the authority contained in and subject convenience and necessity granting ap­ Washington office of the Federal Mari­ to the jurisdiction conferred upon the plications, filed after April 15, 1965, time Commission, 1321 H Street NW., Federal Power Commission by sections 7 without further notice, will contain a Room 609; or may inspect agreements at and 15 of the Natural Gas Act and the condition precluding any filing of an in­ the offices of the District Managers, New Commission’s rules of practice and pro­ creased rate at a price in excess of that York, N.Y., New Orleans, La., and San cedure, a hearing will be held without designated for the particular area of pro­ Francisco, Calif. Comments with ref­ further notice before the Commission on duction for the period prescribed therein erence to an agreement including a re­ all applications in which no protest or unless at the time of filing such certifi­ quest for hearing, if desired, may be sub­ petition to intervene is filed within the cate application, or within the time fixed mitted to the Secretary, Federal Mari­ time required herein if the Commission herein for the filing of protests or peti­ time Commission, Washington, D.C. on its own review of the matter believes tions to intervene the Applicant indi­ 20573, within 20 days after publication that a grant of the certificates or the cates in writing that it is unwilling to of this notice in the F ederal R egister. authorization for the proposed abandon­ accept such a condition. In the event A copy of any such statement should also ment is required by the public conven­ Applicant is unwilling to accept such be forwarded to the party filing the ience and necessity. Where a protest or condition the application will be set for agreement (as indicated hereinafter), petition for leave to intervene is timely formal hearing. and the comments should indicate that filed, or where the Commission on its Under the procedure herein provided this has been done. own motion believes that a formal hear­ for, unless otherwise advised, it will be Notice of agreement filed for apporval ing is required, further notice of such unnecessary for Applicants to appear or by; hearing will be duly given: Provided, be represented at the hearing. Mr. Rene J. Gunning, Secretary-Treasurer, however, That pursuant to § 2.56, Part 2, J oseph H. G utride, Middle Atlantic Ports Dockage Association, Statement of General Policy and Inter- Secretary. 300 St. Paul Place, Baltimore, Md. Agreement No. 9025-2, between the Docket No. Pres- and Applicant Purchaser, field, and location Price per Mcf sure- members of the Middle Atlantic Ports date filed base Dockage Agreement modifies the basic agreement which provides for the estab­ G-13830______Chevron Oil Co., Western Di- El Paso Natural Gas Co., Blanco- 114. 2486 15.025 lishment of a cooperative working ar­ E 10-18-66 vision (successorio Standard Mesa Verde Field, San Juan Oil Co, of Texas, a division County, N. Mex. rangement with respect to the dockage of Chevron Oil Co.), Post of vessels at terminal facilities of the Office Box 599, Denver, Colo. member parties. The purpose of the 802Ò1. G-18721 ______El Paso Natural Gas Co., Aztec- 212. 2758 15.025 modification is to add to the scope of the E 10-18-66 Pictured Cliffs Field, San Juan agreement the dockage of vessels en­ County, N. Mex. G-19438______John R. Royall, 3575 First 12.0 15. 025 gaged in carrying of pig and scrap metal. C 10-31-66 National Bank Bldg., Dallas, Dakota Pool, San Juan County, Tex. 75202. N . Mex. Dated: November 17, 1966., G-20317______Chevron Oil Co., Western El Paso Natural Gas Co., Bisti- 314. 2678 15.025 E 10-18-66 Division (successor to Stand- Lower Gallup Field, San Juan By order of the Federal Maritime Com­ ard Oil Co. of Texas, a divi­ County, N. Mex. mission. sion of Chevron Oil Co.). homas isi C161-1299______Benco Drilling Co., Inc. ' Consolidated Gas Supply Corp., 25.0 15.325 T L , E 11-2-66 (successor to Pace Bower Freemans Creek District, Lewis Secretary. Construction Go.), c/o E. N . County, W. Va. Clark, agent, Post Office Box [P.R. Doc. 66-12611; Piled, Nov. 21, 1966; 3147, Charleston, W. Va. 8:49 a.m.] 25332. C162-78______Chevron Oil Co., Western El Paso Natural Gas Co., Escrito- 212.2295 15.025 E 10-18-66 Division (successor to ■ Gallup Field, Rio Arriba County, Standard Oil Co. of Texas, a N . Mex. division of Chevron Oil Co.). CI62-354 _____ Samedan Oil Corp. (Operator), Lone Star Gas Co., Sholem Alechem ‘ 16.0 14.65 FEDERAL POWER COMMISSION E 10-31-66 et al. (successor to The Field, Carter County, Okla. Gilmer Oil Co.), Post Office [Docket Nos. G-13830 etc.] Box 758, Ardmore, Okla. 73401. CHEVRON OIL CO., ET AL. C162-636______C. S. Sentell, M .D . (successor Arkansas Louisiana Gas Co., Darley « 13.333 15. 025 E 10-27-66 to Joseph B. Singer (Opera- Field, Claiborne Parish, La. Notice of Applications for Certificates, tor), et al.), c/o John M. * Shuey, attorney, 604 Johnson Abandonment of Service and Peti­ Bldg., Shreveport, La. 71102. tions To Amend Certificates 1 CI62-1312...... Benco Drilling Co., Inc. Consolidated Gas Supply Corp., 25.0 15. 325 E 11-2-66 (successor to Pace Bower Washington District, Calhoun N ovember 10,1966. Construction Co.). County, W. Va. C163-116...... - ____do______Consolidated Gas Supply Corp., . 25.0 15. 325 Take notice that each of the Appli­ E Ï1-2-66 Court House District, Lewis County, W. Va. cants listed herein has filed an applica­ C164-1108...... Trebol Drilling Co. (successor El Paso Natural Gas Co., Deep »15.5 14.65 tion or petition pursuant to section 7 of E 11-1-66 to Southern New Mexico Oil Lusk Unit Area, Lea and Eddy - v . the Natural Gas Act for authorization » Corp.), Post Office Box 3986, Counties, N. Mex. Odessa, Tex. 79760. to sell natural gas in interstate com­ CI64-1422-...... Ashland Oil & Refining Co., Oklahoma Natural Gas Gathering 11.0 14.65 merce or to abandon service heretofore C 10-31-66 Post Office Box 18695, Corp., acreage in Major County, Oklahoma City, Okla. 73118. Okla. authorized as described herein, all as CI65-2___ Arkla Exploration Co., et al., Arkansas Louisiana Gas Co., (7) more fully described in the respective D 10-28-66 Post Office Box 1126, acreage in Haskell County, Okla. Shreveport, La. 711Ó2. applications and amendments which are CI65-875______CWM and VLM Trust, El Paso Natural Gas Co., Basin 13.0 15.025 on file with the Commission and open to C 10-31-66 2300 First National Bank Dakota Field, San Juan public inspection. Bldg., Dallas, Tex. 75202. County, N. Mex. CI66-867______Chevron Oil Co., Western El Paso Natural Gas Co., 13.0 15.025 Protests or petitions to intervene may E 10-18-66 Division (successor to Huerfanito Mesa Verde Unit., oe filed with the Federal Power Commis­ Standard Oil Co. of Texas, a San Juan County, N . Mex. sion, Washington, D.C. 20426, in accord­ divisioreof Chevron Oil Co.). Filing code: A—Initial service. ance with the rules of practice and pro­ B—Abandonment. C—Amendment to add acreage. D —Amendment to delete acreage. w l s notice does not provide for con­ E—Succession. solidation for hearing of the several matters F—Partial succession. overed herein, nor should it be so construed. See footnotes at end of table.

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 14794 14794 Docket No. Pres- Docket No. Pres­ and Applicant Purchaser, field, and location Price per Mcf sure and Applicant Purchaser, field, and location Price per Mcf sure date filed base date filed base

C166-901 Robert E. Aikman, et al. d.b.a. Michigan Wisconsin Pipe Line Co., 17.0 14.65 CI67-561...... F. P. Schonwald Co., 900 Petro- Panhandle Eastern Pipe Line Co., w 20.4 14.65 C 10-27-66 A.I.K., Ltd., No. 2, c/0 Mocane-Laveme Field, Beaver A 10-31-66 leum Club Bldg., Oklahoma South Peek Field, Ellis County, Charles J. McPherren, County, Okla. City, Okla. 73102. Okla. attorney at law, 702 Vaughn CI67-562...... Wilbur J. Holleman Trust, 805 Natural Gas Pipeline Co. of Amer- 17.0 14.65 Bldg., Amarillo, Tex. 79101. A 10-31-66 National Bank of Tulsa Bldg., ica, South Taloga Field, Dewey CI66-984...... Amerada Petroleum Corp., 9.0 14.65 Tulsa, Okla. 74103. County, Okla. (CI63-678) • (successor to George L. Langlie-Mattix Field, Lea C167-563...... Sun Oil Co. (Southwest Divi- Tennessee Gas Pipeline Co.* a Depleted F 4-13-66 Buckles, et al.), Post Office County, N. Mex. B 10-28-66 sion), 1608 Walnut St., Phila- division of Tenneco Inc., Fitz- Box 2040, Tulsa, Okla. 74102. delphia, Pa. 19103. simmons and San Diego Fields, CI66-1050...... Jefferson Elk Oil & Gas Co., United Natural Gas Co., Knox (•) 14.73 Jim Wells and Duval Counties, A 4-28-66« Brockport, Pa. 15823. Dale Field, Jefferson County, Pa. Tex. 10-17-66 « CI67-572...... A. B. Blankenship, et al., c/o United Fuel Gas Co., acreage in 16.0 15.325 CI67-36--...... Texaco, Inc., Post Office Box 16.5 14.65 A 10-24-66 John T. Diederich, Attorney Martin County, Ky. A 7-11-66 52332, Houston, Tex. 77052. land Division, Reeves County, at Law, 500 Price Bldg., Ash­ 9-23-66 w Tex. land, K y. 41101. CI67-253...... "Walter C. Crane, et al. d.b.a. Carnegie Natural Gas Co., Union 20.0 15.325 CI67-573 16.0 15.325 V esta Fuel Co., 212 EastA 8-29-66 Vesta Fuel Co., 212 EastA District, Ritchie County, W. Va. A 10-24-66 Pierpoint St., Harrisville, CI67-574...... George W. Hale, et al., c/o John United Fuel Gas Co., acreage in 16.0 15.325 W. Va. A 10-24-66 T. Diederich, Attorney at Mingo COunty, W. Va. CI67-254...... do __ __ 20.0 15.325 Law, 500 Price Bldg., Ash­ A 8-29-66 land, Ky. 41101. CI67-255...... do _ - 20.0 16.325 CJ67-575...... 1.. Stephens Production Co., c/o Arkansas Louisiana Gas Co., acre- 15.0 14.65 A 8-29-66 A 10-31-66 W. R. Walker, Attorney in age in Le Flore County, Okla. CI67-256...... do 20.0 15.325 Fact, 35 South 7th St., Fort A 8-29-66 Smith, Ark. 72901. CT67-541 Texas Gulf Sulphur Co. (Oper­ Michigan Wisconsin Pipe Line Co., 12 20.625 15.025 CI67-576---____ Houston Natural Gas Produc- Tennessee Gas Pipeline Co., a divi- Depleted (CI64-781) ator), et al., 1803 Houston Jeanerette (North) Field, St. B 10-31-66 tion Co., Post Office Box sion of Tenneco, Inc., Morgan A 10-26-66 Club Bldg., Houston, Tex. Mary Parish, La. 1188, Houston, Tex. 77001. Field, San Patricio County, Tex. P 10-26-66 » 77002. CI67-577...... a- Tom M. Penn d.b.a. Penntex Trunkline Gas Co., acreage in 15.25 14.65 CI67-544...... Eagle Gas Co., Lumberport, Cumberland & Allegheny Gas Co., 22 20.0 15.325 A 10-31-66 Petroleum Co. (Operator), et Harris County, Tex. A 10-26-66 W. Va. 26386. North East Oakland No. 7 Field, al., 618 Caroline, Houston, Garrett County, Md. Tex. 77002. CI67-546...... Pan American Petroleum Corp. Transwestem Pipeline Co., North­ 17.0 14.65 CI67-578...... James V. Spankard, et al., 410 Consolidated Gas Supply Corp., 27.5 15.325 (CI61-737) (successor to Shell Oil Co.), east Catesby Field, Ellis County, A 10-28-66 Carlton House, Pittsburgh, Bell and Gaskill Townships, Jef- P 10-27-66 Post Office Box 591, Tulsa, Okla. Pa. 15219. ferson County, Pa. NOTICES Okla. 74102. CI67-579...... Big Sand Drilling Co., c/o John Equitable Gas Co., Salt Lick Dis- 25.0 15.325 CI67-547...... Creslenn Oil Co. (Operator), et Kansas-Nebraska Natural Gas Co., Depleted. A 10-31-66 S. Holy, attorney at law, trict, Braxton County, W. Va. B 10-27-66 al., 1111 Mercantile Dallas Inc., acreage in Logan County, Post Office Box 643, Weston, Bldg., Dallas, Tex. 75201. Colo. W. Va. 26452. CI67-552...... Charley Cain, Inez, Ky. 41224__ ' United Fuel Gas Co., acreage in 16.0 15.325 CI67-580______Diana Goff Cather and Laura Consolidated Gas Supply Corp., 20.0 15.325 A 10-24-66 Martin County, Ky. A 10-31-66 Goff Fireman, c/o Howard Oak Mound Farm, Harrison CI67-553...... Douglas Whitaker, Sklar Bldg., Texas Gas Transmission Corp., 16.75 15.025 Caplan, attorney, Post Office County, W. Va. A 10-28-66 Shreveport, La. 71102. South Bayou Mallet Field, Acadia Box 707, Clarksburg, W. Va. Parish, La. 26301. CI67-554...... United Mineral Development United Fuel Gas Co., Appalachian 16.0 15.325 CI67-582...... Caroline Hunt Sands and Loyd Michigan Wisconsin Pipe Line Co., Depleted A 10-25-66 Co., 3204 Carew Tower, Cin- Gas Field, Pike County, Ky. B 11-1-66 B. Sands, 1401 Elm St., Laveme Field, Beaver County, Cinnati, Ohio 45202. Dallas, Tex. 75202. Okla. CT67-5KK The Cove Gas. Co., c/o G. E. United Fuel Gas Co., acreage in 16.0 15.325 CI67-583...... Shell Oil Co., 50 West 50th St., Tennessee Gas Pipeline Co., a divi- Uneconomical A 10-27-66 Meabon, agent-, 2610 Collis Lincoln County, W. Va. B 11-1-66 New York, N.Y. 10020. sion of Tenneco, Inc., Riverside Ave., Huntington, W. Va. Field, Nueces County, Tex. 25701. CI67-584...... Champlin Petroleum Co. Northern Natural Gas Co., West >«17.0 14.65 CI67-556...... Nine Mile Oil & Gas Co., c/o 16.0 15.325 A 11-1-66 (Operator), et al., Post Office Tangier Field Area, Ellis and A 10-27-66 G. E. Meabon, agent, 2610 Box 9365, Fort Worth, Tex. Woodward Counties, Okla. Collis Ave., Huntington, W. 76107. Va. 25701. CI67-586...... Terteling Land Co., Post Office Texas Gas Transmission Corp., 17.0 15.025 CI67-557...... Irwin Miller, 805 First City Trunkline Gas Co., East Lake 19.5 15.025 A 11-1-66 Box 1428, Boise, Idaho 83701. Midland Field, Muhlenberg A 10-28-66 National Bank Bldg., Hous- Arthur Field, Jefferson Davis County, Ky. ton, Tex. 77002. Parish, La. CI67-587...... May Petroleum, Inc., et al., Cities Service Gas Co., Waynoka >« 14.0 14.65 CI67-558— ____ Oliver Jenkins Drilling Co., United Fuel Gas Co., acreage in 14 25. 0 15.523 A 11-2-66 1435 Republic National Bank . Area, Woods County, Okla. A 10-31-66 Post Office Box 869, Paints- Pike County, Ky. Bldg., Dallas, Tex. 75201. ville, Ky. 41240. C167-588...... E. L. Lusher, Lavalette, United Fuel Gas Co., acreage in 16.0 15.325 C167-559...... Annie Norton, et al., Post Office United Gas Pipe Line Co., Rodessa (15) A 11-2-66 W. Va. 25535. Mingo County, W. Va. B 10-31-66 Box 1666, Shreveport, La. Field, Caddo Parish, La. CI67-589...... Standard Oil Co. of Texas, a Natural Gas Pipeline Co. of Amer- 17.0 14.65 71102. A 11-2-66 division of Chevron Oil Co., ica, Mobeetie (Deep) Field, CT67-560 ____ Union Oil Co. of California, Panhandle Eastern Pipe Line Co., >«17.0 14.65 Post Office Box 1249, Wheeler County, Tex. A 10-31-66 Union Oil Center, Los Belva V Field, Woods County, Houston, Tex. 77001. Angeles, Calif. 90017. Okla. See footnotes at end of table.

FEDERAL REGISTER, VOL. 3 1 , N O . .— TUESDAY, NOVEMBER 22, 1966 NOTICES 14795

i Rate in effect subject to refund in Docket No. RI64-655. s Rate in effect subject to refimd in Docket No. RI64-585. regulations under the Natural Gas Act 3 Rate in effect subject to refund in Docket No. RI64-591. (§ 157.10) on or before December 12, < Rate in effect subject to refund in Docket No. RI63-467. 1966. * Subject to reduction for compression charges. «Rate in effect subject to refund in Docket No. RI65-35. Take further notice that, pursuant to i Uneconomical for Buyer to connect to well. the authority contained in and subject > Application previously noticed May 17,1966 in Docket Nos. 0-3250, et al. at a total initial rate of 25.0 cents per Mcf at 15.325 p.s.i.a. to the jurisdiction conferred upon the • Filing completed Oct. 17,1966. Supplemental filing reflects a rate of 24.0 cents per Mcf, when deliveries are under Federal Power Commission by sections 25 Mcf per day; 25.0 cents per Mcf, from 25 to 49 Mcf per day; 26.0 cents per Mcf, from 50 to 99 Mcf per day; 27.0 cents per Mcf, from 100 to 249 Mcf per day; 28.0 cents per Mcf, from 250 to 499 Mcf per day; 29.0 cents per Mcf, 500 Mcf or 7 and 15 of the Natural Gas Act and the over per day at 14.73 p.s.i.a. Commission’s rules of practice and pro­ io By amendment filed Sept. 23,1966 Applicant agreed to accept permanent certificate containing conditions similar cedure, a hearing will be held without to those imposed by Opinion No. 468, as modified by Opinion No. 468-A. n A portion of the acreage for which authorization is sought was acquired from Atlantic Richfield Co.—Docket No. further notice before the Commission on CI64-781. this application if no protest or petition is Subject to deduction (up to 2.0 cents) for compression, should Seller elect to compress. is In the event Buyer pays an increased or decreased price for other gas in the vicinity of said lease, price will be to intervene is filed within the time re­ increased or decreased accordingly.. quired herein, if the Commission on its m Includes 2.0 cents per Mcf transportation charge, is Gas is no longer available in commercial quantities, own review of the matter finds that a i* Subject to upward and downward B.t.u. adjustment. grant of the certificate is required by is Subject to upward and downward B.t.u. adjustment. Includes 3.4 cents upward adjustment, the public convenience and necessity. If i* Includes three-quarter cent per Mcf for dehydration. a protest or petition for leave to inter­ [F.R. Doc. 66-12532; Filed, Nov. 21,1966; 8:45 a.m.] vene is timely filed, or if the Commission on its own motion believes that a formal [Docket No. CP67-128] this application if no protest or petition hearing is required, further notice of to intervene is filed within the time re­ such hearing will be duly given. ALGONQUIN GAS TRANSMISSION quired herein, if the Commission on its Under the procedure herein provided CO. own review of the matter finds that a for, unless otherwise advised, it will be unnecessary for Applicant to appear or Notice of Application grant of the certificate and permission and approval for the proposed abandon­ be represented at the hearing. N ovember 15,1966. ment are required by the public conven­ J oseph H. Gutride, Take notice that on November 7, 1966, ience and necessity. If a protest or peti­ Secretary. Algonquin Gas Transmission Co. (Ap­ tion for leave to intervene is timely filed, [F.R. Doc. 66-12574; Filed, Nov. 21, 1966; plicant) , 1284 Soldiers Field Road,- Bos­ or if the Commission on its own motion 8:45 a.m.] ton, Mass. 02135, filed in Docket No. believes that a formal hearing is required, CP67-128 an application pursuant to further notice of such hearing will be sections 7(b) and 7(c) of the Natural duly given. [Docket No. CI67-624] Gas Act for permission and approval to Under the procedure herein provided abandon in place 0.67 mile of its lateral for, unless otherwise advised, it will be HUGOTON PRODUCTION CO. pipeline J-l in Lexington and Arlington, unnecessary for Applicant to appear or be Notice of Application Mass., and for a certificate of public represented at the hearing. N ovember 15,1966. convenience and necessity authorizing G ordon M. Grant, the construction and operation of 0.72 Acting Secretary. Take notice that on November 8, 1966, mile of 30-inch lateral pipeline, all as Hugoton Production Co. (Applicant), more fully set forth in the application [F.R. Doc. 66-12572; Filed, Nov. 21, 1966; Post Office Box 441, Garden City, Kans. which is on file with the Commission and 8:45 a.m.] 67846, filed an application pursuant to open to public inspection. section 7(b) of the Natural Gas Act for Applicant states that the Massachu­ [Docket No. CP67-130] permission and approval to abandon setts Department of Public Works has nupc pro tunc a producer sale in Stevens notified it that another portion of Mas­ COLUMBIA GULF TRANSMISSION CO. and Grant Counties, Kans., all as more sachusetts State Route 2 in Lexington Notice of Application fully set forth in the application which and Arlington, Mass., is scheduled to be is on file with the Commission and open regraded, widened, and improved com­ N ovember 14, 1966. to public inspection. mencing in the summer of 1967. Ap-' Take notice that on November 7, 1966, The sale from this area was originally plicant’s lateral pipeline in this area is Columbia Gulf Transmission Co. (Ap­ made to Panhandle Eastern Pipeline Co. in the existing right of way on a rev­ plicant), Post Office Box 683, Houston, in 1956 on a year to year basis until ocable permit and will conflict with the Tex. 77001, filed a “budget-type” appli­ proposed highway construction. There­ April 30, 1963, after which date such sale cation pursuant to section 7(c) of the was continued on a short-notice basis fore, Applicant states that it is necessary Natural Gas Act and § 157.7(b) of the for it to relocate approximately 0.67 mile regulations under the Act for a certificate until February 17, 1965, when such was of the existing lateral pipeline with ap­ of public convenience and necessity au­ terminated by mutual consent. proximately 0.72 mile of 30-inch lateral thorizing the construction and operation Protests or petitions to intervene may Pipeline in the immediate area. of certain facilities for the purchase and be filed with the Federal Power Commis­ The estimated overall capital cost of gathering of gas, all as more fully set sion, Washington, D.C. 20426, in accord­ Applicant's proposed relo ca tio n is forth in the application which is on file ance with the rules of practice and pro­ $305,500, which cost will be financed with the Commission and open to public cedure (18 CFR 1.8 or 1.10) and the through retained earnings. inspection. regulations under the Natural Gas Act or Potions to intervene may Applicant seeks authorization to con­ (§ 157.10) on or before December 12, . ffted with the Federal Power Commis­ struct during the calendar year 1967 and sion, Washington, D.C. 20426, in accord­ 1966. operate certain gas purchase facilities to Take further notice that, pursuant to ance with the rules of practice and pro- take into its certificated pipeline system cedure (18 CFR 1.8 or 1.10) and the regu- natural gas so purchased from producers the authority contained in and subject jK "* under the Natural Gas Act in the general area of its system from to the jurisdiction conferred upon the t !‘10) on or before December 12,1966. time to time as gas becomes available. Federal Power Commission by sections ake *urther notice that, pursuant to The total estimated cost of the pro­ 7 and 15 of the Natural Gas Act and the thority contained in and subject posed facilities will not exceed $500,000 Commission’s rules of practice and pro­ Jurisdiction conferred upon the and no single project will exceed $125,000. 7 i CPower Commission by sections Protests or petitions to intervene may cedure, a hearing will be held without • ana 15 of the Natural Gas Act and the be filed with the Federal Power Commis­ further notice before the Commission on J P » * ° * * rules of practice and pro- sion, Washington, D.C. 20426, in ac­ this application if no protest or petition furtb6’ a hearing will be held without cordance with the rules of practice and to intervene is filed within the time re­ her notice before the Commission on procedure (18 CFR 1.8 or 1.10) and the quired herein, if the Commission on its

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 14796 NOTICES own review of the matter finds that per­ and substantial economic interest in this mission and approval for the proposed Docket Nos. Date Name of applicant filed proceeding which is not adequately rep­ abandonment is required by the public resented by any other party and which convenience and necessity. If a protest CS67-20...... 10-11-66 John Yuronka, Operator, may be adversely affected by the Com­ or petition for leave to intervene is timely 120-C Central Bldg., mission’s action herein. filed, or if the Commission on its own Midland, Tex. 79701. The Commission finds: Good cause has CS67-21...... 10-19-66 W. C. Tyrrell Trust, c/o motion believes that a formal hearing is W. C. Tyrrell, Jr., been shown to allow the petitioners required, further notice of such hearing Trustee, Post Office Box named above to intervene in these pro­ will be duly given. 390, Beaumont, Tex. 77704. ceedings in order that they may estab­ Under the procedure herein provided CS67-22_____ 11- 3-66 E. T. Harkins, Post Office lish the facts and law from which the for, unless otherwise advised, it will be Box 4081, Midland, Tex. 79701. nature and validity of their alleged unnecessary for Applicant to appear or CS67-23_____ 11- 3-66 Robert F. Hicks, Post rights and interests may be determined be represented at the hearing. Office Box 4081, Mid­ and show what further action may be land, Tex. 79701. Gordon M. G rant, appropriate under the circumstances in the administration of the Natural Gas Acting Secretary. [FJfc. Doc. 66-12576; Filed, Nov. 21, 1966; [F.R. Doc. 66-12575; Filed, Nov. 21, 1966; 8:45 a.m.] Act. 8:45 a.m.] The Commission orders; (A) The petitioners named above are [Docket No. CP66-347] hereby permitted to intervene in these [Docket Nos. CS67-20 etc.] proceedings subject to the rules and MANUFACTURERS LIGHT AND HEAT regulations of the Commission: Pro­ JOHN YURONKA ET AL. CO. vided, however, That their participation shall be limited to matters affecting Notice of Applications for “Small Order Permitting Intervention, Pre­ Producer” Certificates 1 rights and, interests expressly asserted scribing Procedure and Setting in their petitions to intervene: And N ovember 15,1966. Hearing Date provided further, That permission to Take notice that each of the Applicants August 23,1966. intervene shall not be construed as rec­ listed herein has filed an application Notice of application in the above- ognition by the Commission that any pursuant to section 7(c) of the Natural entitled case was issued May 9, 1966 (31 intervener might be aggrieved by any Gas Act and § 157.40 of the regulations F.R. 7158). The final date for filing order entered in these proceedings. thereunder for a “small producer” cer­ protests and petitions to intervene was (B) A public hearing on the issues tificate of public convenience and neces­ June 6,1966. presented by the application in the sity authorizing the sale for resale and By application filed April 29,1966, pur­ above-entitled case will be held in a delivery of natural gas in interstate com­ suant to sections 7(b) and 7(c) of the hearing room of the Federal Power Com­ merce from the Permian Basin area of Natural Gas Act, The Manufacturers mission, 441 G Street NW., Washington, Texas and New Mexico, all as more fully Light and Heat Co., Pittsburgh, Pa. 15219, D.C., commencing at 10 a.m., on Decem­ set forth in the applications which are requested a certificate of public con­ ber 6, 1966. on file with the Commission and open venience and necessity authorizing it to (C) Parties who* intend to present to public inspection. increase firm sales and deliveries of nat­ evidence shall file with the Commission Protests or petitions to intervene may ural gas to its wholesale customers, and and serve on all parties and the Com­ be filed with the Federal Power Commis­ to construct and operate additional pipe­ mission’s staff on or before October 3, sion, Washington, D.C. 20426, in accord­ line facilities in West Virginia and Penn­ 1966, the proposed evidence comprising ance with the rules of practice and pro­ sylvania as follows: their cases in chief, including prepared cedure (18 CFR 1.8 or 1.10) on or before (1) A 3,240 horsepower compressor testimony of witnesses and exhibits. December 7, 1966. station on Line No. 1804 at Bruceton By the Commission. Take further notice that, pursuant to Mills, Preston County, W. Va.; the authority contained in and subject [seal] Joseph H. Gutride, (2) 51.5 miles of 20-inch extension of Secretary. to the jurisdiction conferred upon the its existing Line No. 1804 in Lancaster Federal Power Commission by sections and Chester Counties, Pa.; - [F.R. Doc. 66-12577; Filed, Nov. 21, 1966;. 7 and 15 of the Natural Gas Act and the (3) 21.7 miles of 20-inch extension of 8:46 a.m.] Commission’s rules of practice and pro­ its loop lin e No. 10110 in Chester, Mont­ cedure, a hearing will be held without gomery, and Bucks Counties, Pa.; [Docket No. G-11260] further notice before the Commission on (4) 1 mile of 4-inch lateral pipeline all applications in which no protest or and 4.3 miles of 6-inch lateral pipelines PECOS CO. petition to intervene is filed within the in Lancaster County, Pa. Order Amending Order Issuing Cer­ time required herein, if the Commission Manufacturers also requested author­ on its own review of the matter believes ization to abandon the following facili­ tificate of Public Convenience and that a grant of the certificates is required ties : Necessity, Redesignating FPC Gas by the public convenience and necessity. (5) 37.62 miles of multiple lines 138 Rate Schedule, Making Successor Where a protest or petition for leave to extending a distance of 12.54 miles from Co-Respondent, Accepting Quality intervene is timely filed, or where the Marietta to Manheim, Lancaster County, Statement and Accepting Agree­ Commission on its own motion believes Pa.; ment and Undertaking for Filing that a formal hearing is required, fur­ (6) 24.67 miles of multiple lines 138 ther notice of such hearing will be duly extending a distance of 10.69 miles N ovember 14, 1966. given. from Lititz to New Holland, Lancaster On August 19, 1966, Pecos Co. (Peti­ Under the procedure herein provided County, Pa. tioner) filed in Docket No. G-11260 a for, unless otherwise advised, it will be Petitions to intervene were filed by petition to amend the order issuing a unnecessary for Applicants to appear or Pennsylvania Gas and Water Co. (Penn certificate of public convenience and be represented at the hearing. Gas), Wilkes-Barre, Pa. 18701, on June necessity to Hunt Oil Co. (Operator) G ordon M. G rant, 6, 1966, and by The United Gas Improve­ (Hunt) in said docket by authorizing Acting Secretary. ment Co. (UGI), Philadelphia, Pa. 19105, Petitioner in lieu of Hunt to continue on July 27, 1966. the sale of natural gas to El Paso Natu­ 1 This notice does not provide for con­ Although UGI did not file its petition ral Gas Co. (El Paso) from the Wilshire solidation for hearing of the several matters to intervene within the time prescribed Gasoline Plant, Upton County, Tex., and covered herein, nor should it be so con­ in the notice of application, it stated further to authorize Petitioner in lieu of strued. matters showing that it has a direct Hunt to continue the operation of Hunt’s

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 NOTICES 14797 formerly held 50 percent interest in the amended by authorizing Petitioner to [Docket No. CS67-4, etc.] aforementioned Wilshire Gasoline Plant continue in lieu of Hunt the sale of nat­ and the appurtenant gathering facili­ ural gas and operation of Hunt’s 50 per­ M. B. RUDMAN ET AL. ties and properties associated therewith, cent interest in the Wilshire Gasoline Findings and Order After Statutory as more fully set forth in the instrument Plant, related properties and appurte­ Hearing Issuing Small Producer of assignment from Hunt to Petitioner nant gathering facilities. dated August 1, 1966, and in the subject (2) It is necessary and appropriate in Certificates of Public Convenience petition to amend. carrying out the provisions of the Nat­ and Necessity, Severirig and Ter­ Petitioner proposes to continue the ural Gas Act that Petitioner should be minating Proceeding, and Termi­ sale of natural gas pursuant to a con­ made co-respondent in the proceeding nating Certificate tract on file with the Commission as pending in Docket No. RI65-74, that said Hunt Oil Co. (Operator) FPC Gas Rate proceeding should be redesignated ac­ N ovember 14,1966. Schedule No. 31. Said rate schedule will cordingly, and that the agreement and Each Applicant herein has filed an ap­ be redesignated as that of Petitioner. undertaking submitted by Petitioner plication pursuant to section 7(c) of the The presently effective rate under said should be accepted for filing. Natural Gas Act and § 157.40 of the regu­ rate schedule is in effect subject to re­ (3) It is necessary and appropriate in lations thereunder for a small producer fund in Docket No. RI65-74 and Peti­ carrying out the provisions of the Nat­ certificate of public convenience and tioner has filed a motion to be made ural Gas Act that Hunt Oil Co. (Oper­ necessity authorizing the sale for resale co-respondent in said proceeding and ator) FPC Gas Rate Schedule No. 31 and delivery of natural gas in interstate has submitted an agreement and under­ should be redesignated as that of Peti­ commerce from the Permian Basin area taking to assure the refund of any tioner and that the related instrument of of Texas and New Mexico, all as more amounts collected in excess of the just assignment and quality statement be fully set forth in the applications and and reasonable rate determined in said accepted for filing. below. proceeding. Said agreement and under­ The Commission orders: Applicant in Docket No. CS67-4 has taking will be accepted for filing in the (A) The order issuing .the certificate heretofore been authorized in Docket No. abovementioned proceeding, Petitioner of public convenience and necessity in CI65-930 to sell gas from the Permian will be made co-respondent in said pro­ Docket No. G-11260 is amended to au­ Basin area. Said authorization also in­ ceeding and the proceeding will be re­ thorize Petitioner to continue in lieu cludes sales from the interests of Appli­ designated accordingly. Huntf will be of Hunt the sale of natural gas, operation cant in Docket No. CS67-5. The-*certifi­ responsible for any refunds required to of Hunt’s 50-percent interest in the cate issued in Docket No. CI65-930 has be made for the period prior to August 1, Wilshire Gasoline Plant, related prop­ not been accepted and no sales pursuant 1966, in Docket No. RI65-74 and Peti­ erties and appurtenant gathering facili­ thereto have been made. Therefore, tioner will be responsible for any refunds ties, and in all other respects said order said certificate will be terminated and required thereafter. will remain in full force and effect. the related rate schedule canceled. The Commission in Opinion Nos. 468 (B) Petitioner shall be a co-respond­ Other Applicants herein have not been and 468-A determined, inter alia, under ent in the proceeding pending in Docket authorized to sell gas from the Permian section 5(a) the just and reasonable rate No. RI65-74, said proceeding is redesig­ Basin area. Therefore, all of the small for the subject sale by Hunt. This deter­ nated accordingly,2 and the agreement producer certificates issued herein shall mination is equally applicable to Peti­ and undertaking submitted by Petitioner be effective on the date of initial delivery. tioner as Hunt’s successor. Such deter­ in said proceeding is accepted for filing. After due notice no petition to inter­ mination, however, has been stayed (C) Petitioner shall comply v.lth the vene, notice of intervention or protest to pending court review of the Permian refunding and reporting procedure re­ the granting of the applications has been opinion. The issuance of the certificate quired by the Natural Gas Act and sec­ received. herein is without prejudice to any action tion 154.102 of the regulations there­ At a hearing held on November 9,1966, the Commission may take under its under, and the agreement and undertak­ the Commission on its own motion re­ Permian opinion following court review. ing submitted by Petitioner in said pro­ ceived and made a part of the record in On April 20, 1966, Hunt submitted a ceeding shall remain in full force and this proceeding all evidence, including quality statement subsequently adopted effect until discharged by the Commis­ the applications and exhibits thereto by Petitioner for sales proposed to be sion. submitted in support of the authoriza­ made pursuant to Petitioner’s FPC Gas (D) Hunt Oil Co. (Operator) FPC Gas tions sought herein, and upon considera­ Rate Schedule No. 4, as so redesignated Rate Schedule No. 31 is redesignated as tion of the record, herein.1 Said quality statement con­ Pecos Co. (Operator) FPC Gas Rate The Commission finds: forms with the requirements of Opinion Schedule No. 4. The Assignment dated (1) Each Applicant herein is or will Nos. 468 and 468-A and it shall therefore August 1, 1966, is accepted for filing as be engaged in the sale of natural gas in be accepted. of that date and is designated as Sup­ interstate commerce subject to the juris­ plement No. 8 to Pecos Co. (Operator) diction of the Commission and each Ap­ Because Petitioner is a wholly owned FPC Gas Rate Schedule No. 4. The subsidiary of El Paso,-the issuance of the plicant is or upon commencement of quality statement filed April 20, 1966, service will be a “natural-gas company” certificate herein to Petitioner is without is accepted for filing and is designated within the meaning of the Natural Gas Prejudice to any action which may be as Supplement No. 9 to Pecos Co. (Op­ Act. taken by the Commission in any rate erator) FPC Gas Rate Schedule No. 4. Proceeding involving either Petitioner or (2) The sales of natural gas herein­ El Paso. (E) The authorization issued herein is before described, as more fully described without prejudice to any action which After due notice, no petitions to inter­ in the applications herein and in the the Commission may take in any future Appendix hereto, will be made in inter­ vene, notices of" intervention or protests rate proceeding involving either Peti­ to the granting of the petition have been state commerce subject to the jurisdic­ tioner or El Paso, or in the Permian tion of the Commission, and such sales received. proceeding following court review there­ The Commission finds: by Applicants, together with the con­ of. struction and operation of any facilities (1) It is necessary and appropriate in By the Commission. subject to the jurisdiction of the Com­ carrying out the provisions of the Natural mission necessary therefor, are subject ~ras Act and the public convenience and [ seal] J oseph H. G utride, to the requirements of subsections (c) necessity require that the order issuing Secretary. and (e) of section 7 of the Natural Gas ne certificate of public convenience and [F.R. Doc. 66-12578; Filed, Nov. 21, 1966; Act. necessity in Docket No. G-11260 be 8:46 am.] (3) Applicants are able and willing properly to do the acts and to perform r ; ^ rly Hunt Oil Co. (Operator) FPC 2 Hunt Oil Co. (Operator) and Pecos Co, the service proposed and to conform to Gas Rate Schedule No. 31. (Operator). the provisions of the Natural Gas Act

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 14798 NOTICES and the requirements, rules, and regula­ separate certificate applications and in­ [Docket No CP67-133] tions of the Commission thereunder. dividual rate schedules for future sales. SOUTHEASTERN INDIANA NATURAL (4) Applicants are or will be inde­ To the extent compliance with the terms pendent producers of natural gas who are and conditions of this order is observed, GAS CO., INC., AND TEXAS GAS not affiliated with natural gas pipeline the small producer certificates will still TRANSMISSION CORP. companies and whose total jurisdictional be effective as to those sales already in­ Notice of Application sales on a nationwide basis, together with cluded thereunder. sales of affiliated producers, were not in (D) The grant of the certificates is­ N ovember 15, 1966. excess of 10,000,000 Mcf at 14.65 p.s.i.a. sued in paragraph (A) above shall not be Take notice that on November 8, during the preceding calendar year. construed as a waiver of the require­ 1966, Southeastern Indiana Natural Gas (5) The sales of natural gas by Appli­ ments of section 7 of the Natural Gas Act Co., Inc. (Applicant), Milan, Ind. 47031, cants, together with the construction or Part 157 of the Commission’s regula­ filed in Docket No. CP67-133 an applica­ and operation of any facilities subject to tions thereunder, and is without preju­ tion pursuant to section 7(a) of the the jurisdiction of the Commission nec­ dice to any findings or orders which have Natural Gas Act for an order of the essary therefor, are required by the pub­ been or may hereafter be made by the Commission directing Texas Gas Trans­ lic convenience and necessity, and small Commission in any proceeding now mission Corp. (Respondent) to estab­ producer certificates of public conven­ pending or hereafter instituted by or lish physical connection of its trans­ ience and necessity therefor should be against the respective Applicants. Fur­ mission facilities to be constructed by issued as hereinafter ordered and con­ ther, our action in this proceeding shall Applicant and to sell and deliver volumes ditioned. not foreclose nor prejudice any future of gas to Applicant for resale and dis­ (6) It is necessary and appropriate proceedings or objections relating to the tribution, all as more fully set forth in in carrying out the provisions of the operation of any price or related pro­ the application which is on file with the Natural Gas Act that the proceeding visions in the gas purchase contracts Commission and open to public pending in Docket No. . CI65-930 should herein involved. Nor shall the grant of inspection. be severed from the proceeding pending the certificates, aforesaid for service to Specifically, Applicant seeks an order in Docket No. CP64—211, et al., that the the particular customers involved imply directing Respondent to make physical certificate issued in Docket No. CI65-930 approval of all of the terms of the re­ connection of its transmission facilities should be terminated and that the re­ spective contracts, particularly as to the with the facilities to be constructed by lated FPC gas rate schedule should be cessation of service upon termination of Applicant and to sell and deliver to Ap­ canceled. said contracts, as provided by section plicant volumes of natural gas for resale The Commission orders: 7(b) of the Natural Gas Act. Nor shall and distribution in the towns of Milan, (A) Small producer certificates of the grant of the certificates aforesaid be Moores Hill, and Versailles, Ind., and public convenience and necessity are construed to preclude the imposition of environs, located in Dearborn and Rip­ issued upon the terms and conditions of any sanctions pursuant to the provisions ley Counties, Ind. this order authorizing the sale for resale of the Natural Gas Act for the unauthor­ The estimated third year peak day and delivery of natural gas in interstate ized commencement of any sales subject and annual requirements of Applicant’s commerce by Applicants from the Per­ to said certificates. proposed service are 1,443 Mcf and mian Basin area of Texas and New (E) The proceeding pending in Docket 129,861 Mcf, respectively. Mexico, together with the construction No. CI65930 is severed from the proceed­ Protests or petitions to intervene may and operation of any facilities subject ing pending in Docket No. CP64-211, et be filed with the Federal Power Com­ to the jurisdiction of the Commission al.; the certificate heretofore issued in mission, Washington, D.C. 20426, in ac­ necessary therefor, all as hereinbefore Docket No. CI65-930 is terminated; and cordance With the rules of practice and described and as more fully described M. B. Rudman, et al., FPC Gas Rate procedure (18 CFR 1.8 or 1.10) on or be­ below and in the applications in this Schedule No. 3 is canceled. fore December 12, 1966. proceeding. (F) The certificates issued herein (B) The certificates granted in para­ shall be effective on the date of initial G ordon M. Grant, graph (A) above are not transferable delivery. Acting Secretary. and shall be effective only so long as By the Commission. [F.R. Doc. 66-12580; FUed, Nov. 21, 1966; Applicants continue the acts or opera­ 8:46 a.m.] tions hereby authorized in accordance [seal] J oseph H. Gutride, with the provisions of the Natural Gas Secretary. [Docket No. CP66—346] Act and the applicable rules, regulations, Appendix and orders of the Commission, and SOUTH TEXAS NATURAL GAS GATH­ particularly, Docket Canceled Termin- ERING CO. AND TRUNKLINE GAS (a) The subject certificates shall be No. and FPC gas ated certif- CO. filing Applicant rate icate applicable only to all previous and all date schedule docket future “small producer sales”, as defined No. Notice of Petition To Amend in § 157.40(a) (3) of the regulations un­ N ovember 15, 1966. der the Natural Gas Act, from the Per­ CS67-4____ M. B. Rudman, 3 C165-930.1 Take notice that on November 7, 1966, mian Basin area, 8-4—66 CS67-5...... Raymond A. (2) 0 . South Texas Natural Gas Gathering Co. (b) Sales shall not be at rates in ex­ 8-4-66 Williams, Jr. CS67-6____ Kermit Oil C o .. (Petitioner South Texas), Post Office cess of those set forth in § 157.40(b) (1) 8-12-66 Drawer 521, Corpus Christi, Tex. 78403, of the regulations under the Natural CS67-7____ W. Stewart and Trunkline Gas Co. (Petitioner 8-15-66 Boyle, et al. Gas Act, and CS67-14___ English Jack- Trunkline), Post Office Box 1642, (c) Applicants shall file annual state­ 8-10-66 son, Inc., et Houston, Tex. 77001, filed in Docket No. al. ments pursuant to § 154.104 of the regu­ CS67-17___ Jack O. McCall. CP66-346 a petition to amend the order lations under the Natural Gas Act. 10-7-66 issued in said docket on August 19, 1966, CS67-18___ Meadco Proper- construct (C) The certificates granted in para­ 9-20-66 ties, Ltd., et by requesting authorization to graph (A) above shall remain in effect al. and operate certain measuring and ap­ CS67-19___ N , S. Marrow... purtenant facilities and to increase the for small producer sales until the Com­ 10-11-66 mission on its own motion or on appli­ volumes of natural gas to be exchanged, all as more fully set forth in the peti­ cation terminates said certificates be­ 1 Certificate, issued in the proceeding in .Docket No. cause Applicants no longer qualify as CP64-211, et ài;, and not accepted by Applicant. tion to amend which is on file with the small producers or fail to comply with 2 Authorization has heretofore been issued in Docket Commission and open to public in­ No. CI65-930 to sell gas from Applicant’s interests the requirements of the Natural Gas Act, pursuant to M. B. Rudman, et al., FPC Gas Rate spection. the regulations thereunder, or the terms Schedule No. 3. By the order issued on August 19,1966, of the certificates. Upon such termina­ [F.R. Doc. 66-12579; Filed, Nov. 21, 1966; in the instant proceeding Petitioners tion Applicants will be required to file 8:46 a.m.] were granted authorization to make ex-

FEOERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 NOTICES 14799 changes of up to 15,000 Mcf of gas per The Peoples Natural Gas Co., Consoli­ cedure (18 CFR 1.8 or 1.10) on or before day. dated Gas Supply Corp., and The River December 14,1966. Petitioners specifically request that the Gas Co. and to sell an additional 1,224 abovementioned order be amended by Mcf of natural gas per day to the city G ordon M. G rant, authorizing an increase in the volumes of Somerset, Ky. Acting Secretary. of natural gas to be exchanged from No new facilities are required to ef­ [F.R. Doc. 66-12583; Filed, Nov. 21, 1966; 15,000 Mcf per day to 35,000 Mcf per day fectuate the proposed deliveries, which 8:46 a.m.] and by authorizing construction and op­ will be met through the use of unal­ eration of a new point of exchange be­ located capacity of facilities authorized tween Petitioners in Brazoria County, by the order of October 28, 1964. [Docket No. CP67-136] Tex. In addition Petitioners seek Protests or petitions to intervene may TOWN OF MONTEZUMA, IOWA, another point of exchange in Beauregard be filed with the Federal Power Commis­ AND NATURAL GAS PIPELINE Parish, La. Petitioner South Texas also sion, Washington, D.C. 20426, in accord­ COMPANY OF AMERICA seeks authorization for the purchase of ance with the rules of practice and pro­ gas from Bradco Oil and Gas Co., et al. cedure (18 CFR 1.8 or 1.10) and the reg­ Notice of Application (Bradco), in Calcasieu Parish, La., which ulations under the Natural Gas Act gas will be exchanged with Petitioner (§ 157.10) on or before December 12, N ovember 15, 1966. Trunkline at the new point of delivery 1966. "' . Take notice that on November 10,1966, in Beauregard Parish, La. Gordon M. G rant, the town of Montezuma, Iowa, filed in Bradco will pay for the metering and Acting Secretary. Docket No. CP67-136 an application pur­ suant to section 7 (a) of the Natural Gas regulating facilities at the additional de­ [F.R. Doc. 66-12582; Filed, Nov. 21, 1966; livery point in Beauregard Parish, La., 8:46 a.m.] Act for an order of the Commission and Petitioner Trunkline will furnish a directing Natural Gas Pipeline Company valve and tap at such additional de­ of America (Respondent) to establish livery point. The total estimated cost [Docket No. CP67-137] physical connection of its facilities with the facilities to be constructed by Appli­ of jurisdictional facilities to be built by TOWN OF BROOKLYN, IOWA, AND Petitioner Trunkline is $18,077. cant and to sell and deliver to Applicant Protests or petitions to intervene may NATURAL GAS PIPELIN E COM­ volumes of natural gas for resale and dis­ be filed with the Federal Power Commis­ PANY OF AMERICA tribution, all as. more fully set forth in the application which is on file with the sion, Washington, D.C. 20426, in accord­ Notice of Application ance with the rules of practice and pro­ Commission and open to public inspec­ cedure (18 CFR 1.8 or 1.10) and the reg­ N ovember 15,1966. tion. ulations under the Natural Gas Act Take notice that on November 10,1966, Applicant proposes to construct and (§ 157.10) on or before December 12, the town of Brooklyn, Iowa (Applicant), operate a municipal gas distribution sys­ 1966. filed in Docket No. CP67-137 an applica­ tem within its town borders and a lateral G ordon M. Grant, tion pursuant to section 7(a) of the line of sufficient length to transport its Acting Secretary. Natural Gas Act for an order of the own gas requirements as well as those Commission directing Natural Gas Pipe­ of the nearby town of Brooklyn, Iowa, [F.R. Doc. 66-12581; Piled, Nov. 21, 1966; from the interconnection with Respond­ 8:46 a.m.] line Company of America (Respondent) to establish physical connection of its ent’s main transmission line to Appli­ facilities with the facilities to be con­ cant’s town border. The town of Brook­ {Docket No. CP64r-5] structed by Montezuma, Iowa (Monte­ lyn; Iowa, has concurrently filed in zuma) , and to sell and deliver volumes of Docket No. CP67-137 an application for TEXAS EASTERN TRANSMISSION natural gas for resale and redelivery by an order of the Commission directing CORP. Montezuma to Applicant which will then Respondent to sell gas -to Applicant for redelivery to Brooklyn. Notice of Petition To Amend resell and distribute the gas in Applicant, all as more fully set forth in the applica­ Specifically, therefore, Applicant re­ N ovember 15,1966. tion which is on file with the Commission quests that Respondent be ordered to sell Take notice that on November 8, 1966, and open to public inspection. and deliver volumes of natural gas for re­ sale and distribution in Applicant and Texas Eastern Transmission Corp. (Peti­ Concurrent with this application, Brooklyn, Iowa. tioner), Post Office Box 2521, Houston, Montezuma has filed in Docket No. Tex. 77001, filed in Docket No. CP64-5 a CP67-136 an application for an order of The estimated third year peak day and petition to amend the order issued in annual requirements of Applicant alone the Commission directing Respondent to are 843 Mcf and 148,080 Mcf respec­ said docket on October 28, 1964, as sell and deliver to it volumes of natural tively. amended on April 5, 1965, and August gas for resale and distribution in Monte­ 24, 1965, by requesting authorization to Protests or petitions to intervene may zuma. It is proposed that the Hawkeye be filed with the Federal Power Commis­ sell additional volumes of natural gas Service Co. (Hawkeye) should construct sion, Washington, D.C. 20426, in accord­ to certain customers, all as more fully a lateral line extending from a Monte­ set forth in the petition to amend which ance with the rules of practice and pro­ zuma delivery point to Applicant’s town cedure (18 CFR 1.8 or 1.10) on or before is on file with the Commission and open border. Hawkeye will purchase from December 14,1966. to public inspection. Montezuma the gas intended for Appli­ By the order issued on October 28, cant and will resell such gas to Appli­ G ordon M. Grant, 1964, in the instant proceeding Petitioner cant for resale and distribution. Acting Secretary. w^s, authorized to construct and operate Specifically, Applicant requests that [F.R. Doc. 66-12584; Filed, Nov. 21, 1966; additional facilities to its pipeline sys­ Respondent sell and deliver to Monte­ 8:46 a.m.] tem to provide additional peak capacity zuma volumes of natural gas for redeliv­ to meet the increased requirements of its ery and resale to Hawkeye which will in customers over a 4-year period. Peti­ turn resell and redeliver such gas to Ap­ [Docket No. G-3699, etc.] tioner seeks authority herein to use a plicant for resale through Applicant’s ATLANTIC RICHFIELD CO. ET AL. Part of the unallocated capacity of the new distribution system. abovementioned order to serve certain Applicant’s total estimated third year Findings and Order; Correction customers. peak day and annual requirements are October 12,1966. Petitioner, therefore, requests that the 818 Mcf and 120,310 Mcf respectively. Atlantic Richfield Co. et al., Docket order of October 28, 1964, be amended Protests or petitions to intervene may Nos. G-3699, etc., George R. Brown, by authorizing Petitioner to sell on a be filed with the Federal Power Commis­ Docket No. G-12015 (G-17314), Petro­ ong-term basis 25,909 Mcf of natural sion, Washington, D.C. 20426, in accord­ leum Corp. of Texas (Operator), et al.. sas per day to the East Ohio Gas Co., ance with the rules of practice and pro­ Docket No. CI61-1157 (RI60-13), Cenard

No. 226—Pt. I---- 5 FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 14800 NOTICES

Oil & Gas Co., Docket No. CI66-1276, Dated at Washington, D.C., this 16th The data, views, or arguments pre­ Texaco Inc., Docket No. CI67-96. day of November 1966. sented orally or in writing will be avail­ In the findings and order after stat­ able for examination by interested utory hearing issuing certificates of By order of the Board of Governors. parties at the Federal Trade Commis­ public convenience and n e c e s s i t y , [seal] M erritt Sherman, sion, Washington, D.C. amending certificates, permitting and Secretary. The public hearing which will be held approving abandonment of service, ter­ on Wednesday, January 11, 1967, will minating certificate, terminating rate [F.R. Doc. 66-12598; Filed, Nov. 21, 1966; be before the full Commission. proceeding, substituting respondent, 8:47 a.m.] making "successors co-respondents, re­ Issued: November 21, 1966. designating proceedings, making rate By the Commission. change effective, accepting agreements FEDERAL TRADE COMMISSION [seal] J oseph W. Shea, and undertakings for filing, accepting Secretary. surety bond for filing, requiring filing of GRADING AND GRADEMARKING OF [F.R. Doc. 66-12500; Filed, Nov. 21, 1966; agreements and undertakings, and ac­ SOFTWOOD LUMBER cepting related rate schedules and sup­ 8:45 a.m.] plements for filing, issued September 19, Notice of Opportunity for Interested 1966, and published in the F ederal R eg­ Parties To Present Data, Views, or ister September 27, 1966 (F.R. Doc. 66- 10454, 31 F.R. 12652-12659); delete “(Op­ Arguments and Suggestions SECURITIES AND EXCHANGE erator), et al.” after George R. Brown Notice is hereby given that the Federal in paragraph 4; paragraph (11) of the Trade Commission will hold a public COMMISSION findings; ordering paragraph (W ); in hearing on Wednesday, January 11, [File Nos. 7-2621—7-2627] footnote 8 and also footnote 6 of the 1967, commencing at 10 a.m., e.s.t., in footnotes listed after the chart; and in Room 532, Federal Trade Commission ALLEGHENY POWER SYSTEM, INC. the chart after Docket No. G-12015. Building, Sixth Street and Pennsylvania ET AL. " . Correct Docket No. “CI66-1267” to Avenue, Washington, D.C., at which time Notice of Applications for Unlisted read “0166-1276”. and place all interested and affected par­ Trading Privileges and of Oppor­ ties may verbally present data, views, Insert “Geo. L. Buckles, et al.” in foot­ tunity for Hearing note 9 after Reserve Oil and Gas Co. arguments, and suggestions relevant to Insert the filing date “7-27-66” in the the grading and grademarking of soft­ November 15, 1966. chart after Docket No. CI67-96. wood lumber in the United States of In the matter of applications of the America. Written data, views, argu­ Boston Stock Exchange, for unlisted J oseph H. Gutride, ments, and suggestions will also be con­ trading privileges in certain securities. Secretary. sidered if mailed to the Secretary, Fed­ The above named national securities [F.R. Doc. 66-12573; Filed, Nov. 21, 1966; eral Trade Commission, Sixth Street and exchange has filed applications with the 8:45 a.m.] Pennsylvania Avenue NW., Washington, Securities and Exchange Commission D.C. 20580, on or before December 23, pursuant to section 12(f) (1) (B) of the 1966. Persons submitting written pres­ Securities Exchange Act of 1934 and entations exceeding two pages should file Rule 12f-l thereunder, for unlisted FEDERAL RESERVE SYSTEM 12 copies thereof, and persons desiring trading privileges in the common stocks [Reg. Y] to make verbal presentations at the hear­ of the following companies, which securi­ ing on Wednesday, January 11, 1967, ties are listed and registered on one or BANK HOLDING COMPANIES should notify the Secretary of the Com­ more other ^national securities ex­ mission to this effect, with an estimate changes : Annual Report Form of the time required for his verbal pres­ entation, not later than December 23, Allegheny Power System, Inc., File No. 7- The Board of Governors is considering 1966. 2621. the adoption of a revision of Form F.R. Fibreboard Corp., File No. 7-2622. Y -61 for use by a bank holding company -The purpose of this inquiry is to afford Household Finance Corp., File No. 7-2623. in submitting its annual report to the thé Commission the benefit of the views Kayser-Roth Corp., File No. 7-2625. Board pursuant to section 5(c) of the of all concerned to assist it in reaching Peabody Coal Co., File No. 7-2626. a determination as to what action, if any, Teledyne, Inc., File No. 7-2624. Bank Holding Company Act (12 U.S.C. Itek Corp., File No. 7-2627. 1844) and § 222.8 of this part. the Commission should take in the pub­ lic interest under the statutes adminis­ Upon receipt of a request, on or before This notice is published pursuant- to tered by it. section 553(b) of title 5, United States November 30, 1966, from any interested Code, and section 1 (b) of the rules of To assist the Commission, informa­ person, the Commission will determine tion and suggestions on the following whether the application with respect to procedure of the Board of Governors of points are desired: - any of the companies named shall be set the Federal Reserve System (12 CFR 1. Procedures presently employed in down for hearing. Any such request 262.1(b)). grademarking of softwood lumber. should state briefly the title of the se­ To aid in the consideration of this 2. Whether in fact there exists the act curity in which he is interested, the matter by the Board, interested persons or practice of misgrading, or mismark- nature of the interest of the person mak­ are invited to submit relevant data, ing such lumber, and if so, ing the request, and the position he pro­ poses to take at the hearing, if ordered. views, or arguments. Any such material 3. To what extent there is a failure to grademark softwood lumber. In addition, any interested person may should be submitted in writing to the submit his views or any additional facts Secretary, Board of Governors of the 4. Whether these or any other prac­ bearing on any of the said applications tices in connection with the grading, by means of a letter addressed to the Federal Reserve System, Washington, grademarking, or failure to grademark, D.C. 20551, or to the Federal Reserve Secretary, Securities and Exchange Com­ of softwood lumber results in deception mission, Washington 25, D.C.^ not later Bank of the district in which such inter­ of the American public and if sb the ex­ than the date specified. If no one re­ ested person is located, to be received not tent of such deception. quests a hearing with respect to any later than December 5,1966. 5. Possible remedies in the public in­ particular application, such application terest for any deceptive practices thus will be determined by order of the Com­ disclosed. 1 Filed as pkrt of the original document. mission on the basis of the facts stated Copies are available on request to the Board Interested persons are invited to sub­ therein and other information con­ of Governors of the Federal Reserve System mit any information pertinent to these tained in the official files of the Commis­ or to any Federal Reserve Bank. matters or other aspects of the subject. sion pertaining thereto.

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 NOTICES 14801

For the Commission (pursuant to dele­ address set forth above. Proof of such amount to Katy stockholders for sub­ gated authority). service (by affidavit or in case of an at­ scription at 100 percent of the principal [seal! Nellye A. T horsen, torney at law by certificate) shall be filed amount thereof on a nonunderwritten Assistant Secretary. contemporaneously with the request. At basis. Any Convertible Bonds not sub­ any time after said date, as provided by scribed for by stockholders will be of­ [F.R. Doc. 66-12591; Filed, Nov. 21, 1966; Rule 0-5 of the rules and regulations fered to the public for sale at 100 percent 8:47 a.m.] promulgated under the Act, an order of the principal amount thereof or higher disposing of the application herein may plus accrued interest by means of com­ {811-588] be issued by the Commission upon the petitive bidding. basis of the information stated in said Madison and National have separately FIRST SPRINGFIELD CORP. application, unless an order for hearing agreed with Katy that between them upon said application shall be issued they will purchase Convertible Bonds Notice of Application for Order De­ upon request or upon the Commission’s not purchased by others, up to a maxi­ claring That Company Has Ceased own motion. mum of $3,900,000. National’s agree­ To Be an Investment Company For the Commission (pursuant to dele­ ment is that if Madison’s purchases exceed $3 million, National will purchase November 16,1966. gated authority). one-half of the balance not purchased by Notice is hereby given that First [seal] Nellye A. T horsen, others up to a maximum commitment of Springfield Corp. (“applicant”),, 100 Assistant Secretary. $450,000 on its part. Madison’s commit­ Chestnut Street, Springfield, Mass. 01103, [F.R. Doc. 66-12592; Filed, Nov. 21, 1966; ment is for $3,450,000. a Massachusetts corporation and a 8:47 a.m.] Mr. Bernard H. Barnett is Chairman closed-end, nondiversified investment of the Board of National and is also a company registered under the Invest­ director of Madison and of Katy. Be­ ment Company Act of 1940 (“Act”) , has [812-2024] cause Mr. Barnett and members of his filed an application pursuant to section MADISON FUND, INC., AND MIS- family own approximately 5.7 percent of 8(f) of the Act for an order declaring the total number of National’s outstand­ that it has ceased to be an investment SOURI-KANSAS-TEXAS RAILROAD ing voting shares, National is an affiliated company. All persons are referred to the CO. - person of Mr. Barnett who is, because of application on file with the Commission Notice of Filing of Application his directorship, an affiliated person of for a statement of the representations Madison. made therein, which are summarized November 16, 1966. Section 17(a) of the Act, as here per­ below. Notice is hereby given that Madison tinent, may be deemed to prohibit Katy At a meeting of shareholders of Feb­ Fund, Inc. (“Madison”), 660 Madison from borrowing from Madison or from ruary 15, 1965, a plan of complete liqui­ Avenue, New York, N.Y. 10021, a Dela­ selling any security to Madison unless dation and dissolution was adopted. ware corporation registered as a closed- the Commission upon application pur­ Pursuant to that plan, applicant has end management investment company suant to section 17(b) grants an exemp­ ceased transacting business as an in­ under the Investment Company Act of tion from the provisions of section 17(a) vestment company, its portfolio has been 1940 (“Act”) , and the Missouri-Kansas- after finding that the terms of the pro­ sold, all of its known liabilities have Texas Railroad Co. (“Katy”), 701 Com­ posed transaction, including the con­ been paid, and its remaining assets have merce Street, Dallas, Tex. 75202, a Dela­ sideration to be paid, are reasonable and been distributed pro rata to its stock­ ware corporation, have filed a joint fair and do not involve overreaching on holders in cancellation of their shares. application pursuant to section 17(b) of the part of any person concerned, that Applicant made its final distribution of the Act for an order exempting from the the proposed transaction is consistent assets on February 11, 1966, and now provisions of section 17(a) of the Act the with the policy of each registered invest­ has no assets and no known liabilities. purchase by Madison from Katy of 7 per­ ment company concerned, and that it is Applicant has requested the Secretary of cent Convertible Collateral Trust Bonds consistent with the general purposes of State of Massachusetts to place it on the (“Convertible Bonds”), due January 1, the Act. list of corporations to be dissolved by 1977. Madison also has applied for an The proposed transactions may be the Massachusetts Supreme Judicial order pursuant to section 17(d) of the deemed to constitute transactions in Court. Act and Rule 17d-l thereunder for an which Madison and National, an affili­ Section 8(f) of the Act provides, in order permitting a joint arrangement ated person of an affiliated person of pertinent part, that when the Commis­ between Madison and National Indus­ Madison, are joint or joint and several sion, on application, finds that a regis­ tries, Inc. (“National”), a Kentucky participants within the meaning of sec­ tered investment company has ceased corporation, regarding their respective tion 17 (d) and Rule 17d—1 thereunder. to be an investment company, it shall so commitments to Katy to purchase cer­ Section 17(d) and Rule 17d-l prohibit declare by order, which may be made tain amounts of the Convertible Bonds. an affiliated person of an affiliated per­ upon appropriate conditions necessary All interested persons are referred to the son of a registered investment company for the protection of investors, and upon application on file with the Commission acting as principal to effect any trans­ the taking effect of such order the reg­ for a statement of the representations action in which such registered company istration of such company shall cease_to therein which are summarized below. is a joint or a joint and several partici­ be in effect. Madison and National own, respec­ pant with such affiliated person of an Notice is further given that any inter­ tively, 13.3 percent and 16.8 percent of affiliated person unless the Commission, ested person may, not later than Novem­ the total number of Katy shares out­ upon application under Rule 17d-l, ber 30, 1966, at 5:30 p.m., submit to th< standing. Madison and National are grants such application. Rule 17d-l Commission in writing a request for i therefore affiliated persons of Katy. states that the Commission shall con­ hearing on the matter accompanied by i Madison also owns $5,291,000 Subordi­ sider, in passing upon such application, statement as to the nature of his inter­ nated Income Debentures of Katy which whether the participation of such regis­ est, the reason for such request and th< cost Madison $1,889,709. tered investment company in such joint issues of fact or law proposed to b< Katy does not have sufficient funds to enterprise on the basis proposed is con­ controverted, or he may request that h( meet the maturity of 5 percent Adjust­ sistent with the provisions, policies and notified if the Commission shall ordei ment Mortgage Bonds Series A (“Mort­ purposes of the Act and the extent to a hearing thereon. Any such communi­ gage Bonds”) in the amount of $4,699,865 which such participation is on a basis cation should be addressed: Secretary due January 1, 1967. The only way different from or less advantageous than securities and Exchange Commission that Katy can raise money to pay the that of other participants. Washington, D.C. 20549. A copy of sucl Mortgage Bonds is to issue the Converti­ Madison states that an unaffiliated rajuest shall be served personally or bj ble Bonds. Katy proposes to obtain third party has agreed to purchase from au (airmail if the person being servec $4,041,000 to be applied toward payment Medison up to a maximum of $2 million is located more than 500 miles from th< of the said Mortgage Bonds on maturity, principal amount of the Convertible point of mailing) upon applicant at th< by offering Convertible Bonds in that Bonds which Madison purchases, from

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 14802 NOTICES

Katy, at the same price Madison pays Washington, D.C. 20549. A Copy of such Long- and-S hort Haul for such bonds. Madison has requested request shall be served personally or by on behalf of the third party that such mail (airmail if the person being served FSA No. 40793—Iron or Steel Articles party’s identity be accorded confidential is located more than 500 miles from the to Gulfport, Miss. Filed by O. W. South, treatment pursuant to section 45(a) of point of mailing) upon Madison and Jr„ agent (No. A4959), for interested raii the Act on the ground that such infor­ Katy at the addresses stated above. carriers. Rates on iron or steel plate mation is not relevant to the application. Proof of such service (by affidavit or in or sheet, noibn, in carloads, from Alton, The third party has also agreed to pur­ the case of an attorney at law by certifi­ East St. Louis, Federal and Granite City’ chase from Madison $3 million principal cate) shall be filed contemporaneously 111., to Gulfport, Miss. amount of Katy’s 5% percent Subor­ with the request. At any time after such Grounds for relief—Market competi­ dinated Income Debentures due 2033 and date, as provided by Rule 0-5 of the rules tion. owned by Madison, at the weighted aver­ and regulations promulgated under the Tariff—Supplement 85 to Southern age price at which such Debentures are Act, an order disposing of the application Freight Association, agent, tariff ICC S- traded on the New York Stock Exchange herein may be issued by the Commission 502. during the period between September 6, upon the basis of the information stated By the Commission. 1966, and the date Madison purchases the in said application, unless an order for Convertible Bonds, subject to a maxi­ hearing upon said application shall be [seal] H. N eil G arson, mum of 34 and a minimum of 30. On issued upon request or upon the Commis­ Secretary. October 14, 1966, the closing bid price of sion’s own motion. [F.R. Doc. 66-12607; Filed, Nov. 21, 1966; 8:48 a.m.] the Debentures was 24. Madison con­ By the Commission. tends that by reason of its agreement with the third party its commitment to [seal] N ell ye A. T horsen, Katy will involve an additional invest­ Assistant Secretary. [Notice 288] ment of Madison in Katy of only [F.R. Doc. 66-12593; Filed, Nov. 2.1, 1966; MOTOR CARRIER TEMPORARY $550,000. 8:47 a.m.] Madison’s Board of Directors has de­ AUTHORITY APPLICATIONS termined that to protect Madison’s in­ November 17,1966. [File No. 1-4371] vestment in Katy it is essential that Katy The following are notices of filing of be in a position to pay the Mortgage WESTEC CORP. applications for temporary authority un­ Bonds on maturity to prevent a reorgani­ der section 210a(a) of the Interstate zation in which Madison’s common stock Order Suspending Trading Commerce Act provided for under the investment, and possibly the Subordi­ N ovember 16,1966. new rules in Ex Parte No. MC 67 (49 nated Income Debentures, would most The common stock, 10 cents par value, CFR Part 240) published in the F ederal likely be worthless. The Convertible R egister, issue of April 27, 1965, effective Bonds will be senior to the Income of Westec Corp., being listed and regis­ tered on the American Stock Exchange July 1, 1965. These rules provide that Debentures in the event of insolvency on protests to the granting of an applica­ the part of Katy. The Convertible Bonds pursuant to provisions of the Securities Exchange Act of 1934 and all other se­ tion must be filed with the field official are convertible into Common Stock of named in the F ederal R egister publica­ Katy at the rate of $9 principal amount curities of Westec Corp., being traded otherwise than on a national securities tion, within 15 calendar days after the of bonds for each share of common stock. exchange; and date notice of the filing of the application The price range of Katy common stock is published in the F ederal R egister. varied during 1965 from a low of 6% to It appearing to the Securities and Ex­ change Commission that the summary One copy of such protest must be served a high of 11%. During 1966, the stock on the applicant, or its authorized repre­ ranged between a high of 13% in Febru­ suspension of trading in such securities on such Exchange and otherwise than on sentative, if any, and the protest must ary and a low of 4% in October. As of certify that such service has been made. November 3, 1966, the stock was quoted a national securities exchange is required in the public interest and for the protec­ The protest must be~ specific as to the at 5%. service which such protestant can and The Board of Directors of Madison, tion of investors; It is ordered, Pursuant to sections 15 will offer, and must consist of a signed considering the adverse consequences to original and six copies. Madison of a reorganization of Katy, (c)(5) and 19(a)(4) of the Securities Exchange Act of 1934, that trading in A copy of the application is on file, and the third party’s agreement to purchase can be examined, at the Office of the Sec­ $2 million of the Convertible Bonds from such securities on the American Stock Exchange and otherwise than on a na­ retary, Interstate Commerce Commis­ Madison and as part of the same transac­ sion^ Washington, D.C., and also in the tion to purchase $3 million of Katy’s In­ tional securities exchange be summarily suspended, this order to be effective for field office to which protests are to be come Debentures owned by Madison, the transmitted. interest rate of 7 percent on the Con­ the period November 17, 1966, through vertible Bonds and the conversion price November 26, 1966, both dates inclusive. M otor Carriers of Property of $9, has determined that a resultant By the Commission. No. MC 119864 (Sub-No. 37 TA), filed maximum purchase by Madison of $1,- November 14, 1966. Applicant: HOFER 450,000 of Convertible Bonds, amounting [seal] N ellye A. T horsen, Assistant Secretary. MOTOR TRANSPORTATION CO., 26740 to an additional investment of $550,000 of Eckel Road, Perrysburg, Ohio 43551. Ap­ Madison in Katy, is prudent and proper. [F.R. Doc. 66—12594; Filed, Nov. 21, 1966; plicant’s representative: Dale K. Craig Madison and Katy therefore represent 8:47 a.m.] (same address as applicant). Authority that the necessary statutory require­ sought to operate as a common carrier, ments for granting the requested exemp- by motor vehicle, over irregular routes as tive orders exist. follows: Matches, wooden or paper, when Notice is further given that any in­ INTERSTATE COMMERCE in combined shipments with canned or terested person may, not later than preserved foodstuffs, vegetable oil short­ November 30, 1966, submit to the Com­ COMMISSION ening, and cooking or salad oil, with the mission in writing a request for a hearing FOURTH SECTION APPLICATION weight of the matches not to exceed 25 on the matter accompanied by a state­ FOR RELIEF percent of the total weight of the ship­ ment as to the nature of his interest, ment, from the plantsite and storage the reason for such request and the issues November 17,1966. facilities utilized by Hunts Foods and of fact or law proposed to be contro­ Protests to the granting of an applica­ Industries, Inc., located at Willis Day verted, or he may request that he be no­ tion must be prepared in accordance with Industrial Park, near Rossford, Ohio, tified if the Commission shall order a Rule 1.40 of the general rules of practice which is in the commercial zone of the hearing thereon. Any such communica­ (49 CFR 1.40) and filed within 15 days city of Toledo, Ohio, to points in Indiana, tion should be addressed: Secretary, Se­ from the date of publication of this restricted to shipments originating in the curities and Exchange Commission, notice in the F ederal R egister. plantsite and storage facilities utilized

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 NOTICES 14803 by Hunts Foods $nd Industries, Inc., at DISTRIBUTORS, Rural Route 5, Brook- [Investigation and Suspension Docket No. Toledo, Ohio, and destined to points in ville, Ind. 47012. Applicant’s representa­ M—20877 (Sub-No. 1) ] Indiana, for 180 days. Note: Applicant tive : Jack B. Josselson, Atlas Bank Build­ CALIFORNIA, ARIZONA, NEW already has the authority to transport ing, Cincinnati, Ohio 45202. Authority MEXICO, TEXAS all of the above items to points in Indiana sought to operate as a contract carrier, from Rossford, Ohio, with the exception by motor vehicle, over irregular routes, Increased Rates and Charges of matches, wooden or paper. Support­ as follows: Caskets, casket displays, and ing shipper: Hunt Foods and Industries, funeral supplies when moving with cas­ Present: HowardFreas,Commissioner, Inc., 1645 West Valencia Drive, Fuller­ kets being transported, from Cincinnati, to whom the matters which are the sub­ ton, Calif. Send protests to: Keith D. Ohio, to New York, N.Y.; Catasaqua, Pa.; ject of this order have been assigned for Warner, District Supervisor, Bureau of East Haven, Conn.; Southington, Conn.; action thereon. Operations and Compliance, Interstate Providence, R.I.; Fall River, Mass.; It appearing, that by orders of the Commerce Commission, 5234 Federal Of­ Sioux Falls, S. Dak.; Fargo, N. Dak.; Commission, Board of Suspension, dated fice Building, 234 Summit Street, Toledo, Sioux City, Iowa; Hastings, Nebr.; Okla­ September 29 and 30, 1966, in the above- Ohio 43604. homa City, Okla.; Denver, Colo.; Fort entitled proceedings, respectively, in­ No. MC 125608 (Sub-No. 5 TA), filed Smith, Ark.; Little Rock, Ark.; Kansas vestigations were instituted into and con­ November 14, 1966. Applicant: VALER City, Mo.; Dade County, Fla.; St. Peters­ cerning the lawfulness öf the rates, LUPU, doing business as' VALER burg, Fla., for 150 days. Supporting charges, and regulations contained in TRANSPORTATION COMPANY, 18615 shipper: The Crane and Breed Casket schedules described in said orders; Dix Avenue, Melvindale, Mich. Appli­ Co., 1231 West Eighth Street, Cincinnati, It further appearing, that under sec­ cant’s representative: Frank J. Kerwin, Ohio 45203. Send protests to: District tion 216(g) of the Interstate Commerce Jr., 900 Guardian Building, Detroit, Supervisor R. M. Hagerty, Bureau of Act respondents have the burden of proof Mich. 48226. Authority sought to oper­ Operations and Compliance, Interstate to show that the proposed changed rates, ate as a contract carrier, by motor vehi­ Commerce Commission, 802 Century charges, and regulations are just and cle, over irregular routes, as follows: Malt Building, 36 South Pennsylvania Street, reasonable ; beverages, from Evansville and South Indianapolis, Ind. 46204. And it further appearing, that in order Bend, Ind., to Detroit, Mich., under a No. MC 127833 (Sub-No. 3 TA), filed that consideration be given to all factors continuing contract with Hamtramck November 14, 1966. Applicant: T. L. which may bear upon a proper deter­ Distributors of Hamtramck, Mich., and MYDLAND TRUCK LINE, INC., Post mination of the issues, including the Central Distributors of Pfeiffer & Bud- Office Box 10086, New Orleans, La. 70121. question whether the resulting revenues weiser Beer of Detroit, Mich., for 180 Authority sought to operate as a contract would be just and reasonable, it is i days. Supporting shippers: Hamtramck carrier, by motor vehicle, over irregular deemed appropriate in the public interest Distributors, 11618 Sobieski Avenue, routes, as follows: Nonalcoholic bever­ and pursuant to section 216(i) of the act Hamtramck, Mich. 48212; Central Dis­ ages, in cans, from Gretna, La., to Center, that the information specified below be tributors of Pfeiffer & Budweiser Beer, Crockett, El Campo, Henderson, Jack­ included in the record to be developed 795 South Oakwood Boulevard, Detroit, sonville, Longview, Marshall, Nacog­ in these proceedings; Mich. 48217. Send protests to: District doches, Lufkin, Texarkana, Tyler, Pitts­ And good cause appearing therefor : Supervisor Gerald J. Davis, Bureau of burg, and Victoria, Tex.; Memphis, It is ordered, That respondents be, and Operations and Compliance, 1110 Brod­ Tenn.; Little Rock, Camden, Pine Bluff, they are hereby, notified and required to erick Tower, 10 Withered, Detroit, Mich. Hope, El Dorado, Texarkana, Monticello, submit information and supporting data 48226. Forest City, and Hot Springs, Ark.; and which shall include, among other things, No. MC 125708 (Sub-No. 66 TA), filed Gordo, Ala.; for 180 days. Supporting actual cost and revenue data (including November 14, 1966. Applicant: HUGH shipper: The Louisiana Coca-Cola Bot­ anticipated revenue to show the effect of MAJOR, 150 Sinclair Avenue, South tling Co., Ltd., Post Office Drawer 50400, the proposed increase or decrease) and Roxana, 111. 62087. Authority sought to 1050 South Jefferson Davis Parkway, operating ratios specifically related to the operate as a common carrier, by motor New Orleans, La. 70150, Mr. Fred E. Lind, traffic and territories involved, overall vehicle, over irregular routes, as follows: Vice President. Send protests to: Wil­ operating ratios, detailed data to estab­ Lumber, pallets, and forest products, liam R. Atkins, District Supervisor, In­ lish the representative nature of the car­ from McLeansboro, 111., to Toledo and terstate Commerce Commission, Bureau riers used, and detailed data to disclose Perrysburg, Ohio, for 150 days. Sup­ of Operations and Compliance, T-4009 carrier-affiliate financial and operating porting shipper: John G. Baldwin Co., Federal Office Building, 701 Loyola Ave­ relationships and transactions, as gen­ McLeansboro, 111. 62859. Send protests nue, New Orleans, La. 70113. erally indicated by the admonitions in to: Harold Jolliff, District Supervisor, No. MC 128687 TA, filed November 14, General Increase—Middle Atlantic and Interstate Commerce Commission, Bu­ 1966. Applicant: LEO C. TAYLOR, 2711 New England Territories, 319 ICC 168, reau of Operations and Compliance, Manheim Road, Des Plaines, 111. 60018. and in General Increases—Transconti­ Room 476, 325 West Adams Street, Applicant’s representative: Robert H. nental, 319 ICC 792, and in addition all Springfield, 111. 62704. Levy, 29 South La Salle Street, Chicago, pertinent evidence and supporting data No. MC 126427 (Sub-No. 4 TA), filed 111. 60603. Authority sought to operate for the individual representative carriers November 14,1966. Applicant: PALMER as a contract carrier, by motor vehicle, as they relate to their overall operations TRANSPORTATION, INC., Chester, over irregular routes, as follows: Mali and specifically to the traffic and ter­ N.Y. 10918. Applicant’s representative: beverages, from Milwaukee, Sheboygan, ritories involved. Edward M. Alfano, 2 West 45th Street, and La Crosse, Wis., St. Louis, Mo., and It is further ordered, That the Com­ New York, N.Y. 10036. Authority sought Fort Wayne, Ind., to Chicago, 111., and mission will take official notice of all the to operate as a common carrier, by motor empty bottles and containers, on return respondent carriers’ financial statements vehicle, over irregular routes, as follows: movements, for 180 days. Supporting on file with the Commission. Cider, in bulk, in tank vehicles, from shipper: Charter Beers of America, Inc., It is further ordered, That the detailed Highland, N.Y., to East Northport, Long 3040 West 21st Place, Chicago, 111. Send data required to be submitted by re­ Island, N.Y., for 120 days. Supporting protests to: William E. Gallagher, Dis­ spondents regarding carrier-affiliate fi­ Shipper: Oak Tree Farm Dairy, Inc., trict Supervisor, Interstate Commerce nancial and operating relationships and East Northport, Long Island, N.Y. Send Commission, 1086 U.S. Courthouse and transactions shall include, with respect protests to: Charles F. Jacobs, District Federal Office Building, 219 South Dear­ to any and all individuals, partnerships, Supervisor, Interstate Commerce Com­ born Street, Chicago, 111. 60604. and corporations affiliated with respond­ mission, Bureau of Operations and Com­ By the Commission. ents, the following information: pliance, 215-217 Post Office Building, 1. Name of each affiliate from which Binghamton, N.Y. 13902. [seal] ' H. N eil Garson, respondent, during the year 1966, ac­ No. MC 126835 (Sub-No. 10 TA), filed Secretary. quired, leased, or purchased lands, build­ November 14, 1966. Applicant: EDGAR [P.R. Doc. 66-12608; Filed, Nov. 21, 1966; ings, equipment, materials, supplies, BISCHOFF, doing business as CASKET 8:48 a.m.] parts, tires, tubes, gasoline, oil, or other

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 14804 NOTICES property or services used by respondent ent or of an officer, director, or substan­ counsel, if any, on or before March 6, in its operations as a motor common tial stockholder of a respondent. 1967; carrier. d. Any corporation which exercises (5) Respondents desiring to cross-ex­ 2. Kinds of property or service which control over the operations or finances of amine witnesses who have submitted each affiliate supplies to respondent. respondent. verified statements may give notice in 3. Basis of charges for property or It is further ordered, That the traffic writing of such request to affiant and his services supplied by affiliate to respond­ studies to be submitted shall be based counsel, if any, on or before March 27, ent, including the base and rate for upon actual operations conducted during 1967; rental charges. identical periods of time for each carrier, (6) Copies of requests for cross-ex­ 4. Total charges by each affiliate to and the actual cost studies shall be based amination shall be filed simultaneously respondent during year 1966 for : upon the operations of the same carriers with this Commission and the Hearing a. Lease of vehicles. as used in the traffic studies; and that Examiner. Failure of any witness whose b. Lease of terminals. the periods of time selected for, as well as attendance is requested to appear at the c. Lease of other property. the motor carriers used in, such cost and hearing for cross-examination shall be d. Pickup and delivery of shipments. traffic studies shall be shown to be repre­ considered good cause for the rejection e. Repair and servicing of vehicles. sentative and their selection statistically of his verified statement; f. Management, accounting, financial, sound; (7) All underlying data used in the legal, purchasing, or traffic solicitation It is further ordered, That all of the preparation of evidence set forth in the services. required data specified in this order shall verified statements (with appendices, if g. Property sold by affiliate to re­ be based upon and reflect at least the any) shall be made available in the of­ spondent. most recent annual reporting period; fice of the party serving such verified 5. If the affiliate derives revenue from It is further ordered, That the detailed matter during usual office horns for in­ the sale or lease of property or from information called for by this order with spection by any party of record desiring services through transactions with per­ respect to carrier-affiliates, shall be in to do so; and that underlying data shall sons other than respondent, indicate the writing and shall be verified by a person be made available also at the hearing, percentage of the revenue of such busi­ or persons having knowledge thereof, and but only if and to the extent specifically ness to the total revenue of the affiliate in a verified original and two additional requested in writing and required by any the year 1966. copies, shall be mailed to the Secretary, party for the purpose of cross-examina­ 6. The detailed data regarding car­ Interstate Commerce Commission, Wash­ tion; rier-affiliate financial and operating re­ ington, D.C. 20423, in sufficient time to (8) Anyone desiring to become a party lationships and transactions required reach the Commission on or before Feb­ of record and to participate in the hear­ herein may be limited to the class I and ruary 6, 1967; and, in addition, that this ing, and receive and/or serve copies of II motor carrier respondents which are information is to be introduced into evi­ the evidence to be filed in accordance members of Interstate Freight Carriers dence by respondents but may be in sum­ with the procedure set forth above, must Conference, Inc., or Arizona Motor Tariff mary form, if so desired, cf. Surcharge on notify the Commission, in writing, on or Bureau, Inc., participating in the tariffs Small Shipments Within Central States, before January 16, 1967, a copy of such under investigation when such transac­ 63 M.C.C. 157; notification to be filed simultaneously tions individually or in the aggregate It is further ordered, That; with the Hearing Examiner. As soon as amount to $2,500 or more during the (1) The respondents and interveners practicable after such date a service list year 1966. in support thereof shall serve on the of all parties of record will be prepared 7. A copy of the income statements for parties of record on or before February and served by the Commission; each affiliate for the year 1966 and the 6, 1967, their direct evidence in the form (9) Evidence presented which fails to latest period of 1967 for which an income of verified statements (with appendices, conform to the above-outlined procedure statement is available where the carrier- if any); and that they also, at the same will not become a part of the record in affiliate financial or operating trans­ time, shall mail two copies to this Com­ these proceedings. actions fall within the provisions of mission, one copy to the Hearing Ex­ It is further ordered, That a copy of paragraph 6 above. aminer hereinafter named, together with this order be delivered to the Director, 8. A statement listing the amounts of certificates of service in accordance with Office of the Federal Register, for pub­ wages, salaries, bonuses, and other com­ Rule 1.22(a) of the general rules of prac­ lication in the F ederal R egister as pensation paid by the affiliate in 1966 to tice; and the executed original shall be notice to all interested persons. any individual who is also a respondent tendered at the hearing; And it is further ordered, That, to or an officer, director, or substantial (2) The protestants and interveners in avoid future unnecessary service upon stockholder of a respondent; or the wife- support thereof shall serve on the parties those respondents who, although par­ or close relative of a respondent or officer, of record on or before March 6, 1967, ticipating carriers in the tariff schedules director, or substantial stockholder of a their evidence in the form of verified which* are the subject of investigation respondent. statements (with appendices, if any); herein, are not actively interested in the 9. The term “affiliate” as used in this and that they shall comply also with the outcome of such investigation, subse­ order means : provisions in the preceding paragraph quent service on respondents herein of ». Any individual who is also a re­ regarding the mailing and service of notices and orders of the Commission spondent; an officer, director, or substan­ statements; will be limited to those respondents who: tial stockholder of a respondent; or the (3) These proceedings be, and they are (1) Have been identified by name in wife or close relative either of a respond­ hereby, referred to Hearing Examiner the order or orders of investigation ent, or of an officer, director, or substan­ Joseph T. Fittipaldi for hearing on April herein, tial stockholder of a respondent. 3, 1967, at 9:30 a.m., U.S. standard time (2) Specifically make written request b. Any partnership in which one of the at the Federal Building, 300 North Los to the Secretary of the Commission to partners is a respondent; an officer, Angeles Street, Los Angeles, Calif., for be included on the service list, or director, or substantial stockholder of a the purpose of receipt in evidence of the (3) Have appeared at a hearing. respondent; or the wife or close relative verified statements, cross-examination Dated at Washington, D.C., this 7th either of a respondent or of an officer, thereon if requested, and the introduc­ day of November A.D. 1966. director, or substantial stockholder of a tion of rebuttal evidence, and to permit the Hearing Examiner to close the By the Commission, Commissioner respondent. Freas. c. Any corporation whose stock is record; (4) Protestants desiring to cross-ex­ [seal] H. Neil Garson, wholly or partly owned by a respondent; Secretary. by an officer, director, or substantial amine witnesses who have submitted stockholder of a respondent; or by the verified statements may give notice in [F.R. Doc. 66-12609; Filed, Nov. 21, 1966; wife or close relative either of a respond­ writing of such request to affiant and his 8:49 a.m.]

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 FEDERAL REGISTER 14805

CUMULATIVE LIST OF PARTS AFFECTED— NOVEMBER

The following numerical guide is a list of the parts of each title of the Code of Federal Regulations affected by documents published to date during November.

3 CFR pa8e 7 CFR—Continued Page 7 CFR—Continued page Executive Orders: Proposed Rules—Continued P roposed Rules—Continued March 31, 1911 (revoked In 1003 _ 14402 1137 ______14407, 14523 part by PLO 4113)_____ 13995 1004 ______14402 1138 ______14407 April 13,1917 (revoked in part 1005 ______„ 14403 1205—______14441 by PLO 4118)______14555 1006 ______!______14402 11315______14729 1008 ____ 14403 8 CFR 1009 __ 14403 Proclamations: 212___ '______14674 1011 ______14403 316a___ 14629 3753 ______14379 1012 ______14402,14403 324______14078, 14629 3754 ______- 14381 1013 ______:______14402 327 ______14078,14629 1015 ___ 14402 328 _ 14078 5 CFR 1016 ______14402 329 ___ 14078 6 ___ — ______i______14744 1031 ______14406 330 ____ 14078 9______14744 1032 ______14028, 14406 332a______14078,14629 213____ 13935,14077,14260, 14629, 14673 1033 ______14403 499______14079,14629 1034______14403 6 CFR 1035____ (______14403 9 CFR 1036— !_____ 14403 Ch. III______— 14109 97______13939 503______13940 1038 _.______14406 1039 __ 14406 P roposed Rules: 7 CFR 1040 __ 14403 309...... 14005 52______14249 1041 ______14403,14777 314______14005 61______—______13936 1043 ______14403 Ch. II______14297 1044 __:______14406 10 CFR 250______14297 1045 ______14406 30______14349 301______14339,14451 1046 ______14403 32______14349 401______14302, 14303, 14491 1047 _.______14403 1048—______14403 Proposed Rules: 404______14304 35______14317 410____ ;___ 14491 1049 ______14403 706______13979 1050 __ 14028, 14406 717______— ______14673 1051 ______14406 12 CFR 71Q 1060______14407 1______14629 1062 ______14406 72213936, 14077,14254 7______14630 728____ 14383, 14673 1063 ______14406, 14523 208______13985 751------14254 1064 ______14406 211______14259 833------14390 1065 ______14407 P roposed Rules : 863___ 13937 1066—______.' 14407 1067 ______14406 526—______14415 905—______14543,14735 569______14415 906 _ 14348 1068 ___ 14407 1069 ______14407 907 ------14306, 14494, 14735 13 CFR 909------13939 1070 ______14406,14523 910— ______14307, 14495, 14736 1071 ______14406 108____ 14516 912— ______14495 1073______14406 121___ 14311, 14351, 14516, 14544, 14737 915_------14543 1075 ______14407 929------13984 1076 ______14407 14 CFR 971—------14585 1078 ______14406,14523 39——______13985, 981------13984 1079 ______14406,14523 13986, 14312, 14391, 14392, 14545- 987______14736 1090______14403 14547,14771. 991____ 14077 1094______14406 1096 _-______14406 71______13940, 1006______14495 13987,14260, 14261, 14392,14453, H03—____ 14586 1097 ______14406 14547, 14630, 14631, 14674, 14771 1205-----______14438,14771 1098 ______14403 1099 ______14406 73______13987, 14548, 14738 1421------14307 75______13940, 14393, 14631 1464_____ 14451 1101——______14403 1102 ______14406 95______13987, 14587 1483______14504 97______14262,14507, 14675 Ch. XVIII______r______14109 1103 ______14081,14406 1104 _ 14407 99—______13941 Proposed R ules: 1106______14407 296______14632 52______14081 1108______14406 297— ______^______14632 724__------14002,14560 1120______14407 302_____ 13942 811------. 14745 1125______14407 P roposed Rules: 814____------14457 1126—______;____ 14316, 14407 37__ 14599 815 ------14598 1127 ______—__ 14407 39______14005, 14006, 14407, 14686 816 ------14685 1128 ______14407 45__—______— ______14686 906------14359,14563 1129.____ 14407 47______14686 913------14316 1130 ______14407 71— ____ 14407- 987------14004 1131 _ 14407 14412,14457,14556-14559,14652- 989______14081,14316 1132— ___ 14407 14654,14687. 993------14402 1133 ______14407 73______14270, 14412, 14745 1001.------14402 1134 ______14407 75______14688 1002______14402 1136...... 1______14407 135______14413 14806 FEDERAL REGISTER

15 CFR Page 26 CFR Page 41 CFR—Continued Page Ch. m ______14506 l ______14632 11-1------14356,14515 601______14351,14773 11-7------14357 16 CFR Proposed Rules: 11-11------14357 13______— 14516- 179______14359 11-16------14553 14519, 14548-14550, 14587-14589 101-25------1------____ 14260 15___ .______14393, 14520, 14772 27 CFR 115______14394 6______14773 42 CFR roposed ules P R : P roposed Rules: 57__:______14592 412 ______14416 73______4______...... 14556 14000 413 _____ 14559 Proposed Rules 76______17 CFR 28 CFR 14785 0 ______14590 240______— ______— 13990 43 CFR 18 CFR 29 CFR P ublic Land Orders: 40______14773 5 (revoked in part by PLO 701______14716 102______703______14720 14313,14394 4111)------13995 1207______14644 1991 (revoked in part by PLO Proposed Rules: 1601______...... 14255 4110)______13994 141______i ______14786 P roposed Rules: 4096 (revoked in part by PLO 505______14314 4116)______14554 19 CFR 1207______13946 4106 ------13993 l______14313 4107 ______.______13994 4______13944,14394 31 CFR 4108 ______13994 8______14451 10 ______13992 4109 __ 13994 12______. 14543,14738 360______14684 4110 _____ 13994 13______14772 500______13945, 14506, 14775 4111 ______13995 16______14684 515______13945 4112 ______13995 25______14255 4113 ------13995 54______14520 32 CFR 4114 ------14554 P roposed Rules: 4115 _ 14554 743______14590 4116 ------14554 1______14685 4117 ------14554 8______14787 33 CFR 4118 ______14555 203______14454 Proposed Rules: 20 CFR 204 ______13992,14255 21______1'___ _ 14563 405______14808 207______14255 21 CFR 35 CFR 44 CFR 710______13995 19______13991,14349 67______14552 27______, ______14451 119______'___ 14269 121______14350,14351,14590 45 CFR 132______14551 36 CFR 703______13999 144______14590 P roposed Rules: 801______^ ______14357 148e______13991 7______14685 P roposed Rules: 47 CFR 45__ I_____ 14556 37 CFR 1 ______13999,14394 120______14359 1 ______13944 2 ______14395 121______14359 13______14591 130______14652 38 CFR 21______14394,14591 73______14395,14399,14400,14591 22 CFR 2______14454,14775 91______14400 3______13992,14454 41______14674 P roposed Rules: 21-; ______13992 50______- 14521 18__ !______14007 51______14521,14522 39 CFR 21______14318,14598 201______14079 73______14007,14413-14415 205______13993 96______14645 P roposed Rules: 49 CFR 24 CFR 31______14748 170______14080 200______14593 45______14523 203______14593 Proposed Rules: 207______- ___ 14594 41 CFR Ch. I______14599 170______14417 213______14594,14597 1-16____ 14738 220 _ 14594 9-1_____ 14649 221 _ 14595 9-2_____ 14649 50 CFR 1000______i______14596 9-3_____ 14649 32______14080, 9-7_____ 14649 14401, 14455, 14506, 14592, 14775, 25 CFR 9-9_____ 14649 14776. P roposed Rules: 9-15____ 14649 33______14000, 14456, 14648, 14776 221______13946 9-16____ 14649 301______14256 FEDERAL REGISTER VOLUME 31 • NUMBER 226 Tuesday, November 22, 1966 • Washington, D.C,

PA R T II

Department of Health, Education, and Welfare

Social Security Administration Health Insurance Program for the Aged

Principles of Reimbursement for Provider Costs and for Services by Hospital-based Physicians

No. 226—Pt. II----1 14808 RULES AND REGULATIONS

Subpart D— Principles of Reimbursement for Pro­ istration, in which case the same prin­ Title 20— EMPLOYEES’ vider Costs and for Services by Hospital-Based ciples are to be Used in making payment Physicians for services. BENEFITS Sec. (d) In consideration of the wide vari­ 405.401 Introduction. ations in size and scope of services of Chapter III— Social Security Adminis­ 405.402 Cost reimbursement; general. providers and regional differences that tration, Department of Health, Ed­ 405.403 Apportionment of allowable costs. exist, the principles are flexible on many 405.404 Methods of apportionment under ucation, and Welfare points.. They offer certain alternatives title x v m . and options designed to fit individual [Beg. 5] 405.405 Payment to providers. 405.406 Financial data and reports. circumstances and to allow time for those PART 405— FEDERAL HEALTH INSUR­ 405.415 Depreciation: allowance for depre­ providers who do not already collect the ciation based on asset costs. statistical and financial data necessary ANCE FOR THE AGED (1965-— ) 405.416 Depreciation: optional allowance for the reporting of costs to develop the for depreciation based on a per­ necessary records. Principles for Reimbursable Costs centage of operating costs. 405.417 Depreciation: allowance for depre­ (e) An important role of the fiscal in­ On June 2, 1966, there was published ciation on fully depreciated or termediary, in addition to claims proc­ in the F ederal Register (31 F.R. 7864) partially depreciated assets. essing and payment, and other assigned a notice of proposed rule making relating 405.418 Depreciation: allowance for depre­ responsibilities, is to furnish consulta­ to the principles for reimbursement for ciation on assets financed with tive services to providers in the develop­ provider costs for covered services fur­ Federal or public funds. ment of accounting and cost-finding pro­ nished to beneficiaries under title X V m 405.419 Interest expense. cedures which will assure them equitable of the Social Security Act (20 CFR Part 405.420 Bad debts, charity, and courtesy payment under the program. 405). Interested persons were given the allowances. 405.421 Cost of educational activities. § 405.402 Cost reimbursement ; general. opportunity to submit written comments 405.422 Research costs. within 30 days after publication. 405.423 Grants, gifts, and income from en­ (a) In formulating methods for mak­ Written submissions were received and dowments. ing fair and equitable reimbursement considered. Certain changes were made 405.424 Value of services of nonpaid workers. for services rendered beneficiaries of the in the proposed regulations pursuant to 405.425 Purchase discounts and allowances, program, payment is to be made on the and refunds of expenses. basis of current costs of the individual these comments. The following changes 405.426 Compensation of owners. are considered to be the most important. 405.427 Cost to related organizations. provider, rather than costs of a past pe­ (1) A new paragraph (g) discussing 405.428 Allowance in lieu of specific recog­ riod or a fixed negotiated rate. All nec­ the method for determining cost basis for nition of other costs. essary and proper expenses of an institu­ facilities purchased after July 1, 1966, 405.429 Return on equity capital of propri­ tion in the production of services, has been added to § 405.415. etary providers. including normal standby costs, are rec­ 405.451 Cost related to patient care. (2) Section 405.419 (b) and (c) has ognized. Furthermore, the share of the 405.452 Determination of cost of services to total institutional cost that is borne by been changed to recognize, as cost, in­ beneficiaries. the program is related to the care fur­ terest paid to partners, stockholders, 405.453 Adequate cost data and cost finding. 405.454 Payments to providers. nished beneficiaries so that no part of and related organizations on certain their cost would need to be borne by other loans. Authority: §§ 405.401-405.454 issued un­ patients. Conversely, costs attributable (3) Section 405.424 has been changed der secs. 1102, 1814(b), 1861 (v), and 1871, 49 to other patients of the institution are to include services of voluntary workers Stat. 647, as amended, 79 Stat. 296, 79 Stat. 322, 79 Stat. 331; 42 U.S.C. 1302, 1395 et seq. not to be borne by the program. Thus, generally in determining the value of the application of this approach, with voluntary services. § 405.401 Introduction. appropriate accounting support, will re­ (4) Section 405.427(c) has been sult in meeting actual costs of services to changed to provide an exception to the (a) Under the health insurance pro­ beneficiaries as such costs vary from in­ general principle on establishing costs gram for the aged, the amount paid to stitution to institution. where services are furnished by related any provider of services—i.e., hospital, (b) Putting these several points to­ organizations. extended care facility, or home health gether, certain tests have been evolved (5) Section 405.428(b) has been agency—for the covered services fur­ for the principles of reimbursement and changed to remove the limitation on the nished to beneficiaries is required by sec­ certain goals have been established that 2 percent allowance in lieu of specific tion 1814(b) and section 1833(a) (2) of they should be designed to accomplish. recognition of other costs and to indicate the Social Security Act to be the “rea­ In general terms, these are the tests or that in the case of proprietary facilities sonable cost” of such services. objectives: the percentage is l x/2 percent. (b) These principles of reimbursement (1) That the methods of reimburse­ (6) Section 405.429 has been added to and the related policies described in this ment should result in current payment provide an allowance for a reasonable subpart establish the guidelines and pro­ so that institutions will not be disad­ return on equity capital as a cost of cedures to be used by institutional pro­ vantaged, as they sometimes are under covered services furnished by proprietary viders, fiscal intermediaries, and the other arrangements, by having to put facilities. Social Security Administration in deter­ up money for the purchase of goods and Accordingly, Subpart D of Part 405, mining reasonable cost. services well before they receive reim­ Title 20, Code of Federal Regulations is (c) The principles of reimbursement bursement. amended by the addition of the rules set are to be applied on behalf of the pro­ (2) That, in addition to current pay­ forth below. The addition to Subpart gram by public and private organizations ment, there should be retroactive adjust­ D of Part 405, Title 20, shall be effective and agencies acting as fiscal intermedi­ ment so that increases in costs are taken upon publication in the F ederal aries in the payment of claims. These fully into account as they actually oc­ R egister. organizations and agencies are Selected curred, not just prospectively. after nomination by groups or associa­ (3) That there be a division of the Dated: November 15,1966. tions of hospitals. Extended care facili­ allowable costs between the beneficiaries [ seal 1 Robert M. Ball, ties and home health agencies may simi­ of this program and the other patients Commissioner of Social Security. larly nominate such intermediaries. The of the provider that takes account of the fiscal intermediaries are responsible for actual use of services by the beneficiaries Approved: Novehiber 15,1966. paying the bills of beneficiaries for cov­ of this program and that is fair to each ered services received in participating provider individually. Wilbur J. Cohen, hospitals and other institutions under the (4) That there be sufficient flexibility Acting Secretary of Health, medicare program. A provider may deal in the methods of reimbursement to be Education, and Welfare. directly with the Social Security Admin­ used, particularly at the beginning of the

KDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 RULES AND REGULATIONS 14809 program, to take account of the great depreciation allowed by the income tax viders that participate in the program. differences in the present state of de- laws will be permitted. Although fund- Available evidence shows that the use velopment of recordkeeping. ing of depreciation is not required, there of services by persons age 65 and over (5) That the principles should result is an incentive for it since income from differs significantly from other groups. in the equitable treatment of both non- funded depreciation is not considered as Consequently, the objective sought in the profit organizations and profitmaking an offset which must be taken to reduce determination of the title XVIII share organizations. the interest expense that is allowable of a provider’s total costs means that (6) That there should be a recogni- as a program cost. the methods used for apportionment tion of the need of hospitals and other (e) An allowance for costs not spe- must take into account the differences providers to keep pace with growing cifically recognized is included as an in the amount of services received by pa­ needs and to make improvements. element of allowable cost. The difficulty tients who are beneficiaries and other (c) As formulated herein, the princi- in measurement of certain costs, lack ofpatients served by the provider. pies give recognition to such factors as adequate data, various uncertainties in­ (d) The method of cost reimburse­ depreciation, interest, bad debts, educa- herent in the application of any cost ment most widely used at the present tional costs, compensation of owners, an formula at the present stage of cost time by third-party purchasers of in­ allowance for capital funds to secure, finding capabilities and other consid- patient hospital care apportions a pro­ preserve, and improve service-rendering eration have precluded specific recogni- vider’s total costs among groups served capabilities and an allowance for a rea- tion of various elements germane to costs on the basis of the relative number of sonable return on equity capital of of furnishing services. For all providers days of care used. This method, com­ proprietary facilities. With respect to except proprietary institutions, the al- monly referred to as average per diem allowable costs some items of inclusion lowance in lieu of specific recognition of cost, does not take into account varia­ and exclusion are: other costs is 2 percent of the total tions in the amount of service which a (1) An appropriate part of the net cost allowable costs, after exclusion of inter- day of care may represent and thereby of approved educational activities will be est expense and this allowance. For assumes that the patients for whom included. ^ proprietary providers the allowance in payment is made on this basis are (2) Costs incurred for research pur- lieu of specific recognition of other costs average in their use of service. poses, over and above usual patient care, is 1 y2 percent of total allowable costs (e) In considering the average per will not be included. after exclusion of interest expense, this diem method of apportioning cost for (3) Grants, gifts, and income from allowance, and the return allowed to such use under the program, the difficulty endowments will not be deducted from providers on their equity capital, encountered is that the preponderance operating costs unless they are desig- (f) A return on the equity capital of presently available evidence strongly nated by the donor fpr the payment of of proprietary facilities is an allowable indicates that the over-65 patient is not specific operating costs. \ cost in profit-making organizations. typical from the standpoint of average (4) The value of services provided by The rate of return may not exceed one per diem cost. On the average he stays nonpaid workers, as members of an orga- and one-half times the average long- in the hospital twice as long and there­ nization (including services of members term rate of interest on obligations is- fore the ancillary services that he uses of religious orders) having an agreement sued for purchase by the Federal Hospital are averaged over the longer period of with the provider to furnish such serv- Insurance Trust Fund. time, resulting in an average per diem ices, is includible in the amount that D .Ar . no . , „ , , cost for the aged alone, significantly be­ would be paid others for similar work. § 405-403 Apportionment of allowable low the average per diem for all patients. (5) Discounts and allowances received costs. (f) Moreover, the relative use of serv­ on the purchase of goods or services are (a) Consistent with prevailing prac- ices by aged patients as compared to reductions of: the cost to which they tice where third-party organizations pay other patients differs significantly among j for health care on a cost basis, reim- institutions. Consequently, considera­ (6) Bad debts growing out of the fail- bursement under the title XVIII health tions of equity among institutions are ure of a beneficiary to pay the deductible, insurance program involves a determi- involved as well as that of effectiveness or the coinsurance, will be reimbursed nation of (1) each provider’s allowable of the apportionment method under the a^ r ^2na- ^ e e®or^s collection). costs for producing services, and (2) the program in accomplishing the objective (7) Charity and courtesy allowances share of these costs which is to be borne of paying each provider fully, but only, are not includable, although “fringe by title XVIII. The provider’s costs are for services to beneficiaries. >-■ Benefit allowances for employees under to be determined in accordance with the (g) A further consideration of long- p^an be includable as part principles reviewed in the preceding dis- range importance is that the relative use 01 rsn 1 a compensa^ on- cussion relating to allowable costs; the of services by aged and other patients (8) A reasonable allowance of com- share to be borne by title XVIII is to be can be expected to change, possibly to a pensation for the services of owners in determined in accordance with princi- significant extent in future years. The prantmaking organizations will be al- pies relating to apportionment of cost. ability of apportionment methods used Providing their services are actu- (b) In the study and consideration de- under the program to reflect such change y performed in a necessary function, voted to the method of apportioning is an element of flexibility which has roimv» 111 developing these principles of costs, the objective has been to adopt been regarded as important in the formu­ reimoursement for the health insurance methods for use under title XVIII of the lation of the cost reimbursement prin­ program, all of the considerations in- Act that would, to the extent reasonably ciples. wpm ♦“L allowances f°r depreciation possible, result in the program’s share of (h) An alternative to the relative smtL* Ud‘ .* The Principles, as pre- a provider’s total allowable costs being number of 'days of care as a basis for sitnat-’ provi?e options to meet varied the same as the program’s share of the apportioning costs is the relative amount uauons. Depreciati°n will essentially provider’s total services. This result is of charges billed by the provider for manv .an.“^tprical cost basis but since essential for carrying out the statutory services to patients. The amount of rponrric + i i lons do n°t bave adequate directive that the program’s payments to charges is the basis upon which the cost Vida ar, 01 assets> the principles pro- providers should be such that the costs of hospital care is distributed among pa­ denrppiJf• allowance in lieu of such of covered services for beneficiaries tients who pay directly for the services w °n for. assets acquired before would not be passed on to nonbenefici- they receive. Payment for services on thp hic+ • a.sse‘is acquired after 1965, aries, nor would the cost of sendees for the basis of charges applies generally All a oeo4°nc t c,os*' basis must be used, nonbeneficiaries be borne by the pro­ under insurance programs where indi­ of «a • actually in use for production gram. viduals are indemnified for incurred ex­ t]tle ^VIII beneficiaries (c) A basic factor bearing upon ap- pense, a form of health insurance widely have hp^°fiiZed even though they may portionment of costs is that title XVIII held throughout the Nation. Also, for nth a IUUy or Partially depreciated beneficiaries are not a cross section of the Charges to patients are commonly a fac­ with S L purP°ses- Assets financed total population. Nor will they consti- tor in determining the amount of pay­ In genprai fu ds ^ ay be depreciated, tute a cross section of all patients re- ment to hospitals under insurance pro­ rai, tne options for accelerated ceiving services from most of the pro- grams providing service benefits, many

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 14810 RULES AND REGULATIONS of which pay “costs or charges, which­ costs are then combined in determining (c) Basically, therefore, interim pay­ ever is less” and some of which pay ex­ the amount of reimbursement under the ments to providers will be made for serv­ clusively on the basis of charges. In all program. Use of the combination meth­ ices throughout the year, with final of these instances, the provider’s own od will necessitate cost finding to deter­ settlement on a retroactive basis at the charge structure and method of itemiz­ mine the division of the provider’s total end of the accounting period. Interim ing services for the purpose of assessing allowable costs into the two parts, payments will be made as often as pos­ charges is utilized as a measure of the although it would be less involved than sible and in no event less frequently than amount of services received and as the for the first alternative, the department- once a month. The retroactive pay­ basis for allocating responsibility for by-department method. ments will take fully into account the payment among those receiving the pro­ (d) It is recognized that many hos­costs that were actually incurred and vider’s services. pitals and other providers do not cur­ settle on an actual, rather than on an (i) An increasing number of third- rently employ methods for ascertaining estimated basis. party purchasers who pay for services on the cost of the services they produce, (d) In addition to the basic procedure the basis of cost are developing methods either by departmental or other group­ for payment to a provider following the which utilize charges to measure the ings of services. Although the use of submission of bills to the intermediary, amount of services for which they have cost finding has become more extensive payment will be made upon request by responsibility for payment. In this ap­ among institutions in recent years, for the provider on a basis designed to re­ proach, the amount of charges for such a large number of providers use of the imburse currently as services are fur­ services as a proportion of the provider’s apportionment methods under the pro­ nished to beneficiaries. The amount of total charges to all patients is used to de­ gram will involve compiling information such payment will be computed by the termine the proportion of the provider’s needed as a basis for breaking down total intermediary initially on an estimated total costs for which the third-party pur­ costs into departmental costs or be­ basis and periodically adjusted to repre­ chaser assumes responsibility. The ap­ tween routine services and other serv­ sent the average level of services unreim­ proach is subject to numerous varia­ ices, as would need to be done at the end bursed by the basic payment procedure. tions. It can be applied to the total of of each accounting year. To avoid an § 405.406 Financial data and reports. charges for all services combined or it undue burden on providers and to allow can be applied to components of the ample time for all providers to adopt the (a) The principles of cost reimburse­ provider’s activities for which the cost-finding methods needed for the ap­ ment will require that providers main­ amount of costs and charges are ascer­ portionment methods under the pro­ tain sufficient financial records and tained through a breakdown of data gram, a temporary method may be used, statistical data for proper determination from provider’s accounting records. at the option of the provider, for ac­ of costs payable under the program. (j) For the application of the ap­ counting periods ending before January Standardized definitions, accounting, proach to components, which represent 1, 1968. Under this option, a provider statistics, and reporting practices which types of services, the breakdown of total may employ the combination method of are widely accepted in the hospital and costs is accomplished by “cost-finding” apportionment by using an estimated related fields are followed. Changes in techniques under which indirect costs percentage obtained from the intermedi­ these practices and systems will not be and nonrevenue activities are allocated ary as the basis for arriving at a division required in order to determine costs pay­ to revenue producing components for of total allowable costs between routine able under the principles of reimburse­ which charges are made as services are and other services. This estimated per­ ment. Essentially the methods of deter­ rendered. centage basis for division of costs will be mining costs payable under title XVIII accepted in lieu of actual cost finding as involve making use of data available § 405.404 Methods of apportionment the basis for the division in the initial from the institution’s basic accounts, as under title X V III. reporting period (s) of any provider of usually maintained, to arrive at equitable (a) The principles for reimbursement service. Furthermore, where there are_ and proper payment for services to under title XVIII of the act establish two special factors which make the appor­ beneficiaries. basic methods, either of which may be tionment methods difficult to apply, the , (b) Costs reports will be required from used at the option of a provider, for the intermediary may approve appropriate providers on an annual basis with report­ determination of the share of allowable adaptations to accomplish the objective ing periods based on the provider’s costs for which payment is to be made to of determining the share of the pro­ accounting year. In the interpretation the provider. vider’s allowable costs which is attribut­ and application of the principles of re­ (b) The first alternative is to apply able to services rendered to beneficiaries. imbursement, the fiscal intermediaries the beneficiaries’ share of total charges, will be an important source of consul­ on a departmental basis, to total costs for § 405.405 Payments to providers. tative assistance to providers and will be the respective departments. Use of this (a) The fiscal intermediaries will available to deal with questions and department-by-department method will establish a basis for interim payments to problems on a day-to-day basis. involve determination, by cost-finding each provider. This may be done by one methods, of the total costs for each of the of several methods. Where an inter­ § 405.415 Depreciation: allowance for institution’s departments that are reve­ mediary is already paying the provider depreciation based on asset costs. nue-producing; i.e., departments pro­ on a cost basis, the intermediary can ad­ (a) Principle. An appropriate allow­ viding services to patients for which just its rate of payment to an estimate of ance for depreciation on buildings and charges are made. the result under the title XVIII princi­ equipment is an allowable cost. The de­ (c) The second alternative is a com­ ples of reimbursement. Where no or­ preciation must be ; bination method. Under this method, as ganization is paying the provider on a (1) Identifiable and recorded in the applied to inpatient care, that part of a cost basis, the intermediary can obtain provider’s accounting records; provider’s total allowable cost which is the previous year’s financial statement (2) Based on the historical cost of the attributable to routine services (room, from the provider and, by applying the asset or fair market value at the time of board, nursing service) is to be appor­ principles of reimbursement, compute or donation in the case of donated assets; tioned on the basis of the relative num­ approximate an appropriate rate of pay­ and ber of patient days for beneficiaries and ment. The interim payment may be (3) Prorated over the estimated use­ for other patients; i.e., an average cost related to the last year’s average per ful life of the asset using the straight- per diem basis. The residual part of the diem, or to charges, or to any other line method or accelerated depreciation provider’s allowable cost, attributable to ready basis of approximating costs. under the declining balance or sum-ot- nonroutine or ancillary services, is to be (b) At the end of the period, the the-years’ digits methods. apportioned on the basis of the bene­ actual apportionment, based on the cost (b) Definitions— (1) Historical costs. ficiaries’ share of the total charges to finding and apportionment methods se­ Historical cost is the cost incurred by tne patients by the provider for nonroutine lected by the provider, will determine the present owner in acquiring the asset. or ancillary services. The amounts com­ title X V in reimbursement for the actual (2) Fair market value. Fair marke puted to be the program’s share of the services provided to beneficiaries during value is the price that the asset woui two parts of the provider’s allowable the period. bring by bona fide bargaining betwee

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 RULES AND REGULATIONS 14811 well-informed buyers and sellers at the funded depreciation will not be treated as of the cost of pre-1966 depreciable assets date of acquisition. Usually the fair a reduction of allowable interest expense. currently in use. market price will be the price at which (f) Gains and losses on disposal of (d) Allowance based on a percentage bona fide sales have been consummated assets. Gains and losses realized from of operating costs. (1) The allowance for assets of like type, quality, and quan­ the disposal of depreciable assets are to for depreciation based on a percentage tity in a particular market at the time of be included in the determination of al­ of operating costs is to be computed by acquisition. lowable cost. The extent to which such applying a specified percentage to a base (3) The straight-line method. Under gains and losses are includable is to be amount equal to the provider’s 1965 total the straight-line method of depreciation, calculated on a proration basis recogniz­ operating costs, without adjustments to the cost or other basis (e.g. fair market ing the amount of depreciation charged these principles or the current year’s al­ value in the case of donated assets) of under the program in relation to the lowable operating costs, whichever is the asset, less its estimated salvage value, amount of depreciation, if any, charged lower. The percentage to be applied if any, is determined first. Then this or assumed in a period prior to the pro­ would be five for 1966-67, four and one- amount is distributed in equal amounts vider’s participation in the program. half for 1967-68, and would so continue over the period of the estimated useful (g) Establishment of cost basis on to decline annually by equal amounts to life of the asset. purchase of facility as ongoing operation. become zero in 1976-77. (4) Declining balance method. Under In establishing the cost basis for a (2) When used as a base for deter­ the declining balance method, the annual facility purchased as an ongoing opera­ mining the optional allowance for de­ depreciation allowance is computed by tion after July 1, 1966, the price paid preciation, neither the 1965 operating multiplying the undepreciated balance by the purchaser shall be the cost basis costs nor the current year’s allowable of the asset each year by a uniform rate where the purchaser can demonstrate costs are to include any actual deprecia­ up to double the straight-line rate. that the sale was a bona fide sale and the tion, estimated depreciation on rented (5) Sum-of-the-years’ digits method. price did not exceed the fair market value depreciable-type assets, allowance in lieu Under the sum-of-the-years’ digits of the facility at the time of sale. The of specific recognition of other costs, or method, the annual depreciation allow­ cost basis for depreciation of depreciable return on equity capital. Such exclu­ ance is computed by multiplying the de­ assets shall not exceed the fair market sions are to be made only for the purpose preciable cost basis (cost less salvage value of those assets at the time of sale. of computing the allowance for deprecia­ value) by a constantly decreasing frac­ If the sale is not demonstrated to be bona tion based on operating costs. For other tion. The numerator of the fraction is fide, the seller’s cost basis shall be the purposes, the excluded amounts are rec­ represented by the remaining years of cost basis to the purchaser. ognized in determining allowable costs useful life of the asset at the beginning and for computing the costs of services of each year, and the denominator is § 405.416 Depreciation: optional allow­ rendered to the program beneficiaries always represented by the sum of the ance for depreciation based on a per­ during the reporting period. years’ digits of useful life at the time of cen tage o f operating costs. acquisition. (e) Change to actual depreciation. (c) Recording of depreciation. Ap­ (a) Principle. With respect to all as­ (1)A provider that elects this allowance propriate recording of depreciation en­ sets acquired before 1966, the provider, may at any time before 1976 change to compasses the identification of the de­ at its option, may choose an allowance actual depreciation on all pre-1966 de­ preciable assets in use, the assets’ his­ for depreciation based on a percentage preciable assets. In such case, this op­ torical costs, the method of depreciation, of operating costs. The operating costs tion is eliminated and the provider can estimated useful life, and the assets’ ac­ to be used are the lower of the provider’s no longer elect to receive an allowance cumulated depreciation. The Chart of 1965 operating costs or the provider’s for depreciation based on a percentage of Accounts published by the American current year’s allowable costs. The per­ operating costs. Hospital Association and publications of cent to be applied is 5 percent starting (2) Where the provider desires to the Internal Revenue Service are to be with the year 1966-67, with such per­ change to actual depreciation but either used as guides for the estimation of the centage being uniformly reduced by one- has no historical cost records or has in­ useful life of assets. half percent each succeeding year. The complete records, the determination of (d) Depreciation methods. (1) Pro­allowance based on operating costs is in historical cost could be made through ration of the cost of an asset over its addition to regular depreciation on assets appropriate means involving expert con­ useful life will be allowed on the straight- acquired after 1965; however, when the sultation with the determination being line, the declining balance, or the sum- optional allowance is selected, the com­ subject to review and approval by the of-the-years’ digits methods. The pro­ bined amount of such allowance on pre- intermediary. vider may choose to use one of the meth­ 1966 assets and the straight-line depreci­ (f) Determination of optional allow­ ods on a single asset or group of assets ation on assets acquired or rented after ance based on percentage of operating and another method on others. In ap­ 1965 may not exceed 6 percent of the costs illustrated. The following illus­ plying the declining balance or sum-of- provider’s allowable cost for the current trates how the provider would determine the-years’ digits method to an asset that year. the optional allowance for depreciation is not new, the undepreciated balance of (b) Definitions—(1) Operating costs. based on operating costs. the asset is to be treated as the cost of a Operating costs are the total costs in­ new asset in computing the depreciation. curred by the provider in, operating the Example No. 1.—The provider keeps its rec­ institution or facility. ords on a calendar year basis. The current , .1 A provider may change from the year’s actual allowable cost and the actual straight-line, method to an accelerated (2) Allowable costs. Allowable costs operating cost for 1965 do not include any method or vice versa upon advance ap- are the costs of a provider which are in­ actual depreciation or rentals on depreciable- P oval from the intermediary on a pros- cludable under the principles for cost re­ type assets. The current year’s allowable p ctive basis with the request being made imbursement; by the application of ap­ cost also does not include any allowance in fore the end of the first month of the portionment methods to the total amount lieu of specific recognition of other costs or reporting period. Only one of such allowable costs, the share of a return on equity capital. a«l!Change resPect to a particular provider’s total cost which is attributable Year 1966 nLay be made by a provider. to covered services for beneficiaries is funding of depreciation. Al- determined. Current year’s allowable cost__ $1,100, 000 rpm r^ ^ ^ H g °* depreciation is not (c) Application. Where a provider Operating cost for 19651______$1, 000, 000 rnw* “ is str°ngly recommended that has inadequate historical cost records Percent for determining the al­ of r.™ rs ase this mechanism as a means for pre-1966 depreciable assets, the pro­ lowance______5 funds for replacement of vider may elect to receive an allowance asse*'s» and coordinate their for depreciation on such assets based on Allowance______$50, 000 ™S3L °.f caPital expenditures with a percentage of operating costs. The 11965 operating cost was used in comput­ nitvrnio?anning activities of commu- optional allowance for depreciation for ing the allowance for depreciation based on for f,, j. ate agencies. As an incentive such assets may be used, however, a percentage of operating costs because it lunaing, investment income on whether or not a provider has records was lower than 1966 allowable cost.

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 14812 RULES AND REGULATIONS

Year 1967 allowance only is subject to a limitation Assume in this illustration that the pro­ Current year’s allowable cost___ $1, 200, 000 based on the provider’s total allowable vider had elected to use the declining bal­ operating cost for the current year. To ance method in computing its allowable de­ Operating cost for 19651______$1,000,000 preciation and the rental expense for de­ determine this limitation, compute the preciable-type assets was $3,500. In that Percent for determining the al­ sum of the actual depreciation claimed, lowance______4V£ case, it would include in its 1966 allowable the allowance based on a percentage cost not only the $46,000 allowance based Allowance______$45, 000 of operating costs and the estimated on operating costs but also $36,000 (in this straight-line depreciation on depreciable- Instance 2 X straight-line rate is used) in 11965 operating cost was used in comput­ type assets rented after 1965. If this actual depreciation and the rental expense ing the allowance for depreciation based on sum exceeds 6 percent of the provider’s of $3,500—or a total of $85,000 covering all a percentage of operating costs because it its depreciable assets. was lower than 1967 allowable cost. current year’s allowable cost (exclusive of any actual depreciation claimed, esti­ § 405.417 Depreciation: allowance for Year 1968 mated depreciation on rented depreci­ depreciation on fully depreciated or Operating cost for 1965— _____ $1, 000, 000 able-type assests, allowance in lieu of partially depreciated assets. specific recognition of other costs, and Current year’s allowable cost1-- $900,000 return on equity capital), the allowance (a) Principle. Depreciation on assets Percent for determining the al­ for depreciation based on a percentage of being used by a provider at the time it lowance______4 enters into the title XVIII program is operating costs will be reduced by the allowed; this applies even though such Allowance______j______$36, 000 amount of the excess. In applying this assets may be fully or partially depre­ limitation, if the actual depreciation ciated on the provider’s books. 1 The current year’s allowable cost was used claimed is on an accelerated basis it must in computing the allowance for depreciation be converted to a straight-line basis only (b) Application. Depreciation is al­ based on percentage of operating costs be­ lowable on assets being used at the time cause it was lower than 1965 operating cost. for use in calculating this limitation. It is presumed that pre-1966 assets will not the provider enters into the program. Example No. 2.—When the provider pays be retired at a greater than normal rate, This applies even though such assets may rent for depreciable-type assets rented prior be fully depreciated on the provider’s to 1966, the estimated depreciation on such and the limitation of 6 percent, as it af­ books or fully depreciated with respect assets must be deducted from the allowance. fects the availability of the allowance, is to other third-party payers. | So long as The following illustration demonstrates how designed as a safeguard where the pre­ an asset is being used, its useful life is the allowance is determined. sumption is not borne out. Where the considered not to have ended, and con­ The provider keeps its records on a calen­ provider does not elect to use the op­ dar year basis. The current year’s actual al­ tional allowance, the combined allowance sequently the asset is subject to deprecia­ lowable cost and the actual operating cost tion based upon a revised estimate of the for depreciation based on costs of pre- asset’s useful life as determined by the for 1965 did not include any actual deprecia­ 1966 assets and those subsequently ac­ tion, allowance in lieu~of specific recognition provider and approved by the interme­ of other costs, or return on equity capital. quired is not subject to the 6-percent diary. Correction of prior years’ depre­ However, such costs have been adjusted to limitation. ciation to reflect revision of estimated exclude estimated depreciation on rented Example No. 1.—The following illustration useful life should be made in the first depreciable-type assets. demonstrates how this limitation would be year of participation in the program Year 1966 determined. unless the provider has used the optional Year 1966 Adjusted current year’s allowable method (§ 405.416), in which case the cost______$1, 100, 000 The provider keeps its records on a calen­ correction should be made at the time of dar year basis. The current year’s actual discontinuing the use of that method. Adjusted operating cost for allowable cost and the actual operating cost When an asset has become fully depre­ 1965 1______$1, 000, 000 for 1965 have been adjusted to exclude actual ciated under title XVIII, further depre­ Percent for determining the al­ depreciation the estimated depreciation on ciation would not be appropriate or lowance______5 rented depreciable-type assets, allowance in allowable, even though the asset may lieu of specific recognition of other costs, and Allowance______$50, 000 return on equity capital. continue in use. For example, if a 50- Less estimated depreciation for year-old building is in use at the time depreciable-type assets rented Adjusted operating cost for 1965- $1, 000, 000 the provider enters into the program, prior to 1966 on which rental is Percent for determining the al­ depreciation is allowable on the building paid in 1966.______$3, 000 lowance______5 even though it has been fully depreciated In 1966 assets were acquired on the provider’s books. Assuming that Adjusted allowance______$47, 000 which produce a straight-line a reasonable estimate of the asset’s con­ depreciation of______$18,000 11965 operating cost was used in comput­ Estimated depreciation on assets tinued life is 20 years (70 years from the ing the allowance for depreciation based on rented in 1966______$2, 000 date of acquisition), the provider may a percentage of operating costs because it Adjusted allowable operating cost claim depreciation over the next 20 was lower than 1966 allowable cost. for 1966______$1,100, 000 years—if the asset is in use that long— Year 1967 Calculation of Allowance for Depreciation or a total depreciation of as much as Adjusted current year’s allowable Based on a Percentage of Operation Costs twenty-seventieths of the asset’s histor­ cost______$1, 200, 000 ical cost. If the asset is disposed of be­ Gross allowance: fore the expiration of its estimated use­ Adjusted operating cost for 5% times adjusted 1965 operating ful life*, the depreciation would be 19651______$1,000,000 costs ($1,000,000) ______$50,000 adjusted to the actual useful life. Like­ Percent for determining the al­ Estimated depreciation on assets wise, a provider may not have fully de­ lowance______4 y2 rented in 1966______2, 000 Straight-line depreciation on post- preciated other assets it is using and finds that it has incorrectly estimated Allowance______$45, 000 1965 assets______18, 000 Less estimated depreciation for the useful lives of those assets. In such depreciable-type assets rented Total______70, 000 cases, the provider may use the corrected prior to 1966 on which rental is 6% of adjusted 1966 allowable op­ useful lives in determining the amount of paid in 1967______$3, 000 erating cost______66, 000 depreciation, provided such corrections have been approved by the intermediary. Adjusted allowance______$42,000 Deduction in allowance_____ 4, 000 § 405.418 Depreciation: a l lo w a n c e for 1 1965 adjusted operating cost was used in Allowance______50, 000 depreciation on assets financed with. computing the allowance for depreciation Reduction______^______4, 000 Federal or public funds. based on a-percentage of operating costs be­ cause it was lower than 1967 adjusted Adjusted allowance______46, 000 (a) Principle. Depreciation is allowed allowable cost. Total depreciation allowance for 1966 on assets financed with Hill-Burton or ($18,000 actual depreciation plus other Federal or public funds. (g) Limitation on depreciation where $46,000 allowance based on operat­ (b) Application. Like other assets optional allowance is used. This optional ing cost)______64, 000 (including other donated depreciable

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 RULES AND REGULATIONS 14813 assets), assets financed with Hill-Burton affect the “bargaining” process that surance amounts are reimbursable under or other Federal or public funds become usually accompanies the making of a the program. a part of the provider institution’s plant loan, and could thus be suggestive of an (b) Definitions— (1) Bad debts. Bad and equipment to be used in rendering agreement on higher rates of interest or debts are amounts considered to be un­ services. It is the function of payment of unnecessary loans. Loans should be collectible from accounts and notes re­ of depreciation to provide funds which made under terms and conditions that a ceivable which were created or acquired make it possible to maintain the assets prudent borrower would make in arms- in providing services. “Accounts receiv­ and preserve the capital employed in the length transactions with lending insti­ able” and “notes receivable” are designa­ production of services. Therefore, irre­ tutions. The intent of this provision is tions for claims arising from the render­ spective of the source of financing of an to assure that loans are legitimate and ing of services, and are collectible in asset, if it is Used in the providing of needed, and that the interest rate is money in the relatively near future. services for beneficiaries of the program, reasonable. Thus, interest paid by the (2 ) Charity allowances. Charity al­ payment for depreciation of the asset is, provider to partners, stockholders, or lowances are reductions in charges made in fact, a cost of the production of those related organizations of the provider by the provider of services because of the services. Moreover, recognition of this would not be allowable. Where the indigence or medical indigence of the cost is necessary to maintain productive owner uses his own funds in a business, patient. capacity for the future. An incentive it is reasonable to treat the funds as in­ (3) Courtesy allowances. Courtesy for funding of depreciation is provided vested funds or capital, rather than allowances indicate a reduction in in these principles by the provision that borrowed funds. Therefore, where in­ charges in the form of an allowance to investment income on funded deprecia­ terest on loans by partners, stockholders, physicians, clergy, members of religious tion is not treated as a reduction of or related organizations is disallowed as orders, and others as approved by the allowable interest expense under § 405.419 a cost solely because of the relationship governing body of the provider, for serv­ (a) which follows. factor, the principal of such loans shall ices received from the provider. Em­ § 405.419 Interest expense. be treated as invested funds in the com­ ployee fringe benefits, such as hospital­ putation of the provider’s equity capital ization and personnel health programs, (a) Principle. Necessary and proper under § 405.429. are not considered to be courtesy allow­ interest on both current and capital (2 ) Exceptions to the general rule re­ ances. indebtedness is an allowable cost. garding interest on loans from controlled (c) Normal accounting treatment: re­ (b) Definitions—(1) Interest. Inter­ sources of funds are made in the follow­ duction in revenue. Bad debts, charity, est is the cost incurred for the use of ing circumstances. Interest on loans to and courtesy allowances represent re­ borrowed funds. Interest on current in­ providers by partners, stockholders, or ductions in revenue. The failure to col­ debtedness is the cost incurred for funds related organizations made prior to lect charges for services rendered does borrowed for a relatively short term. July 1, 1966, is allowable as cost, pro­ not add to the cost of providing the This is usually for such purposes as work­ vided that the terms and conditions of services. Such costs have already been ing capital for normal operating ex­ payment of such loans have been main­ incurred in the production of the penses. Interest on capital indebtedness tained in effect without modification sub­ services. is the cost incurred for funds borrowed sequent to July 1, 1966. Where the gen­ (d) Requirements of title XVIII. Title for capital purposes, such as acquisition eral fund of a provider “borrows” from a XVIII of the Act costs of covered services of facilities and equipment, and capital donor-restricted fund and pays interest furnished beneficiaries are not to be improvements. Generally, loans for to the restricted fund, this interest ex­ borne by individuals not covered by the capital purposes are long-term loans. pense is an allowable cost. The same health insurance program, and con­ (2 ) Necessary. Necessary requires that the interest: treatment is accorded interest paid by versely, costs of services provided for (i) Be incurred on a loan made to the general fund on money “borrowed” other than beneficiaries are not to be satisfy a financial need of the provider. from the funded depreciation account of borne by the health insurance program. Loans which result in excess funds or the provider or from the provider’s quali­ Uncollected revenue related to services investments would not be considered fied pension fund. In addition, if a rendered to beneficiaries of the program necessary. provider operated by members of a reli­ generally means the provider has not (ii) Be incurred on a loan made for a gious order borrows from the order, in­ recovered the cost of services covered by purpose reasonably related to patient terest paid to the order is an allowable that revenue. The failure of benefici­ care. cost. aries to pay the deductible and coinsur­ (ni) Be reduced by investment income (3) Where funded depreciation is used ance amounts can result in the related except where such income is from gifts for purposes other than improvement, re­ costs of covered services being borne by and grants, whether restricted or unre­ placement, or expansion of facilities or other than beneficiaries of title XVIII. stricted, and which are held separate and equipment related to patient care, allow­ To assure thatjyich covered service costs not commingled with other funds. In- able interest expense is reduced to ad­ are no- ‘ ooTne by others, cue costs at­ come from funded depreciation or pro­ just for offsets not made in prior years tributable to the deductible and coin­ vider’s qualified pension fund is nqt used for earnings on funded depreciation. A surance amounts which remain unpaid to reduce interest expense. similar treatment will be accorded de­ are added to the title XVIII share of allowable costs. Bad debts arising from ter3\ .Proper- Pr°Per requires that in- posits in the provider’s qualified pension fund where such deposits are used for other sources are not allowable costs. nf ,! v> lncurred at a rate not in exce other than the purpose for which the (e) Criteria for allowable bad debt. ho a Prudent borrower would ha fund was established. A bad debt must meet the following aa to pay in the money market existii (4) Allowable interest expense on cur­ criteria to be allowable: (1) The debt must be related to ,.re 4lme l°an was made, rent indebtedness of a provider will be adjusted to reflect the extent to which covered services and derived from de­ thrm, u paid to a lender not relat< ductible and coinsurance amounts. «¡nriJi i c?ntr°l or ownership, or pe working capital needs which are attrib­ , q relationship to the borrowing orgi utable to covered services for benefici­ (2) The provider must be able to es­ if «X** However, interest is allowafc aries have been met by payments to the tablish that reasonable collection efforts provider designed to reimburse cur­ were made. d paid loans from the Providei (3) The debt was actually uncollect­ D PP i? Stricted funds, the funded d rently as services are furnished to bene­ l , account, or provider’s qua] ficiaries. ible when claimed as worthless. ne Charging of bad debts and bad relatedn+^rs or tending organizations n< courtesy allowances are deductions from debt recoveries. The amounts uncollec­ revenue and are not to be included in tible from specific beneficiaries are to be Person*,thr?UF.h c°ntrol, ownership, < charged off as bad debts in the account­ Presen oa ralationship to the borrowe allowable cost; however, bad debts at­ e of any of these factors cou ing period in which the accounts are tributable to the deductibles and coin- deemed to be worthless. In some cases FEDERAL REGISTER, VOL. 31, NO. 226—TUESDAY, NOVEMBER 22, 1966 14814 RULES AND REGULATIONS an amount previously written off as a bad dental internships and residency pro­ grams now being conducted by provider debt and allocated to the program may grams, recognized professional and para­ institutions, and their approving bodies, be recovered in a subsequent accounting medical educational and training pro­ include the following: period; in such cases the income there-- Program Approving bodies from must be used to reduce the cost of beneficiary services for the period in (!) Cytotechnology- Council on Medical Education of the American Medical Association in collaboration with the Board of Schools which the collection is made. of Medical Technology of the American Society of (g) Charity allowances. Charity al­ Clinical Pathologists. lowances have no relationship to bene­ (2 ) Dietetic .internships___ The American Dietetic Association. ficiaries of the health insurance program (3) Hospital ¿administration Members of the Association of University Programs in and are not allowable costs. The cost residencies. Hospital Administration. to the provider of employee fringe-bene­ (4) Inhalation therapy____ Council on Medical Education of the American Medical fit programs is an allowable element of Association in collaboration with the Board of Schools reimbursement. of Inhalation Therapy. (5) Medical records. Council on Medical Education of the American Medical § 405.421 Cost of educational activities. Association in collaboration with the Committee on (a) Principle. An appropriate part Education and Registration of the American Associa­ of the net cost of approved educational tion of Medical Record Librarians. activities is an allowable cost. (6) Medical technology. Council on Medical Education of the American Medical Association in collaboration with the Board of Schools (b) Definitions—(1) Approved edu­ of Medical Technology, American Society of Clinical cational activities. Approved educa­ Pathologists. tional activities means formally or­ (7) Nurse anesthetists.,_ The American Association of Nurse Anesthetists. ganized or planned programs of study ( 8 ) Professional nursing. Approved by the respective State approving authorities. usually engaged in by providers in order Reported for the United States by the National League to enhance the quality of patient care in for Nursing. an institution. These activities must be (9) Practical nursing____ Approved by the respective State approving authorities. licensed where required by State law. Reported for the United States by the National League Where licensing is not required, the in­ for Nursing. stitution must receive approval from the ( 10) Occupational therapy. Council on Medical Education of the American Medical recognized national professional organi­ Association in collaboration with the Council on Edu­ zation for the particular activity. cation of the American Occupational Therapy Association. (2) Net cost. The net cost means the Pharmacy residencies. cost of approved educational activities (ID American Society of Hospital Pharmacists. ( 12) Physical therapy____ Council on Medical Education of the American Medical (including stipends of trainees, compen­ Association in collaboration with the American Physical sation of teachers, and other costs), less Therapy Association. any reimbursements from grants, tuition, (13) X-ray technology Council on Medical Education of the American Medical and specific donations. Association in collaboration with the American Col­ (3) Appropriate part. Appropriate lege of Radiology. part means the net cost of the activity apportioned in accordance with the (f) Other educational programs. tient care are allowable to the extent methods set forth in these principles. There may also be other educational pro­ that such costs are not met by funds (c) Educational activities. Many pro­ grams not included in the foregoing in provided for the research. Under this viders engage in educational activities which a provider institution is engaged. principle, however, studies, analyses, sur­ including training programs for nurses, Appropriate consideration will be given veys, and related activities to serve the medical students, interns and residents, by the intermediary and the Social Se­ provider’s administrative and program and various paramedical specialties. curity Administration to the costs in­ needs, are not excluded as allowable costs These programs contribute to the quality curred for those activities that come in the determination of reimbursement within the purview of the principle when under title XVIII of the Act. of patient care within an institution and determining the allowable costs for ap­ are necessary to meet the community’s portionment under the health insurance § 405.423 Grants, gifts, and income needs for medical and paramedical per­ program. from endowments. sonnel. It is recognized that the costs (a) Principle. Unrestricted grants, of such educational activities should be § 405.422 ReseaicK costs. gifts, and income from endowments borne by the community. However, (a) . Principle. Costs incurred for re­should not be deducted from operating many cgmifiUllities have not assumed re­ search purposes, over and above usual costs in computing reimbursable cost. sponsibility for financing these programs patient care, are not includible as allow­ Grants, gifts, or endowment income des­ and it is necessary that support be pro­ able costs. ignated by a donor for paying specific vided by those purchasing health care. (b) Application. (1) There are nu­ operating costs should be deducted from Until communities undertake to bear merous sources of financing for health- the particular operating cost or group of these costs, the program will participate related research activities. Funds for costs. appropriately in the support of these ac­ this purpose are provided under many (b) Definitions — (1) Unrestricted tivities. Although the intent of the Federal programs and by other tax-sup­ grants, gifts, income from endowment. program is to share in the support of ported agencies. Also, many founda­ Unrestricted grants, gifts, and income educational activities customarily or tions, voluntary health agencies, and from endowments are funds, cash or traditionally carried on by providers in other private organizations, as well as otherwise, given to a provider without conjunction with their operations, it is individuals, sponsor or contribute to the restriction by the donor as to their use. not intended that this program should support of medical and related research. (2) Designated or restricted grants, participate in increased costs resulting Funds available from such sources are gifts, and income from endowments. from redistribution of costs from educa­ generally ample to meet basic medical Designated or restricted grants, g i f t s , tional institutions or units to patient care and hospital research needs. A further andoneóme from endowments are funds, institutions or units. consideration is that quality review cash or otherwise, which must b e u s e d (d) “Orientation” and “on-the-job should be assured as a condition of gov­ only for the specific purpose designated training”. The costs of “orientation” ernmental support for research. Provi­ by the donor. This does not r e f e r to and “on-the-job training” are not within sions for such review would introduce unrestricted grants, gifts, or income from the scope of this principle but are recog­ special difficulties in the health insurance endowments which have been restricted nized as normal operating costs in ac­ program. for a specific purpose by the p r o v i d e r . cordance with principles relating thereto. (2) Where research is conducted in (c) Application. (1) U nrestricted (e) Approved programs. In addition conjunction with and as a part of the funds, cash or otherwise, are g e n e r a l l y 'to approved medical, osteopathic, and care of patients, the costs of usual pa- the property of the provider to b e u s e d

FEDERAL REGISTER, VOL. 31, NO. 226—TUESDAY, NOVEMBER 22, 1966 RULES AND REGULATIONS 14815 in any manner its management deems terhood or other religious order covering are actually performed in a necessary appropriate and should not be deducted payment by the provider for the services. function. from operating costs. It would be in­ § 405.425 Purchase discounts and allow­ (b) Definitions—(1) Compensation. equitable to require providers to use the ances, and refunds of expenses. Compensation means the total benefit unrestricted funds to reduce the pay­ received by the owner for the services ments for care. The use of these funds (a) Principle. Discounts and allow­ he renders to the institution. It is generally a means of recovering costs ances received on purchases of goods or includes: which are not otherwise recoverable. services are reductions of the costs to (1) Salary amounts paid for manage­ (2) Donor-restricted funds which are which they relate. Similarly, refunds rial, administrative, professional, and designated for paying certain hospital of previous expense payments are reduc­ other services. operating expenses should apply and tions of the related expense. (ii) Amounts paid by the institution serve to reduce these costs or group of (b) Definitions—(1) Discounts. Dis­ for the personal benefit of the proprietor. costs and benefit all patients who use counts, in general, are reductions (iii) The cost of assets and services services covered by the donation. If granted for the settlement of debts. which the proprietor receives from tne such costs are not reduced, the provider (2 ) Allowances. Allowances are de­ institution. would secure reimbursement for the same ductions granted for damage, delay, (iv) Deferred compensation. expense twice; it would be reimbursed shortage, imperfection, or other causes, (2 ) Reasonableness. Reasonableness through the donor-restricted contribu­ excluding discounts and returns. requires that the compensation allow­ tions as well as from patients and third- (3) Refunds. Refunds are amounts ance: party payers including the title XVIII paid back or a credit allowed on account (i) Be such an amount as would ordi­ health insurance program. of an overcollection. narily be paid for comparable services § 405.424 Value of Services of nonpaid (c) Normal accounting treatment: by comparable institutions. workers. Reduction of costs. All discounts, al­ (ii) Depend upon the facts and cir­ cumstances of each case. (a) Principle. The value of services lowances, and refunds of expenses are reductions in the cost of goods or serv­ (3) Necessary. Necessary requires in positions customarily held by full­ that the function : time employees performed on a regular, ices purchased and are not income. When they are received in the same ac­ (1) Be such that had the owner not scheduled basis by individuals as nonpaid rendered the services, the institution members of organizations under arrange­ counting period in which the purchases were made or expenses were incurred, would have had to employ another per­ ments between such organizations and a son to perform the services. provider for the performance of such they will reduce the purchases or ex­ penses of that period. However, when (ii) Be pertinent to the operation and services without direct remuneration sound conduct of the institution. from the provider to such individuals is they are received in a later accounting period, they will reduce the comparable (c) Application. (1 ) Owners of pro­ allowable as an operating expense for vider organizations often render services the determination of allowable cost sub­ purchases or expenses in the period in which they are received. as managers, administrators, or in other ject to the limitation contained in para­ capacities. In such cases, it is équitable graph (b) of this section. The amounts (d) Application. (1 ) Purchase dis­ that reasonable compensation for the allowed are not to exceed those paid counts have been classified as cash, services rendered be an allowable cost. others for similar work. Such amounts trade, or quantity discounts. Cash dis­ To do otherwise would disadvantage such must be identifiable in the records of the counts are reductions granted for the owners in comparison with corporate institutions as a legal obligation for settlement of debts before they are due. providers or providers employing persons operating expenses. Trade discounts are reductions from list to perform similar services. (b) Limitations; services of nonpaid prices granted to a class of customers (2) Ordinarily, compensation paid to workers. The services must be per­ before consideration of credit terms. proprietors is a distribution of profits. formed on a regular, scheduled basis in Quantity discounts are reductions from However, where a proprietor renders nec­ positions customarily held by full-time list prices granted because of the size essary services for the institution, the employees and necessary to enable the of individual or aggregate purchase institution is in effect employing his provider to carry out the functions of transactions. Whatever the classifica­ services, and a reasonable compensation normal patient care and operation of the tion of purchase discounts, like treat­ for these' services is an allowable cost. institution. The value of services of a ment in reducing allowable costs is re­ In corporate providers, the salaries of type for which providers generally do not quired. In the past, purchase discounts owners who are also employees are sub­ remunerate individuals performing such were considered as financial manage­ ject to the same requirements of reason­ services is not allowable as a reimbursable ment income. However, modern ac­ ableness. Where the services are ren­ cost under the title XVIII health insur­ counting theory holds that income is not dered on less than a full-time ance program. For example, donated derived from a purchase but rather from allowable compensation should reflect an services of individuals in distributing a sale or an exchange and that purchase amount proportionate to a full-time books and magazines to patients, or in discounts are reductions in the cost of basis. Reasonableness of compensation serving in a provider canteen or cafeteria whatever was purchased. The true cost may be determined by reference to, or °r in a provider gift shop, would not be of the goods or services is the net amount in comparison with, compensation paid reimbursable. actually paid for them. Treating pur­ for comparable services and responsibil­ (c) Application. The following illus­ chase discounts as income would result ities in comparable institutions; or it trates how a provider would determine in an overstatement of costs to the ex­ may be determined by other appropriate an amount to be allowed under this prin­ tent of the discount. means. ciple: The prevailing salary for a lay (2 ) As with discounts, allowances, and nurse working in Hospital A is $5,000 for rebates received from purchases of goods § 405.427 Cost to related organizations. he year. The lay nurse receives no or services and refunds of previous ex­ (a) Principle. Costs applicable to maintenance or special perquisites. A pense payments are clearly reductions services, facilities, and supplies furnished sister working as a nurse engaged in the in costs and must be reflected in the to the provider by organizations related same activities in the same hospital re- determination of allowable costs. This to the provider by common ownership eives maintenance and special per­ treatment is equitable and is in accord or control are includable in the allowable quisites which cost the hospital $2,000 with that generally followed by other cost of the provider at the cost to the na are included in the hospital’s allow- governmental programs and third-party related organization. However, such le operating costs. The hospital would payment organizations paying on the cost must not exceed the price of com­ records an additional basis of cost. parable services, facilities, or supplies jLr®* bring the value of the services that could be purchased elsewhere. § 405.426 Compensation of owners. to $5,000. The amount of (bX Definitions—(1) Related to pro­ ^ ,uoo would be allowable where the pro- (a) Principle. A reasonable allowance vider. Related to the provider means ..s ? assun?es obligation for the expense of compensation for services of owners that the provider to a significant extent aer a written agreement with the sis­ is an allowable cost, provided the services is associated or affiliated with or has

FEDERAL REGISTER, VOL. 31, NO. 226—TUESDAY, NOVEMBER 22, 1966 No. 226—p t . i i ----- 2 14816 RULES AND REGULATIONS control of or is controlled by the organi­ § 405.428 Allowance in lieu of specific equipment related to patient care and is zation furnishing the services, facilities, recognition of other costs. required by the terms of the lease to de­ or supplies. (a) Principle. In lieu of specific posit such funds (net of noncurrent debt (2) Common ownership. Common recognition of other costs in providing related to such investment or deposited ownership exists when an individual or and improving services, an allowance funds), and (2 ) net working capital individuals possess significant ownership amounting to 2 percent of allowable costs maintained for necessary and proper or equity in the. provider and the insti­ (with the exception of interest expense operation of patient care activities (ex­ tution or organization serving the and the allowance under this principle) cluding the amount of any current pay­ provider. ment made pursuant to § 405.454(g) (1)). is includible as an element of reasonable However, debt representing loans from (3) Control. Control exists where an cost of services except that, for pro­ prietary providers, the allowance shall be partners, stockholders, or related orga­ individual or an organization has the nizations on which interest payments power, directly or indirectly, significantly IV2 percent of allowable costs (with the exception of interest expense, the allow­ would be allowable as costs but for the to influence or direct the actions or pol­ provisions of § 405.419(b) (3) (ii), is not icies of an organization or institution. ance under this principle and the return allowed on equity capital). subtracted in computing the amount of (c) Application. (1) Individuals and (1 ) and (2 ), in order that the proceeds organizations associate with others for (b) Application. Difficulty in meas­ urement, lack of adequate data and other from such loans be treated as a part of various reasons and by various means. the provider’s equity capital. In com­ Some deem it appropriate to do so to considerations have precluded specific recognition of various elements which puting the amount of equity capital upon assure a steady flow of supplies or serv­ which a return is allowable, investment ices, to reduce competition, to gain a tax are germane to costs of services for in facilities is recognized on the basis advantage, to extend influence, and for beneficiaries. Moreover, although the methods to be utilized by providers for of the historical cost, or other basis, used other reasons. These goals may be ac­ for depreciation and other purposes um complished by means of ownership or determining the actual cost of services provided to beneficiaries are the best der the health insurance program. For control, by financial assistance, by man­ purposes of computing the allowable re­ agement assistance, and other ways. available, there is some lack of percision in methods for determining costs at the turn the amount of equity capital is the (2) Where the provider obtains items present stage of development of cost average investment during the reporting of services, facilities, or supplies from finding which represents a contingency period. The rate of return allowed, as an organization, even though it is a for which recognition is appropriate. It derived from time to time based upon separate legal entity, and the organiza­ is the established practice of a significant interest rates in accordance with this tion is owned or controlled by the number of large third-party purchasers principle, is determined by the Social owner(s) of the provider, in effect the to include in payment for costs of serv­ Security Administration and communi­ items are obtained from itself. An ex­ ices a factor in the form of an allowance cated through intermediaries. Return ample would be a corporation building to cover various elements not specifically on investment as an element of allowable a hospital or a nursing home and then recognized or not precisely measured. costs is subject to apportionment in the leasing it to another corporation con­ The reduction in the allowance for pro­ same manner as other elements of al­ trolled by the owner. Therefore, re­ prietary providers is made because a lowable costs. For the purposes of this imbursable cost should include the costs return on equity capital is specifically regulation, the term “proprietary pro­ for these items at the cost to the supply­ recognized as a cost for proprietary pro­ viders” is intended to distinguish pro­ ing organization. However, if the price viders under § 405.429. viders, whether sole proprietorships, in the open market for comparable serv­ partnerships, or corporations, that are ices, facilities, or supplies is lower than § 405.429 Return on equity capital of organized and operated with the expecta­ the cost to the supplier, the allowable proprietary providers. tion of earning profit for the owners, cost to the provider shall not exceed the (a) Principle. An allowance of a rea­ from other providers that are organized market price. sonable return on equity capital invested and operated on a nonprofit-basis. (d) Exception. An exception is pro­ and used in the provision of patient care §405.451 Cost related to patient care. vided to this general principle if the pro­ is allowable as an element of the rea­ vider demonstrates by convincing evi­ sonable cost of covered services furnished (a) Principle. All payments to pro­ dence to the satisfaction of the fiscal to beneficiaries by proprietary providers. viders of services must be based on the intermediary (or, where the provider has The amount allowable on an annual basis “reasonable cost” of services covered not nominated a fiscal intermediary, the is determined by applying to the provid­ under title XVHI of the Act and related Social Security Administration), that er’s equity capital a percentage equal to to the care of beneficiaries. Reasonable the supplying organization is a bona fide one and one-half times the average of the cost includes all necessary and proper separate organization;-that a substantial rates of interest on special issues of pub­ costs incurred in rendering the services, part of its business activity of the type lic debt obligations issued to the Federal subject to principles relating to specific carried orr with the provider is trans­ Hospital Insurance Trust Fund for each items of revenue and cost. acted with others than the provider and of the months during the provider’s re­ (b) Definitions—(1) Reasonable Cost. organizations related to the supplier by porting period or portion thereof covered Reasonable cost of any services must be common ownership or control and there under the program. determined in accordance with regu­ is an open, competitive market for the (b) Application. Proprietary pro­ lations establishing the method or meth­ type of services, facilities, or supplies viders generally do not receive public ods to be used, and the items to be in­ furnished by the organization; that the contributions and assistance of Federal cluded. The regulations in this subpart services, facilities, or supplies are those and other governmental programs such take into account both direct and in­ which commonly are obtained by in­ as Hill-Burton in financing capital ex­ direct costs of providers of services. stitutions such as the provider from penditures. Proprietary institutions his­ The objective is that under the methods other organizations and are not a basic torically have financed capital expendi­ of determining costs, the costs with element of patient care ordinarily fur­ tures through funds invested by owners respect to individuals covered by the nished directly to patients by such in­ in the expectation of earning a return. program will not be borne by individuals stitutions; and that the charge to the A return on investment, therefore, is not so covered, and the costs with respect provider is in line with the charge for needed to avoid withdrawal of capital to individuals not so covered will not such services, facilities, or supplies in the and to attract additional capital needed be borne by the program. These regu­ open market and no more than the for expansion. For purposes of comput­ lations also provide for the making of charge made under comparable cir­ ing the allowable return, the provider’s suitable retroactive adjustments after cumstances to others by the organization equity capital means: (1) The provider’s the provider has submitted fiscal and for such services, facilities, or supplies. investment in plant, property, and equip­ statistical reports. The retroactive ad­ In such cases, the charge by the supplier ment related to patient care (net of de­ justment will represent the difference to the provider for such services, facili­ preciation) and funds deposited by a between the amount received by the ties, or supplies shall be allowable as cost. provider who leases plant, property, or provider during the year for covered

FEDERAL REGISTER, VOL. 31, NO. 226—TUESDAY, NOVEMBER 22, 1966 RULES AND REGULATIONS 14817 services from both title XVIII and the average cost per diem of these services costs) rendered by the provider in the beneficiaries and the amount determined for all patients; to this is added the cost accounting period. in accordance with an accepted method of ancillary services used by beneficiaries, (8) Ratio of beneficiary charges for of cost apportionment to be the actual determined by apportioning the total ancillary services to total charges for cost of services rendered to beneficiaries cost of ancillary services on the basis ancillary services. Ratio of beneficiary during the year. of the ratio of beneficiary charges for charges for ancillary services to total (2) Necessary and proper costs. Nec­ ancillary services to total patient charges charges for ancillary services, as applied essary and proper costs are costs which for such services. to inpatients, means the ratio of the are appropriate and helpful in develop­ (b) Definitions—(1 ) Apportionment. total inpatient charges for covered ing and maintaining the operation of Apportionment means an allocation or ancillary services rendered to bene­ patient care facilities and activities. distribution of allowable cost between ficiaries of the health insurance pro­ They are usually costs which are com­ the beneficiaries of the health insurance gram to the total inpatient charges for mon and accepted occurrences in the program and other patients. ancillary services to all patients during field of the provider’s activity. (2) Routine services. Routine serv­ an accounting period. This ratio is (c) Application. (1), It is the intent ices means the regular room, dietary, applied to the allowable inpatient of title XVIII of the Act tljat payments and nursing services, minor medical and ancillary costs for the period to deter­ to providers of services should be fair surgical supplies, and the use of equip­ mine the amount of reimbursement to to the providers, to the contributors to ment and facilities for which a separate a provider for the covered ancillary serv­ the health-insurance trust funds, and to charge is not customarily made. ices rendered to beneficiaries. other patients. (3) Ancillary services. Ancillary serv­ (c) Application—(1 ) Objective, (i) ices or special services are the services (2) The costs of providers’ services The law provides that the costs with for which charges are customarily made respect to individuals covered by the vary from one provider to another and in addition to routine services. the variations generally reflect differ­ health insurance program will not be (4) Charges. Charges refers to the borne by individuals not so covered, and, ences in scope of services and intensity of regular rates for various services which care. The provision in title XVIII of the conversely, that costs with respect to in­ are charged to both beneficiaries and dividuals who are not under the program Act for payment of reasonable cost of other paying patients who receive the services is intended to meet the actual will not be borne by the program. services. Implicit in the use of charges (ii) The cost of services to benefi­ costs, however widely they may vary as the basis for apportionment is the from one institution to another. This is ciaries of the health insurance program objective that charges for services be may be determined by either of the al­ subject to a limitation where a particular related to the cost of the services. institution’s costs are found to be sub­ ternative methods, that is selected by a (5) Cost. Cost refers to reasonable provider; however, the objective of what­ stantially out of line with other institu­ cost as described in § 405.451(a). tions in the same area which are similar ever method of apportionment is used (6) Ratio of beneficiary charges to will be to approximate as closely as prac­ in size, scope of services, utilization, and total charges on a departmental basis. other relevant factors. ticable the actual cost, of services Ratio of beneficiary charges to total rendered. (3) The determination of reasonable charges on a departmental basis, as (iii) The two methods of apportion­ cost of services must be based on cost applied to inpatients, means the ratio of ment available for use in determining related to the care of beneficiaries of inpatient charges to beneficiaries of the the cost of services rendered to benefi­ title XVIII of the Act. Reasonable cost health insurance program for services of ciaries of the program have as their goal includes all necessary and proper ex­ a revenue-producing department or cen­ the allocation of the total allowable costs penses incurred in rendering services, ter to the inpatient charges to all between the beneficiaries and other pa­ such as administrative costs, mainte­ patients for that center during an ac­ tients in as equitable a manner as pos­ nance costs, and premium payments for counting period. After each revenue- sible. Under these methods, if it is employee health and pension plans. It producing center’s ratio is determined, found that beneficiaries receive more includes both direct and indirect costs the cost of services rendered to bene­ and normal standby costs. However, than the average amount of services, the ficiaries of the health insurance pro­ providers would receive reimbursement where the provider’s operating costs gram is computed by applying the include amounts not related to patient greater than average cost for all patients. individual ratio for the center to the cost Conversely, if the beneficiaries receive care, or specifically not reimbursable of the related center for the period. under the program, such amounts will less than the average aniount of services, (7) Average cost per diem for routine the providers would be reimbursed ac­ not be allowable. The reasonable cost services. Average cost per. diem for cordingly for the services rendered. basis of reimbursement contemplates routine services means the amount com­ that the providers of services would be (2 ) Departmental method. The fol­ puted by dividing the total allowable in­ lowing illustrates hdvv apportionment reimbursed the actual costs of providing patient cost for routine services by the quality care however widely the actual based on the ratio of beneficiary charges total number of inpatient days of care to total charges applied to cost on a may vary from provider to pro­ (excluding newborn days where nursery departmental basis would be determined, vider and from time to time for the same costs are excluded from routine service Provider. using only inpatient data. H ospital A § 405.452 Determination of cost of sen ices to beneficiaries. Charges to R atio of D ep artm en t C ost of program T o tal beneficiary T o tal >. beneficiary (a) Principle. Total allowable cosl beneficiaries charges charges to cost services 1 a provider shall be apportioned be total charges iween program beneficiaries and othe Patients so that the share borne by th Percent Routine services______$140,000 $600,000 2ZH program is based upon actual service X -ray ______$630,000 $147,000 24.000 24 75.000 18,000 Operating room ______20.000 70,000 28Vi a™ Ve

FEDERAL REGISTER, VOL. 31, NO. 226—TUESDAY, NOVEMBER 22, 1966 14818 RULES AND REGULATIONS Computation of cost of beneficiary computing the ratio of total inpatient Computation of cost applicable to program: inpatient services: charges for ancillary services to benefi­ Average cost per diem for Ratio of beneficiary charges ciaries to the total inpatient ancillary routine services: to total charges: charges to all patients. This ratio is 70% X $1,000,000 $200,0004-$ 1,000,000=20 %. then applied to the total allowable cost =$700,000 (routine Cost of services rendered to of inpatient ancillary services. service cost). beneficiaries: 20% X $950,000 —:------$190,000 C o s t -F i n d i n g E m p l o y e d b y H o s p i t a l B $700,000-7-35,000 days =$20 per diem. Statistical and financial data: Cost of routine services ren­ (ii) Whenever authorization is given Total inpatient days for all dered to beneficiaries: $20 to apportion costs by a method other patients _____ - ——----- — 30,000 per diem X 5,000 days------$100,000 than one of the two basic alternative Inpatient days applicable to Ratio of beneficiary charges methods, such authorization would be beneficiaries______7, 500 to total charges for all an­ considered to be a temporary expediency Inpatient routine services— cillary services: to cover only one accounting period. It total allowable cost------$600,000 $80,0004-$400,000 would be available to a provider only Inpatient ancillary services— = 20%. total allowable cost— ------$320,000 Cost of ancillary services after diligent efforts have been made by Inpatient ancillary services— rendered to beneficiaries: the provider to apportion its costs based total charges.-______- $400,000 30% X $1,000,000 upon either of the approved methods of Inpatient ancillary services— =$300,000 (ancillary apportionment. charges for services to bene­ service costs). ficiaries ______$80, 000 20 % X $300,000______$60,000 § 4 0 5 .4 5 3 A dequate cost data and cost Computation of cost applicable findin g. to program: Total cost of benefici­ (a) Principle. Providers receiving Average cost per diem for ary services______$160, 000 routine services: payment on the basis of reimbursable $600,000 4-30,000 days=$20 (4) Option to use departmental cost must provide adequate cost data. per diem. method or combination method for the This must be based on their financial Cost of routine services first reporting period. The provider has and statistical records which must be rendered to beneficiaries: the option of using either the depart­ capable of verification by qualified audi­ $20 per diem X 7,500 days. $150, 000 tors. The cost data must be based on an Ratio of beneficiary charges to mental method or the combination total charges for all ancillary method for the first reporting period. approved method of cost finding and on services: Thereafter, a provider may change from the accrual basis of accounting. How­ $80,000 4-$400,000= 20%. one to the other method provided a ever, where governmental institutions Cost of ancillary services request is made to the intermediary operate on a cash basis of accounting, rendered to beneficiaries: before the end of the first month of the cost data based on such basis of account­ 20% X $320,000—______$64,000 period for which the change is to be ing will be acceptable, subject, to appro­ applied and such request is approved. priate treatment of capital expenditures. Total cost of beneficiary (b) Definitions— (1) Cost finding. services______$214, 000 (5) Temporary methods of apportion­ ment. (i) The intermediary may find Cost finding is the process of recasting Total allowable inpatient to all inpatient charges computed on a total a proper regard for consistency need co st______$1, 000, 000 basis for all inpatient services. preclude a desirable change in accoun, Estimated percent for rou­ H o s p i t a l D ing procedures when there is reaso tine inpatient services___ 70 effect such change. .»«.the Estimated percent for ancil­ Financial data: (d) Cost finding methods. After j lary inpatient services___ 30 Inpatient services: close of the accounting period, one o Inpatient ancillary services: Total allowable cost------$950,000 following methods of cost finding . . Total charges------$400,000 Total charges-______1,000,000 Charges for services to Charges for beneficiary be used to determine the actual co beneficiaries______$80,000 services ______200,000 services rendered during that perio .

FEDERAL REGISTER, VOL. 31, NO. 226— TUESDAY, NOVEMBER 22, 1966 RULES AND REGULATIONS 14819 (1) Step-down method. This method segregate inpatient and outpatient costs. itself the rate of payment being used and recognizes that services rendered by Such other method may be used for cost other cost information as may be needed certain nonrevenue-producing depart­ reports covering periods ending before to adjust that rate of payment to give ments or centers are utilized by certain January 1, 1968. recognition to the program’s principles other nonrevenue-producing centers as (e) Accounting basis. The cost data of reimbursement. well as by the revenue-producing cen­ submitted must be based on the accrual (3) Where no organization is paying ters. All costs of nonrevenue-producing basis of accounting which is recognized the provider on a cost or cost-related centers are allocated to all centers which as the most accurate basis for determin­ basis, the intermediary will obtain the they serve, regardless of whether or not ing costs. However, governmental insti­ previous year’s financial statement from these centers produce revenue. The tutions that operate on a cash basis of the provider. By analysis of such state­ cost of the nonrevenue-producing cen­ accounting may submit cost data on the ment in the light of the principles of ter serving the greatest number of other cash basis subject to appropriate treat­ reimbursement, the intermediary will centers, while receiving benefits from the ment of capital expenditures. compute an appropriate rate of payment. least number of centers, is apportioned § 405.454 Payments to providers. (4) After the initial interim rate has first. Following the apportionment of been set, the provider may at any time the cost of the nonrevenue-producing (a) Principle. Providers of services request, and be allowed, an appropriate center, that center will be considered will be paid the reasonable cost of services increase in the computed rate, upon pres­ “closed” and no further costs are appor­ furnished to beneficiaries. Interim pay­ entation of satisfactory evidence to the tioned to that center. This applies even ments approximating the actual costs intermediary that costs have increased. though it may have received some serv­ of the provider will be made on the most Likewise, the intermediary may adjust ice from a center whose cost is appor­ expeditious basis administratively feasi­ the interim rate of payment if it has evi­ tioned later. Generally when two cen­ ble but not less often than monthly. A dence that actual costs may fall signifi­ ters render service to an equal number retroactive adjustment based on actual cantly below the computed rate. of centers while receiving benefits from costs will be made at the end of the re­ (d) Interim payments for new pro­ an equal number, that center which has porting period. At the request of the viders. (1 ) Newly established provid­ the greatest amount of expense should provider, payment will be made on a ers will not have a cost experience on be allocated first. basis designed to reimburse currently which to base a determination of an in­ (2) Other methods— (i) The double­ for services rendered to beneficiaries. terim rate of payment. In such cases, apportionment method. The double­ (b) Amount and frequency of pay­ the intermediary will use the following apportionment method may be used by ment.' Title XVin of the act states that methods to determine an appropriate a provider upon approval of the inter­ providers of services will be paid the rate: mediary. This method also recognizes reasonable cost of services furnished to . (1) Where there is a provider or pro­ that the nonrevenue-producing depart­ beneficiaries. Since actual costs of serv­ viders comparable in substantially all ments or centers render services to other ices cannot be determined until the end relevant factors to the provider for nonrevenue-producing centers as well as of the accounting period, the providers which the rate is needed, the Interme­ to revenue-producing centers. A pre­ must be paid on an estimated cost basis diary will base an interim rate of pay­ liminary allocation of the costs of non- during the year. While the law provides ment on the costs of the comparable revenue-producing centers is made. that interim payments shall be made no provider. These centers or departments are not less often than monthly, intermediaries (ii) If there are no substantially com­ “closed” after this preliminary alloca­ are expected to make payments on the tion. Instead, they , remain “open,” parable providers from whom data are most expeditious basis administratively available, the intermediary will deter­ accumulating a portion of the costs of feasible. Whatever estimated cost basis all other centers from which services mine an interim rate of payment based is used for determining interim payments on the budgeted or projected costs of the are received. Thus, after the first or during the year, the intent is that the provider. preliminary allocation, some costs will interim payments shall approximate (2) Under either method, the inter­ remain in each center representing serv­ actual costs as nearly as is practicable mediary will review the provider’s cost ices received from other centers. The so that the retroactive adjustment based first or preliminary allocation is followed experience after a period of 3 months. on actual costs will be as small as If need for an adjustment is indicated, by a second or final apportionment of possible. the interim rate of payment will be ad­ expenses involving the allocation of all (c) Interim payments during initial justed in line with the provider’s cost costs remaining in the nonrevenue- reporting period. At the beginning of experience. producing functions directly to revenue- the program or when a provider first producing centers. participates in the program, it will be (e) Interim payments after initial re­ (ii) More sophisticated methods. A necessary to establish interim rates of porting period. Interim rates of pay­ more sophisticated method designed to payment to providers of services. Once ment for services provided after the ini­ allocate costs more accurately may be a provider has filed a cost report under tial reporting period will be established used by the provider upon approval of the health insurance program, the cost on the basis of the cost report filed for ?e , j ntermediary. However, having report may be used as a basis for deter­ the previous year covering health insur­ metvf use double-apportionment mining the interim rate of reimburse­ ance services. The current rate will be Provider may not thereafter ment for the following period. How­ determined—whether on a per-diem or e the step-down method without ap- ever, since initially there is no previous percentage of charges basis—using the provai of the intermediary. Request for history of cost under the program, the previous year’s costs of covered services t* approval must be made on a prospec- interim rate of payment must be deter­ and making any appropriate adjustments bas*s and must be submitted before mined by other methods, including the required to bring, as closely as possible, following: the current year’s rate of interim pay­ wu>nf n(* month of the pro- ment into agreement with current year’s reporting period. Likewise, (1) Where the intermediary is already nhict e^ected to use a more so- costs. This interim rate of payment may paying the provider on a cost or cost- be adjusted by the intermediary during nofr t£a^ei* method, the provider may related basis, the intermediary will ad­ an accounting period if the provider sub­ anrJtlereafter use either the double- just its rate of payment to the pro­ mits appropriate evidence that its actual or step-down methods gram’s principles of reimbursement. ut similar request and approval. costs are or will be significantly higher This rate may be either an amount per than the computed rate. Likewise, the Perinii re™P°rary method for initial inpatient day, or a percent of the pro­ intermediary may adjust the interim rate eithP/„ lhe Provider is unable to use vider’s charges for services rendered to of payment if it has evidence that actual Partiiifftt"®nding method when it first the program’s beneficiaries. costs may fall significantly below the to the £Tftes 111 J^e Program, it may apply (2 ) Where an organization other than computed rate. somp iiuermediary for permission to use the intermediary is paying the provider (f) Retroactive adjustment. (1 ) Title would o« accePtable method which for services on a cost or cost-related XVHI of the Act provides that providers basis, the intermediary may obtain from PartmentCnrately*identifyt or center, and appropriately costs by de~ of services shall be paid amounts deter­ that organization or from the provider mined to be due, but not less often than

FEDERAL REGISTER, VOL. 31, NO. 226—TUESDAY, NOVEMBER 22, 1966 14820 RULES AND REGULATIONS monthly, with necessary adjustments due total allowable cost apportioned to the (2) A study will be made of the pos­ to previously made overpayments or un­ program for the reporting year is com­ sibility that a financial requirement in derpayments. Interim payments are puted. This is the total amount of re­ the production of services arises prior to made on the basis of estimated costs. imbursement the provider is due to re­ the rendition of services to beneficiaries Actual costs reimbursable to a provider ceive from the program and the bene­ and is not being met by the program. cannot be determined until the cost re­ ficiaries for covered services rendered Among the factors to be considered in ports are filed and costs are verified. during the reporting period. The total the study will be the extent to which out­ Therefore, a retroactive adjustment will of the interim payments made by the lays for consumable items for which pay­ be made at the end of the reporting program in the reporting year and the ment may be made in advance of ren­ period to bring the interim payments deductibles and coinsurance amounts re­ dition of services are offset by outlays for made to the provider during the period ceivable from beneficiaries is computed. other items, such as wages and salaries, into agreement with the reimbursable The difference between the reimburse­ which ordinarily are not made until after amount payable to the provider for the ment due and the payments made is the services are rendered. amount of the retroactive adjustment. (h) Cost reporting period. For cost­ services rendered to program benefi­ reporting purposes, the program will re­ ciaries during that period. (g) Provision for current financing. (2) In order to reimburse the provider (1) In addition to the basic procedure for quire submission of annual reports cover­ as quickly as possible, an initial retro­ payment to a provider following the sub­ ing a 1 2 -month period of operations active adjustment will be made as soon mission of bills to the intermediary, pay­ based upon the provider’s accounting as the cost report is received. For this ment will be made upon request by the year. At the option of the provider, how­ purpose, the costs will be accepted as re­ provider on a basis designed to reimburse ever, during the first year of the program ported—unless there are obvious errors currently for services furnished to bene­ a short period report beginning July 1, or inconsistencies—subject to later audit. ficiaries. The amount of such payment 1966, and ending with the provider’s ac­ When an audit is made and the final will be computed by the intermediary counting year may be submitted, pro­ liability of the program is determined, a initially on an estimated basis and vided such report covers at least 6 final adjustment will be made. periodically adjusted to represent the months. (3) To determine the retroactive ad­ average level of services unreimbursed [F.R. Doc. 66-12561; Filed, Nov. 21, 1966; justment, the amount of the provider’s by the basic payment procedure. 8:45 a.m.]

FEDERAL REGISTER, VOL. 31, NO. 22«— TUESDAY, NOVEMBER 22, 196«