FR-1998-11-25.pdf - Govinfo.gov

fede

ral r

egiste

r

1

WednesdayNovember 25, 1998

Vol. 63 No. 227Pages 65043–65516

11–25–98

Now Available Online via

GPO AccessFree online access to the official editions of the FederalRegister, the Code of Federal Regulations and other FederalRegister publications is available on GPO Access, a serviceof the U.S. Government Printing Office at:

http://www.access.gpo.gov/nara/index.html

For additional information on GPO Access products,services and access methods, see page II or contact theGPO Access User Support Team via:

★ Phone: toll-free: 1-888-293-6498

★ Email: [email protected]

Attention: Federal Agencies

Plain Language Tools Are Now Available

The Office of the Federal Register offers Plain LanguageTools on its Website to help you comply with thePresident’s Memorandum of June 1, 1998—Plain Languagein Government Writing (63 FR 31883, June 10, 1998). Ouraddress is: http://www.nara.gov/fedreg

For more in-depth guidance on the elements of plainlanguage, read ‘‘Writing User-Friendly Documents’’ on theNational Partnership for Reinventing Government (NPR)Website at: http://www.plainlanguage.gov

.

II

2

Federal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998

The FEDERAL REGISTER is published daily, Monday throughFriday, except official holidays, by the Office of the FederalRegister, National Archives and Records Administration,Washington, DC 20408, under the Federal Register Act (44 U.S.C.Ch. 15) and the regulations of the Administrative Committee ofthe Federal Register (1 CFR Ch. I). The Superintendent ofDocuments, U.S. Government Printing Office, Washington, DC20402 is the exclusive distributor of the official edition.The Federal Register provides a uniform system for makingavailable to the public regulations and legal notices issued byFederal agencies. These include Presidential proclamations andExecutive Orders, Federal agency documents having generalapplicability and legal effect, documents required to be publishedby act of Congress, and other Federal agency documents of publicinterest.Documents are on file for public inspection in the Office of theFederal Register the day before they are published, unless theissuing agency requests earlier filing. For a list of documentscurrently on file for public inspection, see http://www.nara.gov/fedreg.The seal of the National Archives and Records Administrationauthenticates the Federal Register as the official serial publicationestablished under the Federal Register Act. Under 44 U.S.C. 1507,the contents of the Federal Register shall be judicially noticed.The Federal Register is published in paper and on 24x microfiche.It is also available online at no charge as one of the databaseson GPO Access, a service of the U.S. Government Printing Office.The online edition of the Federal Register is issued under theauthority of the Administrative Committee of the Federal Registeras the official legal equivalent of the paper and microfiche editions(44 U.S.C. 4101 and 1 CFR 5.10). It is updated by 6 a.m. eachday the Federal Register is published and it includes both textand graphics from Volume 59, Number 1 (January 2, 1994) forward.GPO Access users can choose to retrieve online Federal Registerdocuments as TEXT (ASCII text, graphics omitted), PDF (AdobePortable Document Format, including full text and all graphics),or SUMMARY (abbreviated text) files. Users should carefully checkretrieved material to ensure that documents were properlydownloaded.On the World Wide Web, connect to the Federal Register at http://www.access.gpo.gov/nara. Those without World Wide Web accesscan also connect with a local WAIS client, by Telnet toswais.access.gpo.gov, or by dialing (202) 512-1661 with a computerand modem. When using Telnet or modem, type swais, then login as guest with no password.For more information about GPO Access, contact the GPO AccessUser Support Team by E-mail at [email protected]; by fax at(202) 512–1262; or call (202) 512–1530 or 1–888–293–6498 (tollfree) between 7 a.m. and 5 p.m. Eastern time, Monday–Friday,except Federal holidays.The annual subscription price for the Federal Register paperedition is $555, or $607 for a combined Federal Register, FederalRegister Index and List of CFR Sections Affected (LSA)subscription; the microfiche edition of the Federal Registerincluding the Federal Register Index and LSA is $220. Six monthsubscriptions are available for one-half the annual rate. The chargefor individual copies in paper form is $8.00 for each issue, or$8.00 for each group of pages as actually bound; or $1.50 foreach issue in microfiche form. All prices include regular domesticpostage and handling. International customers please add 25% forforeign handling. Remit check or money order, made payable tothe Superintendent of Documents, or charge to your GPO DepositAccount, VISA, MasterCard or Discover. Mail to: New Orders,Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA15250–7954.There are no restrictions on the republication of material appearingin the Federal Register.How To Cite This Publication: Use the volume number and thepage number. Example: 63 FR 12345.

SUBSCRIPTIONS AND COPIES

PUBLICSubscriptions:

Paper or fiche 202–512–1800Assistance with public subscriptions 512–1806

General online information 202–512–1530; 1–888–293–6498Single copies/back copies:

Paper or fiche 512–1800Assistance with public single copies 512–1803

FEDERAL AGENCIESSubscriptions:

Paper or fiche 523–5243Assistance with Federal agency subscriptions 523–5243

NOW AVAILABLE ONLINE

The October 1998 Office of the Federal Register DocumentDrafting Handbook

Free, easy online access to the newly revised October 1998Office of the Federal Register Document Drafting Handbook(DDH) is now available at:

http://www.nara.gov/fedreg/draftres.html

This handbook helps Federal agencies to prepare documentsfor publication in the Federal Register.

For additional information on access, contact the Office ofthe Federal Register’s Technical Support Staff.

Phone: 202–523–3447

E-mail: [email protected]

Contents Federal Register

III

Vol. 63, No. 227

Wednesday, November 25, 1998

Agriculture DepartmentSee Farm Service AgencySee Forest ServiceSee Grain Inspection, Packers and Stockyards

Administration

Antitrust DivisionNOTICESCompetitive impact statements and proposed consent

judgments:Omnipoint Corp. et al., 65228–65244

Meetings:International Competition Policy Advisory Committee,

65244

Broadcasting Board of GovernorsNOTICESMeetings; Sunshine Act, 65168

Civil Rights CommissionNOTICESMeetings; State advisory committees:

New York, 65168

Commerce DepartmentSee Economic Development AdministrationSee Export Administration BureauSee Foreign-Trade Zones BoardSee International Trade AdministrationSee National Institute of Standards and TechnologySee National Oceanic and Atmospheric AdministrationNOTICESAgency information collection activities:

Submission for OMB review; comment request, 65169

Commodity Futures Trading CommissionNOTICESContract market proposals:

Chicago Board of Trade—Wheat, 65175–65177

Meetings:Global Markets Advisory Committee, 65177–65178

Customs ServiceRULESDrawback; manufacturing, unused merchandise, etc.

Correction, 65060

Defense DepartmentRULESFreedom of Information Act; implementation, 65419–65454NOTICESAgency information collection activities:

Proposed collection; comment request, 65178Civilian health and medical program of uniformed services

(CHAMPUS):TRICARE program; specialized treatment services

program; regional facilities designations—David Grant Medical Center, Fairfield, CA, 65180Keesler Medical Center, Biloxi, MS, 65179National Naval Medical Center, Bethesda, MD, et al.,

65181–65182

Naval Medical Center, San Diego, CA, 65180–65181St. Joseph Hospital, Atlanta, GA, et al., 65179–65180Walter Reed Army Medical Center, Washington, DC,

65178–65179Committees; establishment, renewal, termination, etc.:

Telecommunications Service Priority System OversightCommittee, 65182

Meetings:Defense Intelligence Agency Science and Technology

Advisory Board, 65182Science Board task forces, 65182

Economic Development AdministrationNOTICESTrade adjustment assistance eligibility determination

petitions:Burley Design Cooperative, Inc., et al., 65169–65170

Energy DepartmentSee Federal Energy Regulatory CommissionNOTICESNatural gas exportation and importation:

Chevron U.S.A., Inc., 65182–65183

Environmental Protection AgencyRULESPesticides; tolerances in food, animal feeds, and raw

agricultural commodities:Azoxystrobin, 65078–65085Carfentrazone-ethyl, 65073–65078Hydramethylnon, 65071–65073Tebufenozide, 65085–65087

PROPOSED RULESSuperfund program:

National oil and hazardous substances contingencyplan—

National priorities list update, 65161–65163NOTICESPesticide, food, and feed additive petitions:

Platte Chemical Co., 65204–65206Pesticide programs:

Rodenticide cluster reregistration eligibility decision;comment request, 65200–65201

Pesticide registration, cancellation, etc.:Agrium Inc. et al., 65202–65203Babolna Bioenvironmental Centre Ltd., 65203Ecogen, Inc., 65203–65204

Pesticide registration process; notification, non-notification,and minor formulation amendments; documentavailability, 65201–65202

Pesticides; experimental use permits, etc.:Platte Chemical Co., 65206–65207

Superfund; response and remedial actions, proposedsettlements:

Osage Metals Superfund Site, Kansas City, KS, 65207–65208

Executive Office of the PresidentSee Presidential Documents

IV Federal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / Contents

Export Administration BureauNOTICESMeetings:

Materials Technical Advisory Committee, 65170–65171

Farm Service AgencyPROPOSED RULESFarm marketing quotas, acreage allotments, and production

adjustments:Peanuts, 65133–65134

Federal Aviation AdministrationRULESAirworthiness directives:

Aerostar Aircraft Corp., 65056–65057Boeing, 65054–65055Empresa Brasileira de Aeronautica S.A., 65050–65052Eurocopter France, 65052–65054Grob Luft-und Raumfahrt, GmbH, 65048–65050Lockheed, 65045–65047McDonnell Douglas, 65047–65048Stemme GmbH & Co. KG, 65057–65060

PROPOSED RULESAirworthiness directives:

General Electric Co., 65136–65147New Piper Aircraft, Inc., 65147–65149

NOTICESMeetings:

RTCA, Inc., 65270Noise abatement:

Indianapolis International Airport, IN, 65270–65271

Federal Communications CommissionRULESTelevision broadcasting:

Two-way transmissions; multipoint distribution serviceand instructional television fixed service licenseesparticipation, 65087–65128

NOTICESReporting and recordkeeping requirements, 65208–65209Rulemaking proceedings; petitions filed, granted, 65209

Federal Energy Regulatory CommissionNOTICESElectric rate and corporate regulation filings:

Lakota Ridge, L.L.C., et al., 65192–65196PacifiCorp et al., 65196–65199

Hydroelectric applications, 65199–65200Applications, hearings, determinations, etc.:

ANR Pipeline Co., 65183Canyon Creek Compression Co., 65183Colorado Interstate Gas Co., 65183Columbia Gas Transmission Corp., 65183–65184Dynegy Midstream Pipeline, Inc., 65184El Paso Natural Gas Co., 65184Granite State Gas Transmission, Inc., 65184–65185Great Northern Paper, Inc., 65185Kentucky West Virginia Gas Co., L.L.C., 65185–65186Kern River Gas Transmission Co., 65186Mississippi River Transmission Corp., 65186Mojave Pipeline Co., 65186Natural Gas Pipeline Co. of America, 65186–65187NorAm Gas Transmission Co., 65187Northern Border Pipeline Co., 65187Northern Natural Gas Co., 65187–65188Northwest Pipeline Corp., 65188–65189PG&E Gas Transmission, Northwest Corp., 65189Questar Pipeline Co., 65189

Southern Natural Gas Co., 65189–65190Stingray Pipeline Co., 65190Tennessee Gas Pipeline Co., 65190Trailblazer Pipeline Co., 65190–65191TransColorado Gas Transmission Co., 65191Transwestern Pipeline Co., 65191Venice Gathering Systems, L.L.C., 65191Wyoming Interstate Co., Ltd., 65191–65192

Federal Housing Finance BoardNOTICESMeetings; Sunshine Act, 65209

Federal Reserve SystemRULESMembership of State banking institutions (Regulation H):

Simplification, update, and regulatory burden reductionTechnical amendments; correction, 65281

Organization, functions, and authority delegations:Consumer and Community Affairs Division, Director,

65043–65044NOTICESBanks and bank holding companies:

Change in bank control, 65209Formations, acquisitions, and mergers, 65209–65210Permissible nonbanking activities, 65210

Fish and Wildlife ServicePROPOSED RULESEndangered and threatened species:

Findings on petitions, etc.—Wood bison, 65164–65165

Peregrine falcon, 65165–65166NOTICESEndangered and threatened species; permit applications,

65214–65215

Food and Drug AdministrationNOTICESAgency information collection activities:

Submission for OMB review; comment request, 65210–65211

Biological products:Patent extension; regulatory review period

determinations—Tisseel VH Kit, 65211–65212

Food additive petitions:International Association of Color Manufacturers, 65212

Meetings:Biologics Evaluation and Research Center; medical device

action plan; correction, 65212–65213Reporting and recordkeeping requirements, 65213

Foreign-Trade Zones BoardNOTICESApplications, hearings, determinations, etc.:

CaliforniaPacesetter, Inc., modular buildings manufacturing

plant, 65171Florida

Harris Corp., telecommunications/information systems,65171

New YorkNew York, expansion, 65171–65172

WashingtonDarigold, Inc., dairy/sugar food products, 65172

VFederal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / Contents

Forest ServiceNOTICESEnvironmental statements; notice of intent:

Northern spotted owl; habitat management for NationalForests and BLM districts, 65167–65168

Grain Inspection, Packers and Stockyards AdministrationPROPOSED RULESGrain inspection:

Rice; cost of living fees, increase, 65134–65136

Health and Human Services DepartmentSee Food and Drug AdministrationSee Health Care Financing Administration

Health Care Financing AdministrationNOTICESAgency information collection activities:

Proposed collection; comment request, 65213Meetings:

Practicing Physicians Advisory Council, 65213–65214

Housing and Urban Development DepartmentNOTICESGrants and cooperative agreements; availability, etc.:

Small cities community development block grantprograms, etc.—

New York, 65455–65483 , 65485–65499

Interior DepartmentSee Fish and Wildlife ServiceSee Land Management BureauSee National Park ServiceSee Surface Mining Reclamation and Enforcement Office

Internal Revenue ServiceNOTICESAgency information collection activities:

Proposed collection; comment request, 65278–65280

International Trade AdministrationRULESUruguay Round Agreements Act (URAA); implementation:

Countervailing duties; methodology, 65347–65418NOTICESAntidumping:

Welded carbon steel pipes and tubes from—Thailand, 65172–65173

Export trade certificates of review, 65174Applications, hearings, determinations, etc.:

University of—California, 65173Hawaii, 65173–65174

International Trade CommissionNOTICESImport investigations:

Emulsion styrene-butadiene rubber from—Brazil, et al., 65219–65221

Hot-rolled steel products from—Brazil, et al., 65221

Roller chain from—Japan, 65221–65222

Meetings; Sunshine Act, 65222

Justice DepartmentSee Antitrust DivisionSee Prisons Bureau

RULESPrivacy Act:

System of records, 65060–65062NOTICESPollution control; consent judgments:

Excel Corp., 65222–65223Privacy Act:

System of records, 65223–65228

Labor DepartmentSee Pension and Welfare Benefits AdministrationSee Workers’ Compensation Programs Office

Land Management BureauNOTICESEnvironmental statements; notice of intent:

Northern spotted owl; habitat management for NationalForests and BLM districts, 65167–65168

Realty actions; sales, leases, etc.:Wyoming, 65215

Withdrawal and reservation of lands:Colorado; correction, 65281

National Aeronautics and Space AdministrationNOTICESMeetings:

Advisory Council, 65262

National Gambling Impact Study CommissionNOTICESMeetings, 65262

National Highway Traffic Safety AdministrationNOTICESMotor vehicle safety standards:

Nonconforming vehicles—Importation eligibility; determinations, 65271–65272

Motor vehicle safety standards; exemption petitions, etc.:American Honda Motor Co., Inc., 65272–65273Nonconforming vehicles—

Defect and noncompliance decisions; annual list,65273–65277

National Institute of Standards and TechnologyNOTICESAgency information collection activities:


National Oceanic and Atmospheric AdministrationRULESFishery conservation and management:

Alaska; fisheries of Exclusive Economic Zone—Pacific halibut and red king crab, 65129–65132

Whaling provisions; aboriginal subsistence whaling quotasand other limitation, 65129

National Park ServiceNOTICESNative American human remains and associated funerary

objects:Arizona State Museum, University of Arizona, AZ;

headdress and wands, 65215–65216Fowler Museum of Cultural History, University of

California-Los Angeles, CA; Katisnas, etc., 65216Maxwell Museum of Anthropology, University of New

Mexico, NM; inventory from Pecos Pueblo, NM,65216–65217

VI Federal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / Contents

Museum of Indian Arts and Culture/Laboratory ofAnthropology, NM—

Cotton textile fragment, etc., 65217–65218Olmsted County Historical Society, MN; Iroquois

medicine rattle, 65218U.S Forest Service, Cibola National Forest, NM; inventory

from Bernalillo, Cibola, and Sorroco Counties, NM,65218–65219

Nuclear Regulatory CommissionNOTICESCertificates of compliance:

United Sates Enrichment Corp.—Paducah Gaseous Diffusion Plant, KY, et al., 65263–

65264United States Enrichment Corp.-0-

Paducah Gaseous Diffusion Plant, KY, 65264–65265Environmental statements; availability, etc.:

Wisconsin Public Service Corp., 65265–65266Applications, hearings, determinations, etc.:

PP&L, Inc., 65262Wolf Creek Nuclear Operating Corp., 65262–65263

Pension and Welfare Benefits AdministrationNOTICESEmployee benefit plans; prohibited transaction exemptions:

John Taylor Fertilizers Co., 65244–65249Keystone Financial, Inc., 65249–65262

Employee Retirement Income Security Act:Multiemployer welfare benefit plans; annual reporting

enforcement policy, 65505–65507

Postal ServicePROPOSED RULESInternational Mail Manual:

International priority airmail service; postage rates andservice conditions changes, 65153–65161

NOTICESMeetings; Sunshine Act, 65266

Presidential DocumentsPROCLAMATIONSSpecial observances:

Family Caregivers Week, National (Proc. 7151), 65513–65514

Family Week, National (Proc. 7152), 65515–65516Fisheries Day, World (Proc. 7150), 65509–65512

Prisons BureauPROPOSED RULESInstitutional management:

Smoking/no smoking areas, 65501–65503

Public Health ServiceSee Food and Drug Administration

Research and Special Programs AdministrationNOTICESAgency information collection activities:


Securities and Exchange CommissionNOTICESApplications, hearings, determinations, etc.:

INVESCO Value Trust, 65266–65268SunAmerica Asset Management Corp. et al., 65268–65270

Social Security AdministrationNOTICESAgency information collection activities:

Proposed collection; comment request, 65270

Surface Mining Reclamation and Enforcement OfficeRULESPermanent program and abandoned mine land reclamation

plan submissions:Arkansas, 65062–65068Texas, 65068–65071

PROPOSED RULESPermanent program and abandoned mine land reclamation

plan submissions:Oklahoma, 65149–65152

Transportation DepartmentSee Federal Aviation AdministrationSee National Highway Traffic Safety AdministrationSee Research and Special Programs AdministrationSee Transportation Statistics BureauRULESWorkplace drug and alcohol testing programs:

Opiate threshold levels; changes, 65128–65129

Transportation Statistics BureauPROPOSED RULESICC Termination Act; implementation:

Motor carriers of proerty; reporting requirements, 65163–65164

Treasury DepartmentSee Customs ServiceSee Internal Revenue Service

Workers’ Compensation Programs OfficeRULESFederal Employees Compensation Act:

Disability and death of noncitizen Federal employeesoutside U.S.; compensation, 65283–65345

Separate Parts In This Issue

Part IIDepartment of Labor, Office of Worker’s Compensation

Program, 65283–65345

Part IIIDepartment of Commerce, International Trade

Administration, 65347–65418

Part IVDepartment of Defense, 65419–65454

Part VDepartment of Housing and Urban Development, 65455–

65483

Part VIDepartment of Housing and Urban Development, 65485–

65499

Part VIIDepartment of Justice, Bureau of Prisons, 65501–65503

Part VIIIDepartment of Labor, Pension and Welfare Benefits

Administration, 65505–65507

VIIFederal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / Contents

Part IXThe President, 65509–65516

Reader AidsConsult the Reader Aids section at the end of this issue forphone numbers, online resources, finding aids, reminders,and notice of recently enacted public laws.

CFR PARTS AFFECTED IN THIS ISSUE

A cumulative list of the parts affected this month can be found in theReader Aids section at the end of this issue.

VIII Federal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / Contents

3 CFRProclamations:7150.................................655117151.................................655137152.................................65515

7 CFRProposed Rules:729...................................65133868...................................65134

12 CFR225...................................65281265...................................65043

14 CFR39 (8 documents) ...........65045,

65047, 65048, 65050, 65052,65054, 65056, 65057

Proposed Rules:39 (2 documents) ...........65136,

65147

19 CFR191...................................65060351...................................65348

20 CFR10.....................................6528425.....................................65284

28 CFR16.....................................65060Proposed Rules:551...................................65502

30 CFR904...................................65062943...................................65068Proposed Rules:936...................................65149

32 CFR286...................................65420

39 CFRProposed Rules:20.....................................65153

40 CFR180 (4 documents) .........65071,

65073, 65078, 65085Proposed Rules:300...................................65161

47 CFR1.......................................6508721.....................................6508774.....................................65087

49 CFR40.....................................65128Proposed Rules:1420.................................65163

50 CFR230...................................65129679...................................65129Proposed Rules:17 (2 documents) ...........65164,

65165

This section of the FEDERAL REGISTERcontains regulatory documents having generalapplicability and legal effect, most of whichare keyed to and codified in the Code ofFederal Regulations, which is published under50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold bythe Superintendent of Documents. Prices ofnew books are listed in the first FEDERALREGISTER issue of each week.

Rules and Regulations Federal Register

65043

Vol. 63, No. 227


FEDERAL RESERVE SYSTEM

12 CFR Part 265

[Docket No. R–1025]

Rules Regarding Delegation ofAuthority

AGENCY: Board of Governors of theFederal Reserve System.ACTION: Final rule.

SUMMARY: The Board is amending itsRules Regarding Delegation of Authority(12 CFR Part 265) pursuant to sections11(i) and (k) of the Federal Reserve Act(12 U.S.C. 248(i) and (k)). Specifically,the Board is revising and expanding thedelegation of authority to the Director ofDivision of Consumer and CommunityAffairs to include: issuinginterpretations under the Fair CreditReporting Act, adjusting the dollaramount to determine coverage under theHome Ownership and Equity ProtectionAct, adjusting the depository institutionexemption threshold under the HomeMortgage Disclosure Act, making certaindeterminations under the CommunityReinvestment Act regulations, andholding public hearings on financialservice issues in keeping withcongressional mandates.EFFECTIVE DATE: November 25, 1998.FOR FURTHER INFORMATION CONTACT:Pamela Morris Blumenthal, StaffAttorney, Division of Consumer andCommunity Affairs, at (202) 452–3667;for users of Telecommunications Devicefor the Deaf (TDD) only, contact DianeJenkins at (202) 452–3544.SUPPLEMENTARY INFORMATION:

I. Background

Section 11(k) of the Federal ReserveAct (12 U.S.C. 248(k)) provides that theBoard may delegate any of its functions,other than those relating to rulemakingor pertaining principally to monetaryand credit policies, to members or

employees of the Board. Section 11(i)authorizes the Board to make rules andregulations necessary to enable theBoard to perform its duties effectively.

Several consumer protection statutesimpose a number of duties on the Board.These include issuing interpretationsand applying formulas for determiningexemption from or application of astatutory provision. The Board isdelegating authority for the tasksdescribed below to the Director ofDivision of Consumer and CommunityAffairs (DCCA) to enable the Board tofulfill its responsibilities moreefficiently by eliminating the need forBoard review of certain technicalmatters and administrative duties.

Delegation of the responsibilitiesdescribed below does not relate torulemaking or monetary and creditpolicies and is consistent with previousBoard practices with respect tointerpretations and actions requiredunder consumer protection statutes.

II. Analysis of Revisions

Clarifications to Authority to IssueExamination Manuals, Forms, andOther Materials

The following clarifying revisions arebeing made to the authority delegated tothe DCCA Director: (1) in § 265.9(a), thetext has been clarified and the Truth inSavings Act has been added to the listof statutes for which the Director mayissue manuals, forms, and othermaterials; (2) in § 265.9(a)(1), the titlesof acts encompassed in the statutorycitations have been added; (3) a newparagraph 265.9(a)(8) has been added toreference the provisions of the Truth inSavings Act; and (4) in § 265.9(c)(1),(c)(4) and (c)(5), the text has beenclarified by adding a reference to theparticular section of the controllingregulations.

Interpretations under the Fair CreditReporting Act

Section 621(e) of the Fair CreditReporting Act (FCRA; 15 U.S.C.1681s(e)) authorizes the Board to issueinterpretations of the FCRA as it appliesto depository institutions and theirholding companies and affiliates. TheBoard is directed to consult with theother federal financial supervisoryagencies in connection with suchinterpretations.

The FCRA is part of the ConsumerCredit Protection Act that encompasses

statutes such as the Truth in LendingAct (15 U.S.C. 1601–1667e) and theEqual Credit Opportunity Act (15 U.S.C.1691–1691f). This delegation parallelsauthority delegated to DCCA officials toissue official staff interpretations of theregulations. (See 12 CFR part 226, App.C; 12 CFR part 202, App. D,respectively.) (Unlike TILA, the ECOA,and several other statutes, the FCRAdoes not assign the Board or any otheragency the authority to issueimplementing regulations.) Delegatinginterpretive authority enables the Boardto provide guidance more efficiently byeliminating the need for Board review ofminor matters and technical issues.

Annual adjustments under TILA andHMDA

TILA requires creditors to disclosecredit terms. TILA is implemented bythe Board’s Regulation Z (12 CFR Part226). The Home Ownership and EquityProtection Act of 1994 (Pub. L. 103–325,108 Stat. 2160) amended TILA toinclude additional disclosurerequirements and restrictions for home-secured loans with total points and feesexceeding the greater of $400 or 8percent of the total loan amount.Congress directed the Board to adjustthe $400 amount annually effectiveJanuary 1 based on the annualpercentage change in the ConsumerPrice Index (CPI) as reported on June 1of the year preceding the adjustment. 15U.S.C. 1602(aa)(3). Section226.32(a)(1)(ii) of Regulation Zimplements the statutory requirement.

The Home Mortgage Disclosure Act(HMDA; 12 U.S.C. 2801–2810) requiresmost mortgage lenders located inmetropolitan statistical areas to collectdata about their housing-related lendingactivity. The Board’s Regulation C (12CFR Part 203) implements HMDA.Provisions of the Economic Growth andRegulatory Paperwork Reduction Act of1996 (Pub. L. 104–208, 110 Stat. 3009)amended HMDA to modify theexemption threshold for smalldepository institutions. Theamendments direct the Board to adjustthe depository institution exemptionthreshold annually based on the annualpercentage change in the CPI for UrbanWage Earners and Clerical Workers.Section 203.3(a)(1)(ii) of Regulation Csets forth the formula for determiningthe annual adjustment.

65044 Federal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / Rules and Regulations

The Board is delegatingimplementation of these annualadjustments, which require applicationof a mathematical formula, to theDirector of DCCA.

Community Reinvestment Actdeterminations

The Community Reinvestment Act (12U.S.C. 2901–2907) requires the federalfinancial supervisory agencies to assesshow depository institutions are meetingthe credit needs of their communities inconnection with the examination ofeach institution by its regulator. Eachagency is authorized to issue regulationsimplementing the act. Regulation BB (12CFR part 228) sets forth the standardsthe Board will apply in evaluating abank’s performance in meeting itscommunity’s credit needs.

Section 228.25 of Regulation BBpermits the Board to approve ordisapprove a bank’s request to bedesignated as a wholesale or limited-purpose bank, and to revoke suchdesignation as appropriate. In addition,the Board may approve or disapprove abank’s strategic plan submitted pursuantto section 228.27. These tasks requireapplication of criteria established in theregulation. The Board is delegatingauthority to make these determinationsto the Director of DCCA to implementreview of proposed strategic plans andto respond to designation requestswithout the need for Board review.

Public hearings on consumer law issues

The Congress on occasion directs theBoard to conduct public hearings orother proceedings regarding consumerlaw issues. For example, the RiegleCommunity Development andRegulatory Improvement Act of 1994required the Board to hold hearings onhome-equity lending within two yearsand periodically thereafter. The Board isdelegating to the Director of DCCA theauthority to arrange and conduct theseproceedings in keeping withcongressional mandates.

III. Public Comment Not Required

The Administrative Procedures Actprovides that notice and opportunity forpublic comment are not required forrules of agency organization, procedure,or practice. 5 U.S.C. 553(b)(3)(A). Sincethe regulatory changes described aboveare procedural and do not constitute asubstantive rule subject to therequirements of section 553(b) of theAdministrative Procedures Act, theBoard, for good cause, finds that noticeand public comment in connection withthis amendment are unnecessary.

List of Subjects in 12 CFR Part 265

Authority delegations (Governmentagencies), Banks, banking, FederalReserve System.

For the reasons set forth above, theBoard amends part 265 in chapter II oftitle 12 of the Code of FederalRegulations as set forth below:

PART 265—RULES REGARDINGDELEGATION OF AUTHORITY

1. The authority citation for part 265continues to read as follows:

Authority: 12 U.S.C. 248(i) and (k).

2. Section 265.9 is amended byrevising paragraphs (a) introductorytext, (a)(1), (c)(1), (c)(4), and (c)(5), andadding new paragraphs (a)(8) and (d)through (g). The revisions and additionsread as follows:

§ 265.9 Functions delegated to theDirector of Division of Consumer andCommunity Affairs.

* * * * *(a) Issuing examination manuals,

forms, and other materials. To issueexamination or inspection manuals;report, agreement, and examinationforms; examination procedures,guidelines, instructions, and othersimilar materials pursuant to: section11(a) of the Federal Reserve Act (12U.S.C. 248(a)); sections 108(b), 621(c),704(b), 814(c), and 917(b) of theConsumer Credit Protection Act (15U.S.C. 1607(b), 1681s(b), 1691c(b),1692l(c) and 1693o(b)); section 305(c) ofthe Home Mortgage Disclosure Act (12U.S.C. 2804(c)); section 18(f)(3) of theFederal Trade Commission Act (15U.S.C. 57a(f)(3)); section 808(c) of theCivil Rights Act of 1968 (42 U.S.C.3608(c)); section 270(b) of the Truth inSavings Act (12 U.S.C. 4309); andsection 5 of the Bank Holding CompanyAct of 1956 (12 U.S.C. 1844(c)). Theforegoing manuals, forms, and othermaterials are for use within the FederalReserve System in the administration ofenforcement responsibilities inconnection with:

(1) Sections 1–200 and 501–921 of theConsumer Credit Protection Act (15U.S.C. 1601–1693r), in regard to theTruth in Lending Act, the ConsumerLeasing Act, the Equal CreditOpportunity Act, the Electronic FundTransfer Act, the Fair Credit ReportingAct and the Fair Debt CollectionPractices Act;* * * * *

(8) Sections 261–274 of the Truth inSavings Act (12 U.S.C. 4301–4313).* * * * *

(c) Determining inconsistenciesbetween state and federal laws. * * *

(1) Sections 111, 171(a) and 186(a) ofthe Truth in Lending Act (15 U.S.C.1610(a), 1666j(a), 1667e(a)) and § 226.28of Regulation Z (12 CFR part 226) and§ 213.7 of Regulation M (12 CFR part213);* * * * *

(4) Section 306(a) of the HomeMortgage Disclosure Act (12 U.S.C.2805(a)) and § 203.3 of Regulation C (12CFR part 203); and

(5) Section 273 of the Truth inSavings Act (12 U.S.C. 4312) and § 230.1of Regulation DD (12 CFR part 230).

(d) Interpreting the Fair CreditReporting Act. To issue interpretationspursuant to section 621(e) of the FairCredit Reporting Act (15 U.S.C.1681s(e));

(e) Annual adjustments. To adjust asrequired by law:

(1) The amount specified in section103(aa)(1)(B)(ii) of the Truth in LendingAct and § 226.32(a)(1)(ii) of RegulationZ (12 CFR part 226), relating tomortgages bearing fees above a certainamount in accord with section103(aa)(3) of that act (15 U.S.C.1602(aa)); and

(2) The amount specified in section309(b)(1) of the Home MortgageDisclosure Act (12 U.S.C. 2808(b)(1))and § 203.3(a)(1)(ii) of Regulation C (12CFR part 203) relating to the assetthreshold above which a depositoryinstitution must collect and report data.

(f) Community Reinvestment Actdeterminations. To makedeterminations, pursuant to section 804of the Community Reinvestment Act (12U.S.C. 2903), approving ordisapproving:

(1) Strategic plans and anyamendments thereto pursuant to§ 228.27(g) and (h) of Regulation BB (12CFR part 228); and

(2) Requests for designation as awholesale or limited purpose bank orthe revocation of such designation,pursuant to § 228.25(b) of Regulation BB(12 CFR part 228).

(g) Public hearings. To conducthearings or other proceedings requiredby law, concerning consumer law orother matters within the responsibilitiesof the Division of Consumer andCommunity Affairs, in consultationwith other interested divisions of theBoard where appropriate.* * * * *

By order of the Board of Governors of theFederal Reserve System, November 20, 1998.Robert deV. Frierson,Associate Secretary of the Board.[FR Doc. 98–31508 Filed 11–24–98; 8:45 am]BILLING CODE 6210–01–P

65045Federal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / Rules and Regulations

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 98–NM–84–AD; Amendment39–10911; AD 98–24–25]

RIN 2120–AA64

Airworthiness Directives; LockheedModel L–188A and L–188C SeriesAirplanes

AGENCY: Federal AviationAdministration, DOT.ACTION: Final rule.

SUMMARY: This amendment adopts anew airworthiness directive (AD),applicable to all Lockheed Model L–188A and L–188C series airplanes, thatrequires revising the Airplane FlightManual to provide the flightcrew withmodified procedures and limitations foroperating in icing conditions. Thisamendment is prompted by incidentsand accidents involving airplanesequipped with turboprop engines thatexperienced tailplane stall due to iceaccretion on the horizontal stabilizer ofthe airplane. The actions specified bythis AD are intended to preventundetected accretion of ice on thehorizontal stabilizer, which could resultin ice contaminated tailplane stall andconsequent loss of pitch control.DATES: Effective December 30, 1998.

The incorporation by reference ofcertain publications listed in theregulations is approved by the Directorof the Federal Register as of December30, 1998.ADDRESSES: The service informationreferenced in this AD may be obtainedfrom Lockheed Aeronautical SystemsSupport Company (LASSC), FieldSupport Department, Dept. 693, Zone0755, 2251 Lake Park Drive, Smyrna,Georgia 30080. This information may beexamined at the Federal AviationAdministration (FAA), TransportAirplane Directorate, Rules Docket,1601 Lind Avenue, SW., Renton,Washington; or at the FAA, SmallAirplane Directorate, Atlanta AircraftCertification Office, One Crown Center,1895 Phoenix Boulevard, suite 450,Atlanta, Georgia; or at the Office of theFederal Register, 800 North CapitolStreet, NW., suite 700, Washington, DC.FOR FURTHER INFORMATION CONTACT:Thomas Peters, Aerospace Engineer,Systems and Flight Test Branch, ACE–116A, FAA, Small Airplane Directorate,Atlanta Aircraft Certification Office,One Crown Center, 1895 PhoenixBoulevard, suite 450, Atlanta, Georgia

30337–2748; telephone (770) 703–6063;fax (770) 703–6097.SUPPLEMENTARY INFORMATION: Aproposal to amend part 39 of the FederalAviation Regulations (14 CFR part 39) toinclude an airworthiness directive (AD)that is applicable to all Lockheed ModelL–188A and L–188C series airplaneswas published in the Federal Registeron August 13, 1998 (63 FR 43340). Thataction proposed to require revising theAirplane Flight Manual to provide theflightcrew with modified proceduresand limitations for operating in icingconditions.

CommentsInterested persons have been afforded

an opportunity to participate in themaking of this amendment. Dueconsideration has been given to thesingle comment received.

The commenter supports theproposed rule.

ConclusionAfter careful review of the available

data, including the comment notedabove, the FAA has determined that airsafety and the public interest require theadoption of the rule as proposed.

Cost ImpactThere are approximately 75 airplanes

of the affected design in the worldwidefleet. The FAA estimates that 32airplanes of U.S. registry will be affectedby this AD, that it will takeapproximately 1 work hour per airplaneto accomplish the requiredincorporation of the AFM revisions, andthat the average labor rate is $60 perwork hour. Based on these figures, thecost impact of the AD on U.S. operatorsis estimated to be $1,920, or $60 perairplane.

The cost impact figure discussedabove is based on assumptions that nooperator has yet accomplished any ofthe requirements of this AD action, andthat no operator would accomplishthose actions in the future if this ADwere not adopted.

Regulatory ImpactThe regulations adopted herein will

not have substantial direct effects on theStates, on the relationship between thenational government and the States, oron the distribution of power andresponsibilities among the variouslevels of government. Therefore, inaccordance with Executive Order 12612,it is determined that this final rule doesnot have sufficient federalismimplications to warrant the preparationof a Federalism Assessment.

For the reasons discussed above, Icertify that this action (1) is not a

‘‘significant regulatory action’’ underExecutive Order 12866; (2) is not a‘‘significant rule’’ under DOTRegulatory Policies and Procedures (44FR 11034, February 26, 1979); and (3)will not have a significant economicimpact, positive or negative, on asubstantial number of small entitiesunder the criteria of the RegulatoryFlexibility Act. A final evaluation hasbeen prepared for this action and it iscontained in the Rules Docket. A copyof it may be obtained from the RulesDocket at the location provided underthe caption ADDRESSES.


Air transportation, Aircraft, Aviationsafety, Incorporation by reference,Safety.

Adoption of the Amendment

Accordingly, pursuant to theauthority delegated to me by theAdministrator, the Federal AviationAdministration amends part 39 of theFederal Aviation Regulations (14 CFRpart 39) as follows:

PART 39—AIRWORTHINESSDIRECTIVES


Authority: 49 U.S.C. 106(g), 40113, 44701.

§ 39.13 [Amended]

2. Section 39.13 is amended byadding the following new airworthinessdirective:98–24–25 Lockheed: Amendment 39–

10911. Docket 98–NM–84–AD.Applicability: All Model L–188A and L–

188C series airplanes, certificated in anycategory.

Note 1: This AD applies to each airplaneidentified in the preceding applicabilityprovision, regardless of whether it has beenmodified, altered, or repaired in the areasubject to the requirements of this AD. Forairplanes that have been modified, altered, orrepaired so that the performance of therequirements of this AD is affected, theowner/operator must request approval for analternative method of compliance inaccordance with paragraph (b) of this AD.The request should include an assessment ofthe effect of the modification, alteration, orrepair on the unsafe condition addressed bythis AD; and, if the unsafe condition has notbeen eliminated, the request should includespecific proposed actions to address it.

Compliance: Required as indicated, unlessaccomplished previously.

To prevent undetected accretion of ice onthe horizontal stabilizer, which could resultin ice contaminated tailplane stall andconsequent loss of pitch control, accomplishthe following:


(a) Within 30 days after the effective dateof this AD, revise the Limitations, NormalProcedures, and Performance Sections andAppendix III of the FAA-approved Electra188A or 188C Airplane Flight Manual (AFM),

as applicable, to include the pages specifiedin Table 1 (for Model L–188A seriesairplanes), Table 2 (for Model L–188C seriesairplanes not equipped with HamiltonStandard propellers), or Table 3 (for Model

L–188C series airplanes equipped withHamilton Standard propellers) of this AD, asapplicable.

TABLE 1.—REVISIONS TO THE ELECTRA 188A AFM FOR ALL MODEL L–188A SERIES AIRPLANES

Sectionnumber Section Page

number Date shown on page

Preface ........................................ Log of Pages .................................................................................... i March 10, 1998.Preface ........................................ Log of Pages .................................................................................... ii March 10, 1998.1 ................................................... Limitations ........................................................................................ 6 December 1, 1997.3 ................................................... Normal Procedures .......................................................................... 10.1 December 1, 1997.3 ................................................... Normal Procedures .......................................................................... 11 March 10, 1998.3 ................................................... Normal Procedures .......................................................................... 12 December 1, 1997.4 ................................................... Performance ..................................................................................... A December 1, 1997.4 ................................................... Performance ..................................................................................... 6 December 1, 1997.4 ................................................... Performance ..................................................................................... 8 December 1, 1997.4 ................................................... Performance ..................................................................................... 12 December 1, 1997.4 ................................................... Performance ..................................................................................... 12.1 December 1, 1997.4 ................................................... Performance ..................................................................................... 12.2 December 1, 1997.Appendix III ................................. Alt. Flap Data ................................................................................... B December 1, 1997.

TABLE 2.—REVISIONS TO THE ELECTRA 188C AFM FOR MODEL L–188C SERIES AIRPLANES NOT EQUIPPED WITHHAMILTON STANDARD PROPELLERS



Preface ........................................ Log of Pages .................................................................................... i March 10, 1998.Preface ........................................ Log of Pages .................................................................................... ii March 10, 1998.1 ................................................... Limitations ........................................................................................ 6 December 1, 1997.3 ................................................... Normal Procedures .......................................................................... 12.1 December 1, 1997.3 ................................................... Normal Procedures .......................................................................... 13 March 10, 19983 ................................................... Normal Procedures .......................................................................... 14 December 1, 1997.4 ................................................... Performance ..................................................................................... A December 1, 1997.4 ................................................... Performance ..................................................................................... 6 December 1, 1997.4 ................................................... Performance ..................................................................................... 8 December 1, 1997.4 ................................................... Performance ..................................................................................... 12 December 1, 1997.4 ................................................... Performance ..................................................................................... 12.1 December 1, 1997.4 ................................................... Performance ..................................................................................... 12.2 December 1, 1997.Appendix III ................................. Alt. Flap Data ................................................................................... B December 1, 1997.

TABLE 3.—REVISIONS TO THE ELECTRA 188C AFM FOR MODEL L–188C SERIES AIRPLANES NOT EQUIPPED WITHHAMILTON STANDARD PROPELLERS



Preface ........................................ Log of Pages .................................................................................... i March 10, 1998.Preface ........................................ Log of Pages .................................................................................... ii March 10, 1998.1 ................................................... Limitations ........................................................................................ 6 December 1, 1997.3 ................................................... Normal Procedures .......................................................................... 12.1 December 1, 1997.3 ................................................... Normal Procedures .......................................................................... 13 March 10, 1998.3 ................................................... Normal Procedures .......................................................................... 14 December 1, 1997.A4 ................................................ Performance ..................................................................................... A December 1, 1997.A4 ................................................ Performance ..................................................................................... 6 December 1, 1997.A4 ................................................ Performance ..................................................................................... 8 December 1, 1997.A4 ................................................ Performance ..................................................................................... 12 December 1, 1997.A4 ................................................ Performance ..................................................................................... 12.1 December 1, 1997.A4 ................................................ Performance ..................................................................................... 12.2 December 1, 1997.Appendix AIII ............................... Alt. Flap Data ................................................................................... B December 1, 1997.

(b) An alternative method of compliance oradjustment of the compliance time thatprovides an acceptable level of safety may beused if approved by the Manager, AtlantaAircraft Certification Office (ACO), FAA,Small Airplane Directorate. Operators shallsubmit their requests through an appropriate

FAA Principal Operations Inspector, whomay add comments and then send it to theManager, Atlanta ACO.

Note 2: Information concerning theexistence of approved alternative methods ofcompliance with this AD, if any, may beobtained from the Atlanta ACO.

(c) Special flight permits may be issued inaccordance with sections 21.197 and 21.199of the Federal Aviation Regulations (14 CFR21.197 and 21.199) to operate the airplane toa location where the requirements of this ADcan be accomplished.


(d) The AFM revisions shall be done inaccordance with the following Lockheed

Airplane Flight Manuals, which contain thespecified list of effective pages:

Airplane flight manuals Pagenumber

Date shown onpage

Electra Model 188A ...................................................................March 10, 1998 .........................................................................

Log of Pages .............................................................................Pages i through Jii

March 10, 1998.

Electra Model 188C ...................................................................March 10, 1998 .........................................................................

Log of Pages .............................................................................Pages i through Lii

March 10, 1998.

This incorporation by reference wasapproved by the Director of the FederalRegister in accordance with 5 U.S.C. 552(a)and 1 CFR part 51. Copies may be obtainedfrom Lockheed Aeronautical SystemsSupport Company (LASSC), Field SupportDepartment, Dept. 693, Zone 0755, 2251 LakePark Drive, Smyrna, Georgia 30080. Copiesmay be inspected at the FAA, TransportAirplane Directorate, 1601 Lind Avenue,SW., Renton, Washington; or at the FAA,Small Airplane Directorate, Atlanta AircraftCertification Office, One Crown Center, 1895Phoenix Boulevard, suite 450, Atlanta,Georgia; or at the Office of the FederalRegister, 800 North Capitol Street, NW., suite700, Washington, DC.

(e) This amendment becomes effective onDecember 30, 1998.

Issued in Renton, Washington, onNovember 17, 1998.Darrell M. Pederson,Acting Manager, Transport AirplaneDirectorate, Aircraft Certification Service.[FR Doc. 98–31319 Filed 11–24–98; 8:45 am]BILLING CODE 4910–13–U



14 CFR Part 39


RIN 2120–AA64

Airworthiness Directives; McDonnellDouglas Model MD–11 SeriesAirplanes


SUMMARY: This amendment adopts anew airworthiness directive (AD),applicable to certain MD–11 seriesairplanes, that requires a one-timevisual inspection to detect discrepanciesof the seat tracks and adjacent structureunderneath lavatories, and repair, ifnecessary. This amendment alsorequires installation of a non-metallicbarrier on the bottom of each lavatoryfoot fitting, and replacement of existingseat track fittings with new seat trackfittings. This amendment is promptedby reports of galvanic corrosion found

on the seat tracks at attachment pointsunder certain lavatories. The actionsspecified by this AD are intended toprevent corrosion of seat tracks andadjacent structure. Corrosion of the seattracks and adjacent structure couldresult in shifting of lavatories, whichcould lead to injury of passengers andcrew, as well as damage to aircraftstructure and systems.DATES: Effective December 30, 1998.

The incorporation by reference ofcertain publications listed in theregulations is approved by the Directorof the Federal Register as of December30, 1998.ADDRESSES: The service informationreferenced in this AD may be obtainedfrom The Boeing Company, DouglasProducts Division, 3855 LakewoodBoulevard, Long Beach, California90846, Attention: TechnicalPublications Business Administration,Dept. C1–L51 (2–60). This informationmay be examined at the FederalAviation Administration (FAA),Transport Airplane Directorate, RulesDocket, 1601 Lind Avenue, SW.,Renton, Washington; or at the FAA,Transport Airplane Directorate, LosAngeles Aircraft Certification Office,3960 Paramount Boulevard, Lakewood,California; or at the Office of the FederalRegister, 800 North Capitol Street, NW.,suite 700, Washington, DC.FOR FURTHER INFORMATION CONTACT:David Hsu, Aerospace Engineer,Airframe Branch, ANM–120L, FAA,Transport Airplane Directorate, LosAngeles Aircraft Certification Office,3960 Paramount Boulevard, Lakewood,California 90712–4137; telephone (562)627–5323; fax (562) 627–5210.SUPPLEMENTARY INFORMATION: Aproposal to amend part 39 of the FederalAviation Regulations (14 CFR part 39) toinclude an airworthiness directive (AD)that is applicable to certain MD–11series airplanes was published in theFederal Register on September 3, 1998(63 FR 46934). That action proposed torequire a one-time visual inspection todetect discrepancies of the seat tracksand adjacent structure underneathlavatories, and repair, if necessary. Theaction also proposed to requireinstallation of a non-metallic barrier on

the bottom of each lavatory foot fitting,and replacement of existing seat trackfittings with new seat track fittings.

Comments

Interested persons have been affordedan opportunity to participate in themaking of this amendment. Dueconsideration has been given to thesingle comment received.

The commenter supports theproposed rule.

Conclusion

After careful review of the availabledata, including the comment notedabove, the FAA has determined that airsafety and the public interest require theadoption of the rule as proposed.

Cost Impact

There are approximately 143airplanes of the affected design in theworldwide fleet. The FAA estimates that46 airplanes of U.S. registry will beaffected by this AD, that it will takeapproximately 40 work hours perairplane to accomplish the requiredinspection, installation, andreplacement, and that the average laborrate is $60 per work hour. Requiredparts will cost less than $1,000 perairplane. Based on these figures, the costimpact of the AD on U.S. operators isestimated to be $156,400, or $3,400 perairplane.

The cost impact figure discussedabove is based on assumptions that nooperator has yet accomplished any ofthe requirements of this AD action, andthat no operator would accomplishthose actions in the future if this ADwere not adopted.

Regulatory Impact

The regulations adopted herein willnot have substantial direct effects on theStates, on the relationship between thenational government and the States, oron the distribution of power andresponsibilities among the variouslevels of government. Therefore, inaccordance with Executive Order 12612,it is determined that this final rule doesnot have sufficient federalismimplications to warrant the preparationof a Federalism Assessment.


For the reasons discussed above, Icertify that this action (1) is not a‘‘significant regulatory action’’ underExecutive Order 12866; (2) is not a‘‘significant rule’’ under DOTRegulatory Policies and Procedures (44FR 11034, February 26, 1979); and (3)will not have a significant economicimpact, positive or negative, on asubstantial number of small entitiesunder the criteria of the RegulatoryFlexibility Act. A final evaluation hasbeen prepared for this action and it iscontained in the Rules Docket. A copyof it may be obtained from the RulesDocket at the location provided underthe caption ADDRESSES.







Authority: 49 U.S.C. 106(g), 40113, 44701.

§ 39.13 [Amended]2. Section 39.13 is amended by

adding the following new airworthinessdirective:98–24–24 McDonnell Douglas: Amendment

39–10910. Docket 98–NM–71–AD.Applicability: Model MD–11 series

airplanes, as listed in McDonnell DouglasService Bulletin MD11–53–043, Revision 02,dated May 28, 1996; certificated in anycategory.

Note 1: This AD applies to each airplaneidentified in the preceding applicabilityprovision, regardless of whether it has beenmodified, altered, or repaired in the areasubject to the requirements of this AD. Forairplanes that have been modified, altered, orrepaired so that the performance of therequirements of this AD is affected, theowner/operator must request approval for analternative method of compliance inaccordance with paragraph (b) of this AD.The request should include an assessment ofthe effect of the modification, alteration, orrepair on the unsafe condition addressed bythis AD; and, if the unsafe condition has notbeen eliminated, the request should includespecific proposed actions to address it.


To detect and correct corrosion of seattracks and adjacent structure, which couldresult in shifting of lavatories causing injury

to passengers and crew, as well as damage toaircraft structure and systems, accomplishthe following:

(a) Within 15 months after the effectivedate of this AD, conduct a visual inspectionto detect discrepancies (i.e., corrosion andbreakage) of the seat tracks and adjacentstructure at the lavatory locations defined inJAMCO Service Bulletin MD11–25–1010,dated July 12, 1994.

(1) If no discrepancy is detected, prior tofurther flight, install a non-metallic barrier onthe bottom of each lavatory foot fitting andreplace existing seat track fittings with newfittings, in accordance with McDonnellDouglas Service Bulletin MD–11–53–043,Revision 02, dated May 28, 1996.

(2) If any discrepancy is detected, prior tofurther flight, repair in accordance with theMcDonnell Douglas MD–11 Structural RepairManual, or in accordance with a methodapproved by the Manager, Los AngelesAircraft Certification Office (ACO), FAA,Transport Airplane Directorate. Prior tofurther flight following accomplishment ofthe repair, install a non-metallic barrier onthe bottom of each lavatory foot fitting andreplace existing seat track fittings with newfittings, in accordance with McDonnellDouglas Service Bulletin MD–11–53–043,Revision 02, dated May 28, 1996.

(b) An alternative method of compliance oradjustment of the compliance time thatprovides an acceptable level of safety may beused if approved by the Manager, LosAngeles ACO. Operators shall submit theirrequests through an appropriate FAAPrincipal Maintenance Inspector, who mayadd comments and then send it to theManager, Los Angeles ACO.

Note 2: Information concerning theexistence of approved alternative methods ofcompliance with this AD, if any, may beobtained from the Los Angeles ACO.


(d) The installation and replacement shallbe done in accordance with McDonnellDouglas Service Bulletin MD11–53–043,Revision 02, dated May 28, 1996. Thisincorporation by reference was approved bythe Director of the Federal Register inaccordance with 5 U.S.C. 552(a) and 1 CFRpart 51. Copies may be obtained from TheBoeing Company, Douglas Products Division,3855 Lakewood Boulevard, Long Beach,California 90846, Attention: TechnicalPublications Business Administration, Dept.C1–L51 (2–60). Copies may be inspected atthe FAA, Transport Airplane Directorate,1601 Lind Avenue, SW., Renton,Washington; or at the FAA, TransportAirplane Directorate, Los Angeles AircraftCertification Office, 3960 ParamountBoulevard, Lakewood, California; or at theOffice of the Federal Register, 800 NorthCapitol Street, NW., suite 700, Washington,DC.


Issued in Renton, Washington, onNovember 17, 1998.Darrell M. Pederson,Acting Manager,Transport Airplane Directorate, AircraftCertification Service.[FR Doc. 98–31318 Filed 11–24–98; 8:45 am]BILLING CODE 4910–13–U



14 CFR Part 39

[Docket No. 96–CE–40–AD; Amendment 39–10905; AD 98–24–20]

RIN 2120–AA64

Airworthiness Directives; Grob Luft-und Raumfahrt, GmbH Models G 109and G 109B Sailplanes


SUMMARY: This amendment adopts anew airworthiness directive (AD) thatapplies to certain Grob Luft-undRaumfahrt (Grob) Models G 109 and G109B sailplanes. This AD requiresinspecting the radius of the landing gearretaining bars, installing additionalsupportive parts, and replacing theretaining bars if the retaining bars’chamfer radius is less than 3.0millimeters (mm). This AD also requiresinspecting the landing gear legs forcracks and proper thickness, and eitherpolishing out the cracks or replacing thelanding gear legs with parts of improveddesign depending on the crack length.This AD is the result of mandatorycontinuing airworthiness information(MCAI) issued by the airworthinessauthority for Germany. The actionsspecified by this AD are intended todetect and correct fatigue cracking of thelanding gear legs, which could result inlanding gear failure with consequentloss of control of the sailplane duringlanding operations.DATES: Effective January 9, 1999.

The incorporation by reference ofcertain publications listed in theregulations is approved by the Directorof the Federal Register as of January 9,1999.ADDRESSES: Service information thatapplies to this AD may be obtained fromGrob-Werke GmbH & Co. KG,Unternehmensbereich, Burkhart GrobFlugzeugbau, Flugplatz Mattsies, 86874Tussenhausen, Germany. Thisinformation may also be examined atthe Federal Aviation Administration(FAA), Central Region, Office of the


Regional Counsel, Attention: RulesDocket No. 96–CE–40–AD, Room 1558,601 E. 12th Street, Kansas City, Missouri64106; or at the Office of the FederalRegister, 800 North Capitol Street, NW,suite 700, Washington, DC.

FOR FURTHER INFORMATION CONTACT: Mr.Mike Kiesov, Aerospace Engineer, FAA,Small Airplane Directorate, 1201Walnut, suite 900, Kansas City, Missouri64106; telephone: (816) 426–6932;facsimile: (816) 426–2169.

SUPPLEMENTARY INFORMATION:

Events Leading to the Issuance of ThisAD

A proposal to amend part 39 of theFederal Aviation Regulations (14 CFRpart 39) to include an AD that wouldapply to certain Grob G 109 and G 109Bsailplanes was published in the FederalRegister as a notice of proposedrulemaking (NPRM) on February 19,1997 (62 FR 7373). The NPRM proposedto require inspecting the radius of thelanding gear retaining bars, installingadditional supportive parts, andreplacing the retaining bars if theretaining bars’ chamfer radius is lessthan 3.0 mm. The NPRM also proposedto require inspecting the landing gearlegs for cracks and proper thickness,and either polishing out the cracks orreplacing the landing gear legs withparts of improved design depending onthe crack length.

Accomplishment of the proposedaction as specified in the NPRM wouldbe required in accordance with GrobService Bulletin TM 817–39, datedJanuary 4, 1994.

The NPRM was the result ofmandatory continuing airworthinessinformation (MCAI) issued by theairworthiness authority for Germany.

Interested persons have been affordedan opportunity to participate in themaking of this amendment. Nocomments were received on theproposed rule or the FAA’sdetermination of the cost to the public.

The FAA’s Determination

After careful review of all availableinformation related to the subjectpresented above, the FAA hasdetermined that air safety and thepublic interest require the adoption ofthe rule as proposed except for minoreditorial corrections. The FAA hasdetermined that these minor correctionswill not change the meaning of the ADand will not add any additional burdenupon the public than was alreadyproposed.

Cost Impact

The FAA estimates that 63 sailplanesin the U.S. registry will be affected bythis AD.

The required inspection andmodification of the retaining bars willtake approximately 4 workhours persailplane (2 workhours per landing gearleg) to accomplish, at an average laborrate of approximately $60 an hour. Partsto accomplish the requiredmodifications cost $90. Based on thesefigures, the total cost impact of thisinspection and modification on U.S.operators is estimated to be $20,790, or$330 per sailplane.

The initial inspection will takeapproximately 18 workhours persailplane (9 workhours per landing gearleg) to accomplish, at an average laborrate of $60 per hour. Based on thesefigures, the total cost impact of theinitial inspection on U.S. operators isestimated to be $68,040, or $1,080 persailplane.

The above figures only take intoaccount the costs of the initialinspection of the landing gear leg anddo not take into account costs associatedwith repetitive inspections or anyrequired crack polishing or landing gearleg replacement. The FAA has no wayof determining the number of repetitiveinspections each owner/operator of theaffected sailplanes would incur, or thenumber of landing gear legs that will befound cracked and either need polishingor replacement.

Compliance Time

The compliance time of this AD ispresented in calendar time instead ofhours time-in-service (TIS). The FAAhas determined that a calendar timecompliance is the most desirablemethod because the unsafe condition ofthe landing gear legs described by thisAD is caused by corrosion. Corrosioninitiates as a result of sailplaneoperation, but can continue to developregardless of whether the sailplane is inservice. In order to assure that theabove-referenced condition is detectedand corrected on all sailplanes within areasonable period of time withoutinadvertently grounding any sailplanes,the FAA is requiring a complianceschedule based upon calendar timeinstead of hours TIS.

Regulatory Impact

The regulations adopted herein willnot have substantial direct effects on theStates, on the relationship between thenational government and the States, oron the distribution of power andresponsibilities among the variouslevels of government. Therefore, in

accordance with Executive Order 12612,it is determined that this final rule doesnot have sufficient federalismimplications to warrant the preparationof a Federalism Assessment.

For the reasons discussed above, Icertify that this action (1) is not a‘‘significant regulatory action’’ underExecutive Order 12866; (2) is not a‘‘significant rule’’ under DOTRegulatory Policies and Procedures (44FR 11034, February 26, 1979); and (3)will not have a significant economicimpact, positive or negative, on asubstantial number of small entitiesunder the criteria of the RegulatoryFlexibility Act. A copy of the finalevaluation prepared for this action iscontained in the Rules Docket. A copyof it may be obtained by contacting theRules Docket at the location providedunder the caption ADDRESSES.







Authority: 49 U.S.C. 106(g), 40113, 44701.

§ 39.13 [Amended]

2. Section 39.13 is amended byadding a new airworthiness directive(AD) to read as follows:98–24–20 Grob Luft-und Raumfahrt,

GMBH: Amendment 39–10905, DocketNo. 96–CE–40–AD.

Applicability: Models G 109 and G 109Bsailplanes, all serial numbers, certificated inany category.

Note 1: This AD applies to each sailplaneidentified in the preceding applicabilityprovision, regardless of whether it has beenmodified, altered, or repaired in the areasubject to the requirements of this AD. Forsailplanes that have been modified, altered,or repaired so that the performance of therequirements of this AD is affected, theowner/operator must request approval for analternative method of compliance inaccordance with paragraph (d) of this AD.The request should include an assessment ofthe effect of the modification, alteration, orrepair on the unsafe condition addressed bythis AD; and, if the unsafe condition has notbeen eliminated, the request should includespecific proposed actions to address it.


Compliance: Required as indicated in thebody of this AD, unless alreadyaccomplished.

To detect and correct fatigue cracking ofthe landing gear legs, which could result inlanding gear failure with consequent loss ofcontrol of the sailplane during landingoperations, accomplish the following:

(a) For all of the affected sailplanes: Withinthe next 120 calendar days after the effectivedate of this AD, inspect the retaining barschamfer on both landing gear legs for aminimum of 3.0 millimeters (mm) radius inaccordance with the ‘‘Actions’’ section,paragraph A3, of Grob Service Bulletin (SB)817–39, dated January 4, 1994.

(1) If the chamfer radius is 3.0 mm orgreater, prior to further flight, glue areinforcing plastic strip (part number (P/N)109–5000.07) to the retaining bar inaccordance with the ‘‘Actions’’ section,paragraph A4, of Grob SB 817–39, datedJanuary 4, 1994.

(2) If the chamfer radius is less than 3.0mm, prior to further flight, replace theretaining bar with a new improved designretaining bar, P/N 109–5000.02; and installthe plastic strip, P/N 109–5000.07.Accomplish these actions in accordance withthe ‘‘Actions’’ section, paragraph A5, of GrobSB 817–39, dated January 1994.

(b) For sailplanes that are not equippedwith landing gear legs, P/N 109B–5001.01/1:Upon the accumulation of 1,000 hours TIS onthe landing gear leg or within the next 100hours TIS after the effective date of this AD,whichever occurs later, and thereafter atintervals not to exceed 500 hours TIS, inspectthe landing gear legs for cracks (using themagnetic particle or X-ray analysis method)in accordance with the ‘‘Actions’’ section,paragraph B9, of Grob SB 817–39, datedJanuary 4, 1994.

(1) If any crack(s) is found that does notexceed a maximum depth of 0.5 millimeters(mm) on each side, prior to further flight,polish out the crack(s) in accordance with the‘‘Actions’’ section, paragraph B10, of Grob SB817–39, dated January 4, 1994.

(2) If after polishing out any crack, asspecified in paragraph (b)(1) of this AD, theundercarriage thickness is not at least 13 mm,prior to further flight, replace the crackedlanding gear leg with a P/N 109B–5001.01/1landing gear leg, in accordance with the‘‘Actions’’ section, paragraph B10, of Grob SB817–39, dated January 4, 1994.

(3) If any crack(s) is found that is equal toor exceeds a maximum depth of 0.5 mm oneither side, prior to further flight, replace thecracked landing gear leg with a P/N 109B–5001.01/1 landing gear leg, in accordancewith the ‘‘Actions’’ section, paragraph B10, ofGrob SB 817–39, dated January 4, 1994.

(4) Replacing both landing gear legs withP/N 109B–5001.01/1 may be accomplished atany time as terminating action for therepetitive inspection requirement of this AD,but must be accomplished prior to furtherflight on any landing gear found cracked asspecified in paragraph (b)(2) or (b)(3) of thisAD.

(5) If one landing gear leg is replaced priorto further flight when a crack is found, theother landing gear leg must still berepetitively inspected every 500 hours TIS

until replacement with the improved designpart.

Note 2: Landing gear legs (P/N 109B–5001.01/1) have a ‘‘0’’ stamped on the frontside of the leg for easy identification.

(c) Special flight permits may be issued inaccordance with sections 21.197 and 21.199of the Federal Aviation Regulations (14 CFR21.197 and 21.199) to operate the sailplaneto a location where the requirements of thisAD can be accomplished.

(d) An alternative method of compliance oradjustment of the initial or repetitivecompliance times that provides an equivalentlevel of safety may be approved by theManager, Small Airplane Directorate, 1201Walnut, suite 900, Kansas City, Missouri64106. The request shall be forwardedthrough an appropriate FAA MaintenanceInspector, who may add comments and thensend it to the Manager, Small AirplaneDirectorate.

Note 3: Information concerning theexistence of approved alternative methods ofcompliance with this AD, if any, may beobtained from the Small AirplaneDirectorate.

(e) Questions or technical informationrelated to Grob Service Bulletin TM 817–39,dated January 4, 1994, should be directed toGrob-Werke GmbH & Co. KG,Unternehmensbereich, Burkhart GrobFlugzeugbau, Flugplatz Mattsies, 86874Tussenhausen, Germany. This serviceinformation may be examined at the FAA,Central Region, Office of the RegionalCounsel, Room 1558, 601 E. 12th Street,Kansas City, Missouri 64106.

(f) The inspections, installation, polishing,and replacements required by this AD shallbe done in accordance to Grob ServiceBulletin TM 817–39, dated January 4, 1994.This incorporation by reference wasapproved by the Director of the FederalRegister in accordance with 5 U.S.C. 552(a)and 1 CFR part 51. Copies may be obtainedfrom Grob-Werke GmbH & Co. KG,Unternehmensbereich, Burkhart GrobFlugzeugbau, Flugplatz Mattsies, 86874Tussenhausen, Germany. Copies may beinspected at the FAA, Central Region, Officeof the Regional Counsel, Room 1558, 601 E.12th Street, Kansas City, Missouri, or at theOffice of the Federal Register, 800 NorthCapitol Street, NW, suite 700, Washington,DC.

(g) This amendment becomes effective onJanuary 9, 1999.

Issued in Kansas City, Missouri, onNovember 16, 1998.

Michael Gallagher,Manager, Small Airplane Directorate, AircraftCertification Service.[FR Doc. 98–31317 Filed 11–24–98; 8:45 am]

BILLING CODE 4910–13–U



14 CFR Part 39


RIN 2120–AA64

Airworthiness Directives; EmpresaBrasileira de Aeronautica S.A.(EMBRAER) Model EMB–145 SeriesAirplanes

AGENCY: Federal AviationAdministration, DOT.ACTION: Final rule; request forcomments.

SUMMARY: This amendment adopts anew airworthiness directive (AD) that isapplicable to certain Empresa Brasileirade Aeronautica S.A. (EMBRAER) ModelEMB–145 series airplanes. This actionrequires revising the PerformanceSection of the Airplane Flight Manual(AFM) to provide the flightcrew withprocedures to adjust landing distancesfor landings performed with the anti-icing system active. This action alsorequires revising the LimitationsSections of the AFM to prohibit certaintypes of approaches with the anti-icingsystem active. This amendment isprompted by a report that increased(i.e., higher than normal) flight idlethrust may occur when the anti-icingsystem is active. The actions specifiedin this AD are intended to ensure thatthe flightcrew is advised of appropriatelanding field lengths when operatingwith the anti-icing system active, andthat instrument approaches at certainflap settings are prohibited with theanti-icing system active. Increased flightidle thrust when the anti-icing system isactive, if not corrected, could result inlanding overrun.DATES: Effective December 10, 1998.

The incorporation by reference ofcertain publications listed in theregulations is approved by the Directorof the Federal Register as of December10, 1998.

Comments for inclusion in the RulesDocket must be received on or beforeDecember 28, 1998.ADDRESSES: Submit comments intriplicate to the Federal AviationAdministration (FAA), TransportAirplane Directorate, ANM–114,Attention: Rules Docket No. 98–NM–317–AD, 1601 Lind Avenue, SW.,Renton, Washington 98055–4056.

The service information referenced inthis AD may be obtained from EmpresaBrasileira de Aeronautica S.A.(EMBRAER), P.O. Box 343—CEP 12.225,


Sao Jose dos Campos—SP, Brazil. Thisinformation may be examined at theFAA, Transport Airplane Directorate,1601 Lind Avenue, SW., Renton,Washington; or at the FAA, SmallAirplane Directorate, Atlanta AircraftCertification Office, One Crown Center,1895 Phoenix Boulevard, suite 450,Atlanta, Georgia; or at the Office of theFederal Register, 800 North CapitolStreet, NW., suite 700, Washington, DC.FOR FURTHER INFORMATION CONTACT:Thomas Peters, Aerospace Engineer,ACE–118A, FAA, Small AirplaneDirectorate, Atlanta AircraftCertification Office, One Crown Center,1895 Phoenix Boulevard, suite 450,Atlanta, Georgia 30349; telephone (770)703–6063; fax (770) 703–6097.SUPPLEMENTARY INFORMATION: TheDepartmento de Aviacao Civil (DAC),which is the airworthiness authority forBrazil, recently notified the FAA that anunsafe condition may exist on certainEMBRAER Model EMB–145 seriesairplanes. The DAC advises that a faultwas discovered during a review ofVersion II.2 of the Full Authority DigitalEngine Control, which is installed onModel EMB–145 series airplanesequipped with Allison ModelAE3007A1/2 engines. That fault affectsoperations when the anti-icing system isactive, and causes increased (i.e., higherthan normal) flight idle thrust duringlanding. Such increased flight idlethrust increases landing distances overthose shown in the existing PerformanceSection of the FAA-approved AirplaneFlight Manual (AFM), which couldresult in landing overrun if the landingdistance is greater than the availablerunway. Also, such increased flight idlethrust during instrument approachesusing the Flaps 22 setting could resultin reduced controllability of theairplane due to inadequate drag to slowthe airplane or to descend. Thiscondition, if not corrected, also couldresult in landing overrun.

Explanation of Relevant ServiceInformation

The FAA has reviewed EMBRAEREMB–145 Airplane Flight Manual 145/1153, Revision 19, dated October 23,1998, which describes procedures forrevising the Performance Section of theFAA-approved AFM to provide theflightcrew with procedures to adjustlanding distances for landingsperformed with the anti-icing systemactive.

FAA’s Determination

The FAA has determined that it isnecessary to revise the LimitationsSection of the FAA-approved AFM to

prohibit instrument approaches usingthe Flaps 22 setting when the anti-icingsystem is active. This determination isbased on the fact that, in conditions ofincreased flight idle thrust, such asetting may not provide adequate drag,which could reduce the ability of theflightcrew to slow the airplane or todescend, and could result in increasedlanding distances.

U.S. Type Certification of the AirplaneThis airplane model is manufactured

in Brazil and is type certificated foroperation in the United States under theprovisions of section 21.29 of theFederal Aviation Regulations (14 CFR21.29) and the applicable bilateralairworthiness agreement. Pursuant tothis bilateral airworthiness agreement,the DAC has kept the FAA informed ofthe situation described above.

Explanation of Requirements of RuleSince an unsafe condition has been

identified that is likely to exist ordevelop on other airplanes of the sametype design registered in the UnitedStates, this AD is being issued to ensurethat the flightcrew is advised ofappropriate landing field lengths whenoperating with the anti-icing systemactive. This AD also is being issued toensure that the flightcrew is advisedthat instrument approaches at certainflap settings are prohibited with theanti-icing system active. Increased flightidle thrust when the anti-icing system isactive, if not corrected, could result inlanding overrun. This AD requiresrevising the Performance Section of theFAA-approved AFM to advise theflightcrew of adjustments to landingdistances for landings performed withthe anti-icing system active. This ADalso requires revising the LimitationsSection of the FAA-approved AFM toprohibit certain types of approacheswith the anti-icing system active.Accomplishment of the AFM revisionsis intended to adequately address theidentified unsafe condition.

Determination of Rule’s Effective DateSince a situation exists that requires

the immediate adoption of thisregulation, it is found that notice andopportunity for prior public commenthereon are impracticable, and that goodcause exists for making this amendmenteffective in less than 30 days.

Comments InvitedAlthough this action is in the form of

a final rule that involves requirementsaffecting flight safety and, thus, was notpreceded by notice and an opportunityfor public comment, comments areinvited on this rule. Interested persons

are invited to comment on this rule bysubmitting such written data, views, orarguments as they may desire.Communications shall identify theRules Docket number and be submittedin triplicate to the address specifiedunder the caption ADDRESSES. Allcommunications received on or beforethe closing date for comments will beconsidered, and this rule may beamended in light of the commentsreceived. Factual information thatsupports the commenter’s ideas andsuggestions is extremely helpful inevaluating the effectiveness of the ADaction and determining whetheradditional rulemaking action would beneeded.

Comments are specifically invited onthe overall regulatory, economic,environmental, and energy aspects ofthe rule that might suggest a need tomodify the rule. All commentssubmitted will be available, both beforeand after the closing date for comments,in the Rules Docket for examination byinterested persons. A report thatsummarizes each FAA-public contactconcerned with the substance of this ADwill be filed in the Rules Docket.

Commenters wishing the FAA toacknowledge receipt of their commentssubmitted in response to this rule mustsubmit a self-addressed, stampedpostcard on which the followingstatement is made: ‘‘Comments toDocket Number 98–NM–317–AD.’’ Thepostcard will be date stamped andreturned to the commenter.


not have substantial direct effects on theStates, on the relationship between thenational government and the States, oron the distribution of power andresponsibilities among the variouslevels of government. Therefore, inaccordance with Executive Order 12612,it is determined that this final rule doesnot have sufficient federalismimplications to warrant the preparationof a Federalism Assessment.

The FAA has determined that thisregulation is an emergency regulationthat must be issued immediately tocorrect an unsafe condition in aircraft,and that it is not a ‘‘significantregulatory action’’ under ExecutiveOrder 12866. It has been determinedfurther that this action involves anemergency regulation under DOTRegulatory Policies and Procedures (44FR 11034, February 26, 1979). If it isdetermined that this emergencyregulation otherwise would besignificant under DOT RegulatoryPolicies and Procedures, a finalregulatory evaluation will be prepared


and placed in the Rules Docket. A copyof it, if filed, may be obtained from theRules Docket at the location providedunder the caption ADDRESSES.







Authority: 49 U.S.C. 106(g), 40113, 44701.


adding the following new airworthinessdirective:98–24–19 Empresa Brasileira de

Aeronautica S.A. (EMBRAER):Amendment 39–10904. Docket 98–NM–317–AD.

Applicability: Model EMB–145 seriesairplanes, equipped with Allison ModelAE3007A1/2 engines; certificated in anycategory.


To ensure that the flightcrew is advised ofappropriate landing field lengths whenoperating with the anti-icing system active,and that instrument approaches at certainflap settings are prohibited with the anti-icing system active, accomplish thefollowing:

(a) Within 10 days after the effective dateof this AD, accomplish the actions specifiedby paragraphs (a)(1) and (a)(2) of this AD.

(1) Revise the Performance Section of theFAA-approved Airplane Flight Manual(AFM) by inserting a copy of EMBRAEREMB–145 AFM 145/1153, Revision 19, datedOctober 23, 1998, into the AFM.

Note 1: When landing in abnormalconfigurations per the emergency andabnormal procedures of Section 3 of the AFMand operating with the anti-icing systemactive, the landing field length multiplesspecified in Section 3 should be applied to

the landing field lengths specified inSupplement 6 of Revision 19 of the AFM.

(2) Revise the Limitations Section ofSupplement 12 of the FAA-approved AFM toinclude the following statement. This actionmay be accomplished by inserting a copy ofthis AD into the AFM.

‘‘Flaps 22 instrument approaches withanti-ice on are not approved.’’

(b) An alternative method of compliance oradjustment of the compliance time thatprovides an acceptable level of safety may beused if approved by the Manager, AtlantaAircraft Certification Office (ACO), FAA,Small Airplane Directorate. Operators shallsubmit their requests through an appropriateFAA Principal Maintenance Inspector, whomay add comments and then send it to theManager, Atlanta ACO.



(d) The AFM revision specified inparagraph (a)(1) of this AD shall be done inaccordance with EMBRAER EMB–145Airplane Flight Manual 145/1153, Revision19, dated October 23, 1998, which containsthe following list of effective pages:

Page No.Revision

level shownon page

Date shown on page

List of Effective Pages, Pages A, S6–i, S6–ii ............................................................................................ 19 October 23, 1998.List of Effective Pages, Page B .................................................................................................................. 18 August 6, 1998.

This incorporation by reference wasapproved by the Director of the FederalRegister in accordance with 5 U.S.C. 552(a)and 1 CFR part 51. Copies may be obtainedfrom Empresa Brasileira de Aeronautica S.A.(EMBRAER), P.O. Box 343—CEP 12.225, SaoJose dos Campos—SP, Brazil. Copies may beinspected at the FAA, Transport AirplaneDirectorate, 1601 Lind Avenue, SW., Renton,Washington; or at the FAA, Small AirplaneDirectorate, Atlanta Aircraft CertificationOffice, One Crown Center, 1895 PhoenixBoulevard, suite 450, Atlanta, Georgia; or atthe Office of the Federal Register, 800 NorthCapitol Street, NW., suite 700, Washington,DC.


Issued in Renton, Washington, onNovember 16, 1998.Darrell M. Pederson,Acting Manager, Transport AirplaneDirectorate, Aircraft Certification Service.[FR Doc. 98–31316 Filed 11–24–98; 8:45 am]BILLING CODE 4910–13–U



14 CFR Part 39

[Docket No. 98–SW–17–AD; Amendment39–10909; AD 98–24–23]

RIN 2120–AA64

Airworthiness Directives; EurocopterFrance Model SE.3160, SA.316B,SA.316C, and SA.319B Helicopters


SUMMARY: This amendment adopts anew airworthiness directive (AD) that isapplicable to Eurocopter France ModelSE.3160, SA.316B, SA.316C, andSA.319B helicopters. This actionrequires inspecting certain horizontalstabilizer spar tubes and replacing themif cracks are found or repairing them ifcrazing, corrosion, fretting marks, orscratches are found and are repairable.This amendment is prompted by several

service reports of spar tube corrosionand fatigue cracks discovered duringnormal maintenance inspections, whichcould cause loss of the horizontalstabilizer and subsequent loss of controlof the helicopter.

DATES: Effective December 10, 1998.The incorporation by reference of

certain publications listed in theregulations is approved by the Directorof the Federal Register as of December10, 1998.

Comments for inclusion in the RulesDocket must be received on or beforeJanuary 25, 1999.

ADDRESSES: Submit comments intriplicate to the Federal AviationAdministration (FAA), Office of theRegional Counsel, Southwest Region,Attention: Rules Docket No. 98–SW–17–AD, 2601 Meacham Blvd., Room 663,Fort Worth, Texas 76137.

The service information referenced inthis AD may be obtained from AmericanEurocopter Corporation, 2701 ForumDrive, Grand Prairie, Texas 75053–4005,telephone (972) 641–3460, fax (972)


641–3527. This information may beexamined at the FAA, Office of theRegional Counsel, Southwest Region,2601 Meacham Blvd., Room 663, FortWorth, Texas; or at the Office of theFederal Register, 800 North CapitolStreet, NW., suite 700, Washington, DC.FOR FURTHER INFORMATION CONTACT: Mr.Shep Blackman, Aerospace Engineer,FAA, Rotorcraft Directorate, RotorcraftStandards Staff, 2601 Meacham Blvd.,Fort Worth, Texas 76137, telephone(817) 222–5296, fax (817) 222–5961.SUPPLEMENTARY INFORMATION: TheDirection Generale De L’Aviation Civile(DGAC), which is the airworthinessauthority for France, recently notifiedthe FAA that an unsafe condition mayexist on Eurocopter France ModelSE.3160, SA.316B, SA.316C, andSA.319B helicopters. The DGAC advisesthat fatigue cracks in certain horizontalspar tubes have been reportedoriginating at or near the airframeattaching fitting.

Eurocopter France has issuedEurocopter France Service Bulletin05.84, Revision 2, dated December 19,1997 (SB). The SB specifies inspectionsof horizontal stabilizer spar tubes, partnumbers (P/N) 3160.35.30.031.1 or .2,for fatigue cracks caused by corrosion orfretting and specifies a procedure torepair them if no cracks are present. TheDGAC classified this SB as mandatoryand issued AD 91–020–049(A)R2, datedMarch 11, 1998, to assure the continuedairworthiness of these helicopters inFrance.

These helicopter models aremanufactured in France and are typecertificated for operation in the UnitedStates under the provisions of § 21.29 ofthe Federal Aviation Regulations (14CFR 21.29) and the applicable bilateralairworthiness agreement. Pursuant tothis bilateral airworthiness agreement,the DGAC has kept the FAA informedof the situation described above. TheFAA has examined the findings of theDGAC, reviewed all availableinformation, and determined that ADaction is necessary for products of thistype design that are certificated foroperation in the United States.

Since an unsafe condition has beenidentified that is likely to exist ordevelop on other Model SE.3160,SA.316B, SA.316C, and SA.319Bhelicopters of the same type designregistered in the United States, this ADis being issued to prevent failure of thehorizontal stabilizer due to fatiguecracks in the horizontal stabilizer spartubes, P/N’s 3160.35.30.031.1 and .2,which could cause loss of the horizontalstabilizer and subsequent loss of controlof the helicopter. The short compliance

time involved is required because thepreviously described critical unsafecondition can adversely affect thecontrollability of the helicopter.Therefore, inspections of the horizontalstabilizer spar tubes for cracks arerequired within 50 hours time-in-service(TIS), and this AD must be issuedimmediately.

Since a situation exists that requiresthe immediate adoption of thisregulation, it is found that notice andopportunity for prior public commenthereon are impracticable, and that goodcause exists for making this amendmenteffective in less than 30 days.

The FAA estimates that 66 helicoptersof U.S. registry will be affected by thisAD, that it will take 6 work hours perhelicopter to accomplish the actions,and that the average labor rate is $60 perwork hour. Required parts will costapproximately $1987 per helicopter.Based on these figures, the total costimpact of this AD on U.S. operators isestimated to be $154,902.


a final rule that involves requirementsaffecting flight safety and, thus, was notpreceded by notice and an opportunityfor public comment, comments areinvited on this rule. Interested personsare invited to comment on this rule bysubmitting such written data, views, orarguments as they may desire.Communications should identify theRules Docket number and be submittedin triplicate to the address specifiedunder the caption ADDRESSES. Allcommunications received on or beforethe closing date for comments will beconsidered, and this rule may beamended in light of the commentsreceived. Factual information thatsupports the commenter’s ideas andsuggestions is extremely helpful inevaluating the effectiveness of the ADaction and determining whetheradditional rulemaking action would beneeded.

Comments are specifically invited onthe overall regulatory, economic,environmental, and energy aspects ofthe rule that might suggest a need tomodify the rule. All commentssubmitted will be available, both beforeand after the closing date for comments,in the Rules Docket for examination byinterested persons. A report thatsummarizes each FAA-public contactconcerned with the substance of this ADwill be filed in the Rules Docket.

Commenters wishing the FAA toacknowledge receipt of their commentssubmitted in response to this rule mustsubmit a self-addressed, stampedpostcard on which the following

statement is made: ‘‘Comments toDocket No. 98–SW–17–AD.’’ Thepostcard will be date stamped andreturned to the commenter.


The FAA has determined that thisregulation is an emergency regulationthat must be issued immediately tocorrect an unsafe condition in aircraft,and that it is not a ‘‘significantregulatory action’’ under ExecutiveOrder 12866. It has been determinedfurther that this action involves anemergency regulation under DOTRegulatory Policies and Procedures (44FR 11034, February 26, 1979). If it isdetermined that this emergencyregulation otherwise would besignificant under DOT RegulatoryPolicies and Procedures, a finalregulatory evaluation will be preparedand placed in the Rules Docket. A copyof it, if filed, may be obtained from theRules Docket at the location providedunder the caption ADDRESSES.







Authority: 49 U.S.C. 106(g), 40113, 44701.


adding a new airworthiness directive toread as follows:AD 98–24–23 Eurocopter France:

Amendment 39–10909. Docket No. 98–SW–17–AD.

Applicability: Model SE.3160, SA.316B,SA.316C, and SA.319B helicopters,certificated in any category.

Note 1: This AD applies to each helicopteridentified in the preceding applicability


provision, regardless of whether it has beenmodified, altered, or repaired in the areasubject to the requirements of this AD. Forhelicopters that have been modified, altered,or repaired so that the performance of therequirements of this AD is affected, theowner/operator must use the authorityprovided in paragraph (b) to request approvalfrom the FAA. This approval may addresseither no action, if the current configurationeliminates the unsafe condition, or differentactions necessary to address the unsafecondition described in this AD. Such arequest should include an assessment of theeffect of the changed configuration on theunsafe condition addressed by this AD. In nocase does the presence of any modification,alteration, or repair remove any helicopterfrom the applicability of this AD.


To prevent failure of the horizontalstabilizer due to a fatigue crack in a spartube, Part Number (P/N) 3160.35.30.031.1 or.2, which could cause loss of control of thehelicopter, accomplish the following:

(a) Within 50 hours time-in-service (TIS)and thereafter at intervals not to exceed 200hours TIS or 12 calendar months, whichevercomes first, using a 10-power or highermagnifying glass, visually inspect thehorizontal stabilizer spar tubes, particularlythe embedded areas adjacent to the left andright attach fittings in accordance withparagraph 1.C.1) through 5) of the PlanningInformation of Eurocopter France ServiceBulletin 05.84, Revision 2, dated December19, 1997 (SB).

(1) If the inspection reveals a crack, beforefurther flight, replace the spar tube with anairworthy spar tube in accordance withparagraph 1.C.7) of the SB.

(2) If the inspection reveals any crazing(fine cracking in the paint), before furtherflight, remove the paint by rubbing with 200grit abrasive paper down to bare metal andinspect the spar tube in accordance withparagraphs 1.C.5) and 1.C.6) a) of the SB.

(3) If corrosion pitting, fretting marks, orscratches are found, before further flight,inspect in accordance with paragraphs 1.C.4),1.C.5), and 1.C.6)a) and c).

(4) If any corrosion pit equals or exceeds0.5 mm in diameter or if a crack is found asa result of the dye penetrant inspectionspecified in paragraph 1.C.6)(a) of the SB,before further flight, replace the spar tubewith an airworthy spar tube in accordancewith paragraph 1.C.7) of the SB.

(5) If pits are less than 0.5mm in diameteror corrosion, fretting, or scratches arerepairable, before further flight, repair thespar tube in accordance with paragraph1.C.6) and reinstall the spar tube inaccordance with paragraph 1.C.7) of the SB.

(6) If no corrosion pitting, fretting marks,scratches or crazing are found, reinstall thespar tube in accordance with paragraph1.C.7) of the SB.

(b) An alternative method of compliance oradjustment of the compliance time thatprovides an acceptable level of safety may beused if approved by the Manager, RotorcraftStandards Staff, Rotorcraft Directorate, FAA.Operators shall submit their requests throughan FAA Principal Maintenance Inspector,

who may concur or comment and then sendit to the Manager, Rotorcraft Standards Staff.

Note 2: Information concerning theexistence of approved alternative methods ofcompliance with this AD, if any, may beobtained from the Rotorcraft Standards Staff.

(c) Special flight permits may be issued inaccordance with sections 21.197 and 21.199of the Federal Aviation Regulations (14 CFR21.197 and 21.199) to operate the helicopterto a location where the requirements of thisAD can be accomplished.

(d) The inspection, replacement and repairshall be done in accordance with EurocopterFrance Service Bulletin 05.84, Revision 2,dated December 19, 1997. This incorporationby reference was approved by the Director ofthe Federal Register in accordance with 5U.S.C. 552(a) and 1 CFR part 51. Copies maybe obtained from American EurocopterCorporation, 2701 Forum Drive, GrandPrairie, Texas 75053–4005, telephone (972)641–3460, fax (972) 641–3527. Copies may beinspected at the FAA, Office of the RegionalCounsel, Southwest Region, 2601 MeachamBlvd., Room 663, Fort Worth, Texas 76137;or at the Office of the Federal Register, 800North Capitol Street, NW., suite 700,Washington, DC.


Note 3: The subject of this AD is addressedin Direction Generale De L’Aviation Civile(France) AD 91–020–049(A)R2 dated March11, 1998.

Issued in Fort Worth, Texas, on November17, 1998.Eric Bries,Acting Manager, Rotorcraft Directorate,Aircraft Certification Service.[FR Doc. 98–31330 Filed 11–24–98; 8:45 am]BILLING CODE 4910–13–U



14 CFR Part 39


RIN 2120–AA64

Airworthiness Directives; BoeingModel 747–400 Series Airplanes


SUMMARY: This amendment adopts anew airworthiness directive (AD),applicable to certain Boeing Model 747–400 series airplanes, that requiresreplacing the cam assembly, cambellcrank assembly, and thrust reversercontrol switch actuator on all four thrustlevers with new components. Thisamendment is prompted by a report ofan uncommanded automatic retractionof the leading edge flaps during takeoff.

The actions specified by this AD areintended to prevent such uncommandedautomatic retraction, which wouldseriously degrade liftoff and climbcapabilities, and could result in near-stall conditions at a critical phase of theflight.DATES: Effective December 30, 1998.

The incorporation by reference ofcertain publications listed in theregulations is approved by the Directorof the Federal Register as of December30, 1998.ADDRESSES: The service informationreferenced in this AD may be obtainedfrom Boeing Commercial AirplaneGroup, P.O. Box 3707, Seattle,Washington 98124–2207. Thisinformation may be examined at theFederal Aviation Administration (FAA),Transport Airplane Directorate, RulesDocket, 1601 Lind Avenue, SW.,Renton, Washington; or at the Office ofthe Federal Register, 800 North CapitolStreet, NW., suite 700, Washington, DC.FOR FURTHER INFORMATION CONTACT:Frank van Leynseele, AerospaceEngineer, Systems and EquipmentBranch, ANM–130S, FAA, SeattleAircraft Certification Office, 1601 LindAvenue, SW., Renton, Washington;telephone (206) 227–2671; fax (206)227–1181.SUPPLEMENTARY INFORMATION: Aproposal to amend part 39 of the FederalAviation Regulations (14 CFR part 39) toinclude an airworthiness directive (AD)that is applicable to certain BoeingModel 747–400 series airplanes waspublished in the Federal Register onApril 14, 1997 (62 FR 18063). Thataction proposed to require replacing thecam assembly, cam bellcrank assembly,and thrust reverser control switchactuator on all four thrust levers withnew components.

Interested persons have been affordedan opportunity to participate in themaking of this amendment. Dueconsideration has been given to thecomments received.

Request To Cite the Latest ServiceInformation

Three commenters request that theproposed rule be revised to reflect thelatest revision of Boeing Alert ServiceBulletin 747–27A2356; the originalissue of that service bulletin wasreferenced in the proposal as theappropriate source of serviceinformation.

The FAA concurs with thecommenters’ request to reference thelatest revision of the service bulletin.The FAA has reviewed and approvedBoeing Service Bulletin 747–27A2356,Revision 1, dated August 13, 1998. That


revision of the service bulletin providesa correction to certain part numbers ofthe cam bellcrank assemblies andclarifies certain part-markinginstructions. In addition, Revision 1 ofthe service bulletin describes a revisionof the operating position of the reversethrust isolation valve switches in thethrust levers. The FAA has revised thefinal rule to reference Boeing ServiceBulletin 747–27A2356, Revision 1,dated August 13, 1998, as theappropriate source of serviceinformation. The FAA has determinedthat requiring the replacements to beperformed in accordance with Revision1 of the service bulletin will not pose anadditional burden on any operator.

Request To Revise the Cost ImpactInformation

One commenter, the manufacturer,requests that the cost impactinformation be corrected to reflect that46 airplanes of U.S. registry will beaffected by this AD, rather than the 35airplanes estimated in the proposal. TheFAA concurs and has revised the costimpact information accordingly.

ConclusionAfter careful review of the available

data, including the comments notedabove, the FAA has determined that airsafety and the public interest require theadoption of the rule with the changesdescribed previously. The FAA hasdetermined that these changes willneither increase the economic burdenon any operator nor increase the scopeof the AD.

Cost ImpactThere are approximately 394 Boeing

Model 747–400 series airplanes of theaffected design in the worldwide fleet.The FAA estimates that 46 airplanes ofU.S. registry will be affected by this AD,that it will take approximately 8 workhours per airplane to accomplish therequired actions, and that the averagelabor rate is $60 per work hour.Required parts would cost between$3,412 and $4,740 per airplane. Basedon these figures, the cost impact of theAD is estimated to be between $179,032and $240,120, or between $3,892 and$5,220 per airplane.

The cost impact figures discussedabove are based on assumptions that nooperator has yet accomplished any ofthe requirements of this AD action, andthat no operator would accomplishthose actions in the future if this ADwere not adopted.


not have substantial direct effects on the

States, on the relationship between thenational government and the States, oron the distribution of power andresponsibilities among the variouslevels of government. Therefore, inaccordance with Executive Order 12612,it is determined that this final rule doesnot have sufficient federalismimplications to warrant the preparationof a Federalism Assessment.

For the reasons discussed above, Icertify that this action (1) is not a‘‘significant regulatory action’’ underExecutive Order 12866; (2) is not a‘‘significant rule’’ under DOTRegulatory Policies and Procedures (44FR 11034, February 26, 1979); and (3)will not have a significant economicimpact, positive or negative, on asubstantial number of small entitiesunder the criteria of the RegulatoryFlexibility Act. A final evaluation hasbeen prepared for this action and it iscontained in the Rules Docket. A copyof it may be obtained from the RulesDocket at the location provided underthe caption ADDRESSES.







Authority: 49 U.S.C. 106(g), 40113, 44701.


adding the following new airworthinessdirective:98–24–26 Boeing: Amendment 39–10913.

Docket 97–NM–13–AD.Applicability: Model 747–400 series

airplanes, line positions 696 through 1090inclusive; certificated in any category.

Note 1: This AD applies to each airplaneidentified in the preceding applicabilityprovision, regardless of whether it has beenmodified, altered, or repaired in the areasubject to the requirements of this AD. Forairplanes that have been modified, altered, orrepaired so that the performance of therequirements of this AD is affected, theowner/operator must request approval for analternative method of compliance inaccordance with paragraph (b) of this AD.The request should include an assessment ofthe effect of the modification, alteration, or

repair on the unsafe condition addressed bythis AD; and, if the unsafe condition has notbeen eliminated, the request should includespecific proposed actions to address it.


To prevent uncommanded automaticretraction of the leading edge flaps duringtakeoff, which would seriously degrade liftoffand climb capabilities, and could result innear-stall conditions, accomplish thefollowing:

(a) Within 18 months after the effectivedate of this AD, accomplish the requirementsof paragraph (a)(1) or (a)(2) of this AD, asapplicable, in accordance with BoeingService Bulletin 747–27A2356, Revision 1,dated August 13, 1998.

(1) For Groups 1 and 2 airplanes, as listedin the service bulletin: Replace the camassembly, cam bellcrank assembly, and thrustreverser control switch actuator on all fourthrust levers with new components.

(2) For Groups 3 and 4 airplanes, as listedin the service bulletin: Replace the cambellcrank assembly and thrust reversercontrol switch actuator on all four thrustlevers with new components.

(b) An alternative method of compliance oradjustment of the compliance time thatprovides an acceptable level of safety may beused if approved by the Manager, SeattleAircraft Certification Office (ACO), FAA,Transport Airplane Directorate. Operatorsshall submit their requests through anappropriate FAA Principal MaintenanceInspector, who may add comments and thensend it to the Manager, Seattle ACO.

Note 2: Information concerning theexistence of approved alternative methods ofcompliance with this AD, if any, may beobtained from the Seattle ACO.


(d) The actions shall be done in accordancewith Boeing Service Bulletin 747–27A2356,Revision 1, dated August 13, 1998. Thisincorporation by reference was approved bythe Director of the Federal Register inaccordance with 5 U.S.C. 552(a) and 1 CFRpart 51. Copies may be obtained from BoeingCommercial Airplane Group, P.O.-Box 3707,Seattle, Washington 98124–2207. Copies maybe inspected at the FAA, Transport AirplaneDirectorate, 1601 Lind Avenue, SW., Renton,Washington; or at the Office of the FederalRegister, 800 North Capitol Street, NW., suite700, Washington, DC.


Issued in Renton, Washington onNovember 18, 1998.Darrell M. Pederson,Acting Manager, Transport AirplaneDirectorate, Aircraft Certification Service.[FR Doc. 98–31324 Filed 11–24–98; 8:45 am]BILLING CODE 4910–13–U




14 CFR Part 39

[Docket No. 97–CE–139–AD; Amendment39–10916; AD 98–24–29]

RIN 2120–AA64

Airworthiness Directives; AerostarAircraft Corporation PA–60–600 andPA–60–700 Series Airplanes


SUMMARY: This amendment adopts anew airworthiness directive (AD) thatapplies to all Aerostar AircraftCorporation (Aerostar) PA–60–600 andPA–60–700 series airplanes. This ADrequires repetitively inspecting theforward face of each wing’s 55-percentupper spar cap for cracks above themain landing gear fitting in the top ofthe wheel well, and replacing orrepairing any cracked upper spar cap.Reports of spanwise cracks in the areaabove the main landing gear attachmenton two of the affected airplanesprompted this action. The actionsspecified by this AD are intended todetect and correct fatigue cracking of thewing upper spar cap, which could resultin structural failure of the wing spar tothe point of failure with consequent lossof control of the airplane.DATES: Effective January 8, 1999.

The incorporation by reference ofcertain publications listed in theregulations is approved by the Directorof the Federal Register as of January 8,1999.ADDRESSES: Service information thatapplies to this AD may be obtained fromthe Aerostar Aircraft Corporation, 10555Airport Drive, Coeur d’Alene Airport,Hayden Lake, Idaho 83835–9742;telephone: (208) 762–0338. Thisinformation may also be examined atthe Federal Aviation Administration(FAA), Central Region, Office of theRegional Counsel, Attention: RulesDocket No. 97–CE–139–AD, Room 1558,601 E. 12th Street, Kansas City, Missouri64106; or at the Office of the FederalRegister, 800 North Capitol Street, NW,suite 700, Washington, DC.FOR FURTHER INFORMATION CONTACT: Mr.Richard N. Simonson, AerospaceEngineer, FAA, Seattle AircraftCertification Office, 1601 Lind Avenue,SW, Renton, Washington 98055–4056;telephone: (425) 227–2597; facsimile:(425) 227–1181.


Events Leading to the Issuance of ThisAD

A proposal to amend part 39 of theFederal Aviation Regulations (14 CFRpart 39) to include an AD that wouldapply to all Aerostar PA–60–600 andPA–60–700 series airplanes waspublished in the Federal Register as anotice of proposed rulemaking (NPRM)on August 21, 1998 (63 FR 44818). TheNPRM proposed to require repetitivelyinspecting the forward face of eachwing’s 55-percent upper spar cap forcracks above the main landing gearfitting in the top of the wheel well, andreplacing or repairing any crackedupper spar cap.

Accomplishment of the proposedinspections as specified in the NPRMwould be required in accordance withAerostar Service Bulletin SB600–132,dated September 3, 1997.Accomplishment of the proposed repair(if necessary) would be required inaccordance with an FAA-approvedrepair scheme. Accomplishment of theproposed replacement (if necessary)would be required in accordance withthe applicable maintenance manual.

The NPRM was the result of reportsof spanwise cracks in the area above themain landing gear attachment on two ofthe affected airplanes.

Interested persons have been affordedan opportunity to participate in themaking of this amendment. Nocomments were received on theproposed rule or the FAA’sdetermination of the cost to the public.


After careful review of all availableinformation related to the subjectpresented above, the FAA hasdetermined that air safety and thepublic interest require the adoption ofthe rule as proposed except for minoreditorial corrections. The FAA hasdetermined that these minor correctionswill not change the meaning of the ADand will not add any additional burdenupon the public than was alreadyproposed.

Cost Impact

The FAA estimates that 600 airplanesin the U.S. registry will be affected bythis AD, that it will take approximately2 workhours per airplane to accomplishthe initial inspection, and that theaverage labor rate is approximately $60an hour. Based on these figures, the totalcost impact of the initial inspectionspecified in this AD on U.S. operators

is estimated to be $72,000, or $120 perairplane.

These figures only take into accountthe costs of the initial inspection and donot take into account the costs ofrepetitive inspections and the costsassociated with any repair that will benecessary if cracks are found. The FAAhas no way of determining the numberof repetitive inspections an owner/operator will incur over the life of theairplane, or the number of airplanes thatwill need replacement or repair.

Regulatory Impact


For the reasons discussed above, Icertify that this action (1) is not a‘‘significant regulatory action’’ underExecutive Order 12866; (2) is not a‘‘significant rule’’ under DOTRegulatory Policies and Procedures (44FR 11034, February 26, 1979); and (3)will not have a significant economicimpact, positive or negative, on asubstantial number of small entitiesunder the criteria of the RegulatoryFlexibility Act. A copy of the finalevaluation prepared for this action iscontained in the Rules Docket. A copyof it may be obtained by contacting theRules Docket at the location providedunder the caption ADDRESSES.







Authority: 49 U.S.C. 106(g), 40113, 44701.



adding a new airworthiness directive(AD) to read as follows:98–24–29 Aerostar Aircraft Corporation:

Amendment 39–10916; Docket No. 97–CE–139–AD.

Applicability: All serial numbers of thefollowing airplane models, certificated in anycategory:PA–60–600 (Aerostar 600)PA–60–601 (Aerostar 601)PA–60–601P (Aerostar 601P)PA–60–602P (Aerostar 602P)PA–60–700P (Aerostar 700P)

Note 1: This AD applies to each airplaneidentified in the preceding applicabilityprovision, regardless of whether it has beenmodified, altered, or repaired in the areasubject to the requirements of this AD. Forairplanes that have been modified, altered, orrepaired so that the performance of therequirements of this AD is affected, theowner/operator must request approval for analternative method of compliance inaccordance with paragraph (d) of this AD.The request should include an assessment ofthe effect of the modification, alteration, orrepair on the unsafe condition addressed bythis AD; and, if the unsafe condition has notbeen eliminated, the request should includespecific proposed actions to address it.


To detect and correct fatigue cracking ofthe wing upper spar cap, which could resultin structural failure of the wing spar to thepoint of failure with consequent loss ofcontrol of the airplane, accomplish thefollowing:

(a) Within the next 100 hours time-in-service (TIS) after the effective date of thisAD, unless already accomplished, andthereafter at intervals not to exceed 100 hoursTIS, inspect the forward face of each wing’s55-percent upper spar cap for cracks abovethe main landing gear fitting in the top of thewheel well. Accomplish this inspection inaccordance with the INSTRUCTIONS sectionof Aerostar Service Bulletin SB600–132,dated September 3, 1997. The initialinspection must be accomplished using dyepenetrant methods and all subsequentinspections must be, at the very least, visualinspections.

(b) If any crack(s) is/are found during anyinspection required by paragraph (a) of thisAD, prior to further flight, accomplish eitherparagraph (b)(1) or (b)(2) of this AD (below):

(1) Replace the upper spar cap inaccordance with the applicable maintenancemanual, and continue to repetitively inspectas required by paragraph (a) of this AD; or

(2) Obtain a repair scheme from themanufacturer through the FAA, SmallAirplane Directorate, at the address specifiedin paragraph (d) of this AD; incorporate thisscheme; and continue to repetitively inspectas required by paragraph (a) of this AD,unless specified differently in theinstructions to the repair scheme.

(c) Special flight permits may be issued inaccordance with §§ 21.197 and 21.199 of the

Federal Aviation Regulations (14 CFR 21.197and 21.199) to operate the airplane to alocation where the requirements of this ADcan be accomplished.

(d) An alternative method of compliance oradjustment of the initial or repetitivecompliance times that provides an equivalentlevel of safety may be approved by theManager, Seattle Aircraft Certification Office(ACO), 1601 Lind Avenue, SW, Renton,Washington 98055–4056. The request shallbe forwarded through an appropriate FAAMaintenance Inspector, who may addcomments and then send it to the Manager,Seattle ACO.

NOTE 2: Information concerning theexistence of approved alternative methods ofcompliance with this AD, if any, may beobtained from the Seattle ACO.

(e) The inspections required by this ADshall be done in accordance with AerostarService Bulletin SB600–132, datedSeptember 3, 1997. This incorporation byreference was approved by the Director of theFederal Register in accordance with 5 U.S.C.552(a) and 1 CFR part 51. Copies may beobtained from the Aerostar AircraftCorporation, 10555 Airport Drive, Coeurd’Alene Airport, Hayden Lake, Idaho 83835–9742. Copies may be inspected at the FAA,Central Region, Office of the RegionalCounsel, Room 1558, 601 E. 12th Street,Kansas City, Missouri, or at the Office of theFederal Register, 800 North Capitol Street,NW, suite 700, Washington, DC.

(f) This amendment becomes effective onJanuary 8, 1999.

Issued in Kansas City, Missouri, onNovember 17, 1998.Michael Gallagher,Manager, Small Airplane Directorate,Aircraft Certification Service.[FR Doc. 98–31435 Filed 11–24–98; 8:45 am]BILLING CODE 4910–13–U



14 CFR Part 39

[Docket No. 98–CE–106–AD; Amendment39–10917; AD 98–24–30]

RIN 2120–AA64

Airworthiness Directives; StemmeGmbH & Co. KG Models S10, S10–V,and S10–VT Sailplanes


SUMMARY: This amendment adopts anew airworthiness directive (AD) thatapplies to certain Stemme GmbH & Co.KG (Stemme) Models S10, S10–V, andS10–VT sailplanes. This AD requiresinspecting certain areas in the flightcontrol system for cracks; immediatelyreplacing any cracked parts; and

eventually replacing all longitudinalcoupling with modified couplingregardless if found cracked. This AD isthe result of mandatory continuingairworthiness information (MCAI)issued by the airworthiness authority forGermany. The actions specified by thisAD are intended to detect and correctcracks in certain areas of the flightcontrol system, which could result inflight control system failure withconsequent reduced or loss of control ofthe sailplane.DATES: Effective December 18, 1998.

The incorporation by reference ofcertain publications listed in theregulations is approved by the Directorof the Federal Register as of December18, 1998.

Comments for inclusion in the RulesDocket must be received on or beforeDecember 28, 1998.ADDRESSES: Submit comments intriplicate to the Federal AviationAdministration (FAA), Central Region,Office of the Regional Counsel,Attention: Rules Docket 98–CE–106–AD, Room 1558, 601 E. 12th Street,Kansas City, Missouri 64106.

Service information that applies tothis AD may be obtained from StemmeGmbH & Co. KG, Gustav-Meyer-Allee25, D–13355 Berlin, Federal Republic ofGermany; telephone: 49.33.41.31.11.70;facsimile: 49.33.41.31.11.73. Thisinformation may also be examined atthe Federal Aviation Administration(FAA), Central Region, Office of theRegional Counsel, Attention: RulesDocket 98–CE–106–AD, Room 1558, 601E. 12th Street, Kansas City, Missouri64106; or at the Office of the FederalRegister, 800 North Capitol Street, NW,suite 700, Washington, DC.FOR FURTHER INFORMATION CONTACT: Mr.Mike Kiesov, Aerospace Engineer, FAA,Small Airplane Directorate, 1201Walnut, suite 900, Kansas City, Missouri64106; telephone: (816) 426–6934;facsimile: (816) 426–2169.SUPPLEMENTARY INFORMATION:

Discussion

The Luftfahrt-Bundesamt (LBA),which is the airworthiness authority forGermany, recently notified the FAA thatan unsafe condition may exist on certainStemme Models S10, S10–V, and S10–VT sailplanes. The LBA reports thatcracks were found on the flight controllongitudinal coupling during a staticload test on the elevator control system.

The cracks were such that the flightcontrol system would have most likelyfailed in a short period of operating timewith reduced or loss of control of thesailplane.


Other parts in the flight controlsystem have the same type of forceintersection design and cracks couldexist or develop in these areas also.These areas are the wing flap coupling,part number (P/N) 10SW–RVW; theairbrake control coupling, P/N 10SB–RVW; the flap drive rocker, P/N 10SW–RMW; and the flap/aileron interferenceshaft, P/N 10SQ–RMW.

Cracks in any of these areas, if notdetected and corrected in a timelymanner, could result in flight controlsystem failure with consequent reducedor loss of control of the sailplane.

Relevant Service Information

Stemme has issued Service BulletinA31–10–032, Amendment-Index 02.a,dated July 10, 1998, which specifiesprocedures for inspecting the followingparts for cracks:

• The flight control longitudinalcoupling, part number (P/N) 10SH–RVH;

• The wing flap coupling, P/N 10SW–RVW;

• The airbrake control coupling, P/N10SB–RVW;

• The flap drive rocker, P/N 10SW–RMW; and

• The flap/aileron interference shaft,P/N 10SQ–RMW.

This service bulletin also referencesStemme Installation Instructions A34–10–032–E, Amendment-Index 01.a,dated August 10, 1998, which includesprocedures for replacing the flightcontrol longitudinal coupling, withmodified P/N 10SH–RVH coupling.

The LBA classified this serviceinformation as mandatory and issuedGerman AD 1998–323, dated July 1,1998, in order to assure the continuedairworthiness of these sailplanes inGermany.


These sailplane models aremanufactured in Germany and are typecertificated for operation in the UnitedStates under the provisions of § 21.29 ofthe Federal Aviation Regulations (14CFR 21.29) and the applicable bilateralairworthiness agreement. Pursuant tothis bilateral airworthiness agreement,the LBA has kept the FAA informed ofthe situation described above.

The FAA has examined the findingsof the LBA; reviewed all availableinformation, including the serviceinformation referenced above; anddetermined that AD action is necessaryfor products of this type design that arecertificated for operation in the UnitedStates.

Explanation of the Provisions of ThisAD

Since an unsafe condition has beenidentified that is likely to exist ordevelop in other Stemme Models S10,S10–V, and S10–VT sailplanes of thesame type design registered foroperation in the United States, the FAAis taking AD action. This AD requiresinspecting the areas of the flight controlsystem previously referenced for cracks;immediately replacing any crackedparts; and eventually replacing alllongitudinal coupling with modifiedcoupling regardless if found cracked.

Accomplishment of the inspectionwill be required in accordance withStemme Service Bulletin A31–10–032,Amendment-Index 02.a, dated July 10,1998.

Accomplishment of the longitudinalcoupling replacement will be requiredin accordance with Stemme InstallationInstructions A34–10–032–E,Amendment-Index 01.a, dated August10, 1998.

Accomplishment of the replacementof any other cracked part in the flightcontrol system will be required inaccordance with procedures obtainedfrom the manufacturer through the FAA,Small Airplane Directorate.

Possible Follow-up Action

Stemme has modified the longitudinalcoupling, but has not modified the wingflap coupling, the airbrake controlcoupling, the flap drive rocker, and theflap/aileron interference shaft. If cracksare found on parts other than thelongitudinal coupling, then Stemmewill develop modified parts upondemand as quickly as possible.Operation of the sailplane while theparts are being developed will not beallowed. The FAA has determined thatthis alternative is better than operatingthe sailplane with cracked parts in theflight control system.

The FAA will continue to monitorthis situation, and may issue additionalAD action to require mandatoryreplacement of modified flight controlsystem parts other than the longitudinalcoupling, as these parts becomeavailable.

Compliance Time of This AD

The replacement compliance of thisAD is presented in calendar time andhours time-in-service (TIS). Cracks inthe flight control system occur becauseof sailplane operation; however, there isa potential for corrosion in this area,which could enhance crack growth. Forthis reason, the FAA has determinedthat requiring the replacement at 6calendar months will assure the safety

of the low-usage sailplanes; andrequiring the replacement at 100 hoursTIS will assure the safety of the high-usage sailplanes. The prevalentcompliance time will be that whichoccurs first.

Differences Between This AD, theService Information, and the GermanAD

Stemme Service Bulletin A31–10–032, Amendment-Index 02.a, dated July10, 1998, specifies inspecting certainareas of the flight control systemcoupling prior to further flight onsailplanes with over 100 hours TIS. TheGerman AD requires this on allsailplanes registered for operation inGermany.

The FAA does not have thejustification to require the initialinspection prior to further flight on allsailplanes with over 100 hours TIS. TheFAA is giving a grace period of 5 hoursTIS for those sailplanes that have morethan 100 hours TIS on the flight controlsystem.

Determination of the Effective Date ofthe AD

Since a situation exists (possible flightcontrol system failure) that requires theimmediate adoption of this regulation, itis found that notice and opportunity forpublic prior comment hereon areimpracticable, and that good causeexists for making this amendmenteffective in less than 30 days.


a final rule that involves requirementsaffecting immediate flight safety and,thus, was not preceded by notice andopportunity to comment, comments areinvited on this rule. Interested personsare invited to comment on this rule bysubmitting such written data, views, orarguments as they may desire.Communications should identify theRules Docket number and be submittedin triplicate to the address specifiedabove. All communications received onor before the closing date for commentswill be considered, and this rule may beamended in light of the commentsreceived. Factual information thatsupports the commenter’s ideas andsuggestions is extremely helpful inevaluating the effectiveness of the ADaction and determining whetheradditional rulemaking action would beneeded.

Comments are specifically invited onthe overall regulatory, economic,environmental, and energy aspects ofthe rule that might suggest a need tomodify the rule. All commentssubmitted will be available, both before


and after the closing date for comments,in the Rules Docket for examination byinterested persons. A report thatsummarizes each FAA-public contactconcerned with the substance of this ADwill be filed in the Rules Docket.

Commenters wishing the FAA toacknowledge receipt of their commentssubmitted in response to this rule mustsubmit a self-addressed, stampedpostcard on which the followingstatement is made: ‘‘Comments toDocket No. 98–CE–106–AD.’’ Thepostcard will be date stamped andreturned to the commenter.

Regulatory Impact


The FAA has determined that thisregulation is an emergency regulationthat must be issued immediately tocorrect an unsafe condition in aircraft,and is not a significant regulatory actionunder Executive Order 12866. It hasbeen determined further that this actioninvolves an emergency regulation underDOT Regulatory Policies and Procedures(44 FR 11034, February 26, 1979). If itis determined that this emergencyregulation otherwise would besignificant under DOT RegulatoryPolicies and Procedures, a finalregulatory evaluation will be preparedand placed in the Rules Docket(otherwise, an evaluation is notrequired). A copy of it, if filed, may beobtained from the Rules Docket.







Authority: 49 U.S.C. 106(g), 40113, 44701.


adding a new airworthiness directive(AD) to read as follows:98–24–30 STEMME GMBH & Co. KG:

Amendment 39–10917; Docket No. 98–CE–106–AD.

Applicability: The following models andserial number sailplanes, certificated in anycategory:

Model Serial numbers

S10 ....... 10–03 through 10–63.S10–V .. 14–002 through 14–030 and trans-

formed S10–V sailplanes withserial numbers of 14–012Mthrough 14–063M.

S10–VT 11–001, 11–004 through 11–013,and 11–015.

Note 1: This AD applies to each sailplaneidentified in the preceding applicabilityprovision, regardless of whether it has beenmodified, altered, or repaired in the areasubject to the requirements of this AD. Forsailplanes that have been modified, altered,or repaired so that the performance of therequirements of this AD is affected, theowner/operator must request approval for analternative method of compliance inaccordance with paragraph (f) of this AD. Therequest should include an assessment of theeffect of the modification, alteration, or repairon the unsafe condition addressed by thisAD; and, if the unsafe condition has not beeneliminated, the request should includespecific proposed actions to address it.


To detect and correct cracks in certainareas of the flight control system, whichcould result in flight control system failurewith consequent reduced or loss of control ofthe sailplane, accomplish the following:

(a) Upon accumulating 100 hours time-in-service (TIS) on the flight control system orwithin the next 5 hours TIS after the effectivedate of this AD, whichever occurs later,inspect the following areas in the flightcontrol system, in accordance with theInstructions section of Stemme ServiceBulletin A31–10–032, Amendment-Index02.a, dated July 10, 1998:

(1) The longitudinal coupling, part number(P/N) 10SH–RVH;

(2) The wing flap coupling, P/N 10SW–RVW;

(3) The airbrake control coupling, P/N10SB–RVW;

(4) The flap drive rocker, P/N 10SW–RMW;and

(5) The flap/aileron interference shaft, P/N10SQ–RMW.

(b) Prior to further flight after theinspection required by paragraph (a) of thisAD, replace any cracked part with a modifiedpart.

(1) Obtain modified parts (includinginstallation instructions), except for thelongitudinal coupling, from the manufacturerthrough the FAA, Small Airplane Directorate,at the address specified in paragraph (e) ofthis AD.

(2) Obtain modified longitudinal couplingfrom the manufacturer as specified inStemme Service Bulletin A31–10–032,Amendment-Index 02.a, dated July 10, 1998;and install this modified longitudinalcoupling in accordance with StemmeInstallation Instructions A34–10–032–E,Amendment-Index 01.a, dated August 10,1998.

Note 2: Stemme Service Bulletin A31–10–032, Amendment-Index 02.a, dated July 10,1998, includes a return form for reporting thefindings of the crack inspection required byparagraph (a) of this AD. The FAAencourages all owners/operators of theaffected sailplanes to have this form filledout and send it to the manufacturer at theaddress specified in paragraph (g) of this AD.

(c) Within the next 6 calendar months afterthe effective date of this AD or within thenext 100 hours TIS after the effective date ofthis AD, whichever occurs first, unlessalready accomplished (compliance with theapplicable part of paragraph (b) of this AD),obtain modified longitudinal coupling fromthe manufacturer as specified in StemmeService Bulletin A31–10–032, Amendment-Index 02.a, dated July 10, 1998; and installthis modified longitudinal coupling inaccordance with Stemme InstallationInstructions A34–10–032–E, Amendment-Index 01.a, dated August 10, 1998.

(d) As of the effective date of this AD, noperson may install on any affected sailplane,longitudinal coupling that has not beenmodified as specified in Stemme ServiceBulletin A31–10–032, Amendment-Index02.a, dated July 10, 1998; and installed inaccordance with Stemme InstallationInstructions A34–10–032–E, Amendment-Index 01.a, dated August 10, 1998.

(e) Special flight permits may be issued inaccordance with §§ 21.197 and 21.199 of theFederal Aviation Regulations (14 CFR 21.197and 21.199) to operate the sailplane to alocation where the requirements of this ADcan be accomplished.

(f) An alternative method of compliance oradjustment of the compliance times thatprovides an equivalent level of safety may beapproved by the Manager, Small AirplaneDirectorate, 1201 Walnut, suite 900, KansasCity, Missouri 64106. The request shall beforwarded through an appropriate FAAMaintenance Inspector, who may addcomments and then send it to the Manager,Small Airplane Directorate.

Note 3: Information concerning theexistence of approved alternative methods ofcompliance with this AD, if any, may beobtained from the Small AirplaneDirectorate.

(g) Questions or technical informationrelated to the service information referencedin this AD should be directed to StemmeGmbH & Co. KG, Gustav-Meyer-Allee 25, D–13355 Berlin, Federal Republic of Germany;telephone: 49.33.41.31.11.70; facsimile:49.33.41.31.11.73. This service informationmay be examined at the FAA, Central Region,Office of the Regional Counsel, Room 1558,601 E. 12th Street, Kansas City, Missouri64106.

(h) The inspection required by this ADshall be done in accordance with Stemme


Service Bulletin A31–10–032, Amendment-Index 02.a, dated July 10, 1998. Thelongitudinal coupling replacement requiredby this AD shall be done in accordance withStemme Installation Instructions A34–10–032–E, Amendment-Index 01.a, dated August10, 1998. This incorporation by reference wasapproved by the Director of the FederalRegister in accordance with 5 U.S.C. 552(a)and 1 CFR part 51. Copies may be obtainedfrom Stemme GmbH & Co. KG, Gustav-Meyer-Allee 25, D–13355 Berlin, FederalRepublic of Germany. Copies may beinspected at the FAA, Central Region, Officeof the Regional Counsel, Room 1558, 601 E.12th Street, Kansas City, Missouri, or at theOffice of the Federal Register, 800 NorthCapitol Street, NW, suite 700, Washington,DC.

Note 4: The subject of this AD is addressedin German AD 1998–323, dated July 1, 1998.

(i) This amendment becomes effective onDecember 18, 1998.

Issued in Kansas City, Missouri, onNovember 17, 1998.Michael Gallagher,Manager, Small Airplane Directorate,Aircraft Certification Service.[FR Doc. 98–31434 Filed 11–24–98; 8:45 am]BILLING CODE 4910–13–U

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 191

[T.D. 98–16]

RIN 1515–AB95

Drawback; Correction

AGENCY: Customs Service, Departmentof the Treasury.ACTION: Correcting amendment.

SUMMARY: This document corrects anerror appearing in an appendix to thefinal regulations relating to drawback(T.D. 98–16) that were published in theFederal Register (63 FR 10970) onMarch 5, 1998.EFFECTIVE DATE: April 6, 1998.FOR FURTHER INFORMATION CONTACT:Margaret R. McKenna, Duty and RefundDetermination Branch, 202–927–2077.SUPPLEMENTARY INFORMATION:

BackgroundThe final regulations (T.D. 98–16) that

were published in the Federal Registeron March 5, 1998 (63 FR 10970) revisedpart 191 of the Customs Regulationsrelating to drawback (19 CFR part 191).These final regulations contained anerror in one of the generalmanufacturing drawback rulings inAppendix A to part 191, that couldprove misleading. This documentcorrects the error.

Need for Correction

In Appendix A to part 191, theintroductory text for generalmanufacturing drawback ruling ‘‘IV.’’incorrectly describes the exportedarticles that are manufactured under theruling as burlap or other textile material.As made clear in the body of the generalruling, however, the exported articles infact consist of bags or meat wrappers.The bags or meat wrappers aremanufactured from imported burlap orother textile material.

The general ruling is largely arepublication of a general drawbackcontract that formerly appeared in theCustoms Bulletin in T.D. 83–53, 17Cust. Bull. 96 (1983). As published, theintroductory text in T.D. 83–53misdescribed the exported articles. Thiserror was repeated in the correspondingintroductory text of generalmanufacturing drawback ruling ‘‘IV.’’ inAppendix A to part 191.

Accordingly, this document correctsthe introductory text of generalmanufacturing drawback ruling ‘‘IV.’’ toproperly reflect the exported articlesthat are manufactured under the ruling.


Drawback, Reporting andrecordkeeping requirements.

Amendment to the Regulations

Accordingly, Appendix A to part 191,Customs Regulations (19 CFR part 191,Appendix A), is corrected by making thefollowing correcting amendment.

PART 191—DRAWBACK

1. The general authority citation forpart 191 continues to read as follows:

Authority: 19 U.S.C. 66, 1202 (GeneralNote 20, Harmonized Tariff Schedule of theUnited States), 1313, 1624.

* * * * *

Appendix A—[Amended]

2. In Appendix A to part 191,following the heading of generalmanufacturing drawback ruling ‘‘IV.’’,the introductory text immediatelypreceding paragraph ‘‘A.’’ of the generalruling is revised to read as follows:‘‘Drawback may be allowed under 19U.S.C. 1313(a) upon the exportation ofbags or meat wrappers manufacturedwith the use of imported burlap or othertextile material, subject to the followingspecial requirements:’’

Dated: November 19, 1998.Harold M. Singer,Chief, Regulations Branch.[FR Doc. 98–31488 Filed 11–24–98; 8:45 am]BILLING CODE 4820–02–P

DEPARTMENT OF JUSTICE

28 CFR Part 16

[AAG/A Order No. 155–98]

Exemption of System of RecordsUnder the Privacy Act

AGENCY: Department of Justice.ACTION: Final rule.

SUMMARY: The Department of Justice,Federal Bureau of Investigation, isexempting the National Instant CriminalBackground Check System (NICS) from5 U.S.C. 552a (c) (3) and (4); (d); (e) (1),(2), and (3); (e)(4) (G) and (H); (e) (5) and(8); and (g). The purposes of theexemptions are to maintain theconfidentiality and security ofinformation compiled for purposes ofcriminal or other law enforcementinvestigation, or of reports compiled atany stage of the law enforcementprocess. The exemptions are necessarybecause some information in NICS isfrom law enforcement records, and may(in the case of NICS denials, forexample) relate to additional lawenforcement interest. Therefore, to theextent that they may be subject toexemption under subsections (j)(2),(k)(2), and (k)(3), these records are notavailable under the Privacy Act and notsubject to certain of its procedures suchas obtaining an accounting ofdisclosures, notification, access, oramendment/correction.EFFECTIVE DATE: November 25, 1998.FOR FURTHER INFORMATION CONTACT:Patricia E. Neely, Program Analyst (202)616–0178.SUPPLEMENTARY INFORMATION: This rulefinalizes a proposed rule published inthe Federal Register with an invitationto comment on June 4, 1998 (63 FR30429). The FBI accepted comments onthe proposed rule from interestedparties dated on or before July 6, 1998.

Significant Comments

A number of comments raised mattersthat were more pertinent to othernotices of proposed rulemaking relatingto the NICS: The National InstantCriminal Background Check SystemRegulation published in the FederalRegister on June 4, 1998 (63 FR 30430),and the National Instant CriminalBackground Check System User FeeRegulation, published in the FederalRegister on August 17, 1998 (63 FR43893). Such comments are addressedin the final NICS rule, the NationalInstant Criminal Background CheckSystem Regulation, published in theFederal Register on October 30, 1998(63 FR 58303). Other comments raised


matters that were more pertinent to thenotice of the establishment of the NICSas a new system of records, the NationalInstant Criminal Background CheckSystem (NICS) JUSTICE/FBI–018,published in the Federal Register onJune 4, 1998 (63 FR 30514). Suchcomments are addressed in a revisedNICS records system notice, theNational Instant Criminal BackgroundCheck System (NICS) JUSTICE/FBI–018,published in the notices section oftoday’s Federal Register.

Several comments questioned theauthority for exempting records in theNICS. One comment pointed out thatcertain records in the NICS might notmeet the Privacy Act’s requirements forexemptions and should therefore not besubject to exemptions. As in theproposed rule, the final rule specificallystates that exemptions will apply onlyto the extent that information in thesystem is subject to exemption. Thecomment questioned whether evenrecords relating to criminal matterswould be exempt. Case law hasestablished that criminal records do notlose their exempt status even ifreplicated in a non-criminal law system.(Likewise, other law enforcementrecords would retain any exempt statuseven if replicated in a non-lawenforcement system.) In addition,however, to the extent it bears onpossible violations of the Brady Act, theGun Control Act (19 U.S.C. Chapter 44),or the National Firearms Act (26 U.S.C.Chapter 53), information in the NICSmay comprise law enforcement materialin its own right. For instance, NICSdenials presumptively relate to anillegal attempt to acquire a firearm inviolation of federal law. Eveninformation on approved transactions(which the NICS destroys after a limitedtime) may implicate law enforcementinterests, for example, where auditsidentify instances in which the NICS isused for unauthorized purposes, such asrunning checks of people other thanactual gun transferees, or wherepotential handgun transferees ortransferors have submitted falseidentification information to thwart thename check system. One commentsuggested that the rule more clearlydelineate which NICS records would besubject to exemptions. The Privacy Actitself delineates exemptionrequirements, and based on the FBI’slong experience with similar provisionsof other FBI records systems, theproposed language is fully sufficient toguide government officials and precludeadverse impact on individual rights.

Other comments addressed specificexemptions. Several comments objectedto the NICS being exempted from 5

U.S.C. 552a(c)(3), which permits anindividual to request access to anaccounting of certain disclosures ofrecords about the individual. Release ofan accounting of disclosures wouldplace an individual on notice of theexistence of an outside interest in his orher activities. This would be ofparticular concern for situationsinvolving NICS denials, which maypresumptively indicate an attemptedviolation of federal criminal law. Eveninformation on approved transactions(which the NICS destroys after a limitedtime) may implicate law enforcementinterests, for example, where auditsidentify instances in which the NICS isused for unauthorized purposes, such asrunning checks of people other thanactual gun transferees, or wherepotential handgun transferees ortransferors have submitted falseidentification information to thwart thename check system. Releases ofaccountings could result in destructionof evidence, intimidation orendangerment of witnesses and victims,flight of the subject from the area, orother activities that would seriouslyimpede law enforcement investigations.

Several comments in essence objectedto the NICS’ being exempted from 5U.S.C. 552a(d) and (e)(4) (G) and (H),which permit an individual to requestaccess to (and amendment of) recordsabout the individual. Access to systemrecords subject to exemption wouldcompromise ongoing investigations,reveal investigatory techniques andconfidential informants, invade theprivacy of persons who provideinformation in connection with aparticular investigation, or constitute apotential danger to the health or safetyof law enforcement personnel. Inaddition, requiring the FBI to amendinformation thought to be not accurate,timely, relevant, and complete, becauseof the nature of the informationcollected and the length of time it ismaintained, would create an impossibleadministrative burden by forcing theagency to continuously update itsinvestigations attempting to resolvethese issues. Individuals concernedwith the accuracy of records maintainedabout them remain free to availthemselves of any means for access oramendment applicable to the recordsources, and record contributors have acontinuing responsibility to delete orupdate contributions determined to beinvalid or incorrect (see 28 CFR 25.5(b)).Moreover, the NICS itself provides analternate procedure for amendingerroneous records resulting in transferdenials (28 CFR 25.10).

One comment objected to the NICSbeing exempted from 5 U.S.C. 552a(e)(1)

and (5), which require that an agencymaintain only relevant recordsnecessary to accomplish the system’spurpose and with such accuracy,relevance, timeliness, and completenessas is reasonably necessary to assurefairness to the individual. Without thisexemption, the NICS might beprevented from acquiring data notshown to be accurate, relevant, timely,and complete at the moment of itsacquisition by the NICS. This exemptionis necessary because it is impossible topredict when and for whom it will benecessary to use the information in theNICS, and, accordingly, it is notpossible to determine in advance whenthe records will be timely or relevant.Relevance and necessity are questions ofcircumstance and timing, and it is onlyafter the information is evaluated thatthe relevance and necessity of theinformation can be established. Inaddition, since most of the records arefrom state, local, and other federalagency record systems, it would beimpossible to review all of the recordsas they are submitted to verify theiraccuracy. However, as previouslydiscussed, affected persons remain freeto avail themselves of any means foraddressing accuracy, timeliness, orcompleteness applicable to the recordsources, and record contributors have acontinuing responsibility to delete orupdate contributions determined to beinvalid or incorrect (see 28 CFR 25.5(b)).In addition, the Department and the FBIhave made efforts to enhance the qualityof NICS records. Using fundingauthorized by the Brady Act, section106(b), the Department has providedsubstantial assistance to the states forthe purpose of improving their criminalhistory record systems. The FBI will beresponsible for maintaining dataintegrity during NICS operationsmanaged and carried out by the FBI,including the conduct of periodicquality control checks to verify that theinformation provided to the NICS Indexremains valid and correct (28 CFR25.5(a)). Finally, the NICS itselfprovides an alternate procedure foramending erroneous records resultingtransfer denials (28 CFR 25.10).

This order relates to individualsrather than small business entities.Nevertheless, pursuant to therequirements of the RegulatoryFlexibility Act, 5 U.S.C. 601–612, it ishereby stated that this order will nothave ‘‘a significant economic impact ona substantial number of small entities.’’


Administrative practices andprocedures, Courts, Freedom of


Information Act, Government in theSunshine Act, and the Privacy Act.

Pursuant to the authority vested in theAttorney General by 5 U.S.C. 552a anddelegated to me by Attorney GeneralOrder 793–78, 28 CFR part 16 isamended as set forth below.

Dated: November 19, 1998.Stephen R. Colgate,Assistant Attorney General forAdministration.

PART 16—[AMENDED]

1. The authority for part 16 continuesto read as follows:

Authority: 5. U.S.C. 301, 552, 552a,552b(g), 553; 18 U.S.C. 4203 (a)(1); 28 U.S.C.509, 510, 534; 31 U.S.C. 3717, 9701.

2. 28 CFR 16.96 is amended by addingparagraphs (p) and (q) to read asfollows:

§ 16.96 Exemption of Federal Bureau ofInvestigation (FBI) Systems—limitedaccess.

* * * * *(p) The National Instant Criminal

Background Check System (NICS),(JUSTICE/FBI–018), a Privacy Actsystem of records, is exempt:

(1) Pursuant to 5 U.S.C. 552a(j)(2),from subsections (c) (3) and (4); (d); (e)(1), (2) and (3); (e)(4) (G) and (H); (e) (5)and (8); and (g); and

(2) Pursuant to 5 U.S.C. 552a(k) (2)and (3), from subsections (c)(3), (d),(e)(1), and (e)(4) (G) and (H).

(q) These exemptions apply only tothe extent that information in thesystem is subject to exemption pursuantto 5 U.S.C. 552a(j)(2), (k)(2), and (k)(3).Exemptions from the particularsubsections are justified for thefollowing reasons:

(1) From subsection (c)(3) because therelease of the accounting of disclosureswould place the subject on notice thatthe subject is or has been the subject ofinvestigation and result in a seriousimpediment to law enforcement.

(2) From subsection (c)(4) to theextent that it is not applicable since anexemption is claimed from subsection(d).

(3)(i) From subsections (d) and (e)(4)(G) and (H) because these provisionsconcern an individual’s access torecords which concern the individualand such access to records in the systemwould compromise ongoinginvestigations, reveal investigatorytechniques and confidential informants,invade the privacy of persons whoprovide information in connection witha particular investigation, or constitutea potential danger to the health or safetyof law enforcement personnel.

(ii) In addition, from subsection (d)(2)because, to require the FBI to amendinformation thought to be not accurate,timely, relevant, and complete, becauseof the nature of the informationcollected and the essential length oftime it is maintained, would create animpossible administrative burden byforcing the agency to continuouslyupdate its investigations attempting toresolve these issues.

(iii) Although the Attorney General isexempting this system from subsections(d) and (e)(4) (G) and (H), an alternatemethod of access and correction hasbeen provided in 28 CFR, part 25,subpart A.

(4) From subsection (e)(1) because itis impossible to state with any degree ofcertainty that all information in theserecords is relevant to accomplish apurpose of the FBI, even thoughacquisition of the records from state andlocal law enforcement agencies is basedon a statutory requirement. In view ofthe number of records in the system, itis impossible to review them forrelevancy.

(5) From subsections (e) (2) and (3)because the purpose of the system is toverify information about an individual.It would not be realistic to rely oninformation provided by the individual.In addition, much of the informationcontained in or checked by this systemis from Federal, State, and localcriminal history records.

(6) From subsection (e)(5) because itis impossible to predict when it will benecessary to use the information in thesystem, and, accordingly, it is notpossible to determine in advance whenthe records will be timely. Since mostof the records are from State and localor other Federal agency records, itwould be impossible to review all ofthem to verify that they are accurate. Inaddition, an alternate procedure is beingestablished in 28 CFR, part 25, subpartA, so the records can be amended iffound to be incorrect.

(7) From subsection (e)(8) because thenotice requirement could present aserious impediment to law enforcementby revealing investigative techniquesand confidential investigations.

(8) From subsection (g) to the extentthat, pursuant to subsections (j)(2),(k)(2), and (k)(3), the system isexempted from the other subsectionslisted in paragraph (p) of this section.

[FR Doc. 98–31502 Filed 11–24–98; 8:45 am]

BILLING CODE 4410–02–P

DEPARTMENT OF THE INTERIOR

Office of Surface Mining Reclamationand Enforcement

30 CFR Part 904

[SPATS No. AR–032–FOR]

Arkansas Regulatory Program

AGENCY: Office of Surface MiningReclamation and Enforcement (OSM),Interior.

ACTION: Final rule; approval ofamendment.

SUMMARY: OSM is approving anamendment to the Arkansas regulatoryprogram (Arkansas program) under theSurface Mining Control andReclamation Act of 1977 (SMCRA).Arkansas proposed to revise theArkansas Surface Coal Mining andReclamation Code (ASCMRC)concerning revegetation successstandards. Arkansas also proposed toadd policy guidelines for determiningPhase III revegetation success forpasture and previously mined areas,cropland, forest products, recreationand wildlife habitat, and industrial/commercial and residential areas.Arkansas intends to revise its programto be consistent with the correspondingFederal regulations.

EFFECTIVE DATE: November 25, 1998.

FOR FURTHER INFORMATION CONTACT:Michael C. Wolfrom, Director, TulsaField Office, Office of Surface MiningReclamation and Enforcement, 5100East Skelly Drive, Suite 470, Tulsa,Oklahoma 74135–6548. Telephone:(918) 581–6430. Internet:[email protected].

SUPPLEMENTARY INFORMATION:I. Background on the Arkansas ProgramII. Submission of the Proposed AmendmentIII. Director’s FindingsIV. Summary and Disposition of CommentsV. Director’s DecisionVI. Procedural Determinations

I. Background on the ArkansasProgram

On November 21, 1980, the Secretaryof the Interior conditionally approvedthe Arkansas program. You can findbackground information on theArkansas program, including theSecretary’s findings, the disposition ofcomments, and the conditions ofapproval in the November 21, 1980,Federal Register (45 FR 77003). You canfind information on later actionsconcerning the Arkansas program at 30CFR 904.12, 904.15, and 904.16.


II. Submission of the ProposedAmendment

By letter dated August 27, 1998(Administrative Record No. AR–562),Arkansas sent us an amendment to itsprogram under SMCRA. Arkansasproposed to amend its program inresponse to the November 26, 1985, andOctober 14, 1997, letters(Administrative Record Nos. AR–332and AR–559.02, respectively) that wesent to Arkansas under 30 CFR732.17(c).

We announced receipt of theamendment in the September 11, 1998,Federal Register (63 FR 48661). In thesame document, we opened the publiccomment period and provided anopportunity for a public hearing ormeeting on the adequacy of theamendment. The public commentperiod closed on October 13, 1998.Because no one requested a publichearing or meeting, we did not holdone.

During our review of the amendment,we identified concerns relating toArkansas’ proposal to remove thedefinition of ‘‘grazingland’’ andassociated references from itsregulations. We discussed our concernswith Arkansas during a telephoneconversation on October 6, 1998(Administrative Record No. AR–562.06).

By letter dated October 8, 1998(Administrative Record No. AR–562.05),Arkansas withdrew its proposal toremove the definition of ‘‘grazingland’’from its regulations at ASCMRC 701.5.Arkansas also withdrew its proposals toremove references to the land usecategory of ‘‘grazingland’’ from thedefinition of ‘‘renewal resource lands’’at ASCMRC 701.5 and ASCMRC816.116(b)(1). We find that Arkansas’withdrawal of these proposed revisionsis an adequate response to our concerns.Therefore, we are proceeding with thisfinal rule Federal Register document.

III. Director’s Findings

Following, under SMCRA and theFederal regulations at 30 CFR 732.15and 732.17, are our findings concerningthe amendment.

Any revisions that we do not discussbelow concern nonsubstantive wordingchanges, or revised cross-references andparagraph notations to reflectorganizational changes resulting fromthis amendment.

1. ASCMRC 701.5 Definition of‘‘Renewable Resource Lands’’

Arkansas corrected a typographicalerror by changing the words ‘‘thesecharge’’ to the words ‘‘the recharge.’’With the correction of this error,

Arkansas’ definition is the same as theFederal definition of ‘‘Renewal resourcelands’’ at 30 CFR 701.5.

2. ASCMRC 816.116(b)(1) RevegetationSuccess Standards for Areas Developedfor Use as Pasture Land

Arkansas amended ASCMRC816.116(b)(1) by replacing the generalphrase ‘‘such other success standardsapproved by the Department’’ with areference to its revegetation guidelines.ASCMRC 816.116(b)(1) now requiresground cover and production of livingplants on areas developed for use asgrazing and pasture land to be at leastequal to that of a reference area or tocomply with the criteria contained inArkansas’ ‘‘Phase III RevegetationSuccess Standards for Pasture andPreviously Mined Areas.’’

The counterpart Federal regulations at30 CFR 816.116(b)(1) and 817.116(b)(1)require ground cover and production ofliving plants on revegetated grazing landand pasture land areas to be at leastequal to that of a reference area or suchother success standards approved by theregulatory authority. As discussed laterin this document, Arkansas’revegetation success guidelines forpasture are consistent with the Federalregulations for revegetation of disturbedareas. Therefore, the revisions toASCMRC 816.116(b)(1) are consistentwith and no less effective than thecounterpart Federal regulations at 30CFR 816.116(b)(1) and 817.116(b)(1).

3. ASCMRC 816.116(b)(2) RevegetationSuccess Standards for Areas Developedfor Use as Cropland

Arkansas revised ASCMRC816.116(b)(2) by replacing the referenceto ‘‘such other success standardsapproved by the Department’’ with areference to its revegetation guidelines.ASCMRC 816.116(b)(2) now requirescrop production on areas developed foruse as cropland to be at least equal tothat of a reference area or to complywith the criteria contained in Arkansas’‘‘Phase III Revegetation SuccessStandards for Cropland.’’

The Federal regulations at 30 CFR816.116(b)(2) and 817.116(b)(2) requirecrop production on revegetatedcropland areas to be at least equal tothat of a reference area or such othersuccess standards approved by theregulatory authority. As discussed laterin this document, Arkansas’revegetation success guidelines forcropland are no less effective than theFederal regulations for revegetation ofdisturbed areas. Therefore, we find thatthe revisions to ASCMRC 816.116(b)(2)are consistent with and no less effectivethan the counterpart Federal regulations

at 30 CFR 816.116(b)(2) and817.116(b)(2).

4. ASCMRC 816.116(b)(3)(iv)Revegetation Success Standards forAreas to be Developed for Fish andWildlife Habitat, Recreation, ShelterBelts, or Forest Products

Arkansas added a new paragraph(b)(3)(iv) that requires vegetationsuccess for areas to be developed forfish and wildlife habitat, recreation,shelter belts, or forest products tocomply with the criteria contained in its‘‘Phase III Revegetation SuccessStandards for Forest Products’’ or its‘‘Phase III Revegetation SuccessStandards for Recreation and WildlifeHabitat.’’

There is no direct Federal counterpartto this provision at 30 CFR816.116(b)(3). However, the Federalregulations at 30 CFR 816.116(a)(1) and817.116(a)(1) require a regulatoryauthority to include standards forsuccess and statistically valid samplingtechniques for measuring success in anapproved program. As discussed later inthis document, Arkansas’ guidelines forrevegetation success standards andsampling techniques for measuringsuccess of forest products and ofrecreation and wildlife habitat are noless effective than the Federalregulations for revegetation of disturbedareas. Therefore, we are approving theaddition of ASCMRC 816.116(b)(3)(iv),which references these guidelines.

5. ASCMRC 816.116(b)(4) RevegetationSuccess Standards for Areas to beDeveloped for Industrial, Commercial,or Residential Use

Arkansas revised ASCMRC816.116(b)(4) by requiring thatvegetative ground cover comply withthe criteria contained in its revegetationguidelines. ASCMRC 816.116(b)(4) nowrequires vegetative ground cover forareas to be developed for industrial,commercial, or residential use less thantwo years after regrading is completed tonot be less than that required to controlerosion and to comply with the criteriacontained in Arkansas’ ‘‘Phase IIIRevegetation Success Standards forIndustrial, Commercial, and ResidentialRevegetation.’’

The counterpart Federal regulations at30 CFR 816.116(b)(4) and 817.116(b)(4)require vegetative ground cover for areasto be developed for industrial,commercial, or residential use less thantwo years after regrading is completed tonot be less than that required to controlerosion. As discussed later in thisdocument, Arkansas’ revegetationsuccess guidelines for industrial,commercial, and residential areas are no


less effective than the Federalregulations for revegetation of disturbedareas. Therefore, we find that therevisions to ASCMRC 816.116(b)(4) areno less effective than the Federalregulations at 30 CFR 816.116(b)(4) and817.116(b)(4).

6. ASCMRC 816.116(b)(5) RevegetationSuccess for Areas Previously Disturbedby Mining

Arkansas added a new provision atASCMRC 816.116(b)(5) which requiresvegetative ground cover for areaspreviously disturbed by mining thatwere not reclaimed to the requirementsof Subchapter K and that are remined orotherwise redisturbed by surface coalmining operations to comply with thecriteria contained in its Phase IIIRevegetation Success Standards forPasture and Previously Mined Areas.This provision is in addition to theexisting requirement that the vegetativeground cover must be no less than theground cover existing beforeredisturbance and must be adequate tocontrol erosion.

There are no direct Federalcounterparts to this additional provisionat 30 CFR 816.116(b)(5) and817.116(b)(5), which also concern areaspreviously disturbed by mining.However, the Federal regulations at 30CFR 816.116(a)(1) and 817.116(a)(1)require a regulatory authority to includestandards for success and statisticallyvalid sampling techniques formeasuring success in an approvedprogram. As discussed later in thisdocument, Arkansas’ guidelines forrevegetation success standards andsampling techniques for measuringsuccess of previously mined areas areno less effective than the Federalregulations for revegetation of disturbedareas. Therefore, we are approving theaddition of Arkansas’ new provision atASCMRC 816.116(b)(5).

7. Phase III Revegetation SuccessStandards for Pasture and PreviouslyMined Areas

Arkansas added policy guidelines in aguidance document entitled ‘‘Phase IIIRevegetation Success Standards forPasture and Previously Mined Areas.’’This guidance document describes thecriteria and procedures for determiningPhase III ground cover and productionsuccess for areas being restored topasture under ASCMRC 816.116(b)(1)and for areas that were previouslymined under ASCMRC 816.116(b)(5). Itprovides general revegetationrequirements and success standards andmeasurement frequency for groundcover and forage production. It alsoincludes sampling procedures and

techniques, data submission andanalysis criteria, and mitigation planrequirements.

Arkansas requires revegetationsuccess on pasture and previouslymined land to be determined on thebasis of the general revegetationrequirements of the approved permit,ground cover, and production. Thepermittee is responsible for measuringthe vegetation and for submitting thedata to Arkansas for analysis. Anypreviously mined land that was reminedor redisturbed and reclaimed to a landuse of pasture must achieve the samesuccess standard for cover as land thatwas not previously disturbed by mining.However if the area is not reclaimed tothe requirements of ASCMRC816.111(b)(4), the vegetative cover mustnot be less than the ground coverexisting before redisturbance and mustbe adequate to control erosion. Thepermittee must determine the groundcover standard and incorporate it intothe permit prior to disturbance.Arkansas must determine that thegeneral requirements for revegetationsuccess are satisfied as stated inASCMRC 816.111. The permittee mustmeasure the vegetation in accordancewith the procedures outlined in theguidance document. The guidancedocument sets out specific successstandards and measurement frequenciesfor ground cover and production basedon the regulatory requirements. Thepermittee must determine the forageproduction standard with a referencearea or a current United StatesDepartment of Agriculture, NaturalResources Conservation Service (USDA/NRCS) high management target yield.The permittee must use statisticallyvalid random sampling methods.Ground cover is to be measured by theline-point transect method. Forageproduction is to be measured utilizingsampling frames or whole area harvest.The guidance document also provides amethod for establishing representativetest plots. The permittee is to use aprescribed formula to determine sampleadequacy. If the data indicate that thevegetation is close to but less than thestandard, the permittee must submit thedata to Arkansas for statistical analysis.Arkansas must determine if thedifferences are statistically significantwithin the limits allowed by regulation.The permittee must provide maps foreach Phase III plan. The maps are toindicate the location of each samplingtransect and sample frame point, thearea covered by the sampling, and allpermit boundaries. If the permittee cannot demonstrate revegetation success inthe fourth year after completion of the

last augmented seeding, the permitteemust submit a mitigation plan toArkansas. The mitigation plan mustinclude a statement of the problem, adiscussion of methods to correct theproblem, and a new Phase III liabilityrelease plan. If the plan involvesaugmented activities, the five yearresponsibility period will begin again.The appendices that are included withthe guidance document illustrate theselection of random sampling sites; dataforms for line point transects; summarydata forms for sampling frames; a T-table; data forms for forage cropproduction data harvested as baled hay;an example use of sample adequacyformula for ground cover measurementsand hay production measurements;statistical analysis on sampling framedata and whole release area harvesting;yield adjustments for release areas dueto differing soil series; and grasses ofacceptable plant species for permanentground cover on agricultural areas.

The Federal regulations at 30 CFR816.116(a)(1) and 817.116(a)(1) require aregulatory authority to includestandards for success and statisticallyvalid sampling techniques formeasuring success in its approvedprogram. Arkansas accomplished this byadoption of a detailed guidancedocument illustrating the methods to beused by the permittee to measurerevegetation success for pasture andpreviously mined areas. We find thatArkansas’ policy guidelines for pastureland use areas and previously minedareas are consistent with therequirements of 30 CFR 816.116(a)(1)and 817.116(a)(1) and are no lesseffective than the Federal regulations forrevegetation of disturbed areas.

8. Phase III Revegetation SuccessStandards for Cropland

Arkansas added policy guidelines in aguidance document entitled ‘‘Phase IIIRevegetation Success Standards forCropland.’’ This guidance documentdescribes the criteria and procedures fordetermining Phase III productionsuccess standards for areas beingrestored to cropland under ASCMRC816.116 (b)(2). It provides successstandards and measurement frequencyfor ground cover and crop production.It also includes sampling proceduresand techniques, data submission andanalysis criteria, and mitigation planrequirements.

Arkansas requires that revegetationsuccess on cropland be determined onthe basis of ground cover and cropproduction. The permittee isresponsible for measuring the vegetationand for submitting the data to Arkansasfor analysis. Measurements of the


vegetation must be made in accordancewith the procedures outlined in theguidance document. The guidancedocument sets out specific successstandards and measurement frequenciesfor ground cover and crop productionbased on the regulatory requirements ofASCMRC 816.111. The permittee is todetermine the crop production standardin accordance with a reference area ora technical standard. Approvedtechnical standards include the countyaverage or target yield established by theUSDA/NRCS. Target yields must beadjusted annually and be representativeof yields expected when using highmanagement practices common to thearea. The permittee is to use statisticallyvalid random sampling methods.Ground cover is to be measured by theline-point transect method. Cropproduction is to be measured utilizingsampling frames for forage productionor whole area harvest for forage or rowcrop production. Arkansas mustapprove any manual sampling of rowcrops. It is only allowed when weatheror other factors prevent mechanicalharvest. The guidance document alsoprovides a method for establishingrepresentative test plots for use withrow crop production. The permittee isto use a prescribed formula to determinesample adequacy. If the data indicatethat the vegetation is close to but lessthan the standard, the permittee mustsubmit the data to Arkansas forstatistical analysis. Arkansas mustdetermine if the differences arestatistically significant within the limitsallowed by regulation. The permitteemust provide maps for each Phase IIIplan. The maps must indicate thelocation of each sampling transect andsample frame point, the area covered bythe sampling, and all permit boundaries.If the permittee can not demonstraterevegetation success in the fifth yearafter completion of initial seeding, thepermittee must submit a mitigation planto Arkansas. The permittee mustinclude a statement of the problem, adiscussion of methods to correct theproblem, and a new Phase III liabilityrelease plan. If the plan involvesaugmented activities, the five yearresponsibility period will begin again.The appendices that are included withthe guidance document illustrate theselection of random sampling sites;summary data forms for samplingframes; data forms for crop productiondata; a T-table; an example of sampleadequacy determination for hayproduction measurements; statisticalanalysis for sampling frame data; a dataform for forage crop production dataharvested as baled hay; statistical

analysis of whole release areaharvesting; yield adjustments for releaseareas due to differing soil series and formoisture; crop surveyor’s affidavit ofqualifications and crop productionyields; grasses of acceptable plantspecies for permanent ground cover onagricultural areas; and procedures formanually sampling row crops.

The Federal regulations at 30 CFR816.116(a)(1) and 817.116(a)(1) require aregulatory authority to includestandards for success and statisticallyvalid sampling techniques formeasuring success in its approvedprogram. Arkansas accomplished this byadoption of a detailed guidancedocument illustrating the methods to beused by the permittee to measurerevegetation success for cropland. Wefind that Arkansas’ policy guidelines forcropland are consistent with therequirements of 30 CFR 816.116(a)(1)and 817.116(a)(1) and are no lesseffective than the Federal regulations forrevegetation of disturbed areas.

9. Phase III Revegetation SuccessStandards for Forest Products

Arkansas added policy guidelines in aguidance document entitled ‘‘Phase IIIRevegetation Success Standards forForest Products.’’ This guidancedocument describes the criteria andprocedures for determining Phase IIIground cover and tree and shrubstocking success for areas being restoredto forest products under ASCMRC816.116(b)(3). It provides generalrevegetation requirements and successstandards and measurement frequencyfor ground cover and tree and shrubstocking rates. It also includes samplingprocedures and techniques, datasubmission and analysis criteria, andmitigation plan requirements.

Arkansas requires that revegetationsuccess for forest products bedetermined on the basis of the generalrevegetation requirements of theapproved permit, ground cover, and treeand shrub stocking and survival. Thepermittee is responsible for measuringthe vegetation and for submitting thedata to Arkansas for analysis. Thepermittee must measure the vegetationin accordance with the proceduresoutlined in the guidance document.Arkansas must determine that thegeneral requirements for revegetationsuccess are satisfied as stated inASCMRC 816.111. The guidancedocument sets out specific successstandards and measurement frequenciesfor ground cover and tree and shrubstocking rates based on the regulatoryrequirements and consultation andapproval of the Arkansas ForestryCommission on a permit specific basis.

The permittee must use statisticallyvalid random sampling methods.Ground cover is to be measured by theline-point transect method, and tree andshrub stocking is to be measured withsampling circles. The permittee mustuse a prescribed formula to determinesample adequacy. If the data indicatethat the vegetation is close to but lessthan the standard, the permittee mustsubmit the data to Arkansas forstatistical analysis. Arkansas mustdetermine if the differences arestatistically significant within the limitsallowed by regulation. The permitteemust provide maps for each Phase IIIplan. The maps must indicate thelocation of each sampling transect andsample frame point, the area covered bythe sampling, and all permit boundaries.If the permittee can not demonstraterevegetation success in the fifth yearafter completion of initial seeding, thepermittee must submit a mitigation planto Arkansas. The permittee mustinclude a statement of the problem, adiscussion of methods to correct theproblem, and a new Phase III liabilityrelease plan. If the plan involvesaugmented activities, the five yearresponsibility period will begin again.The appendices that are included withthe guidance document illustrate theselection of random sampling sites; dataforms for line-point transect; data formsfor sample circles; a T-table; examplesof sample adequacy determinations forground cover and tree and shrubstocking; statistical analysis for groundcover and tree and shrub stocking; andaccepted plant species.

The Federal regulations at 30 CFR816.116(a)(1) and 817.116(a)(1) require aregulatory authority to includestandards for success and statisticallyvalid sampling techniques formeasuring success in its approvedprogram. Arkansas accomplished this byadoption of a detailed guidancedocument illustrating the methods to beused by the permittee to measurerevegetation success for forest products.We find that Arkansas’ policyguidelines for forest products areconsistent with the requirements of 30CFR 816.116(a)(1) and 817.116(a)(1) andare no less effective than the Federalregulations for revegetation of disturbedareas.

10. Phase III Revegetation SuccessStandards for Recreation and WildlifeHabitat

Arkansas added policy guidelines in aguidance document entitled ‘‘Phase IIIRevegetation Success Standards forRecreation and Wildlife Habitat.’’ Thisguidance document describes thecriteria and procedures for determining


Phase III success for areas being restoredto recreation and wildlife habitat underASCMRC 816.116(b)(3). It providessuccess standards and measurementfrequency for ground cover and tree andshrub stocking. It also includessampling procedures and techniques,data analysis criteria, and mitigationplan requirements.

Arkansas requires that revegetationsuccess on recreation areas and wildlifehabitat be determined on the basis of thegeneral revegetation requirements of theapproved permit, ground cover, and treeand shrub stocking and survival. Thepermittee is responsible for measuringthe vegetation and for submitting thedata to Arkansas for analysis.Measurements of the vegetation must bemade in accordance with the proceduresoutlined in the guidance document.Arkansas must determine that thegeneral requirements for revegetationsuccess are satisfied as stated inASCMRC 816.111. The guidancedocument sets out specific successstandards and measurement frequenciesfor ground cover and tree and shrubstocking rates based on the regulatoryrequirements and consultation andapproval of the Arkansas Game and FishCommission on a permit specific basis.The permittee must use statisticallyvalid random sampling methods.Ground cover is to be measured by theline-point transect method, and tree andshrub stocking is to be measured withsampling circles. Sample adequacy is tobe determined using a prescribedformula. If the data indicate that thevegetation is close to but less than thestandard, the permittee must submit thedata to Arkansas for statistical analysis.Arkansas must determine if thedifferences are statistically significantwithin the limits allowed by regulation.The permittee must provide maps foreach Phase III plan. The maps mustindicate the location of each samplingtransect and sample frame point, thearea covered by the sampling, and allpermit boundaries. If the permittee cannot demonstrate revegetation success inthe fifth year after completion of initialseeding, the permittee must submit amitigation plan to Arkansas. Themitigation plan must include astatement of the problem, a discussionof methods to correct the problem, anda new Phase III liability release plan. Ifthe plan involves augmented activitiesthen the five year responsibility periodwill begin again. The appendices thatare included with the guidancedocument illustrate the selection ofrandom sampling sites; data forms forline-point transects; data forms forsample circles; a T-table; examples of

sample adequacy determinations forground cover and for tree and shrubstocking; statistical analysis for groundcover and tree and shrub stocking; andaccepted plant species.

The Federal regulations at 30 CFR816.116(a)(1) and 817.116(a)(1) require aregulatory authority to includestandards for success and statisticallyvalid sampling techniques formeasuring success in its approvedprogram. Arkansas accomplished this byadoption of a detailed guidancedocument illustrating the methods to beused by the permittee to measurerevegetation success for recreation areasand wildlife habitat. We find thatArkansas’ policy guidelines forrecreation areas and wildlife habitat areconsistent with the requirements of 30CFR 816.116(a)(1) and 817.116(a)(1) andare no less effective than the Federalregulations for revegetation of disturbedareas.

11. Phase III Success Standards forIndustrial/Commercial and ResidentialRevegetation

Arkansas added policy guidelines in aguidance document entitled ‘‘Phase IIISuccess Standards for Industrial/Commercial and ResidentialRevegetation.’’ This guidance documentdescribes the criteria and procedures fordetermining Phase III ground coversuccess for areas being restored to anindustrial/commercial or residentialland use under ASCMRC 816.116(b)(4).It provides general revegetationrequirements and success standards andmeasurement frequency for groundcover. It also includes samplingprocedures and techniques, datasubmission and analysis criteria, andmitigation plan requirements.

Arkansas requires that revegetationsuccess on industrial/commercial andresidential land use areas be determinedon the basis of the general revegetationrequirements of the approved permitand ground cover density. Thepermittee is responsible for measuringthe vegetation and for submitting thedata to Arkansas for analysis. Thepermittee must measure the vegetationin accordance with the proceduresoutlined in the guidance document.Arkansas must determine that thegeneral requirements for revegetationsuccess are satisfied as stated inASCMRC 816.111. The guidancedocument sets out specific successstandards and measurement frequenciesfor ground cover based on the regulatoryrequirements. The permittee must usestatistically valid random samplingmethods. Ground cover is to bemeasured by the line-point transectmethod. Sample adequacy is to be

determined using a prescribed formula.If the data indicate that the vegetationis close to but less than the standard, thepermittee must submit the data toArkansas for statistical analysis.Arkansas must determine if thedifferences are statistically significantwithin the limits allowed by regulation.The permittee must provide maps foreach Phase III plan. The maps mustindicate the location of each samplingtransect and sample frame point, thearea covered by the sampling, and allpermit boundaries. If the permittee cannot demonstrate revegetation success, amitigation plan must be submitted toArkansas. The permittee must include astatement of the problem, a discussionof methods to correct the problem, anda new Phase III liability release plan. Ifthe plan involves augmented activities,the five year responsibility period willbegin again. The appendices that areincluded with the guidance documentillustrate the selection of randomsampling sites; data forms for line-pointtransects; a T-table; an example ofsample adequacy determination forground cover; statistical analysis forground cover; and accepted plantspecies.

The Federal regulations at 30 CFR816.116(a)(1) and 817.116(a)(1) require aregulatory authority to includestandards for success and statisticallyvalid sampling techniques formeasuring success in its approvedprogram. Arkansas accomplished this byadoption of a detailed guidancedocument illustrating the methods to beused by the permittee to measurerevegetation success for industrial/commercial and residential land uses.We find that Arkansas’ policyguidelines for industrial/commercialand residential land uses are consistentwith the requirements of 30 CFR816.116(a)(1) and 817.116(a)(1) and areno less effective than the Federalregulations for revegetation of disturbedareas.

12. Prime Farmland and Grazing LandRevegetation Success Guidelines

Prime farmland and grazing land arealso potential pre- and post-mining landuses in the State. In its letters datedAugust 27, 1998, and October 8, 1998,Arkansas indicated that prime farmlandand grazing land guidelines will besubmitted at a later date.

IV. Summary and Disposition ofComments

Public Comments

We asked for public comments on theamendment, but we did not receive any.


Federal Agency CommentsUnder 30 CFR 732.17(h)(11)(i), we

requested comments on the amendmentfrom various Federal agencies with anactual or potential interest in theArkansas program (AdministrativeRecord No AR–562.01).

By letter dated September 28, 1998(Administrative Record No. AR–562.07),the U.S. Army Corps of Engineersresponded that its review found theamendment satisfactory.

Environmental Protection Agency (EPA)The Federal regulation at 30 CFR

732.17(h)(11)(ii) requires us to getwritten consent from the EPA for thoseprovisions of a program amendment thatrelate to air or water quality standardspromulgated under the authority of theClean Water Act (33 U.S.C. 1251 et seq.)or the Clean Air Act (42 U.S.C. 7401 etseq.). None of the revisions thatArkansas proposed to make in thisamendment pertain to air or waterquality standards. Therefore, we did notrequest the EPA’s consent.

Under 30 CFR 732.17(h)(11)(i), werequested comments on the amendmentfrom the EPA (Administrative RecordNo. AR–562.03). The EPA did notrespond to our request.

State Historical Preservation Officer(SHPO) and the Advisory Council onHistoric Preservation (ACHP)

Under 30 CFR 732.17(h)(4), we arerequired to request comments from theSHPO and ACHP on proposedamendments which may have an effecton historic properties. We requested theSHPO and ACHP to comment onArkansas’ amendment (AdministrativeRecord No. AR–562.02), but neitherresponded to our request.

V. Director’s DecisionBased on the above findings, we

approve the amendment as submitted byArkansas on August 27, 1998, and asrevised on October 8, 1998.

We approve the revegetationguidelines that Arkansas proposed withthe provision that they be fully placedin force in identical form to theguidelines submitted to and reviewedby OSM and the public.

To implement this decision, we areamending the Federal regulations at 30CFR Part 904, which codifies decisions

concerning the Arkansas program. Thisfinal rule is effective immediately toexpedite the State program amendmentprocess and to encourage Arkansas tobring its program into conformity withthe Federal standards. SMCRA requiresconsistency of State and Federalstandards.

VI. Procedural Determinations

Executive Order 12866

The Office of Management and Budget(OMB) exempts this rule from reviewunder Executive Order 12866(Regulatory Planning and Review).


The Department of the Interiorconducted the reviews required bysection 3 of Executive Order 12988(Civil Justice Reform) and determinedthat, to the extent allowed by law, thisrule meets the applicable standards ofsubsections (a) and (b) of that section.However, these standards are notapplicable to the actual language ofState regulatory programs and programamendments since each such program isdrafted and published by a specificState, not by OSM. Under sections 503and 505 of SMCRA (30 U.S.C. 1253 and1255) and 30 CFR 730.11, 732.15, and732.17(h)(10), decisions on Stateregulatory programs and programamendments submitted by the Statesmust be based solely on a determinationof whether the submittal is consistentwith SMCRA and its implementingFederal regulations and whether theother requirements of 30 CFR Parts 730,731, and 732 have been met.

National Environmental Policy Act

This rule does not require anenvironmental impact statement sincesection 702(d) of SMCRA (30 U.S.C.1292(d)) provides that agency decisionson State regulatory program provisionsdo not constitute major Federal actionswithin the meaning of section 102(2)(C)of the National Environmental PolicyAct (42 U.S.C. 4332(2)(C)).

Paperwork Reduction Act

This rule does not containinformation collection requirements thatrequire approval by OMB under thePaperwork Reduction Act (44 U.S.C.3507 et seq.).

Regulatory Flexibility Act

The Department of the Interiordetermined that this rule will not havea significant economic impact on asubstantial number of small entitiesunder the Regulatory Flexibility Act (5U.S.C. 601 et seq.). The State submittalwhich is the subject of this rule is basedupon corresponding Federal regulationsfor which an economic analysis wasprepared and certification made thatsuch regulations would not have asignificant economic effect upon asubstantial number of small entities.Therefore, this rule will ensure thatexisting requirements previouslypublished by OSM will be implementedby the State. In making thedetermination as to whether this rulewould have a significant economicimpact, the Department relied upon thedata and assumptions for thecorresponding Federal regulations.

Unfunded Mandates

OSM determined and certifies underthe Unfunded Mandates Reform Act (2U.S.C. 1502 et seq.) that this rule willnot impose a cost of $100 million ormore in any given year on local, state,or tribal governments or private entities.


Intergovernmental relations, Surfacemining, Underground mining.

Dated: November 6, 1998.Brent Wahlquist,Regional Director, Mid-Continent RegionalCoordinating Center.

For the reasons set out in thepreamble, 30 CFR Part 904 is amendedas set forth below:

PART 904—ARKANSAS

1. The authority citation for Part 904continues to read as follows:

Authority: 30 U.S.C. 1201 et seq.

2. Section 904.15 is amended in thetable by adding a new entry inchronological order by ‘‘Date of finalpublication’’ to read as follows:

§ 904.15 Approval of Arkansas regulatoryprogram amendments.

* * * * *

Original amendmentsubmission date

Date of final publica-tion Citation/description

* * * * * * *August 27, 1998 .......... November 25, 1998 .... ASCMRC 701.5; 816.116(b)(1), (2), (3)(iv), (4), (5); Policy Guidelines for Phase III Revegeta-

tion Success Standards for Pasture and Previously Mined Areas, Cropland, Forest Prod-ucts, Recreation and Wildlife Habitat, Industrial/Commercial and Residential Revegetation.


[FR Doc. 98–31490 Filed 11–24–98; 8:45 am]BILLING CODE 4310–05–P



30 CFR Part 943

[SPATS No. TX–039–FOR]

Texas Abandoned Mine LandReclamation Plan

AGENCY: Office of Surface MiningReclamation and Enforcement (OSM),Interior.ACTION: Final rule; approval ofamendment.

SUMMARY: OSM is approving anamendment to the Texas abandonedmine land reclamation plan (from nowon referred to as the ‘‘Texas plan’’)under the Surface Mining Control andReclamation Act of 1977 (SMCRA).Texas proposed additions, deletions,and revisions to its plan pertaining toResponsibilities; Definitions;Abandoned mine land reclamationfund; Eligible coal lands and water;Reclamation objectives and priorities;Reclamation project evaluations;Utilities and other facilities; Limitedliability; Entry for studies orexploration; Contractor responsibility;Eligible noncoal lands and water;Reclamation priorities for noncoalprogram; Exclusion of certain noncoalreclamation sites; Land acquisitionauthority—noncoal; Lien requirements;Written consent for entry; Operations onprivate land; Entry and consent toreclaim; Appraisals; Liens; Satisfactionof liens; Entry for emergencyreclamation; Land eligible foracquisition; Procedures for acquisition;Acceptance of gifts of land; Managementof acquired land; and Disposition ofreclaimed lands. Texas intended torevise its plan to be consistent with thecorresponding Federal regulations.EFFECTIVE DATE: November 25, 1998.FOR FURTHER INFORMATION CONTACT:Michael C. Wolfrom, Director, TulsaField Office, Office of Surface Mining,5100 East Skelly Drive, Suite 470, Tulsa,Oklahoma 74135–6547, Telephone:(918) 581–6430, E-mail:[email protected] INFORMATION:I. Background on the Texas PlanII. Submission of the Proposed Amendment

III. Director’s FindingsIV. Summary and Disposition of CommentsV. Director’s DecisionVI. Procedural Determinations

I. Background on the Texas Plan

On June 23, 1980, the Secretary of theInterior approved the Texas plan. Youcan find background information on theTexas plan, including the Secretary’sfindings, the disposition of comments,and the approval of the plan in the June23, 1980, Federal Register (45 FR41937). You can also find later actionsconcerning the Texas plan andamendments at 30 CFR 943.25.

II. Submission of the ProposedAmendment

By letter dated December 1, 1997(Administrative Record No. TAML–61),Texas submitted a proposed amendmentto its plan under the provisions ofSMCRA. Texas submitted theamendment at its own initiative. Weannounced receipt of the amendment inthe December 29, 1997, Federal Register(62 FR 67592). In the same document,we opened the public comment periodand provided an opportunity for apublic hearing on the adequacy of theamendment. The public commentperiod closed on January 28, 1998.

During our review of the amendment,we identified concerns relating to thefollowing sections: Eligible coal landsand water; Reclamation priorities fornoncoal program; Land acquisitionauthority-noncoal; Lien requirements;Satisfaction of liens; Entry and consentto reclaim; Appraisals; Entry foremergency reclamation; Land eligiblefor acquisition; Disposition of reclaimedlands; Liens. We also identified editorialcorrections in the two sections,Responsibilities and Definitions. Wenotified Texas of the concerns byfacsimiles dated March 9, and August25, 1998 (Administrative Record Nos.TAML–61.08 and TAML–61.10,respectively). Texas responded in lettersdated July 20, and September 3, 1998,by submitting additional explanatoryinformation and a revised amendment(Administrative Record Nos. TAML–61.09 and TAML–61.12, respectively).

Texas proposed additional revisionsto the following sections: 12.803 Eligiblecoal lands and water; 12.809Reclamation priorities for noncoalprogram; 12.811 Land acquisitionauthority-noncoal; 12.812 Lienrequirements; 12.814 Entry and consentto reclaim; 12.815 Appraisals; 12.816

Liens; 12.817 Satisfaction of liens;12.818 Entry for emergency reclamation;12.819 Land eligible for acquisition;12.820 Procedures for acquisition;12.821 Acceptance of gifts of lands;12.822 Management of acquired land;and 12.823 Disposition of reclaimedlands.

Based upon the additionalexplanatory information and revisionsto the proposed plan amendmentsubmitted by Texas, we reopened thepublic comment period in the October2, 1998, Federal Register (63 FR 53003).The public comment period closed onOctober 19, 1998.

III. Director’s Findings

Set forth below, under the provisionsof SMCRA and the Federal regulationsat 30 CFR 884.14 and 884.15, are ourfindings concerning the proposedamendment. Revisions not specificallydiscussed below concernnonsubstantive wording changes, orrevised cross-references and paragraphnotations to reflect organizationalchanges resulting from this amendment.

A. Sections That Texas Deleted From ItsRegulations

1. Section 12.805, Reclamation ProjectEvaluation

Texas proposed to delete this section.We are approving this deletion becausewe have no counterpart Federalregulation and the deletion will notmake the Texas regulations inconsistentwith the Federal regulations.

2. Section 12.814, Operations on PrivateLands

Texas proposed to delete this section.We are approving this deletion becausethe provisions in this section arecontained in new Sections 12.814, Entryand Consent to Reclaim and 12.815,Entry for Emergency Reclamation. Also,the deletion will not make the Texasregulations inconsistent with theFederal regulations.

B. Revisions to Texas’ Plan That AreSubstantively Identical to theCorresponding Provisions of the FederalRegulations

The proposed State regulations listedin the table contain language that is thesame as or similar to the correspondingsections of the Federal regulations.Differences between the proposed Stateprovisions and the Federal provisionsare nonsubstantive.


Topic State regulation Federal counterpart regula-tion

Definitions for abandoned mine reclamation fund or fund, eligible lands and water,emergency, extreme danger, left or abandoned in either an unreclaimed or inad-equately reclaimed condition, mineral owner, OSM, permanent facility, project,reclamation activity, State reclamation program, Texas abandoned mine reclama-tion fund or State fund.

Section 12.801 ................... 30 CFR 870.5.

Texas Abandoned Mine Reclamation Fund ................................................................. Section 12.802 ................... 30 CFR 872.12.Eligible Coal Lands and Water .................................................................................... Section 12.803 ................... 30 CFR 874.12.Reclamation Objectives and Priorities ......................................................................... Section 12.804 ................... 30 CFR 874.13.Utilities and other Facilities .......................................................................................... Section 12.805 ................... 30 CFR 874.14 (b) and (d).Limited Liability ............................................................................................................. Section 12.806 ................... 30 CFR 874.15.Contractor Responsibility ............................................................................................. Section 12.807 ................... 30 CFR 874.16 and 875.20.Eligible Noncoal Lands and Water ............................................................................... Section 12.808 ................... 30 CFR 875.14.Reclamation Priorities for Noncoal Program ................................................................ Section 12.809 ................... 30 CFR 875.15.Exclusion of Certain Noncoal Reclamation Sites ........................................................ Section 12.810 ................... 30 CFR 875.16.Land Acquisition Authority—Noncoal ........................................................................... Section 12.811 ................... 30 CFR 875.17.Lien Requirements ....................................................................................................... Section 12.812 ................... 30 CFR 875.18.Written Consent for Entry ............................................................................................. Section 12.813 ................... 30 CFR 877.11Procedures for Acquisition ........................................................................................... Section 12.820 ................... 30 CFR 879.12.Management of Acquired Land .................................................................................... Section 12.822 ................... 30 CFR 879.14.

Because the above proposed revisionsare identical in meaning to thecorresponding Federal regulations, wefind that Texas’ revised plan is incompliance with the Federalregulations.

C. Revisions to Texas’ Plan That AreNot Substantively Identical to theCorresponding Provisions of the FederalRegulations

1. Section 12.814, Entry and Consent toReclaim

Texas proposed to repeal section12.814, Operations on Private lands, andadopt new section 12.814, Entry andConsent to Reclaim. This new sectionauthorizes the Commission to enter landto perform reclamation activities orconduct studies or exploratory work todetermine the existence of the adverseeffects of past coal mining with orwithout the landowner’s permission.The Commission must give a minimumof 30 days written notice to thelandowner before entering propertywhere the landowner’s permission toenter has not been obtained or wherethe landowner is not known or isreadily available. If the landowner isknown, the Commission will send thewritten notice by mail, return receiptrequested, along with a copy of thewritten findings required underparagraph (c)(1) of this section. If thelandowner is not known, or if thecurrent mailing address of thelandowner is not known, theCommission will post a notice in one ormore places on the property to beentered where it is readily visible to thepublic. The Commission will alsoadvertise once in a newspaper of generalcirculation in the locality in which theland is located. The advertisement mustinclude a statement of where the

findings required under paragraph (c)(1)of this section may be inspected orobtained.

We are approving this revisionbecause it is consistent with thecounterpart Federal regulations at 30CFR 877.13.

2. 12.816, LiensIn paragraph (a)(2), Texas proposed to

add a provision that allows it to notifylandowners of the amount of theproposed lien and to give thelandowners a reasonable amount of timeto pay the lien before the lien is placedagainst the property.

Also, in paragraph (d), Texasproposed to conduct hearings and anyappeals by landowners concerning theamounts of the liens under Chapter2001, Government Code.

The State removed language thatrequired it to place a lien againstreclaimed land if the reclamation resultsin an increase in the fair market valuewith one exception. This exception isthat the State may waive the lien if thecost of filing it exceeds the increase infair market value as a result of thereclamation activities. The Stateproposed to allow itself the discretion toplace a lien against the reclaimed landand to also retain the exception forwaiving liens.

We are approving these revisionsbecause they are in compliance with thecounterpart Federal regulations at 30CFR 882.13.

3. 12.818, Entry for EmergencyReclamation

Texas proposed to adopt this newsection to conform with the TexasNatural Resources Code, Section134.152 (b) and (c). This new sectionallows the Commission to enter landwhere an emergency exists and other

land necessary to have access to thatland. It also allows the Commission torestore, reclaim, abate, control, orprevent the adverse effects of coalmining practices, and to do whatever isnecessary and suitable to protect thepublic health, safety, or general welfare.

We are approving this new sectionbecause it is consistent with thecounterpart Federal regulations at 30CFR 877.14(a). However, because Texashas not formally assumed responsibilityfor its abandoned mine land emergencyprogram, we are under no obligation toreimburse it for expenses it acquires inhandling any emergencies under thissection.

4. Section 12.819, Land Eligible forAcquisition

This section sets forth the criteria thatany land must meet before the State canpurchase the land with abandoned mineland reclamation funds. We areapproving this section because it is incompliance with the Federal regulationsat 30 CFR 879.11.

5. Section 12.821, Acceptance of Gifts ofLand

Texas proposed to renumber thissection from Section 12.812 to 12.821.Texas revised paragraphs (a) and (c) toread as follows:

(a) The Commission under an approvedreclamation plan may accept donations oftitle to land or interests in land if the landproposed for donation meets therequirements set out in § 12.819 of this title(relating to Land Eligible for Acquisition).

(c) If the offer is accepted, a deed ofconveyance shall be executed, acknowledgedand recorded. The deed shall state that it ismade ‘‘as a gift under the Texas Surface CoalMining and Reclamation Act.’’ Title todonated land shall be in the name of the stateof Texas.


We are approving these revisionsbecause they are consistent with theFederal regulations at 30 CFR 879.13.

6. Section 12.823, Disposition ofReclaimed Land

Texas proposed to renumber thissection from Section 12.813 to 12.823,and to reformat this section. Thissection sets forth the criteria underwhich the State may dispose of landacquired under Section 12.819, LandEligible for Acquisition. We areapproving this revision because it is incompliance with the Federal regulationsat 30 CFR 879.15.

D. Revisions to Texas’ Plan That Do NotHave Corresponding Provisions in theFederal Regulations

Texas proposed section 12.800Responsibilities as an addition to itsregulations. This section sets forth theresponsibilities that the Commissionwill have regarding the TexasAbandoned Mine Land ReclamationProgram. We previously approved thissection in the April 22, 1998, FederalRegister notice (63 FR 19821).

IV. Summary and Disposition ofComments

Public CommentsWe asked the public for comments

and provided an opportunity for apublic hearing on the proposedamendment. We did not receive anypublic comments, and because no onerequested an opportunity to speak at apublic hearing, we did not hold one.

Federal Agency CommentsUnder the provisions of 30 CFR

884.14(a)(2) and 884.15(a), we requestedcomments on the proposed amendmentfrom various other Federal agencieswith an actual or potential interest inthe Texas plan. We received commentsfrom the U.S. Army Corps of Engineersin letters dated January 27, and October5, 1998 (Administrative Record Nos.TAML–61.06 and TAML–61.16,respectively). The letters stated that thechanges Texas proposed in itsamendment were satisfactory.

V. Director’s DecisionBased on the above findings, we

approve the proposed plan amendmentas submitted by Texas on December 1,1997, and as revised on September 3,1998. We approve the regulations as

proposed by Texas with the provisionthat Texas fully issue, in identical form,the regulations they submitted and weand the public reviewed.

We are amending the Federalregulations at 30 CFR Part 943, thatcodify decisions concerning the Texasplan. We are also making this final ruleeffective immediately to expedite theState plan amendment process and toencourage States to bring their plansinto conformity with the Federalstandards without undue delay. SMCRArequires consistency of State andFederal standards.

VI. Procedural Determinations


This proposed rule is exempted fromreview by the Office of Management andBudget (OMB) under Executive Order12866 (Regulatory Planning andReview).


The Department of the Interior hasconducted the reviews required bysection 3 of Executive Order 12988(Civil Justice Reform) and hasdetermined that, to the extent allowedby law, this rule meets the applicablestandards of subsections (a) and (b) ofthat section. However, these standardsare not applicable to the actual languageof State and Tribal abandoned mineland reclamation plans and revisionssince each plan is drafted and issued bya specific State or Tribe, not by OSM.Decisions on proposed abandoned mineland reclamation plans and revisionssubmitted by a State or Tribe are basedon a determination of whether thesubmittal meets the requirements ofTitle IV of SMCRA (30 U.S.C. 1231–1243) and 30 CFR Part 884.


This rule does not require anenvironmental impact statement sinceagency decisions on proposed State andTribal abandoned mine landreclamation plans and revisions arecategorically excluded from compliancewith the National Environmental PolicyAct (42 U.S.C. 4332) by the Manual ofthe Department of the Interior (516 DM6, appendix 8, paragraph 8.4B(29)).


This rule does not containinformation collection requirements that

require approval by OMB under thePaperwork Reduction Act (44 U.S.C.3507 et seq.).


The Department of the Interior hasdetermined that this rule will not havea significant economic impact on asubstantial number of small entitiesunder the Regulatory Flexibility Act (5U.S.C. 601 et seq.). The submittal whichis the subject of this rule is based uponcorresponding Federal regulations forwhich an economic analysis wasprepared and certification made that theregulations would not have a significanteconomic effect upon a substantialnumber of small entities. Accordingly,this rule will ensure that existingrequirements previously issued by OSMwill be implemented. In making thedetermination as to whether this rulewould have a significant economicimpact, the Department relied upon thedata and assumptions in the analyses forthe corresponding Federal regulations.

Unfunded Mandates

OSM has determined and certifiesunder the provisions of the UnfundedMandates Reform Act (2 U.S.C. 1502 etseq.) that this rule will not impose a costof $100 million or more in any givenyear on local, state, or tribalgovernments or private entities.



Dated: November 6, 1998.Brent Wahlquist,Regional Director, Mid-Continent RegionalCoordinating Center.

For the reasons set out in thepreamble, 30 CFR Part 943 is amendedas set forth below:

PART 943—TEXAS


Authority: 30 U.S.C. 1201 et seq.

2. Section 943.25 is amended in thetable by adding a new entry inchronological order by ‘‘Date of finalpublication’’ to read as follows:

§ 943.25 Approval of Texas abandonedmine land reclamation plan amendments.

* * * * *

Original amendment sub-mission date Date of final publication Citation/description

* * * * * * *December 1, 1997 .............. November 25, 1998 ............ 12.800 through .814; .815(d); .816; .818 through .823.



ENVIRONMENTAL PROTECTIONAGENCY

40 CFR Part 180

[OPP–300752; FRL–6040–9]RIN 2070–AB78

Hydramethylnon; Extension ofTolerance for Emergency Exemptions

AGENCY: Environmental ProtectionAgency (EPA).ACTION: Final rule.

SUMMARY: This rule extends a time-limited tolerance for residues of theinsecticide hydramethylnon in or onpineapples at 0.05 part per million(ppm) for an additional one and one-half-year period, to May 30, 2001. Thisaction is in response to EPA’s grantingof an emergency exemption undersection 18 of the Federal Insecticide,Fungicide, and Rodenticide Actauthorizing use of the pesticide onpineapples. Section 408(l)(6) of theFederal Food, Drug, and Cosmetic Actrequires EPA to establish a time-limitedtolerance or exemption from therequirement for a tolerance for pesticidechemical residues in food that willresult from the use of a pesticide underan emergency exemption granted byEPA under section 18 of FIFRA.DATES: This regulation becomeseffective November 25, 1998. Objectionsand requests for hearings must bereceived by EPA, on or before January25, 1999.ADDRESSES: Written objections andhearing requests, identified by thedocket control number, [OPP–300752],must be submitted to: Hearing Clerk(1900), Environmental ProtectionAgency, Rm. M3708, 401 M St., SW.,Washington, DC 20460. Feesaccompanying objections and hearingrequests shall be labeled ‘‘TolerancePetition Fees’’ and forwarded to: EPAHeadquarters Accounting OperationsBranch, OPP (Tolerance Fees), P.O. Box360277M, Pittsburgh, PA 15251. A copyof any objections and hearing requestsfiled with the Hearing Clerk identifiedby the docket control number, [OPP–300752], must also be submitted to:Public Information and RecordsIntegrity Branch, Information Resourcesand Services Division (7502C), Office ofPesticide Programs, EnvironmentalProtection Agency, 401 M St., SW.,Washington, DC 20460. In person, bringa copy of objections and hearingrequests to Rm. 119, Crystal Mall #2,

1921 Jefferson Davis Hwy., Arlington,VA.

A copy of objections and hearingrequests filed with the Hearing Clerkmay also be submitted electronically bysending electronic mail (e-mail) to: [email protected]. Follow theinstructions in Unit II. of this preamble.No Confidential Business Information(CBI) should be submitted through e-mail.FOR FURTHER INFORMATION CONTACT: Bymail: Libby Pemberton, RegistrationDivision (7505C), Office of PesticidePrograms, Environmental ProtectionAgency, 401 M St., SW., Washington,DC 20460. Office location, telephonenumber, and e-mail address: Rm. 272,Crystal Mall #2, 1921 Jefferson DavisHwy., Arlington, VA 22202, (703)-308–9364; e-mail:[email protected] INFORMATION: EPAissued a final rule, published in theFederal Register of March 4, 1998 (63FR 10537–10543) (FRL–5767–1), whichannounced that on its own initiativeunder section 408(e) of the FederalFood, Drug, and Cosmetic Act (FFDCA),21 U.S.C. 346a(e) and (l)(6), itestablished a time-limited tolerance forthe residues of hydramethylnon in or onpineapples at 0.05 ppm, with anexpiration date of January 31, 1999. EPAestablished the tolerance becausesection 408(l)(6) of the FFDCA requiresEPA to establish a time-limitedtolerance or exemption from therequirement for a tolerance for pesticidechemical residues in food that willresult from the use of a pesticide underan emergency exemption granted byEPA under section 18 of FIFRA. Suchtolerances can be established withoutproviding notice or period for publiccomment.

EPA received a request to extend theuse of hydramethylnon on pineapplesfor this year growing season due tocontinued need to control big-headedand Argentine ants. After havingreviewed the submission, EPA concursthat emergency conditions exist for thisstate. EPA has authorized under FIFRAsection 18 the use of hydramethylnonon pineapples for control of big-headedand Argentine ants in pineapples.

EPA assessed the potential riskspresented by residues ofhydramethylnon in or on pineapples. Indoing so, EPA considered the safetystandard in FFDCA section 408(b)(2),and decided that the necessary toleranceunder FFDCA section 408(l)(6) would beconsistent with the safety standard andwith FIFRA section 18. The data andother relevant material have beenevaluated and discussed in the final rule

of March 4, 1998 (63 FR 10537). Basedon that data and informationconsidered, the Agency reaffirms thatextension of the time-limited tolerancewill continue to meet the requirementsof section 408(l)(6). Therefore, the time-limited tolerance is extended for anadditional one and one-half-year period.Although this tolerance will expire andis revoked on May 30, 2001, underFFDCA section 408(l)(5), residues of thepesticide not in excess of the amountsspecified in the tolerance remaining inor on pineapples after that date will notbe unlawful, provided the pesticide isapplied in a manner that was lawfulunder FIFRA and the applicationoccurred prior to the revocation of thetolerance. EPA will take action to revokethis tolerance earlier if any experiencewith, scientific data on, or otherrelevant information on this pesticideindicate that the residues are not safe.

I. Objections and Hearing RequestsThe new FFDCA section 408(g)

provides essentially the same processfor persons to ‘‘object’’ to a toleranceregulation issued by EPA under newsection 408(e) and (l)(6) as was providedin the old section 408 and in section409. However, the period for filingobjections is 60 days, rather than 30days. EPA currently has proceduralregulations which govern thesubmission of objections and hearingrequests. These regulations will requiresome modification to reflect the newlaw. However, until those modificationscan be made, EPA will continue to usethose procedural regulations withappropriate adjustments to reflect thenew law.

Any person may, by January 25, 1999,file written objections to any aspect ofthis regulation and may also request ahearing on those objections. Objectionsand hearing requests must be filed withthe Hearing Clerk, at the address givenabove (40 CFR 178.20). A copy of theobjections and/or hearing requests filedwith the Hearing Clerk should besubmitted to the OPP docket for thisrulemaking. The objections submittedmust specify the provisions of theregulation deemed objectionable and thegrounds for the objections (40 CFR178.25). Each objection must beaccompanied by the fee prescribed by40 CFR 180.33(i). If a hearing isrequested, the objections must include astatement of the factual issues on whicha hearing is requested, the requestor’scontentions on such issues, and asummary of any evidence relied uponby the requestor (40 CFR 178.27). Arequest for a hearing will be granted ifthe Administrator determines that thematerial submitted shows the following:


There is genuine and substantial issueof fact; there is a reasonable possibilitythat available evidence identified by therequestor would, if established, resolveone or more of such issues in favor ofthe requestor, taking into accountuncontested claims or facts to thecontrary; and resolution of the factualissues in the manner sought by therequestor would be adequate to justifythe action requested (40 CFR 178.32).Information submitted in connectionwith an objection or hearing requestmay be claimed confidential by markingany part or all of that information asCBI. Information so marked will not bedisclosed except in accordance withprocedures set forth in 40 CFR part 2.A copy of the information that does notcontain CBI must be submitted forinclusion in the public record.Information not marked confidentialmay be disclosed publicly by EPAwithout prior notice.

II. Public Record and ElectronicSubmissions

The official record for thisrulemaking, as well as the publicversion, as described above will be keptin paper form. Accordingly, EPA willtransfer any copies of objections andhearing requests received electronicallyinto printed, paper form as they arereceived and will place the paper copiesin the official rulemaking record whichwill also include all commentssubmitted directly in writing. Theofficial rulemaking record is the paperrecord maintained at the Virginiaaddress in ‘‘ADDRESSES’’ at thebeginning of this document.

Electronic comments may be sentdirectly to EPA at:

[email protected].

Electronic objections and hearingrequests must be submitted as an ASCIIfile avoiding the use of specialcharacters and any form of encryption.Objections and hearing requests willalso be accepted on disks inWordPerfect 5.1/6.1 or ASCII fileformat. All copies of objections andhearing requests in electronic form mustbe identified by the docket controlnumber [OPP–300752]. No CBI shouldbe submitted through e-mail. Electroniccopies of objections and hearingrequests on this rule may be filed onlineat many Federal Depository Libraries.

III. Regulatory AssessmentRequirements

A. Certain Acts and Executive Orders

This final rule extends a time-limitedtolerance that was previouslyestablished by EPA under FFDCA

section 408 (l)(6). The Office ofManagement and Budget (OMB) hasexempted these types of actions fromreview under Executive Order 12866,entitled Regulatory Planning andReview (58 FR 51735, October 4, 1993).In addition, this final rule does notcontain any information collectionssubject to OMB approval under thePaperwork Reduction Act (PRA), 44U.S.C. 3501 et seq., or impose anyenforceable duty or contain anyunfunded mandate as described underTitle II of the Unfunded MandatesReform Act of 1995 (UMRA) (Pub. L.104-4). Nor does it require any priorconsultation as specified by ExecutiveOrder 12875, entitled Enhancing theIntergovernmental Partnership (58 FR58093, October 28, 1993), or specialconsiderations as required by ExecutiveOrder 12898, entitled Federal Actions toAddress Environmental Justice inMinority Populations and Low-IncomePopulations (59 FR 7629, February 16,1994), or require OMB review inaccordance with Executive Order 13045,entitled Protection of Children fromEnvironmental Health Risks and SafetyRisks (62 FR 19885, April 23, 1997).

Since this extension of an existingtime-limited tolerance does not requirethe issuance of a proposed rule, therequirements of the RegulatoryFlexibility Act (RFA) (5 U.S.C. 601 etseq.) do not apply. Nevertheless, theAgency has previously assessed whetherestablishing tolerances, exemptionsfrom tolerances, raising tolerance levelsor expanding exemptions mightadversely impact small entities andconcluded, as a generic matter, thatthere is no adverse economic impact.The factual basis for the Agency’sgeneric certification for toleranceactions published on May 4, 1981 (46FR 24950), and was provided to theChief Counsel for Advocacy of the SmallBusiness Administration.

B. Executive Order 12875Under Executive Order 12875,

entitled Enhancing theIntergovernmental Partnership (58 FR58093, October 28, 1993), EPA may notissue a regulation that is not required bystatute and that creates a mandate upona State, local, or tribal government,unless the Federal government providesthe funds necessary to pay the directcompliance costs incurred by thosegovernments. If the mandate isunfunded, EPA must provide to OMB adescription of the extent of EPA’s priorconsultation with representatives ofaffected State, local, and tribalgovernments, the nature of theirconcerns, copies of any writtencommunications from the governments,

and a statement supporting the need toissue the regulation. In addition,Executive Order 12875 requires EPA todevelop an effective process permittingelected officials and otherrepresentatives of State, local, and tribalgovernments ‘‘to provide meaningfuland timely input in the development ofregulatory proposals containingsignificant unfunded mandates.’’

Today’s rule does not create anunfunded Federal mandate on State,local, or tribal governments. The ruledoes not impose any enforceable dutieson these entities. Accordingly, therequirements of section 1(a) ofExecutive Order 12875 do not apply tothis rule.

C. Executive Order 13084Under Executive Order 13084,

entitled Consultation and Coordinationwith Indian Tribal Governments (63 FR27655, May 19,1998), EPA may notissue a regulation that is not required bystatute, that significantly or uniquelyaffects the communities of Indian tribalgovernments, and that imposessubstantial direct compliance costs onthose communities, unless the Federalgovernment provides the fundsnecessary to pay the direct compliancecosts incurred by the tribalgovernments. If the mandate isunfunded, EPA must provide to OMB,in a separately identified section of thepreamble to the rule, a description ofthe extent of EPA’s prior consultationwith representatives of affected tribalgovernments, a summary of the natureof their concerns, and a statementsupporting the need to issue theregulation. In addition, Executive Order13084 requires EPA to develop aneffective process permitting electedofficials and other representatives ofIndian tribal governments ‘‘to providemeaningful and timely input in thedevelopment of regulatory policies onmatters that significantly or uniquelyaffect their communities.’’

Today’s rule does not significantly oruniquely affect the communities ofIndian tribal governments. This actiondoes not involve or impose anyrequirements that affect Indian tribes.Accordingly, the requirements ofsection 3(b) of Executive Order 13084do not apply to this rule.

IV. Submission to Congress and theComptroller General

The Congressional Review Act, 5U.S.C. 801 et seq., as added by theSmallBusiness Regulatory EnforcementFairness Act of 1996, generally providesthat before a rule may take effect, theagency promulgating the rule mustsubmit a rule report, which includes a


copy of the rule, to each House of theCongress and to the Comptroller Generalof the United States. EPA will submit areport containing this rule and otherrequired information to the U.S. Senate,the U.S. House of Representatives, andthe Comptroller General of the UnitedStates prior to publication of the rule inthe Federal Register. This rule is not a‘‘major rule’’ as defined by 5 U.S.C.804(2).


Environmental protection,Administrative practice and procedure,Agricultural commodities, Pesticidesand pests, Reporting and recordkeepingrequirements.

Dated: October 22, 1998.

James Jones,Director, Registration Division, Office ofPesticide Programs.

Therefore, 40 CFR chapter I isamended as follows:

PART 180–[AMENDED]


Authority: 21 U.S.C. 346a and 371.

§ 180.395 [Amended]

2. Section 180.395, by amendingparagraph (b) in the table, by changingthe date ‘‘1/31/99’’ to read ‘‘5/30/01.’’

[FR Doc. 98–31389 Filed 11–24–98; 8:45 am]BILLING CODE 6560–50–F


40 CFR Part 180

[OPP–300751; FRL 6040–7]

RIN 2070–AB78

Carfentrazone-ethyl; PesticideTolerances for Emergency Exemptions


SUMMARY: This regulation establishestime-limited tolerances for combinedresidues of carfentrazone-ethyl and itschloropropionic acid metabolite in or onrice, grain and rice, straw. This actionis in response to EPA’s granting of anemergency exemption under section 18of the Federal Insecticide, Fungicide,and Rodenticide Act authorizing use ofthe pesticide on rice. This regulationestablishes maximum permissible levelsfor residues of carfentrazone-ethyl inthis food commodity pursuant to section

408(l)(6) of the Federal Food, Drug, andCosmetic Act, as amended by the FoodQuality Protection Act of 1996. Thetolerances will expire and are revokedon October 31, 1999.

DATES: This regulation is effectiveNovember 25, 1998. Objections andrequests for hearings must be receivedby EPA on or before January 25, 1999.

ADDRESSES: Written objections andhearing requests, identified by thedocket control number, (OPP–300751),must be submitted to: Hearing Clerk(1900), Environmental ProtectionAgency, Rm. M3708, 401 M St., SW.,Washington, DC 20460. Feesaccompanying objections and hearingrequests shall be labeled ‘‘TolerancePetition Fees’’ and forwarded to: EPAHeadquarters Accounting OperationsBranch, OPP (Tolerance Fees), P.O. Box360277M, Pittsburgh, PA 15251. A copyof any objections and hearing requestsfiled with the Hearing Clerk identifiedby the docket control number, OPP–300751, must also be submitted to:Public Information and RecordsIntegrity Branch, Information Resourcesand Services Division (7502C), Office ofPesticide Programs, EnvironmentalProtection Agency, 401 M St., SW.,Washington, DC 20460. In person, bringa copy of objections and hearingrequests to Rm. 119, Crystal Mall #2,1921 Jefferson Davis Hwy., Arlington,VA.

A copy of objections and hearingrequests filed with the Hearing Clerkmay also be submitted electronically bysending electronic mail (e-mail) to: [email protected]. Copies ofobjections and hearing requests must besubmitted as an ASCII file avoiding theuse of special characters and any formof encryption. Copies of objections andhearing requests will also be acceptedon disks in WordPerfect 5.1/6.1 orASCII file format. All copies ofobjections and hearing requests inelectronic form must be identified bythe docket control number (OPP–300751). No Confidential BusinessInformation (CBI) should be submittedthrough e-mail. Electronic copies ofobjections and hearing requests on thisrule may be filed online at many FederalDepository Libraries.

FOR FURTHER INFORMATION CONTACT: Bymail: Stephen Schaible, RegistrationDivision (7505C), Office of PesticidePrograms, Environmental ProtectionAgency, 401 M St., SW., Washington,DC 20460. Office location, telephonenumber, and e-mail address: CrystalMall #2, 1921 Jefferson Davis Hwy.,Arlington, VA, (703) 308–9362; e-mail:[email protected].

SUPPLEMENTARY INFORMATION: EPA, onits own initiative, pursuant to sections408(e) and (l)(6) of the Federal Food,Drug, and Cosmetic Act (FFDCA), 21U.S.C. 346a(e) and (l)(6), is establishingtolerances for combined residues of theherbicide carfentrazone-ethyl and itschloropropionic acid metabolite, in oron rice, grain at 0.1 part per million(ppm) and rice, straw at 1.0 ppm. Thesetolerances will expire and are revokedon October 31, 1999. EPA will publisha document in the Federal Register toremove the revoked tolerances from theCode of Federal Regulations.

I. Background and Statutory AuthorityThe Food Quality Protection Act of

1996 (FQPA) (Pub. L. 104–170) wassigned into law August 3, 1996. FQPAamends both the Federal Food, Drug,and Cosmetic Act (FFDCA), 21 U.S.C.301 et seq., and the Federal Insecticide,Fungicide, and Rodenticide Act(FIFRA), 7 U.S.C. 136 et seq. The FQPAamendments went into effectimmediately. Among other things,FQPA amends FFDCA to bring all EPApesticide tolerance-setting activitiesunder a new section 408 with a newsafety standard and new procedures.These activities are described below anddiscussed in greater detail in the finalrule establishing the time-limitedtolerance associated with the emergencyexemption for use of propiconazole onsorghum (61 FR 58135, November 13,1996) (FRL–5572–9).

New section 408(b)(2)(A)(i) of theFFDCA allows EPA to establish atolerance (the legal limit for a pesticidechemical residue in or on a food) onlyif EPA determines that the tolerance is‘‘safe.’’ Section 408(b)(2)(A)(ii) defines‘‘safe’’ to mean that ‘‘there is areasonable certainty that no harm willresult from aggregate exposure to thepesticide chemical residue, includingall anticipated dietary exposures and allother exposures for which there isreliable information.’’ This includesexposure through drinking water and inresidential settings, but does not includeoccupational exposure. Section408(b)(2)(C) requires EPA to give specialconsideration to exposure of infants andchildren to the pesticide chemicalresidue in establishing a tolerance andto ‘‘ensure that there is a reasonablecertainty that no harm will result toinfants and children from aggregateexposure to the pesticide chemicalresidue. ’’

Section 18 of FIFRA authorizes EPAto exempt any Federal or State agencyfrom any provision of FIFRA, if EPAdetermines that ‘‘emergency conditionsexist which require such exemption.’’This provision was not amended by


FQPA. EPA has established regulationsgoverning such emergency exemptionsin 40 CFR part 166.

Section 408(l)(6) of the FFDCArequires EPA to establish a time-limitedtolerance or exemption from therequirement for a tolerance for pesticidechemical residues in food that willresult from the use of a pesticide underan emergency exemption granted byEPA under section 18 of FIFRA. Suchtolerances can be established withoutproviding notice or period for publiccomment.

Because decisions on section 18-related tolerances must proceed beforeEPA reaches closure on several policyissues relating to interpretation andimplementation of the FQPA, EPA doesnot intend for its actions on suchtolerances to set binding precedents forthe application of section 408 and thenew safety standard to other tolerancesand exemptions.

II. Emergency Exemption forCarfentrazone-ethyl on Rice andFFDCA Tolerances

According to the Applicant, Californiaarrowhead Sagittaria montevidensisspp. Calcycina and ricefield bulrushScirpus mucronatus cause economicdamage by competing with rice plantsfor soil, nutrients and sunlight, and byinterfering with harvesting equipment toreduce yields. Resistance to theregistered alternative herbicide ofchoice, bensulfuron methyl, has beenobserved in populations of these weeds.Resistance was first reported in 1992,and a survey conducted in 1995estimated that 60% of rice fields inCalifornia have resistant Californiaarrowhead and 15% have resistantricefield bulrush. Phenoxy herbicidessuch as MCPA or 2,4-D may be used onbensulfuron methyl resistant weeds, butare phytotoxic to rice plants.Additionally, manufacturers haveannounced that they will not supplythese products in the SacramentoValley, due to persistent concerns aboutoff-target applications, drift and damagesymptoms on non-target crops,especially cotton. Propanil and triclopyrmay offer partial control of these weeds,but neither is labeled for this use. EPAhas authorized under FIFRA section 18the use of carfentrazone-ethyl on rice forcontrol of California arrowhead andricefield bulrush in California. Afterhaving reviewed the submission, EPAconcurs that emergency conditions existfor this state.

As part of its assessment of thisemergency exemption, EPA assessed thepotential risks presented by residues ofcarfentrazone-ethyl in or on rice, grainand rice, straw. In doing so, EPA

considered the safety standard inFFDCA section 408(b)(2), and EPAdecided that the necessary tolerancesunder FFDCA section 408(l)(6) would beconsistent with the safety standard andwith FIFRA section 18. Consistent withthe need to move quickly on theemergency exemption in order toaddress an urgent non-routine situationand to ensure that the resulting food issafe and lawful, EPA is issuing thesetolerances without notice andopportunity for public comment undersection 408(e), as provided in section408(l)(6). Although these tolerances willexpire and are revoked on October 31,1999, under FFDCA section 408(l)(5),residues of the pesticide not in excessof the amounts specified in thetolerances remaining in or on rice, grainand rice, straw after that date will notbe unlawful, provided the pesticide isapplied in a manner that was lawfulunder FIFRA, and the residues do notexceed the levels that were authorizedby these tolerances at the time of thatapplication. EPA will take action torevoke these tolerances earlier if anyexperience with, scientific data on, orother relevant information on thispesticide indicate that the residues arenot safe.

Because these tolerances are beingapproved under emergency conditionsEPA has not made any decisions aboutwhether carfentrazone-ethyl meetsEPA’s registration requirements for useon rice or whether permanent tolerancesfor this use would be appropriate.Under these circumstances, EPA doesnot believe that these tolerances serve asa basis for registration of carfentrazone-ethyl by a State for special local needsunder FIFRA section 24(c). Nor do thesetolerances serve as the basis for anyState other than California to use thispesticide on this crop under section 18of FIFRA without following allprovisions of EPA’s regulationsimplementing section 18 as identified in40 CFR part 166. For additionalinformation regarding the emergencyexemption for carfentrazone-ethyl,contact the Agency’s RegistrationDivision at the address provided above.

III. Aggregate Risk Assessment andDetermination of Safety

EPA performs a number of analyses todetermine the risks from aggregateexposure to pesticide residues. Forfurther discussion of the regulatoryrequirements of section 408 and acomplete description of the riskassessment process, see the Final Ruleon Bifenthrin Pesticide Tolerances (62FR 62961, November 26, 1997) (FRL–5754–7).

Consistent with section 408(b)(2)(D),EPA has reviewed the availablescientific data and other relevantinformation in support of this actionEPA has sufficient data to assess thehazards of carfentrazone-ethyl and tomake a determination on aggregateexposure, consistent with section408(b)(2), for time-limited tolerances forcombined residues of carfentrazone-ethyl and its chloropropionic acidmetabolite on rice, grain and rice, strawat 0.1 ppm and 1.0 ppm, respectively.EPA’s assessment of the dietaryexposures and risks associated withestablishing these tolerances follows.

A. Toxicological ProfileEPA has evaluated the available

toxicity data and considered its validity,completeness, and reliability as well asthe relationship of the results of thestudies to human risk. EPA has alsoconsidered available informationconcerning the variability of thesensitivities of major identifiablesubgroups of consumers, includinginfants and children. The nature of thetoxic effects caused by carfentrazone-ethyl are discussed below.

1. Acute toxicity. For the acute dietaryexposure and risk assessment, the acuteRfD was established at 5 milligrams/kilogram/day (mg/kg/day). The noobserved adverse effect level (NOAEL)of 500 mg/kg/day, taken from the acuteneurotoxicity study in rats, was basedon clinical observations (i.e., excessivesalivation) and motor activity testing atthe lowest adverse effect level (LOAEL)of 1,000 mg/kg/day. The acute RfDreflects an uncertainty factor of 100,based on interspecies extrapolation 10x,intraspecies variability 10x, and theAgency determination that the FQPA10x factor was not required.

2. Short - and intermediate - termtoxicity. The Agency determined thatshort- and intermediate-term dermalrisk assessments are not requiredbecause no systemic toxicity was seen atthe limit-dose (1,000 mg/kg/day) in a21–day dermal toxicity study in rats. Inaddition, based on the use pattern, long-term dermal exposure is not anticipated,therefore the chronic dermal riskassessment is not required.

Based on the low toxicity and the usepattern (one application at 0.008–0.031lbs. a.i./acre/season), the Agency alsoconcluded that a risk assessment forinhalation exposure (any time period) isnot required.

3. Chronic toxicity. EPA hasestablished the RfD for carfentrazone-ethyl at 0.03 (mg/kg/day). This RfD isbased on a NOAEL of 3 mg/kg/day takenfrom the 2–year chronic toxicity studyin rats. Effects observed at the LOAEL


of 12 mg/kg/day include histopathology(increases in microscopic redfluorescence of the liver, liver pigment)and total mean urinary porphyrin.

4. Carcinogenicity. Carfentrazone-ethyl has been classified by the Agencyas a ‘‘not likely’’ human carcinogen;there is no evidence of carcinogenicityin reviewed studies.

B. Exposures and Risks

1. From food and feed uses.Permanent tolerances for field corn,soybean and wheat commodities werepublished in the Federal Register onSeptember 30, 1998. An amendment toadd the remaining commodities in thecereal grain crop group is pending withthe Agency. Secondary residues inanimal commodities resulting from thissection 18 use are expected to benegligible. Risk assessments wereconducted by EPA to assess dietaryexposures and risks from carfentrazone-ethyl as follows:

i. Acute exposure and risk. Acutedietary risk assessments are performedfor a food-use pesticide if a toxicologicalstudy has indicated the possibility of aneffect of concern occurring as a result ofa one day or single exposure. Tolerancelevel residues and 100% crop treatedwere assumed to derive TMRC exposurevalues; these values should be viewedas conservative risk estimates; furtherrefinement using anticipated residuevalues and percent crop-treated data inconjunction with Monte Carlo analysiswould result in a lower acute dietaryexposure estimate.

The existing and proposed food usesof carfentrazone-ethyl result in an acutedietary exposure of 0.002 mg/kg/day forthe U.S. population (0.04% of the acuteRfD), 0.003 mg/kg/day for non-nursinginfants (< 1 year) (0.06% of the acuteRfD), and 0.001 mg/kg/day for females13+ years ( 0.02% of the acute RfD).

ii. Chronic exposure and risk. Inestimating chronic dietary exposurefrom food uses of carfentrazone-ethyl, itwas assumed that 100% of rice and allother commodities havingcarfentrazone-ethyl tolerances willcontain residues and those residueswould be at the level of the tolerance;these assumptions lead tooverestimation of human dietaryexposure. Thus, in making a safetydetermination for this tolerance, theAgency is taking into account thisconservative exposure assessment.

Existing and proposed carfentrazone-ethyl food uses result in a TMRC of0.0003 mg/kg/day (1% of the RfD) forthe U.S. population, and 0.0007 mg/kg/day (2% of the RfD) for both non-nursing infants (< 1 year old) and

children (1–6 years old), the twosubgroups having the highest exposure.

2. From drinking water. The Agencyhas calculated drinking water levels ofconcern (DWLOCs) for acute andchronic exposure to carfentrazone-ethylin surface and groundwater. TheDWLOCs are calculated by subtractingfrom the RfD (acute or chronic) therespective acute or chronic dietaryexposure attributable to food to obtainthe acceptable exposure to carfentrazonein drinking water; as there are noresidential uses of carfentrazone-ethyl atthis time, this component is notreflected in the calculation. Defaultbody weights (70 kg for males, 60 kg forfemales, and 10 kg for non-nursinginfants < 1 year old) and defaultdrinking water consumption estimates(2 L/day for adults, 1 L/day for non-nursing infants) are then used tocalculate the actual DWLOCs. TheDWLOC represents the concentrationlevel in surface water or groundwater atwhich aggregate exposure to thechemical is not of concern.

Using generic expected environmentalconcentration (GENEEC) (surface water)and SCI-GROW (groundwater) models,the Agency has calculated acute andchronic Tier I estimated environmentalconcentrations (EECs) for carfentrazone-ethyl for use in human health riskassessments. These values represent theupper bound estimates of theconcentrations of carfentrazone-ethylthat might be found in surface andground water assuming the maximumapplication rate allowed on the label.The EECs from these models arecompared to the DWLOCs to make thesafety determination.

i. Acute exposure and risk. AcuteDWLOCs were calculated to be 175 ppmfor the U.S. population, 150 ppm forfemales 13+ years, and 50 ppm for non-nursing infants less than 1 year old.Using the GENEEC model, thecalculated acute EECs in surface waterfor carfentrazone-ethyl and itschloropropionic acid degradate were 1.2parts per billion (ppb) and 2.88 ppb,respectively. Using the SCI-GROWmodel, the acute EECs in groundwaterwere calculated to be 0.000181 ppb forcarfentrazone-ethyl and 0.016065 ppbfor chloropropionic acid.

ii. Chronic exposure and risk. ChronicDWLOCs were calculated by the Agencyto be 1040 ppb for the U.S. population,891 ppb for females 13+ years, and 293ppb for non-nursing infants less than 1year old. Using the GENEEC model, thecalculated chronic EECs in surfacewater for carfentrazone-ethyl and itschloropropionic acid degradate were0.02 ppb and 2.46 ppb, respectively.Using the SCI-GROW model, the

chronic EECs in groundwater werecalculated to be 0.000181 ppb forcarfentrazone-ethyl and 0.016065 forchloropropionic acid.

3. From non-dietary exposure.Carfentrazone-ethyl is a new chemicalwith no registered residential uses.There is no concern for non-dietaryexposure via the dermal or inhalationroutes.

4. Cumulative exposure to substanceswith common mechanism of toxicity.Section 408(b)(2)(D)(v) requires that,when considering whether to establish,modify, or revoke a tolerance, theAgency consider ‘‘availableinformation’’ concerning the cumulativeeffects of a particular pesticide’sresidues and ‘‘other substances thathave a common mechanism of toxicity.’’

EPA does not have, at this time,available data to determine whethercarfentrazone-ethyl has a commonmechanism of toxicity with othersubstances or how to include thispesticide in a cumulative riskassessment. Unlike other pesticides forwhich EPA has followed a cumulativerisk approach based on a commonmechanism of toxicity, carfentrazone-ethyl does not appear to produce a toxicmetabolite produced by othersubstances. For the purposes of thistolerance action, therefore, EPA has notassumed that carfentrazone-ethyl has acommon mechanism of toxicity withother substances. For more informationregarding EPA’s efforts to determinewhich chemicals have a commonmechanism of toxicity and to evaluatethe cumulative effects of suchchemicals, see the Final Rule forBifenthrin Pesticide Tolerances (62 FR62961, November 26, 1997)(FRL–5754–7).

C. Aggregate Risks and Determination ofSafety for U.S. Population

1. Acute risk. Using the TMRCassumptions described above, acutedietary exposure from existing andproposed uses of carfentrazone-ethylwas calculated to represent 0.4% of theacute RfD for the U.S. population and0.02% of the RfD for females 13+ years.Estimated acute or peak EECs in surfacewater and groundwater of bothcarfentrazone-ethyl and itschloropropionic acid degradate are wellbelow the acute DWLOCs calculated bythe Agency for all population subgroupsof concern.

2. Chronic risk. Using the TMRCexposure assumptions described above,EPA has concluded that aggregateexposure to carfentrazone-ethyl fromfood will utilize 1% of the RfD for theU.S. population. The major identifiablesubgroup with the highest aggregate


exposure is non-nursing infants lessthan 1 year old (discussed below). EPAgenerally has no concern for exposuresbelow 100% of the RfD because the RfDrepresents the level at or below whichdaily aggregate dietary exposure over alifetime will not pose appreciable risksto human health. Estimated chronicEECs in surface water and groundwaterof both carfentrazone-ethyl and itschloropropionic acid degradate are wellbelow the chronic DWLOCs calculatedby the Agency for all populationsubgroups of concern.

3. Aggregate cancer risk for U.S.population. Carfentrazone-ethyl hasbeen classified by the Agency as a ‘‘notlikely’’ human carcinogen; there is noevidence of carcinogenicity in reviewedstudies. This risk assessment was notrequired.

4. Determination of safety. Based onthese risk assessments, EPA concludesthat there is a reasonable certainty thatno harm will result from aggregateexposure to carfentrazone-ethylresidues.

E. Aggregate Risks and Determination ofSafety for Infants and Children

1. Safety factor for infants andchildren—i. In general. In assessing thepotential for additional sensitivity ofinfants and children to residues ofcarfentrazone-ethyl, EPA considereddata from developmental toxicitystudies in the rat and rabbit and a 2-generation reproduction study in the rat.The developmental toxicity studies aredesigned to evaluate adverse effects onthe developing organism resulting frommaternal pesticide exposure duringgestation. Reproduction studies provideinformation relating to effects fromexposure to the pesticide on thereproductive capability of matinganimals and data on systemic toxicity.

FFDCA section 408 provides that EPAshall apply an additional tenfold marginof safety for infants and children in thecase of threshold effects to account forpre-and post-natal toxicity and thecompleteness of the database unlessEPA determines that a different marginof safety will be safe for infants andchildren. Margins of safety areincorporated into EPA risk assessmentseither directly through use of a marginof exposure (MOE) analysis or throughusing uncertainty (safety) factors incalculating a dose level that poses noappreciable risk to humans. EPAbelieves that reliable data support usingthe standard MOE and uncertaintyfactor (usually 100 for combined inter-and intra-species variability)) and notthe additional tenfold MOE/uncertaintyfactor when EPA has a complete database under existing guidelines and

when the severity of the effect in infantsor children or the potency or unusualtoxic properties of a compound do notraise concerns regarding the adequacy ofthe standard MOE/safety factor.

ii. Developmental toxicity studies. Inthe rat study, the maternal (systemic)NOAEL was 100 mg/kg/day based onabdominogenital and cage liner stainingat the LOAEL of 600 mg/kg/day. Thedevelopmental (fetal) NOAEL was 600mg/kg/day based on wavy or thickenedribs at the LOAEL of 1,250 mg/kg/day.In the rabbit developmental toxicitystudy, the maternal (systemic) NOAELwas ≥150 mg/kg/day based onunthriftiness and emaciation in twodoses in the current study at the LOAELof 300 mg/kg/day, as well as, dyspnea,decreased locomotion, lacrimation,abdominogenital staining, loss ofrighting reflex, nasal discharge,unthriftiness, and dehydration reportedin pilot studies at 350 and 700 mg/kg/day. The developmental (fetal) NOAELwas ≥300 mg/kg/day, the highest dosetested.

iii. Reproductive toxicity study. In the2-generation rat reproduction study, thematernal (systemic) NOAEL was 127mg/kg/day in males and 142 mg/kg/dayin females based on decreased bodyweight gains, increased liver weights,liver and bile duct histopathology, andreductions in the mean cell volume,hematocrit, and hemoglobin at theLOAEL of 343 mg/kg/day in males and387 mg/kg/day in females.

iv. Pre- and post-natal sensitivity.Based on the developmental andreproductive toxicity studies forcarfentrazone-ethyl there does notappear to be an extra sensitivity for pre-or post-natal effects. Therefore, theAgency has concluded that the 10xsafety factor to account for potentialsensitivity by infants and children tocarfentrazone-ethyl should be removed.

v. Conclusion. There is a completetoxicity database for carfentrazone-ethyland exposure data is complete or isestimated based on data that reasonablyaccounts for potential exposures.

2. Acute risk. Using the TMRCassumptions described above, acutedietary exposure from existing andproposed uses of carfentrazone-ethylwas calculated to represent 0.06% of theRfD for non-nursing infants less than 1year old, the infant and childrensubgroup most highly exposed.Estimated acute or peak EECs in surfacewater and groundwater of bothcarfentrazone-ethyl and itschloropropionic acid degradate are wellbelow the acute DWLOCs calculated bythe Agency for all population subgroupsof concern.

3. Chronic risk. Using the exposureassumptions described above, EPA hasconcluded that aggregate exposure tocarfentrazone-ethyl from food willutilize 2% of the RfD for infants andchildren. EPA generally has no concernfor exposures below 100% of the RfDbecause the RfD represents the level ator below which daily aggregate dietaryexposure over a lifetime will not poseappreciable risks to human health.Estimated chronic EECs in surface waterand groundwater of both carfentrazone-ethyl and its chloropropionic aciddegradate are well below the chronicDWLOCs calculated by the Agency forall population subgroups of concern.

4. Determination of safety. Based onthese risk assessments, EPA concludesthat there is a reasonable certainty thatno harm will result to infants andchildren from aggregate exposure tocarfentrazone-ethyl residues.

IV. Other Considerations

A. Metabolism In Plants and Animals

The nature of the residue in plantsand animals is adequately understood.The residue of concern is the parentcompound carfentrazone-ethyl and itschloropropionic acid metabolite.

B. Analytical Enforcement Methodology

Adequate enforcement methodologyis available from the Agency, (associatedwith PP#7F4795) to enforce theproposed tolerance on rice. Thisenforcement method is a GC methodthat uses ECD (electron capturedetection), MSD (mass selectivedetection), ELCD (electrolyticconductivity detection), or MS/NCI(negative ion chemical ionization massspectrometry). The method may berequested from: Calvin Furlow, PRRIB,IRSD (7502C), Office of PesticidePrograms, Environmental ProtectionAgency, 401 M St., SW., Washington,DC 20460. Office location and telephonenumber: Rm. 101FF, Crystal Mall #2,1921 Jefferson Davis Hwy., Arlington,VA 22202, (703–305–5229).

Data on multi-residue methods hasbeen submitted pertaining multi-residuemethods testing for carfentrazone-ethyl.Carfentrazone-ethyl was detected underProtocol C using either an ECD or NPDdetector. Better sensitivity was achievedwith ECD detection. Carfentrazone-ethylmetabolites were tested using ProtocolsB and C with ECD detection. These datahave been forwarded to FDA to beincluded in PAM I, Appendix I.

C. Magnitude of Residues

Residues of carfentrazone-ethyl andits chloropropionic acid metabolite arenot expected to exceed 0.10 ppm in/on


rice, grain and 1.0 ppm in/on rice, strawas a result of this section 18 use.

D. International Residue LimitsNo Codex, Canadian, and Mexican

tolerances are established forcarfentrazone-ethyl. Therefore, nocompatibility problems exist betweenthe proposed U.S. and Codex tolerances.

E. Rotational Crop RestrictionsA 30–day plant-back interval is to be

required on the label. Therecommended time-limited tolerancesreflect this restriction.

V. ConclusionTherefore, the tolerance is established

for combined residues of carfentrazone-ethyl and its chloropropionic acidmetabolite in rice, grain at 0.1 ppm andrice, straw at 1.0 ppm.

VI. Objections and Hearing RequestsThe new FFDCA section 408(g)


Any person may, by January 25, 1999,file written objections to any aspect ofthis regulation and may also request ahearing on those objections. Objectionsand hearing requests must be filed withthe Hearing Clerk, at the address givenabove (40 CFR 178.20). A copy of theobjections and/or hearing requests filedwith the Hearing Clerk should besubmitted to the OPP docket for thisrulemaking. The objections submittedmust specify the provisions of theregulation deemed objectionable and thegrounds for the objections (40 CFR178.25). Each objection must beaccompanied by the fee prescribed by40 CFR 180.33(i). If a hearing isrequested, the objections must include astatement of the factual issues on whicha hearing is requested, the requestor’scontentions on such issues, and asummary of any evidence relied uponby the requestor (40 CFR 178.27). Arequest for a hearing will be granted ifthe Administrator determines that thematerial submitted shows the following:There is genuine and substantial issue

of fact; there is a reasonable possibilitythat available evidence identified by therequestor would, if established, resolveone or more of such issues in favor ofthe requestor, taking into accountuncontested claims or facts to thecontrary; and resolution of the factualissues in the manner sought by therequestor would be adequate to justifythe action requested (40 CFR 178.32).Information submitted in connectionwith an objection or hearing requestmay be claimed confidential by markingany part or all of that information asCBI. Information so marked will not bedisclosed except in accordance withprocedures set forth in 40 CFR part 2.A copy of the information that does notcontain CBI must be submitted forinclusion in the public record.Information not marked confidentialmay be disclosed publicly by EPAwithout prior notice.

VII. Public Record and ElectronicSubmissions

EPA has established a record for thisrulemaking under docket controlnumber (OPP–300751) (including anycomments and data submittedelectronically). A public version of thisrecord, including printed, paperversions of electronic comments, whichdoes not include any informationclaimed as CBI, is available forinspection from 8:30 a.m. to 4 p.m.,Monday through Friday, excluding legalholidays. The public record is located inRoom 119 of the Public Information andRecords Integrity Branch, InformationResources and Services Division(7502C) Office of Pesticide Programs,Environmental Protection Agency,Crystal Mall #2, 1921 Jefferson DavisHighway, Arlington, VA.


[email protected].

Electronic comments must besubmitted as an ASCII file avoiding theuse of special characters and any formof encryption.


VIII. Regulatory AssessmentRequirements

A. Certain Acts and Executive OrdersThis final rule establishes a tolerance

under FFDCA section 408 (l)(6). TheOffice of Management and Budget(OMB) has exempted these types ofactions from review under ExecutiveOrder 12866, entitled RegulatoryPlanning and Review (58 FR 51735,October 4, 1993). This final rule doesnot contain any information collectionssubject to OMB approval under thePaperwork Reduction Act (PRA), 44U.S.C. 3501 et seq., or impose anyenforceable duty or contain anyunfunded mandate as described underTitle II of the Unfunded MandatesReform Act of 1995 (UMRA) (Pub. L.104–4). Nor does it require any priorconsultation as specified by ExecutiveOrder 12875, entitled Enhancing theIntergovernmental Partnership (58 FR58093, October 28, 1993), or specialconsiderations as required by ExecutiveOrder 12898, entitled Federal Actions toAddress Environmental Justice inMinority Populations and Low-IncomePopulations (59 FR 7629, February 16,1994), or require OMB review inaccordance with Executive Order 13045,entitled Protection of Children fromEnvironmental Health Risks and SafetyRisks (62 FR 19885, April 23, 1997).

In addition, since tolerances andexemptions that are established underFFDCA section 408 (l)(6), such as thetolerance in this final rule, do notrequire the issuance of a proposed rule,the requirements of the RegulatoryFlexibility Act (RFA) (5 U.S.C. 601 etseq.) do not apply. Nevertheless, theAgency has previously assessed whetherestablishing tolerances, exemptionsfrom tolerances, raising tolerance levelsor expanding exemptions mightadversely impact small entities andconcluded, as a generic matter, thatthere is no adverse economic impact.The factual basis for the Agency’sgeneric certification for toleranceactions published on May 4, 1981 (46FR 24950), and was provided to theChief Counsel for Advocacy of the SmallBusiness Administration.


entitled Enhancing theIntergovernmental Partnership (58 FR58093, October 28, 1993), EPA may notissue a regulation that is not required bystatute and that creates a mandate upona State, local, or tribal government,unless the Federal government providesthe funds necessary to pay the directcompliance costs incurred by thosegovernments. If the mandate is


unfunded, EPA must provide to OMB adescription of the extent of EPA’s priorconsultation with representatives ofaffected State, local, and tribalgovernments, the nature of theirconcerns, copies of any writtencommunications from the governments,and a statement supporting the need toissue the regulation. In addition,Executive Order 12875 requires EPA todevelop an effective process permittingelected officials and otherrepresentatives of State, local, and tribalgovernments ‘‘to provide meaningfuland timely input in the development ofregulatory proposals containingsignificant unfunded mandates.’’



entitled Consultation and Coordinationwith Indian Tribal Governments (63 FR27655, May 19,1998), EPA may notissue a regulation that is not required bystatute, that significantly or uniquelyaffects the communities of Indian tribalgovernments, and that imposessubstantial direct compliance costs onthose communities, unless the Federalgovernment provides the fundsnecessary to pay the direct compliancecosts incurred by the tribalgovernments. If the mandate isunfunded, EPA must provide to OMB,

in a separately identified section of thepreamble to the rule, a description ofthe extent of EPA’s prior consultationwith representatives of affected tribalgovernments, a summary of the natureof their concerns, and a statementsupporting the need to issue theregulation. In addition, Executive Order13084 requires EPA to develop aneffective process permitting electedofficials and other representatives ofIndian tribal governments ‘‘to providemeaningful and timely input in thedevelopment of regulatory policies onmatters that significantly or uniquelyaffect their communities.’’


IX. Submission to Congress and theComptroller General

The Congressional Review Act, 5U.S.C. 801 et seq., as added by the SmallBusiness Regulatory EnforcementFairness Act of 1996, generally providesthat before a rule may take effect, theagency promulgating the rule mustsubmit a rule report, which includes acopy of the rule, to each House of theCongress and to the Comptroller Generalof the United States. EPA will submit areport containing this rule and otherrequired information to the U.S. Senate,the U.S. House of Representatives, andthe Comptroller General of the UnitedStates prior to publication of the rule in

the Federal Register. This rule is not a‘‘major rule’’ as defined by 5 U.S.C.804(2).






PART 180 — [AMENDED]



2. In §180.515 is amended by revisingparagraph (b) to read as follows:

§ 180.515 Carfentrazone-ethyl; tolerancesfor residues

* * * * *(b) Section 18 emergency exemptions.

Time-limited tolerances are establishedfor combined residues of the herbicidecarfentrazone-ethyl and itschloropropionic acid metabolite inconnection with use of the pesticideunder section 18 emergency exemptionsgranted by EPA. These tolerances willexpire and are revoked on the datesspecified in the following table.

Commodity Parts per million Expiration/Revocation Date

Rice, grain ........................................................................................... 0.1 10/31/99

Rice, straw ........................................................................................... 1.0 10/31/99

* * * * *



40 CFR Part 180

[OPP–300759; FRL 6045–4]

RIN 2070–AB78

Azoxystrobin; Pesticide Tolerances forEmergency Exemptions

AGENCY: Environmental ProtectionAgency (EPA).

ACTION: Final rule.

SUMMARY: This regulation establishes atime-limited tolerance for combinedresidues of azoxystrobin or methyl (E)-2-(2-[6-(2-cyanophenoxy)pyrimidin-4-yloxy]phenyl)-3-methoxyacrylate) andits Z isomer in or on sugar beets andsoybeans. This action is in response toEPA’s granting of an emergencyexemption under section 18 of theFederal Insecticide, Fungicide, andRodenticide Act authorizing use of thepesticide on sugar beets and soybeans.This regulation establishes maximumpermissible levels for residues ofazoxystrobin in these food commoditiespursuant to section 408(l)(6) of the

Federal Food, Drug, and Cosmetic Act,as amended by the Food QualityProtection Act of 1996. The tolerancewill expire and will be revoked on June30, 2000.

DATES: This regulation is effectiveNovember 25, 1998. Objections andrequests for hearings must be receivedby EPA on or before January 25, 1999.

ADDRESSES: Written objections andhearing requests, identified by thedocket control number, [OPP–300759],must be submitted to: Hearing Clerk(1900), Environmental ProtectionAgency, Rm. M3708, 401 M St., SW.,Washington, DC 20460. Feesaccompanying objections and hearing


requests shall be labeled ‘‘TolerancePetition Fees’’ and forwarded to: EPAHeadquarters Accounting OperationsBranch, OPP (Tolerance Fees), P.O. Box360277M, Pittsburgh, PA 15251. A copyof any objections and hearing requestsfiled with the Hearing Clerk identifiedby the docket control number, [OPP–300759], must also be submitted to:Public Information and RecordsIntegrity Branch, Information Resourcesand Services Division (7502C), Office ofPesticide Programs, EnvironmentalProtection Agency, 401 M St., SW.,Washington, DC 20460. In person, bringa copy of objections and hearingrequests to Rm. 119, CM #2, 1921Jefferson Davis Hwy., Arlington, VA.

A copy of objections and hearingrequests filed with the Hearing Clerkmay also be submitted electronically bysending electronic mail (e-mail) to: [email protected]. Copies ofobjections and hearing requests must besubmitted as an ASCII file avoiding theuse of special characters and any formof encryption. Copies of objections andhearing requests will also be acceptedon disks in WordPerfect 5.1/6.1 orASCII file format. All copies ofobjections and hearing requests inelectronic form must be identified bythe docket control number [OPP–300759]. No Confidential BusinessInformation (CBI) should be submittedthrough e-mail. Electronic copies ofobjections and hearing requests on thisrule may be filed online at many FederalDepository Libraries.FOR FURTHER INFORMATION CONTACT: Bymail: Jacqueline Gwaltney, RegistrationDivision (7505C), Office of PesticidePrograms, Environmental ProtectionAgency, 401 M St., SW., Washington,DC 20460. Office location, telephonenumber, and e-mail address: CrystalMall #2, 1921 Jefferson Davis Hwy.,Arlington, VA, (703) 305–6792; e-mail:[email protected] INFORMATION: EPA, onits own initiative, pursuant to section408(e) and (l)(6) of the Federal Food,Drug, and Cosmetic Act (FFDCA), 21U.S.C. 346a(e) and (l)(6), is establishinga tolerance for combined residues offungicide azoxystrobin and its Z isomer,in or on sugar beets, and soybeans at0.05 and 1.0 part per million (ppm),respectively. These tolerances willexpire and will be revoked on June 30,2000. EPA will publish a document inthe Federal Register to remove therevoked tolerance from the Code ofFederal Regulations.

I. Background and Statutory Authority

The Food Quality Protection Act of1996 (FQPA) (Pub. L. 104–170) was

signed into law August 3, 1996. FQPAamends both the FFDCA, 21 U.S.C. 301et seq., and the Federal Insecticide,Fungicide, and Rodenticide Act(FIFRA), 7 U.S.C. 136 et seq . The FQPAamendments went into effectimmediately. Among other things,FQPA amends FFDCA to bring all EPApesticide tolerance-setting activitiesunder a new section 408 with a newsafety standard and new procedures.These activities are described below anddiscussed in greater detail in the finalrule establishing the time-limitedtolerance associated with the emergencyexemption for use of propiconazole onsorghum (61 FR 58135, November 13,1996) (FRL–5572–9).

New section 408(b)(2)(A)(i) of theFFDCA allows EPA to establish atolerance (the legal limit for a pesticidechemical residue in or on a food) onlyif EPA determines that the tolerance is‘‘safe.’’ Section 408(b)(2)(A)(ii) defines‘‘safe’’ to mean that ‘‘there is areasonable certainty that no harm willresult from aggregate exposure to thepesticide chemical residue, includingall anticipated dietary exposures and allother exposures for which there isreliable information.’’ This includesexposure through drinking water and inresidential settings, but does not includeoccupational exposure. Section408(b)(2)(C) requires EPA to give specialconsideration to exposure of infants andchildren to the pesticide chemicalresidue in establishing a tolerance andto ‘‘ensure that there is a reasonablecertainty that no harm will result toinfants and children from aggregateexposure to the pesticide chemicalresidue.’’

Section 18 of FIFRA authorizes EPAto exempt any Federal or State agencyfrom any provision of FIFRA, if EPAdetermines that ‘‘emergency conditionsexist which require such exemption.’’This provision was not amended byFQPA. EPA has established regulationsgoverning such emergency exemptionsin 40 CFR part 166.

Section 408(l)(6) of the FFDCArequires EPA to establish a time-limitedtolerance or exemption from therequirement for a tolerance for pesticidechemical residues in food that willresult from the use of a pesticide underan emergency exemption granted byEPA under section 18 of FIFRA. Suchtolerances can be established withoutproviding notice or period for publiccomment.

Because decisions on section 18-related tolerances must proceed beforeEPA reaches closure on several policyissues relating to interpretation andimplementation of the FQPA, EPA doesnot intend for its actions on such

tolerance to set binding precedents forthe application of section 408 and thenew safety standard to other tolerancesand exemptions.

II. Emergency Exemption forAzoxystrobin on Sugar Beets andSoybeans, and FFDCA Tolerances

The Minnesota Department ofAgriculture requested an emergencyexemption in April of 1998 for thecontrol of cercospora leafspots on sugarbeets. The registered alternativefungicides benomyl, thiabendazolethiophanate methyl, triphenyl tinhydroxide (TPTH), EBDCs (Mancozeband Maneb), and copper hydroxide forcontrolling cercospora leaf spots do notcontrol the disease effectively becauseof resistance and/or tolerance in thepathogen. Moderately resistant cultivarsof sugar beet are available, but theiryield potentials are lower than thesusceptible. Cultural practices are notvery effective in managing the disease.During 1998, the disease severity isexpected to be higher and yield lossessignificant due to mild wintertemperature (El Nino effects).

Minnesota also claims that TPTH isstill used in controlling the disease, butit is significantly less effective than inthe past.

In August 1998, the ArkansasDepartment of Agriculture alsorequested an emergency exemption forthe control of aerial blight on soybeans.The disease is particularly aggressive inyears of above-normal nighttemperatures, high humidity, andfrequent rainfall. Conditions in 1998have been near perfect for developmentof sheath blight of rice, with nighttemperatures in the 78–82 degree rangeand oppressively high relative humiditywithin crop canopies. Rainfall innortheast Arkansas has also contributedto the problem. Soybean has just enteredthe most susceptible flowering and earlypod formation stages and aerial blighthas become exceptionally aggressive asweather conditions continue to favor itsdevelopment. Damage to soybean yieldis through destruction of foliage, and toa greater extent-flowers, pods and seeds.Yield losses in some Arkansas fields inthe past have been estimated as high as50%, however, this is a very rareoccurrence most years.

For these reasons, EPA has authorizedunder FIFRA section 18 the use ofazoxystrobin on sugar beets for controlof cercospora leafspots in Minnesota,and the use of azoxystrobin on soybeansfor control of aerial blight in Arkansas.

As part of its assessment of thisemergency exemption, EPA assessed thepotential risks presented by residues ofazoxystrobin in or on sugar beets and


soybeans. In doing so, EPA consideredthe new safety standard in FFDCAsection 408(b)(2), and EPA decided thatthe necessary tolerance under FFDCAsection 408(l)(6) would be consistentwith the new safety standard and withFIFRA section 18. Consistent with theneed to move quickly on the emergencyexemption in order to address an urgentnon-routine situation and to ensure thatthe resulting food is safe and lawful,EPA is issuing this tolerance withoutnotice and opportunity for publiccomment under section 408(e), asprovided in section 408(l)(6). Althoughthis tolerance will expire and will berevoked on June 30, 2000, under FFDCAsection 408(l)(5), residues of thepesticide not in excess of the amountsspecified in the tolerance remaining inor on sugar beets and soybeans after thatdate will not be unlawful, provided thepesticide is applied in a manner thatwas lawful under FIFRA, and theresidues do not exceed a level that wasauthorized by this tolerance at the timeof that application. EPA will take actionto revoke this tolerance earlier if anyexperience with, scientific data on, orother relevant information on thispesticide indicate that the residues arenot safe.

Because this tolerance is beingapproved under emergency conditionsEPA has not made any decisions aboutwhether azoxystrobin meets EPA’sregistration requirements for use onsugar beets and soybeans or whether apermanent tolerance for this use wouldbe appropriate. Under thesecircumstances, EPA does not believethat this tolerance serves as a basis forregistration of azoxystrobin by a Statefor special local needs under FIFRAsection 24(c). Nor does this toleranceserve as the basis for any State otherthan Minnesota or Arkansas to use thispesticide on these crop under section 18of FIFRA without following allprovisions of section 18 as identified in40 CFR part 166. For additionalinformation regarding the emergencyexemption for azoxystrobin, contact theAgency’s Registration Division at theaddress provided above.

III. Risk Assessment and StatutoryFindings

EPA performs a number of analyses todetermine the risks from aggregateexposure to pesticide residues. First,EPA determines the toxicity ofpesticides based primarily ontoxicological studies using laboratoryanimals. These studies address manyadverse health effects, including (butnot limited to) reproductive effects,developmental toxicity, toxicity to thenervous system, and carcinogenicity.

Second, EPA examines exposure to thepesticide through the diet (e.g., food anddrinking water) and through exposuresthat occur as a result of pesticide use inresidential settings.

A. Toxicological ProfileEPA has evaluated the available

toxicity data and considered its validity,completeness, and reliability as well asthe relationship of the results of thestudies to human risk. EPA has alsoconsidered available informationconcerning the variability of thesensitivities of major identifiablesubgroups of consumers, includinginfants and children. The nature of thetoxic effects and The Agency’s selectionof toxicological endpoints upon whichto assess risk caused by azoxystrobin arediscussed below.

1. Acute toxicity. The Agencyevaluated the existing toxicologydatabase for azoxystrobin and did notidentify an acute dietary endpoint.Therefore, a risk assessment is notrequired.

2. Short - and intermediate - termtoxicity. The Agency evaluated theexisting toxicology database for short-and intermediate-term dermal andinhalation exposure and determinedthat this risk assessment is not required.

3. Chronic toxicity. EPA hasestablished the reference dose (RfD) forazoxystrobin at 0.18 milligrams/kilogram/day (mg/kg/day). This RfD isbased on a chronic toxicity study in ratswith a no observed adverse effect level(NOAEL) of 18.2 mg/kg/day. Reducedbody weights and bile duct lesions wereobserved at the lowest effect level (LEL)of 34 mg/kg/day. An Uncertainty Factor(UF) of 100 was used to account for boththe interspecies extrapolation and theintraspecies variability.

4. Carcinogenicity. The Agencydetermined that azoxystrobin should beclassified as ‘‘Not Likely’’ to be a humancarcinogen according to the proposedrevised Cancer Guidelines. Thisclassification is based on the lack ofevidence of carcinogenicity in long-termrat and mouse feeding studies.

B. Exposures and Risks1. From food and feed uses.

Permanent tolerances have beenestablished (40 CFR 180.507(a)) for thecombined residues of azoxystrobin andits Z isomer, in or on a variety of rawagricultural commodities at levelsranging from 0.01 ppm in pecans to 1.0ppm in grapes. In addition, time-limitedtolerances have been established (40CFR 180.507(b) at levels ranging from0.006 ppm in milk to 20 ppm in ricehulls) in conjunction with previoussection 18 requests. Risk assessments

were conducted by EPA to assessdietary exposures and risks fromazoxystrobin as follows:

2. Acute exposure and risk. Acutedietary risk assessments are performedfor a food-use pesticide if a toxicologicalstudy has indicated the possibility of aneffect of concern occurring as a result ofa one day or single exposure. TheAgency did not conduct an acute riskassessment because no toxicologicalendpoint of concern was identifiedduring review of available data.

3. Chronic exposure and risk. Inconducting this chronic dietary riskassessment, EPA has made veryconservative assumptions -- 100% of allcommodities having azoxystrobintolerances will contain azoxystrobinresidues and those residues would be atthe level of the tolerance with theexception of raisins and grape juice --which result in an over estimation ofhuman dietary exposure. Thus, inmaking a safety determination for thistolerance, The Agency is taking intoaccount this conservative exposureassessment.

The existing azoxystrobin tolerancespublished, pending, and including thenecessary section 18 tolerance(s) resultin a Theoretical Maximum ResidueContribution (TMRC) that is equivalentto the following percentages of the RfD:

Population Sub-Group

TMRC(mg/kg/

day)% RFD

U.S. Population (48States).

0.0026 1.5%

All Infants (<1 yearold).

0.0079 4.4%

Nursing Infants (<1year old).

0.0026 1.5%

Non-Nursing Infants(<1 year old).

0.010 5.6%

Children (1–6 yearsold).

0.0065 3.6%

Children (7–12years old).

0.0035 1.9%

U.S. Population(Summer Season).

0.0030 1.7%

Northeast Region ... 0.0029 1.6%

Western Region ...... 0.0029 1.6%

Hispanics ................ 0.0036 2.0%

Non-HispanicsBlacks.

0.0029 1.6%

Non-Hispanics(Other Than Blackor White).

0.0045 2.5%

The subgroups listed above are:i. The U.S. population (48 states).


ii. Those for infants and children.iii. The other subgroups for which the

percentage of the RfD occupied isgreater than that occupied by thesubgroup U.S. population (48 states).

4. From drinking water. There is noestablished maximum contaminant levelfor residues of azoxystrobin in drinkingwater. No health advisory levels for

azoxystrobin in drinking water havebeen established.

5. Acute exposure and risk. Anassessment was not appropriate since notoxicological endpoint of concern wasidentified during review of the availabledata.

6. Chronic exposure and risk. Basedon the chronic dietary (food) exposureestimates, chronic drinking water levels

of concern (DWLOC) for azoxystrobinwere calculated and are summarized inthe following table. The highest EEC forazoxystrobin in surface water is fromthe application of azoxystrobin ongrapes (39 µg/L) and is substantiallylower than the DWLOCs calculated.Therefore, chronic exposure toazoxystrobin residues in drinking waterdo not exceed EPA level of concern.

Chronic RfD (mg/kg/day)

TMRC Food Expo-sure (mg/kg/day)

Max Water Exposure1

(mg/kg/day) DWLOC 2,3,4 (µg/L)

US Population (48 States) ................................ 0.18 0.0026 0.18 6200

Females (13 + years old, not pregnant ornursing) ......................................................... 0.18 0.0029 0.18 5300

Non-nursing Infants (< 1 year old) ................... 0.18 0.010 0.17 1700

1 Maximum Water Exposure (mg/kg/day) = Chronic RfD (mg/kg/day) - TMRC from DRES (mg/kg/day)2 DWLOC(µg/L) = Max water exposure (mg/kg/day) * body wt (kg) /[(10–3 mg/µg)*water consumed daily (L/day)]3 HED Default body wts for males, females, and children are 70 kg, 60 kg, and 10 kg respectively.4 HED Default Daily Drinking Rates are 2 L/Day for Adults and 1 L/Day for children

7. From non-dietary exposure.Azoxystrobin is not currently registeredfor any residential uses.

8. Cumulative exposure to substanceswith common mechanism of toxicity.Azoxystrobin is related to the naturallyoccurring strobilurins. There are noother members of this class offungicides registered with the Agency.Section 408(b)(2)(D)(v) requires that,when considering whether to establish,modify, or revoke a tolerance, theAgency consider ‘‘availableinformation’’ concerning the cumulativeeffects of a particular pesticide’sresidues and ‘‘other substances thathave a common mechanism of toxicity.’’The Agency believes that ‘‘availableinformation’’ in this context mightinclude not only toxicity, chemistry,and exposure data, but also scientificpolicies and methodologies forunderstanding common mechanisms oftoxicity and conducting cumulative riskassessments. For most pesticides,although the Agency has someinformation in its files that may turn outto be helpful in eventually determiningwhether a pesticide shares a commonmechanism of toxicity with any othersubstances, EPA does not at this timehave the methodologies to resolve thecomplex scientific issues concerningcommon mechanism of toxicity in ameaningful way. EPA has begun a pilotprocess to study this issue furtherthrough the examination of particularclasses of pesticides. The Agency hopesthat the results of this pilot process willincrease the Agency’s scientificunderstanding of this question such thatEPA will be able to develop and applyscientific principles for betterdetermining which chemicals have acommon mechanism of toxicity and

evaluating the cumulative effects ofsuch chemicals. The Agency anticipates,however, that even as its understandingof the science of common mechanismsincreases, decisions on specific classesof chemicals will be heavily dependenton chemical specific data, much ofwhich may not be presently available.

Although at present the Agency doesnot know how to apply the informationin its files concerning commonmechanism issues to most riskassessments, there are pesticides as towhich the common mechanism issuescan be resolved. These pesticidesinclude pesticides that aretoxicologically dissimilar to existingchemical substances (in which case theAgency can conclude that it is unlikelythat a pesticide shares a commonmechanism of activity with othersubstances) and pesticides that producea common toxic metabolite (in whichcase common mechanism of activitywill be assumed).

EPA does not have, at this time,available data to determine whetherazoxystrobin has a common mechanismof toxicity with other substances or howto include this pesticide in a cumulativerisk assessment. Unlike other pesticidesfor which EPA has followed acumulative risk approach based on acommon mechanism of toxicity,azoxystrobin does not appear to producea toxic metabolite produced by othersubstances. For the purposes of thistolerance action, therefore, EPA has notassumed that azoxystrobin has acommon mechanism of toxicity withother substances.

C. Aggregate Risks and Determination ofSafety for U.S. Population

1. Chronic risk. Using theconservative TMRC exposureassumptions described above, andtaking into account the completenessand reliability of the toxicity data, EPAhas estimated the exposure toazoxystrobin from food will utilize 1.5%of the RfD for the U.S. population. EPAgenerally has no concern for exposuresbelow 100% of the RfD because the RfDrepresents the level at or below whichdaily aggregate dietary exposure over alifetime will not pose appreciable risksto human health. Despite the potentialfor exposure to azoxystrobin in drinkingwater, EPA does not expect theaggregate exposure to exceed 100% ofthe RfD. Under current EPA guidelines,the registered non-dietary uses ofazoxystrobin do not constitute a chronicexposure scenario. EPA concludes thatthere is a reasonable certainty that noharm will result from chronic aggregateexposure to azoxystrobin residues. EPAconcludes that there is a reasonablecertainty that no harm will result fromaggregate exposure to azoxystrobinresidues.

2. Short- and intermediate-term risk.Short- and intermediate-term aggregateexposure takes into account chronicdietary food and water (considered to bea background exposure level) plusindoor and outdoor residentialexposure. This risk assessment is notapplicable since no indoor and outdoorresidential exposure uses are currentlyregistered for azoxystrobin.

D. Aggregate Cancer Risk for U.S.Population

The Agency determined thatazoxystrobin should be classified as


‘‘Not Likely’’ to be a human carcinogenaccording to the proposed revisedCancer Guidelines. The Agency hastherefore not conducted a cancer riskassessment.

E. Aggregate Risks and Determination ofSafety for Infants and Children

1. Safety factor for infants andchildren — i. In general. In assessing thepotential for additional sensitivity ofinfants and children to residues ofazoxystrobin, EPA considered data fromdevelopmental toxicity studies in the ratand rabbit and a 2-generationreproduction study in the rat. Thedevelopmental toxicity studies aredesigned to evaluate adverse effects onthe developing organism resulting frommaternal pesticide exposure duringgestation. Reproduction studies provideinformation relating to effects fromexposure to the pesticide on thereproductive capability of matinganimals and data on systemic toxicity.

FFDCA section 408 provides that EPAshall apply an additional tenfold marginof safety for infants and children in thecase of threshold effects to account forpre-and post-natal toxicity and thecompleteness of the database unlessEPA determines that a different marginof safety will be safe for infants andchildren. Margins of safety areincorporated into EPA risk assessmentseither directly through use of a MOEanalysis or through using uncertainty(safety) factors in calculating a doselevel that poses no appreciable risk tohumans. EPA believes that reliable datasupport using the standard MOE anduncertainty factor (usually 100 forcombined inter- and intra-speciesvariability) and not the additionaltenfold MOE/uncertainty factor whenEPA has a complete data base underexisting guidelines and when theseverity of the effect in infants orchildren or the potency or unusual toxicproperties of a compound do not raiseconcerns regarding the adequacy of thestandard MOE/safety factor.

ii. Developmental toxicity studies —a. Rabbit. In the developmental toxicitystudy in rabbits, developmental NOAELwas 500 mg/kg/day, at the highest dosetested (HDT). Because there were notreatment-related effects, thedevelopmental LEL was ´500 mg/kg/day. The maternal NOAEL was 150 mg/kg/day. The maternal LEL of 500 mg/kg/day was based on decreased bodyweight gain during dosing.

b. Rat. In the developmental toxicitystudy in rats, the maternal (systemic)NOAEL was not established. Thematernal LEL of 25 mg/kg/day at thelowest dose tested (LDT) was based onincreased salivation. The developmental

(fetal) NOAEL was 100 mg/kg/day(HDT).

iii. Reproductive toxicity study — Rat.In the reproductive toxicity study inrats, the parental (systemic) NOAEL was32.3 mg/kg/day. The parental LEL of165.4 mg/kg/day was based ondecreased body weights in males andfemales, decreased food consumptionand increased adjusted liver weights infemales, and cholangitis. Thereproductive NOAEL was 32.3 mg/kg/day. The reproductive LEL of 165.4 mg/kg/day was based on increased weanlingliver weights and decreased bodyweights for pups of both generations.

iv. Pre- and post-natal sensitivity. Thepre- and post-natal toxicology data basefor azoxystrobin is complete withrespect to current toxicological datarequirements.

v. Conclusion. The results of thesestudies indicate that infants andchildren are not more sensitive toexposure, based on the results of the ratand rabbit developmental toxicitystudies and the 2-generationreproductive toxicity study in rats. Theadditional 10x safety factor to accountfor sensitivity of infants and childrenwas removed by the Agency.

2. Chronic risk. Using theconservative exposure assumptionsdescribed above, EPA has concludedthat aggregate exposure to azoxystrobinfrom food will utilize 1.9% to 5.6% ofthe RfD for infants and children. EPAgenerally has no concern for exposuresbelow 100% of the RfD because the RfDrepresents the level at or below whichdaily aggregate dietary exposure over alifetime will not pose appreciable risksto human health. Despite the potentialfor exposure to azoxystrobin in drinkingwater and from non-dietary, non-occupational exposure, EPA does notexpect the aggregate exposure to exceed100% of the RfD. EPA concludes thatthere is a reasonable certainty that noharm will result to infants and childrenfrom aggregate exposure to azoxystrobinresidues.

V. Other Considerations

A. Metabolism In Plants and Animals

The nature of the residue in grapes isadequately understood. These data arebeing translated for sugar beets for thissection 18 temporary tolerance.

The qualitative nature of the residuein animals is adequately understood forthe purposes of this section 18 request.A ruminant metabolism study has beensubmitted, however the animalmetabolism data have not beenreviewed by the Office of PesticideProgram’s Metabolism AssessmentReview Committee. The residues of

concern in ruminants appears to bedifferent from that of plants.Unidentified metabolite compounds,designated metabolites 2, 20, and 28,appear to be the major components ofthe residue in ruminant tissues. For thepurposes of these time-limitedtolerances for emergency exemptionsonly, the residues of concern in animaltissues are azoxystrobin and its Z-isomer.

As sugar beet commodities are notconsidered to be major poultry feeditems, the nature and the magnitude ofresidues in poultry and eggs are not ofconcern for the this section 18.

B. Analytical Enforcement Methodology

A method (SOP RAM 243/03, GLC/NPD) to determine residues ofazoxystrobin and its Z isomer in banana,peach, peanut, tomato, and wheatcommodities has been submitted. Thismethod has been independentlyvalidated as per PR Notice 88–5. AnAgency validation of this method ispending. The Agency concludes thismethod is adequate for enforcement ofthe requested section 18 tolerances onplant commodities.

GLC/NPD method RAM 255/01 isadequate for collection of residue datafor azoxystrobin in animal commodities.Adequate independent methodvalidation and concurrent methodrecovery data have been submitted.Method SOP RAM 255/01 has beensubmitted for Agency methodvalidation. RAB2 concludes this methodis adequate for enforcement of thenecessary section 18 tolerances onlivestock commodities.

C. Magnitude of Residues

Residue data for azoxystrobin and itsZ-isomer in banana pulp and inwatercress were translated to sugar beetroots and tops, respectively. Residuesare not expected to exceed 0.05 ppm insugar beet roots and 0.2 ppm in sugarbeet tops as a result of this section 18use.

According to the OPPTS TestGuidelines (860.1520), a maximumtheoretical concentration factor of 12.5is noted for the processing of sugar beetroots to refined sugar. The Agency hasapplied this factor to the tolerance levelof sugar beet roots to determine thetolerance level for refined sugar andmolasses. Thus, the tolerance level forazoxystrobin and its Z-isomer in beet,sugar, refined sugar and molasses willbe set at 0.7 ppm. The Agency applieda factor of 20 to the tolerance level ofsugar beet roots to determine thetolerance level for the dried pulp.Therefore, the tolerance level for


azoxystrobin and its Z-isomer in beet,sugar, pulp, dried will be set at 1.0 ppm.

The existing ruminant tolerancesestablished in conjunction with aprevious section 18 request are adequateto cover the proposed uses. Theaddition of sugar beet commodities tothe diet of ruminants will notsignificantly increase the dietary burdenfor azoxystrobin residues. Theexpiration date of livestock commoditytolerances will be extended to theexpiration date of the sugar beettolerances established with this section18 request. In addition, EPA willestablish tolerances for residues ofazoxystrobin and its Z-isomer in/onkidney of goats, hogs, horses, and sheepat 0.06 ppm.

D. International Residue Limits

There are no Codex, Canadian, orMexican Maximum Residue Limits(MRL) for azoxystrobin on sugar beetcommodities. Thus, harmonization isnot an issue for these section 18requests.

E. Rotational Crop Restrictions

Rotational crop data were previouslysubmitted. Based on this information, a45 day plantback interval is appropriatefor all crops.

VI. ConclusionTherefore, tolerances are established

for combined residues of azoxystrobinand its Z isomer in sugar beets andsoybeans at 0.05 ppm, and 1.0 ppmrespectively .

VII. Objections and Hearing RequestsThe new FFDCA section 408(g)


Any person may, by January 25, 1999,file written objections to any aspect ofthis regulation and may also request ahearing on those objections. Objectionsand hearing requests must be filed withthe Hearing Clerk, at the address givenabove (40 CFR 178.20). A copy of theobjections and/or hearing requests filedwith the Hearing Clerk should be

submitted to the OPP docket for thisrulemaking. The objections submittedmust specify the provisions of theregulation deemed objectionable and thegrounds for the objections (40 CFR178.25). Each objection must beaccompanied by the fee prescribed by40 CFR 180.33(i). If a hearing isrequested, the objections must include astatement of the factual issues on whicha hearing is requested, the requestor’scontentions on such issues, and asummary of any evidence relied uponby the requestor (40 CFR 178.27). Arequest for a hearing will be granted ifthe Administrator determines that thematerial submitted shows the following:There is genuine and substantial issueof fact; there is a reasonable possibilitythat available evidence identified by therequestor would, if established, resolveone or more of such issues in favor ofthe requestor, taking into accountuncontested claims or facts to thecontrary; and resolution of the factualissues in the manner sought by therequestor would be adequate to justifythe action requested (40 CFR 178.32).Information submitted in connectionwith an objection or hearing requestmay be claimed confidential by markingany part or all of that information asCBI. Information so marked will not bedisclosed except in accordance withprocedures set forth in 40 CFR part 2.A copy of the information that does notcontain CBI must be submitted forinclusion in the public record.Information not marked confidentialmay be disclosed publicly by EPAwithout prior notice.

VIII. Public Record and ElectronicSubmissions

EPA has established a record for thisrulemaking under docket controlnumber [OPP–300759] (including anycomments and data submittedelectronically). A public version of thisrecord, including printed, paperversions of electronic comments, whichdoes not include any informationclaimed as CBI, is available forinspection from 8:30 a.m. to 4 p.m.,Monday through Friday, excluding legalholidays. The public record is located inRoom 119 of the Public Information andRecords Integrity Branch, InformationResources and Services Division(7502C), Office of Pesticide Programs,Environmental Protection Agency,Crystal Mall #2, 1921 Jefferson DavisHighway, Arlington, VA.


[email protected].

Electronic comments must besubmitted as an ASCII file avoiding the

use of special characters and any formof encryption.


IX. Regulatory AssessmentRequirements


This final rule establishes a toleranceunder FFDCA section 408(l)(6). TheOffice of Management and Budget(OMB) has exempted these types ofactions from review under ExecutiveOrder 12866, entitled RegulatoryPlanning and Review (58 FR 51735,October 4, 1993). This final rule doesnot contain any information collectionssubject to OMB approval under thePaperwork Reduction Act (PRA), 44U.S.C. 3501 et seq., or impose anyenforceable duty or contain anyunfunded mandate as described underTitle II of the Unfunded MandatesReform Act of 1995 (UMRA) (Pub. L.104–4). Nor does it require any priorconsultation as specified by ExecutiveOrder 12875, entitled Enhancing theIntergovernmental Partnership (58 FR58093, October 28, 1993), or specialconsiderations as required by ExecutiveOrder 12898, entitled Federal Actions toAddress Environmental Justice inMinority Populations and Low-IncomePopulations (59 FR 7629, February 16,1994), or require OMB review inaccordance with Executive Order 13045,entitled Protection of Children fromEnvironmental Health Risks and SafetyRisks (62 FR 19885, April 23, 1997).

In addition, since these tolerances andexemptions that are established underFFDCA section 408 (l)(6), such as thetolerance in this final rule, do notrequire the issuance of a proposed rule,the requirements of the RegulatoryFlexibility Act (RFA) (5 U.S.C. 601 etseq.) do not apply. Nevertheless, theAgency has previously assessed whetherestablishing tolerances, exemptionsfrom tolerances, raising tolerance levelsor expanding exemptions mightadversely impact small entities andconcluded, as a generic matter, thatthere is no adverse economic impact.The factual basis for the Agency’s


generic certification for toleranceactions published on May 4, 1981 (46FR 24950), and was provided to theChief Counsel for Advocacy of the SmallBusiness Administration.

B. Executive Order 12875

Under Executive Order 12875,entitled Enhancing theIntergovernmental Partnership (58 FR58093, October 28, 1993), EPA may notissue a regulation that is not required bystatute and that creates a mandate upona State, local, or tribal government,unless the Federal government providesthe funds necessary to pay the directcompliance costs incurred by thosegovernments. If the mandate isunfunded, EPA must provide to OMB adescription of the extent of EPA’s priorconsultation with representatives ofaffected State, local, and tribalgovernments, the nature of theirconcerns, copies of any writtencommunications from the governments,and a statement supporting the need toissue the regulation. In addition,Executive Order 12875 requires EPA todevelop an effective process permittingelected officials and otherrepresentatives of State, local, and tribalgovernments ‘‘to provide meaningfuland timely input in the development ofregulatory proposals containingsignificant unfunded mandates.’’





X. Submission to Congress and theComptroller General

The Congressional Review Act, 5U.S.C. 801 et seq., as added by the Small

Business Regulatory EnforcementFairness Act of 1996, generally providesthat before a rule may take effect, theAgency promulgating the rule mustsubmitted a rule report, which includesa copy of the rule, to each House of theCongress and to the Comptroller Generalof the United States. EPA will submit areport containing this rule and otherrequired information to the U.S. Senate,the U.S. House of Representatives, andthe Comptroller General of the UnitedStates prior to publication of this rule inthe Federal Register. This is not a‘‘major rule’’ as defined by 5 U.S.C.804(2).



Dated: November 10, 1998.






2. In §180.507, by alphabeticallyadding the following commodities to thetable in paragraph (b) to read as follows:

§180.507 Azoxystrobin; tolerances forresidues.

* * * * *(b)* * *


Aspirated soybean grain fractions ....................................................... 10. 6/30/00

* * * * * * *

Kidney of goats, hogs, and sheep grazed on sugar beets ................. 0.06 6/30/00

* * * * * * *Sugar beet roots .................................................................................. 0.05 6/30/00

Sugar beet tops ................................................................................... 0.20 6/30/00

Sugar beet, molasses .......................................................................... 0.70 6/30/00

Sugar beet, pulp, dried ........................................................................ 1.0 6/30/00

Sugar beet, refined sugar .................................................................... 0.70 6/30/00

Soybean hay ........................................................................................ 1.0 6/30/00

Soybean forage ................................................................................... 0.2 6/30/00

Soybean hulls ...................................................................................... 2.0 6/30/00

Soybean meal ...................................................................................... 0.3 6/30/00

Soybean oil .......................................................................................... 2.0 6/30/00



Soybean seed ...................................................................................... 0.1 6/30/00

Soybean silage .................................................................................... 2.0 6/30/00

* * * * * * *

* * * * *



40 CFR Part 180

[OPP–300754; FRL 6041–4]

RIN 2070–AB78

Tebufenozide; Extension of Tolerancefor Emergency Exemptions


SUMMARY: This rule extends a time-limited tolerance for residues of theinsecticide tebufenozide and itsmetabolites in or on leafy vegetables(Crop Group 4) and brassica leafyvegetables (Crop Group 5) at 5.0 partsper million (ppm) for an additional 18–month period, to August 31, 2000. Thisaction is in response to EPA’s grantingof an emergency exemption undersection 18 of the Federal Insecticide,Fungicide, and Rodenticide Act (FIFRA)authorizing use of the pesticide on leafyvegetables (Crop Group 4) and brassicaleafy vegetables (Crop Group 5). Section408(l)(6) of the Federal Food, Drug, andCosmetic Act (FFDCA) requires EPA toestablish a time-limited tolerance orexemption from the requirement of atolerance for pesticide chemicalresidues in food that will result from theuse of a pesticide under an emergencyexemption granted by EPA undersection 18 of FIFRA.DATES: This regulation becomeseffective November 25, 1998. Objectionsand requests for hearings must bereceived by EPA, on or before January25, 1999.ADDRESSES: Written objections andhearing requests, identified by thedocket control number, [OPP–300754],must be submitted to: Hearing Clerk(1900), Environmental ProtectionAgency, Rm. M3708, 401 M St., SW.,Washington, DC 20460. Feesaccompanying objections and hearingrequests shall be labeled ‘‘Tolerance

Petition Fees’’ and forwarded to: EPAHeadquarters Accounting OperationsBranch, OPP (Tolerance Fees), P.O. Box360277M, Pittsburgh, PA 15251. A copyof any objections and hearing requestsfiled with the Hearing Clerk identifiedby the docket control number, [OPP–300754], must also be submitted to:Public Information and RecordsIntegrity Branch, Information Resourcesand Services Division (7502C), Office ofPesticide Programs, EnvironmentalProtection Agency, 401 M St., SW.,Washington, DC 20460. In person, bringa copy of objections and hearingrequests to Rm. 119, Crystal Mall #2,1921 Jefferson Davis Hwy., Arlington,VA.

A copy of objections and hearingrequests filed with the Hearing Clerkmay also be submitted electronically bysending electronic mail (e-mail) to: [email protected]. Follow theinstructions in Unit II. of this preamble.No Confidential Business Information(CBI) should be submitted through e-mail.FOR FURTHER INFORMATION CONTACT: Bymail: Andrew Ertman, RegistrationDivision (7505C), Office of PesticidePrograms, Environmental ProtectionAgency, 401 M St., SW., Washington,DC 20460. Office location, telephonenumber, and e-mail address: Rm. 272,Crystal Mall #2, 1921 Jefferson DavisHwy., Arlington, VA 22202, (703) 308–9367; e-mail:[email protected] INFORMATION: EPAissued a final rule, published in theFederal Register of March 18, 1998; (63FR 13126) (FRL 5773–1), whichannounced that on its own initiativeunder section 408(e) of the FFDCA, 21U.S.C. 346a(e) and (l)(6), it establisheda time-limited tolerance for the residuesof tebufenozide and its metabolites in oron leafy vegetables (except brassicaleafy vegetables; Crop Group 4) andbrassica leafy vegetables (Crop Group 5)at 5.0 ppm, with an expiration date ofFebruary 28, 1999. EPA established thetolerance because section 408(l)(6) ofthe FFDCA requires EPA to establish atime-limited tolerance or exemptionfrom the requirement of a tolerance forpesticide chemical residues in food thatwill result from the use of a pesticide

under an emergency exemption grantedby EPA under section 18 of FIFRA. Suchtolerances can be established withoutproviding notice or period for publiccomment.

EPA received a request to extend theuse of tebufenozide on leafy vegetablesand brassica leafy vegetables for thisyear growing season due to thecontinuing emergencies in bothCalifornia and Arizona. The beetarmyworm (BAW) has been causingcrop damage due to infestations allseason long because the pest will attackcrops at emergence, often causing severeloss. Infestations later in the crop cyclewill stunt growth, damage andcontaminate the harvestable portion ofthe crop.

Because of the BAW’s ability to feedon such a wide array of plants, it hasdemonstrated an enormous capacity fordetoxifying plant defense chemicals andinsecticides. In the leafy vegetable andcole crop groups, there are fewefficacious products for BAW control.The last 5 years have seen a markedincrease in the amounts of activeingredient necessary to achieve controlof the beet armyworm in vegetables withfailures being reported with all productsand combinations. After havingreviewed the submission, EPA concursthat emergency conditions exist for thisstate. EPA has authorized under FIFRAsection 18 the use of tebufenozide onleafy vegetables (except brassica leafyvegetables; Crop Group 4) and brassicaleafy vegetables (Crop Group 5) forcontrol of the beet armyworm inArizona and California.

EPA assessed the potential riskspresented by residues of tebufenozide inor on leafy vegetables (except brassicaleafy vegetables; Crop Group 4) andbrassica leafy vegetables (Crop Group 5).In doing so, EPA considered the safetystandard in FFDCA section 408(b)(2),and decided that the necessary toleranceunder FFDCA section 408(l)(6) would beconsistent with the safety standard andwith FIFRA section 18. The data andother relevant material have beenevaluated and discussed in the final ruleof March 18, 1998. Based on that dataand information considered, the Agencyreaffirms that extension of the time-limited tolerance will continue to meet


the requirements of section 408(l)(6).Therefore, the time-limited tolerance isextended for an additional 18–monthperiod. Although this tolerance willexpire and is revoked on August 31,2000, under FFDCA section 408(l)(5),residues of the pesticide not in excessof the amounts specified in thetolerance remaining in or on leafyvegetables (except brassica leafyvegetables; Crop Group 4) and brassicaleafy vegetables (Crop Group 5) afterthat date will not be unlawful, providedthe pesticide is applied in a manner thatwas lawful under FIFRA and theapplication occurred prior to therevocation of the tolerance. EPA willtake action to revoke this toleranceearlier if any experience with, scientificdata on, or other relevant informationon this pesticide indicate that theresidues are not safe.

I. Objections and Hearing RequestsThe new FFDCA section 408(g)


Any person may, by January 25, 1999,file written objections to any aspect ofthis regulation and may also request ahearing on those objections. Objectionsand hearing requests must be filed withthe Hearing Clerk, at the address givenabove (40 CFR 178.20). A copy of theobjections and/or hearing requests filedwith the Hearing Clerk should besubmitted to the OPP docket for thisrulemaking. The objections submittedmust specify the provisions of theregulation deemed objectionable and thegrounds for the objections (40 CFR178.25). Each objection must beaccompanied by the fee prescribed by40 CFR 180.33(i). If a hearing isrequested, the objections must include astatement of the factual issues on whicha hearing is requested, the requestor’scontentions on such issues, and asummary of any evidence relied uponby the requestor (40 CFR 178.27). Arequest for a hearing will be granted ifthe Administrator determines that thematerial submitted shows the following:There is genuine and substantial issue

of fact; there is a reasonable possibilitythat available evidence identified by therequestor would, if established, resolveone or more of such issues in favor ofthe requestor, taking into accountuncontested claims or facts to thecontrary; and resolution of the factualissues in the manner sought by therequestor would be adequate to justifythe action requested (40 CFR 178.32).Information submitted in connectionwith an objection or hearing requestmay be claimed confidential by markingany part or all of that information asCBI. Information so marked will not bedisclosed except in accordance withprocedures set forth in 40 CFR part 2.A copy of the information that does notcontain CBI must be submitted forinclusion in the public record.Information not marked confidentialmay be disclosed publicly by EPAwithout prior notice.


The official record for thisrulemaking, as well as the publicversion, as described above will be keptin paper form. Accordingly, EPA willtransfer any copies of objections andhearing requests received electronicallyinto printed, paper form as they arereceived and will place the paper copiesin the official rulemaking record whichwill also include all commentssubmitted directly in writing. Theofficial rulemaking record is the paperrecord maintained at the Virginiaaddress in ‘‘ADDRESSES’’ at thebeginning of this document

Electronic comments may be sentdirectly to EPA at:[email protected].

Electronic objections and hearingrequests must be submitted as an ASCIIfile avoiding the use of specialcharacters and any form of encryption.Objections and hearing requests willalso be accepted on disks inWordPerfect 5.1/6.1 or ASCII fileformat. All copies of objections andhearing requests in electronic form mustbe identified by the docket controlnumber [OPP–300754]. No CBI shouldbe submitted through e-mail. Electroniccopies of objections and hearingrequests on this rule may be filed onlineat many Federal Depository Libraries.

III. Regulatory AssessmentRequirements


This final rule extends a time-limitedtolerance that was previouslyestablished by EPA under FFDCAsection 408 (l)(6). The Office of

Management and Budget (OMB) hasexempted these types of actions fromreview under Executive Order 12866,entitled Regulatory Planning andReview (58 FR 51735, October 4, 1993).In addition, this final rule does notcontain any information collectionssubject to OMB approval under thePaperwork Reduction Act (PRA), 44U.S.C. 3501 et seq., or impose anyenforceable duty or contain anyunfunded mandate as described underTitle II of the Unfunded MandatesReform Act of 1995 (UMRA) (Pub. L.104–4). Nor does it require any priorconsultation as specified by ExecutiveOrder 12875, entitled Enhancing theIntergovernmental Partnership (58 FR58093, October 28, 1993), or specialconsiderations as required by ExecutiveOrder 12898, entitled Federal Actions toAddress Environmental Justice inMinority Populations and Low-IncomePopulations (59 FR 7629, February 16,1994), or require OMB review inaccordance with Executive Order 13045,entitled Protection of Children fromEnvironmental Health Risks and SafetyRisks (62 FR 19885, April 23, 1997).

Since this extension of an existingtime-limited tolerance does not requirethe issuance of a proposed rule, therequirements of the RegulatoryFlexibility Act (RFA) (5 U.S.C. 601 etseq.) do not apply. Nevertheless, theAgency has previously assessed whetherestablishing tolerances, exemptionsfrom tolerances, raising tolerance levelsor expanding exemptions mightadversely impact small entities andconcluded, as a generic matter, thatthere is no adverse economic impact.The factual basis for the Agency’sgeneric certification for toleranceactions published on May 4, 1981 (46FR 24950), and was provided to theChief Counsel for Advocacy of the SmallBusiness Administration.


entitled Enhancing theIntergovernmental Partnership (58 FR58093, October 28, 1993), EPA may notissue a regulation that is not required bystatute and that creates a mandate upona State, local, or tribal government,unless the Federal government providesthe funds necessary to pay the directcompliance costs incurred by thosegovernments. If the mandate isunfunded, EPA must provide to OMB adescription of the extent of EPA’s priorconsultation with representatives ofaffected State, local, and tribalgovernments, the nature of theirconcerns, copies of any writtencommunications from the governments,and a statement supporting the need to


issue the regulation. In addition,Executive Order 12875 requires EPA todevelop an effective process permittingelected officials and otherrepresentatives of State, local, and tribalgovernments ‘‘to provide meaningfuland timely input in the development ofregulatory proposals containingsignificant unfunded mandates.’’





IV. Submission to Congress and theComptroller General

The Congressional Review Act, 5U.S.C. 801 et seq., as added by the SmallBusiness Regulatory EnforcementFairness Act of 1996, generally providesthat before a rule may take effect, theagency promulgating the rule mustsubmit a rule report, which includes acopy of the rule, to each House of the

Congress and to the Comptroller Generalof the United States. EPA will submit areport containing this rule and otherrequired information to the U.S. Senate,the U.S. House of Representatives, andthe Comptroller General of the UnitedStates prior to publication of the rule inthe Federal Register. This rule is not a‘‘major rule’’ as defined by 5 U.S.C.804(2).









§180.482 [Amended]2. In §180.482, by amending the table

in paragraph (b) for the followingcommodities ‘‘Leafy Vegetable (Cole-brassica)’’ and ‘‘Leafy Vegetables (non-brassica)’’ by revising the date ‘‘2/28/99’’ to read ‘‘8/31/00.’’


FEDERAL COMMUNICATIONSCOMMISSION

47 CFR Parts 1, 21 and 74

[MM Docket No. 97–217; FCC 98–231]

MDS and ITFS Two-WayTransmissions

AGENCY: Federal CommunicationsCommission.ACTION: Final rule.

SUMMARY: In this Report and Order(‘‘Order’’), the Commission adoptsamendments to its rules to enableMultipoint Distribution Service(‘‘MDS’’) and Instructional TelevisionFixed Service (‘‘ITFS’’) licensees toengage in fixed two-way transmissions.These rule changes enhance theflexibility of MDS and ITFS operationsthrough facilitated use of responsestations, use of cellular configurations,use of signal booster stations withprogram origination capability, and use

of variable bandwidth (‘‘subchanneling’’or ‘‘superchanneling’’). As a result ofthese rule changes, any MDS and ITFSfrequencies in the 2 GHz band may beused by licensees, or leased to wirelesscable operators, for broadband data,video or voice transmissions to and/orfrom subscribers’ premises, promotingthe competitive position of the wirelesscable industry, augmenting theeducational uses of these frequencies byITFS entities, and increasing services toconsumers.DATES: Effective January 25, 1999.FOR FURTHER INFORMATION CONTACT:Michael J. Jacobs, (202) 418–7066 orDave Roberts, (202) 418–1600, VideoServices Division, Mass Media Bureau.SUPPLEMENTARY INFORMATION: This is asynopsis of the Commission’s Reportand Order, MM Docket No. 97–217,adopted September 17, 1998, andreleased September 25, 1998. The fulltext of this Order is available forinspection and copying during normalbusiness hours in the FCC ReferenceCenter (Room 239), 1919 M Street, N.W.,Washington, D.C., and also may bepurchased from the Commission’s copycontractor, International TranscriptionServices, Inc., (202) 857–3800, 123120th Street, N.W., Washington, D.C.20036.

Synopsis of Report and Order on MDSand ITFS Two-Way Transmissions.

I. Introduction1. This Order is adopted by the

Commission after receiving andevaluating comments and replycomments, including ‘‘permit-but-disclose’’ ex parte comments, filed inresponse to the Commission’s Notice ofProposed Rulemaking (‘‘NPRM’’) in thisdocket. MDS and ITFS Two-WayTransmissions, 62 FR 60025, Nov. 6,1997, as corrected, 62 FR 60750, Nov.12, 1997. The NPRM was issued afterthe Commission initially soughtcomment on a petition for rulemakingfiled by a group of 111 educators andparticipants in the wireless cableindustry (collectively, ‘‘Petitioners’’),comprised of MDS and ITFS licensees,wireless cable operators, equipmentmanufacturers, and industry consultantsand associations. Currently, MDS andITFS licensees are authorized to usedigital technology in order to increasethe number of usable one-way channelsavailable to them, leased ITFSfrequencies and MDS channels may beused for asymmetrical high speed digitaldata applications so long as such usagecomplies with the Commission’stechnical rules and its declaratory rulingon the use of digital modulation by MDSand ITFS stations (‘‘Digital Declaratory


Ruling,’’ 11 FCC Rcd 18839 (1996)), andMDS licensees have been permitted toprovide two-way service on a limitedbasis. Response channels, whichcurrently are allocated in 125 kHzblocks for use in association with mostMDS and ITFS stations, must beindividually licensed under theCommission’s existing rules. Promptedby the petition for rulemaking, theNPRM anticipated that many MDS andITFS licensees and wireless cableoperators engaging in two-waytransmissions will require morecapacity for return paths than isavailable through such 125 kHzchannels, and recognized that theindividual licensing of such channels istoo cumbersome and imposes too greata financial burden on licensees seekingto implement two-way wireless services.Instead, the NPRM proposed toimplement a system under which MDSand ITFS licensees would be permittedto utilize all or part of a 6 MHz channelfor return path transmissions fromsubscriber premises, to cellularize theirtransmission systems to take advantageof spectrally efficient frequency reusetechniques, and to employ modulationschemes consistent with bandwidthseither larger or smaller than 6 MHz, allwhile providing incumbent MDS andITFS licensees interference protectionequivalent to what they currentlyreceive.

2. The comments and reply commentsfrom wireless cable industryparticipants generally support theNPRM’s proposals, and include a JointStatement of Position (‘‘JointStatement’’) supported by severalindustry participants in an attempt toreach agreement primarily on issuesrelated to leasing of excess spectrumcapacity by ITFS licensees. Whileseveral commenters express concernover the details of the proposalsadvanced in the NPRM and of the JointStatement, the comments and replycomments reflect unanimous support inthe MDS and ITFS communities forrules which would enable MDS andITFS licensees and wireless cableoperators to offer a wide array of new,enhanced services, including newdigital and two-way communicationsservices. As a result, in this Order we:(1) permit both MDS and ITFS licenseesto provide two-way services on a regularbasis; (2) permit increased flexibility onpermissible modulation types; (3)permit increased flexibility in spectrumuse and channelization, includingcombining multiple channels toaccommodate wider bandwidths,dividing 6 MHz channels into smallerbandwidths, and channel swapping; (4)

adopt a number of technical parametersto mitigate the potential for interferenceamong service providers and to ensureinterference protection to existing MDSand ITFS services; (5) simplify andstreamline the licensing process forstations used in cellularized systems;and (6) modify the ITFS programmingrequirements in a digital environment.We believe that the rules that we adoptin this Order will facilitate the mostefficient use of the affected spectrum,enhance the competitiveness of thewireless cable industry, and providebenefits to the educational communitythrough the use of two-way services,while still permitting traditional use ofthe spectrum, thus giving both MDS andITFS licensees the flexibility they needto serve best the public interest.

II. Technical Changes to Rules

A. Revised Definitions of Service3. The ITFS/MDS spectrum is used

primarily for the provision of either one-way video service to students, in theITFS context, or, in the MDS context,wireless cable service to subscribers,which likewise historically hasconstituted primarily the provision ofone-way video services. While our Rulesalready permit MDS licensees toprovide non-video services, under ourcurrent regulatory scheme, MDSoperators typically only provide two-way service to subscribers usingtelephone return links or individuallylicensed subscriber premises stations.This is an outgrowth of the basic one-way approach to MDS transmissionfrom which our current rules originated.

4. Changes that we adopt in the Orderto MDS and ITFS service definitionsfully incorporate the concept of two-way transmission and reflect thereorientation of the regulatory approachto a flexible service, from that of anessentially one-way service. Aregulatory system is created authorizingthe use of response station hubs and themore flexible use of response stations,enabling the two-way operation ofwireless cable systems. Specifically, thedefinition of a ‘‘response station’’ isamended to indicate that licensees mayuse all or part of any of their 6 MHzchannels as a response channel.Response stations will be the means oftransmission from a subscriber’spremises, and can use either separatetransmitting antennas for return paths orcombined transmitting/receivingantennas. The concept of a responsestation hub is added, and these hubswill serve as the collection points forsignals from the response stations in amultipoint-to-point configuration forupstream signal flow. Thus, response

stations would not need to be licensedindividually, and they could operate atlower power because the responsestation hubs would be located closer tosubscriber premises than are currenttransmitter sites. Moreover, the hubs areexpected to improve service reliabilityand permit greater frequency reuse thanif each subscriber were required tocommunicate directly with theirassociated main transmitter site.

5. We further amend the definition for‘‘signal booster stations’’ to allow suchstations to originate transmissions, aswell as to relay transmissions from otherstations. Booster stations now may beused to cellularize wireless cableoperations in areas too large to be servedby a single station. High-power boostersare those which operate above ¥9 dBWEIRP, while low-power boosters mayoperate at or below the ¥9 dBWthreshold. Permitting boosters tooriginate as well as relay programmingwill facilitate frequency reuse, cellularconfigurations, two-way high speedInternet access and other services.Booster station signals will receiveinterference protection within thebooster’s service area, but not at receivesites beyond the booster’s service area,and booster stations may not haveoverlapping service areas. We also agreewith the Joint Statement and with thecomments of several parties that allbooster stations should be licensed tothe licensee of the channels used by thebooster station.

6. After receiving broad support in thecomments and reply comments to theNPRM, flexible subchannelization (i.e.,the division of a channel of a particularbandwidth into multiple, but notnecessarily equal, channels of smallerbandwidth) will be permitted to allowmore efficient channel reuse within agiven service area, andsuperchannelization (i.e., the combiningof more than one channel into a single,wider channel) will be allowed and maybe used for the transmission of high datarates and/or the use of spread spectrumemissions. Superchannels also will belicensed to multiple entities in manyinstances, due to the fact that theinterleaved, non-contiguous channels inthis band generally are licensed todifferent entities. Subchannels andsuperchannels will be limited to digitaltransmissions with fixed uniform powerspectral density across the bandwidth,in order to make possible the use ofspectral density analysis as part of theinterference analysis process. However,we are permitting the maximumpossible flexibility for digitalsubchannelization andsuperchannelization. Such flexibilityincludes: subchannelization and


superchannelization of 6 MHz and 125kHz channels; permitting suchtechniques both for point-to-multipoint(downstream) and response channeluse; subchannelization ofsuperchannels, e.g., an 18 MHzsuperchannel could be redivided intotwo 9 MHz channels or any othercombination which sums to 18 MHz;division of superchannels into partiallyoverlapping subchannels which sum togreater than the width of thesuperchannel, e.g., an 18 MHz channelsubdivided into three channels each 8MHz wide, thus producing twooverlapping areas of 3 MHz each; andpermitting licensees to use either static(fixed and unchanging) or dynamic (notfixed and changing) bandwidths at theirstations, so as to optimize the efficiencyand speed of information flow. We willcontinue to issue individualauthorizations to individual licenseesfor 6 MHz and 125 kHz channels, andwe will not issue specific authorizationsfor superchannels or subchannels.

7. Finally, after receiving supportfrom most commenters, we adopt rulesin accordance with the most flexibleframework proposed in the NPRM foruse of the 125 kHz channels. Suchflexibility includes: permitting the 125kHz channels to be used as responsechannels and/or for point-to-multipointtransmissions, which promotes greateroptions for two-way system design andmore efficient use of the spectrum;allowing licensees to swap 125 kHzchannels and removing requirementsthat each 125 kHz channel be usedsolely in conjunction with a specificallyassociated 6 MHz channel, whichtogether present opportunities forlicensees to create channels withbandwidths exceeding 125 kHz; and, assuggested by the InstructionalTelecommunications Foundation, Inc.(Foundation), allowing the content ofthose channels to be independent of thattransmitted on related 6 MHz channels.For the sake of simplicity andconsistency with the MDS/ITFSdatabase, we also redesignate the 125kHz channels as the I channels. Inadopting this flexible approach towardsthe 125 kHz channels, we deny therequest of the Catholic TelevisionNetwork (CTN) that we reallocate all ofthe 125 kHz channels to ITFS and usethem solely for response transmissions,and we also deny the University ofMaryland’s request that we mandatethat any non-ITFS use of I channelslicensed to an ITFS entity be secondaryto ITFS use. Where the I channels areused for downstream transmissions,they will be afforded interferenceprotection in the same manner as other

point-to-multipoint MDS and ITFSfacilities. An MDS or ITFS licensee orapplicant wishing to use its I channelsfor downstream transmissions shallapply for such authority using FCCForm 331, and shall prepareinterference showings and serve themon potentially affected parties.

B. Interference Considerations8. Spectral Mask. In the Digital

Declaratory Ruling, the Commissionwaived its rules with respect to out-of-band emissions and permitted the use ofa somewhat relaxed spectral mask fordigital transmission modes. This actionwas taken because the Commissionconcluded that the application of thecurrent analog emission mask to digitalemissions would be unnecessarilyrestrictive and could increase the cost ofdigital equipment while providing nobenefit. In addition, the results oflaboratory tests submitted in connectionwith the Commission’s consideration ofthis issue demonstrated that a digitalstation using the relaxed mask is lesslikely to cause interference than ananalog station using the existing, morerestrictive, mask.

9. As proposed in the NPRM, andsubject to slight modifications based oncomments of the General InstrumentCorporation (formerly NextLevelSystems, Inc.) which we believe willhave no impact on the interferenceenvironment, we permanentlyincorporate into the Rules the digitalspectral mask waiver provisions of theDigital Declaratory Ruling, specificallyfor main station, high-power boosterand response station transmitters whichoperate on a single 6 MHz channel;masks also are specified, albeit withcertain further modifications, for sub-and superchannels, 125 kHz channelstations, and high-power boosterstations transmitting using analog ordigital modulation on multiple non-contiguous channels simultaneouslycarrying separate signals (‘‘broadbandboosters’’). Furthermore, as in theDigital Declaratory Ruling, all spectralmask calculations involving digitalemissions will use the average power ofthe emission across its bandwidth, andsteps must be taken to ensuresubstantially uniform power spectraldensity across the bandwidth in use,including constant power per unit ofbandwidth for sub-and superchannels,with 6 MHz as the reference bandwidth,and continuous energy dispersal duringtimes of no modulation. We alsoincorporate into the Rules formulasprovided by Petitioners for consistentspectral mask measurement andinterpretation, and based on commentsby CTN and as a result of technological

advances over the past year, weeliminate the exception proposed in theNPRM to the mask for response stations,which would have allowed for discretespurious emissions. No spectral maskwhatsoever will be applicable to low-power booster stations using analog ordigital modulation, but suchtransmitters will be shut down if it isestablished that they are causingharmful interference.

10. Power. As requested byPetitioners, we will permit responsestations to use up to 33 dBW EIRP.While the Commission had proposed inthe NPRM to place a limit of 18 dBWEIRP on response station transmitters incellularized systems, and although wecontinue to be concerned aboutinterference, we concur with theconclusions of Petitioners’ propagationanalysis that the proposed 18 dBWpower limit would adversely impactsystem range and reliability, therebyincreasing the number of stationsneeded and increasing system costs. Asa practical matter, however, we do notexpect that all, or even most, responsestations will utilize the maximumpower permitted. In addition, whilecurrent MDS and ITFS rules limitbooster power to 18 dBW EIRP,henceforth we allow boosters to operateup to 33 dBW EIRP, the maximumpower level for MDS and ITFS. The 33dBW power limit is predicated on abandwidth of 6 MHz, and the powerlimit for stations using lesser bandwidthmust be reduced proportional to thatbandwidth. We also retain frequencytolerance requirements for digital andanalog main station and high-powerbooster station transmitters, whiledeclining to impose such requirementsfor low-power booster and responsestation transmitters; retain rulesrequiring type certification of main andbooster transmitters, and adopt rulesrequiring type certification of responsestation transmitters, subject toexceptions set forth in the DigitalDeclaratory Ruling regarding the use ofexisting analog equipment for digitalemissions; and adopt rules protectingagainst excessive radio frequency (‘‘RF’’)emissions exposure from MDS/ITFSreturn path transmissions, in a mannersimilar to the approach that we adoptedfor LMDS.

11. Interference Protection Criteria.The Commission’s current regulationsin ITFS and MDS for interferenceprotection were designed to minimizethe potential for destructive cochanneland adjacent channel interferencebetween systems located in proximity toeach other. The specific criteria forprotection are of two forms, namely, (1)cochannel and adjacent channel


desired-to-undesired signal (D/U) ratiosand (2) limits on the magnitude of astation’s free space field as measured atthe edge of the station’s protectedservice area. For cochannel interferenceprotection, an applicant must configureits system so that the signals from eachof its transmitters are at least 45 dBweaker than the signals of the existinglicensee’s transmitters within thelicensee’s protected service area and/or,in the case of ITFS licensees, at thelicensee’s protected receiver sites. Foradjacent channel protection, the ratiomust be at least 0 dB. In order to meetthe second form of protection, anapplicant generally must be able todemonstrate that the magnitude of thefree space radiated field from eachtransmitter does not exceed a particularlimit (i.e., a power flux density ¥73dBW/m2) at the boundary of theapplicant’s service area.

12. As proposed in the NPRM, and assupported by all parties commenting onthis issue, we will apply the existinginterference criteria in essentiallyunchanged form, and supplement themwith similar new criteria to be appliedto hub, booster, and response stations.Furthermore, because two-way systemswill involve large numbers oftransmitters with heavy frequency reuseand simultaneous operation, acalculation of the combined fieldproduced by the main stationtransmitter, all cochannel boosters, andthe aggregated power from cochannelresponse stations within a system willbe utilized to determine compliancewith the interference criteria wherethese stations partially or completelyshare spectrum. These criteria shall beadjusted to account for the particularbandwidths involved in thecalculations. We also emphasize thatwhere an interfered-with receiveantenna meets the antennacharacteristics set forth in our MDS andITFS rules, the station causing theharmful interference is responsible forcuring it.

13. Interference PredictionMethodology. In order to predict theinterference potential of responsestations in cellularized systems, we willimplement a modified version of thethree-step process proposed in theNPRM, which uses statistical analysisand worst-case assumptions in derivingtheoretical estimations of the locationsand characteristics of individualresponse stations, because theseresponse stations will be licensed underblanket authorizations which specifyonly the locations of the associated hubsto which the response stations transmit.This methodology is found in AppendixD to the Order, and is captioned

‘‘Methods for Predicting Interferencefrom Response Station Transmitters andto Response Station Hubs and forSupplying Data on Response StationSystems.’’ This sequence of systemdesign, development and authorizationnecessitates a radical departure from thecustomary process whereby interferencecalculations are made based on specificinformation concerning specific stationsat specific locations with specificoperating parameters.

14. In step one, the hub stationresponse service area (‘‘RSA’’) is definedand a grid of points is located withinthis area representative of the expectedactual distribution of response stationtransmitters within the area. Regionswithin the area are defined so that anadequate population uniformity existsfor purposes of predicting interferencefrom a distribution of response stationtransmitters. While the methodologyoriginally proposed in the NPRM wouldhave determined population uniformityusing a complex formula involvingevaluation of the population densitywithin each ZIP Code within theplanned boundaries of a region, inresponse to comments filed by SpikeTechnologies, Inc. (Spike) and othersthat this procedure would not produceresults representative of the actualdistribution of response stations, themethodology has been corrected so thatinterference analyses will be conductedfrom the grid points which have thegreatest interference potential, takinginto account, both for TDMA and CDMAsystems, all potential victim sites bothinside and outside the RSA. In step two,the technical characteristics of responsestations which will be associated witheach point in the RSA grid areidentified. One or more classes ofresponse stations are identified withinthe RSA and its regions, with each classbeing a function of several variables,such as transmitted power (EIRP),antenna height, frequency, bandwidth,and maximum number of assumedsimultaneously operated responsestations in the regional class; thesecharacteristics and others will bespecified in the response hubapplication. In response to comments ofEDX Engineering, Inc. (EDX) and othersthat the originally-proposedmethodology ignored terrain data, eachgrid point now will be assigned thehighest elevation AMSL of all thegeographic area surrounding that gridpoint, thus making the theoreticalstations assigned to each grid pointmuch more likely to be representative ofthe actual interference potential.

15. The final step in calculatingresponse station interference wouldrequire combining the radiated fields of

all response stations of all classes,regions and RSAs within the primarystation’s protected service area. In orderto simplify this calculation, thestatistical population uniformity withineach region will be used as a basis forgrouping response stations of all classesin proximity at the grid points laid outwithin each RSA; multiple classes couldshare the same grid points. For eachclass of response stations assigned to agrid point, a set of worst-caseassumptions will be made concerningthe transmitting antenna radiationpattern, transmitter power (EIRP) andantenna height. Several complexcalculations, including procedures forchecking the initial calculations,combining the radiated field for all ofthe transmitters for each class ofresponse station at each grid point fromall RSAs will then be used to evaluatecompliance with the interferencecriteria. Subsequently, licensees arefree, upon notification to theCommission, to continue addingresponse station transmitters withintheir systems until calculations indicatethat permissible interference valueswould be exceeded.

16. We also have considered otherproposed modifications to the proposalsin the NPRM for predicting interferencefrom response stations and to hubs,which we believe render themethodology sufficientlycomprehensive and conservativewithout being overly protective orstifling of growth. For instance, we agreewith CTN and others who argue that the‘‘minimum receivable signal’’ hubprotection standard proposed in theNPRM would have, in some instances,overprotected the hub and thuspotentially precluded construction ofother stations. Instead, we adoptPetitioners’ amended proposal to protectthe hub’s noise floor, and to take intoaccount the actual antenna(s) in use atthe hub. However, in adopting themethodology as modified, we decline toadopt several other proposedmodifications, including: EDX’sproposed alternate methodology, inwhich all response station transmitterswithin a defined area would berepresented by a single hypotheticalaggregate response station located at thehub site, and which likely would giveerroneous interference calculations formany two-way system configurations;Spike’s suggestion that applicantsshould be free to choose anymethodology they wish for makinginterference calculations, which wouldhave promoted uncertainty and slowedthe evaluation of applications; andSpike’s recommendation that hubs be


redefined to include transmittingcapability, which would addunnecessary complexity to theinterference protection rules and whichis further unnecessary in light of theability of licensees to collocate hubswith boosters and main stations.

17. We also decline to adopt theguardband proposal for interferenceprotection advanced by CTN. CTNcontends that interference could becaused to ITFS receive sites by nearbyresponse stations which are neithercochannel nor adjacent channel to thechannels in use at the ITFS receive sites,as a result of brute force overload(‘‘BFO’’) to broadband downconvertersused at these sites. As a solution to thepotential problem of interference fromresponse stations, including BFO, CTNproposes that a guardband be used as abuffer between downstream ITFSoperations and upstream operations,with downstream MDS operationsoccupying the guardband. CTN arguesthat a guardband would have severalbenefits, such as mooting the need forcalculating response station interferenceinto ITFS receive sites, and confiningthe risk of BFO, as well as cochanneland adjacent channel interference,solely to MDS licensees. While we findCTN’s guardband proposal undulylimiting of system design flexibility, andwe also at this time reject as undulyrestrictive CTN’s proposal of on-airtesting of response stations within acertain proximity of ITFS receive sitesprior to activation of those responsestations, we adopt a slightly modifiedversion of CTN’s proposal that noresponse station may be installed untila notification is sent to each ITFSlicensee with any registered receive sitewithin a distance of 1960 feet of thelocation of the proposed responsestation. Moreover, because we agreewith CTN that BFO is a possibility incertain limited circumstances, we willrequire that licensees of stations causinginterference immediately commence afull cooperative effort with licenseesreceiving interference, to solve theproblem as quickly as possible at theexpense of the offending licensee. Weemphasize that we will order theimmediate deactivation of part or all ofa system if that system is causing anyinterference—whether cochannel,adjacent channel or BFO—and thelicensee has not cooperated fully and ina timely manner to eliminate theinterference.

C. Modulation Methods18. In the Digital Declaratory Ruling,

the Commission authorized the use ofQAM and VSB modulation. While theCommission declined to consider the

use of other digital modulation methodsin the context of that proceeding, itstated that it would consider futurerequests for declaratory rulings wherethe requesters submit appropriate datato demonstrate that other modulationtechniques could be used in a mannerthat would not interfere with MDS andITFS analog and digital operations.

19. As in the Digital DeclaratoryRuling, and as supported by thecommenters on this issue, we decline toadopt one or more ‘‘standard’’ digitaltechnologies. We retain and addprovisions for accommodating the use ofdifferent modulation types. In theNPRM, the Commission solicitedcomment on whether there is a basis forconcluding that use of particular digitalmodulation types by MDS and ITFSstations other than VSB and QAMwould not be prone to interference,based on the current 45 dB/0 dBprotection ratios for cochannel andadjacent channel interferencerespectively, i.e. that such modulationformats should be permitted withoutrequiring test data. For example, onemodulation type may be a subset of VSBand QAM and, therefore, is coveredunder the industry tests used to supportthe Digital Declaratory Ruling. Inresponse, four parties filed a jointrequest for declaratory ruling asking thatthe Commission permit the use of twoadditional forms of digital modulation,CDMA and QPSK, and we arepersuaded to permit use of thosemodulations on a regular basis at allMDS and ITFS stations. In addition,because we wish to encourage parties tocontinue to identify different digitalmodulation schemes that could beuseful in MDS and ITFS, we emphasizethat we remain open to consideringfuture requests for declaratory rulings inaccordance with the Digital DeclaratoryRuling, upon submission of appropriatedata. Finally, in order to facilitatetesting and use of different digitalmodulations where possible, we willpermit licensees and system operators touse any digital emission in limitedcircumstances which we set forth whereinterference is unlikely or where allparties potentially affected byinterference have consented to such use,and so long as such emissions meetspectral mask and uniform powerspectral density requirements.

III. Application Processing Issues20. We set forth a scheme governing

the filing and processing of applicationsfor new or modified response stationhubs, boosters or downstream I Channeloperations, that will substantially shiftreview of such applications fromCommission staff and leave much of the

interference environment to be workedout among licensees. As proposed in theNPRM, we adopt a rolling, one-dayfiling window system. While eachapplicant will be required todemonstrate protection of existing orpreviously proposed facilities,applications filed on the same day willbe granted and the filers left to resolveincompatibilities amongst themselveswith little or no intervention byCommission staff. Because parties willbe unable to offer reliable servicewithout resolving such conflicts, webelieve that the incentive to reach aresolution will be so great thatCommission involvement will beunnecessary to resolve disputes.

21. Specifically, applications first willbe placed on public notice without priorstaff review of interference studies.While the Commission tentativelyrejected in the NPRM Petitioners’proposal that the applications thenwould be granted automatically on the61st day after that notice, unless apetition to deny was filed or theCommission notified the applicant priorto that date that a grant would not bemade, the majority of commenters onthe subject supported some type ofstreamlined process, especially whencoupled with a complete guarantee ofprotection against interference. Uponreview of these comments, we havebeen persuaded that failure to adopt anexpedited processing system would beseriously detrimental to the provision oftwo-way service, despite the increasedburden that such a system places onlicensees to track and monitorapplications. Thus, we adopt amodification of the automatic grantproposal, a certification procedure,whereby an applicant must certify in itsapplication that it has completed,served upon potentially affected parties,and submitted to the Commission’scopy contractor all required interferencestudies (or consent letters) andengineering showings demonstrating nointerference. Before placing anapplication on public notice,Commission staff will review it toensure that all required certifications areincluded, and any application that doesnot contain the proper certifications willbe dismissed. The application will begranted in reliance on the certificationson the 61st day after public notice,unless a petition to deny is filed againstit or the Commission finds in a randomaudit that the applicant certified falsely.A false certification also could begrounds for revocation of a license.Though consistent with similarcertification procedures that have beenadopted for other communications


services, this approach is particularlyappropriate for MDS and ITFS, becausethe interdependence of those twoservices in most cases relies on theparties working together. And, as asafeguard, systems causing interferencemust cure it immediately or face shut-down, even if the station applicationshad been unopposed.

22. A large number of applications arelikely to be filed once the new rulesbecome effective, and many of theapplications submitted at that time mayconflict with others filedsimultaneously. Therefore, as proposedin the NPRM, in order to smooth thetransition to the rolling one-day filingwindow application processing system,we adopt a special one-week initialfiling window, the opening of whichwill be announced by public notice,where all applications filed during thiswindow will be deemed to have beenfiled as of the same day. Following thepublication of a public noticeannouncing the tendering for filing ofapplications submitted during thatwindow, applicants will have a periodof 60 days to amend their applicationsto resolve conflicts. During this 60-dayperiod, no additional applications maybe filed, affording those who filedduring the one-week window anopportunity to resolve any conflictswithout fear that, during the pendencyof settlement discussions, third partieswill propose facilities that will have tobe protected if the original applicantsamend their applications. After thisinitial 60 day period, public notice andapplication grant procedures akin tothose that we adopt for the rolling one-day filing windows will beimplemented. On the 61st day after thepublication of the second public notice,the rolling one-day filing window willgo into effect. We believe that ouradoption of the one-week initial filingwindow will lessen the burden on allaffected parties, including theCommission’s staff, during the firstround of application filing. We alsobelieve that providing parties with aninitial 60-day period during which theycan resolve any apparent conflicts andthen amend their applications withoutprejudice will serve to expedite serviceto the public by allowing parties toresolve their differences without theneed to seek Commission reviewthrough the petition to deny process.

23. In the NPRM, the Commissionsolicited comment on whether to adopta system whereby an applicant, onceauthorization for service has beengranted, may switch from commoncarrier to non-common carrier serviceand back without seeking subsequentauthorization. The Commission also

sought comment on whether operatorsshould be required to give theCommission notice when they areswitching back and forth betweencommon carrier and non-commoncarrier service, even if prior approval isnot required. What little comment wereceived on this subject was supportiveof providing the requested flexibility,and we adopt rules implementing it,subject to a requirement that licenseesprovide the Commission with 30-daysadvance notice of such changes.

IV. Proposals and Issues PrimarilyInvolving ITFS

24. Under § 74.931 of theCommission’s Rules, ITFS stations areoperated by educational organizationsand are ‘‘intended primarily to providea formal educational and culturaldevelopment in aural and visual form,’’to students enrolled for credit inaccredited secondary schools, collegesand universities. Currently,§ 74.931(e)(9) specifies that an ITFSlicensee who leases excess channelcapacity to a wireless cable operatormust provide a total average of at least20 hours per channel per week of ITFSprogramming on its authorizedchannels. ITFS licensees in such leasearrangements also retain the right torecapture ‘‘an average of an additional20 hours per channel per week forsimultaneous programming on thenumber of channels for which it isauthorized.’’ In addition, an ITFSlicensee may shift its requirededucational programming onto fewerthan its authorized number of channelsvia channel loading or channelmapping. The licensee may furtheragree to transmission of recapture timeon channels not authorized to it butwhich are included in the wireless cablesystem of which it is a part.

A. ITFS Programming Requirements25. In the NPRM, the Commission

sought comment on several issuesrelated to the question of whether tochange our ITFS programmingrequirements in light of the use ofdigital technology by ITFS licensees. Itasked whether there should be differentrules depending on whether thewireless cable system employs digital oranalog transmissions, or somecombination of both. It further askedwhether our existing program contentrequirements should be retained orwhether they should be modified.Specifically, the Commission soughtcomment on whether data transmissionand voice transmission should counttoward the fulfillment of minimumprogramming requirements, and if theywere to count, how they would be

measured. The Commission alsowelcomed suggestions on whethereducation-related upstreamtransmissions should be appliedtowards satisfaction of minimum ITFSprogramming requirements, and, if so,how they should be measured for thatpurpose. The Joint Statement takespositions on many of these issues. Tothe extent that it and its supportersrepresent an agreement by most of theparties in the wireless cable industryand MDS and ITFS services, we haveaccorded it deference in formulating ourpolicies. Nonetheless, while we findsome its approaches sound, we findsome if its provisions unworthy ofadoption.

26. Redefinition of Eligible Content.Commenters unanimously support theproposal that spectrum usage beyondvideo programming be eligible to satisfyITFS educational usage requirements.We agree that availability of advancedtechnologies dictates that it is now timeto accord ITFS licensees increasedflexibility in determining whichtransmissions qualify as satisfyingeducational usage requirements, so longas such transmissions are in furtheranceof the educational mission of anaccredited public or private school,college or university, or other eligibleinstitution (such as certain uses byhealth care facilities), offering courses toenrolled students. Such uses mayinclude downstream or upstream video,data and voice transmissions. Inaddition, while heretofore notqualifying to satisfy educational usagerequirements, qualifying uses now mayinclude, but are not limited to, teacherconferencing, remote testadministration, distribution of reportsand assignments, research towards andsharing works of progress in projects forcourses, professional training,continuing education, and other similaruses. Furthermore, in light of the myriadof possible uses of the spectrum forcourses by accredited schools, we nolonger need a separate rule pertaining towhere transmissions are not to on-campus receive sites.

27. We also will subject ITFS signalbooster stations to educational usagerequirements, in conjunction with thoseto which main ITFS stations are subject,and unless otherwise specified in theRules, a ‘‘channel’’ henceforth shallrefer to any of the 6 MHz frequencyblocks assigned pursuant to §§ 21.901(b)and 74.902(a) of the Commission’sRules. We amend § 74.931 and otherpertinent rules to reflect all of thesechanges. However, while HispanicInformation and TelecommunicationsNetwork contends that qualifyingeducational service should not be


limited to that offered by accreditedinstitutions, we disagree, becauserequiring that a qualified licensee be anaccredited institution provides greatercertainty of the integrity of thelicensee’s educational function. Thus,we will keep intact our eligibilityrequirements of § 74.932(a).

28. Analog ProgrammingRequirements. Commenters whoaddress this subject unanimouslybelieve that the current programmingrequirements should be retained forITFS licensees solely engaged intransmission of downstream analogprogramming. We agree, and we willimpose no changes to programmingrequirements where licensees solely useanalog transmissions. However, forsome commenters there is still discordover what the extent is of the recapturetime requirement. In the NPRM, theCommission rejected Petitioners’proposed changes to § 74.931(e) thatsought to revise the absolute 20 hoursper channel per week recapture timerequirement to provide that the ITFSprogramming requirements constitute atotal of 40 hours per channel per week,including both actual programming andrecapture time. While Petitioners andsome other commenters argue that theCommission’s stance in the NPRM willdeter investment, we believe that theCommission’s rejection in the NPRM ofPetitioners’ proposed changes to ourrecapture time requirements wascorrect. However, in response toconcerns expressed by BellSouth, weclarify that the Rules do not require that20 hours always be reserved withoutaccounting for the amount of recapturealready exercised.

29. Digital Educational UsageRequirements. While CTN insists thateducational usage requirements must bemodified to reflect increased capacityarising from use of digital technology,and argues that a proportionate increasein instructional usage is needed toprevent the dilution of the instructionalnature of ITFS channels, theoverwhelming majority of commenterson these issues favors retaining thecurrent minimum educational usagerequirements in a digital environment.Some of these commenters, such asBellSouth, argue that ‘‘there is no directcorrelation between technologicaladvancements and the need for ITFSprogramming’’; others, such as WirelessOne of North Carolina, L.L.C., observethat many ITFS licensees are finding itdifficult even to satisfy the existing ITFSminimum educational usagerequirements; several others assume theposture reflected in the Joint Statement,that while the educational usagerequirements should not be changed,

25% of an ITFS licensee’s capacityshould be immediately available to theITFS licensee or subject to recapture(with a minimum of 5% of the licensee’scapacity immediately available); andsome others, such as the San Francisco-San Jose Educator/Operator Consortium,contend that recapture requirements areinefficient and urge that theCommission abolish them.

30. Because we seek to maximize theflexibility of educators and wirelesscable operators to design systems whichbest meet their varied needs, we willadopt ITFS excess capacity leasing ruleswhich best promote this flexibilitywhile at the same time safeguarding theprimary educational purpose of theITFS spectrum allocation. After acareful review of the comments in thisproceeding, we decide that these goalsare best harmonized where digitaltransmissions are used by retaining thecurrent 20 hours per channel per weekeducational usage requirements,adopting the Joint Statement’s proposedabsolute reservation of a minimum of5% of an ITFS station’s licensedcapacity for instructional purposes only,and eliminating requirements settingaside capacity for ready recapture byITFS licensees. We emphasize that the20 hours per channel per weekminimum educational usagerequirement is independent from, butconcurrent with, the minimum 5%capacity reservation; further, thereserved capacity can be devoted tosatisfying minimum educational usagerequirements. These complementarystandards are in the public interestbecause they insure the immediatedevotion of ITFS spectrum to formaleducational usage, and the provision byITFS licensees of at least as mucheducational usage as they provide underthe current rules, while providing forexpansion of ITFS service offerings andmaximization of spectrum available forleasing to wireless cable operators.Thus, these standards also serve thesame purposes as the recaptureprovisions that they supplant.

31. Whether a reservation of 5% of thelicensee’s capacity is sufficient to meetthe minimum educational usagerequirements, let alone provide forfuture expansion of service, will dependboth on the digital compression ratioemployed by the licensee, and on theparticular form of transmissions utilizedby the licensee to meet its usagerequirements; in some cases, an ITFSlicensee may need to reserve more than5% of its capacity in order to satisfy itseducational usage requirements or toprovide room for future expansion ofservices. We also emphasize that anITFS licensee may reserve for itself in

excess capacity lease negotiations morethan the minimum required reservationof capacity, and is free not to lease itsexcess capacity at all if it does not wishto do so.

32. Measurement of EducationalUsage. In recognition of the difficulty ofmeasuring compliance with therequirements of 20 hours per channelper week of educational usage and the5% minimum capacity reservation, andin light of the varied forms that ITFSspectral usage can take, we agree withthose parties commenting on this issuethat at least for now, the best course isto rely on the good faith efforts of ITFSlicensees to meet these requirements,subject to potential Commission auditswith the licensee bearing the burden ofproof of compliance. We decline toadopt time-of-day requirements formeasuring educational usage, and inlight of changed content requirementsand available service options as a resultof this proceeding, we grant relevantportions of pending petitions forreconsideration of a 1994 Commissiondecision that only programmingtransmitted for ‘‘real time’’ viewing bystudents counts towards minimumeducational usage requirements.

B. Channel Loading, Shifting andSwapping

33. It is anticipated that systemdevelopers will attempt to utilizecontiguous 6 MHz channels for two-wayservices in order to minimize theamount of spectrum that would be lostto the spectral mask whenever a returnpath is adjacent to a downlink channel.Furthermore, entire ITFS channelgroups may need to be devoted forreturn paths. Thus, in the NPRM, theCommission advanced Petitioners’proposal that we allow ITFS licensees tosatisfy their educational usagerequirements on other channels withinthe wireless cable system (‘‘channelloading’’), and not mandate thatlicensees meet these requirements usingat least one of their own channels(‘‘channel shifting’’). The Commissionalso proposed to allow the trading ofchannels between licensees (‘‘channelswapping’’), and solicited comment onwhether ITFS licensees should berequired to retain one or more channelsfor downstream transmissions. Thegeneral concepts of channel loading,shifting and swapping are endorsed bythe Joint Statement and supported byalmost all of the commenting parties.With the exception of our channelloading rules and intra-ITFS channelswaps between licensees using analogtransmissions only, the concepts whichwe permanently adopt in the Orderapply only to licensees using digital


transmissions, leasing excess capacity toan operator which uses digitaltransmissions, or swapping channelswith a licensee which uses digitaltransmissions.

34. Channel Loading. The partiescommenting on our channel loadingrules unanimously support theirretention, and we shall do so. Inresponse to comments of Petitioners andof BellSouth, we also modify these rulesto eliminate the requirement that eachITFS licensee engaged in channelmapping or channel loading preservethe ability to transmit all of its readyrecapture time simultaneously on thenumber of channels for which it islicensed.

35. Channel Shifting. Theoverwhelming majority of commenterson this proposal wholeheartedlysupport it. While the Joint Statementsupports the proposal so long as theusage is shifted onto channels licensedto other ITFS entities, we are amendingour Rules to permit maximum flexibilityin voluntary channel shifting for anITFS licensee which itself uses, orleases excess capacity to a wirelesscable operator which uses, digitaltransmissions. Such flexibilityencompasses the right of an eligibleITFS licensee to shift its requirededucational usage onto any otherchannel(s) within the same wirelesscable system, regardless of whetherlicensed to an MDS or ITFS entity. Wehope that the flexibility we accord toITFS licensees to lease their channelcapacity, along with the maintenance ofminimum ITFS educational usagerequirements, also encourages educatorsto apply for new ITFS stations and leadsto more educational usage.

36. Downstream Channel Reservation.Of the few comments that we receivedon this issue, the majority favors amandatory preservation of onedownstream channel. We are adoptingthe Joint Statement’s proposal, asmodified by comments of Alliance forHigher Education, et al. (HigherEducation Alliance): that each ITFSlicensee leasing channels to be used forreturn paths shall be required tomaintain at least 25% of its capacity tobe used for downstream transmissionsboth during the term of the lease andfollowing termination of its leasingarrangement; and that this preservationneed not be over the licensee’s ownlicensed channels. In order to provideadditional safeguards of the ITFSspectrum allocation, we stipulatefurther that in the event the leasingarrangement ends, the wireless cableoperator must return to the ITFSlicensee unfettered use of as many 6MHz channels as are authorized to the

licensee; only 25% of these channels,however, must be devoted todownstream transmissions.

37. Channel Swapping. Thecomments that we receivedunanimously are in favor of the concept,and most commenters on these issuesindicate full support both for swapsbetween ITFS channels, as well asbetween ITFS and MDS channels. Therules that we adopt allow nearlymaximum flexibility in the types ofswaps that may take place. We declineto adopt proposals limiting the locationof response channels, such as a proposalwhich the Commission tentativelyrejected in the NPRM as undulyrestrictive, which sought to convertMDS channels 1, 2 and 2A to upstreamuse only, leaving the rest of the MDSand ITFS spectrum solely fordownstream use. Moreover, becausechannel swapping is voluntary and itsterms negotiable, we see no need toadopt the proposal of Schwartz, Woods& Miller (SWM) to require that thewireless cable operator cover all of thecosts of channel swaps. We implementsimple procedures for channel swapapplications: Each licensee seeking toswap channels shall file a pro formaassignment application with theCommission, attaching an exhibit whichclearly specifies that the application isfiled pursuant to a channel swapagreement.

38. Effects on ITFS License Renewal.Several commenters urge that it isimportant that we clarify that channelshifting, in particular, will notconstitute a basis for, or be a factor in,a license renewal proceeding; the JointStatement also contains a provision tothis effect. This concern arises overpossible effects of an ITFS licensee notproviding any educational usage over itsown licensed channels, even if itsatisfies its educational usagerequirements on other channels in thesame wireless cable system. Because werecognize that two-way system designmay be based largely on theimplementation of channel shifting, andthat wireless cable operators and theirITFS lessors may be deterred fromutilizing these efficiencies withoutassurances that doing so will not havean adverse effect at the time the ITFSlicensee seeks renewal, we amend§ 74.931 to reflect that the fact that anITFS licensee utilizes channel shifting,channel loading or channel mappingwill not itself be considered adversely tothe licensee in seeking a licenserenewal.

C. Autonomy of ITFS Licensees andAgency Role

39. When the Commission solicitedcomments in preparation for the NPRM,several of the ITFS parties whocommented at that time expressedconcern that the proposed two-wayscheme presents threats to theindependence of ITFS licensees andtheir future ability to use spectrumcapacity for instructional purposes.Some of those concerned commentersfocused on the effect that the proposedrules may have on the engineeringautonomy of ITFS licensees. Concernedcommenters also identified issuesrelating to possible encroachment uponthe financial autonomy of ITFSlicensees by implementation of theproposed two-way framework. Whilethe Commission, in the NPRM, soughtcomment on the effects thatcellularization would have on theengineering and financial autonomy ofITFS licensees, it also acknowledgedthat any proposed solutions inherentlywould implicate the fundamentalquestion of what degree of oversight theCommission should maintain inregulating the wireless cable industryand ITFS. The Commission solicitedviews on this fundamental question,and on one of its principal offshoots, thequestion of what impact the proposedtwo-way rules should have on theCommission’s requirements regardingexcess capacity lease agreements.

40. The comments that we received inresponse to the NPRM evince many ofthe same concerns expressed by some ofthe ITFS commenting parties in earlierrounds of comment, and likewise aremet with opposing comments conveyingresponses comparable to thosepreviously conveyed. Some of ourdecisions in the Order, such as generallyprohibiting involuntary modifications toITFS stations in a two-wayenvironment, should help address someof the concerns of ITFS licenseesregarding their autonomy and ability tocontinue providing service should theyno longer be in a relationship with awireless cable operator. However, whilewe will continue to require certainprovisions in excess capacity leasesbetween ITFS licensees and wirelesscable operators, and likewise willcontinue to prohibit certain provisions,we believe generally that ITFS licenseescan—and should—in their negotiationswith wireless cable operators arrange forlease terms that best protect their ownindividual interests and needs.

41. As a starting point, wereemphasize the Commission’sdeclaration in the NPRM thatcellularization by ITFS licensees is


permissive only, and not mandatory. Inaddition, we have decided to grant allITFS licensees protected service area(psa) protection, in response to concernsover coercion such as those expressedby the Foundation, that otherwise therewould be a disparity in interferenceprotection between ITFS licensees thatoffer high-speed Internet servicepursuant to a lease with a wireless cableoperator, and ITFS licensees thatprovide exactly the same service ontheir own. We also reaffirm the abilityof stand-alone ITFS licensees to providecommunications services that are notspecifically educational over theirfrequencies, so long as they meet theeducational usage requirements set forthin our Rules.

42. Engineering Autonomy. We agreewith the commenters who recognizethat our requirement that each ITFSlicensee retain 25% of its capacity fordownstream transmissions will presentsignificant assistance to ITFS licenseesin continuing to provide downstreameducational services. Nevertheless, webelieve generally that post-relationshipconfiguration issues should be arrangedby the ITFS licensee in the course ofnegotiating the terms of its excesscapacity lease with the wireless cableoperator. We further conclude that,particularly in light of the primaryeducational function of ITFS licensees,where an ITFS licensee is not the sourceof transmissions over its licensedbandwidth, we will not regard the ITFSlicensee as having legal control over thecontent of such transmissions. At most,an ITFS licensee’s legal control overcontent transmitted over its authorizedbandwidth is a contractual matterbetween the leasing parties.

43. Financial Autonomy. In theNPRM, the Commission soughtcomment on the concerns of severalcommenters at that stage of theproceeding that ITFS licensees will beunable to sever their relationship withthe wireless cable operator and acquirethe equipment to either continuecellular operations or return to non-two-way transmissions. While somecommenters such as CTN, theFoundation, and SWM propose variousregulatory solutions to these concerns,we agree with the commenters whoargue that the ITFS licensee shouldaddress these concerns itself in its leasenegotiations. Thus, we decline to adoptproposals to require that two-waywireless cable operators establish aperformance bond or escrow account,with sufficient funds to ensure theuninterrupted operation of participatingITFS stations for a given period; or tohave transmission systems transferautomatically to the ownership and

control of the ITFS licensee upontermination of the lease, or uponcommencement of a lease term.However, consistent with currentpolicy, we will require that each excesscapacity lease contain a provisionassuring the ITFS licensee’s right topurchase the actual equipment, orequipment comparable to that, used bythe ITFS licensee during the lease foreducational purposes. This means, forexample, that if the ITFS licensee wasproviding educational services duringthe lease period utilizing digitaltransmissions, the wireless cableoperator is not obligated to retain analogtransmission equipment for ITFSlicensees seeking to return to traditionaldownstream analog transmissions. Inaddition, as requested by CTN, thisrequired lease provision applies todedicated or common equipment usedfor educational purposes. Nonetheless,as further indicated by CTN,negotiations between the parties to thelease still will be required to spell outthe appropriate specific equipment thatmust be made available.

44. Commission Role. In the NPRM,the Commission described how in thepast, it has adopted rules andprocedures to accommodate and protectwhat has been viewed as the specialneeds of educational institutions andorganizations, believing that educationalinstitutions should be treated differentlyfrom commercial entities in manysituations due to limited financial andstaff resources. One of these protectionshas been required review by the staff ofITFS excess capacity lease agreements,for overly restrictive provisions affectingthe licensee’s rights and obligations andfor compliance with the Commission’sleasing policies. The Commissionrequested comment on whether partiesshould continue to be required to filewritten agreements governing the ITFSlicensee’s lease of excess capacity on itschannels.

45. The comments that we receivedon this issue generally are split betweenthose who believe that many ITFSlicensees are well-funded, and thosewho believe that many still have verylimited resources. Because we believethat many examples supporting bothviewpoints exist, we find it stillappropriate for us to maintain somedegree of oversight regarding therelations between the wireless cableindustry and ITFS, albeit a limited rolewhich allows for maximum possibleflexibility of the parties in establishingexcess capacity lease provisions, whileat the same time ensuring educationaluse of ITFS and a licensee’s ability tocontinue uninterrupted in that useshould its relationship with the wireless

cable operator terminate. In this regard,we will heed the prescriptions of thenumerous commenters who request thatwe continue to review excess capacityleases for provisions overly restrictive ofITFS licensees and in order to policeestablished safeguards, and requireamendment of noncompliant leases.However, consistent with many of ourdecisions in the Order regarding thesubstance of such leases, we intend thisreview to be on a lesser scale thanpreviously, and to be more deferential tothe burdens and benefits whichconstitute the agreement between theparties to the leases, and to allowingflexibility in implementation of two-way services.

46. In the NPRM, the Commissiontentatively rejected, but nonethelesssought comment on, a proposal,advanced by the Foundation, that theCommission require that two-waydigital applications and interferenceconsents be reviewed by legal andengineering counsel that do notrepresent commercial interests, and thatthese independent advisors certify thatin their professional opinion thesubmission will not harm futureinstructional service. The Commissionnoted that past attempts to require allleasing parties to hire separate counselhave been declined by the Commission,having found this safeguardunnecessary and relying instead on thestaff’s review and monitoring of leases.After reviewing the comments on thisissue, we continue to see no reason tochange our position on this issue, andwe decline to adopt the Foundation’sproposal.

47. Grandfathering of Excess CapacityLease Provisions. The Joint Statementrecommends that excess capacity leaseagreements that provide for digital usageand were entered into prior to release ofthe Order be ‘‘grandfathered for theirduration.’’ We seek to ensure atransition as smooth as possible to two-way operations, and we are persuadedby commenters such as HigherEducation Alliance who describe howeffectively requiring amendment ofnumerous existing leases could proveunduly burdensome to ITFS licenseesand wireless cable operators who didnot anticipate such changes. However,since the March 31, 1997 release of ourPublic Notice announcing the filing ofthe petition for rulemaking whichinitiated this proceeding, no party canbe heard to argue that it did not havenotice that ITFS/MDS two-operationswere anticipated in the not-too-distantfuture. Thus, any excess capacity leaseentered into, renewed, or extended afterMarch 31, 1997 is expected to bebrought into compliance immediately


1 Public Law 104–121, 110 Stat. 847 (1996)(CWAAA); see generally 5 U.S.C. §§ 601 et seq. TitleII of the CWAAA is the Small Business RegulatoryEnforcement Fairness Act of 1996 (SBREFA).

with all of the rule changes and policiesthat are adopted here, as is each newsuch lease, renewal, or term extensionfrom here onward. Finally, weemphasize that we will not adjudicatewhether the provisions of any specificlease contemplated digital operations asa general matter. In the absence ofresolution between the parties to thelease, we believe this issue to be amatter of contract law properly heardbefore a state tribunal. In framing ourpolicies towards grandfathering ofcertain excess capacity leases, we haveconsidered, and rejected, SWM’sproposal that in order to protect therights of incumbent ITFS licenses, theCommission require that leasesapproved or submitted under theprevious rules ‘‘be amended to makeclear that the wireless cable lessee andthe ITFS licensee have togetherconsidered the rule changes adoptedand made any appropriate changes tolease terms, prior to the commencementof commercial operations on thefrequencies using cellularization,sectorization or differing channelizationplans.’’

48. Length of Leases. The JointStatement urges that the Commissionallow excess capacity leases of up to 15years duration, provided that any leaseextending beyond the term of alicensee’s authorization provides fortermination of the lease in the event theCommission denies the subject station’sapplication for renewal. Virtually all ofthe commenters who address thisproposal support it, and we are adoptingit. In doing so, we decline to adopt theFoundation’s suggestion of maintainingthe 10 year lease limit for downstream-only digital and analog systems, whileallowing a 15 year limit for two-waysystems.

49. Other Lease Requirements.Petitioners urge that the Commissionreverse two policies which, Petitionersassert, were not formed in rulemakingproceedings: (1) Barring lease provisionsthat require an ITFS licensee to assignits remaining obligations under anexcess capacity lease if it chooses toassign its underlying license; and (2)Rejecting lease provisions which requirethat an ITFS licensee, seeking to ceaseoperating its facility during the excesscapacity lease term, provide the wirelesscable operator a reasonable opportunityto secure an eligible ITFS assigneebefore the license is returned to theCommission for cancellation. Webelieve that it is appropriate to continueour ban of provisions that would requirean ITFS licensee to assign its remainingobligations under an excess capacitylease. However, henceforth we willallow provisions that would permit a

wireless cable operator to find aqualified ITFS assignee to assume thelicense prior to its cancellation, and weset forth guidelines to govern whatconstitutes acceptable such provisions.

50. The Joint Statement containsprovisions which call for all excesscapacity leases to state that the ITFSlicensee ‘‘shall have the right to use anyInternet services offered over the systemat no greater than the lowest prevailingcommercial rate and shall havereasonable access, at rates to benegotiated between the parties, to otherservices offered over the system (such asaddressability and two-way capability).’’Because we believe that these are bestprivate contractual matters between theparties, we decline to implement theseprovisions of the Joint Statement.

D. ITFS Call Sign Transmission51. In the NPRM, the Commission

presented Petitioners’ arguments thatthe burdens of continued enforcementof the ITFS call sign transmissionrequirement in a two-way environmentwill far outweigh the benefits. TheCommission sought comment on theproposed elimination of § 74.982, andsolicited alternative solutions formaintaining the accountability of ITFSlicensees. The few commenters whichaddressed this proposal unanimouslyfavored eliminating the call signtransmission requirement where digitaltransmissions are utilized. In a two-wayenvironment, alleviation of interferenceproblems primarily will be left to thewireless cable operator, because of allthe coordination it must do to make atwo-way system function properly. Inrecognition of this and the greaterefficiency of digital transmissions, webelieve that the burdens embedded in§ 74.982, such as costs, outweigh thebenefits of applying the rule to any ITFSstation using any digital transmissions.Thus, any ITFS station using digitalmodulation, whether or not in a leaseagreement with a wireless cableoperator and whether or not in a two-way system, will be exempt from therequirements of § 74.982. However,because these costs would not beprohibitive to ITFS stations using onlyanalog transmissions, and because thebenefits of interference identificationcan still be realized economically wheretransmissions are in analog, we willretain § 74.982 and apply it to ITFSstations which transmit only in analog.

V. Final Regulatory Flexibility Analysis(FRFA)

52. As required by the RegulatoryFlexibility Act (RFA), 5 U.S.C. § 603, anInitial Regulatory Flexibility Analysis(IRFA) was incorporated in the NPRM in

this proceeding. The Commissionsought written public comment on theproposals in the NPRM, including onthe IRFA. The Commission’s FinalRegulatory Flexibility Analysis (FRFA)in this Order conforms to the RFA, asamended by the Contract With AmericaAdvancement Act of 1996.1

A. Need for and Objectives of Action53. In the Order, we amend parts 1,

21 and 74 of our Rules to enable MDSand ITFS licensees to provide two-waycommunication services. These serviceswill be enhanced through the use oftwo-way audio, video and datacommunications from ‘‘response’’stations, the use of booster stations withprogram origination capability in acellular configuration designed to createspectrum flexibility through frequencyreuse, and the use of variable bandwidth(‘‘subchanneling’’ and‘‘superchanneling’’) to create additionalflexibility. We believe the final ruleamendments will facilitate two-waytransmission and other improvements tothe MDS and ITFS services.

B. Significant Issues Raised by thePublic in Response to the InitialAnalysis

54. No comments were receivedspecifically in response to the IRFAcontained in the NPRM. However, somecommenters did raise argumentsconcerning the effect that certain of ourproposals may have on small entities.

55. As to whether we should increaseeducational usage requirements whenITFS licensees employ digitaltransmissions, Region IV argued thatgreater educational usage requirementswould particularly burden small ITFSentities, by indirectly imposingfinancial and administrative burdensbefore these licensees are in a posture toassume such responsibilities.

56. With respect to whether weshould adopt a rolling one-day filingwindow for the submission of two-wayMDS and ITFS applications, theAlliance of MDS Licensees argued thatsuch a system would place anunbearable burden on the limitedresources of incumbents, resulting inlarge operators having an advantageover small operators.

C. Description and Number of SmallEntities Involved

57. The RFA generally defines ‘‘smallentity’’ as having the same meaning asthe terms ‘‘small business,’’ ‘‘smallorganization,’’ and ‘‘small business


2 5 U.S.C. § 601(3) (incorporating by reference thedefinition of ‘‘small business concern’’ in 15 U.S.C.§ 632). Pursuant to 5 U.S.C. § 601(3), the statutorydefinition of small business applies unless anagency after consultation with the Office ofAdvocacy of the Small Business Administrationand after an opportunity for public comment,establishes one or more definitions of such termwhich are appropriate to the activities of the agencyand publishes definitions in the Federal Register.

3 One of these small entities, O’ahu WirelessCable, Inc., was subsequently acquired by GTEMedia Ventures, Inc., which did not qualify as asmall entity for purposes of the MDS auction.

concern.’’ 5 U.S.C. § 601(6). In addition,the term ‘‘small business’’ has the samemeaning as the term ‘‘small businessconcern’’ under the Small BusinessAct.2 A small business concern is onewhich: (1) is independently owned andoperated; (2) is not dominant in its fieldof operation; and (3) satisfies anyadditional criteria established by theSBA. Small Business Act, 15 U.S.C.§ 632.

58. MDS: The Commission hasdefined ‘‘small entity’’ for the auction ofMDS as an entity that, together with itsaffiliates, has average gross annualrevenues that are not more than $40million for the preceding three calendaryears. 47 CFR 21.961(b)(1). Thisdefinition of a small entity in thecontext of MDS auctions has beenapproved by the SBA. See Amendmentof Parts 21 and 74 of the Commission’sRules With Regard to Filing Proceduresin the Multipoint Distribution Serviceand in the Instructional TelevisionFixed Service and Implementation ofSection 309(j) of the CommunicationsAct—Competitive Bidding, MM DocketNo. 94–31 and PP Docket No. 93–253,Report and Order, 10 FCC Rcd 9589(1995), 60 FR 36524, Jul. 17, 1995. TheCommission completed its MDS auctionin March 1996 for authorizations in 493basic trading areas (BTAs). Of 67winning bidders, 61 qualified as smallentities.3

59. MDS is also heavily encumberedwith licensees of stations authorizedprior to the auction. The SBA hasdeveloped a definition of small entitiesfor pay television services, whichincludes all such companies generating$11 million or less in annual receipts.13 CFR 121.201. This definitionincludes multipoint distributionsystems, and thus applies to MDSlicensees and wireless cable operatorswhich did not participate in the MDSauction. Information available to usindicates that there are 832 of theselicensees and operators that do notgenerate revenue in excess of $11million annually. Therefore, forpurposes of this FRFA, we find thatthere are approximately 892 small MDSproviders as defined by the SBA and the

Commission’s auction rules, and someof these providers may take advantage ofour amended rules to provide two-wayMDS.

60. ITFS: There are presently 2032ITFS licensees. All but 100 of theselicenses are held by educationalinstitutions (these 100 fall in the MDScategory, above). Educationalinstitutions may be included in thedefinition of a small entity. See 5 U.S.C.§§ 601 (3)–(5). ITFS is a non-pay, non-commercial broadcast service that,depending on SBA categorization, has,as small entities, entities generatingeither $10.5 million or less, or $11.0million or less, in annual receipts. See13 CFR 121.210 (SIC 4833, 4841, and4899). However, we do not collect, norare we aware of other collections of,annual revenue data for ITFS licensees.Thus, we find that up to 1932 of theseeducational institutions are smallentities that may take advantage of ouramended rules to provide two-wayITFS.

D. Summary of Projected Reporting,Recordkeeping and Other ComplianceRequirements

61. The Order adopts the followingproposals that include reporting,recordkeeping, and compliancerequirements:

62. We required MDS and ITFSlicensees employing two-waytechnology to attach labels to everysubscriber transceiver in a conspicuousfashion. In addition, MDS and ITFSlicensees employing two-waytechnology will be required to includea full explanation of the labels thatappear on their transceivers, as well asreference to the applicable Commissionguidelines, in the instruction manualsand other information accompanyingtheir subscriber transceivers.

63. We required a hub station licenseeto formally notify an ITFS licenseewhen a response station is being locatedin the vicinity of any of the ITFSlicensee’s receive sites. Specifically, wecreated a notification zone with a radiusof 1960 feet around each registered ITFSreceive site and we required that, atleast 20 days prior to the activation ofany response station within such a zone,the hub station licensee notify, bycertified mail, the appropriate ITFSlicensee.

64. In addition to requiredinformation contained on new FCCForm 331, we required applicants tosubmit additional data in specifiedformats and on diskettes accompanyingthe application forms.

65. While we do not ordinarilyrequire applicants for minor changes toITFS facilities to prepare interference

showings or serve them on potentiallyaffected parties, we required thepreparation and service of interferenceanalyses by ITFS licensees who seek touse their associated I channels fordownstream transmissions.

66. We will accept applications forMDS and ITFS response stations hubs orboosters via a rolling, one-day filingwindow. Each applicant will have toprovide interference protection to allfacilities existing or proposed prior tothe filing of its application, but itsapplication will take precedence overall subsequently filed applications.Applicants will be required to file theirapplications with all of theirinterference analyses, in both hard copyand on disk.

67. Applicants for two-way facilitieswill be required to certify that they havemet all requirements regardinginterference protection to existing andprior proposed facilities. The applicantwill also be required to certify that it hasserved all potentially affected partieswith copies of its application, and withits engineering analysis supporting itsinterference compliance claim.

E. Steps Taken to Minimize SignificantEconomic Impact on Small Entities, andSignificant Alternatives Considered

68. The following steps were taken inthe Order to minimize the significanteconomic impact on small entities:

69. The rule changes adopted in theOrder to allow two-way operations forMDS and ITFS will simplify ourlicensing system and provide greaterflexibility in the use of the allottedspectrum to licensees. It is expected thatsuch changes will further eliminatemarket entry barriers for small entities.

70. By allowing forsubchannelization, small entitylicensees will be able to respond to thedemands of the market and create anunlimited number of channels to carrytheir current and futurecommunications needs. Allowingsuperchannelization will permit smallentity licensees to combine theirspectrum with other small entitylicensees and create larger systems tomeet their particular operations and tooperate at greater speeds.

71. To permit small entity ITFSlicensees with limited resourcesadequate time to evaluate a two-wayapplicant’s proposed service plan, weadopted a certification procedurewhereby applicants are required tocertify that they have met allrequirements regarding interferenceprotection to existing and priorproposed facilities. The applicant willalso be required to certify that it hasserved all potentially affected parties


with copies of its application and withits engineering analysis supporting itsinterference compliance claim.

72. In an effort to minimize theimpact of our new rules on educationalITFS licensees, many of whom are smallentities, we determined that restrictingITFS eligible use to the downstreamvideo/audio paradigm would precludeflexibility in service offerings for anITFS licensee which leases excesschannel capacity. We providededucational entities with additionalflexibility to define what ITFS usagethey regard as educational, in an effortto permit such entities to further theireducational mission. We did not expandour minimum educational usagerequirement for digital ITFStransmissions, and we added arequirement that 5 percent of an ITFSstation’s capacity be set aside forinstructional purposes only.

73. The following significantalternatives were considered in theOrder:

74. We declined to adopt CTN’ssuggestion that greater suppression ofspurious emissions is needed on theorder of ¥60 dB for response stationsoperating at +48 dBm, up to ¥75 dB forresponse stations operating at +63 dBm.We found that modifications made tothe spectral mask for response stationswould completely eliminate therequirements that were proposed forsuch emissions.

75. We did not adopt NextLevel’ssuggestion that a maximum suppressionlimit be placed on digital emitters,which would effectively remove the out-of-band attenuation requirements forpower levels below a certain minimum.We found that such a relaxation of out-of-band limits, in the context of acellularized CDMA system, could resultin an adverse impact on the interferenceenvironment because, unlike otherservices, hundreds or thousands of lowpower emitters may be transmittingsimultaneously and the combinedeffects of their out-of-band emissionscould be significant.

76. In the Order, we adopted aMethodology for calculating theinterference potential of responsestations. We rejected CTN’s request toprotect hub receivers only to a distanceof 35 miles and make them secondarybeyond that distance. We concludedthat such a step would render hubsextremely susceptible to interferenceand seriously degrade thecommunications capabilities andreliabilities within the hub’s RSA. Wedid not adopt EDX Engineering’salternative to Petitioners’ responsestation interference Methodologybecause, for many two-way system

configurations, EDX’s interferencecalculations will inevitably giveerroneous results, a shortcoming thatwas conceded by EDX itself. We alsodid not permit applicants to choose anymethodology they wish for makinginterference calculations, as we foundthat this would drastically slow theevaluation of applications and almostcertainly result in many Petitions toDeny, as licensees and applicantsstruggled to understand the differingand potentially incompatibleassumptions and calculationsincorporated into the variousmethodologies.

77. We also declined to adopt Spike’srecommendation that hub stations beredefined to include transmittingcapability. We found that this was notnecessary because booster and primarystations may be co-located with hubstations to provide transmissioncapability, and permitting hubs to alsotransmit would simply add redundancyand unnecessary complexity to theinterference protection requirements ofthe rules.

78. We denied CTN’s request thatguardbands be established separatingupstream (response station)transmissions from downstream ITFStransmissions. We determined thatCTN’s first proposal, involving thecreation of 24 MHz-wide guardbands,could result in partially or completelyeliminating many MHz of potentiallyuseful upstream spectrum on thespeculative assumption that such actionwas necessary to protect ITFS receivesites from interference. We alsodeclined to adopt CTN’s subsequentproposals, involving 6 MHz guardbands,believing that it was not the case thatthe proposed response stationinterference Methodology is ‘‘undulycomplex’’ and will be ineffective indetermining interference when thepotential victim ITFS receive site iswithin a hub station’s RSA.

79. We did not adopt CTN’s requestfor mandatory response station testing,as we found that it would impose anunnecessary burden on two-waylicensees.

80. We denied CTN’s request toreallocate all of the 125 kHz channels toITFS and to use them solely forresponse transmissions. We found thatreallocation and the complicationsassociated with that is not necessary,and that allowing the I channels to beused for point-to-multipointtransmissions promotes greater optionsfor two-way system design and moreefficient use of the spectrum. For thesame reasons, we declined to adoptCTN’s suggestion that we render lowpower boosters secondary, and we also

declined to adopt Maryland’s requestthat we mandate that any non-ITFS useof I channels licensed to an ITFS entitybe secondary to ITFS use.

81. We rejected the automatic grantproposal made by the Petitioners forgranting without review any unopposedtwo-way license application after a 60-day comment period. We also did notadopt the proposal specified in theNPRM to set up a system whereby thestaff would fully review the filedapplications and issue a grant or denial.Instead, we adopted a certificationprocedure whereby applicants certifythat they have met the requirementsregarding interference protection toexisting and prior proposed facilitiesand have served copies of theirapplications on all affected parties. Wedetermined that this approach wasneeded to facilitate two-way service tothe public, and that without it, two-wayservice by MDS operators and/or ITFSlicensees may not become a reality. Thecertification requirement would alsoprotect the interests of ITFS licensees,many of whom do not have the time orresources to evaluate a two-wayapplicant’s proposed service plan.

82. In the Order, we determined thatparties will have 60 days from the dateof the public notice to file petitions todeny against two-way applications. Wedecided that, due to the complex natureof the engineering to be filed, a 60 daypetition to deny period is morereasonable that the usual 30 day period.

83. We did not adopt HITN’ssuggestion that we eliminate our rulethat limits eligible ITFS educationalservice providers to accreditedinstitutions. We found that the primarypurpose of ITFS is, and always hasbeen, to meet the needs of studentsenrolled in courses of formalinstruction. Furthermore, we found thataccredited schools have been theintended users of ITFS since the originof the service.

84. We decided to subject ITFS highpower booster stations to educationalusage requirements, separate from thoseto which main ITFS stations are subject.We determined, however, not to subjectITFS response stations or responsestation hubs to educational usagerequirements, because the ITFS licenseehas no control over which upstreamtransmissions would qualify to satisfythe requirements.

85. We declined to adopt time-of-dayrequirements for measuring educationalusage, in order to provide ITFSlicensees with the maximum flexibilityto determine which uses of theirspectrum enhance their formaleducational mission.


86. In the Order, we retained twodifferent but complementaryrequirements of ITFS spectral usage: aminimum of 20 hours per channel perweek for educational usage, and aminimum reservation of 5% of alicensee’s capacity that it may not lease.We determined that both would bedifficult to measure in light of the variedforms that such usage can take. Wedecided that the best course would beto rely on the good faith efforts of ITFSlicensees to meet these requirements,and we did not institute any new,formal proof of compliance reportingsubmissions in this area.

F. Report to Congress87. The Commission will send a copy

of the Order, including this FRFA, in areport to be sent to Congress pursuantto the Small Business RegulatoryEnforcement Fairness Act of 1996. See5 USC § 801(a)(1)(A). In addition, theCommission will send a copy of theOrder, including the FRFA, to the ChiefCounsel for Advocacy of the SmallBusiness Administration. A copy of theOrder and FRFA (or summaries thereof)will also be published in the FederalRegister. See 5 USC § 604(b).

VI. Procedural Matters88. Accordingly, it is ordered that,

pursuant to the authority contained inSections 4(i) and (j), 301, 303(f), 303(g),303(h), 303(j), 303(r), and 308(b) of theCommunications Act of 1934, asamended, 47 USC §§ 154(i), 154(j), 301,303(f), 303(g), 303(h), 303(j), 303(r), and

308(b), this Order is adopted, and parts1, 21, and 74 of the Commission’s Rules,47 CFR 1, 21, and 74, are amended asset forth below.

89. It is further ordered that thePetition of Wireless Cable Ass’n Int’l forReconsideration and Clarification, MMDocket No. 93–106 (filed August 12,1994), and Petition of Alliance forHigher Education, et al., MM Docket No.93–106 (filed August 5, 1994), aregranted to the extent described in theOrder at note 230.

90. The action contained in the Orderhas been analyzed with respect to thePaperwork Reduction Act of 1995 andfound to impose new or modifiedreporting and recordkeepingrequirements or burdens on the public.Implementation of these new ormodified reporting and recordkeepingrequirements will be subject to approvalby the Office of Management andBudget as prescribed by the Act. Thenew or modified paperworkrequirements contained in this Order(which are subject to approval by theOffice of Management and Budget) willgo into effect upon OMB approval.

List of Subjects

47 CFR Part 1

Environmental impact statements.

47 CFR Part 21

Communications common carriers,Communications equipment, Reportingand recordkeeping requirements,Television.

47 CFR Part 74

Communications equipment,Education, Reporting and recordkeepingrequirements, Television.Federal Communications Commission.Magalie Román Salas,Secretary.

Rule Changes

Parts 1, 21 and 74 of Title 47 of theCode of Federal Regulations areamended as follows:

PART 1—PRACTICE ANDPROCEDURE


Authority: 15 U.S.C. 79 et seq.; 47 U.S.C.151, 154(i), 154(j), 155, 225, and 303(r).

2. In § 1.1307, paragraph (b)(1), Table1, right column is amended by addingthe entry regarding MDS licenseesdirectly following the existing referenceto Multipoint Distribution Servicebuilding-mounted antennas, and byadding the entry regarding ITFSlicensees directly following the existingreference to part 74, subpart I stations,to read as follows:

§ 1.1307 Actions that may have asignificant environmental effect, for whichEnvironmental Assessments (EAs) must beprepared.

* * * * *(b) * * *(1) * * *

TABLE 1.—TRANSMITTERS, FACILITIES AND OPERATIONS SUBJECT TO ROUTINE ENVIRONMENTAL EVALUATION

Service (title 47 CFR rule part) Evaluation required if—

* * * * * * *Multipoint Distribution Service (subpart K of part

21).* * *

MDS licensees are required to attach a label to subscriber transceiver or transverter antennasthat:

(1) provides adequate notice regarding potential radiofrequency safety hazards, e.g., in-formation regarding the safe minimum separation distance required between users andtransceiver antennas; and

(2) references the applicable FCC-adopted limits for radiofrequency exposure specified in§ 1.1310.

* * * * * * *Experimental, auxiliary, and special broadcast

and other program distributional services (part74).

* * *

ITFS licensees are required to attach a label to subscriber transceiver or transverter antennasthat:

(1) provides adequate notice regarding potential radiofrequency safety hazards, e.g., in-formation regarding the safe minimum separation distance required between users andtransceiver antennas; and

(2) references the applicable FCC-adopted limits for radiofrequency exposure specified in§ 1.1310.

* * * * * * *


PART 21—DOMESTIC PUBLIC FIXEDRADIO SERVICES


Authority: Secs. 1, 2, 4, 201–205, 208, 215,218, 303, 307, 313, 403, 404, 410, 602, 48Stat. as amended, 1064, 1066, 1070–1073,1076, 1077, 1080, 1082, 1083, 1087, 1094,1098, 1102; 47 U.S.C. 151, 154, 201–205, 208,215, 218, 303, 307, 313, 314, 403, 404, 602;47 U.S.C. 552, 554.

4. In § 21.2, the following definitionsare added in alphabetical order, to readas follows:

§ 21.2 Definitions.* * * * *

Booster service area. A geographicarea to be designated by an applicant fora booster station, within which thebooster station shall be entitled toprotection against interference as setforth in this part. The booster servicearea must be specified by the applicantso as to not overlap the booster servicearea of any other booster authorized toor proposed by the applicant. However,a booster station may provide service toreceive sites outside of its boosterservice area, at the licensee’s risk ofinterference.* * * * *

Channel. Unless otherwise specified,a channel under this part shall refer toa 6 MHz frequency block assignedpursuant to §§ 21.901(b) or 74.902(a) ofthis chapter.* * * * *

Response station hub. A fixed facilitylicensed to an MDS licensee, andoperated by an MDS licensee or thelessee of an MDS facility, for thereception of information transmitted byone or more MDS response stations thatutilize digital modulation with uniformpower spectral density. A responsestation hub licensed under this part mayshare facilities with other MDS responsestation hubs, ITFS response station hubsauthorized pursuant to § 74.939 of thischapter, MDS signal booster stations,ITFS signal booster stations, MDSstations, and/or ITFS stations.

Response station hub license. Ablanket license authorizing theoperation of a single response stationhub at a specific location and theoperation of a specified number ofassociated digital response stations ofone or more classes at unspecifiedlocations within one or more regions ofthe response service area.

Sectorization. The use of an antennasystem at an MDS station, boosterstation and/or response station hub thatis capable of simultaneouslytransmitting multiple signals over thesame frequencies to different portions of

the service area and/or simultaneouslyreceiving multiple signals over the samefrequencies from different portions ofthe service area.* * * * *

4a. In § 21.2, the followingdefinitions, in alphabetical order, arerevised to read as follows:

Multichannel Multipoint DistributionService (MMDS). Those MultipointDistribution Service Channels that usethe frequency band 2596 MHz to 2644MHz and associated 125 kHz channels.

Multipoint Distribution Service(MDS). A domestic public radio servicerendered on microwave frequenciesfrom one or more fixed stationstransmitting to multiple receivingfacilities located at fixed points. MDSalso may encompass transmissions fromresponse stations to response stationhubs or associated fixed stations.

Multipoint Distribution Serviceresponse station. A fixed stationoperated by an MDS licensee, the lesseeof MDS channel capacity or a subscriberof either to communicate with aresponse station hub or associated MDSstation. A response station under thispart may share facilities with other MDSresponse stations and/or one or moreInstructional Television Fixed Service(ITFS) response stations authorizedpursuant to § 74.939 of this chapter or§ 74.940 of this chapter.* * * * *

Signal Booster Station. An MDSstation licensed for use in accordancewith § 21.913 that operates on one ormore MDS channels. Signal boosterstations are intended to augment serviceas part of a distributed transmissionsystem where signal booster stationsretransmit the signals of one or moreMDS stations and/or originatetransmissions on MDS channels. Asignal booster station licensed underthis part may share facilities with otherMDS signal booster stations, ITFS signalbooster stations authorized pursuant to§ 74.985 of this chapter, MDS responsestation hubs and/or ITFS responsestation hubs.* * * * *

5. In § 21.11, paragraphs (f) and (g) areredesignated as paragraphs (e) and (f),respectively, and the section heading,paragraphs (a) and (d), and newlyredesignated paragraph (e) are revised,to read as follows:

§ 21.11 Miscellaneous forms.(a) Licensee qualifications. FCC Form

430 (‘‘Licensee Qualification Report’’)must be filed annually, no later thanMarch 31 for the end of the precedingcalendar year, unless the licenseeoperates solely on a common carrier

basis and service was not offered at anytime during the preceding year. Eachannual filing must include all changesof information required by FCC Form430 that occurred during the precedingyear. In those cases in which there hasbeen no change in any of the requiredinformation, the applicant or licensee,in lieu of submitting a new form, mayso notify the Commission by letter.* * * * *

(d) Assignment of license. FCC Form702 (‘‘Application for Consent toAssignment of Radio StationConstruction Authorization or License(for Stations in Services Other thanBroadcast)’’) must be submitted toassign voluntarily (as by, for example,contract or other agreement) orinvoluntarily (as by, for example, death,bankruptcy, or legal disability) thestation license or conditional license. Inthe case of involuntary assignment, theapplication must be filed within 30 daysof the event causing the assignment.FCC Form 702 also must be used fornonsubstantial (pro forma) assignments.In addition, FCC Form 430 must besubmitted by the proposed assigneeunless such assignee has a current andsubstantially accurate report on file withthe Commission. Whenever a group ofstation licenses or conditional licensesin the same radio service is to beassigned to a single assignee, a single‘‘blanket’’ application may be filed tocover the entire group, if the applicationidentifies each station by call sign andstation location and if two copies areprovided for each station affected. Theassignment must be completed within45 days from the date of authorization.Upon consummation of an approvedassignment, the Commission must benotified by letter of the date ofconsummation within 10 days of itsoccurrence.

(e) Transfer of control of corporationholding a conditional license or license.FCC Form 704 (‘‘Application forConsent to Transfer of Control’’) must besubmitted in order to voluntarily orinvoluntarily transfer control (de jure orde facto) of a corporation holding anyconditional licenses or licenses. In thecase of involuntary transfer of control,the application must be filed within 30days of the event causing the transfer ofcontrol. FCC Form 704 also must beused for nonsubstantial (pro forma)transfers of control. In addition, FCCForm 430 must be submitted by theproposed transferee unless suchtransferee has a current andsubstantially accurate report on file withthe Commission. Whenever control of acorporation holding a group of stationlicenses or conditional licenses in the


same radio service is to be transferred toa single transferee, a single ‘‘blanket’’application may be filed to cover theentire transfer, if the applicationidentifies each station by call sign andstation location and if two copies areprovided for each station affected. Thetransfer must be completed within 45days from the date of authorization.Upon consummation of an approvedtransfer, the Commission must benotified by letter of the date ofconsummation within 10 days of itsoccurrence.* * * * *

6. In § 21.27, paragraph (d) is added,to read as follows:

§ 21.27 Public notice period.* * * * *

(d) Notwithstanding any otherprovisions of this part, effective as ofSeptember 17, 1998, there shall be oneone-week window, at such time as theCommission shall announce by publicnotice, for the filing of applications forhigh-power signal booster station,response station hub and I channelspoint-to-multipoint transmissionslicenses, during which all applicationsshall be deemed to have been filed as ofthe same day for purposes of §§ 21.909,21.913 and 74.939(l) of this chapter.Following the publication of a publicnotice announcing the tendering forfiling of applications submitted duringthat window, applicants shall have aperiod of sixty (60) days to amend theirapplications, provided suchamendments do not result in anyincrease in interference to anypreviously proposed or authorizedstation, or to facilities proposed duringthe window, absent consent of theapplicant for or conditional licensee orlicensee of the station that wouldreceive such interference. At theconclusion of that sixty (60) day period,the Commission shall publish a publicnotice announcing the acceptance forfiling of all applications submittedduring the initial window, as amendedduring the sixty (60) day period. Allpetitions to deny such applicationsmust be filed within sixty (60) days ofsuch second public notice. On the sixty-first (61st) day after the publication ofsuch second public notice, applicationsfor new or modified response stationhub, booster station and I channelspoint-to-multipoint transmissionslicenses may be filed and will beprocessed in accordance with theprovisions of §§ 21.909, 21.913 and74.939(l) of this chapter.Notwithstanding § 21.31, eachapplication submitted during the initialwindow shall be granted on the sixty-first (61st) day after the Commission

shall have given such public notice ofits acceptance for filing, unless prior tosuch date either a party in interesttimely files a formal petition to deny orfor other relief pursuant to § 21.30(a), orthe Commission notifies the applicantthat its application will not be granted.Where an application is grantedpursuant to the provisions of thisparagraph, the conditional licensee orlicensee shall maintain a copy of theapplication at the transmitter site orresponse station hub until such time asthe Commission issues a license.

7. In § 21.30, paragraph (a)(4) isrevised to read as follows:

§ 21.30 Opposition to applications.(a) * * *(4) Except as provided in

§ 21.902(i)(6) regarding InstructionalTelevision Fixed Service licensees andconditional licensees, in § 21.909regarding MDS response station hubsand in § 21.913 regarding MDS boosterstations, be filed within thirty (30) daysafter the date of public noticeannouncing the acceptance for filing ofany such application or majoramendment thereto, or identifying thetentative selectee of a random selectionproceeding in the MultichannelMultipoint Distribution Service or forMultipoint Distribution Service H-channel stations (unless theCommission otherwise extends thefiling deadline); and* * * * *

8. In § 21.31, paragraph (e)(6)(iv) isrevised to read as follows:

§ 21.31 Mutually exclusive applications.* * * * *

(e) * * *(6) * * *(iv) The change of status by an MDS

applicant from common carrier to non-common carrier, from non-commoncarrier to common carrier, or fromcommon carrier or non-common carrierto flexibility to alternate betweencommon carrier and non-commoncarrier service.

9. In § 21.42, paragraph (b)(3) isrevised, and paragraph (c)(8) is added,to read as follows:

§ 21.42 Certain modifications not requiringprior authorization.* * * * *

(b) * * *(3) The Commission is notified of

changes made to facilities by thesubmission of a completed FCC Form304 within thirty (30) days after thechanges are made.* * * * *

(c) * * *(8) A change to a sectorized antenna

system comprising an array of

directional antennas, provided that suchsystem does not change polarization orresult in an increase in radiated powerby more than one dB in any direction;provided, however, that notice of suchchange is provided to the Commissionon FCC Form 331 within ten (10) daysof installation.* * * * *

10. In § 21.101, paragraph (a), footnote2 is revised to read as follows:

§ 21.101 Frequency tolerance.(a) * * *

llllllll

2 Beginning November 1, 1991, equipmentauthorized to be operated in the frequencybands 2150–2162 MHz, 2596–2644 MHz,2650–2656 MHz, 2662–2668 MHz, and 2674–2680 MHz for use in the MultipointDistribution Service shall maintain afrequency tolerance within ±1 kHz of theassigned frequency. MDS booster stationsauthorized pursuant to § 21.913(b) shallmaintain a frequency tolerance within ±1kHz of the assigned frequencies. MDS boosterstations authorized pursuant to § 21.913(e)and MDS response stations authorizedpursuant to § 21.909 shall employtransmitters with sufficient frequencystability to ensure that the emission stayswithin the authorized bandwidth.

* * * * *11. In § 21.118, paragraph (c) is

revised to read as follows:

§ 21.118 Transmitter construction andinstallation.

* * * * *(c) Each transmitter employed in

these services shall be equipped with anappropriately labeled pilot lamp ormeter which will provide continuousvisual indication at the transmitterwhen its control circuits have beenplaced in a condition to activate thetransmitter. Such requirement will notbe applicable to MDS response stationsor MDS booster stations authorizedpursuant to § 21.913(e). In addition,facilities shall be provided at eachtransmitter to permit the transmitter tobe turned on and off independently ofany remote control circuits associatedtherewith.* * * * *

12. Section 21.201 is revised to readas follows:

§ 21.201 Posting of station license.Each licensee shall post at the station,

the booster station authorized pursuantto § 21.913(b) or the MDS responsestation hub the name, address andtelephone number of the custodian ofthe station license or other instrumentof authorization if such license orinstrument of authorization, or a clearlylegible photocopy thereof, is notmaintained at the station, booster


station or response station hub. Eachoperator of an MDS booster stationauthorized pursuant to § 21.913(e) shallpost at the booster station the name,address and telephone number of thecustodian of the notification filedpursuant to § 21.913(e) if suchnotification is not maintained at thestation.


§ 21.304 Tariffs, reports, and othermaterial required to be submitted to theCommission.

Sections 1.771 through 1.815 of thischapter contain summaries of certainmaterials and reports, includingschedule of charges and accounting andfinancial reports, which, whenapplicable, must be filed with theCommission. These requirementslikewise shall apply to licensees whichalternate between rendering service on acommon carrier and non-commoncarrier basis.


§ 21.900 Eligibility.

(a) Authorizations for stations in thisservice will be granted to existing andproposed communications commoncarriers and non-common carriers. Anapplication will be granted only in caseswhere it can be shown that:

(1) The applicant is legally,financially, technically, and otherwisequalified to render the proposed service;and

(2) There are frequencies available toenable the applicant to render asatisfactory service; and

(3) The public interest, convenienceand necessity would be served by agrant thereof.

(b) The applicant shall state whetherservice will be provided on a commoncarrier basis, a non-common carrierbasis, or alternating between a commoncarrier and non-common carrier basis.In addition, an applicant proposing toprovide any common carrier servicewhatsoever shall state whether there isany affiliation or relationship to anyintended or likely subscriber or programoriginator.

15. In § 21.901, paragraphs (a), (b),and (d) and note 1 are revised, and newparagraph (g) is added, to read asfollows:

§ 21.901 Frequencies.

(a) Frequencies in the bands 2150–2162 MHz, 2596–2644 MHz, 2650–2656MHz, 2662–2668 MHz, 2674–2680 MHzand 2686–2690 MHz are available forassignment to fixed stations in thisservice. Frequencies in the band 2150–

2160 MHz are shared with nonbroadcastomnidirectional radio systems licensedunder other parts of the Commission’sRules, and frequencies in the band2160–2162 MHz are shared withdirectional radio systems authorized inother common carrier services.Frequencies in the 2596–2644 MHzband are shared with InstructionalTelevision Fixed Service stationslicensed under part 74 of theCommission’s Rules. Channels I5, I13,I6 and I14, listed in § 74.939(j) of thischapter, are assigned to fixed stations inthe 2596–2620 band, and are sharedwith Instructional Television FixedService Stations licensed under part 74of the Commission’s Rules to operate inthis band; grandfathered channels I21,I29, I22 and I30, listed in § 74.939(j) ofthis chapter, are licensed under part 21or part 74 of the Commission’s Rules, asapplicable.

(b) Applicants may be assigned achannel(s) according to one of thefollowing frequency plans:

(1) At 2150–2156 MHz (designated asChannel 1), or

(2) At 2156–2162 MHz (designated asChannel 2), or

(3) At 2156–2160 MHz (designated asChannel 2A), or

(4) At 2596–2602 MHz, 2608–2614MHz, 2620–2626 MHz, and 2632–2638MHz (designated as Channels E1, E2, E3and E4, respectively, with the fourchannels to be designated the E-groupchannels), and Channels I5 and I13listed in § 74.939(j) of this chapter,1 or

(5) At 2602–2608 MHz, 2614–2620MHz, 2626–2632 MHz and 2638–2644MHz (designated as Channels F1, F2, F3and F4, respectively, with the fourchannels to be designated the F-groupchannels), and Channels I6 and I14,listed in § 74.939(j) of this chapter,1 or

(6) At 2650–2656 MHz, 2662–2668MHz and 2674–2680 MHz (designatedas Channels H1, H2 and H3,respectively, with the three channels tobe designated the H-group channels).1

* * * * *(d) An MDS licensee or conditional

licensee may apply to exchange evenlyone or more of its assigned channelswith another MDS licensee orconditional licensee in the same system,or with an ITFS licensee or conditionallicensee in the same system where oneor both parties utilizes digitaltransmissions or leases capacity to anoperator which utilizes digitaltransmissions. The licensees orconditional licensees seeking toexchange channels shall file in tandemwith the Commission separate pro formaassignment of license applications, eachattaching an exhibit which clearly

specifies that the application is filedpursuant to a channel exchangeagreement. The exchanged channel(s)shall be regulated according to therequirements applicable to the assignee.* * * * *

(g) Frequencies in the bands 2150–2162 MHz, 2596–2644 MHz, 2650–2656MHz, 2662–2668 MHz and 2674–2680MHz are available for point-to-multipoint use and/or forcommunications between MDS responsestations and response station hubs whenauthorized in accordance with theprovisions of § 21.909, provided thatsuch frequencies may be employed forMDS response stations only whentransmitting using digital modulation.llllllll

1 No 125 kHz channels are provided forChannels E3, E4, F3, F4, H1, H2 and H3,except for those grandfathered for ChannelsE3, E4, F3 and F4. The 125 kHz channelsassociated with Channels E3, E4, F3, F4, H1,H2 and H3 are allocated to the PrivateOperational Fixed Point-to-Point MicrowaveService, pursuant to § 101.147(g) of thischapter.

16. In § 21.902, the section heading,paragraphs (b)(3), (b)(4) (b)(5)(i), (f)(1)and (f)(2) are revised, and newparagraphs (b)(7) and (l) are added, toread as follows:

§ 21.902 Interference.* * * * *

(b) * * *(3) Engineer the system to provide at

least 45 dB of cochannel interferenceprotection within the 56.33 km (35 mile)protected service area of any authorizedor previously-proposed ITFS orincumbent MDS station, and at eachpreviously-registered ITFS receive site(both stations utilizing 6 MHzbandwidths).

(4) Engineer the station to provide atleast 0 dB of adjacent channelinterference protection within the 56.33km (35 mile) protected service area ofany authorized or previously-proposedITFS or incumbent MDS station, and ateach previously-registered ITFS receivesite (both stations utilizing 6 MHzbandwidths).

(5) (i) Engineer the station to limit thecalculated free space power flux densityto ¥73 dBW/m 2 (or the appropriatevalue for bandwidth other than 6 MHz)at the boundary of a 56.33 km (35 mile)protected service area, where there is anunobstructed signal path from thetransmitting antenna to the boundary; oralternatively, obtain the written consentof the entity authorized for the adjoiningarea to exceed the ¥73 dBW/m 2

limiting signal strength at the commonboundary.* * * * *


(7) Notwithstanding the above, main,booster and response stations shall usethe following formulas, as applicable,for determining compliance with: (1)Radiated field contour limits wherebandwidths other than 6 MHz areemployed at stations utilizing digitalmodulation with uniform powerspectral density; and (2) Cochannel andadjacent channel D/U ratios where thebandwidths in use at the interfering andprotected stations are unequal and bothstations are utilizing digital modulationwith uniform power spectral density orone station is utilizing such modulationand the other station is utilizing either6 MHz NTSC analog modulation or 125kHz analog modulation (I channelsonly).

(i) Contour limit: ¥73 dBW + 10 log(X/6), where X is the bandwidth in MHzof the digital channel.

(ii) Cochannel D/U: 45 dB + 10 log(X1/X2), where X1 is the bandwidth inMHz of the protected channel and X2 isthe bandwidth in MHz of the interferingchannel.

(iii) Adjacent channel D/U: 0 dB + 10log (X1/X2), where X1 is the bandwidthin MHz of the protected channel and X2is the bandwidth in MHz of theinterfering channel.* * * * *

(f) * * *(1) Cochannel interference is defined

as the ratio of the desired signal to theundesired signal present in the desiredchannel, at the output of a referencereceiving antenna oriented to receivethe maximum desired signal. Harmfulinterference will be considered presentwhen a free space calculation for anunobstructed signal path determinesthat this ratio is less than 45 dB (bothstations utilizing 6 MHz bandwidths).

(2) Adjacent channel interference isdefined as the ratio of the desired signalto undesired signal present in anadjacent channel, at the output of areference receiving antenna oriented toreceive the maximum desired signallevel.

(i) Harmful interference will beconsidered present when a free spacecalculation for an unobstructed signalpath determines that this ratio is lessthan 0 dB (both stations utilizing 6 MHzbandwidths).

(ii) In the alternative, harmfulinterference will be considered presentfor an ITFS station constructed beforeMay 26, 1983, when a free spacecalculation determines that this ratio isless than 10 dB (both stations utilizing6 MHz bandwidths), unless:

(A) The individual receive site underconsideration has been subsequentlyupgraded with up-to-date reception

equipment, in which case the ratio shallbe less than 0 dB. Absent informationpresented to the contrary, however, theCommission will assume that receptionequipment installation occurredsimultaneously with original stationequipment; or

(B) The license for an MDS station isconditioned on the proffer to theaffected ITFS station licensee ofequipment capable of providing a ratioof 0 dB or more at no expense to theITFS station licensee, and alsoconditioned, if necessary, on the profferof installation of such equipment; andthere has been no showing by theaffected ITFS station licenseedemonstrating good cause and that theproposed equipment will not provide aratio of 0 dB or more, or that installationof such equipment, at no expense to theITFS station licensee, is not possible orhas not been proffered.* * * * *

(l) Specific rules relating to responsestation hubs, booster stations, and 125kHz channels are set forth in §§ 21.909,21.913, 21.940, 74.939 of this chapter,74.940 of this chapter and 74.985 of thischapter. To the extent those specificrules are inconsistent with any rules setforth above, those specific rules shallcontrol.

17. In § 21.903, paragraphs (a) and(b)(1) are revised, and new paragraph (d)is added, to read as follows:

§ 21.903 Purpose and permissible service.(a) Multipoint Distribution Service

channels are available for transmissionsfrom MDS stations and associated MDSsignal booster stations to receivelocations, and from MDS responsestations to response station hubs. Whenservice is provided on a common carrierbasis, subscriber supplied information istransmitted to points designated by thesubscriber. When service is provided ona non-common carrier basis,transmissions may include informationoriginated by persons other than thelicensee, licensee-manipulatedinformation supplied by other persons,or information originated by thelicensee. Point-to-point radio returnlinks from a subscriber’s location to aMDS operator’s facilities may also beauthorized in the 18,580 through 18,820MHz and 18,920 through 19,160 MHzbands. Rules governing such operationare contained in subpart I of part 101 ofthis chapter, the Point-to-PointMicrowave Radio Service.

(b) * * *(1) Unless service is rendered on a

non-common carrier basis, the commoncarrier controls the operation of allreceiving facilities (e.g., including anyequipment necessary to convert the

signal to a standard television channel,but excluding the television receiver);and* * * * *

(d) An MDS licensee also may applyfor authorization by the Commission toalternate, without further authorizationrequired, between rendering service ona common carrier and non-commoncarrier basis, provided that the licenseenotify the Commission of any servicestatus changes at least 30 days inadvance of such changes.


§ 21.904 Transmitter power.

(a) The maximum EIRP of an MDSmain or booster station shall not exceed33 dBW (or, when digital modulationwith uniform power spectral densityand subchannels or superchannels, or125 kHz channels, are used, theappropriately adjusted value basedupon the ratio of 6 MHz to thesubchannel or superchannel, or 125kHz, bandwidth), except as provided inparagraph (b) of this section.

(b) If a main or booster stationsectorizes or otherwise uses one or moretransmitting antennas with a non-omnidirectional horizontal planeradiation pattern, the maximum EIRPover a 6 MHz channel in dBW in a givendirection shall be determined by thefollowing formula:EIRP = 33 dBW + 10 log (360/

beamwidth) [where 10 log (360/beamwidth) ≤ 6 dB]. Beamwidth isthe total horizontal planebeamwidth of the individualtransmitting antenna for the stationor any sector measured at the half-power points. The first term of theequation above, 33 dBW, must beadjusted appropriately based uponthe ratio of 6 MHz to thesubchannel or superchannel, or 125kHz, bandwidth.

(c) An increase in station transmitterpower, above currently authorized orpreviously-proposed values, to themaximum values provided inparagraphs (a) and (b) of this section,may be authorized, if the requestedpower increase would not causeharmful interference to any authorizedor previously-proposed, cochannel oradjacent channel station entitled tointerference protection under theCommission’s rules, or if an applicantdemonstrates that:

(1) A station that must be protectedfrom interference could eliminate thatinterference by increasing its power;and

(2) The interfered-with station mayincrease its own power consistent with


the rules and without causinginterference to any MDS booster stationor response station hub which operatesas part of the same coordinated systemas the interfered-with station; and

(3) The applicant requestingauthorization of a power increase agreesto pay all expenses associated with theincrease in power by the interfered-withstation.

19. In § 21.905, paragraph (b) isrevised, and new paragraph (d) isadded, to read as follows:

§ 21.905 Emissions and bandwidth.* * * * *

(b) Quadrature amplitude modulation,digital vestigial sideband modulation,quadrature phase shift key modulationand code division multiple accessemissions may be employed, subject tocompliance with the policies set forth inthe Declaratory Ruling and Order, 11FCC Rcd 18839 (1996). Different typesof emissions may be authorized if theapplicant describes fully the modulationand bandwidth desired anddemonstrates that operation of thestation will not cause impermissibleinterference. The licensee maysubchannelize its authorizedbandwidth, provided that digitalmodulation is employed and theaggregate power does not exceed theauthorized power for the channel, andmay utilize all or a portion of itsauthorized bandwidth for MDS responsestations authorized pursuant to § 21.909.The licensee may also, jointly withaffected adjacent channel licensees,transmit utilizing bandwidth in excessof its authorized frequencies, providedthat digital modulation is employed, allpower spectral density requirements setforth in this part are met and the out-of-band emissions restrictions set forthin § 21.908 are met at and beyond theedges of the channels employed. Thewider channels thus created may beredivided to create narrower channels.* * * * *

(d) Notwithstanding the above, anydigital emission which meets theuniform power spectral densityrequirements of the Declaratory Rulingand Order may be used in the followingcircumstances:

(1) At any MDS main or boosterstation transmitter which is locatedmore than 160.94 km (100 miles) fromthe nearest boundary of all cochanneland adjacent channel ITFS and MDSprotected service areas, including BasicTrading Areas and Partitioned ServiceAreas; and

(2) At all MDS response stationtransmitters within a response servicearea if all points along the responseservice area boundary line are more

than 160.94 km (100 miles) from thenearest boundary of all cochannel andadjacent channel ITFS and MDSprotected service areas, including BasicTrading Areas and Partitioned ServiceAreas; and

(3) At any MDS transmitter where allparties entitled by this part tointerference protection from thattransmitter have mutually consented tothe use at that transmitter of suchemissions.

20. In § 21.906, paragraphs (a) and (d)are revised to read as follows:

§ 21.906 Antennas.

(a) Transmitting antennas shall beomnidirectional, except that adirectional antenna with a main beamsufficiently broad to provide adequateservice may be used either to avoidpossible interference with other users inthe frequency band, or to providecoverage more consistent withdistribution of potential receivingpoints. In lieu of an omnidirectionalantenna, a station may employ an arrayof directional antennas in order to reusespectrum efficiently. When an applicantproposes to employ a directionalantenna, or a licensee notifies theCommission pursuant to § 21.42 of theinstallation of a sectorized antennasystem, the applicant shall provide theCommission with information regardingthe orientation of the directionalantenna(s), expressed in degree ofazimuth, with respect to true north, andthe make and model of such antenna(s).* * * * *

(d) Directive receiving antennas shallbe used at all points other than responsestation hubs and shall be elevated nohigher than necessary to assureadequate service. Receiving antennaheight shall not exceed the heightcriteria of part 17 of this chapter, unlessauthorization for use of a specificmaximum antenna height (above groundand above mean sea level) for eachlocation has been obtained from theCommission prior to the erection of theantenna. Requests for suchauthorization shall show the inclusivedates of the proposed operation. (Seepart 17 of this chapter concerning theconstruction, marking and lighting ofantenna structures.)

§ 21.907 [Removed]

21. Section 21.907 is removed.22. In § 21.908, paragraph (b) is

redesignated as paragraph (a), thesection heading and newly redesignatedparagraph (a) are revised, paragraphs (c)through (e) are removed, and newparagraphs (b) through (e) are added, toread as follows:

§ 21.908 Transmitting equipment.

(a) The maximum out-of-band powerof an MDS station transmitter or boostertransmitting on a single 6 MHz channelwith an EIRP in excess of ¥9 dBWemploying analog modulation shall beattenuated at the channel edges by atleast 38 dB relative to the peak visualcarrier, then linearly sloping from thatlevel to at least 60 dB of attenuation at1 MHz below the lower band edge and0.5 MHz above the upper band edge,and attenuated at least 60 dB at all otherfrequencies. The maximum out-of-bandpower of an MDS station transmitter orbooster transmitting on a single 6 MHzchannel or a portion thereof with anEIRP in excess of ¥9 dBW (or, whensubchannels are used, the appropriatelyadjusted value based upon the ratio ofthe channel-to-subchannel bandwidths)employing digital modulation shall beattenuated at the 6 MHz channel edgesat least 25 dB relative to the licensedaverage 6 MHz channel power level,then attenuated along a linear slope toat least 40 dB at 250 kHz beyond thenearest channel edge, then attenuatedalong a linear slope from that level to atleast 60 dB at 3 MHz above the upperand below the lower licensed channeledges, and attenuated at least 60 dB atall other frequencies. Notwithstandingthe foregoing, in situations where anMDS station or booster stationtransmits, or where adjacent channellicensees jointly transmit, a single signalover more than one contiguous 6 MHzchannel utilizing digital modulationwith an EIRP in excess of ¥9 dBW (or,when subchannels or superchannels areused, the appropriately adjusted valuebased upon the ratio of 6 MHz to thesubchannel or superchannelbandwidth), the maximum out-of-bandpower shall be attenuated at the channeledges of those combined channels atleast 25 dB relative to the power levelof each channel, then attenuated alonga linear slope from that level to at least40 dB at 250 kHz above or below thechannel edges of those combinedchannels, then attenuated along a linearslope from that level to at least 60 dBat 3 MHz above the upper and below thelower edges of those combinedchannels, and attenuated at least 60 dBat all other frequencies. However,should harmful interference occur as aresult of emissions outside the assignedchannel, additional attenuation may berequired. A transmitter licensed prior toNovember 1, 1991, that remains at thestation site initially licensed, and doesnot comply with this paragraph, maycontinue to be used for its life if it doesnot cause harmful interference to theoperation of any other licensee. Any


non-conforming transmitter replacedafter November 1, 1991, must bereplaced by a transmitter meeting therequirements of this paragraph.

(b) A booster transmitting on multiplecontiguous or non-contiguous channelscarrying separate signals (a ‘‘broadband’’booster) with an EIRP in excess of ¥9dBW per 6 MHz channel and employinganalog, digital or a combination of thesemodulations shall have the followingcharacteristics:

(1) For broadband boosters operatingin the frequency range of 2.150–2.160/2 GHz, the maximum out-of-band powershall be attenuated at the upper andlower channel edges forming the bandedges by at least 25 dB relative to thelicensed analog peak visual carrier ordigital average power level (or, whensubchannels are used, the appropriatelyadjusted value based on upon the ratioof the channel-to-subchannelbandwidths), then linearly sloping fromthat level to at least 40 dB of attenuationat 0.25 MHz above and below the bandedges, then linearly sloping from thatlevel to at least 60 dB of attenuation at3.0 MHz above and below the bandedges, and attenuated at least 60 dB atall other frequencies.

(2) For broadband boosters operatingin the frequency range of 2.500–2.690GHz, the maximum out-of-band powershall be attenuated at the upper andlower channel edges forming the bandedges by at least 25 dB relative to thelicensed analog peak visual carrier ordigital average power level (or, whensubchannels are used, the appropriatelyadjusted value based on upon the ratioof the channel-to-subchannelbandwidths), then linearly sloping fromthat level to at least 40 dB of attenuationat 0.25 MHz above and below the bandedges, then linearly sloping from thatlevel to at least 50 dB of attenuation at3.0 MHz above and below the bandedges, then linearly sloping from thatlevel to at least 60 dB of attenuation at20 MHz above and below the bandedges, and attenuated at least 60 dB atall other frequencies.

(3) Within unoccupied channels inthe frequency range of 2.500–2.690 GHz,the maximum out-of-band power shallbe attenuated at the upper and lowerchannel edges of an unoccupiedchannel by at least 25 dB relative to thelicensed analog peak visual carrierpower level or digital average powerlevel of the occupied channels (or, whensubchannels or 125 kHz channels areused, the appropriately adjusted valuebased upon the ratio of the channel-to-subchannel bandwidths), then linearlysloping from that level to at least 40 dBof attenuation at 0.25 MHz above andbelow the occupied channel edges, then

linearly sloping from that level to atleast 50 dB of attenuation at 3.0 MHzabove and below the occupied channeledges, and attenuated at least 50 dB atall other unoccupied frequencies.

(c) Boosters operating with an EIRPless than -9 dBW per 6 MHz channelshall have no particular out-of-bandpower attenuation requirement, exceptthat if they cause harmful interference,their operation shall be terminatedwithin 2 hours of notification by theCommission until the interference canbe cured.

(d) The maximum out-of-band powerof an MDS response station using all orpart of a 6 MHz channel and employingdigital modulation shall be attenuated atthe 6 MHz channel edges at least 25 dBrelative to the licensed average 6 MHzchannel power level, then attenuatedalong a linear slope to at least 40 dB at250 kHz beyond the nearest channeledge, then attenuated along a linearslope from that level to at least 60 dBat 3 MHz above the upper and below thelower licensed channel edges, andattenuated at least 60 dB at all otherfrequencies. Where MDS responsestations with digital modulation utilizeall or part of more than one contiguous6 MHz channel to form a larger channel(e.g., a channel of width 12 MHz), theabove-specified attenuations shall beapplied only at the upper and loweredges of the overall combined channel.Notwithstanding these provisions,should harmful interference occur as aresult of emissions outside the assignedchannel(s), additional attenuation maybe required by the Commission.

(e) In measuring compliance with theout-of-band emissions limitations, thelicensee shall employ one of twomethods in each instance: (1) absolutepower measurement of the averagesignal power with one instrument, withmeasurement of the spectral attenuationon a separate instrument; or (2) relativemeasurement of both the average powerand the spectral attenuation on a singleinstrument. The formula for absolutepower measurements is to be used whenthe average signal power is found usinga separate instrument, such as a powermeter; the formula gives the amount bywhich the measured power value is tobe attenuated to find the absolute powervalue to be used on the spectrumanalyzer or equivalent instrument at thespectral point of concern. The formulafor relative power measurements is to beused when the average signal power isfound using the same instrument asused to measure the attenuation at thespecified spectral points, and allowsdifferent resolution bandwidths to beapplied to the two parts of themeasurement; the formula gives the

required amplitude separation (in dB)between the flat top of the (digital)signal and the point of concern.

For absolute power measurements:Attenuation in dB (below channel

power) = A + 10log (CBW / RBw)For relative power measurements:

Attenuation in dB (below flat top) = A+ 10log (RBW1 / RBW2)

Where:A= Attenuation specified for spectral

point (e.g., 25, 35, 40, 60 dB)CBW = Channel bandwidth (for absolute

power measurements)RBW = Resolution bandwidth (for

absolute power measurements)RBW1 = Resolution bandwidth for flat

top measurement (relative)RBW2 = Resolution bandwidth for

spectral point measurement(relative)


§ 21.909 MDS response stations.(a) An MDS response station is

authorized to provide communicationby voice, video and/or data signals withits associated MDS response station hubor MDS station. An MDS responsestation may be operated only by thelicensee of an MDS station, by anylessee of the MDS station or responsestation hub, or by a subscriber of either.The authorized channel may be dividedto provide distinct subchannels for eachof more than one response station,provided that digital modulation isemployed and the aggregate power doesnot exceed the authorized power for thechannel. An MDS response station mayalso, jointly with other licensees,transmit utilizing bandwidth in excessof that authorized to the station,provided that digital modulation isemployed, all power spectral densityrequirements set forth in this part aremet, and the out-of-band emissionsrestrictions set forth in § 21.908(b) orparagraph (j) of this section arecomplied with. When a 125 kHzchannel is employed for responsecommunications, the specific channelwhich may be used by the responsestation is determined in accordancewith §§ 21.901 and 74.939(j) of thischapter.

(b) MDS response stations that utilizethe 2150–2162 MHz band, the 2500–2686 MHz band, and/or the 125 kHzchannels may be installed and operatedwithout an individual license, tocommunicate with a response stationhub authorized under a response stationhub license, provided that theconditions set forth in paragraph (g) ofthis section are complied with and thatMDS response stations operating in the


2150–2162 MHz and/or 2500–2686 MHzband(s) employ only digital modulationwith uniform power spectral density inaccordance with the Commission’sDeclaratory Ruling and Order, 11 FCCRcd 18839 (1996).

(c) An applicant for a response stationhub license shall:

(1) File FCC Form 331 with MellonBank, and certify on that form that it hascomplied with the requirements ofparagraphs (c)(2) and (d) of this section.Failure to certify compliance and tocomply completely with therequirements of paragraphs (c)(2) and(d) of this section shall result indismissal of the application orrevocation of the response station hublicense, and may result in imposition ofa monetary forfeiture; and

(2) Submit to InternationalTranscription Services, Inc. (‘‘ITS’’),1231 20th Street, N.W., Washington, DC20036, both in hard copy, and on a 3.5′′computer diskette in ASCII, thefollowing:

(i) Duplicates of the Form 331 filedwith Mellon Bank; and

(ii) The data required by Appendix Dto the Report and Order in MM DocketNo. 97–217, FCC 98–231, ‘‘Methods forPredicting Interference from ResponseStation Transmitters and to ResponseStation Hubs and for Supplying Data onResponse Station Systems’’; and

(iii) The information, showings andcertifications required by paragraph (d)of this section; and

(3) Submit to the Commission, onlyupon Commission staff request,duplicates of the submissions requiredby paragraph (c)(2) of this section.

(d) An applicant for a response stationhub license shall, pursuant to paragraph(c)(2)(iii) of this section, submit to ITSthe following:

(1) The geographic coordinates, streetaddress, and the height of the centerline of the reception antenna(s) abovemean sea level for the proposedresponse station hub; and

(2) A specification of:(i) the response service area in which

the applicant or its lessee proposes toinstall MDS response stations tocommunicate with the response stationhub, any regions into which theresponse service area will be subdividedfor purposes of interference analysis,and any regional classes of responsestation characteristics which will beused to define the operating parametersof groups of response stations withineach region for purposes of interferenceanalysis, including:

(A) the maximum height aboveground level of the transmissionantenna that will be employed by anyresponse station in the regional class

and that will be used in interferenceanalyses; and

(B) the maximum equivalent isotropicradiated power (EIRP) that will beemployed by any response station in theregional class and that will be used ininterference analyses; and

(C) any sectorization that will beemployed, including the polarization tobe employed by response stations ineach sector and the geographicorientation of the sector boundaries, andthat will be used in interferenceanalyses; and

(D) the combined worst-case outerenvelope plot of the patterns of allmodels of response station transmissionantennas that will be employed by anyresponse station in the regional class tobe used in interference analyses; and

(E) the maximum number of responsestations that will be operatedsimultaneously in each region using thecharacteristics of each regional classapplicable to each region.

(ii) the channel plan (including anyguardbands at the edges of the channel)to be used by MDS response stations incommunicating with each responsestation hub, including a statement as towhether the applicant will employ thesame frequencies on which responsestations will transmit to also transmit ona point-to-multipoint basis from an MDSstation or MDS booster station; and

(3) A demonstration that:(i) The proposed response station hub

is within a protected service area, asdefined in § 21.902(d) or § 21.933, towhich the applicant is entitled either

(A) by virtue of its being the licenseeof an incumbent MDS station whosechannels are being converted for MDSresponse station use; or

(B) by virtue of its holding a BasicTrading Area or Partitioned ServiceArea authorization. In the case of anapplication for response stations toutilize one or more of the 125 kHzresponse channels, such demonstrationshall establish that the response stationhub is within the protected service areaof the station authorized to utilize theassociated E-Group or F-Groupchannel(s); and

(ii) The entire proposed responseservice area is within a protected servicearea to which the applicant is entitledeither (A) by virtue of its being thelicensee of an incumbent MDS stationwhose channels are being converted forMDS response station use; or (B) byvirtue of its holding a Basic TradingArea or Partitioned Service Areaauthorization. In the alternative, theapplicant may demonstrate that thelicensee entitled to any cochannelprotected service area which isoverlapped by the proposed response

service area has consented to suchoverlap. In the case of an application forresponse stations to utilize one or moreof the 125 kHz response channels, suchdemonstration shall establish that theresponse service area is entirely withinthe protected service area of the stationauthorized to utilize the associated E-Group or F-Group channel(s), or, in thealternative, that the licensee entitled toany cochannel protected service areawhich is overlapped by the proposedresponse service area has consented tosuch overlap; and

(iii) The combined signals of allsimultaneously operating MDS responsestations within all response serviceareas and oriented to transmit towardstheir respective response station hubs,and all cochannel MDS stations andbooster stations licensed to or appliedfor by the applicant will not generate apower flux density in excess of –73dBW/m2 (or the pro rata power spectraldensity equivalent based on thebandwidth actually employed in thosecases where less than a 6 MHz channelis to be employed) outside theboundaries of the applicant’s protectedservice area, as measured at locationsfor which there is an unobstructedsignal path, except to the extent thatconsent of affected licensees has beenobtained or consents have been grantedpursuant to paragraph (d)(3)(ii) of thissection to an extension of the responseservice area beyond the boundaries ofthe protected service area; and

(iv) The combined signals of allsimultaneously operating MDS responsestations within all response serviceareas and oriented to transmit towardstheir respective response station hubs,and all cochannel MDS stations andbooster stations licensed to or appliedfor by the applicant, will result in adesired to undesired signal ratio of atleast 45 dB (or the appropriatelyadjusted value based upon the ratio ofthe channel-to-subchannel bandwidths):

(A) within the protected service areaof any authorized or previously-proposed cochannel incumbent MDS orITFS station with a 56.33 km (35 miles)protected service area with centercoordinates located within 160.94 km(100 miles) of the proposed responsestation hub; and

(B) within the booster service area ofany cochannel booster station entitled tosuch protection pursuant to §§ 21.913(f)or 74.985(f) of this chapter and locatedwithin 160.94 km (100 miles) of theproposed response station hub; and

(C) at any registered receive site ofany authorized or previously-proposedcochannel ITFS station or boosterstation located within 160.94 km (100miles) of the proposed response station


hub, or, in the alternative, that thelicensee of or applicant for suchcochannel station or hub consents to theapplication; and

(v) The combined signals of allsimultaneously operating MDS responsestations within all response serviceareas and oriented to transmit towardstheir respective response station hubs,and all cochannel MDS stations andbooster stations licensed to or appliedfor by the applicant, will result in adesired to undesired signal ratio of atleast 0 dB (or the appropriately adjustedvalue based upon the ratio of thechannel to subchannel bandwidths):

(A) within the protected service areaof any authorized or previously-proposed adjacent channel incumbentMDS or ITFS station with a 56.33 km(35 miles) protected service area withcenter coordinates located within160.94 km (100 miles) of the proposedresponse station hub; and

(B) within the booster service area ofany adjacent channel booster stationentitled to such protection pursuant to§§ 21.913(f) or 74.985(f) of this chapterand located within 160.94 km (100miles) of the proposed response stationhub; and

(C) at any registered receive site ofany authorized or previously-proposedadjacent channel ITFS station or boosterstation located within 160.94 km (100miles) of the proposed response stationhub, or, in the alternative, that thelicensee of or applicant for suchadjacent channel station or hubconsents to the application; and

(vi) The combined signals of allsimultaneously operating MDS responsestations within all response serviceareas and oriented to transmit towardstheir respective response station hubsand all cochannel MDS stations andbooster stations licensed to or appliedfor by the applicant will comply withthe requirements of paragraph (i) of thissection and § 74.939(i) of this chapter.

(4) A certification that the applicationhas been served upon.

(i) The holder of any cochannel oradjacent channel authorization with aprotected service area which isoverlapped by the proposed responseservice area;

(ii) The holder of any cochannel oradjacent channel authorization with aprotected service area that adjoins theapplicant’s protected service area;

(iii) The holder of a cochannel oradjacent channel authorization for anyBTA or PSA inside whose boundariesare locations for which there is anunobstructed signal path for combinedsignals from within the response stationhub applicant’s protected service area;and

(iv) Every licensee of, or applicant for,any cochannel or adjacent channel,authorized or previously-proposed,incumbent MDS station with a 56.33 km(35 mile) protected service area withcenter coordinates located within160.94 km (100 miles) of the proposedresponse station hub; and

(v) Every licensee of, or applicant for,any cochannel or adjacent channel,authorized or previously-proposed ITFSstation (including any booster station orresponse station hub) located within160.94 km (100 miles) of the proposedresponse station hub.

(e) Except as set forth in § 21.27(d),applications for response station hublicenses may be filed at any time.Notwithstanding any other provision ofpart 21 (including § 21.31), applicationsfor response station hub licensesmeeting the requirements of paragraph(c) of this section shall cut-offapplications that are filed on asubsequent day for facilities that wouldcause harmful electromagneticinterference to the proposed responsestation hubs. A response station hubshall not be entitled to protection frominterference caused by facilitiesproposed on or prior to the day theapplication for the response station hublicense is filed. Response stations shallnot be required to protect frominterference facilities proposed on orafter the day the application for theresponse station hub license is filed.

(f) Notwithstanding the provisions of§ 21.30(b)(4) and except as set forth in§ 21.27(d), any petition to deny anapplication for a response station hublicense shall be filed no later than thesixtieth (60th) day after the date ofpublic notice announcing the filing ofsuch application or major amendmentthereto. Notwithstanding § 21.31 andexcept as provided in § 21.27(d), anapplication for a response station hublicense that meets the requirements ofthis section shall be granted on thesixty-first (61st) day after theCommission shall have given publicnotice of the acceptance for filing of it,or of a major amendment to it if suchmajor amendment has been filed, unlessprior to such date either a party ininterest timely files a formal petition todeny or for other relief pursuant to§ 21.30(a), or the Commission notifiesthe applicant that its application willnot be granted. Where an application isgranted pursuant to the provisions ofthis paragraph, the conditional licenseeor licensee shall maintain a copy of theapplication at the response station hubuntil such time as the Commissionissues a response station hub license.

(g) An MDS response station hublicense shall be conditioned uponcompliance with the following:

(1) No MDS response station shall belocated beyond the response servicearea of the response station hub withwhich it communicates; and

(2) No MDS response station shalloperate with a transmitter output powerin excess of 2 watts; and

(3) No MDS response station shalloperate with an EIRP in excess of thatspecified in the application for theresponse station hub pursuant toparagraph (d)(2)(i)(B) of this section forthe particular regional class ofcharacteristics with which the responsestation is associated, and such responsestation shall not operate at an excess of33 dBW EIRP (or, when subchannels orsuperchannels, or 125 kHz channels, areused, the appropriately adjusted valuebased upon the ratio of 6 MHz to thesubchannel or superchannel, or 125kHz, bandwidth); and

(4) Each MDS response station shallemploy a transmission antenna orientedtowards the response station hub withwhich the MDS response stationcommunicates, and such antenna shallbe no less directional than the worstcase outer envelope pattern specified inthe application for the response stationhub pursuant to paragraph (d)(2)(i)(D) ofthis section for the regional class ofcharacteristics with which the responsestation is associated; and

(5) The combined out-of-bandemissions of all response stations usingall or part of one or multiple contiguous6 MHz channels and employing digitalmodulation shall comply with§ 21.908(d). The combined out-of-bandemissions of all response stations usingall or part of one or multiple contiguous125 kHz channels shall comply withparagraph (j) of this section. However,should harmful interference occur as aresult of emissions outside the assignedchannel, additional attenuation may berequired; and

(6) The response stations transmittingsimultaneously at any time within anygiven region of the response service areautilized for purposes of analyzing thepotential for interference by responsestations shall conform to the numericallimits for each class of response stationproposed in the application for theresponse station hub license.Notwithstanding the foregoing, thelicensee of a response station hublicense may alter the number ofresponse stations of any class operatedsimultaneously in a given region,without prior Commissionauthorization, provided that thelicensee:


(i) First notifies the Commission ofthe altered number of response stationsof such class(es) to be operatedsimultaneously in such region, andcertifies in that notification that it hascomplied with the requirements ofparagraphs (g)(6)(ii) and (iii) of thissection; and

(ii) Provides ITS with a copy of suchnotification and with an analysisestablishing that such alteration will notresult in any increase in interference tothe protected service area or protectedreceive sites of any existing orpreviously-proposed, cochannel oradjacent channel MDS or ITFS station orbooster station, to the protected servicearea of any MDS Basic Trading Area orPartitioned Service Area licenseeentitled to protection pursuant toparagraph (d)(3) of this section, or toany existing or previously-proposed,cochannel or adjacent channel responsestation hub, or response station under§ 21.940 or § 74.940 of this chapter; orthat the applicant for or licensee of suchfacility has consented to suchinterference; and

(iii) Serves a copy of such notificationand analysis upon each party entitled tobe served pursuant to paragraph (d)(4)of this section; and

(iv) Submits to the Commission, onlyupon Commission staff request,duplicates of the submissions requiredby paragraph (g)(6)(ii) of this section;and

(7) Where an application is grantedunder this section, if a facility operatedpursuant to that grant causes harmful,unauthorized interference to anycochannel or adjacent channel facility,it must promptly remedy theinterference or immediately ceaseoperations of the interfering facility,regardless of whether any petitions todeny or for other relief were filedagainst the application during theapplication process. The burden ofproving that a facility operated underthis section is not causing harmful,unauthorized interference lies on thelicensee of the alleged interferingfacility, following the filing of adocumented complaint of interferenceby an affected party; and

(8) In the event any MDS or ITFSreceive site suffers interference due toblock downconverter overload, thelicensee of each response station hubwith a response service area within fivemiles of such receive site shallcooperate in good faith to expeditiouslyidentify the source of the interference.Each licensee of a response station hubwith an associated response stationcontributing to such interference shallbear the joint and several obligation topromptly remedy all interference

resulting from block downconverteroverload at any ITFS receive siteregistered prior to the submission of theapplication for the response station hublicense or at any receive site within anMDS or ITFS protected service areaapplied for prior to the submission ofthe application for the response stationhub license, regardless of whether thereceive site suffering the interferencewas constructed prior to or after theconstruction of the response station(s)causing the downconverter overload;provided, however, that the licensee ofthe registered ITFS receive site or theMDS or ITFS protected service areamust cooperate fully and in good faithwith efforts by the response station hublicensee to prevent interference beforeconstructing response stations and/or toremedy interference that may occur. Inthe event that more than one responsestation hub licensee contributes to blockdownconverter interference at a MDS orITFS receive site, the licensees of thecontributing response station hubs shallcooperate in good faith to remedypromptly the interference.

(h) Applicants must comply with part17 of this chapter concerningnotification to the Federal AviationAdministration of proposed antennaconstruction or alteration.

(i) Response station hubs shall beprotected from cochannel and adjacentchannel interference in accordance withthe following criteria:

(1) An applicant for any new ormodified MDS or ITFS station(including any high-power boosterstation or response station hub) shall berequired to demonstrate interferenceprotection to a response station hubwithin 160.94 km (100 miles) of theproposed facilities. In lieu of theinterference protection requirements setforth in §§ 21.902(b)(3) through (b)(5),21.938(b)(1) and (2) and (c), and 74.903of this chapter, such demonstrationshall establish that the proposed facilitywill not increase the effective powerflux density of the undesired signalsgenerated by the proposed facility andany associated main stations, boosterstations or response stations at theresponse station hub antenna for anysector. In lieu of the foregoing, anapplicant for a new MDS or ITFS mainstation license or for a new or modifiedresponse station hub or booster licensemay demonstrate that the facility willnot increase the noise floor at areception antenna of the responsestation hub by more than 1 dB forcochannel signals and 45 dB foradjacent channel signals, provided that:

(i) The entity submitting theapplication may only invoke this

alternative once per response stationhub reception sector; or

(ii) The licensee of the affectedresponse station hub may consent toreceive a certain amount of interferenceat its hub.

(2) Commencing upon the filing of anapplication for an MDS response stationhub license and until such time as theapplication is dismissed or denied or, ifthe application is granted, a certificationof completion of construction is filed,the MDS station whose channels arebeing utilized shall be entitled both tointerference protection pursuant to§§ 21.902(b)(3) through (b)(5),21.938(b)(1) and (2) and (c), and 74.903of this chapter, and to protection of theresponse station hub pursuant to thepreceding paragraph. Unless theapplication for the response station hublicense specifies that the samefrequencies also will be employed fordigital and/or analog point-to-multipoint transmissions by MDSstations and/or MDS booster stations,upon the filing of a certification ofcompletion of construction of an MDSresponse station hub where thechannels of an MDS station are beingutilized as response station transmitfrequencies, the MDS station whosechannels are being utilized for responsestation transmissions shall no longer beentitled to interference protectionpursuant to §§ 21.902(b)(3) through(b)(5), 21.938(b)(1) and (2) and (c), and74.903 of this chapter within theresponse service area with regard to anyportion of any 6 MHz channel employedsolely for response stationcommunications. Upon the certificationof completion of construction of anMDS response station hub where thechannels of an MDS station are beingutilized for response stationtransmissions and the application forthe response station hub licensespecifies that the same frequencies willbe employed for point-to-multipointtransmissions, the MDS station whosechannels are being utilized shall beentitled both to interference protectionpursuant to §§ 21.902(b)(3) through(b)(5), 21.938(b)(1) and (2) and (c), and74.903 of this chapter, and to protectionof the response station hub pursuant tothe preceding provisions of thisparagraph.

(j) 125 kHz wide response channelsshall be subject to the followingrequirements: The 125 kHz widechannel shall be centered at theassigned frequency. If amplitudemodulation is used, the carrier shall notbe modulated in excess of 100%. Iffrequency modulation is used, thedeviation shall not exceed ±25 kHz. Anyemissions outside the channel shall be


attenuated at the channel edges at least35 dB below peak output power whenanalog modulation is employed or 35 dBbelow licensed average output powerwhen digital modulation is employed(or, when subchannels are used, theappropriately adjusted value basedupon the ratio of the channel-to-subchannel bandwidths). Any emissionsmore than 125 kHz from either channeledge, including harmonics, shall beattenuated at least 60 dB below peakoutput power when analog modulationis employed, or at least 60 dB belowlicensed average output power whendigital modulation is employed (or,when subchannels are used, theappropriately adjusted value basedupon the ratio of the channel-to-subchannel bandwidths).Notwithstanding the foregoing, insituations where adjacent channellicensees jointly transmit over morethan one contiguous channel utilizingdigital modulation, the maximum out-of-band power shall be attenuated at theedges of those combined channels atleast 35 dB relative to the licensedaverage power level of each channel.Emissions more than 125 kHz fromeither edge of the combined channels,including harmonics, shall beattenuated at least 60 dB below peakanalog power or average digital power ofeach channel, as appropriate.

(k) A response station may beoperated unattended. The overallperformance of the response stationtransmitter shall be checked by the hublicensee as often as necessary to ensurethat it is functioning in accordance withthe requirements of the Commission’srules. The licensee of a response stationhub is responsible for the properoperation of all associated responsestations and must have reasonable andtimely access to all associated responsestation transmitters. Response stationsshall be installed and maintained by thelicensee of the associated hub station, orthe licensee’s employees or agents, andprotected in such manner as to preventtampering or operation by unauthorizedpersons. No response hub may lawfullycommunicate with any response stationwhich has not been installed by anauthorized person, and each responsestation hub licensee is responsible formaintaining, and making available tothe Commission upon request, a listcontaining the customer name and sitelocation (street address and latitude/longitude to the nearest second) of eachassociated response station, plus thetechnical parameters (e.g., EIRP,emission, bandwidth, and antennapattern, height, orientation and

polarization) pertinent to each specificresponse station.

(l) The transmitting apparatusemployed at MDS response stationsshall have received type certification.

(m) An MDS response station shall beoperated only when engaged incommunication with its associated MDSresponse station hub or MDS station, orfor necessary equipment or system testsand adjustments. Radiation of anunmodulated carrier and otherunnecessary transmissions areforbidden.

(n) At least 20 days prior to theactivation of a response stationtransmitter located within a radius of1960 feet of a registered or previously-applied-for ITFS receive site, theresponse station hub licensee mustnotify, by certified mail, the licensee ofthe ITFS site of the intention to activatethe response station. The notificationmust contain the street address andgeographic coordinates (to the nearestsecond) of the response station, aspecification of the station’s EIRP,antenna pattern/orientation/heightAMSL, channel(s) to be used, as well asthe name and telephone number of acontact person who will be responsiblefor coordinating the resolution of anyinterference problems.

(o) Interference calculations shall beperformed in accordance withAppendix D to the Report and Order inMM Docket No. 97–217, FCC 98–231,‘‘Methods for Predicting InterferenceFrom Response Station Transmittersand To Response Station Hubs and forSupplying Data on Response StationSystems.’’ Compliance with the out-of-band emissions limitations shall beestablished in accordance with§ 21.908(e).

24. In § 21.910, the section headingand introductory text, paragraph (a), andthe introductory text of paragraph (b)are revised, and new paragraph (d) isadded, to read as follows:

§ 21.910 Special procedures fordiscontinuance, reduction or impairment ofservice by common carrier licensees.

Any licensee who has electedcommon carrier status and who seeks todiscontinue service on a commoncarrier basis and instead provide serviceon a non-common carrier basis, or whootherwise intends to reduce or impairservice, shall be subject to the followingprocedures:

(a) The carrier shall notify all affectedcustomers of the planneddiscontinuance, reduction orimpairment. Notice shall be in writingto each affected customer unless theCommission authorizes in advance, forgood cause shown, another form of

notice. Notice shall include thefollowing:

(1) Name and address of carrier; and(2) Date of planned service

discontinuance, reduction orimpairment; and

(3) Points or geographic areas ofservice affected; and

(4) How many and which channelsare affected; and

(5) The following statement:The FCC normally will authorize this

proposed discontinuance of service (orreduction or impairment) unless it is shownthat end-users will be affected adverselythereby. Affected customers wishing to objectshould file objections within 45 days afterreceipt of this notification, and address themto the Video Services Division, FederalCommunications Commission, Washington,DC 20554, referencing the § 21.910Application of (carrier’s name). Commentsshould include specific information aboutthe impact of this proposed discontinuance(or reduction or impairment) upon end-users,including any inability by the customer toacquire reasonable substitute service fromanother provider. The affected customer muststate that it has provided a copy of theobjection to the carrier seekingdiscontinuance.

(b) The carrier shall file with thisCommission, on or after the date onwhich notice has been given to allaffected customers, an applicationwhich shall contain the following:* * * * *

(d) The provisions of this section shallnot apply to licensees authorized by theCommission to alternate, withoutfurther authorization required, betweenrendering service on a common carrierand non-common carrier basis.


§ 21.913 Signal booster stations.(a) An MDS booster station may reuse

channels to repeat the signals of MDSstations or to originate signals on MDSchannels. The aggregate power fluxdensity generated by an MDS stationand all associated signal booster stationsand all simultaneously operatingcochannel response stations may notexceed ¥73 dBW/m2 (or, whensubchannels or 125 kHz channels areused, the appropriately adjusted valuebased upon the ratio of the channel-to-subchannel or 125 kHz bandwidths) ator beyond the boundary of the protectedservice area, as defined in §§ 21.902(d)and 21.933, of the main MDS stationwhose channels are being reused, asmeasured at locations for which there isan unobstructed signal path, unless theconsent of the affected cochannellicensee is obtained.

(b) An MDS licensee or conditionallicensee who is a response station hub


licensee, conditional licensee orapplicant may secure a license for anMDS signal booster station that has amaximum power level in excess of ¥9dBW EIRP (or, when subchannels orsuperchannels, or 125 kHz channels, areused, the appropriately adjusted valuebased upon the ratio of 6 MHz to thesubchannel or superchannel, or 125kHz, bandwidth) and that employs onlydigital modulation with uniform powerspectral density in accordance with theCommission’s Declaratory Ruling andOrder, 11 FCC Rcd 18839 (1996) (a‘‘high-power MDS signal boosterstation’’). The applicant for a high-power MDS signal booster station shallfile FCC Form 331 with Mellon Bank,and certify on that form that theapplicant has complied with theadditional requirements of paragraph (b)of this section. Failure to certifycompliance and to comply completelywith the following requirements ofparagraph (b) of this section shall resultin dismissal of the application orrevocation of the high-power MDSsignal booster station license, and mayresult in imposition of a monetaryforfeiture. The applicant for a high-power MDS signal booster stationadditionally is required to submit toInternational Transcription Services,Inc., 1231 20th Street, N.W.,Washington, DC 20036, both in hardcopy, and on a 3.5′′ computer diskettein ASCII, and likewise to submit to theCommission, only upon Commissionstaff request, duplicates of the Form 331filed with Mellon Bank, and thefollowing information:

(1) A demonstration that the proposedsignal booster station site is within theprotected service area, as defined in§§ 21.902(d) and 21.933, of the MDSstation whose channels are to be reused;and

(2) A study which demonstrates thatthe aggregate power flux density of theMDS station and all associated boosterstations and simultaneously operatingcochannel response stations licensed toor applied for by the applicant,measured at or beyond the boundary ofthe protected service area of the MDSstation whose channels are to be reused,does not exceed ¥73 dBW/m2 (or, whensubchannels or 125 kHz channels areused, the appropriately adjusted valuebased upon the ratio of the channel-to-subchannel or 125 kHz bandwidths) atlocations for which there is anunobstructed signal path, unless theconsent of the affected licensees hasbeen obtained; and

(3) In lieu of the requirements of§ 21.902(c) and (i), a study whichdemonstrates that the proposed boosterstation will cause no harmful

interference (as defined in § 21.902(f)) tocochannel and adjacent channel,authorized or previously-proposed ITFSand MDS stations with protected servicearea center coordinates as specified in§ 21.902(d), to any authorized orpreviously-proposed response stationhubs, booster stations or I channelstations associated with such ITFS andMDS stations, or to any previously-registered ITFS receive sites, within160.94 kilometers (100 miles) of theproposed booster station’s transmittersite. Such study shall consider theundesired signal levels generated by theproposed signal booster station, themain station, all other licensed orpreviously-proposed associated boosterstations, and all simultaneouslyoperating cochannel response stationslicensed to or applied for by theapplicant. In the alternative, a statementfrom the affected MDS or ITFS licenseeor conditional licensee stating that itdoes not object to operation of the high-power MDS signal booster station maybe submitted; and

(4) A description of the boosterservice area; and

(5) A demonstration either(i) That the booster service area is

entirely within the protected servicearea to which the licensee of a stationwhose channels are being reused isentitled by virtue of its being thelicensee of an incumbent MDS station,or by virtue of its holding a BasicTrading Area or Partitioned ServiceArea authorization; or

(ii) That the licensee entitled to anycochannel protected service area whichis overlapped by the proposed boosterservice area has consented to suchoverlap; and

(6) A demonstration that the proposedbooster service area can be served by theproposed booster without interference;and

(7) A certification that copies of thematerials set forth in paragraph (b) ofthis section have been served upon thelicensee or conditional licensee of eachstation (including each response stationhub and booster station) required to bestudied pursuant to paragraph (b)(3) ofthis section, and upon any affectedholder of a Basic Trading Area orPartitioned Service Area authorizationpursuant to paragraph (b)(2) of thissection.

(c) Except as provided in § 21.27(d),applications for high-power MDS signalbooster station licenses may be filed atany time. Notwithstanding any otherprovision of part 21 (including § 21.31),applications for high-power MDS signalbooster station licenses meeting therequirements of paragraph (b) of thissection shall cut-off applications that

are filed on a subsequent day forfacilities that would cause harmfulelectromagnetic interference to theproposed booster stations.

(d) Notwithstanding the provisions of§ 21.30(a)(4) and except as provided in§ 21.27(d), any petition to deny anapplication for a high-power MDS signalbooster station license shall be filed nolater than the sixtieth (60th) day afterthe date of public notice announcing thefiling of such application or majoramendment thereto. Notwithstanding§ 21.31 and except as provided in§ 21.27(d), an application for a high-power MDS signal booster stationlicense that meets the requirements ofparagraph (b) of this section shall begranted on the sixty-first (61st) day afterthe Commission shall have given publicnotice of the acceptance for filing of it,or of a major amendment to it if suchmajor amendment has been filed, unlessprior to such date either a party ininterest timely files a formal petition todeny or for other relief pursuant to§ 21.30(a), or the Commission notifiesthe applicant that its application willnot be granted. Where an application isgranted pursuant to the provisions ofthis paragraph, the conditional licenseeor licensee shall maintain a copy of theapplication at the MDS booster stationuntil such time as the Commissionissues a high-power MDS signal boosterstation license.

(e) Eligibility for a license for an MDSsignal booster station that has amaximum power level of ¥9 dBW EIRP(or, when subchannels orsuperchannels, or 125 kHz channels, areused, the appropriately adjusted valuebased upon the ratio of 6 MHz to thesubchannel or superchannel, or 125kHz, bandwidth) (a ‘‘low-power MDSsignal booster station’’) shall berestricted to an MDS licensee orconditional licensee. A low-power MDSsignal booster station may operate onlyon one or more MDS channels that arelicensed to the licensee of the MDSbooster station, but may be operated bya third party with a fully-executed leaseor consent agreement with the MDSconditional licensee or licensee. AnMDS licensee or conditional licenseemay install and commence operation ofa low-power MDS signal booster stationfor the purpose of retransmitting thesignals of the MDS station or fororiginating signals. Such installationand operation shall be subject to thecondition that for sixty (60) days afterinstallation and commencement ofoperation, no objection or petition todeny is filed by an authorizedcochannel or adjacent channel ITFS orMDS station with a transmitter within8.0 kilometers (5 miles) of the


coordinates of the low-power MDSsignal booster station. An MDS licenseeor conditional licensee seeking to installa low-power MDS signal booster stationunder this rule must, within 48 hoursafter installation, submit FCC Form 331to the Commission in Washington, DC,and submit to InternationalTranscription Services, Inc., 1231 20thStreet, N.W., Washington, DC 20036,both in hard copy, and on a 3.5′′computer diskette in ASCII, duplicatesof the Form 331 filed with theCommission, and the following (whichalso shall be submitted to theCommission only upon Commissionstaff request at any time):

(1) A description of the signal boostertechnical specifications (including anantenna envelope plot or, if theenvelope plot is on file with theCommission, the make and model of theantenna, antenna gain and azimuth), thecoordinates of the booster, the height ofthe center of radiation above mean sealevel, the street address of the signalbooster and a description of the boosterservice area; and

(2) A demonstration either(i) That the booster service area is

entirely within the protected servicearea to which each licensee of a stationwhose channels are being reused isentitled by virtue of its being thelicensee of an incumbent MDS station,or by virtue of its holding a BasicTrading Area or Partitioned ServiceArea authorization; or

(ii) That the licensee entitled to anycochannel protected service area whichis overlapped by the proposed boosterservice area has consented to suchoverlap; and


(4) A certification that no FederalAviation Administration determinationof No Hazard to Air Navigation isrequired under part 17 of this chapteror, if such determination is required,either:

(i) A statement of the FCC AntennaStructure Registration Number; or

(ii) If an FCC Antenna StructureRegistration Number has not beenassigned for the antenna structure, thefiler must indicate the date theapplication by the antenna structureowner to register the antenna structurewas filed with the FCC in accordancewith part 17 of this chapter; and

(5) A certification that:(i) The maximum power level of the

signal booster transmitter does notexceed ¥9 dBW EIRP (or, whensubchannels or superchannels, or 125kHz channels, are used, the

appropriately adjusted value basedupon the ratio of 6 MHz to thesubchannel or superchannel, or 125kHz, bandwidth); and

(ii) Where the booster is operating onchannel D4, E1, F1, E2, F2, E3, F3, E4,F4 and/or G1, no registered receiver ofan ITFS E or F channel station,constructed prior to May 26, 1983, islocated within a 1.61 km (1 mile) radiusof the coordinates of the booster, or inthe alternative, that a consent statementhas been obtained from the affectedITFS licensee; and

(iii) The applicant has complied with§ 1.1307 of this chapter; and

(iv) Each MDS and/or ITFS stationlicensee (including the licensees ofbooster stations and response stationhubs) with protected service areas and/or registered receivers within a 8 km (5mile) radius of the coordinates of thebooster has been given notice of itsinstallation; and

(v) The signal booster site is withinthe protected service area of the MDSstation whose channels are to be reused;and

(vi) The aggregate power flux densityof the MDS station and all associatedbooster stations and simultaneouslyoperating cochannel response stationslicensed to or applied for by theapplicant, measured at or beyond theboundary of the protected service areasof the MDS stations whose channels areto be reused, does not exceed ¥73dBW/m2 (or, when subchannels or 125kHz channels are used, theappropriately adjusted value basedupon the ratio of the channel-to-subchannel or 125 kHz bandwidths) atlocations for which there is anunobstructed signal path, unless theconsent of the affected licensees hasbeen obtained; and

(vii) The antenna structure willextend less than 6.10 meters (20 feet)above the ground or natural formationor less than 6.10 meters (20 feet) abovean existing manmade structure (otherthan an antenna structure); and

(viii) The MDS conditional licensee orlicensee understands and agrees that, inthe event harmful interference isclaimed by the filing of an objection orpetition to deny, the conditionallicensee or licensee must terminateoperation within two (2) hours ofnotification by the Commission, andmust not recommence operation untilreceipt of written authorization to do soby the Commission.

(f) Commencing upon the filing of anapplication for a high-power MDS signalbooster station license and until suchtime as the application is dismissed ordenied or, if the application is granted,a certification of completion of

construction is filed, an applicant forany new or modified MDS or ITFSstation (including a response stationhub, high-power booster station, or IChannels station) shall demonstratecompliance with the interferenceprotection requirements set forth in§§ 21.902 (b)(3) through (b)(5), 21.938(b) (1) and (2) and (c), or 74.903 of thischapter with respect to any previously-proposed or authorized booster servicearea both using the transmissionparameters of the high-power MDSsignal booster station (e.g., EIRP,polarization(s) and antenna height) andthe transmission parameters of the MDSstation whose channels are to be reusedby the high-power MDS signal boosterstation. Upon the filing of a certificationof completion of construction of anMDS booster station applied forpursuant to paragraph (b) of this section,or upon the submission of an MDSbooster station notification pursuant toparagraph (e) of this section, the MDSstation whose channels are being reusedby the MDS signal booster shall nolonger be entitled to interferenceprotection pursuant to §§ 21.902 (b)(3)through (b)(5), 21.938 (b) (1) and (2) and(c), and 74.903 of this chapter withinthe booster service area based on thetransmission parameters of the MDSstation whose channels are beingreused. A booster station shall not beentitled to protection from interferencecaused by facilities proposed on or priorto the day the application or notificationfor the booster station is filed. A boosterstation shall not be required to protectfrom interference facilities proposed onor after the day the application ornotification for the booster station isfiled.

(g) Where an application is grantedunder paragraph (d) of this section, if afacility operated pursuant to that grantcauses harmful, unauthorizedinterference to any cochannel oradjacent channel facility, it mustpromptly remedy the interference orimmediately cease operations of theinterfering facility, regardless ofwhether any petitions to deny or forother relief were filed against theapplication during the applicationprocess. The burden of proving that ahigh-power MDS signal booster stationis not causing harmful, unauthorizedinterference lies on the licensee of thealleged interfering facility, following thefiling of a documented complaint ofinterference by an affected party.

(h) In the event any MDS or ITFSreceive site suffers interference due toblock downconverter overload, thelicensee of each signal booster stationwithin five miles of such receive siteshall cooperate in good faith to


expeditiously identify the source of theinterference. Each licensee of a signalbooster station contributing to suchinterference shall bear the joint andseveral obligation to promptly remedyall interference resulting from blockdownconverter overload at any ITFSreceive site registered prior to thesubmission of the application ornotification for the signal booster stationor at any receive site within an MDS orITFS protected service area applied forprior to the submission of theapplication or notification for the signalbooster station, regardless of whetherthe receive site suffering theinterference was constructed prior to orafter the construction of the signalbooster station(s) causing thedownconverter overload; provided,however, that the licensee of theregistered ITFS receive site or the MDSor ITFS protected service area mustcooperate fully and in good faith withefforts by the signal booster stationlicensee to prevent interference beforeconstructing the signal booster stationand/or to remedy interference that mayoccur. In the event that more than onesignal booster station licenseecontributes to block downconverterinterference at a MDS or ITFS receivesite, the licensees of the contributingsignal booster stations shall cooperate ingood faith to remedy promptly theinterference.

26. In § 21.925, paragraph (b) isrevised to read as follows:

§ 21.925 Applications for BTAauthorizations and MDS station licenses.

* * * * *(b) Separate long-form applications

must be filed for each individual MDSstation license sought within theprotected service area of a BTA or PSA,including:

(1) An application for each E-channelgroup, F-channel group, and single H, 1,and 2A channel station license sought;

(2) An application for each site whereone or more MDS response station hublicense(s) is/are sought, provided thatthe technical parameters of each MDSresponse station hub are the same;

(3) An application for each site whereone or more MDS booster station(s) willoperate with an EIRP in excess of ¥9dBW (or, when subchannels orsuperchannels, or 125 kHz channels, areused, the appropriately adjusted valuebased upon the ratio of 6 MHz to thesubchannel or superchannel, or 125kHz, bandwidth);

(4) An application for authority tooperate at an MDS station in the areavacated by an MDS station incumbentthat has forfeited its station license; and

(5) An application for each ITFS-channel group station license sought inaccordance with §§ 74.990 and 74.991 ofthis chapter.* * * * *

27. In § 21.938, paragraph (b)introductory text, and paragraphs (c)(4),(e) and (f), are revised to read as follows:

§ 21.938 BTA and PSA technical andinterference provisions.

* * * * *(b) Unless the affected parties have

executed a written interferenceagreement in accordance with § 21.937,and subject to the provisions of§§ 21.909, 21.913, 21.940, 74.939 of thischapter, 74.940 of this chapter and74.985 of this chapter regarding theprotection of response station hubs,booster service areas and 125 kHzchannels from harmful electromagneticinterference, stations licensed to a BTAor PSA authorization holder must notcause harmful electromagneticinterference to the following:

* * *(c) * * *(4) An ITFS station authorized before

September 15, 1995 may be modified,provided the power flux density of thatstation does not exceed ¥73 dBW/m2

(or the appropriate value for bandwidthother than 6 MHz) at locations along the56.33 km (35 mile) circle centered onthe then-existing transmitting antennasite or service area of a collocatedincumbent MDS station, as applicable.* * * * *

(e) Unless specifically excepted, BTAor PSA authorization holders aregoverned by the interference protectionand other technical provisionsapplicable to MDS.

(f) The calculated free space powerflux density from an MDS station, otherthan an incumbent MDS station, maynot exceed ¥73 dBW/m2 (or theappropriate value for bandwidth otherthan 6 MHz) at locations on BTA or PSAboundaries for which there is anunobstructed signal path from thetransmitting antenna to the boundary,unless the applicant has obtained thewritten consent of the authorizationholder for the affected BTA or PSA.* * * * *

28. New § 21.940 is added, to read asfollows:

§ 21.940 Individually licensed 125 kHzchannel MDS response stations.

(a) The provisions of § 21.909(a), (e),(h), (j), (l) and (m), and § 74.939(j) of thischapter, also shall apply with respect toauthorization of a 125 kHz channel(s)MDS response station not under aresponse station hub license. Theapplicant shall comply with the

requirements of § 21.902, and § 21.938where appropriate, including theprovisions of §§ 21.909, 21.913, 74.939of this chapter and 74.985 of thischapter regarding the protection ofresponse station hubs and boosterservice areas from harmfulelectromagnetic interference, using theappropriately adjusted interferenceprotection values based upon the ratioof the bandwidths in use, where theauthorized or previously-proposedcochannel or adjacent channel station isoperated or to be operated in a systemwith one or more response stationhub(s).

(b) An application for a license tooperate a new or modified 125 kHzchannel(s) MDS response station notunder a response station hub licenseshall be filed with Mellon Bank on FCCForm 304. The applicant shall supplythe following information on that formfor each response station:

(1) The geographic coordinates andstreet address of the MDS responsestation transmitting antenna; and

(2) The manufacturer’s name, typenumber, operating frequency, andpower output of the proposed MDSresponse station transmitter; and

(3) The type of transmitting antenna,power gain, azimuthal orientation andpolarization of the major lobe ofradiation in degrees measured clockwisefrom True North; and

(4) A sketch giving pertinent details ofthe MDS response station transmittingantenna installation including groundelevation of the transmitter site abovemean sea level; overall height aboveground, including appurtenances, of anyground-mounted tower or mast onwhich the transmitting antenna will bemounted or, if the tower or mast is orwill be located on an existing buildingor other manmade structure, theseparate heights above ground of thebuilding and the tower or mastincluding appurtenances; the location ofthe tower or mast on the building; thelocation of the transmitting antenna onthe tower or mast; and the overall heightof the transmitting antenna aboveground.

(c) Each MDS response stationlicensed under this section shall complywith the following:

(1) No MDS response station shall belocated beyond the protected servicearea of the MDS station with which itcommunicates; and

(2) No MDS response station shalloperate with a transmitter output powerin excess of 2 watts; and

(3) No MDS response station shalloperate at an excess of 16 dBW EIRP.

(d) During breaks in communications,the unmodulated carrier frequency shall


be maintained within 35 kHz of theassigned frequency at all times.Adequate means shall be provided toinsure compliance with this rule.

(e) Each MDS response station shallemploy a directive transmitting antennaoriented towards the transmitter site ofthe associated MDS station or towardsthe response station hub with which theMDS response station communicates.The beamwidth between half powerpoints shall not exceed 15° andradiation in any minor lobe of theantenna radiation pattern shall be atleast 20 dB below the power in the mainlobe of radiation.

(f) A response station may be operatedunattended. The overall performance ofthe response station transmitter shall bechecked by the licensee of the station orhub receiving the response signal, or bythe licensee’s employees or agents, asoften as necessary to ensure that thetransmitter is functioning in accordancewith the requirements of theCommission’s rules. The licensee of thestation or hub receiving the responsesignal is responsible for the properoperation of the response station andmust have reasonable and timely accessto the response station transmitter. Theresponse station shall be installed andmaintained by the licensee of theassociated station or hub, or thelicensee’s employees or agents, andprotected in such manner as to preventtampering or operation by unauthorizedpersons. No response station which hasnot been installed by an authorizedperson may lawfully communicate withany station or hub.

PART 74—EXPERIMENTAL RADIO,AUXILIARY, SPECIAL BROADCASTAND OTHER PROGRAMDISTRIBUTIONAL SERVICES

29. The authority for part 74continues to read as follows:

Authority: 47 U.S.C. 154, 303, 307, and554.

30. In § 74.901, the followingdefinitions are added in alphabeticalorder, to read as follows:

§ 74.901 Definitions.* * * * *

Booster service area. A geographicarea to be designated by an applicant fora booster station, within which thebooster station shall be entitled toprotection against interference as setforth in this part. The booster servicearea must be specified by the applicantso as to not overlap the booster servicearea of any other booster authorized toor proposed by the applicant. However,a booster station may provide service toreceive sites outside of its booster

service area, at the licensee’s risk ofinterference. The booster station mustbe capable of providing substantialservice within the designated boosterservice area.

Channel. Unless otherwise specified,a channel under this part shall refer toa 6 MHz frequency block assignedpursuant to §§ 21.901(b) of this chapteror 74.902(a).* * * * *

Response station hub. A fixed facilitylicensed to an ITFS licensee, andoperated by an ITFS licensee or thelessee of an ITFS channel, for thereception of information transmitted byone or more ITFS response stations thatutilize digital modulation with uniformpower spectral density. A responsestation hub licensed under this part mayshare facilities with other ITFS responsestation hubs, MDS response station hubsauthorized pursuant to § 21.909 of thischapter, MDS signal booster stations,ITFS signal booster stations, MDSstations, and/or ITFS stations.

Response station hub license. Ablanket license authorizing theoperation of a single response stationhub at a specific location and theoperation of a specified number ofassociated digital response stations ofone or more classes at unspecifiedlocations within one or more regions ofthe response service area.

Sectorization. The use of an antennasystem at an ITFS station, boosterstation and/or response station hub thatis capable of simultaneouslytransmitting multiple signals over thesame frequencies to different portions ofthe service area and/or simultaneouslyreceiving multiple signals over the samefrequencies from different portions ofthe service area.

Signal booster station. An ITFSstation licensed for use in accordancewith § 74.985 that operates on one ormore ITFS channels. Signal boosterstations are intended to augment serviceas part of a distributed transmissionsystem where signal booster stationsretransmit the signal of an ITFS stationand/or originate information. A signalbooster station licensed under this partmay share facilities with other ITFSsignal booster stations, MDS signalbooster stations authorized pursuant to§ 21.913 of this chapter, MDS responsestations and/or ITFS response stations.* * * * *

30a. In § 74.901, the followingdefinitions, in alphabetical order, arerevised to read as follows:

Instructional television fixed station.A fixed station licensed to aneducational organization and intendedprimarily for video, data, or voice

transmissions of instructional, cultural,and other types of educational materialto one or more fixed receiving locations.

ITFS response station. A fixed stationoperated by an ITFS licensee, the lesseeof ITFS channel capacity or a subscriberof either to communicate with aresponse station hub or associated ITFSstation. A response station under thispart may share facilities with other ITFSresponse stations and/or one or moreMultipoint Distribution Service (MDS)response stations authorized pursuant to§ 21.909 of this chapter or § 21.940 ofthis chapter.* * * * *

31. In § 74.902, paragraphs (f) through(j) are redesignated as paragraphs (g)through (k), respectively, paragraphs (c)through (e) are revised, and newparagraph (f) and a new note toparagraph (c) are added, to read asfollows:

§ 74.902 Frequency assignments.

* * * * *(c) Channels 2596–2602, 2602–2608,

2608–2614, 2614–2620, 2620–2626,2626–2632, 2632–2638, and 2638–2644MHz and the corresponding 125 kHzchannels listed in § 74.939(j) are sharedwith the Multipoint DistributionService. No new InstructionalTelevision Fixed Service applicationsfor these channels filed after May 25,1983 will be accepted, except inaccordance with paragraph (f) of thissection. In those areas where MultipointDistribution Service use of thesechannels is allowed, InstructionalTelevision Fixed Service users of thesechannels will continue to be affordedprotection from harmful cochannel andadjacent channel interference fromMultipoint Distribution Service stations,pursuant to § 21.902 of this chapter.Note to Paragraph (C):

No 125 kHz channels are provided forChannels E3, E4, F3 and F4, except for thosegrandfathered. The 125 kHz channelsassociated with Channels E3, E4, F3 and F4are allocated to the Private Operational FixedPoint-to-Point Microwave Service, pursuantto § 101.147(g) of this chapter.

(d) Frequencies will be assigned asfollows:

(1) A licensee is limited to theassignment of no more than four 6 MHzand four 125 kHz channels for use in asingle area of operation, all of which 6MHz channels initially should beselected from the same Group listed inparagraph (a) of this section, but whichlater may come from different Groups asa result of authorized channel swapspursuant to paragraph (f) of this section.An area of operation is defined as thearea 35 miles or less from the ITFS main


station transmitter. Applicants shall notapply for more channels than theyintend to construct within a reasonabletime, simply for the purpose ofreserving additional channels. Thenumber of channels authorized to anapplicant will be based on thedemonstration of need for the number ofchannels requested. The Commissionwill take into consideration such factorsas the amount of use of any currentlyassigned channels and the amount ofproposed use of each channel requested,the amount of, and justification for, anyrepetition in the schedules, and theoverall demand and availability of ITFSchannels in the community. For thoseapplicant organizations formed for thepurpose of serving accreditedinstitutional or governmentalorganizations, evaluation of the needwill only consider service to thosespecified receive sites which submittedsupporting documentation pursuant to§ 74.932(a)(4).

(2) An applicant leasing excesscapacity and proposing a schedulewhich complies in all respects with therequirements of § 74.931 (c) or (d) willhave presumptively demonstrated need,in accordance with paragraph (d)(1) ofthis section, for no more than fourchannels. This presumption isrebuttable by demonstrating that theapplication does not propose to comportwith our educational usagerequirements, that is, to transmit someformal educational usage, as defined in§ 74.931(a), and to transmit the requisiteminimum educational usage of § 74.931(c) or (d) for genuinely educationalpurposes.

(e) Frequencies in the bands 2500–2650 MHz, 2656–2662 MHz, 2668–2674MHz, and 2680–2686 MHz are availablefor point-to-multipoint use and/or forcommunications between ITFS responsestations and response station hubs whenauthorized in accordance with theprovisions of § 74.939, provided thatsuch frequencies may be employed forITFS response stations only whentransmitting using digital modulation.

(f) An ITFS licensee or conditionallicensee may apply to exchange evenlyone or more of its assigned channelswith another ITFS licensee orconditional licensee in the same system,or with an MDS licensee or conditionallicensee in the same system where oneor both parties utilizes digitaltransmissions or leases capacity to anoperator which utilizes digitaltransmissions, except that an ITFSlicensee or conditional licensee may notexchange one of its assigned channelsfor MDS channel 2A. The licensees orconditional licensees seeking toexchange channels shall file in tandem

with the Commission separate pro formaassignment of license applications, eachattaching an exhibit which clearlyspecifies that the application is filedpursuant to a channel exchangeagreement. The exchanged channel(s)shall be regulated according to therequirements applicable to the assignee;provided, however, that an ITFSlicensee or conditional licensee whichreceives one or more E or F Groupchannels through a channel exchangewith an MDS licensee or conditionallicensee shall not be subject to therestrictions on ITFS licensees who wereauthorized to operate on the E or FGroup channels prior to May 26, 1983.* * * * *

32. In § 74.903, paragraphs (a)(1)through (a)(3), paragraph (b)introductory text, paragraphs (b) (1), (2),(4) and (5), paragraph (c) and paragraph(d) are revised, paragraphs (e) and (f) areremoved, and new paragraph (a)(6) isadded, to read as follows:

§ 74.903 Interference.(a) * * *(1) Cochannel interference is defined

as the ratio of the desired signal to theundesired signal, at the output of areference receiving antenna oriented toreceive the maximum desired signallevel. Harmful interference will beconsidered present when a free spacecalculation determines that this ratio isless than 45 dB (both stations utilizing6 MHz bandwidths).

(2) Adjacent channel interference isdefined as the ratio of the desired signalto undesired signal present in anadjacent channel, at the output of areference receiving antenna oriented toreceive the maximum desired signallevel.

(i) Harmful interference will beconsidered present when a free spacecalculation determines that this ratio isless than 0 dB (both stations utilizing 6MHz bandwidths).

(ii) In the alternative, harmfulinterference will be considered presentfor an ITFS station constructed beforeMay 26, 1983, when a free spacecalculation determines that this ratio isless than 10 dB (both stations utilizing6 MHz bandwidths), unless:

(A) The individual receive site underconsideration has been subsequentlyupgraded with up-to-date receptionequipment, in which case the ratio shallbe less than 0 dB. Absent informationpresented to the contrary, however, theCommission will assume that receptionequipment installation occurredsimultaneously with original stationequipment; or

(B) The license for an ITFS station isconditioned on the proffer to the

affected ITFS station licensee ofequipment capable of providing a ratioof 0 dB or more at no expense to theITFS station licensee, and alsoconditioned, if necessary, on the profferof installation of such equipment; andthere has been no showing by theaffected ITFS station licenseedemonstrating good cause and that theproposed equipment will not provide aratio of 0 dB or more, or that installationof such equipment, at no expense to theITFS station licensee, is not possible orhas not been proffered.

(3) For purposes of this section andexcept as set forth in § 74.939 regardingthe protection of response station hubs,all interference calculations involvingreceive antenna performance shall usethe reference antenna characteristicsshown in Figure I, § 74.937(a) or, in thealternative, utilize the actual patterncharacteristics of the antenna in use atthe receive site under study. If theactual receive antenna pattern isutilized, the applicant must submitcomplete details includingmanufacturer, model number(s), co-polar and cross-polar gain patterns, andother pertinent data.* * * * *

(6) Notwithstanding the above, main,booster and response stations shall usethe following formulas, as applicable,for determining compliance with: (1)Radiated field contour limits wherebandwidths other than 6 MHz areemployed at stations utilizing digitalmodulation with uniform powerspectral density; and (2) Cochannel andadjacent channel D/U ratios where thebandwidths in use at the interfering andprotected stations are unequal and bothstations are utilizing digital modulationwith uniform power spectral density orone station is utilizing such modulationand the other station is utilizing either6 MHz NTSC analog modulation or 125kHz analog modulation (I channelsonly).

(i) Contour limit: ¥73 dBW + 10 log(X/6), where X is the bandwidth in MHzof the digital channel.

(ii) Cochannel D/U: 45 dB + 10 log(X1/X2), where X1 is the bandwidth inMHz of the protected channel and X2 isthe bandwidth in MHz of the interferingchannel.

(iii) Adjacent channel D/U: 0 dB + 10log (X1/X2), where X1 is the bandwidthin MHz of the protected channel and X2is the bandwidth in MHz of theinterfering channel.

(b) All applicants for instructionaltelevision fixed stations are expected totake full advantage of such directiveantenna techniques to preventinterference to the reception of any


existing or previously-proposedoperational fixed, multipointdistribution, international control orinstructional television fixed station atauthorized receiving locations.Therefore, all applications for new ormajor changes must include an analysisof potential interference to all existingand previously-proposed stations inaccordance with paragraph (a) of thissection. An applicant for a newinstructional television fixed station orfor changes in an existing ITFS facilityor conditional license must include thefollowing technical information withthe application:

(1) An analysis of the potential forharmful interference with the receivesites registered as of September 17,1998, and with the protected servicearea, of any authorized or previously-proposed cochannel station if:

(i) The proposed transmitting antennahas an unobstructed electrical path toreceive site(s) and/or the protectedservice area of any other station thatutilizes, or would utilize, the samefrequency; or

(ii) The proposed transmitter is within80.5 km (50 miles) of the coordinates ofany such station.

(2) An analysis of the potential forharmful adjacent channel interferencewith the receive sites registered as ofSeptember 17, 1998, and with theprotected service area, of any authorizedor previously-proposed station if theproposed transmitter is within 80.5 km(50 miles) of the coordinates of anystation that utilizes, or would utilize, anadjacent channel frequency.* * * * *

(4) In lieu of the interference analysesrequired by paragraphs (b)(1) and (2) ofthis section, an applicant may submit (a)statement(s) from the affected cochannelor adjacent channel licensee(s) orconditional licensee(s) that anyresulting interference is acceptable.

(5) Specific rules relating to responsestation hubs, booster stations, and 125kHz channels are set forth in §§ 21.909of this chapter, 21.913 of this chapter,21.940 of this chapter, 74.939, 74.940and 74.985. To the extent those specificrules are inconsistent with any rules setforth above, those specific rules shallcontrol.

(c) Existing licensees, conditionallicensees and prospective applicants,including those who lease or propose tolease excess capacity pursuant to§ 74.931(c) or (d), are expected tocooperate fully and in good faith inattempting to resolve problems ofpotential interference before bringingthe matter to the attention of theCommission.

(d) Each authorized or previously-proposed applicant, conditionallicensee, or licensee must be protectedfrom harmful electrical interference ateach of its receive sites registeredpreviously as of September 17, 1998,and within a protected service area asdefined at § 21.902(d)(1) of this chapterand in accordance with the referencereceive antenna characteristics specifiedat § 21.902(f) of this chapter. An ITFSentity which did not receive protectedservice area protection prior toSeptember 17, 1998 shall be accordedsuch protection by a cochannel oradjacent channel applicant for a newstation or station modification,including a booster station, responsestation or response station hub, wherethe applicant is required to prepare ananalysis, study or demonstration of thepotential for harmful interference.

33. In § 74.911, paragraph (a)(1) isrevised, and new paragraph (d) isadded, to read as follows:

§ 74.911 Processing of ITFS stationapplications.

(a) * * *(1) In the first group are applications

for new stations or major changes in thefacilities of authorized stations. Theseapplications are subject to theprovisions of paragraph (c) of thissection. A major change for an ITFSstation will be any proposal to add newchannels, change from one channel (orchannel group) to another except asprovided for in § 74.902(f), changepolarization, increase the EIRP in anydirection by more than 1.5 dB, increasethe transmitting antenna height by 25feet or more, or relocate a facility’stransmitter site by 10 miles or more.Applications submitted pursuant to§§ 74.939 and 74.985 shall not beconsidered major change applications.However, the Commission may, within15 days after the acceptance of anapplication, or 15 days after theacceptance of any other application formodification of facilities, advise theapplicant that such application isconsidered to be one for a major change,and subject to the provisions ofparagraph (c) of this section.* * * * *

(d) Notwithstanding any otherprovisions of this part, effective as ofSeptember 17, 1998, there shall be oneone-week window, at such time as theCommission shall announce by publicnotice, for the filing of applications forhigh-power signal booster station,response station hub, and I channelspoint-to-multipoint transmissionslicenses, during which all applicationsshall be deemed to have been filed as ofthe same day for purposes of §§ 74.939

and 74.985. Following the publicationof a public notice announcing thetendering for filing of applicationssubmitted during that window,applicants shall have a period of sixty(60) days to amend their applications,provided such amendments do notresult in any increase in interference toany previously-proposed or authorizedstation, or to facilities proposed duringthe window, absent consent of theapplicant for or conditional licensee orlicensee of the station that wouldreceive such additional interference. Atthe conclusion of that sixty (60) dayperiod, the Commission shall publish apublic notice announcing theacceptance for filing of all applicationssubmitted during the initial window, asamended during the sixty (60) dayperiod. All petitions to deny suchapplications must be filed within sixty(60) days of such second public notice.On the sixty-first (61st) day after thepublication of such second publicnotice, applications for new or modifiedresponse station hub and booster stationlicenses may be filed and will beprocessed in accordance with theprovisions of §§ 74.939 and 74.985.Notwithstanding paragraph (d) of thissection, each application submittedduring the initial window shall begranted on the sixty-first (61st) day afterthe Commission shall have given suchpublic notice of its acceptance for filing,unless prior to such date either a partyin interest timely files a formal petitionto deny or for other relief pursuant to§ 74.912, or the Commission notifies theapplicant that its application will not begranted. Where an application is grantedpursuant to the provisions of thisparagraph, the conditional licensee orlicensee shall maintain a copy of theapplication at the transmitter site orresponse station hub until such time asthe Commission issues a license.

34. New § 74.912 is added to read asfollows:

§ 74.912 Petitions to deny.(a) Any party in interest may file with

the Commission a petition to deny anyapplication for new facilities or majorchanges in the facilities of authorizedstations, provided such petitions arefiled by the date established pursuant tothe cut-off provisions of § 74.911(c). Inthe case of all other applications, exceptthose excluded under Section 309(c) ofthe Communications Act of 1934, asamended, and except as provided in§§ 74.939 and 74.985, petitions to denymust be filed not later than 30 days afterissuance of a public notice of theacceptance for filing of the applications.In the case of applications for renewalof license, petitions to deny may be filed


after the issuance of a public notice ofacceptance for filing of the applicationsand up until the first day of the last fullcalendar month of the expiring licenseterm. Any party in interest may file withthe Commission a petition to deny anynotification regarding ITFS boosterstations within the 60 day periodprovided for in § 74.985(e).

(b) The applicant may file anopposition to any petition to deny, andthe petitioner a reply to such oppositionin which allegations of fact or denialsthereof shall be supported by affidavit ofa person or persons with personalknowledge thereof. The times for filingsuch oppositions and replies shall bethose provided in § 1.45 of this chapter.

35. In § 74.931, paragraphs (d) and (e)are redesignated as paragraphs (b) and(c), respectively, and paragraphs (f)through (k) are redesignated asparagraphs (e) through (j), respectively,paragraph (a) and newly redesignatedparagraphs (b) and (c) are revised, andnew paragraph (d) is added, to read asfollows:

§ 74.931 Purpose and permissible service.(a) (1) Instructional television fixed

stations are intended primarily throughvideo, data, or voice transmissions tofurther the educational mission ofaccredited public and private schools,colleges and universities providing aformal educational and culturaldevelopment to enrolled students.Authorized instructional televisionfixed station channels must be used tofurther the educational mission ofaccredited schools offering formaleducational courses to enrolledstudents, with limited exceptions as setforth in paragraphs (c)(3) and (d)(2) ofthis section and §§ 74.990 through74.992.

(2) In furtherance of the educationalmission of accredited schools,instructional television fixed stationchannels may be used for:

(i) In-service training and instructionin special skills and safety programs,extension of professional training,informing persons and groups engagedin professional and technical activitiesof current developments in theirparticular fields, and other similarendeavors.

(ii) Transmission of material directlyrelated to the administrative activities ofthe licensee, such as the holding ofconferences with personnel, distributionof reports and assignments, exchange ofdata and statistics, and other similaruses.

(iii) Response channels transmittinginformation associated with formaleducational courses offered to enrolledstudents, including uses described in

paragraphs (a)(2) (i) and (ii) of thissection, from ITFS response stations toresponse station hubs.

(b) Stations, including high-powerITFS signal booster stations, may belicensed in this service as originating orrelay stations to interconnectinstructional television fixed stations inadjacent areas, to deliver instructionaland cultural material to, and obtainsuch material from, commercial andnoncommercial educational televisionbroadcast stations for use on theinstructional television fixed system,and to deliver instructional and culturalmaterial to, and obtain such materialfrom, nearby terminals or connectionpoints of closed circuit educationaltelevision systems employing wireddistribution systems or radio facilitiesauthorized under other parts of thisChapter, or to deliver instructional andcultural material to any CATV systemserving a receiving site or sites whichwould be eligible for direct reception ofITFS signals under the provisions ofparagraph (a) of this section.

(c) A licensee solely utilizing analogtransmissions may use excess capacityon each channel to transmit materialother than the ITFS subject matterspecified in paragraphs (a) and (b) ofthis section, subject to the followingconditions:

(1) Before leasing excess capacity onany one channel, the licensee mustprovide at least 20 hours per week ofITFS educational usage on that channel,except as provided in paragraph (c)(2) ofthis section. An additional 20 hours perweek per channel must be strictlyreserved for ITFS use and not used fornon-ITFS purposes, or reserved forrecapture by the ITFS licensee for itsITFS educational usage, subject to oneyear’s advance, written notification bythe ITFS licensee to its lessee andaccounting for all recapture alreadyexercised, with no economic oroperational detriment to the licensee.These hours of recapture are notrestricted as to time of day or day of theweek, but may be established bynegotiations between the ITFS licenseeand the lessee. This 20 hours perchannel per week ITFS educationalusage requirement and this recaptureand/or reservation requirement of anadditional 20 hours per channel perweek shall apply spectrally over thelicensee’s whole protected service area.

(2) For the first two years of operation,an ITFS entity may lease excess capacityif it provides ITFS educational usage forat least 12 hours per channel per week,provided that the entity does notemploy channel loading technology.

(3) The licensee may shift its requisiteITFS educational usage onto fewer than

its authorized number of channels, viachannel mapping or channel loadingtechnology, so that it can lease full-timechannel capacity on its ITFS station,associated ITFS booster stations, and/orITFS response stations and associatedresponse station hubs, subject to thecondition that it provide a total averageof at least 20 hours per channel perweek of ITFS educational usage on itsauthorized channels. The use of channelmapping or channel loading consistentwith the Rules shall not be consideredadversely to the ITFS licensee inseeking a license renewal. The licenseealso retains the unabridgeable right torecapture, subject to six months’advance written notification by the ITFSlicensee to its lessee, an average of anadditional 20 hours per channel perweek, accounting for all recapturealready exercised. The licensee mayagree to the transmission of thisrecapture time on channels notauthorized to it, but which are includedin the wireless system of which it is apart.

(4) An ITFS applicant, conditionallicensee, or licensee may specify anomnidirectional antenna for point-to-multipoint transmissions to facilitatethe leasing of excess capacity.

(5) Leasing activity may not causeunacceptable interference to cochannelor adjacent channel operations.

(6) When an ITFS licensee makescapacity available on a common carrierbasis, it will be subject to commoncarrier regulation.

(i) A licensee operating as a commoncarrier is required to apply for theappropriate authorization and to complywith all policies and rules applicable tothat service. Responsibility for makingthe initial determination of whether aparticular activity is common carriagerests with the ITFS licensee. Initialdeterminations by the licensees aresubject to Commission examination andmay be reviewed at the Commission’sdiscretion.

(ii) An ITFS licensee also may applyfor authorization by the Commission toalternate, without further authorizationrequired, between rendering service ona common carrier and non-commoncarrier basis, provided that the licenseenotify the Commission of any servicestatus changes at least 30 days inadvance of such changes.

(iii) Licensees under paragraph (c)(6)of this section additionally shall complywith the provisions of §§ 21.304,21.900(b), 21.903(b)(1) and (2), and21.910 of this chapter.

(d) A licensee utilizing digitaltransmissions on any of its licensedchannels may use excess capacity oneach channel to transmit material other


than the ITFS subject matter specified inparagraphs (a) and (b) of this section,subject to the following conditions:

(1) The licensee must reserve aminimum of 5% of the capacity of itschannels for instructional purposesonly, and may not lease this reservedcapacity. In addition, before leasingexcess capacity, the licensee mustprovide at least 20 hours per licensedchannel per week of ITFS educationalusage. This 5% reservation and this 20hours per licensed channel per weekITFS educational usage requirementshall apply spectrally over the licensee’swhole protected service area.

(2) The licensee may shift its requisiteITFS educational usage onto fewer thanits authorized number of channels, viachannel mapping or channel loadingtechnology, and may shift its requisiteITFS educational usage onto channelsnot authorized to it, but which areincluded in the wireless system ofwhich it is a part (‘‘channel shifting’’),so that it can lease full-time channelcapacity on its ITFS station, associatedITFS booster stations, and/or ITFSresponse stations and associatedresponse station hubs, subject to thecondition that it provide a total averageof at least 20 hours per licensed channelper week of ITFS educational usage. Theuse of channel mapping, channelloading, and/or channel shiftingconsistent with the Rules shall not beconsidered adversely to the ITFSlicensee in seeking a license renewal.

(3) An ITFS applicant, conditionallicensee, or licensee may specify anomnidirectional antenna for point-to-multipoint transmissions to facilitatethe leasing of excess capacity.

(4) Leasing activity may not causeunacceptable interference to cochannelor adjacent channel operations.

(5) A licensee leasing any of itslicensed channels to be used asresponse channels shall be required tomaintain at least 25% of the capacity ofits channels for point-to-multipointtransmissions during the term of thelease and following termination of theleasing arrangement. This 25%preservation may be over the licensee’sown authorized channels or overchannels not authorized to it, but whichare included in the wireless system ofwhich it is a part.

(6) When an ITFS licensee makescapacity available on a common carrierbasis, it will be subject to commoncarrier regulation.

(i) A licensee operating as a commoncarrier is required to apply for theappropriate authorization and to complywith all policies and rules applicable tothat service. Responsibility for makingthe initial determination of whether a

particular activity is common carriagerests with the ITFS licensee. Initialdeterminations by the licensees aresubject to Commission examination andmay be reviewed at the Commission’sdiscretion.

(ii) An ITFS licensee also may applyfor authorization by the Commission toalternate, without further authorizationrequired, between rendering service ona common carrier and non-commoncarrier basis, provided that the licenseenotify the Commission of any servicestatus changes at least 30 days inadvance of such changes.

(iii) Licensees under paragraph (d)(6)of this section additionally shall complywith the provisions of §§ 21.304,21.900(b), 21.903(b)(1) and (2), and21.910 of this chapter.* * * * *

36. In Section 74.935, paragraphs (a)and (b) are revised to read as follows:

§ 74.935 Power limitations.

(a) The maximum EIRP of an ITFSmain or booster station shall not exceed33 dBW (or, when digital modulationwith uniform power spectral densityand subchannels or superchannels, or125 kHz channels, are used, theappropriately adjusted value basedupon the ratio of 6 MHz to thesubchannel or superchannel, or 125kHz, bandwidth), except as provided inparagraph (b) of this section.

(b) If a main or booster stationsectorizes or otherwise uses one or moretransmitting antennas with a non-omnidirectional horizontal planeradiation pattern, the maximum EIRPover a 6 MHz channel in dBW in a givendirection shall be determined by thefollowing formula:EIRP = 33 dBW + 10 log (360/

beamwidth) [where 10 log (360/beamwidth) ≤ 6 dB]

Beamwidth is the total horizontalplane beamwidth of the individualtransmitting antenna for the station orany sector measured at the half-powerpoints. The first term of the equationabove, 33 dBW, must be adjustedappropriately based upon the ratio of 6MHz to the subchannel or superchannel,or 125 kHz, bandwidth.* * * * *

37. Section 74.936 is revised in itsentirety, to read as follows:

§ 74.936 Emissions and bandwidth.

(a) An ITFS station may employamplitude modulation (C3F) for thetransmission of the visual signal andfrequency modulation (F3E) or (G3E) forthe transmission of the aural signalwhen transmitting a standard analogtelevision signal. Quadrature amplitude

modulation, digital vestigialmodulation, quadrature phase shift keymodulation and code division multipleaccess emissions may be employed,subject to compliance with the policiesset forth in the Declaratory Ruling andOrder, 11 FCC Rcd 18839 (1996). Thelicensee may subchannelize itsauthorized bandwidth, provided thatdigital modulation is employed and theaggregate power does not exceed theauthorized power for the channel, andmay utilize all or a portion of itsauthorized bandwidth for ITFS responsestations authorized pursuant to § 74.939.The licensee may also, jointly withaffected adjacent channel licensees,transmit utilizing bandwidth in excessof its authorized frequencies, providedthat digital modulation is employed, allpower spectral density requirements setforth in this part are met and the out-of-band emissions restrictions set forthin 74.936 are met at the edges of thechannels employed. The wider channelsthus created may be redivided to createnarrower channels.

(b) Notwithstanding the above, anydigital emission which meets theuniform power spectral densityrequirements of the Declaratory Rulingand Order may be used in the followingcircumstances:

(1) At any ITFS main or boosterstation transmitter which is locatedmore than 160.94 km (100 miles) fromthe nearest boundary of all cochanneland adjacent channel ITFS and MDSprotected service areas, including BasicTrading Areas and Partitioned ServiceAreas; and

(2) At all ITFS response stationtransmitters within a response servicearea if all points along the responseservice area boundary line are morethan 160.94 km (100 miles) from thenearest boundary of all cochannel andadjacent channel ITFS and MDSprotected service areas, including BasicTrading Areas and Partitioned ServiceAreas; and

(3) At any ITFS transmitter where allparties entitled by this part tointerference protection from thattransmitter have mutually consented tothe use at that transmitter of suchemissions.

(c) The maximum out-of-band powerof an ITFS station transmitter or boostertransmitting on a single 6 MHz channelwith an EIRP in excess of ¥9 dBWemploying analog modulation shall beattenuated at the channel edges by atleast 38 dB relative to the peak visualcarrier, then linearly sloping from thatlevel to at least 60 dB of attenuation at1 MHz below the lower band edge and0.5 MHz above the upper band edge,and attenuated at least 60 dB at all other


frequencies. The maximum out-of-bandpower of an ITFS station transmitter orbooster transmitting on a single 6 MHzchannel or a portion thereof with anEIRP in excess of ¥9 dBW (or, whensubchannels are used, the appropriatelyadjusted value based upon the ratio ofthe channel-to-subchannel bandwidths)employing digital modulation shall beattenuated at the 6 MHz channel edgesat least 25 dB relative to the licensedaverage 6 MHz channel power level,then attenuated along a linear slope toat least 40 dB at 250 kHz beyond thenearest channel edge, then attenuatedalong a linear slope from that level to atleast 60 dB at 3 MHz above the upperand below the lower licensed channeledges, and attenuated at least 60 dB atall other frequencies. Notwithstandingthe foregoing, in situations where anITFS station or booster station transmits,or where adjacent channel licenseesjointly transmit, a single signal overmore than one contiguous 6 MHzchannel utilizing digital modulationwith an EIRP in excess of ¥9 dBW (or,when subchannels or superchannels areused, the appropriately adjusted valuebased upon the ratio of 6 MHz to thesubchannel or superchannelbandwidth), the maximum out-of-bandpower shall be attenuated at the channeledges of those combined channels atleast 25 dB relative to the power levelof each channel, then attenuated alonga linear slope from that level to at least40 dB at 250 kHz above or below thechannel edges of those combinedchannels, then attenuated along a linearslope from that level to at least 60 dBat 3 MHz above the upper and below thelower edges of those combinedchannels, and attenuated at least 60 dBat all other frequencies. However,should harmful interference occur as aresult of emissions outside the assignedchannel, additional attenuation may berequired. A transmitter licensed prior toNovember 1, 1991, that remains at thestation site initially licensed, and doesnot comply with this paragraph, maycontinue to be used for its life if it doesnot cause harmful interference to theoperation of any other licensee. Anynon-conforming transmitter replacedafter November 1, 1991, must bereplaced by a transmitter meeting therequirements of this paragraph.

(d) A booster transmitting on multiplecontiguous or non-contiguous channelscarrying separate signals (a ‘‘broadband’’booster) with an EIRP in excess of ¥9dBW per 6 MHz channel and employinganalog, digital or a combination of thesemodulations shall have the followingcharacteristics:

(1) For broadband boosters operatingin the frequency range of 2.150–2.160/

2 GHz, the maximum out-of-band powershall be attenuated at the upper andlower channel edges forming the bandedges by at least 25 dB relative to thelicensed analog peak visual carrier ordigital average power level (or, whensubchannels are used, the appropriatelyadjusted value based on upon the ratioof the channel-to-subchannelbandwidths), then linearly sloping fromthat level to at least 40 dB of attenuationat 0.25 MHz above and below the bandedges, then linearly sloping from thatlevel to at least 60 dB of attenuation at3.0 MHz above and below the bandedges, and attenuated at least 60 dB atall other frequencies.

(2) For broadband boosters operatingin the frequency range of 2.500–2.690GHz, the maximum out-of-band powershall be attenuated at the upper andlower channel edges forming the bandedges by at least 25 dB relative to thelicensed analog peak visual carrier ordigital average power level (or, whensubchannels are used, the appropriatelyadjusted value based on upon the ratioof the channel-to-subchannelbandwidths), then linearly sloping fromthat level to at least 40 dB of attenuationat 0.25 MHz above and below the bandedges, then linearly sloping from thatlevel to at least 50 dB of attenuation at3.0 MHz above and below the bandedges, then linearly sloping from thatlevel to at least 60 dB of attenuation at20 MHz above and below the bandedges, and attenuated at least 60 dB atall other frequencies.

(3) Within unoccupied channels inthe frequency range of 2.500–2.690 GHz,the maximum out-of-band power shallbe attenuated at the upper and lowerchannel edges of an unoccupiedchannel by at least 25 dB relative to thelicensed analog peak visual carrierpower level or digital average powerlevel of the occupied channels (or, whensubchannels or 125 kHz channels areused, the appropriately adjusted valuebased upon the ratio of the channel-to-subchannel bandwidths), then linearlysloping from that level to at least 40 dBof attenuation at 0.25 MHz above andbelow the occupied channel edges, thenlinearly sloping from that level to atleast 50 dB of attenuation at 3.0 MHzabove and below the occupied channeledges, and attenuated at least 50 dB atall other unoccupied frequencies.

(e) Boosters operating with an EIRPless than ¥9 dBW per 6 MHz channelshall have no particular out-of-bandpower attenuation requirement, exceptthat if they cause harmful interference,their operation shall be terminatedwithin 2 hours of notification by theCommission until the interference canbe cured.

(f) The maximum out-of-band powerof an ITFS response station using all orpart of a 6 MHz channel and employingdigital modulation shall be attenuated atthe 6 MHz channel edges at least 25 dBrelative to the licensed average 6 MHzchannel power level, then attenuatedalong a linear slope to at least 40 dB at250 kHz beyond the nearest channeledge, then attenuated along a linearslope from that level to at least 60 dBat 3 MHz above the upper and below thelower licensed channel edges, andattenuated at least 60 dB at all otherfrequencies. Where ITFS responsestations with digital modulation utilizeall or part of more than one contiguous6 MHz channel to form a larger channel(e.g., a channel of width 12 MHz), theabove-specified attenuations shall beapplied only at the upper and loweredges of the overall combined channel.Notwithstanding these provisions,should harmful interference occur as aresult of emissions outside the assignedchannel(s), additional attenuation maybe required by the Commission.

(g) The requirements of § 73.687(c)(2)will be considered to be satisfied insofaras measurements of operating power areconcerned if the transmitter is equippedwith instruments for determining thecombined visual and aural operatingpower. However, licensees are expectedto maintain the operating powers withinthe limits specified in § 74.935.Measurements of the separate visual andaural operating powers must be made atsufficiently frequent intervals to insurecompliance with the rules, and in noevent less than once a month. However,the provisions of § 73.687(c)(2) and ofthis paragraph shall not be applicable toITFS response stations or to low powerITFS booster stations authorizedpursuant to § 74.985(e).

(h) Compliance with the out-of-bandemissions limitations shall beestablished in accordance with§ 21.908(e) of this chapter.

38. In § 74.937, paragraph (a) isrevised by amending the text precedingfigure 1, and paragraph (b) is revised, toread as follows:

§ 74.937 Antennas.(a) In order to minimize the hazard of

harmful cochannel and adjacentchannel interference from other stations,directive receiving antennas should beused at all receiving locations other thanresponse station hubs. The choice ofreceiving antennas is left to thediscretion of the licensee. However, forthe purpose of interference calculations,except as set forth in § 74.939, thegeneral characteristics of the referencereceiving antenna shown in Figure I ofthis section (i.e., a 0.6 meter (2 foot)


parabolic reflector antenna) are assumedto be used in accordance with theprovisions of § 74.903(a)(3) unlesspertinent data is submitted of the actualantenna in use at the receive site.Licensees may install receivingantennas with general characteristicssuperior to those of the reference receiveantenna. Nevertheless, shouldinterference occur and it can bedemonstrated by an applicant that theexisting antenna at the receive site isinappropriate, a more suitable yetpractical receiving antenna should beinstalled. In such cases, themodification of the receive site will bein the discretion, and will be theresponsibility, of the licensee servingthe site.* * * * *

(b) Except as set forth in § 74.931(c)(4) and (d)(3), directive transmittingantennas shall be used wheneverfeasible so as to minimize interferenceto other licensees. The radiation patternshall be designed to minimize radiationin directions where no reception isintended. When an ITFS station is usedfor point-to-point service, anappropriate directional antenna must beused.* * * * *


§ 74.938 Transmission standards.The width of an ITFS channel is 6

MHz. However, the licensee maysubchannelize its authorizedbandwidth, provided that digitalmodulation is employed and theaggregate power does not exceed theauthorized power for the channel, andmay utilize all or a portion of itsauthorized bandwidth for ITFS responsestations authorized pursuant to § 74.939.The licensee may also, jointly withother licensees, transmit utilizingbandwidth in excess of its authorizedbandwidth, provided that digitalmodulation is employed, all powerspectral density requirements set forthin this part are met and the out-of-bandemissions restrictions set forth in§ 74.936 are met at the edges of thechannels employed.


§ 74.939 ITFS response stations.(a) An ITFS response station is

authorized to provide communicationby voice, video and/or data signals withits associated ITFS response station hubor associated ITFS station. An ITFSresponse station may be operated onlyby the licensee of the ITFS station, byany person or entity authorized by theITFS licensee to receive point-to-

multipoint transmissions over itschannels, by any lessee of excesscapacity, or by a subscriber of any lesseeof excess capacity. The authorizedchannel may be divided to providedistinct subchannels for each of morethan one response station, provided thatdigital modulation is employed and theaggregate power does not exceed theauthorized power for the channel. AnITFS response station may also, jointlywith other licensees, transmit utilizingbandwidth in excess of that authorizedto the station, provided that digitalmodulation is employed, all powerspectral density requirements set forthin this part are met, and the out-of-bandemission restrictions set forth in§ 74.936 or paragraph (k) of this sectionare complied with.

(b) ITFS response stations that utilizethe 2150–2162 MHz band pursuant to§ 74.902(f), the 2500–2686 MHz band,and/or the 125 kHz channels identifiedin paragraph (j) of this section may beinstalled and operated without anindividual license, to communicate witha response station hub authorized undera response station hub license, providedthat the conditions set forth inparagraph (g) of this section arecomplied with and that ITFS responsestations operating in the 2150–2162MHz and/or 2500–2686 MHz band(s)employ only digital modulation withuniform power spectral density inaccordance with the Commission’sDeclaratory Ruling and Order, 11 FCCRcd 18839 (1996).

(c) An applicant for a response stationhub license shall:

(1) File FCC Form 331 with theCommission in Washington, DC, andcertify on that form that it has compliedwith the requirements of paragraphs(c)(2) and (d) of this section. Failure tocertify compliance and to complycompletely with the requirements ofparagraphs (c)(2) and (d) of this sectionshall result in dismissal of theapplication or revocation of theresponse station hub license, and mayresult in imposition of a monetaryforfeiture; and

(2) Submit to InternationalTranscription Services, Inc. (‘‘ITS’’),1231 20th Street, NW, Washington, DC20036, both in hard copy, and on a 3.5′′computer diskette in ASCII, thefollowing:

(i) Duplicates of the Form 331 filedwith the Commission; and

(ii) The data required by Appendix Dto the Report and Order in MM DocketNo. 97–217, FCC 98–231, ‘‘Methods forPredicting Interference from ResponseStation Transmitters and to ResponseStation Hubs and for Supplying Data onResponse Station Systems’’; and

(iii) The information, showings andcertifications required by paragraph (d)of this section; and

(3) Submit to the Commission, onlyupon Commission staff request,duplicates of the submissions requiredby paragraph (c)(2) of this section.

(d) An applicant for a response stationhub license shall, pursuant to paragraph(c)(2)(iii) of this section, submit to ITSthe following:

(1) The geographic coordinates, streetaddress, and the height of the centerline of the reception antenna(s) abovemean sea level for the response stationhub; and (2) A specification of:

(i) The response service area in whichthe applicant or its lessee proposes toinstall ITFS response stations tocommunicate with the response stationhub, any regions into which theresponse service area will be subdividedfor purposes of interference analysis,and any regional classes of responsestation characteristics which will beused to define the operating parametersof groups of response stations withineach region for purposes of interferenceanalysis, including:

(A) the maximum height aboveground level of the transmissionantenna that will be employed by anyresponse station in the regional classand that will be used in interferenceanalyses; and

(B) the maximum equivalent isotropicradiated power (EIRP) that will beemployed by any response station in theregional class and that will be used ininterference analyses; and

(C) any sectorization that will beemployed, including the polarization tobe employed by response stations ineach sector and the geographicorientation of the sector boundaries, andthat will be used in interferenceanalyses; and

(D) the combined worst-case outerenvelope plot of the patterns of allmodels of response station transmissionantennas that will be employed by anyresponse station in the regional class tobe used in interference analyses; and

(E) the maximum number of responsestations that will be operatedsimultaneously in each region using thecharacteristics of each regional classapplicable to each region.

(ii) The channel plan (including anyguardbands at the edges of the channel)to be used by ITFS response stations incommunicating with the responsestation hub, including a statement as towhether the applicant will employ thesame frequencies on which responsestations will transmit to also transmit ona point-to-multipoint basis from an MDSstation or MDS booster station; and

(3) A demonstration that:


(i) The proposed response station hubis within the protected service area, asdefined in § 21.902(d)(1) of this chapter,of the ITFS station(s) whose channelswill be used for communications to theresponse station hub or, in the case ofan application for response stations toutilize one or more of the 125 kHzresponse channels, the response stationhub is within the protected service areaof the station authorized to utilize theassociated channel(s); and

(ii) The entire proposed responseservice area is within the protectedservice area of the ITFS station(s) whosechannels will be used forcommunications to the response stationhub or, in the alternative, the applicantmay demonstrate that the licensee ofany cochannel protected service areawhich is overlapped by the proposedresponse service area has consented tosuch overlap. In the case of anapplication for response stations toutilize one or more of the 125 kHzresponse channels, such demonstrationshall establish that the response servicearea is entirely within the protectedservice area of the station authorized toutilize the associated channel(s), or, inthe alternative, that the licensee entitledto any cochannel protected service areawhich is overlapped by the proposedresponse service area has consented tosuch overlap; and

(iii) The combined signals of allsimultaneously operating ITFS responsestations within all response serviceareas and oriented to transmit towardtheir respective response station hubsand all cochannel ITFS stations andbooster stations licensed to or appliedfor by the applicant will not generate apower flux density in excess of ¥73dBW/m2 (or the pro rata power spectraldensity equivalent based on thebandwidth actually employed in thosecases where less than a 6 MHz channelis to be employed) outside theboundaries of the applicant’s protectedservice area, as measured at locationsfor which there is an unobstructedsignal path, except to the extent thatconsent of affected licensees has beenobtained or consents have been grantedpursuant to paragraph (d)(3)(ii) of thissection to an extension of the responseservice area beyond the boundaries ofthe protected service area; and

(iv) The combined signals of allsimultaneously operating ITFS responsestations within all response serviceareas and oriented to transmit towardtheir respective response station hubs,and all cochannel ITFS stations andbooster stations licensed to or appliedfor by the applicant, will result in adesired to undesired signal ratio of atleast 45 dB (or the appropriately

adjusted value based upon the ratio ofthe channel-to-subchannel bandwidths):

(A) within the protected service areaof any authorized or previously-proposed cochannel MDS or ITFSstation with center coordinates locatedwithin 160.94 km (100 miles) of theproposed response station hub; and

(B) within the booster service area ofany cochannel booster station entitled tosuch protection pursuant to § 21.913(f)of this chapter or 74.985(f) and locatedwithin 160.94 km (100 miles) of theproposed response station hub; and

(C) at any registered receive site ofany authorized or previously-proposedcochannel ITFS station or boosterstation located within 160.94 km (100miles) of the proposed response stationhub, or, in the alternative, that thelicensee or applicant for such cochannelstation or hub consents to theapplication; and

(v) The combined signals of allsimultaneously operating ITFS responsestations within all response serviceareas and oriented to transmit towardtheir respective response station hubs,and all cochannel ITFS stations andbooster stations licensed to or appliedfor by the applicant, will result in adesired to undesired signal ratio of atleast 0 dB (or the appropriately adjustedvalue based upon the ratio of thechannel-to-subchannel bandwidths):

(A) within the protected service areaof any authorized or previously-proposed adjacent channel MDS or ITFSstation with center coordinates locatedwithin 160.94 km (100 miles) of theproposed response station hub; and

(B) within the booster service area ofany adjacent channel booster stationentitled to such protection pursuant to§§ 21.913(f) of this chapter or 74.985(f)and located within 160.94 km (100miles) of the proposed response stationhub; and

(C) at any registered receive site ofany authorized or previously-proposedadjacent channel ITFS station or boosterstation located within 160.94 km (100miles) of the proposed response stationhub, or, in the alternative, that thelicensee of or applicant for suchadjacent channel station or hubconsents to such application; and

(vi) The combined signals of allsimultaneously operating ITFS responsestations within all response serviceareas and oriented to transmit towardtheir respective response station huband all cochannel ITFS stations andbooster stations licensed to or appliedfor by the applicant will comply withthe requirements of §§ 21.909(i) of thischapter and paragraph (i) of this section.

(4) A certification that the applicationhas been served upon

(i) the holder of any cochannel oradjacent channel authorization with aprotected service area which isoverlapped by the proposed responseservice area;

(ii) the holder of any cochannel oradjacent channel authorization with aprotected service area that adjoins theapplicant’s protected service area;

(iii) the holder of a cochannel oradjacent channel authorization for anyBTA or PSA inside whose boundariesare locations for which there is anunobstructed signal path for combinedsignals from within the response stationhub applicant’s protected service area;and

(iv) every licensee of, or applicant for,any cochannel or adjacent channel,authorized or previously-proposed,incumbent MDS station with a 56.33 km(35 mile) protected service area withcenter coordinates located within160.94 km (100 miles) of the proposedresponse station hub; and

(v) every licensee of, or applicant for,any cochannel or adjacent channel,authorized or previously-proposed ITFSstation (including any booster station orresponse station hub) located within160.94 km (100 miles) of the proposedresponse station hub.

(e) Applications for response stationhub licenses shall be deemed minorchange applications and, except asprovided in § 74.911(e), may be filed atany time. Notwithstanding any otherprovision of part 74, applications forresponse station hub licenses meetingthe requirements of paragraph (c) of thissection shall cut-off applications thatare filed on a subsequent day forfacilities that would cause harmfulelectromagnetic interference to theproposed response station hubs. Aresponse station hub shall not beentitled to protection from interferencecaused by facilities proposed on or priorto the day the application for theresponse station hub license is filed.Response stations shall not be requiredto protect from interference facilitiesproposed on or after the day theapplication for the response station hublicense is filed.

(f) Notwithstanding the provisions of§ 74.912 and except as provided by§ 74.911(e), any petition to deny anapplication for a response station hublicense shall be filed no later than thesixtieth (60th) day after the date ofpublic notice announcing the filing ofsuch application or major amendmentthereto. Notwithstanding § 74.911(d)and except as provided in § 74.911(e),an application for a response stationhub license that meets the requirementsof this section shall be granted on thesixty-first (61st) day after the


Commission shall have given publicnotice of the acceptance for filing of it,or of a major amendment to it if suchmajor amendment has been filed, unlessprior to such date either a party ininterest timely files a formal petition todeny or for other relief pursuant to§ 74.912, or the Commission notifies theapplicant that its application will not begranted. Where an application is grantedpursuant to the provisions of thisparagraph, the conditional licensee orlicensee shall maintain a copy of theapplication at the response station hubuntil such time as the Commissionissues a response station hub license.

(g) An ITFS response station hublicense establishing a response servicearea shall be conditioned uponcompliance with the following:

(1) No ITFS response station shall belocated beyond the response servicearea of the response station hub withwhich it communicates; and

(2) No ITFS response station shalloperate with a transmitter output powerin excess of 2 watts; and

(3) No ITFS response station shalloperate with an EIRP in excess of thatspecified in the application for theresponse station hub pursuant toparagraph (d)(2)(i)(B) of this section forthe particular regional class ofcharacteristics with which the responsestation is associated, and such responsestation shall not operate at an excess of33 dBW EIRP (or, when subchannels orsuperchannels, or 125 kHz channels, areused, the appropriately adjusted valuebased upon the ratio of 6 MHz to thesubchannel or superchannel, or 125kHz, bandwidth); and

(4) Each ITFS response station shallemploy a transmission antenna orientedtoward the response station hub withwhich the ITFS response stationcommunicates, and such antenna shallbe no less directional than the worstcase outer envelope pattern specified inthe application for the response stationhub pursuant to paragraph (d)(2)(i)(D) ofthis section for the regional class ofcharacteristics with which the responsestation is associated; and

(5) The combined out-of-bandemissions of all response stations usingall or part of one or multiple contiguous6 MHz channels and employing digitalmodulation shall comply with§ 74.936(e). The combined out-of-bandemissions of all response stations usingall or part of one or multiple contiguous125 kHz channels shall comply withparagraph (k) of this section. However,should harmful interference occur as aresult of emissions outside the assignedchannel, additional attenuation may berequired; and

(6) The response stations transmittingsimultaneously at any time within anygiven region of the response service areautilized for purposes of analyzing thepotential for interference by responsestations shall conform to the numericallimits for each class of response stationproposed in the application for theresponse station hub license.Notwithstanding the foregoing, thelicensee of a response station hublicense may alter the number ofresponse stations of any class operatingsimultaneously in a given region,without prior Commissionauthorization, provided that thelicensee:

(i) First notifies the Commission ofthe altered number of response stationsof such class(es) to be operatedsimultaneously in such region, andcertifies in that notification that it hascomplied with the requirements ofparagraphs (g)(6)(ii) and (iii) of thissection; and

(ii) Provides ITS with a copy of suchnotification and with an analysisestablishing that such alteration will notresult in any increase in interference tothe protected service area or protectedreceive sites of any existing orpreviously-proposed, cochannel oradjacent channel MDS or ITFS station orbooster station, to the protected servicearea of any MDS Basic Trading Area orPartitioned Service Area licenseeentitled to protection pursuant toparagraph (d)(3) of this section, or toany existing or previously-proposed,cochannel or adjacent channel responsestation hub, or response station under§ 21.940 of this chapter or § 74.940; orthat the applicant for or licensee of suchfacility has consented to suchinterference; and

(iii) Serves a copy of such notificationand analysis upon each party entitled tobe served pursuant to paragraph (d)(4)of this section; and

(iv) Submits to the Commission, onlyupon Commission staff request,duplicates of the submissions requiredby paragraph (g)(6)(ii) of this section;and

(7) Where an application is grantedunder this section, if a facility operatedpursuant to that grant causes harmful,unauthorized interference to anycochannel or adjacent channel facility,it must promptly remedy theinterference or immediately ceaseoperations of the interfering facility,regardless of whether any petitions todeny or for other relief were filedagainst the application during theapplication process. The burden ofproving that a facility operated underthis section is not causing harmful,unauthorized interference lies on the

licensee of the alleged interferingfacility, following the filing of adocumented complaint of interferenceby an affected party; and

(8) In the event any MDS or ITFSreceive site suffers interference due toblock downconverter overload, thelicensee of each response station hubwith a response service area within fivemiles of such receive site shallcooperate in good faith to expeditiouslyidentify the source of the interference.Each licensee of a response station hubwith an associated response stationcontributing to such interference shallbear the joint and several obligation topromptly remedy all interferenceresulting from block downconverteroverload at any ITFS receive siteregistered prior to the submission of theapplication for the response station hublicense or at any receive site within anMDS or ITFS protected service areaapplied for prior to the submission ofthe application for the response stationhub license, regardless of whether thereceive site suffering the interferencewas constructed prior to or after theconstruction of the response station(s)causing the downconverter overload;provided, however, that the licensee ofthe registered ITFS receive site or theMDS or ITFS protected service areamust cooperate fully and in good faithwith efforts by the response station hublicensee to prevent interference beforeconstructing response stations and/or toremedy interference that may occur. Inthe event that more than one responsestation hub licensee contributes to blockdownconverter interference at a MDS orITFS receive site, the licensees of thecontributing response station hubs shallcooperate in good faith to remedypromptly the interference.

(h) Applicants must comply with part17 of this chapter concerningnotification to the Federal AviationAdministration of proposed antennaconstruction or alteration. Theprovisions of §§ 74.967 and 74.981(a)(5),concerning antenna painting andlighting requirements, apply to ITFSresponse stations and response stationhubs, as well as to main and boosterstations.

(i) Response station hubs shall beprotected from cochannel and adjacentchannel interference in accordance withthe following criteria:

(1) An applicant for any new ormodified MDS or ITFS station(including any high-power boosterstation or response station hub) shall berequired to demonstrate interferenceprotection to a response station hubwithin 160.94 km (100 miles) of theproposed facilities. In lieu of theinterference protection requirements set


forth in §§ 21.902(i) of this chapter,21.938(b)(3) of this chapter and 74.903,such demonstration shall establish thatthe proposed facility will not increasethe effective power flux density of theundesired signals generated by theproposed facility and any associatedmain stations, booster stations orresponse stations at the response stationhub antenna for any sector. In lieu of theforegoing, an applicant for a new MDSor ITFS main station license or for anew or modified response station hub orbooster license may demonstrate thatthe facility will not increase the noisefloor at a reception antenna of theresponse station hub by more than 1 dBfor cochannel signals and 45 dB foradjacent channel signals, provided that:

(i) The entity submitting theapplication may only invoke thisalternative once per response stationhub reception sector; or

(ii) The licensee of the affectedresponse station hub may consent toreceive a certain amount of interferenceat its hub.

(2) Commencing upon the filing of anapplication for an ITFS response stationhub license and until such time as theapplication is dismissed or denied or, ifthe application is granted, a letterinforming the Commission ofcompletion of construction is submitted,the ITFS station whose channels arebeing utilized shall be entitled both tointerference protection pursuant to§§ 21.902(i) of this chapter, 21.938(b)(3)of this chapter and 74.903, and toprotection of the response station hubpursuant to the preceding paragraph.Unless the application for the responsestation hub license specifies that thesame frequencies also will be employedfor digital and/or analog point-to-multipoint transmissions by ITFSstations and/or ITFS booster stations,upon the submission of a letterinforming the Commission ofcompletion of construction of an ITFSresponse station hub where thechannels of an ITFS station are beingutilized as response station transmitfrequencies, the ITFS station whosechannels are being utilized for responsestation transmissions shall no longer beentitled to interference protectionpursuant to §§ 21.902(i) of this chapter,21.938(b)(3) of this chapter and 74.903within the response service area withregard to any portion of any 6 MHzchannel employed solely for responsestation communications. Upon thesubmission of a letter informing theCommission of completion ofconstruction of an ITFS response stationhub where the channels of an ITFSstation are being utilized for responsestation transmissions and the

application for the response station hublicense specifies that the samefrequencies will be employed for point-to-multipoint transmissions, the ITFSstation whose channels are beingutilized shall be entitled both tointerference protection pursuant to§§ 21.902(i) of this chapter, 21.938(b)(3)of this chapter and 74.903, and toprotection of the response station hubpursuant to the preceding provisions ofthis paragraph.

(j) ITFS response stations may operateon either all or part of a 6 MHz channelassigned a licensee, on any 125 kHzchannel assigned a licensee, or onadjacent frequencies authorized tomultiple licensees where such stationsare operated jointly. The 125 kHzchannels listed in the following tableshall be assigned to the licensees ofMDS and ITFS stations for use atresponse stations, or for licensing forpoint-to-multipoint transmissionspursuant to paragraph (l) of this section,in accordance with the table. Thespecified 125 kHz frequency channelmay be subdivided to provide a distinctoperating frequency for each of morethan one station, or may be combinedwith adjacent channels, provided thatdigital modulation is employed inaccordance with paragraph (a) of thissection. The specified 125 kHzfrequency channels also may beexchanged with the licensee of anotherMDS or ITFS station for use of another125 kHz channel assigned to the otherlicensee.

Frequency (MHz)

Mainchanneldesigna-

tion

125 kHzchanneldesigna-

tion

2686.0625 A1 I12686.1875 B1 I22686.3125 C1 I32686.4375 D1 I42686.5625 E1 I52686.6875 F1 I62686.8125 G1 I72686.9375 H1 I82687.0625 A2 I92687.1875 B2 I102687.3125 C2 I112687.4375 D2 I122687.5625 E2 I132687.6875 F2 I142687.8125 G2 I152687.9375 H2 I162688.0625 A3 I172688.1875 B3 I182688.3125 C3 I192688.4375 D3 I202688.5625 E3 I212688.6875 F3 I222688.8125 G3 I232688.9375 H3 I242689.0625 A4 I252689.1875 B4 I262689.3125 C4 I272689.4375 D4 I282689.5625 E4 I292689.6875 F4 I302689.8125 G4 I31

(k) 125 kHz wide response channelsshall be subject to the followingrequirements: The 125 kHz widechannel shall be centered at theassigned frequency. If amplitudemodulation is used, the carrier shall notbe modulated in excess of 100%. Iffrequency modulation is used, thedeviation shall not exceed ± 25 kHz.Any emissions outside the channel shallbe attenuated at the channel edges atleast 35 dB below peak output powerwhen analog modulation is employed or35 dB below licensed average outputpower when digital modulation isemployed (or, when subchannels areused, the appropriately adjusted valuebased upon the ratio of the channel-to-subchannel bandwidths). Any emissionsmore than 125 kHz from either channeledge, including harmonics, shall beattenuated at least 60 dB below peakoutput power when analog modulationis employed, or at least 60 dB belowlicensed average output power whendigital modulation is employed (or,when subchannels are used, theappropriately adjusted value basedupon the ratio of the channel-to-subchannel bandwidths).Notwithstanding the foregoing, insituations where adjacent channellicensees jointly transmit over morethan one channel utilizing digital


modulation, the maximum out-of-bandpower shall be attenuated at the edgesof those combined channels at least 35dB relative to the licensed averagepower level of each channel. Emissionsmore than 125 kHz from either edge ofthe combined channels, includingharmonics, shall be attenuated at least60 dB below peak analog power orlicensed average digital power of eachchannel, as appropriate. Different typesof emissions may be authorized for useon 125 kHz wide channels if theapplicant describes fully the modulationand bandwidth desired, anddemonstrates that the modulationselected will cause no more interferencethan is permitted under this paragraph.Greater attenuation may be required ifinterference is caused by out-of-channelemissions.

(l) Any MDS or ITFS conditionallicensee or licensee who wishes to useone or more of its associated I channelsfor point-to-multipoint transmissions ina system with one or more authorized,or previously- or simultaneously-proposed, response station hub(s) shall:

(1) File FCC Form 331 with theCommission, filing with Mellon Bankfor I channels associated with an MDSstation, and filing with the Commissionin Washington, DC for I channelsassociated with an ITFS station. Theapplication shall specify which of theassociated I channels is/are intended forpoint-to-multipoint transmissions. Theapplicant also shall certify on theappropriate form that it has compliedwith the requirements of paragraph(l)(2) of this section. Failure to certifycompliance and to comply completelywith the requirements of paragraph(l)(2) of this section shall result indismissal of the application orrevocation of the authorization forpoint-to-multipoint transmissions onthe relevant I channels, and may resultin imposition of a monetary forfeiture.Modification applications to convert Ichannels associated with ITFS stationsto point-to-multipoint transmissionsshall be considered minor changes forpurposes of § 74.911. These applicationsshall be subject to the procedures setforth in § 21.27(d) of this chapter or§ 74.911(e), as appropriate; and

(2) Submit to InternationalTranscription Services, Inc., 1231 20thStreet, N.W., Washington, DC 20036,both in hard copy, and on a 3.5′′computer diskette in ASCII, andlikewise submit to the Commission,only upon Commission staff request:

(i) Duplicates of the Form 331 filedwith Mellon Bank or with theCommission, as appropriate; and

(ii) The interference analyses requiredto be performed under § 21.902 of this

chapter, and § 21.938 of this chapterwhere appropriate, including theprovisions of §§ 21.909 of this chapter,21.913 of this chapter, 74.939 and74.985 regarding the protection ofresponse station hubs and boosterservice areas from harmfulelectromagnetic interference, andincluding protection of stationsauthorized pursuant to §§ 21.940 of thischapter and 74.940 from harmfulelectromagnetic interference, using theappropriately adjusted interferenceprotection values based upon the ratioof the bandwidths in use; and

(3) Except as provided in § 21.27(d) ofthis chapter or § 74.911(e), asappropriate, be permitted to fileapplications to convert associated Ichannels to point-to-multipointtransmissions at any time. I channelsused for point-to-multipointtransmissions shall be affordedinterference protection in the samemanner as other point-to-multipointMDS and ITFS facilities, withappropriate adjustment of theinterference protection values forbandwidth. Notwithstanding any otherprovision of parts 21 and 74,applications to convert associated Ichannels to point-to-multipointtransmissions, meeting the requirementsof paragraphs (l) (1) and (2) of thissection, shall cut-off applications thatare filed on a subsequent day forfacilities that would cause harmfulelectromagnetic interference to theproposed point-to-multipointoperations; and

(4) Notwithstanding the provisions of§§ 21.30(a)(4) of this chapter and 74.912,and except as provided in § 21.27(d) ofthis chapter or § 74.911(e), asappropriate, be subject to a petition todeny an application to convertassociated I channels to point-to-multipoint transmissions that is filed nolater than the sixtieth (60th) day afterthe date of public notice announcing thefiling of such application or majoramendment thereto. Notwithstanding§§ 21.31 of this chapter and 74.911(d),and except as provided in § 21.27(d) ofthis chapter or § 74.911(e), asappropriate, an application to convertassociated I channels to point-to-multipoint transmissions that meets therequirements of this paragraph shall begranted on the sixty-first (61st) day afterthe Commission shall have given publicnotice of the acceptance for filing of it,or of a major amendment to it if suchmajor amendment has been filed, unlessprior to such date either a party ininterest timely files a formal petition todeny or for other relief pursuant to§ 21.30(a) of this chapter or § 74.912, orthe Commission notifies the applicant

that its application will not be granted.Where an application is grantedpursuant to the provisions of thisparagraph, the conditional licensee orlicensee shall maintain a copy of theapplication at the I channels stationuntil such time as the Commissionissues an I channels station license forpoint-to-multipoint transmissions; and

(5) Where an application is grantedunder this paragraph, and a facilityoperated pursuant to that grant causesharmful, unauthorized interference toany cochannel or adjacent channelfacility, promptly remedy theinterference or immediately ceaseoperations of the interfering facility,regardless of whether any petitions todeny or for other relief were filedagainst the application during theapplication process. The burden ofproving that a facility operated underthis paragraph is not causing harmful,unauthorized interference lies on thelicensee of the alleged interferingfacility, following the filing of adocumented complaint of interferenceby an affected party.

(m) A response station may beoperated unattended. The overallperformance of the response stationtransmitter shall be checked by the hublicensee as often as necessary to ensurethat it is functioning in accordance withthe requirements of the Commission’srules. The licensee of a response stationhub is responsible for the properoperation of all associated responsestations and must have reasonable andtimely access to all station transmitters.Response stations shall be installed andmaintained by the licensee of theassociated hub station, or the licensee’semployees or agents, and protected insuch manner as to prevent tampering oroperation by unauthorized persons. Noresponse hub may lawfullycommunicate with any response stationwhich has not been installed by anauthorized person, and each responsestation hub licensee is responsible formaintaining, and making available tothe Commission upon request, a listcontaining the customer name and sitelocation (street address and latitude/longitude to the nearest second) of eachassociated response station, plus thetechnical parameters (e.g., EIRP,emission, bandwidth, and antennapattern, height, orientation andpolarization) pertinent to each specificresponse station.

(n) The transmitting apparatusemployed at ITFS response stationsshall have received type certification.

(o) An ITFS response station shall beoperated only when engaged incommunication with its associated ITFSresponse station hub or ITFS station, or


for necessary equipment or system testsand adjustments. Radiation of anunmodulated carrier and otherunnecessary transmissions areforbidden.

(p) At least 20 days prior to theactivation of a response stationtransmitter located within a radius of1960 feet of a registered or previously-applied-for ITFS receive site, theresponse station hub licensee mustnotify, by certified mail, the licensee ofthe ITFS site of the intention to activatethe response station. The notificationmust contain the street address andgeographic coordinates (to the nearestsecond) of the response station, aspecification of the station’s EIRP,antenna pattern/orientation/heightAMSL, channel(s) to be used, as well asthe name and telephone number of acontact person who will be responsiblefor coordinating the resolution of anyinterference problems.

(q) Interference calculations shall beperformed in accordance withAppendix D to the Report and Order inMM Docket No. 97–217, FCC 98–231,‘‘Methods For Predicting InterferenceFrom Response Station Transmittersand To Response Station Hubs and ForSupplying Data on Response StationSystems.’’ Compliance with the out-of-band emission limitations shall beestablished in accordance with§ 21.908(e) of this chapter.

41. New § 74.940 is added, to read asfollows:

§ 74.940 Individually licensed 125 kHzchannel ITFS response stations.

(a) The provisions of § 74.939 (a), (e),(h), (j), (k), (n) and (o), also shall applywith respect to authorization of a 125kHz channel(s) ITFS response stationnot under a response station hublicense. The applicant shall complywith the requirements of § 21.902 of thischapter, and § 21.938 of this chapterwhere appropriate, including theprovisions of §§ 21.909 of this chapter,21.913 of this chapter, 74.939 and74.985 regarding the protection ofresponse station hubs and boosterservice areas from harmfulelectromagnetic interference, using theappropriately adjusted interferenceprotection values based upon the ratioof the bandwidths in use, where theauthorized or previously-proposedcochannel or adjacent channel station isoperated or to be operated in a systemwith one or more response stationhub(s).

(b) An application for a license tooperate a new or modified 125 kHzchannel(s) ITFS response station notunder a response station hub licenseshall be filed with the Commission in

Washington, DC, on FCC Form 330. Theapplicant shall supply the followinginformation on that form for eachresponse station:

(1) The geographic coordinates andstreet address of the ITFS responsestation transmitting antenna; and

(2) The manufacturer’s name, typenumber, operating frequency, andpower output of the proposed ITFSresponse station transmitter; and

(3) The type of transmitting antenna,power gain, azimuthal orientation andpolarization of the major lobe ofradiation in degrees measured clockwisefrom True North; and

(4) A sketch giving pertinent details ofthe ITFS response station transmittingantenna installation including groundelevation of the transmitter site abovemean sea level; overall height aboveground, including appurtenances, of anyground-mounted tower or mast onwhich the transmitting antenna will bemounted or, if the tower or mast is orwill be located on an existing buildingor other manmade structure, theseparate heights above ground of thebuilding and the tower or mastincluding appurtenances; the location ofthe tower or mast on the building; thelocation of the transmitting antenna onthe tower or mast; and the overall heightof the transmitting antenna aboveground.

(c) Each ITFS response stationlicensed under this section shall complywith the following:

(1) No ITFS response station shall belocated beyond the protected servicearea of the ITFS station with which itcommunicates; and

(2) No ITFS response station shalloperate with a transmitter output powerin excess of 2 watts; and

(3) No ITFS response station shalloperate at an excess of 16 dBW EIRP.

(d) During breaks in communications,the unmodulated carrier frequency shallbe maintained within 35 kHz of theassigned frequency at all times.Adequate means shall be provided toinsure compliance with this rule.

(e) Each ITFS response station shallemploy a directive transmitting antennaoriented towards the transmitter site ofthe associated ITFS station or towardsthe response station hub with which theITFS response station communicates.The beamwidth between half powerpoints shall not exceed 15° andradiation in any minor lobe of theantenna radiation pattern shall be atleast 20 dB below the power in the mainlobe of radiation.

(f) A response station may be operatedunattended. The overall performance ofthe response station transmitter shall bechecked by the licensee of the station or

hub receiving the response signal, or bythe licensee’s employees or agents, asoften as necessary to ensure that thetransmitter is functioning in accordancewith the requirements of theCommission’s rules. The licensee of thestation or hub receiving the responsesignal is responsible for the properoperation of the response station andmust have reasonable and timely accessto the response station transmitter. Theresponse station shall be installed andmaintained by the licensee of theassociated station or hub, or thelicensee’s employees or agents, andprotected in such manner as to preventtampering or operation by unauthorizedpersons. No response station which hasnot been installed by an authorizedperson may lawfully communicate withany station or hub.

§ 74.950 [Removed]

42. Section 74.950 is removed.43. In § 74.951, paragraph (b) is

revised to read as follows:

§ 74.951 Modification of transmissionsystems.

* * * * *(b) Any change in the antenna system

affecting the direction of radiation,directive radiation pattern, antennagain, or radiated power; provided,however, that a licensee may install asectorized antenna system without priorconsent if such system does not changepolarization or result in an increase inradiated power by more than one dB inany direction, and notice of suchinstallation is provided to theCommission on FCC Form 331 withinten (10) days of installation.* * * * *


§ 74.952 Acceptability of equipment forlicensing.

ITFS transmitters must be typecertified by the Commission for theparticular signals that will be employedin actual operation. Either themanufacturer or the licensee mustobtain transmitter certification for thetransmitter by filing an application forcertification with appropriateinformation concerning the signalwaveforms and measurements.

45. In § 74.961, paragraph (a) isrevised to read as follows:

§ 74.961 Frequency tolerance.

(a) The frequency of any ITFS station,or of any ITFS booster stationauthorized pursuant to § 74.985(b), shallbe maintained within ±1 kHz of theassigned frequency at all times when thestation is in operation. ITFS 65125booster


stations authorized pursuant to§ 74.985(e) and ITFS response stationsauthorized pursuant to § 74.939 shallemploy transmitters with sufficientfrequency stability to ensure that theemission stays within the authorizedbandwidth. A transmitter licensed priorto November 1, 1991, that remains at thestation site initially licensed and doesnot comply with this paragraph maycontinue to be used for its life if it doesnot cause harmful interference to theoperation of any other licensee. Anynon-conforming transmitter replacedafter November 1, 1991, must bereplaced by a transmitter meeting therequirements of this paragraph.* * * * *

46. Section 74.965 is revised to readas follows.

§ 74.965 Posting of station license.

(a) The instrument of authorization, aclearly legible photocopy thereof, or thename, address and telephone number ofthe custodian of the instrument ofauthorization shall be available at eachstation, booster station authorizedpursuant to § 74.985(b) and ITFSresponse station hub. Each operator ofan ITFS booster station shall post at thebooster station the name, address andtelephone number of the custodian ofthe notification filed pursuant to§ 74.985(e) if such notification is notmaintained at the booster station.

(b) If an ITFS station, an ITFS boosterstation or an ITFS response station hubis operated unattended, the call sign andname of the licensee shall be displayedsuch that it may be read within thevicinity of the transmitter enclosure orantenna structure.

47. In § 74.982, paragraph (b) isrevised, and new paragraph (g) is added,to read as follows:

§ 74.982 Station identification.

* * * * *(b) Except as otherwise provided in

paragraphs (c) and (d) of this section,each instructional television fixedstation solely utilizing analogtransmissions shall transmit its call signat the beginning and end of each periodof operation and, during operation, onthe hour. Visual or aural transmissionsshall be employed.* * * * *

(g) The provisions of paragraphs (b)through (e) of this section shall notapply to any ITFS licensee’s station ortransmissions where digitaltransmissions are utilized by the ITFSlicensee on any of its licensed or shiftedchannels.


§ 74.985 Signal booster stations.

(a) An ITFS booster station may reusechannels to repeat the signals of ITFSstations or to originate signals on ITFSchannels. The aggregate power fluxdensity generated by an ITFS stationand all associated signal booster stationsand all simultaneously operatingcochannel response stations licensed toor applied for by the applicant may notexceed –73 dBW/m2 (or, whensubchannels or 125 kHz channels areused, the appropriately adjusted valuebased upon the ratio of the channel-to-subchannel or 125 kHz bandwidths) ator beyond the boundary of the protectedservice area, as defined by § 21.902(d)(1)of this chapter, of the main ITFS stationwhose channels are being reused, asmeasured at locations for which there isan unobstructed signal path, unless theconsent of the cochannel licensee isobtained.

(b) An ITFS licensee or conditionallicensee who is a response station hublicensee, conditional licensee orapplicant may secure a license for anITFS signal booster station that has amaximum power level in excess of –9dBW EIRP (or, when subchannels orsuperchannels, or 125 kHz channels, areused, the appropriately adjusted valuebased upon the ratio of 6 MHz to thesubchannel or superchannel, or 125kHz, bandwidth) and that employs onlydigital modulation with uniform powerspectral density in accordance with theCommission’s Declaratory Ruling andOrder, 11 FCC Rcd 18839 (1996) (a‘‘high-power ITFS signal boosterstation’’). The applicant for a high-power ITFS signal booster station shallfile FCC Form 331 with the Commissionin Washington, DC, and certify on thatform that the applicant has compliedwith the additional requirements ofparagraph (b) of this section. Failure tocertify compliance and to complycompletely with the followingrequirements of paragraph (b) of thissection shall result in dismissal of theapplication or revocation of the high-power ITFS signal booster stationlicense, and may result in imposition ofa monetary forfeiture. The applicant fora high-power ITFS signal booster stationadditionally is required to submit toInternational Transcription Services,Inc., 1231 20th Street, N.W.,Washington, DC 20036, both in hardcopy, and on a 3.5’’ computer diskettein ASCII, and likewise to submit to theCommission, only upon Commissionstaff request, duplicates of the Form 331filed with the Commission, and thefollowing information:

(1) A demonstration that the proposedsignal booster station site is within the

protected service area, as defined in§ 21.902(d)(1) of this chapter, of themain ITFS station whose channels are tobe reused; and

(2) A demonstration that the boosterservice area is entirely within theprotected service area of the ITFSstation whose channels are beingreused, or in the alternative, that thelicensee entitled to any cochannelprotected service area which isoverlapped by the proposed boosterservice area has consented to suchoverlap; and


(4) A study which demonstrates thatthe aggregate power flux density of theITFS station and all associated boosterstations and simultaneously operatingcochannel response stations licensed toor applied for by the applicant does notexceed –73 dBW/m2 (or, whensubchannels or 125 kHz channels areused, the appropriately adjusted valuebased upon the ratio of the channel-to-subchannel or 125 kHz bandwidths) ator beyond the boundary of the protectedservice area of the main ITFS stationwhose channels are to be reused, asmeasured at locations for which there isan unobstructed signal path, unless theconsent of affected licensees has beenobtained; and

(5) In lieu of the requirements of§ 74.903, a study which demonstratesthat the proposed signal booster stationwill cause no harmful interference (asdefined in § 74.903(a) (1) and (2)) tocochannel and adjacent channel,authorized or previously-proposed ITFSand MDS stations with protected servicearea center coordinates as specified in§ 21.902(d) of this chapter, to anyauthorized or previously-proposedresponse station hubs, booster serviceareas, or I channel stations associatedwith such ITFS and MDS stations, or toany previously-registered ITFS receivesites, within 160.94 kilometers (100miles) of the proposed booster station’stransmitter site. Such study shallconsider the undesired signal levelsgenerated by the proposed signalbooster station, the main station, allother licensed or previously-proposedassociated booster stations, and allsimultaneously operating cochannelresponse stations licensed to or appliedfor by the applicant. In the alternative,a statement from the affected MDS orITFS licensee or conditional licenseestating that it does not object tooperation of the high-power ITFS signalbooster station may be submitted; and

(6) A description of the boosterservice area; and


(7) A certification that copies of thematerials set forth in paragraph (b) ofthis section have been served upon thelicensee or conditional licensee of eachstation (including each response stationhub and booster station) required to bestudied pursuant to paragraph (b)(5) ofthis section, and upon any affectedholder of a BTA or PSA authorizationpursuant to paragraph (b)(4) of thissection.

(c) Applications for high-power ITFSsignal booster station licenses shall bedeemed minor change applications and,except as provided in § 74.911(e), maybe filed at any time. Notwithstandingany other provision of part 74,applications for high-power ITFS signalbooster station licenses meeting therequirements of paragraph (b) of thissection shall cut-off applications thatare filed on a subsequent day forfacilities that would cause harmfulelectromagnetic interference to theproposed booster stations.

(d) Notwithstanding the provisions of§ 74.912 and except as provided in§ 74.911(e), any petition to deny anapplication for a high-power ITFS signalbooster station license shall be filed nolater than the sixtieth (60th) day afterthe date of public notice announcing thefiling of such application or majoramendment thereto. Notwithstanding§ 74.911(d) and except as provided in§ 74.911(e), an application for a high-power ITFS signal booster stationlicense that meets the requirements ofparagraph (b) of this section shall begranted on the sixty-first (61st) day afterthe Commission shall have given publicnotice of the acceptance for filing of it,or of a major amendment to it if suchmajor amendment has been filed, unlessprior to such date either a party ininterest timely files a formal petition todeny or for other relief pursuant to§ 74.912, or the Commission notifies theapplicant that its application will not begranted. Where an application is grantedpursuant to the provisions of thisparagraph, the conditional licensee orlicensee shall maintain a copy of theapplication at the ITFS booster stationuntil such time as the Commissionissues a high-power ITFS signal boosterstation license.

(e) Eligibility for a license for an ITFSsignal booster station that has amaximum power level of –9 dBW EIRP(or, when subchannels orsuperchannels, or 125 kHz channels, areused, the appropriately adjusted valuebased upon the ratio of 6 MHz to thesubchannel or superchannel, or 125kHz, bandwidth) (a ‘‘low-power ITFSsignal booster station’’) shall berestricted to an ITFS licensee orconditional licensee. A low-power ITFS

signal booster station may operate onlyon one or more ITFS channels that arelicensed to the licensee of the ITFSbooster station, but may be operated bya third party with a fully-executed leaseor consent agreement with the ITFSconditional licensee or licensee. AnITFS licensee or conditional licenseemay install and commence operation ofa low-power ITFS signal booster stationfor the purpose of retransmitting thesignals of the ITFS station or fororiginating signals. Such installationand operation shall be subject to thecondition that for sixty (60) days afterinstallation and commencement ofoperation, no objection or petition todeny is filed by an authorizedcochannel or adjacent channel ITFS orMDS station with a transmitter within8.0 kilometers (5 miles) of thecoordinates of the low-power ITFSsignal booster station. An ITFS licenseeor conditional licensee seeking to installa low-power ITFS signal booster stationunder this rule must, within 48 hoursafter installation, submit FCC Form 331to the Commission in Washington, DC,and submit to InternationalTranscription Services, Inc., 1231 20thStreet, NW., Washington, DC 20036,both in hard copy, and on a 3.5′′computer diskette in ASCII, duplicatesof the Form 331 filed with theCommission, and the following (whichalso shall be submitted to theCommission only upon Commissionstaff request at any time):

(1) A description of the signal boostertechnical specifications (including anantenna envelope plot or, if theenvelope plot is on file with theCommission, the make and model of theantenna, antenna gain and azimuth), thecoordinates of the booster, the height ofthe center of radiation above mean sealevel, the street address of the signalbooster, and a description of the boosterservice area; and

(2) A demonstration that the boosterservice area is entirely within theprotected service area of the stationwhose channels are being reused, or, inthe alternative, that the licensee entitledto any protected service area which isoverlapped by the proposed boosterservice area has consented to suchoverlap; and


(4) A certification that no FederalAviation Administration determinationof No Hazard to Air Navigation isrequired under part 17 of this chapteror, if such determination is required,either

(i) A statement of the FCC AntennaStructure Registration Number; or

(ii) If an FCC Antenna StructureRegistration Number has not beenassigned for the antenna structure, thefiler must indicate the date theapplication by the antenna structureowner to register the antenna structurewas filed with the FCC in accordancewith part 17 of this chapter; and

(5) A certification that(i) The maximum power level of the

signal booster transmitter does notexceed ¥9 dBW EIRP (or, whensubchannels or superchannels, or 125kHz channels, are used, theappropriately adjusted value basedupon the ratio of 6 MHz to thesubchannel or superchannel, or 125kHz, bandwidth); and

(ii) Where the booster is operating onchannel D4, E1, F1, E2, F2, E3, F3, E4,F4 and/or G1, no registered receiver ofan ITFS E or F channel station,constructed prior to May 26, 1983, islocated within a 1 mile (1.61 km) radiusof the coordinates of the booster, or inthe alternative, that a consent statementhas been obtained from the affectedITFS licensee; and

(iii) The applicant has complied with§ 1.1307 of this chapter; and

(iv) Each MDS and/or ITFS stationlicensee (including the licensees ofbooster stations and response stationhubs) with protected service areas and/or registered receivers within a 8 km (5mile) radius of the coordinates of thebooster has been given notice of itsinstallation; and

(v) The signal booster site is withinthe protected service area of the ITFSstation whose channels are to be reused;and

(vi) The aggregate power flux densityof the ITFS station and all associatedbooster stations and simultaneouslyoperating cochannel response stationslicensed to or applied for by theapplicant does not exceed ¥73 dBW/m2 (or, when subchannels or 125 kHzchannels are used, the appropriatelyadjusted value based upon the ratio ofthe channel-to-subchannel or 125 kHzbandwidths) at or beyond the boundaryof the protected service area of the mainITFS station whose channels are to bereused, as measured at locations forwhich there is an unobstructed signalpath, unless the consent of affectedlicensees has been obtained; and

(vii) The antenna structure willextend less than 6.10 meters (20 feet)above the ground or natural formationor less than 6.10 meters (20 feet) abovean existing manmade structure (otherthan an antenna structure); and

(viii) The ITFS conditional licensee orlicensee understands and agrees that in


the event harmful interference isclaimed by the filing of an objection orpetition to deny, the conditionallicensee or licensee must terminateoperation within two (2) hours ofnotification by the Commission, andmust not recommence operation untilreceipt of written authorization to do soby the Commission.

(f) Commencing upon the filing of anapplication for a high-power ITFS signalbooster station license and until suchtime as the application is dismissed ordenied or, if the application is granted,a letter informing the Commission ofcompletion of construction is submitted,an applicant for any new or modifiedMDS or ITFS station (including anyresponse station hub, high-powerbooster station, or I channels station)shall demonstrate compliance with theinterference protection requirements setforth in §§ 21.902(i) of this chapter,21.938(b)(3) of this chapter or 74.903with respect to any previously-proposedor authorized booster service area bothusing the transmission parameters of thehigh-power ITFS signal booster station(e.g., EIRP, polarization(s) and antennaheight) and the transmission parametersof the ITFS station whose channels areto be reused by the high-power ITFSsignal booster station. Upon thesubmission of a letter informing theCommission of completion ofconstruction of an ITFS booster stationapplied for pursuant to paragraph (b) ofthis section, or upon the submission ofan ITFS booster station notificationpursuant to paragraph (e) of this section,the ITFS station whose channels arebeing reused by the ITFS signal boostershall no longer be entitled tointerference protection pursuant to§§ 21.902(i) of this chapter, 21.938(b)(3)of this chapter and 74.903 within thebooster service area based on thetransmission parameters of the ITFSstation whose channels are beingreused. A booster station shall not beentitled to protection from interferencecaused by facilities proposed on or priorto the day the application or notificationfor the booster station is filed. A boosterstation shall not be required to protectfrom interference facilities proposed on

or after the day the application ornotification for the booster station isfiled.

(g) Where an application is grantedunder paragraph (d) of this section, if afacility operated pursuant to that grantcauses harmful, unauthorizedinterference to any cochannel oradjacent channel facility, it mustpromptly remedy the interference orimmediately cease operations of theinterfering facility, regardless ofwhether any petitions to deny or forother relief were filed against theapplication during the applicationprocess. The burden of proving that ahigh-power ITFS signal booster stationis not causing harmful, unauthorizedinterference lies on the licensee of thealleged interfering facility, following thefiling of a documented complaint ofinterference by an affected party.

(h) In the event any MDS or ITFSreceive site suffers interference due toblock downconverter overload, thelicensee of each signal booster stationwithin five miles of such receive siteshall cooperate in good faith toexpeditiously identify the source of theinterference. Each licensee of a signalbooster station contributing to suchinterference shall bear the joint andseveral obligation to promptly remedyall interference resulting from blockdownconverter overload at any ITFSreceive site registered prior to thesubmission of the application ornotification for the signal booster stationor at any receive site within an MDS orITFS protected service area applied forprior to the submission of theapplication or notification for the signalbooster station, regardless of whetherthe receive site suffering theinterference was constructed prior to orafter the construction of the signalbooster station(s) causing thedownconverter overload; provided,however, that the licensee of theregistered ITFS receive site or the MDSor ITFS protected service area mustcooperate fully and in good faith withefforts by the signal booster stationlicensee to prevent interference beforeconstructing the signal booster stationand/or to remedy interference that may

occur. In the event that more than onesignal booster station licenseecontributes to block downconverterinterference at a MDS or ITFS receivesite, the licensees of the contributingsignal booster stations shall cooperate ingood faith to remedy promptly theinterference.

49. In § 74.986, paragraph (a) isrevised, and new paragraph (a)(8) isadded, to read as follows:

§ 74.986 Involuntary ITFS stationmodifications.

(a) Parties specified in paragraph (b)of this section may, subject toCommission approval, involuntarilymodify the facilities of an existing ITFSlicensee in the following situations:* * * * *

(8) There are no response station hubslicensed to or previously-proposed byany of the parties specified in paragraph(b) of this section, in the same systemas the existing ITFS licensee of whosefacilities involuntary modification issought; however, in no event shall theCommission approve an involuntaryretuning of an existing ITFS licensee’sstation to other frequencies, except asprovided in § 74.902(i) through (k).* * * * *

50. The alphabetical index to part 74is amended by adding ‘‘ITFS’’ as the lastentry under the ‘‘Changes ofEquipment’’ heading; removing the‘‘ITFS’’ entry from under the‘‘Equipment and installation’’ heading;removing the ‘‘ITFS’’ entry from underthe ‘‘Equipment Performance’’ heading;revising the entries under the ‘‘ITFS’’heading; removing the ‘‘ITFS’’ entryfrom under the ‘‘Remote controloperation’’ heading; revising the ‘‘Signalboosters, UHF translator (LPTV/TVTranslators)’’ heading to read ‘‘Signalboosters’’, and adding entries under the‘‘Signal boosters’’ heading; removing the‘‘Mutually exclusive applications,selection procedure (ITFS)’’ heading;revising the ‘‘Response stations (ITFS)’’heading; and adding in alphabeticalorder a ‘‘Response station hubs (ITFS)’’heading and a ‘‘Wireless cable usage ofITFS’’ heading, to read as follows:

ALPHABETICAL INDEX—PART 74

* * * * * * *Changes of Equipment—

* * * * * * *ITFS .................................................................................................................................................................................................. 74.951

* * * * * * *ITFS—

Application processing ...................................................................................................................................................................... 74.911


ALPHABETICAL INDEX—PART 74—Continued

Application requirements from part 73 ............................................................................................................................................. 74.910Interference ....................................................................................................................................................................................... 74.903Petition to deny ................................................................................................................................................................................. 74.912Purpose and permissible service ..................................................................................................................................................... 74.931Response station hubs ..................................................................................................................................................................... 74.939Response stations (individually licensed) ......................................................................................................................................... 74.940Signal booster stations ..................................................................................................................................................................... 74.985Transmission standards .................................................................................................................................................................... 74.938Wireless cable use ........................................................................................................................................................................... 74.990

* * * * * * *Response station hubs (ITFS) .......................................................................................................................................................... 74.939Response stations (ITFS; individually licensed) ............................................................................................................................... 74.940

* * * * * * *Signal boosters—

UHF translator (LPTV/TV Translators) ............................................................................................................................................. 74.733ITFS .................................................................................................................................................................................................. 74.985

* * * * * * *

W

Wireless cable usage of ITFS .......................................................................................................................................................... 74.990

* * * * * * *



Office of the Secretary

49 CFR Part 40

[Docket No. OST–98–4777]

RIN 2105–AC74

Amendments to Opiate ThresholdLevels

AGENCY: Office of the Secretary, DOT.ACTION: Final rule.

SUMMARY: This final rule makesconforming changes to the Department’sdrug testing procedures to incorporatechanges made by the Department ofHealth and Human Services (DHHS) inthe threshold levels of opiates. It isessential for the Department’s drugtesting procedures to remain consistentwith the DHHS Guidelines, as Congressprovided in the OmnibusTransportation Employee Testing Act of1991.EFFECTIVE DATE: The final rule takeseffect on December 1, 1998.FOR FURTHER INFORMATION CONTACT:Robert C. Ashby, Deputy AssistantGeneral Counsel for Regulation andEnforcement, Room 10424, (202–366–9306); 400 7th Street, SW., Washington,DC 20590 or Mary Bernstein, Director,Office of Drug and Alcohol Policy andCompliance, Room 5405, (202–366–3784); 400 7th Street, SW., Washington,DC 20590.

SUPPLEMENTARY INFORMATION: OnSeptember 30, 1997, the Department ofHealth and Human Services (DHHS)published the final amendments to itsMandatory Guidelines for FederalWorkplace Testing Programs (DHHSGuidelines) and indicated that May 1,1998 would be the effective date forimplementing these amendments. Theamendments raised the initial andconfirmatory test opiate thresholds from300 nanograms per milliliter (ng/ml) to2000 ng/ml. The DHHS amendmentsalso established a new requirement totest for 6-acetylmorphine (6-AM), ametabolite that comes only from heroin,using a 10 ng/ml confirmatory level, forspecimens that have tested positive formorphine on the confirmatory test at the2000 ng/ml level.

DHHS made changes to the testingcutoff levels for opiates following anotice and opportunity for comment.DHHS received 22 comments, of whicha majority favored their proposal. Underthe previous standards, 87 percent oflaboratory positive opiate specimenswere verified as negative by medicalreview officers (MROs). DHHSanticipates that these amendments willeliminate the identification of mostindividuals legitimately takingprescriptions including morphine orcodeine or who have ingested poppyseeds.

Subsequent to the publication of thefinal amendments, it became clear thatmanufacturers would not be able toprovide a sufficient supply of themodified opiate test kits by the May 1,1998 effective date. On February 4,1998, DHHS sent a letter to all Federal

agencies, HHS certified and applicantdrug testing laboratories, andimmunoassay kit manufacturersinforming them that the effective datewould be delayed 4 to 6 months beyondthe May 1, 1998 effective date.

DHHS chose December 1, 1998 as thenew effective date for implementing thenew opiate testing cutoff levels. DHHSwas satisfied that manufacturers of testkits can provide an adequate supply ofthe modified opiate test kits to thelaboratories by the December 1, 1998effective date and that the laboratorieswould be able to use these opiate testkits to conduct the initial andconfirmatory tests at the revised testinglevels for opiates.

It is essential for the Department’sdrug testing procedures to remainconsistent with the DHHS Guidelines,as Congress provided in the OmnibusTransportation Employee Testing Act of1991. Consistency is also necessary toavoid confusion in the testing process.For these reasons, the Department ismaking conforming changes to its drugtesting procedures in 49 CFR Part 40.

Regulatory Process Matters

The final rule is considered to be anonsignificant rulemaking under theDOT Regulatory Policies andProcedures. It is also a nonsignificantrule for purposes of Executive Order12886. The Department certifies, underthe Regulatory Flexibility Act, that thefinal rule does not have a significanteconomic effect on a substantial numberof small entities. The rule does notimpose any costs or burdens onregulated entities, since it will result in


fewer opiate positives having to bereviewed by medical review officers.The rule has also been analyzed inaccordance with the principles andcriteria contained in Executive Order12612, and it has been determined thatit does not have sufficient federalismimplications to warrant the preparationof a Federalism Assessment.

Issuance of Final Rule WithoutOpportunity for Notice and Comment

With respect to the amendments to 49CFR Part 40 concerning opiate testinglevels, the Department has determinedthat it would be impracticable,unnecessary, or contrary to the publicinterest to provide an opportunity fornotice and comment under 5 U.S.C.553(b). These amendments areconforming amendments making theDepartment’s drug testing proceduresconsistent with those of DHHS, as isrequired under the OmnibusTransportation Employee Testing Act of1991. Before publishing its amendmentsto the DHHS Guidelines, DHHSsolicited, received, and responded topublic comment on the identicalprovisions. Since there has already beenan opportunity for public comment onthe substance of the changes andconsistency is necessary to avoidconfusion in the testing process, theSecretary finds good cause under 5U.S.C. 553(d)(3) for the final rule to beeffective less than 30 days from the dateof publication in the Federal Register.

Paperwork Reduction ActThis rule contains no new

information collection requirementsunder the Paperwork Reduction Act of1995 (44 U.S.C. 3501 et seq).

Unfunded Mandates Reform Act of1995

The Department has determined thatthe requirements of Title II of theUnfunded Mandates Reform Act of 1995do not apply to this rulemaking.

Office of the Secretary ofTransportation

List of Subjects in 49 CFR Part 40Drug testing, Reporting and

recordkeeping requirements, Safety,Transportation.

For the reasons set forth in thepreamble, the Office of the Secretaryamends 49 CFR Part 40 as follows:

PART 40—PROCEDURES FORTRANSPORTATION WORKPLACEDRUG AND ALCOHOL TESTINGPROGRAMS


Authority: 49 U.S.C. 102, 301, 322; 49U.S.C. App. 1301 nt., app. 1434 nt., app.2717., app. 1618a.

§ 40.29 [Amended]

2. In section 40.29(e)(1), the initialtest level for opiates appearing in thetable is amended by revising the value‘‘300’’ to ‘‘2000’’ and deleting thefootnote ‘‘*’’ that had specified a 25ng/ml testing level if the immunoassaytest was specific for free morphine.

3. In section 40.29(f)(1), theconfirmatory test level for morphineappearing in the table is amended byrevising the value from ‘‘300’’ to‘‘2000’’.

4. In section 40.29(f)(1), theconfirmatory test level for codeineappearing in the table is amended byrevising the value from ‘‘300’’ to‘‘2000’’.

5. In section 40.29(f)(1), the table isamended by adding a new line underopiates to read as follows:

§ 40.29 Laboratory analysis procedures.

Confirm-atory testcutoff lev-els (ng/ml)

* * * * *6-Acetylmorphine 4 ...................... 10 ng/ml.

* * * * *

4 Test for 6–AM when morphine concentra-tion exceeds 2,000 ng/ml.

Issued this 17th day of November, 1998, atWashington, D.C.Rodney E. Slater,Secretary.[FR Doc. 98–31495 Filed 11–24–98; 8:45 am]BILLING CODE 4910–62–P

DEPARTMENT OF COMMERCE

National Oceanic and AtmosphericAdministration

50 CFR Part 230

[I.D. 022398A]

Whaling Provisions: AboriginalSubsistence Whaling Quotas

AGENCY: National Marine FisheriesService (NMFS), National Oceanic andAtmospheric Administration (NOAA),Commerce.ACTION: Revision of aboriginalsubsistence whaling quota.

SUMMARY: The U.S. Government andRussian Federation have concludedbilateral arrangements to ensure that thequotas for bowhead whales and gray

whales set at the 1997 Annual Meetingof the International WhalingCommission are not exceeded. Inresponse, NMFS is revising the 1998quota for bowhead whales from 77bowhead whales struck to 75 bowheadwhales struck. The gray whale quota for1998 remains 5 gray whales landed. Therevised bowhead quota will govern theharvest of bowhead whales by membersof the Alaska Eskimo WhalingCommission.FOR FURTHER INFORMATION CONTACT:Catherine Corson, (301) 713–2322.SUPPLEMENTARY INFORMATION: So that the1998 quota of bowhead strikes is notexceeded, the Russian natives may useno more than 7 strikes, and the AlaskaEskimos may use no more than 75strikes. Each side will ensure that thenumbers specified in this paragraph forits native group are not exceeded. Thetwo sides plan to confer on monitoringof the 1999 quota, including any strikesthat may be carried forward from 1998.

Likewise, so that the 1998 quota ofgray whales is not exceeded, thebilateral arrangements concluded thatthe Makah Indian Tribe may take nomore than five gray whales, and theRussian natives may take no more than135 gray whales. Each side will ensurethat the numbers specified in thisparagraph for its native group are notexceeded. The two sides plan to conferon monitoring of the 1999 quota.

Dated: November 16, 1998.Rolland A. Schmitten,Assistant Administrator for Fisheries,National Marine Fisheries Service.[FR Doc. 98–31521 Filed 11–24–98; 8:45 am]BILLING CODE 3510–22–F


National Oceanic and AtmosphericAdministration

50 CFR Part 679

[Docket No. 961107312–7021–02; I.D.111698D]

Fisheries of the Exclusive EconomicZone Off Alaska; Bycatch RateStandards for the First Half of 1999

AGENCY: National Marine FisheriesService (NMFS), National Oceanic andAtmospheric Administration (NOAA),Commerce.ACTION: Pacific halibut and red king crabbycatch rate standards; request forcomments.

SUMMARY: NMFS announces the Pacifichalibut and red king crab bycatch ratestandards for the first half of 1999.


Publication of these bycatch ratestandards is necessary under regulationsimplementing the vessel incentiveprogram. This action is necessary toimplement the bycatch rate standardsfor trawl vessel operators whoparticipate in the Alaska groundfishtrawl fisheries. The intent of this actionis to reduce prohibited species bycatchrates and promote conservation ofgroundfish and other fishery resources.DATES: Effective 1201 hours, Alaskalocal time (A.l.t.), January 20, 1999,through 2400 hours, A.l.t., June 30,1999. Comments on this action must bereceived at the following address nolater than 4:30 p.m., A.l.t., December 24,1998.ADDRESSES: Comments should bemailed to Sue Salveson, AssistantRegional Administrator, SustainableFisheries Division, NMFS, P.O. Box21668, Juneau, AK 99802–1668, Attn:Lori Gravel; or be delivered to 709 West9th Street, Federal Building, Room 401,Juneau, AK.FOR FURTHER INFORMATION CONTACT: SueSalveson, 907–586–7228.SUPPLEMENTARY INFORMATION: NMFSmanages the domestic groundfishfisheries in the exclusive economic zoneof the Bering Sea and Aleutian Islandsmanagement area (BSAI) and Gulf ofAlaska (GOA) according to the FisheryManagement Plan for the GroundfishFishery of the Bering Sea and Aleutian

Islands Area and the FisheryManagement Plan for Groundfish of theGulf of Alaska (FMPs). The NorthPacific Fishery Management Council(Council) prepared the FMPs under theauthority of the Magnuson-StevensFishery Conservation and ManagementAct (Magnuson-Stevens Act).Regulations implementing these FMPsand governing the U.S. groundfishfisheries appear at 50 CFR part 679.

Regulations at § 679.21(f) implement avessel incentive program to reducehalibut and red king crab bycatch ratesin the groundfish trawl fisheries. Underthe incentive program, operators oftrawl vessels may not exceed Pacifichalibut bycatch rate standards specifiedfor the BSAI and GOA midwater pollockand ‘‘other trawl’’ fisheries, and theBSAI yellowfin sole and bottom pollockfisheries. Vessel operators also may notexceed red king crab bycatch standardsspecified for the BSAI yellowfin soleand ‘‘other trawl’’ fisheries in BycatchLimitation Zone 1 (defined in § 679.2).The fisheries included under theincentive program are defined inregulations at § 679.21(f)(2).

Regulations at § 679.21(f)(3) requirepublication of halibut and red king crabbycatch rate standards for each fisheryincluded under the incentive program.The standards are in effect for specifiedseasons within the 6-month periods ofJanuary 1 through June 30, and July 1through December 31. Because the

Alaskan groundfish fisheries are closedto trawling from January 1 to January 20of each year (§ 679.23(c)), theAdministrator, Alaska Region, NMFS(Regional Administrator) ispromulgating bycatch rate standards forthe first half of 1999 effective fromJanuary 20, 1999, through June 30, 1999.

As required by § 679.21(f)(4), bycatchrate standards are based on thefollowing information:

(A) Previous years’ average observedbycatch rates;

(B) Immediately preceding season’saverage observed bycatch rates;

(C) The bycatch allowances andassociated fishery closures specifiedunder § 679.20;

(D) Anticipated groundfish harvests;(E) Anticipated seasonal distribution

of fishing effort for groundfish; and(F) Other information and criteria

deemed relevant by the RegionalAdministrator.

At its October 1998 meeting, theCouncil reviewed halibut and red kingcrab bycatch rates experienced byvessels participating in the fisheriesunder the incentive program during1994–1998. Based on this and otherinformation presented below, theCouncil recommended halibut and redking crab bycatch rate standards for thefirst half of 1999. These standards areunchanged from those specified for thepast 5 years. Table 1 lists the Council’srecommended bycatch rate standards.

TABLE 1.—BYCATCH RATE STANDARDS, BY FISHERY AND QUARTER, FOR THE FIRST HALF OF 1999 FOR PURPOSES OFTHE VESSEL INCENTIVE PROGRAM IN THE BSAI AND GOA

Fishery and quarter 1999 bycatchrate standard

Halibut bycatch rate standards (kilogram (kg) of halibut/metric ton (mt) of groundfish catch

BSAI Midwater pollock:Qt 1 ............................................................................................................................................................................................... 1.0Qt 2 ............................................................................................................................................................................................... 1.0

BSAI Bottom pollock:Qt 1 ............................................................................................................................................................................................... 7.5Qt 2 ............................................................................................................................................................................................... 5.0

BSAI Yellowfin sole:Qt 1 ............................................................................................................................................................................................... 5.0Qt 2 ............................................................................................................................................................................................... 5.0

BSAI Other trawl:Qt 1 ............................................................................................................................................................................................... 30.0Qt 2 ............................................................................................................................................................................................... 30.0

GOA Midwater pollock:Qt 1 ............................................................................................................................................................................................... 1.0Qt 2 ............................................................................................................................................................................................... 1.0

GOA Other trawl:Qt 1 ............................................................................................................................................................................................... 40.0Qt 2 ............................................................................................................................................................................................... 40.0

Zone 1 red king crab bycatch rate standards (number of crab/mt of groundfish catch)

BSAI yellowfin sole:Qt 1 ............................................................................................................................................................................................... 2.5Qt 2 ............................................................................................................................................................................................... 2.5

BSAI Other trawl:Qt 1 ............................................................................................................................................................................................... 2.5


TABLE 1.—BYCATCH RATE STANDARDS, BY FISHERY AND QUARTER, FOR THE FIRST HALF OF 1999 FOR PURPOSES OFTHE VESSEL INCENTIVE PROGRAM IN THE BSAI AND GOA—Continued

Fishery and quarter 1999 bycatchrate standard

Qt 2 ............................................................................................................................................................................................... 2.5

Bycatch Rate Standards for PacificHalibut

The BSAI pollock roe season beginsJanuary 20 and ends April 15. In 1998,NMFS closed the inshore and offshorecomponent fisheries for pollock 5 to 8weeks prior to April 15, depending onthe processing component and area.Directed fishing for pollock by theinshore and offshore componentfisheries did not reopen until September1, the start of the pollock non-roeseason. Directed fishing for pollock byvessels participating in the communitydevelopment quota program couldcontinue after the end of roe season.However, the community developmentquota pollock fishery did not resumeuntil just prior to September 1. As inpast years, the directed fishingallowances specified for the 1999pollock roe season likely will bereached before the end of the roe seasonon April 15.

As in past years, the halibut bycatchrate standard recommended for theBSAI and GOA midwater pollockfisheries (1 kg halibut/mt of groundfish)is higher than the bycatch ratesnormally experienced by vesselsparticipating in these fisheries. Therecommended standard is intended toencourage vessel operators to maintainoff-bottom trawl operations and limitfurther bycatch of halibut in the pollockfishery when halibut bycatchrestrictions at § 679.21 prohibit directedfishing for pollock by vessels using non-pelagic trawl gear.

The recommended halibut bycatchrate standards for the first calendarquarter BSAI bottom pollock fisheryapproximate the average rates observedon trawl vessels participating in thisfishery during 1998 (7.87 kg halibut/mtgroundfish). Though these rates areslightly higher than the average bycatchrate observed during 1994–1997, therecommended halibut bycatch ratestandard remains at 7.5 kg halibut/mtgroundfish to discourage unacceptablyhigh halibut bycatch rates. The bycatchrate standard for the second quarterremains at 5 kg halibut/mt groundfisheven though little fishing for pollock isanticipated during this period.

At its June 1998 meeting, the Counciladopted a management measure thatwould prohibit the use of non-pelagic

trawl gear in the BSAI pollock fishery.NMFS currently is preparing a proposedrule, that if approved, would implementthe Council’s intent and further reducehalibut bycatch mortality and bycatchrates in the pollock fishery. At this time,NMFS does not anticipate that theproposed prohibition on the use of non-pelagic trawl gear in the pollock fisherywould be effective prior to the 1999pollock non-roe season on September 1.

Other factors that could affect thespatial and temporal distribution of thedirected pollock fishery include the1999 allocations of pollock among theinshore and offshore fleets under theAmerican Fisheries Act andconservation measures that may benecessary under the Endangered SpeciesAct to mitigate potential fishery impactson Steller sea lions. At this time, theeffect of these changes on halibutbycatch rates in the pollock fishery areunknown.

Data available on halibut bycatchrates in the yellowfin sole fishery duringthe first and second quarters of 1998showed average bycatch rates of 9.65and 6.57 kg halibut/mt of groundfish,respectively. These rates are slightlyhigher than in past years, but theCouncil has presumed that a bycatchrate standard of 5.0 kg halibut/mt ofgroundfish for the yellowfin sole fisherywill continue to encourage vesseloperators to take action to avoidexcessively high bycatch rates ofhalibut.

For the ‘‘other trawl’’ fisheries, theCouncil recommended a 30 kg halibut/mt of groundfish bycatch rate standardfor the BSAI and a 40 kg halibut/mt ofgroundfish bycatch rate standard for theGOA. Observer data collected from the1998 BSAI ‘‘other trawl’’ fishery showfirst and second quarter halibut bycatchrates of 12.07 and 13.78 kg halibut/mtof groundfish, respectively. Observerdata collected from the 1998 GOA‘‘other trawl’’ fishery show first andsecond quarter halibut bycatch rates of26.23 and 57.15 kg halibut/mt ofgroundfish, respectively.

With the exception of the GOAsecond quarter ‘‘other trawl’’ fishery, theaverage bycatch rates experienced byvessels participating in the GOA andBSAI ‘‘other trawl’’ fisheries have beenlower than the Council’s recommendedbycatch rate standards for these

fisheries. The Council determined thatits recommended halibut bycatch ratestandards for the ‘‘other trawl’’ fisheries,including the second quarter GOAfishery, would continue to provide anincentive to vessel operators to avoidunusually high halibut bycatch rateswhile participating in these fisheriesand contribute towards an overallreduction in halibut bycatch ratesexperienced in the Alaska trawlfisheries. Furthermore, these standardswould provide some leniency to thosevessel operators that choose to use largemesh trawl gear as a means to reducegroundfish discard amounts. Thebycatch rates of halibut and crab couldincrease for those vessels using largemesh sizes, but the Councilrecommended maintaining the currentbycatch rate standards for the ‘‘othertrawl’’ fisheries until data becomesavailable that would provide a basis forbycatch rate standards for vessels usinglarge mesh trawl gear.

Bycatch Rate Standards for Red KingCrab

For the BSAI yellowfin sole and‘‘other trawl’’ fisheries in Zone 1 of theBering Sea subarea, the Council’srecommended red king crab bycatch ratestandard is 2.5 crab/mt of groundfish.This standard is unchanged since 1992.The red king crab bycatch ratesexperienced by the yellowfin solefishery in Zone 1 during the first andsecond quarters of 1998 averaged 0.01and 0.03 crab/mt of groundfish,respectively. The average bycatch ratesof red king crab experienced in the‘‘other trawl’’ fishery during the firstand second quarter of 1998 were 0.12and 0.01 crab/mt groundfish,respectively. The low 1998 red king crabbycatch rates primarily were due totrawl closures in Zone 1 that wereimplemented to reduce red king crabbycatch.

During 1998 through October, thetotal bycatch of red king crab by trawlvessels fishing in Zone 1 is estimated at37,000 crab, considerably less than the100,000 red king crab bycatch limitestablished for the trawl fisheries inZone 1. NMFS anticipates that the 1999red king crab bycatch in Zone 1 willincrease relative to 1998 because thebycatch limit will double to 200,000crab under criteria set out at


§ 679.21(e)(1)(i). The increased bycatchlimit as well as the increased abundanceof crab upon which the bycatch limit isbased could result in increased red kingcrab bycatch rates, but the magnitude ofany such increase is unknown at thistime.

In spite of anticipated 1999 red kingcrab bycatch rates being significantlylower than 2.5 red king crab/mt ofgroundfish, the Council recommendedthe red king crab bycatch rate standardsbe maintained at this level to avoidunusually high crab bycatch rates whileproviding some leniency to those vesseloperators that choose to use large meshtrawl gear as a means to reducegroundfish discard amounts.

The Regional Administrator hasdetermined that Councilrecommendations for bycatch ratestandards are appropriately based on theinformation and considerations

necessary for such determinations under§ 679.21(f). Therefore, the RegionalAdministrator concurs in the Council’sdeterminations and recommendationsfor halibut and red king crab bycatchrate standards for the first half of 1999as set forth in Table 1. The RegionalAdministrator may revise the bycatchrate standards when appropriate basedon consideration of the information setforth at § 679.21(f)(4).

As required in regulations at §§ 679.2and 679.21(f)(5), the 1999 fishingmonths are specified as the followingperiods for purposes of calculatingvessel bycatch rates under the incentiveprogram:Month 1: January 1 through January 30;Month 2: January 31 through February

27;Month 3: February 28 through April 3;Month 4: April 4 through May 1;Month 5: May 2 through May 29;Month 6: May 30 through July 3;

Month 7: July 4 through July 31;Month 8: August 1 through August 28;Month 9: August 29 through October 2;Month 10: October 3 through October

30;Month 11: October 31 through

November 27; andMonth 12: November 28 through

December 31.

Classification

This action is taken under 50 CFR679.21(f) and is exempt from OMBreview under E.O. 12866.

Authority: 16 U.S.C. 773 et seq., 1801 etseq. and 3631 et seq.

Dated: November 19, 1998.Richard W. Surdi,Acting Director, Office of SustainableFisheries, National Marine Fisheries Service.[FR Doc. 98–31520 Filed 11–24–98; 8:45 am]BILLING CODE 3510–22–P

This section of the FEDERAL REGISTERcontains notices to the public of the proposedissuance of rules and regulations. Thepurpose of these notices is to give interestedpersons an opportunity to participate in therule making prior to the adoption of the finalrules.

Proposed Rules Federal Register

65133

Vol. 63, No. 227


DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 729

RIN 0560–AF48

1999-Crop Peanut National PoundageQuota for Quota Peanuts

AGENCY: Farm Service Agency, USDA.ACTION: Proposed rule.

SUMMARY: The Agricultural AdjustmentAct of 1938, (the 1938 Act) as amended,requires that the national peanutpoundage quota for the 1999 crop beannounced by December 15, 1998. Thisproposed rule suggests a nationalpoundage quota figure in the rangebetween 1,175,000 short tons (st) and1,225,000 st.DATES: Comments must be received byDecember 8, 1998, in order to be assuredof consideration.ADDRESSES: Comments must besubmitted to the Director, Tobacco andPeanuts Division, Farm Service Agency(FSA), United States Department ofAgriculture, STOP 0514, 1400Independence Avenue, S.W.,Washington, DC 20250–0514. Allwritten submissions will be madeavailable for public inspection from 8:15a.m. to 4:45 p.m., Monday throughFriday, except holidays, in Room 5750-South Building, 1400 IndependenceAvenue, S.W., Washington, DC 20250–0514.FOR FURTHER INFORMATION CONTACT:Kenneth M. Robison, Tobacco andPeanuts Division, FSA, USDA, STOP0514, 1400 Independence Avenue, S.W.,Washington, DC 20250–0514, telephone202–720–9255. Copies of the cost-benefit assessment prepared for the rulecan be obtained from Mr. Robison.SUPPLEMENTARY INFORMATION:


This proposed rule has beendetermined to be significant forpurposes of Executive Order 12866 and,therefore, has been reviewed by OMB.

Federal Assistance Program

The title and number of the FederalAssistance Program, as found in theCatalog of Federal Domestic Assistance,to which this rule applies are:Commodity Loans and Purchases—10.051.


This proposed rule has been reviewedin accordance with Executive Order12998. The provisions of this proposedrule do not preempt State laws, are notretroactive, and do not involveadministrative appeals.


It has been determined that theRegulatory Flexibility Act is notapplicable to this proposed rule sinceneither the Farm Service Agency (FSA)nor Commodity Credit Corporation(CCC) are required by 5 U.S.C. 553 orany other provision of law to publish anotice of proposed rulemaking withrespect to the subject of thesedeterminations.


This proposed amendment does notcontain information collections thatrequire clearance by the Office ofManagement and Budget under theprovisions of 44 U.S.C. chapter 35.

Unfunded Federal Mandates

This proposed rule contains noFederal mandates under the regulatoryprovisions of Title II of the UnfundedMandate Reform Act (UMRA), for State,local, and tribal governments or theprivate sector. Thus, this rule is notsubject to the requirements of sections202 and 205 of the UMRA.

Discussion

This proposed rule would amend 7CFR part 729 to set forth the 1999-croppeanut national poundage quota.

Determination of the Quota

Peanut producers voting in a mailreferendum December 1 through 4,1997, approved poundage quotas for the1998 through 2002 marketing years(MY) by an affirmative vote of 94.8percent. Therefore, as provided for inthe 1938 Act, the Secretary is requiredto administer a peanut program inwhich marketings are governed throughthe use of federally-granted quota and inwhich price support is offered.

Section 358–1(a)(1) of the 1938 Act, asamended by the Federal AgriculturalImprovement and Reform Act of 1996(the 1996 Act), requires that the nationalpoundage quota for peanuts for each ofthe 1996 through 2002 MYs beestablished by the Secretary at a levelthat is equal to the quantity of peanuts(in tons) that the Secretary estimateswill be devoted in each MY to domesticedible use (excluding seed use) andrelated uses. Under the 1996amendments to the 1938 Act, seed useremains a quota use but, unlike in thepast, the seed aspect of the quota isaccounted for through the grant of atemporary seed quota to all producers—hence, seed is no longer part of the basicquota calculation which will be codifiedthrough this determination. The MY for1999-crop peanuts runs from August 1,1999, through July 31, 2000.

The national poundage quota for MY1998 was set at 1,167,000 st. This ruleproposes that the national poundagequota for MY 1999 be set between1,175,000 st and 1,225,000 st based onthe following data:

ESTIMATED DOMESTIC EDIBLE, EX-CLUDING SEED, AND RELATED USESFOR 1999-CROP PEANUTS WITHMARKETING LEVELS OF 98.4 PER-CENT AND 94.4 PERCENT

Item

Farmer Stock Equivalent

(Short tons)

98.4% ofQuota Mar-

keted

94.4% ofQuota Mar-

keted

Regular domes-tic food use .... 984,000 984,000

Related uses:Crushing re-

sidual .......... 128,500 128,500Shrinkage and

other losses 44,000 44,000Unused quota .... 18,500 68,500

Totals ......... 1,175,000 1,225,000

The estimate of 1999 domestic fooduse was developed in two steps. First,normal commercial use was estimatedbased upon figures from the USDAInteragency Commodity EstimatesCommittee (ICEC) adjusted to take outpeanut imports, peanut butter imports,and peanut butter exports (which arenormally comprised of additionalpeanuts only). Then, farm sales andother direct marketings to consumers

65134 Federal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / Proposed Rules

were added based upon differencesbetween production data and Federal-State Inspection Service inspection data.Insofar as related uses are concerned, anadded allowance is made for the normalcrushing residual that cannot effectivelybe used for food use and that amounthas traditionally been expected to beabout 12 percent, on a farmer stockbasis, of the total of MY domesticproduction. An allowance for shrinkageand other losses is made to account forreduced kernel and other kernel lossesduring storage, using the customaryfactor of 4 percent of domestic food use.In addition, disaster transfers of poorquality peanuts are included as part ofother losses. Finally the unused quotaallowance goes to those instances wherethe farmer cannot fulfill a quota eitherbecause of under-planting or becausethe farmer is unable to produce enoughSegregation 1 peanuts to fulfill the fullquota. Because of the program changesin the 1996 Act, which have beenoutlined in previous notices, there isnow a greater incentive than in the pastto fully market the quota and it isexpected that, after discounting forquality problems, somewhere between94.4 percent and 98.4 percent of thequota will be marketed.

In MY 1996 about 97.3 percent wasmarketed, in MY 1997 about 99.7percent of quota was marketed and forMY 1998 between 94 and 98 percent ofthe quota is anticipated to be marketed.Also, it is anticipated that between 94.4and 98.4 percent of the MY 1999 quotawill be marketed.

The proposed 1999 quota range, as setforth above, reflects expected growth indomestic consumption of peanutproducts through governmentpurchases, new uses and a smallincrease in demand resulting from lowerpeanut support prices in recent years.Overall demand, including imports, isprojected to increase about 2 percent.However, government supportpurchases in MY 1997 have increasedabout 15 percent from 28,516 st in MY1996 to 32,799 st in MY 1997.


Peanuts, Penalties, Poundage quotas,Reporting and recordkeepingrequirements.

Accordingly, it is proposed that 7 CFRparts 729 be amended as follows:

PART 729—PEANUTS

1. The authority citation for 7 CFRpart 729 shall continue to read asfollows:

Authority: 7 U.S.C. 1301, 1357 et seq.,1372, 1373, 1375, and 7271.

2. Section 729.216 paragraph (c) isrevised to read as follows:

§ 729.216 National poundage quota.

* * * * *(c) Quota determination for individual

marketing years:(1) The national poundage quota

(excluding seed) for quota peanuts formarketing year 1996 is 1,100,000 shorttons.

(2) The national poundage quota(excluding seed) for quota peanuts formarketing year 1997 is 1,133,000 shorttons.

(3) The national poundage quota(excluding seed) for quota peanuts formarketing year 1998 is 1,167,000 shorttons.

(4) The national poundage quota(excluding seed) for quota peanuts formarketing year 1999 will be set between1,175,000 and 1,225,000 short tons.

Signed at Washington, DC, on November20, 1998.Parks Shackelford,Acting Administrator, Farm Service Agency.[FR Doc. 98–31563 Filed 11–20–98; 4:37 pm]BILLING CODE 3410–05–P


Grain Inspection, Packers andStockyards Administration

7 CFR Part 868

RIN 0580–AA67

Fees for Rice Inspection

AGENCY: Grain Inspection, Packers andStockyards Administration, USDA.ACTION: Proposed rule.

SUMMARY: The Grain Inspection, Packersand Stockyards Administration (GIPSA)is proposing an increase in certain feesfor Federal Rice Inspection Servicesperformed under the AgriculturalMarketing Act (AMA) of 1946. This feeincrease is intended to cover, as nearlyas practicable, the projectedapproximate 3.6 percent increase toFederal salaries for Federal RiceInspection Services. The proposedincrease is designated to generateadditional revenue required to recoveroperational costs created by cost-of-living increases to Federal salariesJanuary 1, 1999.DATES: Written comments must besubmitted on or before January 25, 1999.ADDRESSES: Written comments must besubmitted to Sharon Vassiliades, USDA,GIPSA, ART, 1400 IndependenceAvenue, SW., Stop 3649, Washington,DC 20250–3649, or faxed to (202) 720–4628. Comments may also be sent by

electronic mail or Internet to:[email protected]. All commentsreceived will be made available forpublic inspection during regularbusiness hours in Room 0623, SouthBuilding, USDA, 1400 IndependenceAvenue, SW., Washington, DC 20250–3649 (7 CFR 1.27(b)).FOR FURTHER INFORMATION CONTACT:Sharon Vassiliades at 202 720–1738.SUPPLEMENTARY INFORMATION:

Executive Order 12866This rule has been determined to be

nonsignificant for the purpose ofExecutive Order 12866 and, therefore,has not been reviewed by the Office ofManagement and Budget.

Executive Order 12988This proposed rule has been reviewed

under Executive Order 12988, CivilJustice Reform. This action is notintended to have a retroactive effect.This action will not preempt any Stateor local laws, regulations, or policiesunless they present irreconcilableconflict with this rule. There are noadministrative procedures which mustbe exhausted prior to any judicialchallenge to provisions of this rule.

Regulatory Flexibility Act and Effectson Small Entities

James R. Baker, Administrator,GIPSA, has determined that thisproposed rule will not have a significanteconomic impact on a substantialnumber of small entities as definedunder the Regulatory Flexibility Act (5U.S.C. 601 et seq.).

The proposed cost of living increasein the rice service fee is primarilyapplicable to GIPSA customers thatproduce, process, and market rice forthe domestic and international markets.There are approximately 550 suchcustomers located primarily in theArkansas, Louisiana and Texasgeographic areas. Many of thesecustomers meet the criteria for smallbusiness. GIPSA has determined thatthis proposed rule will have a limitedeconomic impact on small entities asdefined in the Regulatory FlexibilityAct.

Under the provisions of theAgricultural Marketing Act of 1946 (7U.S.C. 1621 et seq.), rice inspectionservices are provided upon customerrequest and GIPSA must recover fromthe customer the cost of providing suchservices. GIPSA is proposing to recovera projected January 1, 1999, 3.6 percentincrease in federal salary costs byraising its rice service fee. The proposedincrease will affect only that portion ofthe fees associated with the hourlysalaries paid to Federal employees and

65135Federal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / Proposed Rules

administrative personnel; overheadrecovery is not being proposed in thisdocket.

GIPSA cannot absorb the approximate3.6 percent increase in salary costs withthe existing deficit in retained earnings.In fiscal year 1998, GIPSA’s obligationswere $3,820,820 with revenue of$4,011,446, resulting in a positivemargin of $190,626 and retainedearnings of negative $895,584.

The proposed increase in fees wouldnot have a significant impact on eithersmall or large entities. GIPSA estimatesthat the increased fee charged to its 550customers will provide an annualincrease of $155,356 in revenue(assuming fiscal year 1998 volumeequivalents).

Information Collection and RecordKeeping Requirements

In compliance with the PaperworkReduction Act of 1995 (44 U.S.C.Chapter 35), the information collectionand record keeping requirementsconcerning applications for officialinspection services including riceinspections have been previouslyapproved by the Office of Managementand Budget under control number 0580–0013.

BackgroundThe rice inspection fees were last

amended on July 3, 1996 (61 FR 34714),with a tri-level fee increase witheffective dates of August 2, 1996,January 1, 1997, and January 1, 1998.These fees were to cover, as nearly aspracticable, the projected operatingcosts, including related supervisory andadministrative costs and to maintain anoperating reserve for Federal RiceInspection Services. They presentlyappear at 7 CFR 868.91 in Tables 1 and2. Currently, the regular workdaycontract and noncontract fees are $40.20and $48.90, respectively, while thenonregular workday contract andnoncontract fees are $56.00 and $67.90,respectively. The unit rate perhundredweight for export port servicesis currently $.048/cwt. and the unit rate

for total oil and free fatty acid tests iscurrently $39.80. These unit rates alsoare proposed to be changed.

The proposed increase will affect onlythat portion of the fees associated withhourly salaries paid to Federalemployees and administrativepersonnel; overhead recovery is notbeing proposed in this docket. Theproposed fee increase generatesadditional revenue required to recoveroperational costs created by a projectedJanuary 1999 cost-of-living increase toFederal salaries. The average salaryincrease for GIPSA employees incalendar year 1999 is projected atapproximately 3.6 percent. Thisproposed action is being taken to ensurethat the service fees charged by GIPSAgenerate adequate revenue to cover theadditional cost created by the January1999 Federal salary increase.

The hourly fees covered by thisproposal generate revenue to cover thebasic salary, benefits, and leave forthose employees providing directservice delivery and administrativesalaries and benefits, as well ascontributing to overall overhead costrecovery. GIPSA has also identified thatpart of the hourly rate that is directlyattributable to salaries and benefits andcertain unit fees for services notperformed at an applicant’s facility thatcontain labor costs. This proposalincreases those hourly rates and unitfees based on an approximate 3.6percent increase to the labor cost of eachhourly rate and unit.

The amount of revenue collectedunder this proposal will be a directresult of the work volume. GIPSAestimates an annual increase of$155,356 in revenue (assuming fiscalyear 1998 volume equivalents). If GIPSAforegoes this adjustment, GIPSA willincur a net loss equivalent to theapproximate 3.6 percent Federal salaryincrease for every hour worked by anemployee providing direct servicedelivery and administrative personnel.

In fiscal year 1998, GIPSA’sobligations were $3,820,820 with

revenue of $4,011,446, resulting in apositive margin of $190,626 andretained earnings of negative $895,589.GIPSA cannot afford to absorb a$155,356 loss due to the approximate3.6 percent increase in salary costs withthe existing deficit in retained earnings.Additionally, GIPSA will continue tomonitor its costs to improve operatingefficiencies and adopt cost savingmeasures, where possible andpracticable.

Proposed Action

Section 203 of the AMA (7 U.S.C.1622) provides for the establishmentand collection of fees that are reasonableand, as nearly as practicable, cover thecosts of the services rendered. Thesefees cover the GIPSA administrative andsupervisory costs for the performance ofofficial services, including personnelcompensation, personnel benefits,travel, rent, communications, utilities,contractual services, supplies, andequipment.

Section 868.91, Tables 1 and 2 areproposed to be revised to provide for theincrease in rice inspection fees.


Administrative practice andprocedure, Agricultural commodities.

For reasons set out in the preamble,7 CFR Part 868 is proposed to beamended as follows:

PART 868—GENERAL REGULATIONSAND STANDARDS FOR CERTAINAGRICULTURAL COMMODITIES


Authority: Secs. 202–208, 60 Stat. 1087, asamended (7 U.S.C. 1621 et seq.).

2. Section 868.91 is revised to read asfollows:

§ 868.91 Fees for certain Federal riceinspection services.

The fees shown in Tables 1 and 2apply to Federal Rice InspectionServices.

TABLE 1—HOURLY RATES/UNIT RATE PER CWT[Fees for Federal Rice Inspection Services]

Service 1 Regular workday(Monday–Saturday)

Nonregular workday(Sunday–holiday)

Contract (per hour per Service representative) ............................................................................... $40.80 $56.80Noncontract (per hour per Service representative) 2 ....................................................................... 50.00 69.00Export Port Services 2 ...................................................................................................................... 0.05 0.05

1 Original and appeal inspection services include: Sampling, grading, weighing, and other services requested by the applicant when performedat the applicant’s facility.

2 Services performed at export port locations on lots at rest.


TABLE 2.—UNIT RATES

Service 1 3 Rough rice Brown rice forprocessing Milled rice

Inspection for quality (per lot, sublot, or sample inspection) ....................................................... $32.90 28.40 20.20Factor analysis for any single factor (per factor):

(a) Milling yield (per sample) ................................................................................................ 25.50 25.50 ........................(b) All other factors (per factor) ............................................................................................ 12.10 12.10 12.10

Total oil and free fatty acid interpretative line samples: 2 ............................................................ ........................ 40.00 40.00(a) Milling degree (per set) ........................................................................................................... ........................ ........................ 85.10(b) Parboiled light (per sample) ................................................................................................... ........................ ........................ 21.30Extra copies of certificates (per copy) ......................................................................................... 3.00 3.00 3.00

1 Fees apply to determinations (original or appeals) for kind, class, grade, factor analysis, equal to type, milling yield, or any other quality des-ignation as defined in the U.S. Standards for Rice or applicable instructions, whether performed singly or combined at other than at the appli-cant’s facility.

2 Interpretive lines samples may be purchased from the U.S. Department of Agriculture, GIPSA, FGIS, Technical Services Division, 10383North Executive Hills Boulevard, Kansas City, Missouri 68030. Interpretive line samples also are available for examination at selected FGIS fieldoffices. A list of field offices may be obtained from the Director, Field Management Division, USDA, GIPSA, FGIS, 1400 Independence Avenue,SW, STOP 3630, Washington, DC 20250–3630. The interpretive line samples illustrate the lower limit for milling degrees only and the color limitfor the factor ‘‘Parboiled Light’’ rice.

3 Fees for other services not referenced in Table 2 will be based on the noncontract hourly rate listed in Section 868.90, Table 1.

Dated: November 20, 1998.James R. Baker,Administrator.[FR Doc. 98–31514 Filed 11–24–98; 8:45 am]BILLING CODE 3410–EN–M



14 CFR Part 39

[Docket No. 95–ANE–39]

RIN 2120–AA64

Airworthiness Directives; GeneralElectric Company CF6 Series TurbofanEngines

AGENCY: Federal AviationAdministration, DOT.ACTION: Notice of proposed rulemaking(NPRM).

SUMMARY: This document proposes thesupersedure of an existing airworthinessdirective (AD), applicable to GeneralElectric Company (GE) CF6 seriesturbofan engines, that currently requiresinitial and repetitive ultrasonic andeddy current inspections of highpressure compressor rotor (HPCR) stage3–9 spools for cracks. This action woulddefine more aggressive inspectionintervals for certain HPCR stage 3–9spools, add CF6–80E1 engines to theinspection program, add inspectionrequirements for spools manufacturedfrom 8 inch diameter billet, add a one-time inspection of the stage 3–5 bladeslot bottoms, and add a one-timeinspection of the web and hub-to-webtransition areas. This proposal isprompted by analysis of recent HPCRstage 3–9 spool inspection results andseparations, and assessment of theadequacy of the existing program to

prevent HPCR stage 3–9 spool crackingand separation. As a result of thatassessment, the FAA has determinedthere is a need to make changes to theexisting AD. The actions specified bythe proposed AD are intended toprevent HPCR stage 3–9 spool crackingand separation, which can result in anuncontained engine failure and aircraftdamage.DATES: Comments must be received byJanuary 25, 1999.ADDRESSES: Submit comments intriplicate to the Federal AviationAdministration (FAA), New EnglandRegion, Office of the Regional Counsel,Attention: Rules Docket No. 95–ANE–39, 12 New England Executive Park,Burlington, MA 01803–5299. Commentsmay also be sent via the Internet usingthe following address: ‘‘[email protected]’’. Commentssent via the Internet must contain thedocket number in the subject line.Comments may be inspected at thislocation between 8:00 a.m. and 4:30p.m., Monday through Friday, exceptFederal holidays.

The service information referenced inthe proposed rule may be obtained fromGeneral Electric Company via LockheedMartin Technology Services, 10525Chester Road, Suite C, Cincinnati, Ohio45215, telephone (513) 672–8400, fax(513) 672–8422. This information maybe examined at the FAA, New EnglandRegion, Office of the Regional Counsel,12 New England Executive Park,Burlington, MA.FOR FURTHER INFORMATION CONTACT:William S. Ricci, Aerospace Engineer,Engine Certification Office, FAA, Engineand Propeller Directorate, 12 NewEngland Executive Park, Burlington, MA01803–5299; telephone (781) 238–7742,fax (781) 238–7199.


Comments Invited

Interested persons are invited toparticipate in the making of theproposed rule by submitting suchwritten data, views, or arguments asthey may desire. Communicationsshould identify the Rules Docketnumber and be submitted in triplicate tothe address specified above. Allcommunications received on or beforethe closing date for comments, specifiedabove, will be considered before takingaction on the proposed rule. Theproposals contained in this notice maybe changed in light of the commentsreceived.

Comments are specifically invited onthe overall regulatory, economic,environmental, and energy aspects ofthe proposed rule. All commentssubmitted will be available, both beforeand after the closing date for comments,in the Rules Docket for examination byinterested persons. A reportsummarizing each FAA-public contactconcerned with the substance of thisproposal will be filed in the RulesDocket.

Commenters wishing the FAA toacknowledge receipt of their commentssubmitted in response to this noticemust submit a self-addressed, stampedpostcard on which the followingstatement is made: ‘‘Comments toDocket Number 95–ANE–39.’’ Thepostcard will be date-stamped andreturned to the commenter.

Availability of NPRMs

Any person may obtain a copy of thisNPRM by submitting a request to theFAA, New England Region, Office of theRegional Counsel, Attention: RulesDocket No. 95–ANE–39, 12 New


England Executive Park, Burlington, MA01803–5299.

DiscussionOn January 31, 1995, the Federal

Aviation Administration (FAA) issuedairworthiness directive (AD) 95–03–01,Amendment 39–9138 (60 FR 8930,February 16, 1995), applicable toGeneral Electric Company (GE) CF6–45/–50/–80A series turbofan engines, torequire initial and repetitive ultrasonicand eddy current inspections of acertain population of high pressurecompressor rotor (HPCR) stage 3–9spools for cracks. That action wasprompted by a finding of severalcracked parts in service.

Since the issuance of AD 95–03–01,the FAA received a report of an in-service uncontained failure of an HPCRstage 3–9 spool. The investigationrevealed that the uncontained failurewas caused by a crack that developedfrom the same metallurgical conditionwhich prompted AD 95–03–01.However, that spool was not part of thepopulation required to be inspected byAD 95–03–01. Further investigationindicated that the scope of AD 95–03–01 had to be expanded to include otherHPCR stage 3–9 spools installed on GECF6–45/–50/–80A engines, and alsoHPCR stage 3–9 spools installed on GECF6–80C2 series engines, and that theinspection schedule for the spoolsaffected by AD 95–03–01 needed to beaccelerated. The FAA issued AD 95–23–03, amendment 39–9423 on November13, 1995 (60 FR 57803, November 21,1995) that superseded AD 95–03–01 andincorporated these inspection programchanges and added a reportingrequirement for operators to advise theFAA of the results of the inspections.

Since issuing AD 95–23–03, the FAAhas analyzed the inspection reportssubmitted in accordance with AD 95–23–03, the results of an investigation ofan uncontained failure caused by acrack that developed from a hard alphainclusion material defect in the hub-to-web transition area of CF6–50 stage 6disk, and the results of an investigationof an uncontained failure caused by acrack that developed in a CF6–80C2stage 3 blade slot bottom. The stage 3–9 spool is one of the major structuralelements of the fourteen-stage axial flowHPCR installed in the CF6 engine. TheCF6 HPCR is manufactured from Ti 6–2–4–2 titanium alloy. Since 1974 therehave been 9 events where CF6 stage 3–9 spools have failed due to cracking. Allof these events have resulted in therelease of engine fragments, and amajority have resulted in anuncontained engine failure. The rootcause of the cracking and separation

events has been attributed to two failuremechanisms. The first failuremechanism is crack initiation from hardalpha inclusions. Hard alpha inclusionsare hard brittle areas within the materialwhich can crack under service loadsand propagate in fatigue. The secondfailure mechanism is dwell time fatigue(DTF). DTF is a crack initiation modeassociated with certain creep resistanttitanium alloys under sustained loading(dwell) at temperatures below 400degrees Fahrenheit that results ininternal crack initiations at flat facets.The facets are associated with groups orcolonies of primary alpha grains havinga common alpha phase crystalorientation. Crack initiation by both ofthese failure mechanisms can occur atrelatively low cyclic exposures andresult in HPCR stage 3–9 failure. Basedon this analysis, the FAA hasdetermined that the inspection programrequired by AD 95–23–03 must beaccelerated and expanded to includespools manufactured from 8 inchdiameter billets. This condition, if notcorrected, could result in HPCR stage 3–9 spool cracking and separation, whichcan result in an uncontained enginefailure and aircraft damage.

The FAA has reviewed and approvedthe technical contents of the followingGE Service Bulletins (SBs) and AlertService Bulletins (ASBs): CF6–50 SBNo. 72–1108, Revision 1, dated July 29,1996; CF6–80A SB No. 72–678, Revision1, dated July 29, 1996; CF6–80C2 SB No.72–812, Revision 1, dated January 30,1998, CF6–80E1 ASB No. 72–A135,Original, dated August 13, 1998, CF6–50SB No. 72–1157, Original, dated June10, 1998, CF6–80A SB No. 72–719,Revision 1, dated September 24, 1998,CF6–80C2 SB No. 72–934, Original,dated June 10, 1998, CF6–80E1 SB No.72–137, Original, dated June 9, 1998,CF6–50 ASB No. 72–A1131, Revision 1,dated March 12, 1998, CF6–80A ASBNo. 72–A691, Revision 2, datedSeptember 23, 1998, CF6–80C2 ASB No.72–A848, Revision 2, dated March 12,1998, CF6–80E1 ASB No. 72–A126,Revision 1, dated March 31, 1998, andTable 801 of GE CF6–50 Shop ManualGEK 50481, section 05–11–02 TimeLimits. These service documentsdescribe procedures for eddy currentand ultrasonic inspections of HPCRstage 3–9 spools for cracks.

Since an unsafe condition has beenidentified that is likely to exist ordevelop on other products of this sametype design, the proposed AD wouldsupersede AD 95–23–03 to define moreaggressive inspection intervals forcertain HPCR stage 3–9 spools, addCF6–80E1 engines to the inspectionprogram, add inspection requirements

for spools manufactured from 8 inchdiameter billet, add a one-timeinspection of the stage 3–5 blade slotbottoms, and add a one-time inspectionof the web and hub-to-web transitionareas. The proposed inspection programwould also incorporated repetitiveinspection intervals that change basedon the calendar time that has elapsedsince the effective date of this proposedAD. These calendar date triggers havethe effect of tightening the repetitiveinspection intervals as the affectedpopulation of engines ages throughnormal utilization. The dates also reflectthe risk analysis performed by themanufacturer which took intoconsideration many factors includingthe shop capacity to perform therequired inspections. The FAA chose touse calendar dates for these triggersrather than engine cycles or hours inorder not to unduly penalize highutilization users while providing somedefinite ending point for each phase ofthe repetitive inspection program.

The FAA is also consideringadditional rulemaking that wouldrequire eddy current and ultrasonicinspections of the side fillet radii of thestage 3–5 blade slot bottoms, the stage6–9 blade slot bottoms, and a modulelevel inspection of the stage 3–5 bores.

There are approximately 4,506engines of the affected design in theworldwide fleet. The FAA estimates that1,197 engines installed on aircraft ofU.S. registry would be affected by thisproposed AD, that it would takeapproximately 216 work hours perengine to accomplish the proposedactions, and that the average labor rateis $60 per work hour. Based on thesefigures, the total cost impact of theproposed AD on U.S. operators isestimated to be $15,485,340.

The regulations proposed hereinwould not have substantial direct effectson the States, on the relationshipbetween the national government andthe States, or on the distribution ofpower and responsibilities among thevarious levels of government. Therefore,in accordance with Executive Order12612, it is determined that thisproposal would not have sufficientfederalism implications to warrant thepreparation of a Federalism Assessment.

For the reasons discussed above, Icertify that this proposed regulation (1)is not a ‘‘significant regulatory action’’under Executive Order 12866; (2) is nota ‘‘significant rule’’ under the DOTRegulatory Policies and Procedures (44FR 11034, February 26, 1979); and (3) ifpromulgated, will not have a significanteconomic impact, positive or negative,on a substantial number of small entitiesunder the criteria of the Regulatory


Flexibility Act. A copy of the draftregulatory evaluation prepared for thisaction is contained in the Rules Docket.A copy of it may be obtained bycontacting the Rules Docket at thelocation provided under the captionADDRESSES.

List of Subjects in 14 CFR Part 39Air transportation, Aircraft, Aviation

safety, Safety.

The Proposed AmendmentAccordingly, pursuant to the

authority delegated to me by theAdministrator, the Federal AviationAdministration proposes to amend part39 of the Federal Aviation Regulations(14 CFR part 39) as follows:



Authority: 49 U.S.C. 106(g), 40113, 44701.


removing amendment 39–9423 (60 FR57803, November 21, 1995) and byadding a new airworthiness directive toread as follows:General Electric Company: Docket No. 95–

ANE–39. Supersedes AD 95–23–03,Amendment 39–9423.

Applicability: General Electric Company(GE) CF6–45, –50, –80A, –80C2 and –80E1series turbofan engines, with High PressureCompressor Rotor (HPCR) stage 3–9 spools,part numbers (P/Ns) 1333M66G01,1333M66G03, 1333M66G07, 1333M66G09,1333M66G10, 1669M22G01, 1781M52P01,1781M53G01, 1782M22G01, 1782M22G02,1782M22G04, 1854M95P01, 1854M95P02,1854M95P03, 1854M95P04, 1854M96P05,1854M95P06, 9136M89G02, 9136M89G03,9136M89G06, 9187M89G07, 9136M89G08,9136M89G09, 9136M89G10, 9136M89G11,9136M89G17, 9136M89G18, 9136M89G19,9136M89G20, 9136M89G21, 9136M89G22,9136M89G27, 9136M89G28, 9136M89G29,

9253M85G01, 9253M85G02, 9273M14G01,9331M29G01, and 9380M28P05 installed.These engines are installed on but notlimited to Airbus A300, A310, and A330series, Boeing 747 and 767 series, andMcDonnell Douglas DC–10 and MD–11 seriesaircraft.

Note 1: This airworthiness directive (AD)applies to each engine identified in thepreceding applicability provision, regardlessof whether it has been modified, altered, orrepaired in the area subject to therequirements of this AD. For engines thathave been modified, altered, or repaired sothat the performance of the requirements ofthis AD is affected, the owner/operator mustrequest approval for an alternative method ofcompliance in accordance with paragraph (k)of this AD. The request should include anassessment of the effect of the modification,alteration, or repair on the unsafe conditionaddressed by this AD; and, if the unsafecondition has not been eliminated, therequest should include specific proposedactions to address it.


To prevent HPCR stage 3–9 spool crackingand separation, which can result in anuncontained engine failure and aircraftdamage, accomplish the following:

(a) For the purpose of this AD, thefollowing abbreviations apply:

(1) Cycles Since New (CSN).(2) Cycles Since Last Inspection (CSLI).(3) Cycles At Last Inspection (CALI).(4) Engine Shop Visit (ESV).Note 2: Paragraph (b) of this AD is only

applicable to GE CF6–45/50 series engines.Paragraph (c) of this AD is only applicable toGE CF6–80A series engines. Paragraph (d) ofthis AD is only applicable to GE CF6–80C2series engines. Paragraph (e) of this AD isonly applicable to GE CF6–80E1 seriesengines.

(b) For HPCR stages 3–9 spools installed inCF6–45/50 series engines, eddy current andultrasonic inspect for cracks as follows:

(1) Eddy current and ultrasonic inspect forcracks HPCR stage 3–9 spools with P/Ns9136M89G02, 9136M89G03, 9136M89G06,9136M89G07, 9136M89G08, 9136M89G09,9136M89G17, 9136M89G18, 9136M89G19,9136M89G21, 9136M89G22, 9136M89G27,

9136M89G29, 9253M85G01, 9253M85G02,9273M14G01, and 9331M29G01, installed inGE CF6–45/–50 series engines, as follows:

(i) Perform eddy current and ultrasonicinspections in accordance with GE CF6–50Service Bulletin (SB) No. 72–1157, Original,dated June 10, 1998, at the next piece-partexposure after 1,000 CSN.

(ii) Perform eddy current and ultrasonicinspections in accordance with GE CF6–50Alert Service Bulletin (ASB) No. 72–A1131,Revision 1, dated March 12, 1998, at the nextpiece-part exposure after 1,000 CSN.

(iii) Remove from service, prior to furtherflight, HPCR stage 3–9 spools that equal orexceed the reject criteria established by SBNo. 72–1157, Original, dated June 10, 1998,or ASB No. 72–A1131, Revision 1, datedMarch 12, 1998, as applicable, and replacewith a serviceable part.

(2) Eddy current and ultrasonic inspect forcracks HPCR stage 3–9 spools with P/Ns9136M89G08, 9253M85G02, 9273M14G01,and 9331M29G01 and with Serial Numbers(S/Ns) listed in Table 801 of GE CF6–50 ShopManual GEK50481, section 05–11–02 TimeLimits, and with P/Ns 9136M89G02 and9136M89G06 installed in GE CF6–45/–50series engines. Perform the inspections inaccordance with GE CF6–50 SB No. 72–1108,Revision 1, dated July 29, 1996, as follows:

(i) For HPCR stage 3–9 spools that have notbeen previously inspected using theprocedures in GE SB No. 72–888, Revision 6,dated December 22, 1995; or SB No. 72–1000,Revision 2, dated September 9, 1993; or SBNo. 72–1108, Revision 1, dated July 29, 1996,or any earlier versions of these SBs, inspectat the first piece-part exposure after 1,000CSN but prior to accumulating 3,500 CSN, orprior to exceeding 30 days from the effectivedate of this AD, whichever occurs later.

(ii) For HPCR stage 3–9 spools that havebeen previously inspected using theprocedures in GE SB No. 72–888, Revision 6,dated December 22, 1995; or SB No. 72–1000,Revision 2, dated September 9, 1993; or SBNo. 72–1108, Revision 1, dated July 29, 1996,or any earlier versions of these SBs, performrepeat inspections at the earliest occurrenceof the requirements of Table 1, 2, or 3 of thisAD, as applicable, based on elapsed calendartime from the effective date of this AD, asspecified in paragraph (b)(2)(v) of this AD.

TABLE 1

First piece-part exposure after both 1,000 CSLI and 3,500 CSN, but not later than the first ESV after both 2,000 CSLI and 3,500 CSN, and be-fore 3,500 CSLI.

TABLE 2

First piece-part exposure after both 1,000 CSLI and 3,500 CSN, but not later than the first ESV after both 2,000 CSLI and 3,500 CSN, and be-fore:

3,500 CSLI, if spool CALI is 0–6,500, or9,500 CSN, if spool CALI is 6,501–7,000, or2,500 CSLI, if spool CALI is 7,001–8,000, or10,500 CSN, if spool CALI is 8,001–8,500, or2,000 CSLI, if spool CALI is greater than 8,500.


TABLE 3


3,500 CSLI, if spool CALI is 0–5,000, or8,500 CSN, if spool CALI is 5,001–5,500, or3,000 CSLI, if spool CALI is 5,501–6,500, or9,500 CSN, if spool CALI is 6,501–7,000, or2,500 CSLI, if spool CALI is 7,001–8,000, or10,500 CSN, if spool CALI is 8,001–8,500, or2,000 CSLI, if spool CALI is greater than 8,500.

(iii) Thereafter, inspect HPCR stage 3–9 spools at intervals not to exceed the earliest occurrence shown in Table 1, Table 2,or Table 3 of this AD, as applicable, based on the elapsed calendar time from the effective date of this AD, as specified in paragraph(b)(2)(v) of this AD.

(iv) Remove from service prior to further flight HPCR stage 3–9 spools that equal or exceed the reject criteria established byGE CF6–50 SB No. 72–1108, Revision 1, dated July 29, 1996, and replace with a serviceable part.

(v) Use the Tables as follows:(A) Use Table 1 from the effective date of this AD to 18 months from the effective date of this AD.(B) Use Table 2 after 18 months from the effective date of this AD to 36 months from the effective date of this AD.(C) Use Table 3 after 36 months from the effective date of this AD.(3) Eddy current and ultrasonic inspect for cracks HPCR stage 3–9 spools with P/Ns 9136M89G08, 9253M85G02, 9273M14G01,

and 9331M29G01, with S/Ns not listed in Table 801 of GE CF6–50 Shop Manual GEK50481, section 05–11–02 Time Limits, andwith P/Ns 9136M89G03, 9136M89G07, 9136M89G09, 9136M89G17, 9136M89G18, and 9253M85G01 installed in GE CF6–45/–50 seriesengines. Perform the inspections in accordance with GE CF6–50 SB No. 72–1108, Revision 1, dated July 29, 1996, as follows:

(i) For HPCR stage 3–9 spools that have not been previously inspected using the procedures in GE SB No. 72–888, Revision6, dated December 22, 1995; or SB No. 72–1000, Revision 2, dated September 9, 1993; or SB No. 72–1108, Revision 1, dated July29, 1996, or any earlier versions of these SBs, inspect at the first piece-part exposure after 1,000 CSN but not later than the firstESV after 4,000 CSN.

(ii) For HPCR stage 3–9 spools that have been previously inspected using the procedures in GE SB No. 72–888, Revision 6,dated December 22, 1995; or SB No. 72–1000, Revision 2, dated September 9, 1993; or SB No. 72–1108, Revision 1, dated July29, 1996, or any earlier versions of these SBs, perform repeat inspections at the first piece-part exposure after both 1,000 CSLI and4,000 CSN, but not later than the first ESV after both 2,000 CSLI and 4,000 CSN.

(iii) Thereafter, inspect HPCR stage 3–9 spools at intervals not to exceed the first piece-part exposure after both 1,000 CSLI and4,000 CSN, but not later than the first ESV after both 2,000 CSLI and 4,000 CSN.


(4) Eddy current and ultrasonic inspect for cracks HPCR stage 3–9 spools with P/Ns 9136M89G19, 9136M89G21, 9136M89G22,and 9136M89G27 installed in GE CF6–45/–50 series engines. Perform the inspections in accordance with GE CF6–50 SB No. 72–1108, Revision 1, dated July 29, 1996, as follows:

(i) For HPCR stage 3–9 spools that have not been previously inspected using the procedures in GE SB No. 72–888, Revision6, dated December 22,1995; or SB No. 72–1000, Revision 2, dated September 9, 1993; or SB No. 72–1108, Revision 1, dated July29, 1996, or any earlier versions of these SBs, inspect at the first piece-part exposure after 1,000 CSN but not later than the firstESV after 3,000 CSN, provided, however, from 18 to 36 months after the effective date of this AD, inspect not later than 9,500CSN, and after 36 months after the effective date of this AD, inspect not later than 3,500 CSN.

(ii) For HPCR stage 3–9 spools that have been previously inspected using the procedures in GE SB No. 72–888, Revision 6,dated December 22,1995; or SB No. 72–1000, Revision 2, dated September 9, 1993; or SB No. 72–1108, Revision 1, dated July 29,1996, or any earlier versions of these SBs, perform repeat inspections at the earliest occurrence of the requirements of Table 4,5, or 6 of this AD, as applicable, based on elapsed calendar time from the effective date of this AD, as specified in paragraph(b)(4)(vi) of this AD.

TABLE 4

First piece-part exposure after both 1,000 CSLI and 5,000 CSN, but not later than the first ESV after both 2,000 CSLI and 5,000 CSN.

TABLE 5


9,500 CSN, if spool CALI is 0–7,000, or2,500 CSLI, if spool CALI is 7,001–8,000, or10,500 CSN, if spool CALI is 8,001–8,500, or2,000 CSLI, if spool CALI is greater than 8,500.

TABLE 6


5,000 CSN, if spool CALI is 0–1,500, or3,500 CSLI, if spool CALI is 1,501–5,000, or8,500 CSN, if spool CALI is 5,001–5,500, or3,000 CSLI, if spool CALI is 5,501–6,500, or


TABLE 6—Continued

9,500 CSN, if spool CALI is 6,501–7,000, or2,500 CSLI, if spool CALI is 7,001–8,000, or10,500 CSN, if spool CALI is 8,001–8,500, or2,000 CSLI, if spool CALI is greater than 8,500.

(iii) Thereafter, inspect HPCR stage 3–9 spools at intervals not to exceed the earliest occurrence shown in Table 4, Table 5,or Table 6 of this AD, as applicable, based on the elapsed calendar time from the effective date of this AD, as specified in paragraph(b)(4)(vi) of this AD.


(v) HPCR stage 3–9 spools with a CSN of 10,500 or greater may not be put back in service after an ESV.(vi) Use the Tables as follows:(A) Use Table 4 from the effective date of this AD to 18 months from the effective date of this AD.(B) Use Table 5 after 18 months from the effective date of this AD to 36 months from the effective date of this AD.(C) Use Table 6 after 36 months from the effective date of this AD.(5) Eddy current and ultrasonic inspect for cracks HPCR stage 3–9 spools with P/N 9136M89G29 installed in GE CF6–45/–50

series engines. Perform the inspections in accordance with GE CF6–50 SB No. 72–1108, Revision 1, dated July 29, 1996, as follows:(i) For HPCR stage 3–9 spools that have not been previously inspected using the procedures in GE SB No. 72–888, Revision

6, dated December 22,1995; or SB No. 72–1000, Revision 2, dated September 9, 1993; or SB No. 72–1108, Revision 1, dated July29, 1996, or any earlier versions of these SBs, or any of the combinations of service documents specified by Table 7 of this AD,inspect at the next piece-part exposure after 1,000 CSN.

TABLE 7

Either any one of the following:CF6 Standard Practice Manual GEK9250 Procedures 70–32–09, Revision 71, dated October 1, 1995,CF6 Standard Practice Manual GEK9250 Procedures 70–32–09, Revision 72, dated November 15, 1996,CF6 Standard Practice Manual GEK9250 Procedures 70–32–09, Revision 74, dated May 1, 1998,and any one of the following:CF6 Standard Practice Manual GEK9250 Procedures 70–32–10, Revision 71, dated October 1, 1995,CF6 Standard Practice Manual GEK9250 Procedures 70–32–010, Revision 72, dated November 15, 1996,CF6 Standard Practice Manual GEK9250 Procedures 70–32–010, Revision 74, dated May 1, 1998;or any one of the following:CF6 Standard Practice Manual GEK9250 Procedures 70–32–13, Revision 70–25, dated August 26, 1996,CF6 Standard Practice Manual GEK9250 Procedure 70–32–13, Revision 72, dated November 15, 1996,CF6 Standard Practice Manual GEK9250 Procedures 70–32–13, Revision 73, dated November 1, 1997,and any one of the following:CF6 Standard Practice Manual GEK9250 Procedures 70–32–14, Revision 70–26, dated August 26, 1996,CF6 Standard Practice Manual GEK9250 Procedure 70–32–14, Revision 72, dated November 15, 1996,CF6 Standard Practice Manual GEK9250 Procedures 70–32–14, Revision 73, dated November 1, 1997.

(ii) For HPCR stage 3–9 spools that have been previously inspected using the procedures in GE SB No. 72–888, Revision 6,dated December 22,1995; or SB No. 72–1000, Revision 2, dated September 9, 1993; or SB No. 72–1108, Revision 1, dated July 29,1996, or any earlier versions of these SBs, or any of the combinations of service documents specified by Table 7 of this AD, inspectat first piece-part exposure after both 1,000 CSLI and 5,000 CSN.

(iii) Thereafter, inspect HPCR stage 3–9 spools at piece part exposure after both 1,000 CSLI and 5,000 CSN.(iv) Remove from service prior to further flight HPCR stage 3–9 spools that equal or exceed the reject criteria established by

GE CF6–50 SB No. 72–1108, Revision 1, dated July 29, 1996, and replace with a serviceable part.(c) For HPCR stages 3–9 spools installed in GE CF6–80A/–80A1/–80A2/–80A3 series engines, eddy current and ultrasonic inspect

for cracks as follows:(1) Eddy current and ultrasonic inspect for cracks HPCR stage 3–9 spools with P/Ns 9136M89G10, 9136M89G11, 9136M89G20,

9136M89G21, 9136M89G22, 9136M89G27, and 9136M89G28 installed in GE CF6–80A/–80A1/–80A2/–80A3 series engines, as follows:(i) Perform eddy current and ultrasonic inspections in accordance with GE CF6–80A SB No. 72–719, Revision 1, dated September

24, 1998, at the next piece-part exposure after 1,000 CSN.(ii) Perform eddy current and ultrasonic inspections in accordance with GE CF6–80A ASB No. 72–A691, Revision 2, dated September

23, 1998, at the next piece-part exposure after 1,000 CSN.(iii) Remove from service, prior to further flight, HPCR stage 3–9 spools that equal or exceed the reject criteria established by

the SB No. 72–719, Revision 1, dated September 24, 1998, or ASB No. 72–A691, Revision 2, dated September 23, 1998, as applicable,and replace with a serviceable part.

(2) Eddy current and ultrasonic inspect for cracks HPCR stage 3–9 spools with P/N 9136M89G10, with the following S/Ns: MPOM0054,MPOM7090, MPOM8303, MPOM8304, MPOM9263, MPOM9264, MPON0054, MPON0071, MPON0072, MPON1643, MPON4251, andMPON4253 installed in GE CF6–80A/–80A1/–80A2/–80A3 series engines. Perform the inspections in accordance with GE CF6–80ASB No. 72–678, Revision 1, dated August 8, 1996, as follows:

(i) For HPCR stage 3–9 spools that have not been previously inspected using the procedures in GE SB No. 72–500, Revision6, dated December 22,1995; or SB No. 72–583, Revision 5, dated December 22, 1995; or SB No. 72–678, Revision 1, dated July29, 1996, or any earlier versions of these SBs, inspect at the first piece-part exposure after 1,000 CSN but before accumulating 3,500CSN, or prior to exceeding 30 days from the effective date of this AD, whichever is later.

(ii) For HPCR stage 3–9 spools that have been previously inspected using the procedures in GE SB No. 72–500, Revision 6,dated December 22, 1995; or SB No. 72–583, Revision 5, dated December 22, 1995; or SB No. 72–678, Revision 1, dated July 29,1996, or any earlier versions of these SBs, perform repeat inspections at the earliest occurrence of the requirements of Table 8,9, or 10 of this AD, as applicable, based on elapsed calendar time from the effective date of this AD, as specified in paragraph(c)(2)(vi) of this AD.


TABLE 8

First piece-part exposure after both 1,000 CSLI and 3,500CSN, but not later than the first ESV after both 3,500 CSN and 2,000 CSLI (for GE CF6–80A1/A3 engines) or 1,500 CSLI (for GE CF6–80A/A2

engines), and before 3,500 CSLI.

TABLE 9

First piece part exposure after both 1,000 CSLI and 3,500 CSN, but not later than the first ESV after both 3,500 CSN and 2,000 CSLI (for GECF6–80A1/A3 engines) or 1,500 CSLI (for GE CF6–80A/A2 engines), and before:

3,500 CSLI, if spool CALI is 0—6,500, or9,500 CSN, if spool CALI is 6,501—7,000, or2,500 CSLI, if spool CALI is 7,001—8,000, or10,500 CSN, if spool CALI is 8,001-8,500, or2,000 CSLI, if spool CALI is greater than 8,500.

TABLE 10

First piece-part exposure after both 1,000 CSLI and 3,500 CSN, but not later than the first ESV after both 2,000 CSLI (for GE CF6–80A1/A3) or1,500 CSLI (for GE CF6–80A/A2) and 3,500 CSN, and before:

3,500 CSLI, if spool CALI is 0—5,000, or8,500 CSN, if spool CALI is 5,001—5,500, or3,000 CSLI, if spool CALI is 5,501—6,500, or9,500 CSN, if spool CALI is 6,501—7,000, or2,500 CSLI, if spool CALI is 7,001—8,000, or10,500 CSN, if spool CALI is 8,001—8,500, or2,000 CSLI, if spool CALI is greater than 8,500.

(iii) Thereafter, inspect HPCR stage 3–9spools at intervals not to exceed the earliestoccurrence shown in Table 8, Table 9, orTable 10 of this AD, as applicable, based onthe elapsed calendar time from the effectivedate of this AD, as specified in paragraph(c)(2)(vi) of this AD.

(iv) Remove from service prior to furtherflight HPCR stage 3–9 spools that equal orexceed the reject criteria established by GECF6–80A SB No. 72–678, Revision 1, datedAugust 8, 1996, and replace with aserviceable part.

(v) HPCR stage 3–9 spools with a CSN of10,500 or greater may not be put back inservice after an ESV.

(vi) Use the Tables as follows:(A) Use Table 8 from the effective date of

this AD to 18 months from the effective dateof this AD.

(B) Use Table 9 after 18 months from theeffective date of this AD to 36 months fromthe effective date of this AD.

(C) Use Table 10 after 36 months from theeffective date of this AD.

(3) Eddy current and ultrasonic inspect forcracks HPCR stage 3–9 spools with P/N9136M89G10, with S/Ns other than thoselisted in paragraph (c)(2) of this AD, and P/N 9136M89G11, installed in GE CF6–80A/A2series engines. Perform the inspections inaccordance with GE CF6–80A SB No. 72–678, Revision 1, dated August 8, 1996, asfollows:

(i) For HPCR stage 3–9 spools that have notbeen previously inspected using theprocedures in GE SB No. 72–500, Revision 6,dated December 22,1995; or SB No. 72–583,Revision 5, dated December 22, 1995; or SBNo. 72–678, Revision 1, dated July 29, 1996,or any earlier versions of these SBs, inspectat the first piece-part exposure after 1,000CSN, but not later than the first ESV after5,000 CSN.

(ii) For HPCR stage 3–9 spools that havebeen previously inspected using theprocedures in GE SB No. 72–500, Revision 6,dated December 22, 1995; or SB No. 72–583,Revision 5, dated December 22, 1995; or SBNo. 72–678, Revision 1, dated July 29, 1996,or any earlier versions of these SBs, performrepeat inspections at the first piece-partexposure after both 1,000 CSLI and 5,000CSN, but not later than the first ESV afterboth 1,500 CSLI and 5,000 CSN.

(iii) Thereafter, inspect HPCR stage 3–9spools at intervals not to exceed the firstpiece-part exposure after both 1,000 CSLI and5,000 CSN, but not later than the first ESVafter both 1,500 CSLI and 5,000 CSN.


(4) Eddy current and ultrasonic inspect forcracks HPCR stage 3–9 spools with P/N9136M89G10, with S/Ns other than thoselisted in paragraph (c)(2) of this AD, and P/N 9136M89G11, installed in GE CF6–80A1/A3 series engines. Perform the inspections inaccordance with GE CF6–80A SB No. 72–678, Revision 1, dated August 8, 1996, asfollows:

(i) For HPCR stage 3–9 spools that have notbeen previously inspected using theprocedures in GE SB No. 72–500, Revision 6,dated December 22,1995; or SB No. 72–583,Revision 5, dated December 22, 1995; or SBNo. 72–678, Revision 1, dated July 29, 1996,or any earlier versions of these SBs, inspectat the first piece-part exposure after 1,000CSN but not later than the first ESV after5,000 CSN.

(ii) For HPCR stage 3–9 spools that havebeen previously inspected using theprocedures in GE SB No. 72–500, Revision 6,

dated December 22,1995; or SB No. 72–583,Revision 5, dated December 22, 1995; or SBNo. 72–678, Revision 1, dated July 29, 1996,or any earlier versions of these SBs, performrepeat inspections at the first piece-partexposure after both 1,000 CSLI and 5,000CSN, but not later than the first ESV afterboth 2,000 CSLI and 5,000 CSN.

(iii) Thereafter, inspect HPCR stage 3–9spools at intervals not to exceed the firstpiece-part exposure after both 1,000 CSLI and5,000 CSN, but not later than the first ESVafter both 2,000 CSLI and 5,000 CSN.


(5) Eddy current and ultrasonicinspect for cracks HPCR stage 3–9spools with P/Ns 9136M89G20,9136M89G21, 9136M89G22 and9136M89G27, installed in GE CF6–80A1/A3 series engines. Perform theinspections in accordance with GE CF6–80A SB No. 72–678, Revision 1, datedAugust 8, 1996, as follows:

(i) For HPCR stage 3–9 spools that have notbeen previously inspected using theprocedures in GE SB No. 72–500, Revision 6,dated December 22,1995; or SB No. 72–583,Revision 5, dated December 22, 1995; or SBNo. 72–678, Revision 1, dated July 29, 1996,or any earlier versions of these SBs, inspectat the first piece-part exposure after 1,000CSN but not later than the first ESV after3,000 CSN, provided, however, from 18 to 36months after the effective date of this AD,inspect not later than 9,500 CSN, and after36 months after the effective date of this AD,inspect not later than 3,500 CSN.


(ii) For HPCR stage 3–9 spools that havebeen previously inspected using theprocedures in GE SB No. 72–500, Revision 6,dated December 22,1995; or SB No. 72–583,Revision 5, dated December 22, 1995; or SB

No. 72–678, Revision 1, dated July 29, 1996,or any earlier versions of these SBs, performrepeat inspections at the earliest occurrenceof the requirements of Table 11, 12, or 13 ofthis AD, as applicable, based on elapsed

calendar time from the effective date of thisAD, as specified in paragraph (c)(5)(vi) of thisAD.

TABLE 11


TABLE 12



TABLE 13


5,000 CSN, if spool CALI is 0–1,500, or3,500 CSLI, if spool CALI is 1,501–5,000, or8,500 CSN, if spool CALI is 5,001–5,500, or3,000 CSLI, if spool CALI is 5,501–6,500, or9,500 CSN, if spool CALI is 6,501–7,000, or2,500 CSLI, if spool CALI is 7,001–8,000, or10,500 CSN, if spool CALI is 8,001–8,500, or2,000 CSLI, if spool CALI is greater than 8,500.

(iii) Thereafter, inspect HPCR stage 3–9 spools at intervals not to exceed the earliest occurrence shown in Table 11, Table 12,or Table 13 of this AD, as applicable, based on the elapsed calendar time from the effective date of this AD, as specified in paragraph(c)(5)(vi) of this AD.

(iv) Remove from service prior to further flight HPCR stage 3–9 spools that equal or exceed the reject criteria established byGE CF6–80A SB No. 72–678, Revision 1, dated August 8, 1996, and replace with a serviceable part.

(v) HPCR stage 3–9 spools with a CSN of 10,500 or greater may not be put back in service after an ESV.(vi) Use the Tables as follows:(A) Use Table 11 from the effective date of this AD to 18 months from the effective date of this AD.(B) Use Table 12 after 18 months from the effective date of this AD to 36 months from the effective date of this AD.(C) Use Table 13 after 36 months from the effective date of this AD.(6) Eddy current and ultrasonic inspect for cracks HPCR stage 3–9 spools with P/Ns 9136M89G20, 9136M89G21, 9136M89G22,

and 9136M89G27 installed in GE CF6–80A/A2 series engines. Perform the inspections in accordance with GE CF6–80A SB No. 72–678, Revision 1, dated August 8, 1996, as follows:

(i) For HPCR stage 3–9 spools that have not been previously inspected using the procedures in GE SB No. 72–500, Revision6, dated December 22, 1995; or SB No. 72–583, Revision 5, dated December 22, 1995; or SB No. 72–678, Revision 1, dated July29, 1996, or any earlier versions of these SBs, inspect at the first piece-part exposure after 1,000 CSN but not later than the firstESV after 3,000 CSN, provided, however, from 18 to 36 months after the effective date of this AD, inspect not later than 9,500CSN, and after 36 months after the effective date of this AD, inspect not later than 3,500 CSN.

(ii) For HPCR stage 3–9 spools that have been previously inspected using the procedures in GE SB No. 72–500, Revision 6,dated December 22, 1995; or SB No. 72–583, Revision 5, dated December 22, 1995; or SB No. 72–678, Revision 1, dated July 29,1996, or any earlier versions of these SBs, perform repeat inspections at the earliest occurrence of the requirements of Table 14,15, or 16 of this AD, as applicable, based on elapsed calendar time from the effective date of this AD, as specified in paragraph(c)(6)(vi) of this AD.

TABLE 14


TABLE 15




TABLE 16


5,000 CSN, if spool CALI is 0–1,500, or3,500 CSLI, if spool CALI is 1,501–5,000, or8,500 CSN, if spool CALI is 5,001–5,500, or3,000 CSLI, if spool CALI is 5,501–6,500, or9,500 CSN, if spool CALI is 6,501–7,000, or2,500 CSLI, if spool CALI is 7,001–8,000, or10,500 CSN, if spool CALI is 8,001–8,500, or2,000 CSLI, if spool CALI is greater than 8,500.

(iii) Thereafter, inspect HPCR stage 3–9 spools at intervals not to exceed the earliest occurrence shown in Table 14, Table 15,or Table 16 of this AD, as applicable, based on the elapsed calendar time from the effective date of this AD, as specified in paragraph(c)(6)(vi) of this AD.

(iv) Remove from service prior to further flight HPCR stage 3–9 spools that equal or exceed the reject criteria established byGE CF6–80A SB No. 72–678, Revision 1, dated August 8, 1996, and replace with a serviceable part.

(v) HPCR stage 3–9 spools with a CSN of 10,500 or greater may not be put back in service after an ESV.(vi) Use the Tables as follows:(A) Use Table 14 from the effective date of this AD to 18 months from the effective date of this AD.(B) Use Table 15 after 18 months from the effective date of this AD to 36 months from the effective date of this AD.(C) Use Table 16 after 36 months from the effective date of this AD.(7) Eddy current and ultrasonic inspect for cracks HPCR stage 3–9 spools with P/N 9136M89G28 installed in GE CF6–80A/A1/

A2/A3 series engines. Perform the inspections in accordance with GE CF6–80A SB No. 72–678, Revision 1, dated August 8, 1996,as follows:

(i) For HPCR stage 3–9 spools that have not been previously inspected using the procedures in GE SB No. 72–500, Revision6, dated December 22,1995; or SB No. 72–583, Revision 5, dated December 22, 1995; or SB No. 72–678, Revision 1, dated July29, 1996, or any earlier versions of these SBs, or any of the combinations of service documents specified by Table 7 of this AD,inspect at the first piece-part exposure after both 1,000 CSN and the effective date of this AD.

(ii) For HPCR stage 3–9 spools that have been previously inspected using the procedures in GE SB No. 72-500, Revision 6,dated December 22, 1995; or SB No. 72–583, Revision 5, dated December 22, 1995; or SB No. 72–678, Revision 1, dated July 29,1996, or any earlier versions of these SBs, or any of the service documents listed in Table 7 of this AD, inspect at first piece-part exposure after both 1,000 CSLI and 5,000 CSN.

(iii) Thereafter, inspect HPCR stage 3–9 spools at piece-part exposure after both 1,000 CSLI and 5,000 CSN.(iv) Remove from service prior to further flight HPCR stage 3–9 spools that equal or exceed the reject criteria established by

GE CF6–80A SB No. 72–678, Revision 1, dated August 8, 1996, and replace with a serviceable part.(d) For HPCR stages 3–9 spools installed in GE CF6-80C2 series engines, eddy current and ultrasonic inspect for cracks as follows:(1) Eddy current and ultrasonic inspect for cracks HPCR stage 3–9 spools with P/Ns 1333M66G01, 1333M66G03, 1333M66G07,

1333M66G09, 1333M66G10, 1781M52P01, 1781M53G01, 1854M95P01, 1854M95P02, 1854M95P03, 1854M95P04, 1854M95P05,1854M95P06, and 9380M28P05 installed in GE CF6–80C2 series engines, as follows:

(i) Perform eddy current and ultrasonic inspections in accordance with GE CF6–80C2 SB No. 72–934, Original, dated June 10,1998,at the next piece-part exposure after 1,000 CSN.

(ii) Perform eddy current and ultrasonic inspections in accordance with GE CF6–80C2 ASB No. 72–A848, Revision 2, dated March12, 1998, at the next piece-part exposure after 1,000 CSN.

(iii) Remove from service prior to further flight HPCR stage 3–9 spools that equal or exceed the reject criteria established bythe SB No. 72–934, Original, dated June 10, 1998 or ASB No. 72-A848, Revision 2, dated March 12, 1998, as applicable and replacewith a serviceable part.

(2) Eddy current and ultrasonic inspect for cracks HPCR stage 3–9 spools with P/Ns 1781M52P01, 1854M95P02, 1854M95P05,and 9380M28P05 installed in GE CF6–80C2 series engines. Perform the inspections in accordance with GE CF6-80C2 SB No. 72–812, Revision 1, dated January 30, 1998, as follows:

(i) For HPCR stage 3–9 spools that have not been previously inspected using the procedures in GE SB No. 72–418, Revision4, dated December 22, 1995; or SB No. 72–758, Revision 1, dated December 22, 1995; or SB No. 72–812, Revision 1, dated January30, 1998, or any earlier versions of these SBs, inspect at the first piece-part exposure after 1,000 CSN but prior to accumulating3,500 CSN, or prior to exceeding 30 days from the effective date of this AD, whichever occurs later.

(ii) For HPCR stage 3–9 spools that have been previously inspected using the procedures in GE SB No. 72–418, Revision 4,dated December 22, 1995; or SB No. 72–758, Revision 1, dated December 22, 1995; or SB No. 72–812, Revision 1, dated January30, 1998, or any earlier versions of these SBs, perform repeat inspections at the earliest occurrence of the requirements of Table17, 18, or 19 of this AD, as applicable, based on elapsed calendar time from the effective date of this AD, as specified in paragraph(d)(2)(vi) of this AD.

TABLE 17

First piece-part or module level exposure after both 1,000 CSLI and 3,500 CSN, but not later than the first ESV after both 1,500 CSLI and3,500 CSN, and before 3,500 CSLI.

TABLE 18

First piece-part or module level exposure after both 1,000 CSLI and 3,500 CSN, but not later than the first ESV after both 1,500 CSLI and3,500 CSN, and before:

3,500 CSLI, if spool CALI is 0–6,500, or9,500 CSN, if spool CALI is 6,501–7,000, or2,500 CSLI, if spool CALI is 7,001–8,000, or10,500 CSN, if spool CALI is 8,001–8,500, or2,000 CSLI, if spool CALI is greater than 8,500.


TABLE 19



(iii) Thereafter, inspect HPCR stage 3–9 spools at intervals not to exceed the earliest occurrence shown in Table 17, Table 18,or Table 19 of this AD, as applicable, based on the elapsed calendar time from the effective date of this AD, as specified in paragraph(d)(2)(vi) of this AD.

(iv) Remove from service prior to further flight HPCR stage 3–9 spools that equal or exceed the reject criteria established byGE CF6–80C2 SB No. 72–812, Revision 1, dated January 30, 1998, and replace with a serviceable part.

(v) HPCR stage 3–9 spools with a CSN of 10,500 or greater may not be put back in service after an ESV.(vi) Use the Tables as follows:(A) Use Table 17 from the effective date of this AD to 18 months from the effective date of this AD.(B) Use Table 18 after 18 months from the effective date of this AD to 36 months from the effective date of this AD.(C) Use Table 19 after 36 months from the effective date of this AD.(3) Eddy current and ultrasonic inspect for cracks HPCR stage 3–9 spools with P/Ns 1333M66G01, 1333M66G03, 1333M66G07,

1333M66G09, 1781M53G01, 1854M95P01, 1854M95P03, 1854M95P04, and 1854M95P06 installed in GE CF6–80C2 series engines. Performthe inspections in accordance with GE CF6–80C2 SB No. 72–812, Revision 1, dated January 30, 1998, as follows:

(i) For HPCR stage 3–9 spools that have not been previously inspected using the procedures in GE SB No. 72–418, Revision4, dated December 22, 1995; or SB No. 72–758, Revision 1, dated December 22, 1995; or SB No. 72–812, Revision 1, dated January30, 1998, or any earlier versions of these SBs, inspect at the first piece–part exposure after 1,000 CSN but not later than the firstESV after 3,000 CSN, provided, however, from 18 to 36 months after the effective date of this AD, inspect not later than 9,500CSN, and after 36 months after the effective date of this AD, inspect not later than 3,500 CSN.

(ii) For HPCR stage 3–9 spools that have been previously inspected using the procedures in GE SB No. 72–418, Revision 4,dated December 22, 1995; or SB No. 72–758, Revision 1, dated December 22, 1995; or SB No. 72–812, Revision 1, dated January30, 1998, or any earlier versions of these SBs, perform repeat inspections at the earliest occurrence of the requirements of Table20, 21, or 22 of this AD, as applicable, based on elapsed calendar time from the effective date of this AD, as specified in paragraph(d)(3)(vi) of this AD.

TABLE 20

First piece-part or module level exposure after both 1,000 CSLI and 3,500 CSN, but not later than the first ESV after both 1,500 CSLI and3,500 CSN.

TABLE 21



TABLE 22



(iii) Thereafter, inspect HPCR stage 3–9 spools at intervals not to exceed the earliest occurrence shown in Table 21, Table 22,or Table 23 of this AD, as applicable, based on elapsed calendar time from the effective date of this AD, as specified in paragraph(d)(3)(vi) of this AD.

(iv) Remove from service prior to further flight HPCR stage 3–9 spools that equal or exceed the reject criteria established byGE CF6–80C2 SB No. 72–812, Revision 1, dated January 30, 1998, and replace with a serviceable part.

(v) HPCR stage 3–9 spools with a CSN of 10,500 or greater may not be put back in service after an ESV.(vi) Use the Tables as follows:(A) Use Table 21 from the effective date of this AD to 18 months from the effective date of this AD.(B) Use Table 22 after 18 months from the effective date of this AD to 36 months from the effective date of this AD.(C) Use Table 23 after 36 months from the effective date of this AD.(4) Eddy current and ultrasonic inspect for cracks HPCR stage 3–9 spools with P/N 1333M66G10 installed in GE CF6–80C2 series

engines. Perform the inspections in accordance with GE CF6–80C2 SB No. 72–812, Revision 1, dated January 30, 1998, as follows:


(i) For HPCR stage 3–9 spools that have not been previously inspected using the procedures in GE SB No. 72–418, Revision4, dated December 22, 1995; or SB No. 72–758, Revision 1, dated December 22, 1995; or SB No. 72–812, Revision 1, dated January30, 1998, or any earlier versions of these SBs, or any of the combinations of service documents specified by Table 7 of this AD,inspect at the first piece-part exposure after both 1,000 CSN and the effective date of this AD.

(ii) For HPCR stage 3–9 spools that have been previously inspected using the procedures in GE SB No. 72–418, Revision 4,dated December 22, 1995; or SB No. 72–758, Revision 1, dated December 22, 1995; or SB No. 72–812, Revision 1, dated January30, 1998, or any earlier versions of these SBs, or any of the combinations of service documents specified by Table 7 of this AD,inspect at first piece part exposure after both 1,000 CSLI and 3,500 CSN.

(iii) Thereafter, inspect HPCR stage 3–9 spools at piece part exposure after both 1,000 CSLI and 3,500 CSN.(iv) Remove from service prior to further flight HPCR stage 3–9 spools that equal or exceed the reject criteria established by

GE CF6–80C2 SB No. 72–812, Revision 1, dated January 30, 1998, and replace with a serviceable part.(e) For HPCR stages 3–9 spools installed in GE CF6–80E1 series engines, eddy current and ultrasonic inspect for cracks as follows:(1) Eddy current and ultrasonic inspect for cracks HPCR stage 3–9 spools with P/Ns 1669M22G01, 1669M22G03, 1782M22G01,

1782M22G02, and 1782M22G04 installed in GE CF6–80E1 series engines, as follows:(i) Perform eddy current and ultrasonic inspections in accordance with GE CF6–80E1 SB No. 72–137, Original, dated June 9,

1998, at the next piece-part exposure after 1,000 CSN.(ii) Perform eddy current and ultrasonic inspections in accordance with GE CF6–80E1 ASB No. 72–A126, Revision 1, dated March

31, 1998, at the next piece-part exposure after 1,000 CSN.(iii) Remove from service prior to further flight HPCR stage 3–9 spools that equal or exceed the reject criteria established by

SB No. 72–137, Original, dated June 9, 1998 or ASB No. 72–A126, Revision 1, dated March 31, 1998, as applicable, and replacewith a serviceable part.

(2) Eddy current and ultrasonic inspect for cracks HPCR stage 3–9 spools with P/Ns 1669M22G01, 1669M22G03, 1782M22G01,and 1782M22G02 installed in GE CF6–80E1 series engines. Perform the inspections in accordance with GE CF6–80E1 ASB No. 72–A135, Original, dated August 13, 1998, as follows:

(i) For HPCR stage 3–9 spools that have not been previously inspected in accordance with in accordance GE CF6–80E1 ASBNo. 72–A135, Original, dated August 13, 1998, or any of the combinations of service documents specified by Table 7 of this AD,inspect HPCR stage 3–9 spools at the first piece-part exposure after 1,000 CSN, but not later than the first ESV after 3,000 CSN,provided, however, from 18 to 36 months after the effective date of this AD, inspect not later than 9,500 CSN, and after 36 monthsafter the effective date of this AD, inspect not later than 3,500 CSN.

(ii) For HPCR stage 3–9 spools that have been previously inspected in accordance with GE CF6–80E1 ASB No. 72–A135, Original,dated August 13, 1998, or any of the combinations of service documents specified by Table 7 of this AD, perform repeat inspectionsat the earliest occurrence of the requirements of Table 24, 25, or 26 of this AD, as applicable, based on elapsed calendar timefrom the effective date of this AD, as specified in paragraph (e)(2)(vi) of this AD.

TABLE 24

First piece-part or module level exposure after both 1,000 CSLI and 3,500 CSN, but not later than the first ESV after both 1,500 CSLI and3,500 CSN.

TABLE 25



TABLE 26



(iii) Thereafter, inspect HPCR stage 3–9 spools at intervals not to exceed the earliest occurrence shown in Table 24, Table 25,or Table 26 of this AD, as applicable, based on the elapsed calendar time from the effective date of this AD, as specified in paragraph(e)(2)(vi ) of this AD.

(iv) Remove from service prior to further flight HPCR stage 3–9 spools that equal or exceed the reject criteria established byGE CF6–80E1 ASB No. 72–A135, Original, dated August 13, 1998, and replace with a serviceable part.

(v) HPCR stage 3–9 spools with a CSN of 10,500 or greater may not be put back in service after an ESV.(vi) Use the Tables as follows:(A) Use Table 24 from the effective date of this AD to 18 months from the effective date of this AD.(B) Use Table 25 after 18 months from the effective date of this AD to 36 months from the effective date of this AD.(C) Use Table 26 after 36 months from the effective date of this AD.(3) Eddy current and ultrasonic inspect for cracks HPCR stage 3–9 spools with P/N 1782M22G04 installed in GE CF6–80E1 series

engines. Perform the inspections in accordance GE CF6–80E1 ASB No. 72–A135, Original, dated August 13, 1998, as follows:(i) For HPCR stage 3–9 spools that have not been previously inspected in accordance with any of the service documents listed

in Table 24 of this AD, inspect at first piece-part exposure after both 1,000 CSN and the effective date of this AD.(ii) Thereafter, inspect at first piece part exposure after both 1,000 CSLI and 3,500 CSN.


(iii) Remove from service prior to further flight HPCR stage 3–9 spools that equal or exceed the reject criteria established byGE CF6–80E1 ASB No. 72–A135, Original, dated August 13, 1998, and replace with a serviceable part.

(f) Report within 5 calendar days of inspection the results of inspections that equal or exceed the reject criteria to: WilliamRicci, Aerospace Engineer, Engine Certification Office, FAA, Engine and Propeller Directorate, 12 New England Executive Park, Burlington,MA 01803–5299; telephone (718) 238–7742, fax (781) 238–7199, as follows:

(1) Engine model in which the HPCR stage 3–9 spool was installed;(2) P/N;(3) S/N;(4) Part CSN;(5) Part CSLI;(6) Date and location of inspection.

Reporting requirements have been approved by the Office of Management and Budget and assigned OMB control number 2120–0056.(g) For the purpose of this AD, a serviceable part for installation in an engine is defined as an HPCR stage 3–9 spool with

less than 1,000 CSN or with less than 1,000 CSLI, in accordance with the inspection and pass/fail criteria contained in the applicableservice documents or combinations of service documents provided by Table 27 of this AD.

TABLE 27

GE CF6–50 SB No. 72–888, Revision 3, dated January 31, 1991,GE CF6–50 SB No. 72–888, Revision 4, dated March 28, 1991,GE CF6–50 SB No. 72–888, Revision 5, dated November 7, 1994,GE CF6–50 SB No. 72–888, Revision 6, dated December 22, 1995,GE CF6–50 SB No. 72–1000, Original, dated December 14, 1990,GE CF6–50 SB No. 72–1000, Revision 1, dated March 28, 1991,GE CF6–50 SB No. 72–1000, Revision 2, dated September 9, 1993,GE CF6–50 SB No. 72–1000, Revision 3, dated December 22, 1995,GE CF6–50 SB No. 72–1108, Original, dated November 6, 1995,GE CF6–50 SB No. 72–1108, Revision 1, dated July 29, 1996,GE CF6–80A SB No. 72–500, Revision 3, dated March 19, 1991,GE CF6–80A SB No. 72–500, Revision 4, dated July 1, 1991,GE CF6–80A SB No. 72–500, Revision 5, dated November 7, 1994,GE CF6–80A SB No. 72–500, Revision 6, dated December 22, 1995,GE CF6–80A SB No. 72–583, Original, dated December 20, 1990,GE CF6–80A SB No. 72–583, Revision 1, dated March 18, 1991,GE CF6–80A SB No. 72–583, Revision 2, dated July 15, 1991,GE CF6–80A SB No. 72–583, Revision 3, dated July 24, 1991,GE CF6–80A SB No. 72–583, Revision 4, dated September 15, 1993,GE CF6–80A SB No. 72–583, Revision 5, dated December 22, 1995,GE CF6–80A SB No. 72–678, Original, dated November 6, 1995,GE CF6–80A SB No. 72–678, Revision 1, dated July 29, 1996,GE CF6–80C2 SB No. 72–418, Revision 2, May 14, 1991,GE CF6–80C2 SB No. 72–418, Revision 3, November 7, 1994,GE CF6–80C2 SB No. 72–418, Revision 4, December 22, 1995,GE CF6–80C2 SB No. 72–758, Original, dated November 7, 1994,GE CF6–80C2 SB No. 72–758, Revision 1, dated December 22, 1995,GE CF6–80C2 SB No. 72–812, Original, dated November 6, 1995,GE CF6–80C2 SB No. 72–812, Revision 1, dated January 30, 1998,GE CF6–80E1 ASB No. 72–A135, Original, dated August 13, 1998,Either any one of the following:CF6 Standard Practice Manual GEK9250 Procedures 70–32–09, Revision 71, dated October 1, 1995,CF6 Standard Practice Manual GEK9250 Procedures 70–32–09, Revision 72, dated November 15, 1996,CF6 Standard Practice Manual GEK9250 Procedures 70–32–09, Revision 74, dated May 1, 1998,and any one of the following:CF6 Standard Practice Manual GEK9250 Procedures 70–32–10, Revision 71, dated October 1, 1995,CF6 Standard Practice Manual GEK9250 Procedures 70–32–10, Revision 72, dated November 15, 1996,CF6 Standard Practice Manual GEK9250 Procedures 70–32–10, Revision 74, dated May 1, 1998;or any one of the following:CF6 Standard Practice Manual GEK9250 Procedures 70–32–13, Revision 70–25, dated August 26, 1996,CF6 Standard Practice Manual GEK9250 Procedures 70–32–13, Revision 72, dated November 15, 1996,CF6 Standard Practice Manual GEK9250 Procedures 70–32–13, Revision 73, dated November 1, 1997,and any one of the following:CF6 Standard Practice Manual GEK9250 Procedures 70–32–14, Revision 70–26, dated August 26, 1996,CF6 Standard Practice Manual GEK9250 Procedure 70–32–14, Revision 72, dated November 15, 1996,CF6 Standard Practice Manual GEK9250 Procedure 70–32–14, Revision 73, dated November 1, 1997.

(h) For the purpose of this AD, core module exposure is defined as separation of the fan module from the engine.(i) For the purpose of this AD, piece-part exposure is defined as disassembly and removal of the stage 3–9 spool from the HPC

rotor structure, regardless of any blades, locking lugs, bolts or balance weights assembled to the spool.(j) For the purpose of this AD, an ESV is defined as the introduction of an engine into a shop where the separation of a major

engine flange will occur after the effective date of this AD. The following maintenance actions are not considered ESVs for thepurpose of this AD:

(1) Introduction of an engine into a shop solely for removal of the compressor top case for airfoil maintenance;(2) Introduction of an engine into a shop solely for removal or replacement of the Stage 1 Fan Disk;(3) Introduction of an engine into a shop solely for replacement of the Turbine Rear Frame;(4) Introduction of an engine into a shop solely for replacement of the Accessory and/or Transfer Gearboxes;


(5) Introduction of an engine into a shop for any combination of the above specified exceptions.(k) An alternative method of compliance or adjustment of the compliance time that provides an acceptable level of safety may

be used if approved by the Manager, Engine Certification Office. Operators shall submit their requests through an appropriate FAAPrincipal Maintenance Inspector, who may add comments and then send it to the Manager, Engine Certification Office.

Note 3: Information concerning the existence of approved alternative methods of compliance with this airworthiness directive,if any, may be obtained from the Engine Certification Office.

(l) Special flight permits may be issued in accordance with sections 21.197 and 21.199 of the Federal Aviation Regulations (14CFR 21.197 and 21.199) to operate the aircraft to a location where the requirements of this AD can be accomplished.

Issued in Burlington, Massachusetts, on November 17, 1998.Jay J. Pardee,Manager, Engine and Propeller Directorate, Aircraft Certification Service.[FR Doc. 98–31437 Filed 11–24–98; 8:45 am]BILLING CODE 4910–13–P



14 CFR Part 39

[Docket No. 97–CE–32–AD]

RIN 2120–AA64

Airworthiness Directives; The NewPiper Aircraft, Inc. Models PA–31, PA–31–300, PA–31–325, PA–31–350, andPA–31P–350 Airplanes

AGENCY: Federal AviationAdministration, DOT.ACTION: Notice of proposed rulemaking(NPRM).

SUMMARY: This document proposes toadopt a new airworthiness directive(AD) that would apply to certain TheNew Piper Aircraft, Inc. (Piper) ModelsPA–31, PA–31–300, PA–31–325, PA–31–350, and PA–31P–350 airplanes. Theproposed AD would require installingaccess holes for the inspection of theelevator spar; inspecting the elevator iceprotection boots for looseness andreinstalling or replacing the elevator iceprotection boots if looseness is found.The proposed AD also requiresrepetitively inspecting the elevator sparsfor cracks, and replacing the elevators orelevator spar assemblies with parts ofimproved design either at a certain timeperiod or when cracks are found,whichever occurs first. The proposedAD is the result of reports of cracksdeveloping in the elevator spar inboardof the outboard hinge location on theaffected airplanes. The actions specifiedby the proposed AD are intended toprevent failure of the elevator sparcaused by fatigue cracking, which couldresult in reduced airplanecontrollability.DATES: Comments must be received onor before January 27, 1999.ADDRESSES: Submit comments intriplicate to the Federal AviationAdministration (FAA), Central Region,Office of the Regional Counsel,Attention: Rules Docket No. 97–CE–32–AD, Room 1558, 601 E. 12th Street,

Kansas City, Missouri 64106. Commentsmay be inspected at this locationbetween 8 a.m. and 4 p.m., Mondaythrough Friday, holidays excepted.

Service information that applies to theproposed AD may be obtained from TheNew Piper Aircraft, Inc., CustomerServices, 2926 Piper Drive, Vero Beach,Florida 32960. This information alsomay be examined at the Rules Docket atthe address above.FOR FURTHER INFORMATION CONTACT:William Herderich, Aerospace Engineer,FAA, Atlanta Certification Office, OneCrown Center, 1895 Phoenix Boulevard,suite 450, Atlanta, Georgia 30349;telephone: (770) 703–6084; facsimile:(770) 703–6097.SUPPLEMENTARY INFORMATION:

Comments Invited

Interested persons are invited toparticipate in the making of theproposed rule by submitting suchwritten data, views, or arguments asthey may desire. Communicationsshould identify the Rules Docketnumber and be submitted in triplicate tothe address specified above. Allcommunications received on or beforethe closing date for comments, specifiedabove, will be considered before takingaction on the proposed rule. Theproposals contained in this notice maybe changed in light of the commentsreceived.

Comments are specifically invited onthe overall regulatory, economic,environmental, and energy aspects ofthe proposed rule. All commentssubmitted will be available, both beforeand after the closing date for comments,in the Rules Docket for examination byinterested persons. A report thatsummarizes each FAA-public contactconcerned with the substance of thisproposal will be filed in the RulesDocket.

Commenters wishing the FAA toacknowledge receipt of their commentssubmitted in response to this noticemust submit a self-addressed, stampedpostcard on which the followingstatement is made: ‘‘Comments to

Docket No. 97-CE–32-AD.’’ The postcardwill be date stamped and returned to thecommenter.

Availability of NPRMsAny person may obtain a copy of this

NPRM by submitting a request to theFAA, Central Region, Office of theRegional Counsel, Attention: RulesDocket No. 97–CE–32–AD, Room 1558,601 E. 12th Street, Kansas City, Missouri64106.

DiscussionThe FAA has received several reports

of cracks in the elevator spar inboard ofthe outboard hinge attachment locationon Piper Models PA–31, PA–31–300,PA–31–325, PA–31–350, and PA–31P–350 airplanes. Initiation of these cracksis at the end rivets in the reinforcementdoubler on the aft surface of the spar.These cracks are occurring at the endrow of rivets that attach the spar andreinforcement doubler. The FAA hasalso received reports of cracks at theoutboard end of the spar.

Poorly installed or maintained iceprotection boots on the affectedairplanes may aggravate the occurrenceand growth of these cracks. If these iceprotection boots become loose, they mayset up a vibration and promote fatiguecracking of the elevator spar.

These conditions, if not corrected ina timely manner, could result in failureof the elevator spar with reducedairplane controllability.

Relevant Service InformationPiper has issued Service Bulletin No.

998A, dated August 4, 1997, whichspecifies procedures for installingaccess holes for the inspection of theelevator spar; inspecting the elevator iceprotection boots for looseness andreinstalling or replacing the elevator iceprotection boots if looseness is found;and repetitively inspecting the elevatorspars for cracks.

The FAA’s DeterminationAfter examining the circumstances

and reviewing all available informationrelated to the incidents described above,


including the referenced serviceinformation, the FAA has determinedthat AD action should be taken toprevent failure of the elevator sparcaused by fatigue cracking, which couldresult in reduced airplanecontrollability.

Explanation of the Provisions of theProposed AD

Since an unsafe condition has beenidentified that is likely to exist ordevelop in other Piper Models PA–31,PA–31–300, PA–31–325, PA–31–350,and PA–31P–350 airplanes of the sametype design, the FAA is proposing ADaction. The proposed AD would requireinstalling access holes for the inspectionof the elevator spar; inspecting theelevator ice protection boots forlooseness and reinstalling or replacingthe elevator ice protection boots iflooseness is found. The proposed ADalso requires repetitively inspecting theelevator spars for cracks, and replacingthe elevators or elevator spar assemblieswith parts of improved design either ata certain time period or when cracks arefound, whichever occurs first.

Accomplishment of the proposedinspection access holes installation,inspections, and elevator ice protectionboots reinstallation or replacement isrequired in accordance with PiperService Bulletin No. 998A, dated August4, 1997.

Accomplishment of the installation ofthe improved design elevators orelevator spar assemblies is required inaccordance with the maintenancemanual.

The FAA’s Aging Commuter AircraftPolicy

The actions proposed in this NPRMare consistent with the FAA’s agingcommuter aircraft policy, which brieflystates that, when a modification existsthat could eliminate or reduce thenumber of required critical inspections,the modification should beincorporated. This policy is based onthe FAA’s determination that relianceon critical repetitive inspections onairplanes utilized in commuter servicecarries an unnecessary safety risk whena design change exists that couldeliminate or, in certain instances,reduce the number of those critical

inspections. In determining whatinspections are critical, the FAAconsiders (1) the safety consequences ofthe airplane if the known problem is notdetected by the inspection; (2) thereliability of the inspection such as theprobability of not detecting the knownproblem; (3) whether the inspection areais difficult to access; and (4) thepossibility of damage to an adjacentstructure as a result of the problem.

The alternative to replacing theelevators or elevator spar assemblieswith ones of improved design would beto repetitively inspect this area for thelife of the airplane.

Cost ImpactThe FAA estimates that 1,739

airplanes in the U.S. registry would beaffected by the proposed AD.

The proposed inspection holesinstallation and inspections would takeapproximately 2 workhours per airplaneto accomplish with an average labor rateof approximately $60 an hour. Parts costapproximately $26 per airplane. Basedon these figures, the total cost impact ofthe proposed inspection access holesinstallation and inspections on U.S.operators is estimated to be $253,894, or$146 per airplane.

The proposed elevator spar assemblyreplacements would take approximately36 workhours per airplane toaccomplish with an average labor rate ofapproximately $60 an hour. Parts costapproximately $600 per airplane ($300per elevator spar assembly with 2elevator spar assemblies per airplane).Based on these figures, the total costimpact of the proposed elevator sparassembly replacement on U.S. operatorsis estimated to be $4,799,640, or $2,760per airplane.

According to Piper, numerousairplanes already have complied withthe proposed initial inspectionrequirements of this NPRM, specificallymost of the Model PA–31–350 airplanessince many of these are used incommuter service.

Regulatory ImpactThe regulations proposed herein

would not have substantial direct effectson the States, on the relationshipbetween the national government andthe States, or on the distribution ofpower and responsibilities among the

various levels of government. Therefore,in accordance with Executive Order12612, it is determined that thisproposal would not have sufficientfederalism implications to warrant thepreparation of a Federalism Assessment.

For the reasons discussed above, Icertify that this action (1) is not a‘‘significant regulatory action’’ underExecutive Order 12866; (2) is not a‘‘significant rule’’ under DOTRegulatory Policies and Procedures (44FR 11034, February 26, 1979); and (3) ifpromulgated, will not have a significanteconomic impact, positive or negative,on a substantial number of small entitiesunder the criteria of the RegulatoryFlexibility Act. A copy of the draftregulatory evaluation prepared for thisaction has been placed in the RulesDocket. A copy of it may be obtained bycontacting the Rules Docket at thelocation provided under the captionADDRESSES.


Air transportation, Aircraft, Aviationsafety, Safety.

The Proposed Amendment

Accordingly, pursuant to theauthority delegated to me by theAdministrator, the Federal AviationAdministration proposes to amend part39 of the Federal Aviation Regulations(14 CFR part 39) as follows:



Authority: 49 U.S.C. 106(g), 40113, 44701.

§ 39.13 [Amended]

2. Section 39.13 is amended byadding a new airworthiness directive(AD) to read as follows:The New Piper Aircraft, Inc.: Docket No. 97–

CE–32–AD.Applicability: The following airplane

model and serial numbers, certificated in anycategory, that are not equipped with theapplicable improved design elevators orelevator spar assemblies specified in the‘‘Replacement Elevator P/N’’ and ‘‘ReplaceSpar P/N’’ columns of the ‘‘Material RequiredTable’’ on page 4 of Piper Service BulletinNo. 998A, dated August 4, 1997:

Models Serial numbers

PA–31, PA–31–300, and PA–31–325 .......................................................................................................... 31–2 through 31–8312019.PA–31–350 ................................................................................................................................................... 31–5001 through 31–8553002.PA–31P–350 ................................................................................................................................................. 31P–8414001 through 31P–8414050.


Note 1: This AD applies to each airplaneidentified in the preceding applicabilityprovision, regardless of whether it has beenmodified, altered, or repaired in the areasubject to the requirements of this AD. Forairplanes that have been modified, altered, orrepaired so that the performance of therequirements of this AD is affected, theowner/operator must request approval for analternative method of compliance inaccordance with paragraph (g) of this AD.The request should include an assessment ofthe effect of the modification, alteration, orrepair on the unsafe condition addressed bythis AD; and, if the unsafe condition has notbeen eliminated, the request should includespecific proposed actions to address it.


To prevent failure of the elevator sparcaused by fatigue cracking, which couldresult in reduced airplane controllability,accomplish the following:

(a) Upon accumulating 2,500 hours time-in-service (TIS) on each elevator sparassembly or within the next 100 hours TISafter the effective date of this AD, whicheveroccurs later, accomplish the following inaccordance with the INSTRUCTIONS sectionof Piper Service Bulletin No. 998A, datedAugust 4, 1997:

(1) Install access holes for the inspection ofthe elevator spar;

(2) Inspect the elevator spars for cracks;and

(3) Inspect the elevator ice protection bootsfor looseness.

(b) If the elevator ice protection boots arefound loose during the inspection requiredby paragraph (a)(3) of this AD, prior tofurther flight, reinstall or replace the elevatorice protection boots in accordance with theINSTRUCTIONS section of Piper ServiceBulletin No. 998A, dated August 4, 1997.

(c) If no cracks are found in the elevatorspars during the inspection required byparagraph (a)(2) of this AD, reinspect theelevator spars for cracks at intervals not toexceed 100 hours TIS, provided no cracks arefound (if cracks are found, refer to paragraphs(d) and (d)(1) of this AD).

(d) At whichever of the compliance timespresented in paragraphs (d)(1) and (d)(2) ofthis AD that occurs first, replace eachelevator or elevator spar assembly with a partof improved design as specified in the‘‘Replacement Elevator P/N’’ and ‘‘ReplaceSpar P/N’’ columns of the ‘‘Material RequiredTable’’ on page 4 of Piper Service BulletinNo. 998A, dated August 4, 1997. Accomplishthese replacements in accordance with theapplicable maintenance manual.

(1) Prior to further flight on any elevatorspar assembly where any cracks are foundduring the initial inspection required byparagraph (a)(2) of this AD or any repetitiveinspection required by paragraph (c) of thisAD; or

(2) Within 1,000 hours TIS after the initialinspection required by paragraph (a)(2) ofthis AD.

(e) Replacing both the left and rightelevators or elevator spar assemblies withparts of improved design as specified in the‘‘Replacement Elevator P/N’’ and ‘‘Replace

Spar P/N’’ columns of the ‘‘Material RequiredTable’’ on page 4 of Piper Service BulletinNo. 998A, dated August 4, 1997, isconsidered terminating action for therepetitive inspection requirement of this AD.

(1) This action may be accomplished at anytime to terminate the repetitive inspections,but must be accomplished prior to furtherflight on any elevator spar found cracked orwithin 1,000 hours TIS after the initialinspection, whichever occurs first.

(2) If one elevator spar assembly isreplaced prior to further flight when a crackis found, the other elevator spar assemblymust still be repetitively inspected every 100hours TIS until replacement at 1,000 hoursTIS after the initial inspection or whencracks are found, whichever occurs later.

(f) Special flight permits may be issued inaccordance with sections 21.197 and 21.199of the Federal Aviation Regulations (14 CFR21.197 and 21.199) to operate the airplane toa location where the requirements of this ADcan be accomplished.

(g) An alternative method of compliance oradjustment of the initial or repetitivecompliance times that provides an equivalentlevel of safety may be approved by theManager, Atlanta Aircraft Certification Office(ACO), One Crown Center, 1895 PhoenixBoulevard, Suite 450, Atlanta, Georgia 30349.The request shall be forwarded through anappropriate FAA Maintenance Inspector,who may add comments and then send it tothe Manager, Atlanta ACO.


(h) All persons affected by this directivemay obtain copies of the document referredto herein upon request to The New PiperAircraft, Inc., 2926 Piper Drive, Vero Beach,Florida 32960; or may examine thisdocument at the FAA, Central Region, Officeof the Regional Counsel, Room 1558, 601 E.12th Street, Kansas City, Missouri 64106.

Issued in Kansas City, Missouri, onNovember 17, 1998.Michael Gallagher,Manager, Small Airplane Directorate, AircraftCertification Service.[FR Doc. 98–31436 Filed 11–24–98; 8:45 am]BILLING CODE 4910–13–U



30 CFR Part 936

[SPATS No. OK–024–FOR]

Oklahoma Regulatory Program

AGENCY: Office of Surface MiningReclamation and Enforcement (OSM),Interior.ACTION: Proposed rule; reopening andextension of public comment period onproposed amendment.

SUMMARY: OSM is announcing receipt ofrevisions to and other explanatoryinformation about a previouslyproposed amendment to the Oklahomaregulatory program (Oklahoma program)under the Surface Mining Control andReclamation Act of 1977 (SMCRA). Therevisions and explanatory informationconcern definitions, permittingrequirements, small operator assistanceprogram, performance standards,inspection and enforcement procedures,and corrections of reference citationsand typographical errors. Oklahomaintends to revise its program to beconsistent with the correspondingFederal regulations.DATES: We will accept writtencomments until 4:00 p.m., c.s.t.,December 10, 1998.ADDRESSES: You should mail or handdeliver written comments to Michael C.Wolfrom, Director, Tulsa Field Office atthe address listed below.

You may review copies of theOklahoma program, the amendment,and all written comments received inresponse to this document at theaddresses listed below during normalbusiness hours, Monday through Friday,excluding holidays. You may receiveone free copy of the amendment bycontacting OSM’s Tulsa Field Office.

Michael C. Wolfrom, Director, TulsaField Office, Office of Surface Mining,5100 East Skelly Drive, Suite 470, Tulsa,Oklahoma 74135–6547, Telephone:(918) 581–6430.

Oklahoma Department of Mines, 4040N. Lincoln Blvd., Suite 107, OklahomaCity, Oklahoma 73105, Telephone: (405)521–3859.FOR FURTHER INFORMATION CONTACT:Michael C. Wolfrom, Director, TulsaField Office. Telephone: (918) 581–6430. Internet:[email protected] INFORMATION:

I. Background on the OklahomaProgram

On January 19, 1981, the Secretary ofthe Interior conditionally approved theOklahoma program. You can findbackground information on theOklahoma program, including theSecretary’s findings, the disposition ofcomments, and the conditions ofapproval in the January 19, 1981,Federal Register (46 FR 4902). You canfind later actions on the Oklahomaprogram at 30 CFR 936.15 and 936.16.

II. Discussion of the ProposedAmendment

By letter dated December 18, 1997(Administrative Record No. OK–981),Oklahoma sent us an amendment to its


program under SMCRA. Oklahoma sentthe amendment in response to a letterdated June 17, 1997 (AdministrativeRecord No. OK–979), that we sent toOklahoma under 30 CFR 732.17(c). Weannounced receipt of the proposedamendment in the January 6, 1998,Federal Register (63 FR 454) andinvited public comment on itsadequacy. The public comment periodended February 5, 1998.

During our review of the amendment,we identified concerns relating todefinitions, permitting requirements,small operator assistance program,performance standards, inspection andenforcement procedures, andcorrections of reference citations andtypographical errors. We notifiedOklahoma of the concerns by facsimilesdated June 5 and 30, and October 21,1998 (Administrative Record Nos. OK–981.13, OK–981.08, and OK–981.11). OnJune 22, August 10, September 24, andNovember 5, 1998, Oklahoma sent us arevised amendment or additionalexplanatory information(Administrative Record Nos. OK–981.06, OK–981.09, OK–981.10, andOK–981.12, respectively).

Oklahoma proposes to correct anyincorrect reference citations and anytypographical errors throughout theproposed amendment. Also, Oklahomasubmitted additional revisions or otherexplanatory information for thefollowing provisions of the amendment:

1. OAC 460:20–3–5. DefinitionsOklahoma proposes to revise the

definitions for ‘‘other treatmentfacilities’’ and ‘‘previously minedareas.’’

2. OAC 460:20–27–14. Reclamationplan: siltation structures,impoundments, banks, dams, andembankments (Surface MiningActivities)

a. Oklahoma proposes to reviseparagraph (a)(3) so that structures thatdo not meet the size or other criteria of30 CFR 77.216(a) or the Class B or Ccriteria for dams in the U.S. Departmentof Agriculture Soil Conservation ServiceTechnical Release No. 60 (210–VI–TR60, Oct. 1985), ‘‘Earth Dams andReservoirs,’’ Technical Release No. 60(TR–60) are not subject to theregulations in paragraphs (a)(3)(A)–(3)(D).

b. Oklahoma proposes to reviseparagraph (c)(3) regarding permanentand temporary impoundments to read asfollows:

(3) For an impoundment not meeting thesize or other criteria of 30 CFR 77.216(a) orthe Class B or C criteria for dams in TR–60,(210–VI–TR60, Oct. 1985), ‘‘Earth Dams and

Reservoirs,’’ or located where failure wouldnot be expected to cause loss of life or seriousproperty damage, the Department mayestablish through the State program approvalprocess engineering design standards thatensure stability comparable to a 1.3minimum static safety factor in lieu ofengineering tests to establish compliancewith the minimum static safety factor of 1.3specified in Section 460:20–43–14(a)(3)(B) ofthis Chapter.

c. Oklahoma proposes to reviseparagraph (f) regarding stability analysisso that it also applies to structuresmeeting the Class B or C criteria fordams in TR–60 or other criteria of 30CFR 77.216(a).

3. OAC 460:20–31–9. Reclamation plan:siltation structures, impoundments,banks, dams, and embankments(Underground Mining Activities)

a. Oklahoma proposes to reviseparagraph (a)(3) so that structures thatdo not meet the size or other criteria of30 CFR 77.216(a) or the Class B or Ccriteria for dams in the U.S. Departmentof Agriculture Soil Conservation ServiceTechnical Release No. 60 (210–VI–TR60, Oct. 1985), ‘‘Earth Dams andReservoirs’’ Technical Release No. 60(TR–60) are not subject to theregulations in paragraphs (a)(3)(A)through (3)(D).

b. Oklahoma proposes to reviseparagraph (c)(2) to read as follows:

(2) For an impoundment not meeting thesize or other criteria of 30 CFR 77.216(a) orthe Class B or C criteria for dams in TR–60,(210–VI–TR60, Oct. 1985) ‘‘Earth Dams andReservoirs’’ TR60, or located where failurewould not be expected to cause loss of lifeor serious property damage, the Departmentmay establish through the State programapproval process engineering designstandards that ensure stability comparable toa 1.3 minimum static safety factor in lieu ofengineering tests to establish compliancewith the minimum static safety factor of 1.3specified in Section 460:20–45–14(a)(3)(B) ofthis Chapter.

c. Oklahoma proposes to reviseparagraph (f) Stability analysis to readas follows:

(f) Stability analysis. If the structure meetsClass B or C criteria for dams in TR–60 orthe size or other criteria of 30 CFR 77.216(a)then each plan under Subsections (b), (c),and (e) of this Section shall include astability analysis of each structure. Thestability analysis shall include, but notlimited to, strength parameters, porepressures, and long-term seepage conditions.The plan shall also contain a description ofeach engineering design assumption andcalculation with a discussion of eachalternative considered in selecting thespecific design parameters and constructionmethods.

4. OAC 460:20–31–16. Operation plan:Maps and plans (Underground MiningActivities)

Oklahoma proposes to redesignateparagraphs (a) through (c) as paragraphs(1) through (3) and to redesignateparagraphs (b)(1) through (b)(13) asparagraphs (2)(A) through (2)(M).

5. OAC 460:20–35–6. Program servicesand data requirements

Oklahoma proposes to reviseparagraphs (b)(3) through (b)(6) to readas follows:

(3) The collection of archaeological andhistorical information required by Section460:20–25–5(b), 460:20–29–5(2), 460:20–27–17 and 460:20–31–10 and any otherarchaeological and historical informationrequired by the Department, and thepreparation of plans necessitated thereby;and (4) The collection of site-specificresource information and production ofprotection and enhancement plans for fishand wildlife habitats and otherenvironmental values and plans required bythe Department under Section 460:20–27–9,460:20–31–14, and any other applicableregulations; and (5) Pre-blast surveys ifrequired under Section 460:20–43–19; and(6) The development of cross-section mapsand plans required under Section 460:20–25–11, 460:20–29–11, and any other applicableregulation.

6. OAC 460:20–35–7. Applicant liability

In paragraph (a), Oklahoma proposesto remove the word ‘‘laboratory’’ so thatapplicants are responsible, undercertain conditions, for reimbursing theDepartment for any services renderedunder Subchapter 460:20–35 and notjust for those pertaining to laboratoryservices.

7. OAC 460:20–35–8. Assistance funding

Oklahoma proposes to add this newsection to read as follows:

(a) Use of funds. Funds specificallyauthorized for this program shall be used toprovide the services specified in 460:20–35–6 of this Subchapter and shall not be usedto cover administrative expenses.

(b) Allocation of funds. The programadministrator shall establish a formula forallocating funds to provide services foreligible small operators if available funds areless than those required to provide theservices pursuant to this Subchapter.

8. OAC 460:20–43–12. Hydrologicbalance: siltation structures (SurfaceMining Activities)

Oklahoma proposes to combineparagraph (a)(1) with paragraph (a) andto redesignate existing paragraphs(a)(2)(A) and (a)(2)(B) as new paragraphs(a)(1) and (a)(2).


9. OAC 460:20–43–14. Impoundments(Surface Mining Activities)

a. Oklahoma proposes to add newparagraph (a)(1) to specify thatimpoundments meeting the Class B or Ccriteria for dams in the U.S. Departmentof Agriculture, Soil ConservationService Technical Release No. 60 (210–VI–TR60, Oct. 1985) must comply withthe ‘‘Minimum Emergency SpillwayHydrologic Criteria’’ table in TR–60 andthe requirements of section 460:20–43–14.

b. Oklahoma proposes to redesignateexisting paragraphs (a)(1) through(a)(12) as new paragraphs (a)(2) through(a)(13).

c. Oklahoma proposes to revise newparagraph (a)(2) to read as follows:

(2) Impoundments meeting the criteria of30 CFR 77.216(a) shall comply with therequirements of 30 CFR Section 77.216 andthis section. The plan required to besubmitted to the District Manager of MSHAunder 30 CFR Section 77.216 shall also besubmitted to the Department as part of thepermit application.

d. Oklahoma proposes to revise newparagraph (a)(4)(A) to includeimpoundments meeting the Class B or Ccriteria for dams in TR–60.

e. Oklahoma proposes to revise newparagraph (a)(4)(B) to read as follows:

(B) Impoundments not included inSubsection (a)(4)(A) of this Section, exceptfor a coal mine waste impounding structure,or located where failure would not beexpected to cause loss of life or seriousproperty damage shall have a minimum staticsafety factor of 1.3 for a normal pool withsteady state seepage saturation conditions ormeet the requirements of Section 460:20–27–14(c)(3).

f. The State proposes to revise newparagraph (a)(5) to requireimpoundments that meet the Class B orC criteria for dams in TR–60 to complywith the freeboard hydrograph criteriain the ‘‘Minimum Emergency SpillwayHydrologic Criteria’’ table in TR–60.

g. Oklahoma proposes to revise newparagraph (a)(6)(A) to requireimpoundments that meet the Class B orC criteria for dams in TR–60 or the sizeor other criteria of 30 CFR 77.216(a) tobe stable under all conditions ofconstruction and operation. Theimpoundments must also be designedbased on accurate and adequateinformation on the foundationconditions. In addition, the Staterequires sufficient foundationinvestigations and laboratory testing offoundation materials in order todetermine the design requirements forfoundation stability.

h. Oklahoma proposes to revise newparagraph (a)(9)(B)(i)-(iii) to read asfollows:

(i) For an impoundment meeting the ClassB or C criteria for dams in TR–60, theemergency spillway hydrograph criteria inthe ‘‘Minimum Emergency SpillwayHydrologic Criteria’’ table in TR–60, orgreater event as specified by the Department.

(ii) For an impoundment meeting orexceeding the size or other criteria of 30 CFR77.216(a), a 100-year 6-hour event, or greaterevent as specified by the Department.

(iii) For an impoundment not meeting therequirements of Subsection (a)(9)(B)(i) or (ii)if this Section, a 25-year 6-hour event, orgreater event as specified by the Department.

i. Oklahoma proposes to revise newparagraph (a)(11)(D) to allow qualifiedregistered professional land surveyors toinspect any temporary or permanentimpoundment that does not meet theSCS Class B or C criteria for dams inTR–60 or the size or other criteria of 30CFR 77.216(a).

j. Oklahoma proposes to revise newparagraph (a)(12) to requireimpoundments meeting the SCS Class Bor C criteria for dams in TR–60 or othercriteria of 30 CFR 77.216 to be examinedin accordance with 30 CFR 77.216–3.

k. Oklahoma proposes to reviseparagraph (c)(2)(A) and (B) to read asfollows:

(A) In the case of an impoundment meetingthe SCS Class B or C criteria for dams in TR–60, or other size or other criteria of Section77.216(a) of 30 CFR , it is designed to controlthe precipitation of the probable maximumprecipitation of a 6-hour event, or greaterevent as specified by the Department, or

(B) In the case of an impoundment notincluded in Subsection (c)(2)(A) of thisSection it shall be designed to control theprecipitation of a 100-year 6-hour event, orgreater event as specified by the Department.

10. OAC 460:20–43–29. Coal minewaste: general requirements (SurfaceMining Activities)

Oklahoma proposes to reviseparagraph (a) to include that coal minewaste be hauled or conveyed and placedfor final placement in a controlledmanner.

11. OAC 460:20–43–39. Backfilling andgrading: thin overburden (SurfaceMining Activities)

Oklahoma proposes to reviseparagraph (a) to read as follows:

(a) Definition. Thin overburden meansinsufficient spoil and other waste materialsavailable from the entire permit area torestore the disturbed area to its approximateoriginal contour. Insufficient spoil and otherwaste materials occur where the overburdenthickness times the swell factor, plus thethickness of other available waste materials,is less than the combined thickness of theoverburden and the coal bed prior toremoving the coal, so that after backfillingand grading the surface configuration of thereclaimed area would not:

12. OAC 460:20–45–12. Hydrologicbalance: siltation structures(Underground Mining Activities)

Oklahoma proposes to combineparagraph (a)(1) with paragraph (a) andto redesignate existing paragraphs(a)(1)(A) and (a)(1)(B) as new paragraphs(a)(1) and (a)(2).

13. OAC 460:20–45–14. Impoundments(Underground Mining Activities)

a. Oklahoma proposes to add newparagraph (a)(1) to specify thatimpoundments meeting the Class B or Ccriteria for dams in the U.S. Departmentof Agriculture, Soil ConservationService Technical Release No. 60 (210–VI–TR60, Oct. 1985) must comply withthe ‘‘Minimum Emergency SpillwayHydrologic Criteria’’ table in TR–60 andthe requirements of section 460:20–45–14.

b. Oklahoma proposes to redesignateexisting paragraphs (a)(1) through(a)(12) as new paragraphs (a)(2) through(a)(13).

c. Oklahoma proposes to revise newparagraph (a)(2) to read as follows:

(2) Impoundments meeting the criteria of30 CFR 77.216(a) shall comply with therequirements of 30 CFR Section 77.216 andthis section. The plan required to besubmitted to the District Manager of MSHAunder 30 CFR Section 77.216 shall also besubmitted to the Department as part of thepermit application.

d. Oklahoma proposes to revise newparagraph (a)(4)(A) to includeimpoundments meeting the Class B or Ccriteria for dams in TR–60.

e. Oklahoma proposes to reviseparagraph (a)(4)(B) to read as follows:

(B) Impoundments not included inSubsection (a)(4)(A) of this Section, exceptfor a coal mine waste impounding structure,or located where failure would not beexpected to cause loss of life or seriousproperty damage shall have a minimum staticsafety factor of 1.3 for a normal pool withsteady state seepage saturation conditions ormeet the requirements of Section 460:20–31–9(c)(2).

f. The State proposes to revise newparagraph (a)(5) to requireimpoundments that meet the Class B orC criteria for dams in TR–60 to complywith the freeboard hydrograph criteriain the ‘‘Minimum Emergency SpillwayHydrologic Criteria’’ table in TR–60.

g. Oklahoma proposes to revise newparagraph (a)(6)(A) to requireimpoundments that meet the Class B orC criteria for dams in TR–60 or the sizeor other criteria of 30 CFR 77.216(a) tobe stable under all conditions ofconstruction and operation. Theseimpoundments must also be designedbased on accurate and adequateinformation on the foundation


conditions. In addition, the Staterequires sufficient foundationinvestigations and laboratory testing offoundation materials in order todetermine the design requirements forfoundation stability.

h. Oklahoma proposes to revise newparagraph (a)(9)(B)(i)–(iii) to read asfollows:

(i) For an impoundment meeting the ClassB or C criteria for dams in TR–60, theemergency spillway hydrograph criteria inthe ‘‘Minimum Emergency SpillwayHydrologic Criteria’’ table in TR–60, orgreater event as specified by the Department.

(ii) For an impoundment meeting orexceeding the size or other criteria of 30 CFR77.216(a), a 100-year 6-hour event, or greaterevent as specified by the Department.

(iii) For an impoundment not included inSubsections (a)(9)(B)(i) or (ii), a 25-year 6-hour event, or greater event as specified bythe Department.

i. Oklahoma proposes to revise newparagraph (a)(11)(D) to allow qualifiedregistered professional land surveyors toinspect any temporary or permanentimpoundment that does not meet theSCS Class B or C criteria for dams inTR–60 or the size or other criteria of 30CFR 77.216(a).

j. Oklahoma proposes to revise newparagraph (a)(12) to requireimpoundments meeting the SCS Class Bor C criteria for dams in TR–60 or othercriteria of 30 CFR 77.216 to be examinedin accordance with 30 CFR 77.216–3.

k. Oklahoma proposes to reviseparagraph (c)(2)(A) and (B) to read asfollows:

(A) In the case of an impoundment meetingthe SCS Class B or C criteria for dams in TR–60, or the size or other criteria of Section77.216(a) of 30 CFR , it shall be designed tocontrol the precipitation of the probablemaximum precipitation of a 6-hour event, orgreater event as specified by the Department,or

(B) In the case of an impoundment notincluded in Subsection (c)(2)(A) of thisSection it shall be designed to control theprecipitation of a 100-year 6-hour event, orgreater event as specified by the Department.

14. OAC 460:20–45–27. Disposal ofexcess spoil: preexisting benches(Underground Mining Activities)

Oklahoma proposes to reviseparagraph (c) to include that fills bedesigned and constructed using current,prudent engineering practices.

15. OAC 460:20–45–29. Coal minewaste: general requirements(Underground Mining Activities)

Oklahoma proposes to reviseparagraph (a) to include that coal minewaste be hauled or conveyed and placedfor final placement in a controlledmanner.

16. OAC 460:20–57–2. State inspectionsand monitoring

Oklahoma proposes to reviseparagraph (h)(1)(C) to read as follows:

(C) Whether, and to what extent, there existon the site impoundments, earthen structuresor other conditions that pose, or mayreasonably be expected to ripen into,imminent dangers to the health or safety ofthe public or significant environmentalharms to land, air, or water resources;

III. Public Comment Procedures

We are reopening the comment periodon the proposed Oklahoma programamendment to provide the public anopportunity to reconsider whether theproposed amendment is adequate inlight of the additional materialssubmitted. Under the provisions of 30CFR 732.17(h), we are seekingcomments on whether the proposedamendment satisfies the applicableprogram approval criteria of 30 CFR732.15. If we approve the amendment,it will become part of the Oklahomaprogram.

Written Comments

Your written comments must bespecific and pertain only to the issuesproposed in this rulemaking. You mustexplain the reason for anyrecommended change. In the finalrulemaking, we will not necessarilyconsider or include in theAdministrative Record commentsreceived after the time indicated underDATES or at locations other than theTulsa Field Office.

IV. Procedural Determinations


The Office of Management and Budget(OMB) exempts this rule from reviewunder Executive Order 12866(Regulatory Planning and Review).


The Department of the Interior hasconducted the reviews required bysection 3 of Executive Order 12988(Civil Justice Reform) and hasdetermined that, to the extent allowedby law, this rule meets the applicablestandards of subsections (a) and (b) ofthat section. However, these standardsare not applicable to the actual languageof State regulatory programs andprogram amendments since each suchprogram is drafted and published by aspecific State, not by OSM. Undersections 503 and 505 of SMCRA (30U.S.C. 1253 and 1255) and 30 CFR730.11, 732.15, and 732.17(h)(10),decisions on State regulatory programsand program amendments must bebased solely on a determination of

whether the submittal is consistent withSMCRA and its implementing Federalregulations and whether the otherrequirements of 30 CFR Parts 730, 731,and 732 have been met.


This rule does not require anenvironmental impact statement sincesection 702(d) of SMCRA (30 U.S.C.1292(d)) provides that agency decisionson State regulatory program provisionsdo not constitute major Federal actionswithin the meaning of section 102(2)(C)of the National Environmental PolicyAct (42 U.S.C. 4332(2)(C)).


This rule does not containinformation collection requirements thatrequire approval by OMB under thePaperwork Reduction Act (44 U.S.C.3507 et seq.).


The Department of the Interior hasdetermined that this rule will not havea significant economic impact on asubstantial number of small entitiesunder the Regulatory Flexibility Act (5U.S.C. 601 et seq.). The State submittalwhich is the subject of this rule is basedupon corresponding Federal regulationsfor which an economic analysis wasprepared and certification made thatsuch regulations would not have asignificant economic effect upon asubstantial number of small entities.Therefore, this rule will ensure thatexisting requirements previouslypublished by OSM will be implementedby the State. In making thedetermination as to whether this rulewould have a significant economicimpact, the Department relied upon thedata and assumptions for thecorresponding Federal regulations.

Unfunded Mandates

OSM has determined and certifiesunder the Unfunded Mandates ReformAct (2 U.S.C. 1502 et seq.) that this rulewill not impose a cost of $100 millionor more in any given year on local, state,or tribal governments or private entities.




Charles E. Sandberg,Acting Regional Director, Mid-ContinentRegional Coordinating Center.[FR Doc. 98–31414 Filed 11–24–98; 8:45 am]



POSTAL SERVICE

39 CFR Part 20

International Priority Airmail Service;Proposed Changes

AGENCY: Postal Service.ACTION: Proposed rule.

SUMMARY: The Postal Service proposesto change the postage rates andconditions of service for InternationalPriority Airmail service (IPA). Inaddition to adjusting rates, the PostalService is changing country rate groupsto be the same as International SurfaceAir Lift service (ISAL) and increasingthe minimum weight from 10 to 11pounds of mail. Also, acceptance of IPAwill be extended to all post officesaccepting bulk mail.DATES: Comments on the proposedchanges must be received on or beforeDecember 28, 1998.ADDRESSES: Written comments shouldbe sent to the Manager, InternationalPricing, Costing, and Classification,Room 370–IBU, International BusinessUnit, U.S. Postal Service, Washington,DC 20260–6500. Copies of all writtencomments will be available for publicinspection between 9 a.m. and 4 p.m.,Monday through Friday, in theInternational Business Unit, 10th Floor,901 D Street SW, Washington, DC.FOR FURTHER INFORMATION CONTACT:Walter J. Grandjean, (202) 314–7256 orDan Singer, (202) 314–3422.SUPPLEMENTARY INFORMATION:International Priority Airmail service(IPA) is a volume airmail letter service.Mailers have the opportunity to benefitfrom work sharing with the PostalService and gain improved speed ofdelivery for presorted mail, which thePostal Service does not have to sort.

The Postal Service recently adoptedprogram changes to InternationalSurface Air Lift Service (ISAL) onFebruary 28, 1998, (63 FR 3642–3650)and is now proposing changes to IPAwhich will align it with ISAL in ratestructure and preparation requirements.This will make it easier for mailers toparticipate in either service.

Minimum WeightThe Postal Service is increasing the

minimum weight for direct country andmixed direct country package sacksfrom 10 to 11 pounds. This reflects thedesired minimum sack which the PostalService normally dispatches to othercountries and matches the sack weightsrecently adopted in ISAL. This willcause the minimum weight for a mailingto be increased to 11 pounds. Inaddition, a package of mail will be

defined as 10 or more pieces or 1 poundof mail to coincide with the definitionused in ISAL. ‘‘Bundles’’ will bereferred to as ‘‘packages’’ in the future.

Acceptance Cities

Since the inception of IPA, the PostalService has limited the number of citieswhere IPA mailings could be deposited.This was intended to reduce the cost ofmaintaining an extensive transportationnetwork, but many customers notlocated near an acceptance point couldnot use IPA. The Postal Serviceproposes a Full Service rate that will beavailable from all post offices wherebulk mail is accepted and will make IPAaccessible to all customers.Additionally, a drop shipment option isadded.

Volume Discounts

The Postal Service proposes discountsfor IPA based on the amount of postagespent by a mailer in the precedingpostal fiscal year for both IPA and ISAL.For example, a mailer spending $2million or more for IPA and ISALduring postal fiscal year 1996(September 16, 1995–September 13,1996) will receive a 5 percent discounton IPA mailings made during the nextfiscal year, 1997 (September 14, 1996–September 12, 1997). Mailers spendingover $5 million receive a 10 percentdiscount and a 15 percent discount forover $10 million. These discounts applyto full service and drop ship rates. Thediscount is calculated on the mailingstatement.

Drop Ship Rates

The Postal Service is introducing dropship rates for mailers willing totransport their mail to certain locations.The Postal Service avoids certainprocessing, handling, and transportationcosts and these savings are being passedon to the mailer. Drop ship sites arelocated in the following locations:Jamaica, NY; Miami, FL; Franklin Park,IL; and San Francisco, CA.

Although exempt from the notice andcomment requirements of theAdministrative Procedure Act, S U.S.C.553(b), (c) regarding proposedrulemaking by 39 U.S.C. 410 (a), thePostal Service invites comments on thefollowing proposed revisions of Chapter280 of the International Mail Manual,incorporated by reference in the Code ofFederal Regulations. See 30 CFR 20.1.


Foreign relations, Incorporation byreference, International postal services.

Part 20—[AMENDED]

1. The authority citation for 39 CFRPart 20 continues to read as follows:

Authority: 5 U.S.C. 552(a); 39 U.S.C. 401,404, 407, 408.

2. The International Mail Manual isamended to incorporate programchanges to Subchapter 280 InternationalPriority Airmail Service as follows:

280 INTERNATIONAL PRIORITYAIRMAIL SERVICE

281 Description

281.1 General

International Priority Airmail (IPA)service is as fast as or faster than regularinternational airmail service. It isavailable to bulk mailers of all LC andAO items that are prepared by thesender in accordance with therequirements of this subchapter.Separate rates are provided for presortedmail and nonpresorted mail with dropshipment and volume discounts.

281.2 Qualifying Mail

Any item of the LC or AOclassification, as defined in 141.2,qualifies. Letters, letter packages, postalcards, aerogrammes, regular printedmatter, books and sheet music,publishers’ periodicals, matter for theblind, and small packets, which areprepared in compliance with theapplicable mailing conditions in thissubchapter, may be sent in this service.Items do not have to be of the same sizeand weight to qualify.

281.3 Minimum QuantityRequirements

281.31 Worldwide Nonpresort Mail

The mailer must have a minimum of11 pounds of LC/AO mail in the totalmailing. The minimum does not applyto each country destination.

281.32 Presort Mail

The mailer must have a minimum of11 pounds of presorted LC/AO mail toa single rate group to qualify for thepresort rate for that rate group.

Note: Mail that cannot be made up indirect country packages (284.521) or in directcountry sacks (284.61) does not qualify forthe presort rates and is subject to theworldwide nonpresort rates.

281.4 Dutiable Items

Dutiable items may be sent in LCletter packages or AO small packets inaccordance with the applicable rules inthis subchapter for those classes of mail.Parcel post (CP) items, either ordinaryor insured, may not be mailed asInternational Priority Airmail.


281.5 Deposit

281.51 Full Service

Mailings must be deposited andaccepted at a business mail entry unit ofthe post office where the mailer holdsan advance deposit account or postagemeter license.

281.52 Drop Shipment

To qualify for the drop shipmentrates, the mailer must tender the mail toone of the locations in 281.53. Themailer must pay postage at the dropshipment location either through anadvance deposit account or postagemeter license at the serving post office.

As an alternative, mailers who areparticipating in a PVDS program (seeDMM P750) may have the mail verified,accepted and paid for at the mailer’splant or at the origin post office servingthe mailer’s plant if authorized underDMM P750.2.2. Plant-verified dropshipment mail must be transported bythe mailer to the drop shipment locationand the mail accompanied by aclearance document Form 8125.

281.53 Drop Shipment Locations

Drop shipment rates are availablefrom the following offices:

New York

Regular and plant-verified dropshipment:AMC JFK BUILDING 250JFK INTERNATIONAL AIRPORTJAMAICA NY 11430–9998

California

Regular drop shipment:SAN FRANCISCO P&DC1300 EVANS AVESAN FRANCISCO CA 94188

Plant-verified drop shipment:AMC SAN FRANCISCOBLDG 660 RD 6SAN FRANCISCO CA 94158–9998

Florida

Regular drop shipment:MIAMI P&DC2200 NORTHWEST 72 AVEMIAMI FL 33152

Plant-verified drop shipment:AMC MIAMIMIAMI INTERNATIONAL AIRPORTMIAMI FL 33159–9998

Illinois

Regular and plant-verified dropshipment:CHICAGO O’HARE DROPSHIP ISAL

SERVICE CENTERINTERNATIONAL PROCESSING

CENTER ANNEX3333 N MOUNT PROSPECT RD

FRANKLIN PARK IL 60131

281.6 Special Services Not AvailableItems sent in this service may not be

registered.

282 Postage

282.1 Rates

282.11 GeneralThere are two rate options for

International Priority Airmail service: apresort rate option that has four rategroups and a worldwide nonpresortrate. For both options there are fullservice rates for mail deposited atoffices other than the four dropshipment offices listed in 281.5, anddrop ship rates for mail deposited at oneof the four drop shipment offices. Theper-piece rates and per-pound rates areshown in Exhibit 282.11. The per-piecerate of $0.10 or $0.25 applies to eachpiece regardless of its weight. The per-pound rate applies to the net weight(gross weight minus tare weight of sack)of the mail for the specific rate group.Fractions of a pound are rounded to thenext whole pound for postagecalculation.

EXHIBIT 282.11—INTERNATIONALPRIORITY AIRMAIL RATES

Rate group Piecerate

Pound rate

Fullservice Dropship

1 ...................... $0.25 $5.00 $4.002 ...................... 0.10 5.25 4.253 ...................... 0.10 6.50 5.504 ...................... 0.10 7.50 6.50Worldwide ....... 0.25 7.00 6.00

282.12 Volume DiscountMailers who spend $2 million or more

on IPA and ISAL in the preceding postalfiscal year may receive discounts off therates shown in Exhibit 282.11 asfollows:a. $2 million to $5 million: 5% discountb. over $5 million to $10 million: 10%

discountc. over $10 million: 15% discount

Mailers entitled to these discountsmust place the full per piece rate oneach piece of mail if payment is bypostage meter or mailer-precanceledstamps. The discount is calculated onthe statement of mailing.

282.13 Qualifying for VolumeDiscounts

To qualify for volume discounts,mailers must apply in writing to theManager, Mail Order, InternationalBusiness Unit, 475 L’Enfant Plaza, SW,Room 370–IBU, Washington, DC 20260–6500. The Manager evaluates all

requests and informs the mailer and thepost office(s) of mailing whetherdiscounts are approved and the level ofdiscount. Mailers must supply thefollowing information:

a. Postal fiscal year for the qualifyingmail.

b. Permit number(s) and post office(s)where the permits are held.

c. Total revenue for the postal fiscalyear.

d. Post office(s) where the discount isto be claimed.

The combined IPA and ISAL revenueis counted toward the discounts. ThePostal Service will count as revenue toqualify for the volume discounts onlypostage paid by the permit holder. If apermit holder has more than oneaccount, or accounts in several cities,then these revenues may be combined toqualify for discounts. Agents whoprepare mail for the owner of the mailand mail paid by the owner’s permitmay not be included in the revenue toqualify for the discounts, except for theinitial year (Postal Fiscal Year 1997,September 14, 1996, through September12, 1997). Customers may be required tosubstantiate their request by providingcopies of all postage statements for theappropriate postal fiscal year. Alldecisions of the Manager, Mail Orderare final.

282.14 Availability

IPA service is available to all foreigncountries, as listed in Exhibit 284.522.The exhibit shows the rate groupassigned to each country.

282.15 Presort Rates

To qualify for the presort Group 1, 2,3, or 4 rates (see Exhibit 282.11), amailing must consist of a minimum of11 pounds to a specific rate group. Thisminimum applies to each rate group andnot to the entire mailing (see 281.32).Within a rate group all mail addressedto an individual country must be sortedinto direct country packages of 10 ormore pieces (or 1 pound or more ofmail) (284.521) and/or sacked in directcountry sacks of 11 pounds or more(284.61). Mail that cannot be made upinto direct country packages or directcountry sacks must be sent at theworldwide nonpresort rates.

282.16 Separation by Rate Group

The mailer must specify the rategroup on the back of Tag 115,International Priority Airmail, with thenumber 1, 2, 3, 4 or WW (Worldwide),and must physically separate the sacksby rate group at the time of mailing.


282.17 Computation of PostagePostage is computed on PS Form

3652, Postage Statement—InternationalPriority Airmail. Postage at theworldwide nonpresort rate is calculatedby multiplying the number of pieces inthe mailing by the applicable per-piecerate, multiplying the net weight (inwhole pounds) of the entire mailing bythe applicable per-pound rate, and thenadding the two totals together. Postageat the presorted rates is calculated bymultiplying the number of pieces in themailing destined for countries in aspecific rate group by the appropriateper-piece rate, multiplying the netweight (in whole pounds) of thosepieces by the corresponding per-poundrate, and then adding the two totalstogether. Volume discounts arecalculated on the postage statement.

282.2 Postage Payment Methods

282.21 General

282.211 Postage Meter or PermitImprint

Postage must be paid by postagemeter, permit imprint, or mailerprecanceled stamps (see DMM P023.3.0)or a combination. Postage charges arecomputed on PS Form 3652.

282.212 Piece Rate PortionThe applicable per-piece postage must

be affixed to each piece by meter unlesspostage is paid by permit imprint (see282.23).

282.213 Pound Rate PortionPostage for the pound rate portion

must be paid either by meter stamp(s)attached to the postage statement orfrom the mailer’s authorized permitimprint advance deposit account.

282.22 Postage Meter

282.221 Postage EndorsementWhen postage is paid by meter or

mailer precanceled stamps, each piecemust be legibly endorsed with thewords ‘‘INTERNATIONAL PRIORITYAIRMAIL.’’

282.222 Specifications forEndorsement

The endorsement required in 282.221must appear on the address side of eachpiece and must be applied by a printingpress, hand stamp, or other similarprinting device. It must be printedabove the name of the addressee and tothe left or below the postage, or it maybe printed adjacent to the meter stampin either the postal inscription slug areaor ad plate area. If the postalendorsement appears in the ad platearea, no other information may beprinted in the ad plate. The

endorsement may not be typewritten orhand drawn. The endorsement is notconsidered adequate if it is included aspart of a decorative design oradvertisement.

282.223 Unmarked Pieces

Unmarked pieces lacking the postageendorsement required by 282.221 aresubject to the applicable LC/AO airmailsingle piece rates.

282.224 Drop Shipment of MeteredMail

Mailers who want to enter meteredIPA mail at a post office other thanwhere the meter is licensed must obtaina drop shipment authorization. Toobtain an authorization, the mailer mustsubmit a written request to thepostmaster at the office where the mailwill be entered. (see DMM D072).

282.23 Permit Imprint

Mailers may use a permit imprint formailings that contain identical weightpieces. Any of the permit imprintsshown in Exhibit 152.3 are acceptable.The postage charges are computed onPS Form 3652 and deducted from theadvance deposit account. Permitimprints must not denote Priority Mail,bulk mail, nonprofit, or other domesticor special rate mail. Mailers may usepermit imprint with nonidenticalweight pieces only if authorized to usepostage mailing systems under DMMP710, P720, or P730.

283 Weight and Size Limits

See 223 and 233 for the weight andsize limits for LC items sent in thisservice. See 243, 253, and 263 for theweight and size limits for AO items sentin this service.

284 Preparation Requirements forIndividual Items

284.1 Addressing

See 122.

284.2 Marking

284.21 Airmail

The sender should mark ‘‘PARAVION’’ or ‘‘AIR MAIL’’ on the addressside of each piece. Use of borderedairmail envelopes is optional and maybe used for items sent in this service ifthe envelope contains the ‘‘AIR MAIL’’endorsement.

284.22 Class of Mail

284.221 Printed Matter

Printed matter is endorsed as requiredby weight:

a. Items weighing more than 4 poundsmust be marked to specify the type ofprinted matter: ‘‘PRINTED MATTER,’’

‘‘PRINTED MATTER—BOOKS,’’‘‘PRINTED MATTER—SHEET MUSIC,’’or ‘‘PRINTED MATTER—PERIODICALS,’’ as appropriate (see244.211).

b. Items weighing 4 pounds or less donot require any printed matterendorsement but may be marked withthe endorsements in 284.221a at themailer’s option. Unmarked printedmatter items are subject to the mailingconditions for letters (see 220).

284.222 Letters/Letter Packages

Letters and letter packages that mightbe mistaken for another class of mailbecause of their weight or appearanceshould be marked ‘‘LETTER’’ on theaddress side (see 224.2).

284.223 Small Packets

Each small packet must be marked‘‘SMALL PACKET’’ (see 264.21).

284.3 Sealing

Any item sent in this service may besealed at the option of the sender.

284.4 Packaging

All items must be placed in envelopesor prepared in package form. See 224.4for LC mail and 244.4 for AO mail.

284.5 Sorting Requirements for IPA

284.51 Worldwide Nonpresorted Mail

284.511 Working Packages

IPA mail paid at the nonpresorted ratemust be made up into workingpackages. Letters and flats must bepackaged separately, althoughnonidentical pieces may be commingledwithin each of these categories. Piecesthat cannot be packaged because of theirphysical characteristics must be placedloose in the sack.

284.512 Facing of Nonpresorted MailWithin Package

All pieces in the working packagesmust be faced the same way.

284.52 Presorted Mail

284.521 Direct Country Packages

When there are ten or more pieces or1 pound or more of mail for the samecountry (except Great Britain andMexico), it must be made up into acountry package. Great Britain andMexico require a finer sortation (see284.523). At the mailer’s option, a finerbreakdown by city or postal code maybe made based on sortation informationprovided by the postal administration ofthe destination country.

284.522 Country Package Label

a. The label (facing slip) for countrypackages that contain ten or more pieces


to a specific country (except for GreatBritain and Mexico) must be completedas follows:Line 1: Foreign Exchange OfficeLine 2: Country of DestinationLine 3: Mailer, Mailer Location

Example

1150 VIENNA FLUGAUSTRIARBA COMPANY WASHINGTON DC

b. See Exhibit 284.522 for DirectCountry Package Label and Tag 178, CN35 Par Avion, for information.

284.523 Country Packages to GreatBritain and Mexico

Country packages to Great Britain andMexico must be made up as follows:

a. Great Britain. When there are 10 ormore pieces or 1 pound or more of mailper separation, mail to Great Britainmust be sorted into packages as follows:

Separation Exchange Office (Line 1Package Label):LONDON CITY LONDONTOWNSCOTLAND GLASGOW FWDNORTHERN IRELAND BELFAST FWDALL OTHER GREAT BRITAIN GREAT

BRITAIN, GREAT BRITAIN

Example

LONDONTOWNGREAT BRITAINMAILER, MAILER LOCATION

b. Mexico. Mail to Mexico must besorted based on state separations. Whena state separation contains ten or morepieces or 1 pound or more of mail, itmust be packaged and labeled to thedesignated foreign exchange officeshown in Exhibit 284.523. When thereare less than ten pieces or 1 pound toone or more states in the grouping,package and label these pieces to thedesignated foreign exchange office listedfor ‘‘Remaining.’’ When there are lessthan ten pieces or 1 pound to one ormore states in the grouping, packageand label these pieces to the designatedforeign exchange office listed for‘‘Remaining.’’

Example: MEXICO 506 DF MEXICOMAILER, MAILER LOCATION.

Exception: When there are less thanten pieces or 1 pound of mail to theMexican states of Baja Calif Norte, BajaCalif Sur, Chihuahua, Distrito Federal(Mexico City), Guerrero, and Sonora,package the pieces separately and affixa facing slip labeled to the U.S.International Exchange Office listed inExhibit 284.622.

284.524 Facing of Pieces WithinCountry Package

All pieces in the country packagemust be faced in the same direction and

a facing slip identifying the contents ofthe package must be placed on theaddress side of the top piece of eachpackage in such a manner that it willnot become separated from the package.

Note: The pressure-sensitive labels andoptional endorsement lines useddomestically for presort mail are prohibitedfor International Priority Airmail.

284.53 Physical Characteristics andRequirements for Packages

284.531 ThicknessPackages of letter-size mail should be

no thicker than approximately a handfulof mail (4 to 6 inches thick).

284.532 Securing PackagesEach package must be securely tied.

Placing rubber bands around the lengthand then the girth is the preferredmethod of securing packages of letter-size mail. Plastic strapping placedaround the length and then the girth isthe preferred method of securingpackages of flat-size mail.

284.533 Separation of PackagesLetter-size and flat-size mail must be

packaged separately. LC and AO mailclasses may be commingled in a letter-size or flat-size mail package.

284.6 Sacking Requirements

284.61 Direct Country Sack (11Pounds or More)

284.611 GeneralWhen there are 11 or more pounds of

mail addressed to the same country(including Great Britain and Mexico),the mail must be packaged and enclosedin blue international airmail sacks andlabeled to the country with Tag 178,Airmail Bag Label LC (CN 35/AV 8)(white). All types of mail, includingletter-size packages, flat-size packages,and loose items for each destination,can be commingled in the same sackand counted toward the 11-poundminimum.

284.612 Direct Country Sack TagsDirect country sacks must be labeled

with Tag 178. The tag is white andspecially coded to route the mail to aspecific country and airport ofdestination. The blocks on the tag fordate, weight, and dispatch informationmust be completed by the Postal Serviceand may not be completed by themailer. The mailer must complete the‘‘To’’ block showing the destinationcountry. Tag 115, International PriorityAirmail, must also be affixed to theDirect Country Sacks. Tag 115 is a ‘‘Day-Glo’’ pink tag that identifies the mail toensure it receives priority handling. Themailer must designate on the back of

Tag 115 the applicable rate group, usinga number 1, 2, 3, 4, or WW (Worldwide).

284.62 Mixed Direct Country PackageSacks

284.621 General

The direct country packagescontaining 10 or more pieces or 1 poundor more of mail destined to a specificcountry that cannot be made up indirect country sacks must be enclosed inorange Priority Mail sacks unless otherequipment is specified by theacceptance office.

284.622 Mixed Direct Country SackLabel

The sack label must be completed asfollows. (See Exhibit 284.622 for list ofU.S. International Exchange Offices.)Line 1: Appropriate U.S. Exchange

Office and Routing CodeLine 2: Contents—DRXLine 3: Mailer, Mailer Location

Example

AMC SEATTLE WA 980INT’L PRIORITY AIRMAIL—DRXABC STORE SEATTLE WA

284.63 Worldwide Nonpresort MailSacks

284.631 General

The working packages of mixedcountry mail and loose items must beenclosed in orange Priority Mail sacksunless other equipment is specified bythe acceptance office. Nonpresortedletter-size mail may be presented intrays if authorized by the acceptanceoffice.

Note: Working packages of mixed countrymail cannot be enclosed in mixed directcountry package sacks.

284.632 Worldwide Nonpresort MailSack Label

The sack label must be completed asfollows:Line 1: Appropriate U.S. Exchange

Office and Routing CodeLine 2: Contents—WKGLine 3: Mailer, Mailer Location

Example

AMC ATLANTA GA 300INT’L PRIORITY AIRMAIL—WKGCPA COMPANY ATLANTA GA

See Exhibit 284.622 for list of U.S.International Exchange Offices.

284.64 Tags and Weight Maximum forSacks

284.641 Tag 115 and Tag 178

All IPA sacks (direct country, mixeddirect country package sacks, andworldwide nonpresort mail sacks) must


be labeled with Tag 115, InternationalPriority Airmail. Tag 115 is a ‘‘Day-Glo’’pink tag that identifies IPA mail toensure that it receives prioritytreatment. Tag 178 (see section 284.611)is a dispatching tag to be used only fordirect country sacks. Tag 178 is whiteand specially coded to route the mail toa specific country and airport ofdestination. The Postal Service must

complete the blocks on the tag for date,weight, and dispatch information. Themailer must complete only the ‘‘To’’block showing the destination country.Postal tags and sacks are available fromthe post office.

284.642 Sack Weight Maximum

The maximum weight of the sack andcontents must not exceed 66 pounds.

284.7 Customs Forms Requirements

284.71 Letters and Letter Packages

See 224.5.

284.72 Printed Matter

See 244.6.

284.73 Small Packets

See 264.5.

EXHIBIT 284.522—FOREIGN EXCHANGE OFFICE AND COUNTRY RATE GROUPS, INFORMATION FOR DIRECT COUNTRYPACKAGE LABEL (FACING SLIP), TAG 178, 3-LETTER COUNTRY EXCHANGE OFFICE CODE, AND EXCHANGE OFFICE

Rate group Country3-letter ex-

change officecode

Exchange office

4 ................................ Afghanistan .............................................................................................. KBL Kabul.1 ................................ Albania ..................................................................................................... TIA Tirana.4 ................................ Algeria ...................................................................................................... ALG Algiers.1 ................................ Andorra 1

4 ................................ Angola ...................................................................................................... LAD Luanda.2 ................................ Anguilla ..................................................................................................... AXA The Valley.2 ................................ Antigua and Barbuda ............................................................................... ANU St. John’s.2 ................................ Argentina .................................................................................................. BUE Buenos Aires Avion.4 ................................ Armenia .................................................................................................... EVN Yerevan.2 ................................ Aruba ........................................................................................................ AUA Oranjestad.1 ................................ Ascension 1

3 ................................ Australia 2 ................................................................................................. SYD Sydney.1 ................................ Austria ...................................................................................................... VIE 1150 Vienna Flug.4 ................................ Azerbaijan ................................................................................................ BAK Baku.1 ................................ Azores 1

2 ................................ Bahamas .................................................................................................. NAS Nassau.4 ................................ Bahrain ..................................................................................................... BAH Bahrain.4 ................................ Bangladesh .............................................................................................. DAC Dhaka 17.2 ................................ Barbados .................................................................................................. BGI Bridgetown.1 ................................ Belarus ..................................................................................................... MOW Moscow PCI–1.1 ................................ Belgium .................................................................................................... BRU Brussels X.2 ............................... Belize ........................................................................................................ BZE Belize City.4 ................................ Benin ........................................................................................................ COO Cotonou.2 ................................ Bermuda ................................................................................................... BDA Hamilton.4 ................................ Bhutan 1

2 ................................ Bolivia ....................................................................................................... LPB La Paz2 ................................ Bonaire 1 3

1 ................................ Bosnia-Herzegovina ................................................................................. SJJ Sarajevo.4 ................................ Botswana .................................................................................................. GBE Gabrone.2 ................................ Brazil ........................................................................................................ RIO Rio de Janeiro.2 ................................ British Virgin Islands ................................................................................ EIS Roadtown Tortola3 ................................ Brunei Darussalam ................................................................................... BWN Bandar Seri Begawan.1 ................................ Bulgaria .................................................................................................... SOF Sofia.4 ................................ Burkina Faso ............................................................................................ OUA Ouagadougou.4 ................................ Burma (Myanmar) .................................................................................... RGN Rangoon.4 ................................ Burundi ..................................................................................................... BJM Bujumbura.3 ................................ Cambodia ................................................................................................. PNH Phnom Penh.4 ................................ Cameroon ................................................................................................. DLA Douala.4 ................................ Cape Verde .............................................................................................. SID SAL.2 ................................ Cayman Islands ....................................................................................... GCM Grand Cayman.4 ................................ Central African Republic .......................................................................... BGF Bangui.4 ................................ Chad ......................................................................................................... NDJ N’Djamena.2 ................................ Chile ......................................................................................................... SCL Santiago.3 ................................ China ........................................................................................................ PEK Beijing.2 ................................ Colombia .................................................................................................. BOG Bogota Aeropuerto.4 ................................ Comoros Islands 1

4 ................................ Congo, Dem. Rep. of the ......................................................................... FIH Kinshasa CTT.4 ................................ Congo, Rep. of the (Brazzaville) .............................................................. BZV Brazzaville.4 ................................ Corsica 1

2 ................................ Costa Rica ................................................................................................ SJO San Jose.4 ................................ Côte d’Ivoire ............................................................................................. ABJ Abidjan.1 ................................ Croatia ...................................................................................................... ZAG Zagreb.2 ................................ Cuba ......................................................................................................... HAV Havana.

Curacao 3 .................................................................................................. CUR Willemstad.4 ................................ Cyprus ...................................................................................................... NIC Nicosia.1 ................................ Czech Republic ........................................................................................ PRG Prague 120.1 ................................ Denmark ................................................................................................... CPH Copenhagen PTM.


EXHIBIT 284.522—FOREIGN EXCHANGE OFFICE AND COUNTRY RATE GROUPS, INFORMATION FOR DIRECT COUNTRYPACKAGE LABEL (FACING SLIP), TAG 178, 3-LETTER COUNTRY EXCHANGE OFFICE CODE, AND EXCHANGE OFFICE—Continued


change officecode

Exchange office

4 ................................ Djibouti ..................................................................................................... JIB Djibouti.2 ................................ Dominica .................................................................................................. DOM Roseau.2 ................................ Dominican Republic ................................................................................. SDQ Santo Domingo.2 ................................ Ecuador .................................................................................................... UIO Quito.4 ................................ Egypt ........................................................................................................ CAI Cairo Int’l Airport.2 ................................ El Salvador ............................................................................................... SAL San Salvador.4 ................................ Equatorial Guinea .................................................................................... BSG Bata.4 ................................ Eritrea ....................................................................................................... ASM Asmara.1 ................................ Estonia ..................................................................................................... TLL Tallinn.4 ................................ Ethiopia .................................................................................................... ADD Addis Ababa.2 ................................ Falkland Islands 1

1 ................................ Faroe Islands 1

3 ................................ Fiji ............................................................................................................. NAN Nadi.1 ................................ Finland ...................................................................................................... HEL Helsinki.1 ................................ France ...................................................................................................... PAR Paris Aviation Passe.2 ................................ French Guiana ......................................................................................... CAY Cayenne.3 ................................ French Polynesia ..................................................................................... PPT Papeete.4 ................................ Gabon ....................................................................................................... LBV Libreville.4 ................................ Gambia ..................................................................................................... BJL Banjul.4 ................................ Georgia, Republic of ................................................................................ TBS Tbilisi.1 ................................ Germany ................................................................................................... FRA Frankfurt am Main.

Flughafen.4 ................................ Ghana ....................................................................................................... ACC Accra.1 ................................ Gibraltar .................................................................................................... GIB Gibraltar.1 ................................ Great Britain

London City .............................................................................................. LON Londontown.Northern Ireland ....................................................................................... BFS Belfast.Scotland ................................................................................................... GLA Glasgow.All OtherGreat Britain ............................................................................................. LON Great Britain.

1 ................................ Greece ...................................................................................................... ATH Athens.1 ................................ Greenland 1

2 ................................ Grenada ................................................................................................... GND St. George’s.2 ................................ Guadeloupe .............................................................................................. PTP Pointe-a-Pitre.2 ................................ Guatemala ................................................................................................ GUA Guatemala.4 ................................ Guinea ...................................................................................................... CKY Conakry.4 ................................ Guinea-Bissau .......................................................................................... BXO Bissau.2 ................................ Guyana ..................................................................................................... GEO Georgetown.2 ................................ Haiti .......................................................................................................... PAP Port-au-Prince.2 ................................ Honduras .................................................................................................. TGU Tegucigalpa.3 ................................ Hong Kong ............................................................................................... HKG Victoria.1 ................................ Hungary .................................................................................................... BUD Budapest 72 Trans.1 ................................ Iceland ...................................................................................................... REK Reykjavik.4 ................................ India .......................................................................................................... DEL Delhi Air.3 ................................ Indonesia .................................................................................................. JKT Jakarta Soekarno-Hatta.4 ................................ Iran ........................................................................................................... THR Tehran.4 ................................ Iraq ........................................................................................................... BGW Baghdad.1 ................................ Ireland ...................................................................................................... DUB Dublin.4 ................................ Israel ......................................................................................................... TLV Tel Aviv-Yafo.1 ................................ Italy ........................................................................................................... ROM Rome Ferr.2 ................................ Jamaica .................................................................................................... KIN Kingston.3 ................................ Japan ........................................................................................................ TYO Tokyo APT FWD.4 ................................ Jordan ...................................................................................................... AMM Amman.4 ................................ Kazakhstan ............................................................................................... ALA Alma Ata.4 ................................ Kenya ....................................................................................................... NBO Nairobi.3 ................................ Kiribati ...................................................................................................... TRW Tarawa.3 ................................ Korea, Dem. People’s Rep. (North) 1

3 ................................ Korea, Republic of (South) ...................................................................... SEL Seoul.4 ................................ Kuwait ....................................................................................................... KWI Kuwait.1 ................................ Kyrgyzstan ................................................................................................ MOW Moscow PCI–1.3 ................................ Laos .......................................................................................................... VTE Vientiane.1 ................................ Latvia ........................................................................................................ RIX Riga.4 ................................ Lebanon ................................................................................................... BEY Beirut.4 ................................ Lesotho ..................................................................................................... MSU Maseru.4 ................................ Liberia ....................................................................................................... MLW Monrovia.4 ................................ Libya ......................................................................................................... TIP Tripoli.1 ................................ Liechtenstein 1

1 ................................ Lithuania ................................................................................................... VNO Vilnius.




change officecode

Exchange office

1 ................................ Luxembourg ............................................................................................. LUX Luxembourg Ville.3 ................................ Macao ....................................................................................................... HKG Macau.1 ................................ Macedonia ................................................................................................ BEG Belgrade.4 ................................ Madagascar .............................................................................................. TNR Antananarivo.1 ................................ Madeira Islands ........................................................................................ FNC Funchal.4 ................................ Malawi ...................................................................................................... BLZ Limbe C.S.O.3 ................................ Malaysia ................................................................................................... KUL Kuala Lumpur.4 ................................ Maldives ................................................................................................... MLE Male.4 ................................ Mali ........................................................................................................... BKO Bamako.4 ................................ Malta ......................................................................................................... VLT Valletta.2 ................................ Martinique ................................................................................................. FDF Fort de France.4 ................................ Mauritania ................................................................................................. NKC Nouakchott.4 ................................ Mauritius ................................................................................................... MRU Mauritius.2 ................................ Mexico See Exhibit 284.5234 ................................ Moldova .................................................................................................... KIV Kishinev.1 ................................ Monaco ..................................................................................................... MCM Monte Carlo.3 ................................ Mongolia 1

2 ................................ Montserrat ................................................................................................ MNI Plymouth.4 ................................ Morocco .................................................................................................... CAS Casablanca P/PAL.4 ................................ Mozambique ............................................................................................. MPM CPI Maputo.4 ................................ Namibia .................................................................................................... WDH Windhoek.3 ................................ Nauru ........................................................................................................ INU Nauru.3 ................................ Nepal ........................................................................................................ KTM Kathmandu.1 ................................ Netherlands .............................................................................................. AMS Amsterdam EXP.2 ................................ Netherlands Antilles 1 3

3 ................................ New Caledonia ......................................................................................... NOU Noumea.3 ................................ New Zealand ............................................................................................ AKL Auckland.2 ................................ Nicaragua ................................................................................................. MGA Managua.4 ................................ Niger ......................................................................................................... NIM Niamey.4 ................................ Nigeria ...................................................................................................... LOS Lagos.1 ................................ Norway ..................................................................................................... OSL Oslo Transit.4 ................................ Oman ........................................................................................................ MCT Muscat.4 ................................ Pakistan .................................................................................................... KHI Karachi.2 ................................ Panama .................................................................................................... PTY Panama City.3 ................................ Papua New Guinea .................................................................................. POM Port Moresby.2 ................................ Paraguay .................................................................................................. ASU Asuncion.2 ................................ Peru .......................................................................................................... LIM Lima Transito.3 ................................ Philippines ................................................................................................ MNL Manila.3 ................................ Pitcairn Island 1

1 ................................ Poland ...................................................................................................... WAW Warsaw.31 ................................ Portugal .................................................................................................... LIS Lisbon Province.4 ................................ Qatar ........................................................................................................ DOH Doha.4 ................................ Reunion .................................................................................................... RUN St. Denis.1 ................................ Romania ................................................................................................... BUH Bucharest.1 ................................ Russia ...................................................................................................... MOW Moscow PCI–1.4 ................................ Rwanda .................................................................................................... KGL Kigali.2 ................................ Saba 1 3

2 ................................ Saint Christopher and Nevis .................................................................... SKB Basseterre.2 ................................ Saint Eustatius 1 3

4 ................................ Saint Helena 1

2 ................................ Saint Lucia ............................................................................................... SLU Castries.2 ................................ Saint Maarten 3 ......................................................................................... SXM Philipsburg.2 ................................ Saint Pierre and Miquelon 1

2 ................................ Saint Vincent and The Grenadines .......................................................... SVD Kingstown.1 ................................ San Marino 1

1 ................................ Sao Tome and Principe 1

4 ................................ Saudi Arabia ............................................................................................. DHA Dhahran APT.4 ................................ Senegal .................................................................................................... DKR Dakar Yoff.1 ................................ Serbia-Montenegro (Yugoslavia) ............................................................. BEG Belgrade.4 ................................ Seychelles ................................................................................................ SEZ Mahe Is.4 ................................ Sierra Leone ............................................................................................. FNA Freetown.3 ................................ Singapore ................................................................................................. SIN Singapore.1 ................................ Slovak Republic (Slovakia) ...................................................................... BTS Bratislava.1 ................................ Slovenia .................................................................................................... LJU Ljubljana.3 ................................ Solomon Islands ....................................................................................... HIR Honiara.4 ................................ Somalia .................................................................................................... MGQ Mogadishu.4 ................................ South Africa .............................................................................................. JNB Johannesburg.1 ................................ Spain ........................................................................................................ MAD Madrid Airport.




change officecode

Exchange office

4 ................................ Sri Lanka .................................................................................................. CMB Colombo.4 ................................ Sudan ....................................................................................................... KRT Khartoum.2 ................................ Suriname .................................................................................................. PBM Paramaribo.4 ................................ Swaziland ................................................................................................. MTS Manzini.1 ................................ Sweden .................................................................................................... STO Stockholm Flug.1 ................................ Switzerland ............................................................................................... GVA Geneva 1.4 ................................ Syria ......................................................................................................... DAM Damascus.3 ................................ Taiwan ...................................................................................................... TPE Taipei.4 ................................ Tajikistan .................................................................................................. MOW Moscow PCI–1.4 ................................ Tanzania ................................................................................................... DAR Dar es Salaam.3 ................................ Thailand .................................................................................................... BKK Bangkok.4 ................................ Togo ......................................................................................................... LFW Lome.3 ................................ Tonga ....................................................................................................... NUK Nukualofa.2 ................................ Trinidad and Tobago ................................................................................ POS Port of Spain.4 ................................ Tristan da Cunha 1

4 ................................ Tunisia ...................................................................................................... TUN Tunis.1 ................................ Turkey ...................................................................................................... IST Istanbul Hava Alani.1 ................................ Turkmenistan ............................................................................................ MOW Moscow PCI–1.2 ................................ Turks and Caicos Islands ........................................................................ TKI Grand Turk.3 ................................ Tuvalu 1

4 ................................ Uganda ..................................................................................................... KLA Kampala4 ................................ Ukraine ..................................................................................................... IEV Kiev.4 ................................ United Arab Emirates ............................................................................... DXB Dubai.2 ................................ Uruguay .................................................................................................... MVD Montevideo.4 ................................ Uzbekistan ................................................................................................ TAS Tashkent.3 ................................ Vanuatu .................................................................................................... VLI Port Vila.4 ................................ Vatican City .............................................................................................. VCY Vatican City State.2 ................................ Venezuela ................................................................................................ CCS Caracas.3 ................................ Vietnam .................................................................................................... SGN Ho Chi Minh Ville.3 ................................ Wallis and Futuna Islands 1

3 ................................ Western Samoa ....................................................................................... APW Apia.4 ................................ Yemen ...................................................................................................... SAH Sanaa.4 ................................ Zambia ..................................................................................................... NLA Ndola.4 ................................ Zimbabwe ................................................................................................. HRE Harare.

Footnotes1 Direct country sacks are not made to these destinations. Prepare direct country packages (ten or more pieces) and include in mixed direct

country package sacks labeled to the assigned U.S. exchange office listed in Exhibit 284.622.2 At the mailer’s option, a finer sortation for IPA items addressed to Australia may be used. If this option is chosen, items addressed with postal

codes beginning with 0, 1, 2, 4, and 9 and uncoded mail should be sorted and packaged to Sydney. Direct country sacks should be tagged toSydney as well. Both the three-letter exchange office code, ‘‘SYD,’’ and the country name, Australia, should be entered in the ‘‘TO’’ block of Tag178. Items addressed with postal codes beginning with 3, 5, 6, 7, and 8 should be sorted and packaged to Melbourne. Direct country sacksshould be tagged to Melbourne as well. Both the three-letter exchange office code, ‘‘MEL,’’ and the country name, Australia, should be entered inthe ‘‘TO’’ block of Tag 178.

3 Netherlands Antilles includes Bonaire, Curacao, Saba, St. Eustatius, and St. Maarten.

EXHIBIT 284.523—MEXICO

State group State name State abbrevia-tion Package label (facing slip) line 1

Tag 116 3-letter ex-

change of-fice code

1 ................................ Aguascalientes ........................................... AGS 20001 Aguascalientes AGS DIS ................ GDL.Colima ........................................................ COL 28001 Colima COL DIS ............................. GDL.Guanajuato ................................................. GTO 36501 Irapuato GTO DIS ........................... GDL.Jalisco ......................................................... JAL CPA Occidente ........................................... GDL.

Guadalajara DIS ......................................... GDL.Nayarit ........................................................ NAY 63001 Tepic NAY DIS ................................ GDL.Zacatecas ................................................... ZAC 98001 Zacatecas ZAC DIS ........................ GDL.Remaining .................................................. CPA Occidente Guadalajara DIS ....................... GDL.

2 ................................ Campeche .................................................. CAM 24001 Campeche CAM DIS ....................... MID.Tabasco ...................................................... TAB 86001 Villahermosa TAB DIS .................... MID.Yucatan ...................................................... YUC 97001 Merida YUC DIS ............................. MID.Remaining .................................................. 97001 Merida YUC DIS ............................. MID.

3 ................................ Coahuila ..................................................... COAH CPA Noreste Monterrey NL DIS ................ MTY.Nuevo Leon ................................................ NL CPA Noreste Monterrey NL DIS ................ MTY.San Luis Potosi .......................................... SLP 78001 San Luis Potosi SPL DIS ................ MTY.Tamulipas ................................................... TAM 87001 DC Victoria TAM DIS ...................... MTY.


EXHIBIT 284.523—MEXICO—Continued

State group State name State abbrevia-tion Package label (facing slip) line 1

Tag 116 3-letter ex-

change of-fice code

Remaining .................................................. CPA Noreste Monterrey NL DIS ......................... MTY.4 ................................ Chiapas ...................................................... CHIS 29002 Tuxtla Gtz CHIS DIS ....................... MEX.

Hidalgo ....................................................... HGO 42001 Pachuca HGO DIS .......................... MEX.Mexico ........................................................ MEX Mexico 506 DF DIS .................................... MEX.Michoacan .................................................. MICH 58001 Morelia MICH DIS ........................... MEX.Morelos ....................................................... MOR 62001 Cuernavaca MOR DIS .................... MEX.Oaxaca ....................................................... OAX 68001 Oaxaca OAX DIS ............................ MEX.Puebla ........................................................ PUE 72001 Puebla PUE DIS ............................. MEX.Queretaro ................................................... QRO 76001 Queretaro QRO DIS ........................ MEX.Quintana Roo ............................................. QROO 77001 Chetumal QROO DIS ...................... MEX.Tlaxcala ...................................................... TLAX 90001 Tlaxcala TLAX DIS .......................... MEX.Veracruz ..................................................... VER 91701 Veracruz VER DIS .......................... MEX.Remaining Mexico ...................................... 506 DF DIS ................................................ MEX.

5 ................................ Durango ...................................................... DGO 82001 Mazatlan SIN DIS ........................... MZT.Sinaloa ........................................................ SIN 82001 Mazatlan SIN DIS ........................... MZT.Remaining 82001 ....................................... SIN DIS Mazatlan ..................................................... MZT.

6 ................................ Distrito Federal ........................................... DF Mexico 506 DF (Mexico City) ..................... MEX.7 ................................ Guerrero ..................................................... GRO 39301 Acapulco de Juarez GRO DIS ........ ACA.8 ................................ Baja Calif Norte .......................................... BCN 22001 Tijuana BCN DIS ............................. N/A.

Baja Calif Sur ............................................. BCS 23001 La Paz BCS DIS ............................. N/A.Chihuahua .................................................. CHIH 32001 CD Juarez CHIH DIS ...................... N/A.Sonora ........................................................ SON 84001 Nogales SON DIS ........................... N/A.

EXHIBIT 284.622—LABELING OF IPA MAIL TO USPS EXCHANGE OFFICES

IPA acceptance office 3-digit ZIP code prefix U.S. exchange office androuting code for line 1

004–005, 010–098, 100–199, 250–267 ........................................................................................................................ AMC KENNEDY NY 003.200–249, 254, 268, 283–285, 400–418, 420–427, 476–477 ....................................................................................... P&DC DULLES VA 201.270–282, 286–326, 344, 350–397, 399 ........................................................................................................................ AMC ATLANTA GA 300.424, 430–459, 460–516, 520–528, 530–532, 534–535, 537–567, 570–588, 600–620, 622–631, 633–641, 644–

658, 660–662, 664–681, 683–693, 739.AMC O’HARE 606.

700–708, 710–738, 740–799, 885 ................................................................................................................................ ISC DALLAS TX 753.590–599, 821, 832–838, 970–986, 988–999 ................................................................................................................ AMC SEATTLE WA 980850, 852–853, 855–857, 859–860, 863–865, 870–875, 877–884, 889–891, 900–908, 910–928, 930–936 .............. AMC LOS ANGELES CA

900.800–816, 820, 822–831, 840–847, 893–898, 937–966 ............................................................................................... AMC SAN FRANCISCO CA

940.967–969 ........................................................................................................................................................................ P&DC HONOLULU 967.

Stanley F. Mires,Chief Counsel, Legislative.[FR Doc. 98–31438 Filed 11–24–98; 8:45 am]BILLING CODE 7710–12–P


40 CFR Part 300

[FRL–6193–3]

National Oil and Hazardous SubstancePollution Contingency Plan; NationalPriorities List

AGENCY: Environmental ProtectionAgency.ACTION: Notice of intent to delete theWilliams Pipe Line Disposal PitSuperfund Site from the NationalPriorities List: request for comments.

SUMMARY: The Environmental ProtectionAgency (EPA) Region VIII announces itsintent to delete the Williams Pipe LineDisposal Pit Superfund Site (Site) fromthe National Priorities List (NPL) andrequests public comment on this action.The NPL constitutes Appendix B of 40CFR part 300 which is the National Oiland Hazardous Substances PollutionContingency Plan (NCP), which the EPApromulgated pursuant of Section 105 ofthe Comprehensive EnvironmentalResponse, Compensation, and LiabilityAct (CERCLA) of 1980, as amended,commonly referred to as Superfund.EPA and the state of South DakotaDepartment of Environment and NatureResources (State) have determined allappropriate CERCLA response actionshave been implemented and the Siteposes no significant threat to publichealth and the environment. Therefore,no further response measures pursuant

to CERCLA are appropriate. Thisdetermination does not apply to ongoingnon-CERCLA petroleum assessment andcleanup work conducted under Stateauthorities.

DATES: Comments may be submitted toEPA on or before December 28, 1998.

ADDRESSES: Comments may be mailedto: Mr. Dennis R. Jaramillo, U.S.Environmental Protection Agency,Region VIII, Mail Code 8EPR–SR, 99918th Street, Suite 500, Denver, Co80202–2466, Telephone: (303) 312–6580.

Comprehensive information on thissite is available through the EPA RegionVIII public docket. Located at the EPARegion VIII, Superfund Records Centerwhich are available for viewing from 8AM to 4 PM, Monday through Fridayexcluding holidays. Requests fordocuments should be directed to the


EPA Region VIII, Superfund RecordsCenter.

The address for the Region VIIISuperfund Records Center is: SuperfundRecords Center, U.S. EnvironmentalProtection Agency, Region VIII, 99918th Street, 5th Floor, Denver, Co80202, Telephone: (303) 312–6473.

Background information from theRegional public docket is also availablefor viewing at the following locations:Sioux Falls Library,201 N. Main,Sioux Falls, South Dakota 57105.Contact: Mr. Doug Murdock.South Dakota Department ofEnvironment and NaturalResources (DENR),Groundwater Quality Program,Joe Foss Bldg.,523 E. Capital,Pierre, South Dakota 57501.Contact: Mr. Mark Lawrensen.FOR FURTHER INFORMATION CONTACT:Dennis R. Jaramillo, (303) 312–6580.SUPPLEMENTARY INFORMATION:

Table of Contents

I. IntroductionII. NPL Deletion CriteriaIII. Deletion ProceduresIV. Basis for Intended Site DeletionV. Conclusion

I. IntroductionThe Environmental Protection Agency

(EPA), Region VIII announces its intentto delete the Williams Pipe LineDisposal Pit Superfund Site from theNational Priorities List (NPL) andrequests comments on this deletion. TheNPL constitutes Appendix B of theNational Oil and Hazardous SubstancePollution Contingency Plan (NCP), Title40 of the Code of Federal Regulations(40 CFR), as amended. The EPAidentifies sites that appear to present asignificant risk to the public health,welfare, or to the environment andmaintains the NPL as a list of thosesites. Sites on the NPL may be thesubject of remedial actions financed bythe Hazardous Substance Trust Fund(fund). Pursuant to § 300.425(e)(3) of theNCP, any site deleted from the NPLremains eligible for fund-financedremedial actions in the unlikely eventthat future conditions at the site warrantsuch action.

EPA intends to delete the Site fromthe NPL. EPA will accept comments onthis proposed deletion for thirty daysfollowing publication of this documentin the Federal Register.

Section II of this document explainsthe criteria for deleting sites from theNPL. Section III discusses proceduresthat EPA is using for this action. SectionIV discusses how the Williams PipeLine Site meets the deletion criteria.

Deletion of sites from the NPL doesnot itself create, alter or revoke anyindividual’s rights or obligations withregard to an individual site. It also doesnot alter the requirements under stateorders.

II. NPL Deletion CriteriaThe NCP establishes the criteria EPA

uses to delete sites from the NPL. Inaccordance with 40 CFR 300.425(e),sites may be deleted from the NPLwhere no further response isappropriate. In making thisdetermination, EPA will considerwhether any of the following criteriahave been met:

(i) EPA, in consultation with the state,has determined that that responsible orother parties have implemented allappropriate response actions required;or

(ii) All appropriate fund-financedresponses under CERCLA have beenimplemented and EPA, in consultationwith the state, has determined that nofurther response action by responsibleparties is appropriate; or

(iii) Based on a remedialinvestigation, EPA, in consultation withthe state, has determined that therelease poses no significant threat topublic health or the environment and,therefore taking remedial measures isnot appropriate.

A five year-review for the Site is notwarranted by EPA based on theDeclaration portion of the No ActionRecord Of Decision (ROD), which statesthe five year review provision ofCERCLA does not apply to a No Actionremedy. If new information becomesavailable which indicates a need forfurther action, EPA may initiateremedial actions. Whenever there is asignificant release from a site deletedfrom the NPL, the Site may be restoredto the NPL without the application ofthe Hazard Ranking System.

III. Deletion ProceduresEPA, Region VIII will accept and

evaluate public comments beforemaking a final decision to delete theSite. The following procedures wereused for the intended deletion of thisSite:

(1) EPA, Region VIII hasrecommended deletion of the Site andhas prepared the relevant documents;

(2) The State of South Dakota hasconcurred with EPA’s recommendationfor deletion;

(3) Concurrent with this NationalNotice of Intent to Delete, a notice hasbeen published in a local newspaperand has been distributed to appropriateFederal, State and local officials, andother interested parties; and

(4) EPA Region VIII has made allrelevant documents available in theRegional Office and local Siteinformation repositories.

Comments received during the noticeand comment period will be evaluatedbefore making a final decision to delete.Region VIII will prepare aResponsiveness Summary, which willaddress the comments received duringthe pubic comments period, the deletionwill occur after EPA publishes a Noticeof Deletion in the Federal Register. TheNPL will reflect any deletions in thenext final update. Public notices andcopies of the Responsive Summary willbe made available by mail to localresidents by EPA Region VIII.

IV. Basis for Intended Site DeletionThe following summary provided

EPA’s rationale for recommendingdeletion of the Superfund Site.

A. Site BackgroundThe Site is located on the Williams

Pipe Line 12th Street Terminal(Terminal) property at the intersectionof 12th Street and Marion Road inMinnehaha County, Sioux Falls, SouthDakota. The disposal Pit, or burn pond,was located in the northeast corner ofthe Terminal. The Terminal included anunlined pit about 40 feet in diameterand 7–9 feet deep. The Terminal alsoincludes 42 above ground petroleumfuel tanks, a fuel loading rack, garages,an administration building, and othersupport structures.

In 1966, the Terminal was purchasedby Williams Pipe Line Company fromthe Great Lakes Pipe Line Company.Historically bulk quantities of liquidfertilizers as well as petroleum productshave been stored and conveyed at theTerminal including fuel oil, diesel fuel,unleaded gasoline, aviation gasoline,and jet fuel. Tanks and pipe racks at theTerminal were used to convey and storepetroleum fuel to the loading rackswhere delivery vehicles were filled.

The burn pond was constructed in1945 and used until 1987 to collectstorm water runoff, often contaminatedwith spilled materials, from variousareas of the Terminal. Petroleumproducts accumulating on the pondsurface were periodically burned off.

The environmental investigations atthe Terminal are regulated under bothFederal and State authorities to addressthe petroleum releases throughout theentire Terminal. Petroleum releases areregulated by the State. In the mid-1980’sinvestigations were performed underState authority and directed atexamining the nature and extent of thecontamination from petroleum releases,such as leaks or spills throughout the


Terminal. In March and November1987, EPA conducted an investigationthat identified Site related chemicals,including some CERCLA hazardoussubstances, in the soil and thegroundwater near the burn pond. Basedon these results, the Site was placed onthe NPL on August 30, 1990 (55 FR35502). In November 1988 WilliamsPipe Line Company signed a SettlementAgreement with the State of SouthDakota and the City of Sioux Falls forinvestigation and cleanup of petroleumspills throughout the Terminal. Theresponse actions taken pursuant to theSettlement Agreement consisted of theinstallation of recovery wells and aninterception trench.

Williams Pipe Line signed anAdministrative Order on Consent onApril 25, 1991 to conduct a CERCLARemedial Investigation (RI) andFeasibility Study (FS). The purpose ofthe RI, which was conducted in twophases from 1991 to 1993, was to morefully investigate the nature and extent ofthe hazardous substances contaminationin the burn pond area. Through the RI,arsenic and benzene were identified asthe main contaminants of concern,however, benzene is a petroleumconstituent and addressed at the Siteunder State authority. EPA issued aRecord of Decision (ROD) for the Site onSeptember 29, 1994. The selectedremedy for the Site was No Action witha minimum of two years of quarterlygroundwater monitoring of arsenic. TheROD determination that no action waswarranted applies only to CERCLA andnot to state authority or otherregulations and statutes. For a detailedunderstanding of the selected remedy,refer to the ROD dated September 29,1994.

B. Characterization of RisksBased on the Base Line Risk

Assessment (BRA), the RI concludedthat there was no current or likely futureexposure to groundwater contaminatedfrom arsenic. Since no exposure existsor is likely, there is no unacceptablerisk. As an added measure ofconfidence, the ROD required aminimum of two years of quarterlygroundwater monitoring to assure thatno unacceptable levels of arsenic weremoving from the Terminal.

Williams Pipe Line completed tenquarters of groundwater sampling inDecember 1997. These groundwatersampling events show that allmonitoring wells that were tested forarsenic are below the MaximumContaminant Level (MCL) of 50 µg/l,with the exception of one on-sitemonitoring well, P–11. This well hasshown a decline in arsenic levels over

the ten quarters of groundwatermonitoring, with the current arseniclevel at 150 µg/l. The offsite monitoringwells show for the ten quarters ofgroundwater sampling that the arsenicpresent in P–11 is not migrating off-site,due in part to a collection trenchinstalled under the 1988 SettlementAgreement addressing hydrocarbonspills. The off-site wells show thatlevels of arsenic concentration are at 2µg/l.

EPA is satisfied that the monitoringconducted pursuant to the ROD met itsobjectives to assure that the arsenic wasnot migrating off-site, and that therewould be no unacceptable risk in thefuture.

Notwithstanding the declining levelsof arsenic in well P–11, its capture bythe ongoing hydrocarbon collectionsystem administered under the StateSettlement Agreement, and monitoringresults clearly demonstrating nomigration of arsenic from P–11 to off-site monitoring wells, Williams PipeLine and the State have amended theirsettlement agreement for the futuremonitoring of arsenic due to its currentelevated level in well P–11.

V. ConclusionOne of the three criteria for deletion

specifies that EPA may delete a sitefrom the NPL if the remedialinvestigation has shown that the releaseposes no significant threat to publichealth or the environment and therefore,taking remedial measures is notappropriate. EPA, with concurrence ofthe State believes that this criterion fordeletion has been met.

Subsequently, EPA is proposingdeletion of this Site from the NPL.Documents supporting this action areavailable from the docket.

Dated: November 18, 1998.William P. Yellowtail,Regional Administrator, Region VIII.[FR Doc. 98–31540 Filed 11–24–98; 8:45 am]BILLING CODE 6560–50–P


Bureau of Transportation Statistics

49 CFR Part 1420

[Docket No. BTS–98–4659]

RIN 2139–AA05

Revision to Reporting Requirementsfor Motor Carriers of Property;Extension of Comment Period

AGENCY: Bureau of TransportationStatistics, DOT.ACTION: Extension of comment period.

SUMMARY: The Bureau of TransportationStatistics (BTS) is extending thecomment period for its proposedrevisions to the reporting requirementsfor motor carriers of property. Asinitially published in the FederalRegister of November 3, 1998 (63 FR59263), the comments were to bereceived by December 3, 1998. BTS isextending the comment period untilJanuary 15, 1999, in order to give allinterested persons the opportunity tocomment fully.

DATES: Written comments must besubmitted by January 15, 1999.

ADDRESSES: Please direct comments tothe Docket Clerk, Docket No. BTS–98–4659, Department of Transportation, 400Seventh Street, SW., Room PL–401,Washington, DC 20590, from 10 a.m. to5 p.m. ET, Monday through Friday,except Federal Holidays.

Comments should identify theregulatory docket number and besubmitted in duplicate to the addresslisted above. Commenters wishing theDepartment to acknowledge receipt oftheir comments must submit with thosecomments a self-addressed stampedpostcard on which the followingstatement is made: Comments on DocketBTS–98–4659. The Docket Clerk willdate stamp the postcard and mail it backto the commenter.

If you wish to file comments using theInternet, you may use the U.S. DOTDockets Management System website athttp://dms.dot.gov. Please follow theinstructions online for moreinformation.

FOR FURTHER INFORMATION CONTACT:David Mednick, K–2, Bureau ofTransportation Statistics, 400 SeventhStreet, SW., Washington, DC 20590;(202) 366–8871; fax: (202) 366–3640; e-mail: [email protected].


I. Electronic Access

All comments submitted will beavailable for examination in the RulesDocket both before and after the closingdate for comments. Internet users canaccess all comments received by theU.S. DOT Dockets, Room PL–401, at theaddress: http://dms.dot.gov. Pleasefollow the instructions online for moreinformation and help.

An electronic copy of this documentmay be downloaded using a modem andsuitable communications software fromthe Federal Register Electronic BulletinBoard Service at (202) 512–1661. If youhave access to the Internet, you canobtain an electronic copy at http://www.bts.gov/mcs/rulemaking.htm.


II. Extension of Comment Period

Several parties who have beenactively involved in the proceedingsrelating to the proposed revisions haverequested additional time for theirorganizations to review the proposaland prepare and coordinate theirresponses. BTS is therefore extendingthe comment period to January 15, 1999,a period that includes additional time toavoid a deadline occurring immediatelyafter the holidays.


Motor carriers, Reporting andclassification.

Issued in Washington, DC, on November12, 1998.Robert A. Knisely,Deputy Director.[FR Doc. 98–31522 Filed 11–24–98; 8:45 am]BILLING CODE 4910–FE–P


Fish and Wildlife Service

50 CFR Part 17

Endangered and Threatened Wildlifeand Plants: Notice of Finding on aPetition To Delist the Wood BisonFrom the List of Threatened andEndangered Species

AGENCY: Fish and Wildlife Service,Interior.ACTION: Notice of petition finding.

SUMMARY: The U.S. Fish and WildlifeService (Service) announces a 90-dayfinding for a petition to delist the woodbison (Bison bison athabascae) pursuantto the Endangered Species Act of 1973,as amended. The Service finds that thepetitioner did not supply substantialinformation to indicate that the delistingof wood bison may be warranted.DATES: The finding announced in thisdocument was made on November 12,1998. Comments and informationconcerning this petition finding may besubmitted until further notice.ADDRESSES: Questions, comments, orinformation concerning this petitionshould be sent to the Office of ScientificAuthority, U.S. Fish and WildlifeService, Mail Stop ARLSQ–750,Washington, D.C. 20240. The petition,finding, and supporting information areavailable for public inspection, byappointment, during normal businesshours at the Office of ScientificAuthority, 4401 N. Fairfax Dr., Rm. 750,Arlington, Virginia.FOR FURTHER INFORMATION CONTACT: Dr.Javier Alvarez, Office of Scientific

Authority, U.S. Fish and WildlifeService, Mail Stop ARLSQ–750,Washington, D.C. 20240 (phone: 703–358–1708; fax: 703–358–2276; e-mail:[email protected] INFORMATION:

BackgroundSection 4(b)(3)(A) of the Endangered

Species Act (ESA) of 1973, as amended(16 U.S.C. 1531 et seq.), requires that theU.S. Fish and Wildlife Service (Service)make a finding on whether a petition tolist, delist, or reclassify a speciespresents substantial scientific orcommercial information to demonstratethat the petitioned action may bewarranted. This finding is to be basedon all information available to theService at the time the finding is made.This finding is to be made within 90days of receipt of the petition, and thefinding is to be published promptly inthe Federal Register.

The Service has made a 90-dayfinding on a petition to delist the woodbison (Bison bison athabascae)populations in Canada, currently listedas endangered under ESA. The petitionwas submitted by Mr. Gary A. Plumlee,Anderson, Indiana, and was received bythe Service on May 14, 1998.

The document provided by thepetitioner to substantiate his petitionconsisted primarily of a copy of theproposal submitted by the Governmentof Canada to the Tenth Meeting of theConference of the Parties to theConvention on International Trade inEndangered Species (CITES), held inHarare, Zimbabwe, from 9–20 June,1997. The proposal, which was adoptedat the Tenth Conference, requested thetransfer of wood bison from AppendixI to Appendix II of CITES to allowcommercial trade of this subspecies.The information contained in the CITESproposal originated primarily fromresearch and management conducted byCanadian federal, provincial andterritorial governments as part of arecovery program for the wood bison.

The Service agrees that wood bisonpopulations are capable of growingrapidly when protected from over-hunting. Historically found in theinterior plains of northwestern NorthAmerica (northwestern Saskatchewan,northern Alberta, northeastern BritishColumbia, and southwestern NorthernTerritories), the wood bison was almostextirpated by Europeans during the late19th century. Of approximately 200,000wood bison believed to exist in Canadain 1800, the population was reduced toabout 250 animals at the beginning ofthis century. Under governmentprotection (it currently has legalprotection in British Columbia, Yukon

Territory, and Northwest Territories; itis designated as threatened according tothe Committee on the Status ofEndangered Wildlife in Canada) thispopulation has grown to an estimated2,500 wood bison today, including1,800 animals in seven wild herds, andaround 700 held in captivity. Anadditional 2,300 animals exist in free-ranging populations that originate fromwood bison exposed to hybridizationwith plains bison (Bison bison bison)and disease (tuberculosis andbrucellosis). As a result of theseincreases in population, the Canadiangovernment opened regulated huntingof wood bison in 1988, with an annualquota of 47 animals to be allocatedamong native peoples, local residents,and non-resident trophy huntersaccompanied by native people.

The Service also agrees that illegaltrade in this subspecies does not appearto be a significant problem. CITESrecords reveal that a very small numberof live wood bison or their parts haveentered international trade since it wasincluded in Appendix I of CITES in1973.

When referring to the downlisting ofthe wood bison from Appendix I toAppendix II of CITES, the petitionerincorrectly states that the wood bisonwas reclassified as threatened underCITES. CITES Appendix II is notequivalent to threatened under ESA.Moreover, although Parties to CITESconsider the level of threat when listingspecies, the listing criteria are different.Listing criteria adopted by Parties toCITES in November 1994 (Resolution9.24) clearly state that a species can beplaced in CITES appendices only if it isthreatened or has the potential to bethreatened by trade. The Canadianproposal to downlist the subspecies toAppendix II was adopted in June 1997based on these new criteria.

Although over-hunting and illegaltrade are no longer considered threats tothe species, recovery of the species isstill limited by habitat availability andquality. Approximately 34 percent ofthe wood bison’s historical range is nolonger available because of agricultureand urban development, a problem thatis expected to increase. A further 27percent is temporarily unavailablebecause of the presence of disease.Several reintroduced populations arethreatened by the risk of infection withtuberculosis and brucellosis, includingthe largest at Mackenzie BisonSanctuary in the NorthwesternTerritories, which contains 1,300 of theremaining 1,800 free-ranging non-hybridized wood bison. Therefore,buffer zones are currently beingestablished to separate diseased and


disease-free herds. This leaves onlyabout 39 percent of the species’historical range available for recovery.

The official Canadian recovery plandeveloped by the Wood Bison RecoveryTeam calls for the establishment of fouror more free-ranging herds of woodbison in suitable habitat in the originalrange, each herd containing orexceeding the minimum viablepopulation (MVP) of 400 animals. TheCanadian CITES proposal states thatonly the population at Mackenzie BisonSanctuary exceeds the MVP, with theother four reestablished herds having‘‘the potential to meet or exceed thatnumber by the year 2000.’’

When evaluating petitions fordelisting or downlisting of speciesunder the ESA, the Service’s guidelinesstate that a ‘‘not-substantialinformation’’ finding be made whenalready established recovery objectiveshave not been met (see page 14, section2(a)(1) of Endangered Species PetitionManagement Guidance—U.S. Fish andWildlife Service and National MarineFisheries Service, July 1996). TheCanadian recovery plan goals for thewood bison have not been met yet.Therefore, the Service finds that thepetitioner did not supply substantialinformation to indicate that thepetitioned action may be warranted. Atsuch time when the free-rangingdisease-free populations of wood bisonmeet the recovery plan criteria, theService may initiate such a downlisting.In the meantime and within availableresources, the Service will evaluate theadvisability of downlisting the captivepopulation of wood bison fromendangered to threatened, with a specialrule to allow the import to the UnitedStates of captive-bred wood bisons.

References Cited: 1997. Prop. 10.35.Proposal for the transfer of wood bison(Bison bison athabascae) fromAppendix I to Appendix II of theConvention on International Trade inEndangered Species submitted by theGovernment of Canada at the TenthMeeting of the Conferences of theParties held in Harare, Zimbabwe, 9–20June, 1997.

Author: The primary author of thisdocument is Dr. Javier Alvarez (seeADDRESSES section).

Authority: The authority for this action isthe Endangered Species Act of 1973, asamended (16 U.S.C. 1531 et seq.).

Dated: November 12, 1998.John G. Rogers,Director.[FR Doc. 98–31282 Filed 11–24–98; 8:45 am]BILLING CODE 4310–55–P



50 CFR Part 17

RIN 1018–AF04

Endangered and Threatened Wildlifeand Plants; Extension of CommentPeriod and Notice of Public Hearingson Proposed Rule To Remove thePeregrine Falcon in North AmericaFrom the List of Endangered andThreatened Wildlife

AGENCY: Fish and Wildlife Service,Interior.ACTION: Proposed rule; extension ofcomment period and notice of publichearings.

SUMMARY: The U.S. Fish and WildlifeService (Service) gives notice that thecomment period on the proposed rule toremove the peregrine falcon (Falcoperegrinus) in North America from thelist of Endangered and ThreatenedWildlife will be extended and that twopublic hearings will be held. Theextension and hearings will allow allinterested parties to submit oral orwritten comments on the proposal.DATES: The comment period for thisproposal will be extended an additional60 days from November 24, 1998 toJanuary 23, 1999. Comments must bereceived by the closing date. Anycomments received after the closingdate may not be considered in the finaldecision on the proposal. The publichearings will be held from 7 p.m. to 9p.m. on December 3, 1998 in Madison,Wisconsin and December 8, 1998, inConcord, New Hampshire. Bothmeetings will be preceded by aninformational session from 6 p.m. to 7p.m..ADDRESSES: The public hearings will beheld at the Madison Area TechnicalCollege, 3550 Anderson Street, Room129D, Madison, Wisconsin and the NewHampshire Department of Fish andGame East-West Conference Room, 2Hazen Drive, Concord, New Hampshire.Written comments should be sent toDiane Noda, Field Supervisor, U.S. Fishand Wildlife Service, Ventura Fish andWildlife Office, 2493 Portola Road,Suite B, Ventura, California 93003.Comments and materials received willbe available for public inspection, byappointment, during normal businesshours at the above Service address.FOR FURTHER INFORMATION CONTACT:Robert Mesta, at the above Ventura,California address, phone 805/644–1766, facsimile 805/644–3958.SUPPLEMENTARY INFORMATION:

Background

On August 26, 1998, the U.S. Fish andWildlife Service (Service) published aproposal in the Federal Register toremove the peregrine falcon (Falcoperegrinus) in North America from theList of Endangered and ThreatenedWildlife (63 FR 45446). The Serviceproposed this action because theavailable data indicate that this specieshas recovered following restrictions onorganochlorine pesticides in the UnitedStates and Canada, protections providedby the Endangered Species Act of 1973,as amended (Act), and theimplementation of successfulmanagement activities, including thereintroduction of captive-bred andrelocated wild hatchling peregrinefalcons. Currently, a minimum of 1,388American peregrine falcon pairs arefound in Alaska, Canada, and theWestern United States, and a minimumof 174 peregrine falcon pairs are foundin the Eastern United States. At least 31peregrine falcon pairs occur in 6Midwestern States not covered by theEastern Peregrine Falcon Recovery Planor the two recovery plans for theAmerican peregrine falcon in theWestern United States. Overallproductivity goals were met or exceededin four American peregrine falconrecovery plans, and most recovery goalsfor the eastern peregrine falconpopulation have been met.

If made final, the action proposed willremove the American peregrine falcon(Falco peregrinus anatum) as anendangered species and will remove thedesignation of endangered due tosimilarity of appearance for any free-flying peregrine falcons within the 48conterminous States from the List ofEndangered and Threatened Wildlife.The action proposed will remove allEndangered Species Act protectionsfrom all subspecies and populations ofFalco peregrinus in North American.The proposed action will not affectprotection provided to this species bythe Migratory Bird Treaty Act (MBTA).The proposal also includes a proposedminimum 5-year post delistingmonitoring program as required forspecies that are delisted due to recovery.Monitoring will include populationtrends, productivity, contaminantexposure, and take for falconry.

Pursuant to 50 CFR 424.16(c)(2), theService may extend or reopen acomment period upon finding that thereis good cause to do so. Full participationof the affected public in a species’listing or delisting, allowing the Serviceto consider the best scientific andcommercial data available in making a


final determination on the proposedaction, is deemed as sufficient cause.

Section 4(b)(5)(E) of the Act (16 U.S.C.1531 et seq.), requires that a publichearing be held if it is requested within45 days of the publication of a proposedrule. In response to two such requests,the Service will hold public hearings onthe dates and at the addresses describedin the DATES and ADDRESSES sectionsabove. Anyone wishing to make an oralstatement for the record is encouragedto provide a written copy of theirstatement and present it to the Serviceat the start of the hearing. In the eventthere is a large attendance, the time

allotted for oral statements may have tobe limited. Oral and written statementsreceive equal consideration. There areno limits to the length of writtencomments presented at the hearings ormailed to the Service. Legal noticesannouncing the dates, times, andlocations of the hearings will bepublished in newspapers concurrentlywith the Federal Register notice.

Extension of the comment period willenable the Service to complete the peerreview process for the proposeddelisting action. The current commentperiod on this proposal closes onNovember 24, 1998. The Service is

extending the public comment period.Written comments may be submitteduntil January 23, 1998, to the Serviceoffice in the ADDRESSES section.

Author. The primary author of thisnotice is Robert Mesta (see ADDRESSES).

Authority: The authority for this action isthe Endangered Species Act of 1973, asamended (16 U.S.C. 1531–1544).


Anne Badgley,Regional Director, Fish and Wildlife Service.[FR Doc. 98–31478 Filed 11–24–98; 8:45 am]


This section of the FEDERAL REGISTERcontains documents other than rules orproposed rules that are applicable to thepublic. Notices of hearings and investigations,committee meetings, agency decisions andrulings, delegations of authority, filing ofpetitions and applications and agencystatements of organization and functions areexamples of documents appearing in thissection.

Notices Federal Register

65167

Vol. 63, No. 227



Forest Service

Department of the Interior

Bureau of Land Management

Survey and Manage Strategy forNational Forests and Bureau of LandManagement Districts Within theRange of the Northern Spotted Owl

AGENCIES: Forest Service, USDA; Bureauof Land Management, USDI.

ACTION: Notice of intent to prepare anenvironmental impact statement.

SUMMARY: The Forest Service and theBureau of Land Management (BLM) willprepare an environmental impactstatement (EIS) to be used inconsidering a proposal to make changesin two of the mitigation measures firstadopted in the Standards andGuidelines for Management of Habitatfor Late-Successional and Old-GrowthForest Related Species Within the Rangeof the Northern Spotted Owl (NorthwestForest Plan), and then incorporated intosubsequent planning documents of theForest Service and BLM. These changesaffect the Survey and Manage andProtection Buffer species provisions ofthe Standards and Guidelines and arebased on new information that has beencollected in the past four years ofimplementation. The purpose of theseproposed changes is to update theconservation strategies in the NorthwestForest Plan and to continue to meet allof the objectives articulated in theNorthwest Forest Plan. The selectedalternative may result in amendment toagency land and resource managementplans for National Forests and BLMDistricts within the range of thenorthern spotted owl.

DATES: Comments concerning the scopeof the analysis should be received inwriting by December 24, 1998.

ADDRESSES: Send written commentsconcerning this proposal to BillTorgersen, Project Manager, P.O. Box3623, Portland, Oregon 97203.FOR FURTHER INFORMATION CONTACT:Cynthia Henchell, EIS Team Leader,P.O. Box 3623, Portland, Oregon 97203,phone (503) 808–2490.SUPPLEMENTARY INFORMATION: This EISwill evaluate the Survey and Manageand Protection Buffer species Standardsand Guidelines as they are applied toNational Forest System Lands (NFS) andpublic lands administered by the BLMwithin the range of the northern spottedowl. The selected alternative may resultin an amendment to Land ManagementPlans (LMPs) for the Gifford Pinchot,Mount Baker-Snoqualmie, Mount Hood,Olympic, Rogue River, Siuslaw,Siskiyou, Six Rivers, Umpqua, andWillamette National Forests andportions of the Deschutes, Okanogan,Wenatchee, Winema, Klamath, Lassen,Mendocino, Modoc, and Shasta-TrinityNational Forests implementing theNorthwest Forest Plan.

The Record of Decision for this EISwould amend the BLM ResourceManagement Plans (RMPs) for theSalem, Eugene, Coos Bay, Roseburg, andMedford Districts, and the KlamathFalls Field Office of the LakeviewDistrict in Oregon. In addition, theRecord of Decision for this EIS wouldamend the plans for the Redding FieldOffice, Arcata Field Office, King RangeNational Conservation Area, and UkiahField Office within the grouping ofindependent Northern California FieldOffices known as NORCAL.

New information, such as the rangeand abundance of species listed in TableC–3 of the Survey and Manage andProtection Buffer species Standards andGuidelines of the Northwest Forest Plan,continues to be compiled from surveysand analyzed following four years ofimplementation of these provisions.This new information indicates thatadhering to some of the presentStandards and Guidelines for Surveyand Manage and Protection Bufferspecies may not fully meet both theneed to protect old growth-relatedspecies and the need for forest products,which are the dual goals of theNorthwest Forest Plan. The presentStandards and Guidelines for Surveyand Manage and Protection Bufferspecies require substantial reductions inthe availability of resources from

Federal lands; including recreation,timber, prescribed fire, mining, grazingand restoration activities, whileproviding little corresponding benefit tothe species the provisions weredesigned to protect. Moreover, there isa need to clarify the Survey and Manageand Protection Buffer species (Standardsand Guidelines to design an orderly andcredible adaptive management processto change or revise the status of speciesand management of Survey and Manageand Protection Buffer species as we gainnew insights to their needs.

The proposed action would altercertain procedures under the Surveyand Manage provisions so that theagencies can more rapidly respond tonew information concerning thepopulation status and habitatrequirements of species associated withlate-successional and old-growth foresthabitat of the Pacific Northwest. Theproposed action would merge ProtectionBuffer species into the protectivemeasures provided under the Surveyand Manage provisions establishedunder the Northwest Forest Plan. Theproposed action may include the initialchanges to species’ categorization whichwould be made under the new adaptivemanagement procedures to be adoptedfor the Survey and Manage mitigationmeasure, such as moving a species fromone Component to another. Thesechanges would be based on theinformation which has been developedsince adoption of the Northwest ForestPlan.

Alternatives other than the proposaland the ‘‘no action’’ alternative have notbeen developed. The public is invited topropose alternatives for considerationduring the scoping process.

The scoping process as defined in theCouncil of Environmental Quality’sNational Environmental Policy Act(NEPA) implementing regulations willbe used to identify issues for developinga range of alternatives that consider theunderlying need for this action. Ascoping notice will be prepared andcirculated to mailing lists of individualsand organizations previously expressingan interest in National Forest LMPs andBLM RMPs within the range of thenorthern spotted owl. The scopingnotice along with backgroundinformation will also be posted on theInternet: http://or.blm.gov/information.htm. A scoping meetingwill not be held. For comments to be

65168 Federal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / Notices

most useful in this analysis, they shouldbe submitted in writing beforeDecember 24, 1998.

The Forest Service and BLM will bejoint lead agencies for this analysis. Thetwo agencies will consult with the U.S.Fish and Wildlife Service and NationalMarine Fisheries Service pursuant to theEndangered Species Act. Other Federalagencies, such as the Pacific Northwestand Pacific Southwest Research Station,Bureau of Indian Affairs, National ParkService, Environmental ProtectionAgency (EPA), U.S. Army Corps ofEngineers, Natural ResourcesConservation Service, the U.S.Geological Survey Biological ResourcesDivision, EPA Research Laboratory, andTribal, local, and state governments willalso be involved.

The responsible officials for NFSlands will be the Regional Forester,Pacific Northwest Region, P.O. Box3623, Portland, Oregon 97208 and theRegional Forester, Pacific SouthwestRegion, 630 Sansome Street, SanFrancisco, CA 94111. The responsibleofficial for public lands administered bythe BLM will be the State Director forOregon and Washington, P.O. Box 2965,Portland, Oregon 97208 and the StateDirector for California, 2135 ButanoDrive, Sacramento, CA 95825.

The draft EIS is expected to be filedwith the EPA approximately February1999 and will be available for publicreview at that time. The commentperiod on the draft EIS will be 90 daysfrom the date the EPA publishes thenotice of availability in the FederalRegister.

The Forest Service and BLM believeit is important to give reviewers noticeof several court rulings related to publicparticipation in the environmentalreview process. First, reviewers of draftEISs must structure their participationin the environmental review of theproposal so that it is meaningful andalerts an agency to the reviewer’sposition and contentions. VermontYankee Nuclear Power Corp. v. NRDC,435 U.S. 519, 533 (1978). Also,environmental objections that could beraised at the draft EIS stage may bewaived or dismissed by the courts. Cityof Angoon v. Hodel, 803 F.2nd 1016,1022 (9th Cir. 1986) and WisconsinHeritages, Inc. v. Harris, 490 F. Supp.1334, 1338 (E.D. Wis. 1980). Because ofthese court rulings, it is important thatthose interested in this proposed actionparticipate by the close of the 90-daycomment period on the draft EIS so thatsubstantive comments and objectionsare made available to the Forest Serviceand BLM at a time when the agenciescan meaningfully consider substantive

comments and objectives and respondto them in the final EIS.

To assist the Forest Service and BLMin identifying and considering issuesand concerns on the proposed action,comments on the draft EIS should be asspecific as possible. It is also helpful ifcomments refer to specific pages orchapters of the draft statement.Comments may also address theadequacy of the draft EIS or the meritsof the alternatives formulated anddiscussed in the statement. Reviewersmay wish to refer to the Council onEnvironmental Quality Regulations forimplementing the procedural provisionsof NEPA at 40 CFR 1503.3 in addressingthese points.

It is expected that the final EIS willbe filed with the EPA approximatelyOctober 1999. There will be twoRecords of Decisions issued; one forNFS lands and one for BLM publiclands in Oregon, Washington andCalifornia. The decision for NationalForest System Lands will be subject toForest Service appeal regulations (36CFR 217). The decision in regard tolands managed by the BLM would besubject to the protest procedures inBLM’s planning regulations (43 CFR1610.5–2).

Dated: November 16, 1998.Robert W. Williams,Regional Forester, R–6, Forest Service.

Dated: November 16, 1998.William L. Bradley,Deputy State Director, Resource Planning, Use& Protection, Bureau of Land Management.[FR Doc. 98–31199 Filed 11–24–98; 8:45 am]BILLING CODE 3410–11–M

BROADCASTING BOARD OFGOVERNORS

Sunshine Act Meeting

DATE AND TIME: November 30–December1, 1998; 3:00 p.m. and 9:00 a.m.PLACE: The Cohen Building, Room 3321,330 Independence Ave., S.W.,Washington, D.C. 20547.

Closed Meeting: The members of theBroadcasting Board of Governors (BBG)will meet in closed session to reviewand discuss a number of issues relatingto U.S. Government-funded non-military international broadcasting.They will address internal procedural,budgetary, and personnel issues, as wellas sensitive foreign policy issuesrelating to potential options in the U.S.international broadcasting field. Thismeeting is closed because if open itlikely would either disclose matters thatwould be properly classified to be keptsecret in the interest of foreign policy

under the appropriate executive order (5U.S.C. 552b. (c)(1)) or would discloseinformation the premature disclosure ofwhich would be likely to significantlyfrustrate implementation of a proposedagency action. (5 U.S.C. 552b. (c)(9)(B))In addition, part of the discussion willrelate solely to the internal personneland organizational issues of the BBG orthe International Broadcasting Bureau.(5 U.S.C. 552b.(c)(2) and (6)).

CONTACT PERSON FOR MORE INFORMATION:Persons interested in obtaining moreinformation should contact BrendaMassey or John Lindburg at (202) 401–3736.

Dated: November 23, 1998.Marc B. Nathanson,Chairman.[FR Doc. 98–31669 Filed 11–23–98; 3:38 pm]BILLING CODE 8230–01–M

COMMISSION ON CIVIL RIGHTS

Agenda and Notice of Public Meetingof the New York State AdvisoryCommittee

Notice is hereby given, pursuant tothe provisions of the rules andregulations of the U.S. Commission onCivil Rights, that a meeting of the NewYork State Advisory Committee to theCommission will convene at 1 p.m. andadjourn at 4:30 p.m. on December 11,1998, in the Mayor’s Conference Room,City Hall, Albany, New York 12207. Thepurpose of the meeting is to receiveinformation on the status of civil rightsin the State, to plan future activity, andto review the final draft of a report onsection 8 housing.

Persons desiring additionalinformation, or planning a presentationto the Committee, should contactCommittee Chairperson M.D. (Lita)Taracido, 212–645–8999, or Ki-TaekChun, Director of the Eastern RegionalOffice, 202–376–7533 (TDD 202–376–8116). Hearing-impaired persons whowill attend the meeting and require theservices of a sign language interpretershould contact the Regional Office atleast five (5) working days before thescheduled date of the meeting.

The meeting will be conductedpursuant to the provisions of the rulesand regulations of the Commission.

Dated at Washington, DC, November 16,1998.Carol-Lee Hurley,Chief, Regional Programs Coordination Unit.[FR Doc. 98–31537 Filed 11–24–98; 8:45 am]BILLING CODE 6335–01–P

65169Federal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / Notices


Submission for OMB Review;Comment Request

The Department of Commerce (DOC)has submitted to the Office ofManagement and Budget (OMB) forclearance the following proposal forcollection of information underprovisions of the Paperwork ReductionAct (44 U.S.C. Chapter 35).

Agency: Office of the Secretary.Title: Revision to the Commerce

Acquisition Regulation (CAR) clause at1352.217–109 Entitled ‘‘InsuranceRequirements.’’

Agency Form Number: N/A.OMB Approval Number: 0690–0010.Type of Request: Extension of a

currently approved collection.Burden: 30 hours.Number of Respondents: 30.Average Hours Per Response: 1 hour.Needs and Uses: The Department of

Commerce requires in its contracts forconstruction, alteration and repair ofships each selected contractor toprocure and maintain insurance asspecified in the CAR clause 1352.217–109, ‘‘Insurance Requirements.’’ Theclause also requires the contractor tosubmit proof of this insurance to thecontracting officer before the workunder the contract is authorized to start.

Affected Public: Businesses or otherfor-profit and not-for-profit institutions.

Frequency: On occasion.Respondent’s Obligation: Required to

obtain or retain benefits.OMB Desk Officer: David Rostker,

(202) 395–3897.Copies of the above information

collection proposal can be obtained bycalling or writing Linda Engelmeier,DOC Forms Clearance Officer, (202)482–3272, Department of Commerce,Room 5327, 14th and ConstitutionAvenue, N.W., Washington, D.C. 20230.

Written comments andrecommendations for the proposedinformation collection should be sentwithin 30 days of publication of thisnotice to David Rostker, OMB DeskOfficer, Room 10202, New ExecutiveOffice Building, 725 17th Street, N.W.,Washington, D.C. 20503.

Dated: November 18, 1998.Linda Engelmeier,Departmental Forms Clearance Officer, Officeof the Chief Information Officer[FR Doc. 98–31439 Filed 11–26–98; 8:45 am]BILLING CODE 3510–EC–P


Submission for OMB Review;Comment Request

The Department of Commerce (DOC)has submitted to the Office ofManagement and Budget (OMB) forclearance the following proposal forcollection of information underprovisions of the Paperwork ReductionAct (44 U.S.C. Chapter 35).

Agency: Office of the Secretary.Title: Department of Commerce

Unique Solicitations: Requests forProposals (RFPs) or Invitations for Bids(IFBs).

Agency Form Number: N/A.OMB Approval Number: 0690–0008.Type of Request: Extension of a

currently approved collection.Burden: 5,000.Number of Respondents: 250.Average Hours Per Response: 20

hours.Needs and Uses: The Commerce

Department is required by theCompetition in Contracting Act (CICA)(Pub. L. 98–369) requires each agency toseek maximum competition whenissuing contracts for supplies andservices. The Department is required toissue solicitations which requireprospective contractors to prepare andsubmit technical, business and costproposals as part of the Federalacquisition process for awarding thesecontracts. In soliciting proposals, theDepartment collects, from eachcompeting contractor, the informationnecessary to evaluate the proposals andmake a decision as to which proposaloffers the most benefit to theGovernment. There are seven officialCommerce-unique clauses which placea paperwork burden on the contractor.The use of these clauses provide a lessburdensome way for potential

contractors to respond to theGovernment’s request for informationconcerning the evaluation of bids andproposals; expedite solicitation andcontract preparation; and facilitatecontract negotiation, administration andreview.

Affected Public: Businesses or otherfor-profit and not-for-profit institutions.

Frequency: On occasion.Respondent’s Obligation: Required to

obtain or retain benefits.OMB Desk Officer: David Rostker,

(202) 395–3897.Copies of the above information

collection proposal can be obtained bycalling or writing Linda Engelmeier,DOC Forms Clearance Officer, (202)482–3272, Department of Commerce,Room 5327, 14th and ConstitutionAvenue, N.W., Washington, D.C. 20230.

Written comments andrecommendations for the proposedinformation collection should be sentwithin 30 days of publication of thisnotice to David Rostker, OMB DeskOfficer, Room 10202, New ExecutiveOffice Building, 725 17th Street, N.W.,Washington, D.C. 20503.

Dated: November 18, 1998.Linda Engelmeier,Departmental Forms Clearance Officer, Officeof the Chief Information Officer.[FR Doc. 98–31440 Filed 11–24–98; 8:45 am]BILLING CODE 3510–EC–P


Economic DevelopmentAdministration

Notice of Petitions by Producing Firmsfor Determination of Eligibility ToApply for Trade AdjustmentAssistance

AGENCY: Economic DevelopmentAdministration (EDA), Commerce.ACTION: To Give Firms an OpportunityTo Comment.

Petitions have been accepted for filingon the dates indicated from the firmslisted below.

LIST OF PETITION ACTION BY TRADE ADJUSTMENT ASSISTANCE FOR PERIOD 10/15/98–11/18/98

Firm name AddressDate peti-

tion accept-ed

Product

Burley Design Cooperative, Inc ................ 4020 Stewart Rd., Eugene, OR 97402 .... 10/30/98 Bicycle trailers, TANDEMS and RainGear.

Ark Manufacturing, Inc .............................. 3780 Boone Rd., SE. Salem, OR 97301 10/21/98 Horse tack, and dog and cat equipment.Tech Fab, Inc ............................................ 1 W. Main St., South Hadley, MA 01075 10/22/98 Hand held air guns used for cleaning,

blowing, drying and general mainte-nance.


LIST OF PETITION ACTION BY TRADE ADJUSTMENT ASSISTANCE FOR PERIOD 10/15/98–11/18/98—Continued

Firm name AddressDate peti-

tion accept-ed

Product

Electro Technology, Inc ............................. 1830 Amos Dr., Muscle Shoals, AL35661.

10/22/98 Custom electronic transformers.

A. W. Enterprises, Inc ............................... 6543 S. Laramie Ave., Bedford Park, IL60638.

10/22/98 Leather, nylon, wood and vinyl cases.

Fotodyne, Incorporated ............................. 950 Walnut Ridge Dr., Hartland, WI53029.

10/22/98 Chemical analysis and imaging instru-mentation systems.

Circuits Engineering, Inc ........................... 1832 180th St., SE., Bothell, WA 98012 .. 10/26/98 Printed circuit boards.Darius Enterprises, Inc .............................. 38 Lafayette St., Hudson Falls, NY 12839 10/27/98 Automobile engines.Dixon Manufacturing, Inc .......................... 701 Clinton St., Arkadelphia, AR 71923 .. 10/28/98 School and nurses uniforms (dresses),

and industrial aprons.Precision Design, Inc ................................ P.O. Box 2064, Weatherford, OK 73096 10/29/98 Control surface parts for airplanes, I.E.

ailerons, flaps, gears doors and rud-ders.

Lube Systems, Inc ..................................... 93 Stickles Pond Rd., Newton, NJ 07860 10/29/98 Industrial lubricating machinery.Dick’s Pattern ............................................ 620 Cross St., Beloit, WI 53511 ............... 10/30/98 Patterns for the foundry industry.E & F Electronics, Inc ............................... 55 S. State Ave., Indianapolis, IN 46201 10/30/98 Transformers and electronic coils.Good Lad Company .................................. 431 East Tioga St., Philadelphia, PA

19134.10/30/98 Children’s clothing.

Perky Cap Company, Inc .......................... 186 Industrial Blvd., SE., Eatonton, GA31024.

11/03/98 Caps, visors, curtains.

Mastercraft Mold, Inc ................................. 3301 W. Vernon Ave., Phoenix, AZ85009.

11/03/98 Plastic injection molds and parts land-scaping and gaming equipment.

Plastics Development, Inc ......................... 10360 SW. Spokane Court, Tualatin, OR97062.

11/10/98 Custom injection molds—electronic, auto-motive, medical, sports, toy and trans-portation parts.

Cellini, Inc .................................................. 215 Jefferson Blvd., Warwick, RI 02888 .. 11/13/98 Silver Jewelry.Robison Solar Systems ............................. 404 Loomis Rd., Weatherford, OK 73096 11/16/98 Submersible pumps powered by solar

modules.Mackenzie Specialty Castings .................. 19430 63rd Ave., NE, Arlington, WA

98223.11/18/98 Syphon tubes, steel ingot molds and

other castings.

The petitions were submittedpursuant to Section 251 of the Trade Actof 1974 (19 U.S.C. 2341). Consequently,the United States Department ofCommerce has initiated separateinvestigations to determine whetherincreased imports into the United Statesof articles like or directly competitivewith those produced by each firmcontributed importantly to total orpartial separation of the firm’s workers,or threat thereof, and to a decrease insales or production of each petitioningfirm.

Any party having a substantialinterest in the proceedings may requesta public hearing on the matter. Arequest for a hearing must be receivedby Trade Adjustment Assistance, Room7315, Economic DevelopmentAdministration, U.S. Department ofCommerce, Washington, D.C. 20230, nolater than the close of business of thetenth calendar day following thepublication of this notice.

The Catalog of Federal DomesticAssistance official program number andtitle of the program under which thesepetitions are submitted is 11.313, TradeAdjustment Assistance.

Dated: November 18, 1998.Anthony J. Meyer,Coordinator, Trade Adjustment andTechnical Assistance.[FR Doc. 98–31479 Filed 11–24–98; 8:45 am]BILLING CODE 3510–24–M


Bureau of Export Administration

Materials Technical AdvisoryCommittee; Notice of Partially ClosedMeeting

The Materials Technical AdvisoryCommittee will meet December 17,1998, 10:30 a.m., Herbert C. HooverBuilding, Room 6029, 14th Streetbetween Constitution & PennsylvaniaAvenues, N.W., Washington, D.C. TheCommittee advises the Office of theAssistant Secretary for ExportAdministration with respect to technicalquestions that affect the level of exportcontrols applicable to materials andrelated technology.

Agency

General Session

1. Opening remarks by the Chairman.2. Presentation of papers and

comments by the public.

3. Discussion of Biological WeaponsConvention protocol.

Executive Session

4. Discussion of matters properlyclassified under Executive Order 12958,dealing with U.S. export controlprograms and strategic criteria relatedthereto.

The General Session of the meetingwill be open to the public and a limitednumber of seats will be available.Reservations are not required. To theextent time permits, members of thepublic may present oral statements tothe Committee. Written statements maybe submitted at any time before or afterthe meeting.

However, to facilitate distribution ofpublic presentation materials to theCommittee members, the materialsshould be forwarded prior to themeeting to the address below:Ms. Lee Ann Carpenter, BXA MS:

3886C, U.S. Department of Commerce,15 St. & Pennsylvania Ave., N.W.,Washington, D.C. 20230

The Assistant Secretary forAdministration, with the concurrence ofthe delegate of the General Counsel,formally determined on February 24,1998, pursuant to section 10(d) of theFederal Advisory Committee Act, as


amended, that the series of meetings orportions of meetings of the Committeeand of any Subcommittee thereofdealing with the classified materialslisted in 5 U.S.C. 552(c)(1) shall beexempt from the provisions relating topublic meetings found in section10(a)(1) and (a)(3) of the FederalAdvisory Committee Act. The remainingseries of meetings or portions thereofwill be open to the public. A copy of theNotice of Determination to closemeetings or portions of meetings of theCommittee is available for publicinspection and copying in the CentralReference and Records InspectionFacility, Room 6020, U.S. Department ofCommerce, Washington, D.C. For moreinformation call Ms. Lee Ann Carpenterat (202) 482–2583.

Dated: November 19, 1998.Lee Ann Carpenter,Committee Liaison Officer.[FR Doc. 98–31558 Filed 11–24–98; 8:45 am]BILLING CODE 3510–33–M


Foreign-Trade Zones Board

[Order No. 1009]

Approval of Manufacturing ActivityWithin Foreign-Trade Zone 226Atwater, California; Pacesetter, Inc.(Modular Buildings)

Pursuant to its authority under the Foreign-Trade Zones Act of June 18, 1934, asamended (19 U.S.C. 81a–81u) (the Act), theForeign-Trade Zones Board (the Board)adopts the following Order:

Whereas, Merced County, California,grantee of FTZ 226, has requestedauthority under § 400.32(b)(1) of theBoard’s regulations on behalf ofPacesetter, Inc., to manufacture modularbuildings for export under zoneprocedures within FTZ 226, Atwater,California (filed 8–12–98, FTZ Docket38–98);

Whereas, pursuant to § 400.32(b)(1),the Commerce Department’s AssistantSecretary for Import Administration hasthe authority to act for the Board inmaking such decisions on newmanufacturing/processing activityunder certain circumstances, includingsituations where the proposed activity isfor export only (§ 400.32(b)(1)(ii)); and,

Whereas, the FTZ Staff has reviewedthe proposal, taking into account thecriteria of § 400.31, and the ExecutiveSecretary has recommended approval;

Now, therefore, the AssistantSecretary for Import Administration,acting for the Board pursuant to§ 400.32(b)(1), concurs in the

recommendation and hereby approvesthe request subject to the Act and theBoard’s regulations, including § 400.28,and further subject to a conditionrequiring that all foreign-statusmerchandise admitted to FTZ 226 forthe Pacesetter, Inc., activity, must beexported.

Signed at Washington, DC, this 16th day ofNovember 1998.Robert S. LaRussa,Assistant Secretary of Commerce for ImportAdministration, Alternate Chairman, Foreign-Trade Zones Board.

Attest:Dennis Puccinelli,Acting Executive Secretary.[FR Doc. 98–31550 Filed 11–24–98; 8:45 am]BILLING CODE 3510–DS–P



[Order No. 1007]

Grant of Authority for Subzone Status;Harris Corporation—ElectronicSystems Sector (Telecommunications/Information Systems), Brevard County,Florida

Pursuant to its authority under the Foreign-Trade Zones Act of June 18, 1934, asamended (19 U.S.C. 81a–81u), the Foreign-Trade Zones Board (the Board) adopts thefollowing Order:

Whereas, the Foreign-Trade Zones Actprovides for ‘‘* * * the establishment* * * of foreign-trade zones in ports ofentry of the United States, to expediteand encourage foreign commerce, andfor other purposes,’’ and authorizes theForeign-Trade Zones Board to grant toqualified corporations the privilege ofestablishing foreign-trade zones in oradjacent to U.S. Customs ports of entry;

Whereas, the Board’s regulations (15CFR Part 400) provide for theestablishment of special-purposesubzones when existing zone facilitiescannot serve the specific use involved;

Whereas, the Canaveral PortAuthority, grantee of Foreign-TradeZone 136, has made application to theBoard for authority to establish special-purpose subzone status at thetelecommunications/informationmanufacturing facilities of HarrisCorporation—Electronic Systems Sector,located at sites in Brevard County,Florida, (FTZ Docket 84–97, filed 12/22/97);

Whereas, notice inviting publiccomment has been given in the FederalRegister (63 FR 2660, 1/16/98); and,

Whereas, the Board adopts thefindings and recommendations of the

examiner’s report, and finds that therequirements of the FTZ Act and theBoard’s regulations are satisfied, andthat approval of the application is in thepublic interest;

Now, therefore, the Board herebygrants authority for subzone status at thetelecommunications/informationsystems manufacturing facilities ofHarris Corporation—Electronic SystemsSector, located at sites in BrevardCounty, Florida (Subzone 136C), at thelocations described in the application,and subject to the FTZ Act and theBoard’s regulations, including § 400.28.

Signed at Washington, DC, this 16th day ofNovember 1998.

Robert S. LaRussa,Assistant Secretary of Commerce for ImportAdministration, Alternate Chairman, Foreign-Trade Zones Board.




[Order No. 1010]

Expansion of Foreign-Trade Zone 1New York, New York, Area

Pursuant to its authority under the Foreign-Trade Zones Act of June 18, 1934, asamended (19 U.S.C. 81a–81u), the Foreign-Trade Zones Board (the Board) adopts thefollowing Order:

Whereas, the City of New York, NewYork, grantee of Foreign-Trade Zone 1,submitted an application to the Boardfor authority to expand FTZ 1 to includea new site in Staten Island, New York,within the New York Seaport AreaCustoms port of entry area (FTZ Docket7–98; filed 2/5/98);

Whereas, notice inviting publiccomment was given in Federal Register(63 FR 7755, 2/17/98; 63 FR 23720, 4/30/98) and the application has beenprocessed pursuant to the FTZ Act andthe Board’s regulations; and,

Whereas, the Board adopts thefindings and recommendations of theexaminer’s report, and finds that therequirements of the FTZ Act andBoard’s regulations are satisfied, andthat the proposal is in the publicinterest;

Now, Therefore, the Board herebyorders:

The application to expand FTZ 1 isapproved, subject to the Act and theBoard’s regulations, including Section400.28.


Signed at Washington, DC, this 16th day ofNovember 1998.Robert S. LaRussa,Assistant Secretary of Commerce for ImportAdministration, Alternate Chairman, Foreign-Trade Zones Board.




[Docket 53–98]

Foreign-Trade Zone 216—Olympia,WA; Request for Export ManufacturingAuthority, Darigold, Inc. (Dairy/SugarFood Products)

An application has been submitted tothe Foreign-Trade Zones Board (theBoard) by the Port of Olympia, granteeof FTZ 216, pursuant to § 400.32(b)(1) ofthe Board’s regulations (15 CFR Part400), requesting authority on behalf ofDarigold, Inc. (Darigold), to manufacturedairy products for export under FTZprocedures within FTZ 216. It wasformally filed on November 19, 1998.

Darigold operates a 74,000 square footdairy product manufacturing facility (37employees) within FTZ 216-Site 13located at 67 S.W. Chehalis Avenue inChehalis, Washington, which recentlyreceived FTZ Board authority to processforeign-origin liquid whey permeateunder FTZ procedures for export (BoardOrder 986, 63 FR 35909, 7–1–98). ThePort of Olympia is now requestingauthority on behalf of Darigold tomanufacture dry milk/honey blends,sweetened butter, butter/oil blends, drycoffee whiteners, and ice cream forexport. In this activity, about 50 percentof all ingredients used will be sourcedfrom abroad, including whey proteinisolate, anhydrous milkfat, caseinate,butter, whey and whey proteinconcentrate-34, whole and skim milkpowder, sugar, honey, glucose, lactose,wheat bran and flour, corn flour, soyflour, rice flour, coconut oil, milkcalcium, calcium carbonate, niacin,cocoa, vanilla, tapioca, vegetable oil(soy, canola, corn), and corn sweeteners.All of the finished products would beexported, and none of the foreigningredients noted above would beentered for U.S. consumption.

FTZ procedures would exemptDarigold from U.S. dairy product andsugar quota requirements and Customsduty payments on the foreigningredients used in this export activity.The application indicates that the

savings from FTZ procedures wouldhelp improve the plant’s internationalcompetitiveness.

The application has requested reviewunder Section 400.32(b)(1) of the FTZBoard regulations based on the exportonly activity.

Public comment on the application isinvited from interested parties.Submissions (original and three copies)shall be addressed to the Board’sExecutive Secretary at the addressbelow. The closing period for theirreceipt is January 25, 1999. Rebuttalcomments in response to materialsubmitted during the foregoing periodmay be submitted during the subsequent15-day period (to February 8, 1999).

A copy of the application will beavailable for public inspection at thefollowing location: Office of theExecutive Secretary, Foreign-TradeZones Board, Room 3716, U.S.Department of Commerce, 14th Street &Pennsylvania Avenue, NW, Washington,DC 20230.

Dated: November 19, 1998.Dennis Puccinelli,Acting Executive Secretary.[FR Doc. 98–31554 Filed 11–24–98; 8:45 am]BILLING CODE 3510–DS–P


International Trade Administration

[A–549–502]

Certain Welded Carbon Steel Pipesand Tubes From Thailand: AmendedFinal Results of Antidumping DutyAdministrative Review

AGENCY: Import Administration,International Trade Administration,Department of Commerce.ACTION: Notice of Amended FinalResults of Antidumping DutyAdministrative Review; Certain WeldedCarbon Steel Pipes and Tubes fromThailand.

SUMMARY: On October 16, 1998 theDepartment of Commerce (theDepartment) published the final resultsof the administrative review of theantidumping duty order on certainwelded carbon steel pipes and tubesfrom Thailand (63 FR 55578). Thisreview covers the followingmanufacturer/exporter of the subjectmerchandise to the United States: SahaThai Steel Pipe Company, Ltd. (‘‘SahaThai’’), and its affiliated exporter S.A.F.Pipe Export Co., Ltd. (‘‘SAF’’). Theperiod of review (POR) is March 1, 1996through February 28, 1997.

On October 16, 1998, pursuant tosection 353.28(a) of the Department’s

regulations, Saha Thai, SAF, and twoU.S. importers, Ferro Union, Inc., andAsoma Corporation (collectively, ‘‘SahaThai’’) filed a ministerial errorallegation regarding the Department’scalculation of importer-specificassessment rates in the final results ofthe review. In addition, when reviewingSaha Thai’s allegation, the Departmentidentified a misstatement in the FederalRegister notice of the final results. TheDepartment is publishing theseamended final results to correct theseministerial errors.EFFECTIVE DATE: November 25, 1998.FOR FURTHER INFORMATION CONTACT: JohnTotaro, AD/CVD Enforcement Group III,Office 7, Import Administration,International Trade Administration,U.S. Department of Commerce, 14thStreet and Constitution Avenue, NW,Washington, DC 20230; telephone: (202)482–1374.

Applicable Statute

Unless otherwise indicated, allcitations to the statute are references tothe provisions effective January 1, 1995,the effective date of the amendmentsmade to the Tariff Act of 1930(hereinafter, ‘‘the Act’’) by the UruguayRound Agreements Act (URAA). Inaddition, unless otherwise indicated, allcitations to the Department’s regulationsare to the regulations codified at 19 CFRPart 353 (1997). Although theDepartment’s new regulations, codifiedat 19 CFR Part 351 (1998) (‘‘FinalRegulations’’), do not govern thisadministrative review, citations to thoseregulations are provided, whereappropriate, as a statement of currentDepartmental practice.

Ministerial Errors in the Final Resultsof Review

Where U.S. sales are on an exportprice (EP) basis and the record does notcontain entered value data, theDepartment’s margin calculationprogram calculates the duty amount tobe collected from each importer on adollars-per-metric ton basis. BecauseSaha Thai’s sales during the POR wereall EP sales, the Department’s margincalculation program intended tocalculate the duty owed for assessmentpurposes using the methodologydescribed above. Saha Thai alleged thatthe Department’s margin calculationprogram contained a ministerial errorbecause in calculating the unit duty foreach importer, the Departmentinadvertently increased the quotient ofits unit duty calculation by a factor of100. We examined the margincalculation program, and we agree withSaha Thai that this is a clerical error


within the meaning of 19 CFR 353.28(d), i.e., an error in arithmetic functionsof the calculation program. We havecorrected the program so that the resultof the unit duty calculation program isno longer multiplied by a factor of 100.This correction affects only theimporter-specific assessment rates, notthe margin calculated in the finalresults.

We also note one additionalministerial error not raised by theparties in this review. In the final resultsFederal Register notice, the Departmentstated that ‘‘[f]or assessment purposes,we have calculated importer-specificduty assessment rates for themerchandise based on the ratio of thetotal amount of antidumping dutiescalculated for the examined sales duringthe POR to the total entered value ofsales examined during the POR.’’ 63 FRat 55590. This statement is incorrect,and does not reflect the margincalculation program disclosed to theparties with the final results of thisreview. As stated above, the record ofthis review does not contain data on theentered value of the sales examinedduring the POR. Therefore, for the finalresults of this review we calculated theduty amount to be collected from eachimporter on a unit basis, i.e., a ratio ofthe total amount of antidumping dutiescalculated for the examined sales duringthe POR to the total quantity of salesexamined during the POR, not a ratio ofantidumping duties to the entered valueof these sales.

Amended Final Results of Review

Upon correction of the ministerialerrors described above, the marginremains unchanged from the finalresults published in the FederalRegister on October 16, 1998. However,as discussed above, the importer-specific assessment rates will changefrom those disclosed to the parties withthe final results. We will instruct theCustoms Service accordingly.

Manufacturer/Exporter Period Margin

Saha Thai ....... 3/1/96–2/28/97 1.92%

The Department shall determine, andthe U.S. Customs Service shall assess,antidumping duties on all appropriateentries. The Department shall issueappraisement instructions directly tothe Customs Service. As a result of thisreview, we have determined that theimporter-specific duty assessments ratesare necessary. For assessment purposes,therefore, we have calculated importer-specific duty assessment rates for themerchandise based on the ratio of the

total amount of antidumping dutiescalculated for the examined sales duringthe POR to the total quantity of salesexamined during the POR.

Furthermore, the following depositrequirements shall be effective uponpublication of this notice of final resultsof review for all shipments of certainwelded carbon steel pipes and tubesfrom Thailand, entered, or withdrawnfrom warehouse, for consumption on orafter the publication date, as providedfor by section 751(a)(1) of the Tariff Act:(1) the cash deposit rate for thereviewed company will be the ratestated above; (2) for previouslyinvestigated companies not listed above,the cash deposit rate will continue to bethe company-specific rate published forthe most recent period; (3) if theexporter is not a firm covered in thesereviews, or the original LTFVinvestigations, but the manufacturer is,the cash deposit rate will be the rateestablished for the most recent periodfor the manufacturer of themerchandise; and (4) if neither theexporter nor the manufacturer is a firmcovered in these reviews, the cashdeposit rate for this case will continueto be 15.67 percent, the ‘‘All Others’’rate made effective by the LTFVinvestigation. These depositrequirements shall remain in effect untilpublication of the final results of thenext administrative review.

This notice serves as a final reminderto importers of their responsibilityunder 19 CFR 353.26 to file a certificateregarding the reimbursement ofantidumping duties prior to liquidationof the relevant entries during thisreview period. Failure to comply withthis requirement could result in theSecretary’s presumption thatreimbursement of antidumping dutiesoccurred and the subsequent assessmentof double antidumping duties.

This notice also serves as a reminderto parties subject to administrativeprotective order (‘‘APO’’) of theirresponsibility concerning thedisposition of proprietary informationdisclosed under APO in accordancewith section 353.34(d) of theDepartment’s regulations. Timelynotification of return/destruction ofAPO materials or conversion to judicialprotective order is hereby requested.Failure to comply with the regulationsand the terms of an APO is asanctionable violation.

This amended administrative reviewand notice are in accordance withsection 751(a)(1) of the Act (19 U.S.C.1675(a)(1)) and sections 353.22 and353.28(c) of the Department’sregulations.

Dated: November 18, 1998.Robert S. LaRussa,Assistant Secretary for ImportAdministration.[FR Doc. 98–31555 Filed 11–24–98; 8:45 am]BILLING CODE 3510–DS–P



University of California at Los Angeles;Notice of Decision on Application forDuty-Free Entry of ScientificInstrument

This decision is made pursuant toSection 6(c) of the Educational,Scientific, and Cultural MaterialsImportation Act of 1966 (Pub. L. 89–651, 80 Stat. 897; 15 CFR part 301).Related records can be viewed between8:30 A.M. and 5:00 P.M. in Room 4211,U.S. Department of Commerce, 14th andConstitution Avenue, N.W.,Washington, D.C.

Docket Number: 98–004R. Applicant:University of California at Los Angeles,Los Angeles, CA 90095–1547.Instrument: YAG Pumped Dye Laser.Manufacturer: Spectron Laser Systems,United Kingdom. Intended Use: Seenotice at 63 FR 8164, February 18, 1998.

Comments: None received. Decision:Approved. No instrument of equivalentscientific value to the foreigninstrument, for such purposes as it isintended to be used, is beingmanufactured in the United States.Reasons: The foreign instrumentprovides: (1) an internal modular threebar resonator design, (2) operation in‘‘tophat’’ mode to minimize beamdivergence and (3) an internal cavitytelescope that compensates for thethermal loading on the laser rod. Thesecapabilities are pertinent to theapplicant’s intended purposes and weknow of no other instrument orapparatus of equivalent scientific valueto the foreign instrument which is beingmanufactured in the United States.Frank W. Creel,Director, Statutory Import Programs Staff.[FR Doc. 98–31552 Filed 11–24–98; 8:45 am]BILLING CODE 3510–DS–P



Application for Duty-Free Entry ofScientific Instrument

Pursuant to Section 6(c) of theEducational, Scientific and CulturalMaterials Importation Act of 1966 (Pub.L. 89–651; 80 Stat. 897; 15 CFR part


301), we invite comments on thequestion of whether an instrument ofequivalent scientific value, for thepurposes for which the instrumentshown below is intended to be used, isbeing manufactured in the UnitedStates.

Comments must comply with 15 CFR301.5(a)(3) and (4) of the regulations andbe filed within 20 days with theStatutory Import Programs Staff, U.S.Department of Commerce, Washington,D.C. 20230. Application may beexamined between 8:30 A.M. and 5:00P.M. in Room 4211, U.S. Department ofCommerce, 14th Street and ConstitutionAvenue, N.W., Washington, D.C.

Docket Number: 98–058. Applicant:University of Hawaii, 1000 Pope Road,MSB 317, Honolulu, HI 96822.Instrument: Directional Wave Buoy.Manufacturer: Datawell bv, TheNetherlands. Intended Use: Theinstrument will be used in support ofongoing research regarding therefraction, diffraction and reflection ofsea and swell around the HawaiianIslands. Two ongoing projects include:examination of wave-driven sedimenttransport at Kailua Bay and evaluationof various wave modeling strategies topredict nearshore waves around islandcoasts. Both require directional waveinformation in the open ocean.Application accepted by Commissionerof Customs: November 3, 1998.Frank W. Creel,Director, Statutory Import Programs Staff.[FR Doc. 98–31553 Filed 11–24–98; 8:45 am]BILLING CODE 3510–DS–P



Export Trade Certificate of Review

ACTION: Notice of application to amendcertificate.

SUMMARY: The Office of Export TradingCompany Affairs (‘‘OETCA’’),International Trade Administration,Department of Commerce, has receivedan application to amend an ExportTrade Certificate of Review. This noticesummarizes the proposed amendmentand requests comments relevant towhether the amended Certificate shouldbe issued.FOR FURTHER INFORMATION CONTACT:Morton Schnabel, Director, Office ofExport Trading Company Affairs,International Trade Administration,(202) 482–5131. This is not a toll-freenumber.SUPPLEMENTARY INFORMATION: Title III ofthe Export Trading Company Act of

1982 (15 U.S.C. 4001–21) authorizes theSecretary of Commerce to issue ExportTrade Certificates of Review. ACertificate of Review protects the holderand the members identified in theCertificate from state and federalgovernment antitrust actions and fromprivate, treble damage antitrust actionsfor the export conduct specified in theCertificate and carried out incompliance with its terms andconditions. Section 302(b)(1) of the Actand 15 CFR 325.6(a) require theSecretary to publish a notice in theFederal Register identifying theapplicant and summarizing its proposedexport conduct.

Request for Public CommentsInterested parties may submit written

comments relevant to the determinationwhether an amended Certificate shouldbe issued. If the comments include anyprivileged or confidential businessinformation, it must be clearly markedand a nonconfidential version of thecomments (identified as such) should beincluded. Any comments not markedprivileged or confidential businessinformation will be deemed to benonconfidential. An original and fivecopies, plus two copies of thenonconfidential version, should besubmitted no later than 20 days after thedate of this notice to: Office of ExportTrading Company Affairs, InternationalTrade Administration, Department ofCommerce, Room 1800H, Washington,D.C. 20230. Information submitted byany person is exempt from disclosureunder the Freedom of Information Act(5 U.S.C. 552). However,nonconfidential versions of thecomments will be made available to theapplicant if necessary for determiningwhether or not to issue the Certificate.Comments should refer to thisapplication as ‘‘Export Trade Certificateof Review, application number 88–2A015.’’

Ferrous Scrap Export Association’s(‘‘FSEA’’) original Certificate was issuedon December 12, 1988 (53 FR 51294,December 21, 1988) and previouslyamended on February 28, 1989 (54 FR9542, March 7, 1989). A summary of theapplication for an amendment follows.

Summary of the ApplicationApplicant: Ferrous Scrap Export

Association, 1209 Orange Street,Wilmington, Delaware 19809.

Contact: Cara E. Maggioni, Attorney,Telephone: (202) 662–5162.

Application No.: 88–2A015.Date Deemed Submitted: November

13, 1998.Proposed Amendment: FSEA seeks to

amend its Certificate to:

1. Add Metal Management, Inc.,Chicago, IL as a new ‘‘Member’’ of theCertificate within the meaning ofsection 325.2(1) of the Regulations (15CFR 325.2(1)); and

2. Delete Michael Schiavone & Sons,Inc., North Haven, CT; and Schiavone-Bonomo Corporation, Jersey City, NJ as‘‘Members’’ of the Certificate.

Dated: November 19, 1998.Morton Schnabel,Director, Office of Export Trading CompanyAffairs.[FR Doc. 98–31444 Filed 11–24–98; 8:45 am]BILLING CODE 3510–DR–I


National Institute of Standards andTechnology

1999 Survey of Reference Materials

ACTION: Proposed collection; commentrequest.

SUMMARY: The Department ofCommerce, as part of its continuingeffort to reduce paperwork andrespondent burden, invites the generalpublic and other Federal agencies totake this opportunity to comment ofproposed and/or continuing informationcollections, as required by thePaperwork Reduction Act of 1995,Public Law 104–13 (44 U.S.C.3506(c)(2)(A).DATES: Written comments must besubmitted on or before January 25, 1999.ADDRESSES: Direct all written commentsto Linda Engelmeier, DepartmentalForms Clearance Officer, Department ofCommerce, Room 5327, 14th andConstitution Avenue, NW, Washington,DC 20230.FOR FURTHER INFORMATION CONTACT:Requests for additional information orcopies of the information collectioninstrument(s) and instructions shouldbe directed to Alim A. Fatah, Ph.D.,National Institute of Standards andTechnology (NIST), Building 225, RoomA323, Gaithersburg, MD 20899.SUPPLEMENTARY INFORMATION:

1. AbstractIn 1999, the Department of Justice-

supported by NIST’s Office of LawEnforcement Standards (OLES) willundertake a scientific study todetermine the status, current need for,and use of standard reference materials(SRM) and standard referencecollections (SRC) within the Nation’scrime laboratories. The new study willbuild upon a 1977 study entitled‘‘Standard Reference Collections ofForensic Science Materials: Status and


1 The request was made in conjunction with theCommission’s notification to the CBT under Section5a(a)(10) of the Act, 7 U.S.C. Sec. 7a(a)(10), that thedelivery terms of the CBT corn and soybean futurescontracts no longer accomplish the statutoryobjectives of ‘‘permit[ting] the delivery of anycommodity . . . at such point or points and at suchquality and locational price differentials as willtend to prevent or diminish price manipulation,market congestion, or the abnormal movement ofsuch commodity in interstate commerce.’’ Thisrequest was based on the continuing diminution ofthe role of terminal markets in the cash market forgrain, the increasing shift of the locus of the mainchannels of commodity flows away from thedelivery points on the grain contracts, particularlythe par delivery point of Chicago, and the resultingprecipitous drop in regular warehouse storagecapacity at the Chicago delivery point. For corn andsoybeans, the Commission on November 7, 1997,issued an Order changing and supplementing underSection 5a(a)(10) of the Act, 7 U.S.C. 7a(a)(10), thedelivery terms of those futures contracts (62 FR60831 (November 13, 1997)), and, on May 7, 1998,approved further changes to the corn and soybeansfutures contracts’ delivery terms (63 FR 26575 (May13, 1998)).

2 The CBT reported that, although a Task Forceappointed by the CBT Board of Directors hadrecommended certain changes to the delivery termsof the wheat futures contract, the Board haddecided to refrain from acting on thoserecommendations at that time and determinedinstead to conduct market research to determinewhether a broader review of the contract, notlimited to its delivery terms, should be undertaken.

Needs. Since the report was issued, anumber of SRMs have been developedand new technologies have placedevidentiary material under the scrutinyof district attorneys, defense teams, andthe general public. The nations crimelaboratories will be survey by mail andasked to identify the reference materialsneeded by the different disciplines ororganizational sections within thelaboratory ie. trace analysis, firearms,DNA, latent fingerprints etc. In addition,crime laboratories will be asked abouttheir current reference collectionssource of these collections.

II. Method of Collection

Forensic science (crime) laboratorieswill be asked to complete and return aself-administered mail questionnaire.

III. Data

OMB Number: None.Form Number: None.Type of Review: Regular submission.Affected Public: Federal, state forensic

science laboratories.Estimated Number of Respondents:

330.Estimated Time Per Response:

Approximately 2 hours.Estimated Total Annual Cost to

Public: $0 (no capital expenditures arerequired).

IV. Request for Comments

Comments are invited on: (a) Whetherthe proposed collection of informationis necessary for the proper performanceof the functions of the agency, includingwhether the information shall havepractical utility; (b) the accuracy of theagency’s estimate of the burden(including hours and cost) of theproposed collection of information; (c)ways to enhance the quality, utility, andclarity of the information to becollected; and (d) ways to minimize theburden of the collection of informationon respondents, including through theuse of automated collection techniquesor other forms of informationtechnology.

Comments submitted in response tothis notice will be summarized and/orincluded in the request for OMBapproval of this information collection;they also will become a matter of publicrecord.

Dated: November 20, 1998.Linda Engelmeier,Departmental Forms Clearance Officer, Officeof the Chief Information Officer.[FR Doc. 98–31557 Filed 11–24–98; 8:45 am]BILLING CODE 3510–13–P

COMMODITY FUTURES TRADINGCOMMISSION

Chicago Board of Trade: ProposedAmendments to the Wheat, Oats, andSoybean Futures Contracts ModifyingCertain Delivery Specifications of theWheat Futures Contract, AmendingRules Governing Load Out AgainstWarehouse Receipts for Wheat andOats and Shipping Certificates forCorn and Soybeans, and Revising theLast Trading and Delivery Days for theOats and Wheat Futures Contracts

AGENCY: Commodity Futures TradingCommission.ACTION: Notice of proposed contractmarket rule change.

SUMMARY: The Chicago Board of Trade(CBT or Exchange) has submittedproposed amendments to its wheatfutures contract which will modify thelocational price differentials for deliveryat Toledo and St. Louis, change thequality price differentials for U.S. No. 1and U.S. No. 2 grade northern springwheat, and reduce the speculativeposition limits for the March and Maycontract months during the last fivetrading days. In additional, theExchange is proposing amendments thatwill modify the load-out provisions forthe wheat, corn, oats and soybeanfutures contracts and which will changethe last trading day and the last deliveryday for all contract months for thewheat and oats futures contracts. TheCommission has determined to requestpubic comment on the proposedamendments based upon its finding thatthe proposed amendments are of majoreconomic significance within themeaning of section 5a(a)(12) of theCommodity Exchange Act (Act) and thattheir publication is in the public interestand will assist the Commission inconsidering the views of interestedpersons.DATES: Comments must be received onor before December 28, 1998.ADDRESSES: Interested persons shouldsubmit their views and comments toJean A. Webb, Secretary, CommodityFutures Trading Commission, ThreeLafayette Centre, 1155 21st Street, NW,Washington, DC 20581. In addition,comments may be sent by facsimiletransmission to facsimile number (202)418–5521 or by electronic mail [email protected]. Reference should bemade to the CBT grain futures contracts’delivery specification proposals.FOR FURTHER INFORMATION, CONTACT:Please contact Fred Linse of theDivision of Economic Analysis,Commodity Futures TradingCommission, Three Lafayette Centre,

1155 21st Street, NW, Washington, DC20581, telephone (202) 418–5273,facsimile number (202) 418–5527, orelectronically at [email protected] INFORMATION: TheCommodity Futures TradingCommission (Commission), by letterdated December 19, 1996, issued arequest to the Chicago Board of Trade(CBT) to undertake a study of thedelivery specifications of its wheatfutures contract and to submit itsfindings to the Commission by April 18,1997, 120 days from the date of theCommission’s request (see 61 FR 67998(December 26, 1996)).1 The CBTresponded to the Commission’s requestby letter dated April 18, 1997, providinga status report to the Commission of itsactions.2 The Commission on July 8,1997, solicited public comment on thedelivery specifications of the CBT’swheat futures contract (62 FR 36499) toassist it in considering the concernsidentified in the Commission’sDecember 19, 1996 notification. TheCBT on October 21, 1998, submitted tothe Commission for its review proposedamendments to its wheat futurescontract.

Current Contract TermsThe wheat futures contract’s current

terms provide for the delivery ofwarehouse receipts representing U.S.No. 1 or U.S. No. 2 grade soft red winterwheat, dark northern spring wheat,northern spring wheat, or hard redwinter wheat in store at CBT-approved


3 For example, in St. Louis the minimum dailyloading rate is 1 barge per day for soybeans and 3barges per day for wheat. If both soybeans andwheat are in the line-up, the St. Louis warehouse/shipping station operator would be required to loada minimum of 3 barges per day total of beans and/or wheat.

(regular) delivery warehouses located inChicago, Toledo and St. Louis. (Onlysoft red winter wheat is deliverable atSt. Louis.) U.S. No. 2 grade soft redwinter wheat, U.S. No. 2 dark northernspring wheat, U.S. No. 2 hard red winterand U.S. No. 1 northern spring wheatare deliverable at par. U.S. No. 1 gradesoft red winter wheat, dark northernspring wheat, and hard red winterwheat are deliverable at a premium ofthree cents per bushel. U.S. No. 2 gradenorthern spring wheat is deliverable ata discount of one cent per bushel.Currently, wheat is deliverable inChicago at par, in Toledo at a discountof two cents per bushel, and in St. Louisat a premium of eight cents per bushel.

The oats futures contract calls for thedelivery of warehouse receiptsrepresenting oats in store at regularwarehouses in Chicago andMinneapolis/St. Paul.

Beginning in the year 2000, the cornand soybean futures contracts will callfor the delivery of shipping certificatesproviding for the loading out of corn atregular shipping stations in Chicago andon the northern Illinois River and theloading out of soybeans at regularshipping stations in Chicago, St. Louis,and on the Illinois River.

Under the current delivery proceduresfor the wheat and oats futures contracts,warehouse receipt holders may requireload out of wheat or oats from regularelevators into vessels, barges or rail cars.Regular warehouse operators must loadout wheat and oats at specified dailyrates, which differ depending upon themode of transportation provided bywarehouse receipt holders. Load outmust begin on the third business dayfollowing receipt of loading orders fromthe receipt holder or on the day after thetransportation equipment has beenconstructively placed, whichever occurslater. Regular warehouse operators arerequired to load out wheat and oatsconsecutively without giving preferenceto products owned by the operator overthe products of others and withoutgiving preference to one depositor overanother. The operator must in-loadproducts into the warehouseconsecutively in the order in which theyarrive at his warehouse at specifiedminimum daily rates pursuant to in-loading orders previously received sofar as the warehouse capacity for grainand grade permits.

An operator of a regular shippingstation for corn or soybeans is requiredto begin loading out product withinthree business days of the operator’sreceipt of loading orders and cancelledshipping certificates from a shippingcertificate holder. A shipping stationoperator must load out corn or soybeans

at the station’s registered daily loadingrate, giving preference to takers offutures delivery.

Proposed AmendmentsThe CBT is proposing to amend its

wheat contract as follows:(1) The locational price differential for

delivery of wheat at Toledo would bechanged to par from the two-cent-per-bushel discount currently applicable todeliveries at that location.

(2) The location price differential fordelivery at St. Louis would be increasedto a premium of 10 cents per bushelfrom the current 8 cents per bushelpremium.

(3) The quality price differential fordelivery of U.S. No. 1 grade northernspring wheat would be changed to apremium of 3 cents per bushel from paras presently specified in the contract.

(4) U.S. No. 2 grade northern springwheat would be deliverable at par,rather than at a one cent per busheldiscount as currently specified.

(5) Speculative position limits wouldbe reduced during the last five tradingdays in the March and May contractmonths to 350 contracts and 220contracts, respectively, from the existingspot month level of 600 contracts whichapplies uniformly to all contractmonths.

The CBT also has submitted proposedamendments that would delete all ofthese CBT’s existing provisions relatingto the in-loading of wheat and oats atregular warehouses. In addition, theproposed amendments would extend towheat and oats for futures delivery thepreferential treatment that receivers ofcorn and soybeans for futures deliverycurrently receive when load-out isordered (over the warehouse or shippingstation operator’s cash commitments).

In addition, the proposedamendments would specify that, if alineup for loading out grain into bargesfrom a particular regular warehouse/shipping station includes both wheatand corn or soybeans or both oats andcorn or soybeans, then the minimumdaily rate for loading shall be equal tothe highest loading rate applicable forany one commodity in the line-up.3 Tothe extent that the proposed termsapplicable to the soybean and cornfutures contracts differ from theprovisions of the Commission’s Order ofMay 7, 1998, the Exchange’s request forapproval of the proposed rule changes

also constitutes a request to theCommission to amend its Orderaccordingly. Publication of theseproposals, therefore, also constitutesnotice of the proposed amendment ofthe Commission’s Order consistent withthe proposed rule amendments.

Finally, the Exchange is proposing,for both the wheat and oats futurescontracts, amendments which wouldchange the last trading day for allcontract months to the business dayprior to the fifteenth calendar day of themonth from the current last trading daywhich is the business day prior to thelast seven business days of the month.Along with this amendment, the lastdelivery day for these contracts wouldbe changed to the seventh business dayfollowing the last trading day rather thelast business day of the month ascurrently specified.

The Exchange plans to implement theproposed amendments to the wheat andoats futures contracts beginning withthe March 2000 contract month exceptfor the proposed amendments to theloading provisions. The latter proposals,which relate to the corn and soybeansfutures contracts as well as the wheatand oats futures contracts, would applyto all grain loaded out againstoutstanding warehouse receipts on andafter January 1, 2000. In reviewingwhether proposed amendments can beapplied to the terms of existingcontracts, the Commission considers theeffect any such amendments may haveon the value of existing positions. Inthis regard, the proposed amendmentsto the wheat and oats futures contractswill apply beginning with the March2000 contract month which has not yetbeen listed for trading for eithercontract. However, the proposedamendments to the soybean and cornfutures contracts will apply to certaincurrently-listed contract months thatexpire after January 1, 2000 (as well asto all outstanding warehouse receiptsdelivered on prior contract months forcorn, soybeans, wheat and oats).Accordingly, the Commission is seekingpublic comment on what effect, if any,the proposed amendments would haveon the value of existing positions in thesubject contracts.

The CBT, in support of the proposedamendment to provide for par deliveryof wheat at Toledo, states that, ‘‘[P]arrecognizes that Toledo is the primarydelivery point for the wheat futurescontract and that it is a key pricingpoint for soft red winter wheat.’’ Withrespect to the proposed increase in thepremium for delivery at St. Louis, theExchange states that the change‘‘maintains the current differentialspread between Toledo and St. Louis.’’


4 On March 25, 1998, Cargill, Inc. announced anagreement under which The Andersons, Inc. wouldlease Cargill’s two grain handling facilities inToledo/Maumee, Ohio and provide on-sitemanagement of those facilities, in addition to theAndersons’ own grain-handling facilities in Toledo/Maumee. Cargill also announced that it wouldprovide marketing services for grain originated fromall facilities owned or leased by the Andersons inToledo/Maumee. In addtion, on November 10,1998, Cargill announced the purchase of all ofContinental Grain Co.’s grain merchandisingoperations, including Continental’s existing wheatfutures delivery facilities located in Chicago and St.Louis.

The Exchange notes that the proposedincrease in the quality gradedifferentials for U.S. No. 1 and U.S. No.2 grade northern spring wheat ‘‘willbring the grade differentials forNorthern Spring Wheat in line with thegrade differentials for Hard Red Winter,Soft Red Winter and Dark NorthernSpring Wheat.’’

With respect to the proposal tointroduce lower speculative positionlimit levels during the last five tradingdays of the March and May wheatcontract months, the Exchange statesthat, ‘‘The purpose of the decrease inspeculative position limits is to satisfyCFTC concerns on the adequacy ofdeliverable supply of wheat.’’ TheExchange further notes that, ‘‘while thedecrease in the speculative positionlimits in the last five business days hasthe potential to reduce liquidity, theproposed [lower] limits would not haverestrained positions held by speculatorsin the last five years.’’

The Exchange states that the proposedlast trading day for both wheat and oatsis the same as that for grain futurescontracts and thus ‘‘will standardize thelast trading day for CBOT commoditiesof wheat, corn, oats, soybeans, soybeanmeal and soybean oil.’’ Finally,according to the Exchange, the proposedload-out requirements to give takers ofdelivery on the wheat and oats futurescontracts preference in loading grainover the warehouse operator’s non-futures delivery commitments ‘‘willallow delivery wheat to be moreaccessible to takers of delivery andallow the futures to be more reflectiveof nearby cash grain prices.’’

The Commission finds that theproposed changes in wheat differentialsare of major economic significance andthe publication of the CBT’s proposedamendments as a whole is in the publicinterest and will assist the Commissionin its consideration of the amendments.In particular, commenters are invited toanalyze the following issues and tosubmit written data, views or commentsrelating to the CBT’s proposals.

1. Would available deliverablesupplies under the proposed contractterms for wheat be sufficient to preventor diminish price manipulation, marketcongestion, or the abnormal movementof such commodity in interstatecommerce?

2. Do the proposed locational pricedifferentials for delivery of wheat atToledo and St. Louis reflect cash marketprice differentials for wheat at suchlocations relative to cash market valuesat Chicago?

3. Do the proposed quality pricedifferentials for delivery of U.S. No 1and U.S. No. 2 grade northern spring

wheat reflect cash market pricingrelationships between such wheat andother deliverable classes and grades ofwheat, particularly U.S. No. 2 gradessoft red winter wheat?

4. Are the proposed amendments tothe corn, wheat, soybeans and oatsfutures contracts concerning load out ofgrain against warehouse receipts andshipping certificates consistent withcash market practices for thosecommodities at the regular warehouse atthe contracts’ delivery points? If not, towhat extent, if any, will the proposedload-out amendments limit deliverablesupplies available for the wheat, oats,corn and soybean futures contracts?

5. In light of recently announcedplans concerning changes 4 in theownership and/or operational control ofthe wheat futures contract’s deliveryfacilities, what effect, if any, will theincreased concentration in the control ofdelivery capacity resulting from thesechanges have on the contract’ssusceptibility to price manipulation,market congestion or the abnormalmovement of wheat in interstatecommerce? To what extent do thesechanges reflect general trends in thecash market?

Copies of the proposed amendmentswill be a available for inspection at theOffice of the Secretariat, CommodityFutures Trading Commission, ThreeLafayette Centre, 1155 21st Street, NW,Washington, D.C. 20581. Copies of theproposed amendments can be obtainedthrough the Office of the Secretariat bymail at the above address or bytelephone at (202) 418–5100.

Other materials submitted by the CBTmay be available upon request pursuantto the Freedom of Information Act (5U.S.C. 552) and the Commission’sregulations thereunder (17 C.F.R. Part145 (1987)), except to the extent they areentitled to confidential treatment as setforth in 17 C.F.R. 145.5 and 145.9.Requests for copies of such materialsshould be made to the FOI, Privacy andSunshine Act Compliance Staff of theOffice of the Secretariat at theCommission’s headquaters inaccordance with 17 C.F.R. 145.7 or145.8.

Issued in Washington, DC, on November19, 1998.Jean A. Webb,Secretary of the Commission.[FR Doc. 98–31494 Filed 11–24–98; 8:45 am]BILLING CODE 6351–01–M

COMMODITY FUTURES TRADINGCOMMISSION

Global Markets Advisory CommitteeMeeting

This is to give notice, pursuant toSection 10(a) of the Federal AdvisoryCommittee Act, 5 U.S.C. App. 2, section10(a), that the Commodity FuturesTrading Commission’s Global MarketsAdvisory Committee (‘‘GMAC’’) willconduct a public meeting on December9, 1998 in the first floor hearing room(Room 1000) of the Commission’sWashington, D.C. headquarters, ThreeLafayette Centre, 1155 21st Street, N.W.,Washington, D.C. 20581. The meetingwill begin at 1:00 p.m. and last until4:30 p.m. The agenda will consist of thefollowing:

Agenda

1. Introductory Remarks—Commissioner Barbara P. Holum

2. Reports of GMAC Working GroupsA. Working Group I—Electronic

Terminals—Comment on CFTCFederal Register Release

B. Working Group II—Impediments toCross-Border Business—Report onWork Projects

C. Working Group III—IOSCOinitiatives

3. Discussion4. New Business

The meeting is open to the public.The Chairman of the AdvisoryCommittee, Commissioner Barbara P.Holum, is empowered to conduct themeeting in a fashion that will, in herjudgment, facilitate the orderly conductof business. Any member of the publicwho wishes to file a written statementwith the Advisory Committee shouldmail a copy of the statement to theattention of: The Global MarketsAdvisory Committee, c/o CommissionerBarbara P. Holum, Commodity FuturesTrading Commission, Three LafayetteCentre, 115 21st Street, N.W.,Washington, D.C. 20581, before themeeting. Members of the public whowish to make oral statements shouldinform Commissioner Holum in writingat the foregoing address at least threebusiness days before the meeting.Reasonable provision will be made, iftime permits, for an oral presentation ofno more than five minutes each induration.


Issued by the Commission in Washington,D.C. on November 20, 1998.Jean A. Webb,Secretary of the Commission.[FR Doc. 98–31631 Filed 11–24–98; 8:45 am]BILLING CODE 6351–01–M

DEPARTMENT OF DEFENSE


Proposed Collection; CommentRequest

AGENCY: Defense Finance andAccounting Service.ACTION: Notice.

SUMMARY: In compliance with Section3506(c)(2)(A) of the PaperworkReduction Act of 1995, the DefenseFinance and Accounting Serviceannounces the proposed publicinformation collection and seeks publiccomment on the provisions thereof.Comments are invited on: (a) whetherthe proposed collection of informationis necessary for the proper performanceof the functions of the agency, includingwhether the information shall havepractical utility; (b) the accuracy of theagency’s estimate of the burden of theproposed information collection; (c)ways to enhance the quality, utility andclarity of the information to becollected; and (d) ways to minimize theburden of the information collection onrespondents, including through the useof automated collection techniques orother forms of information technology.DATES: Consideration will be given to allcomments received by January 25, 1999.ADDRESSES: Written comments andrecommendations on the proposedinformation collection should be sent tothe Denver Center, Defense Finance andAccounting Service, DFAS–DE/FJPD,Attn: Carolyn Crane, 6760 East IrvingtonPlace, Denver, CO 80279–3000.FOR FURTHER INFORMATION CONTACT: Torequest more information on thisproposed information collection or toobtain a copy of the proposal andassociated collection instruments,please write to the above address, or callCarolyn Crane, 303–676–7818.

Title, Associated Form, and OMBNumber: Dependency Statement—Wardof a Court.

Needs and Uses: A military membermay claim a ward of a court formonetary allowances. Pursuant to 37U.S.C. 401, 403 and 406, the membermust provide over one-half of theclaimed ward’s monthly expenses.DoDFMR 7000.14, Volume 7A definesthe definition of dependent and directsthat dependency be proved. This form

may be prepared by the militarymember or may be prepared by anotherindividual who may be a member of thepublic.

Affected Public: Individuals.Annual Burden Hours: 187.5 hours.Number of Respondents: 150.Responses per Respondent: 1 (new

form may be required if circumstanceschange).

Average Burden per Response: 1.25hours.

Frequency: On occasion.SUPPLEMENTARY INFORMATION:

Summary of Information Collection

When military members apply forbenefits, they will complete this form,Dependency Statement—Ward of aCourt. While members would normallycomplete this form, they could also becompleted by others consideredmembers of the public. Dependencyclaim examiners will use informationfrom these forms to determine thedegree of benefits. This collection willalso decrease the possibility of monetaryallowances being approved on behalf ofineligible dependents, and alleviate theopportunity for fraud, waste and abuse.

Dated: November 19, 1998.Patricia L. Toppings,Alternate OSD Federal Register LiaisonOfficer, Department of Defense.[FR Doc 98–31418 Filed 11–24–98; 8:45 am]BILLING CODE 5000–04–M



TRICARE; the Civilian Health andMedical Program of the UniformedServices (CHAMPUS); SpecializedTreatment Services (STS) Program

AGENCY: Office of the Secretary, DoD.ACTION: Notice.

SUMMARY: This notice is to adviseinterested parties that Walter ReedArmy Medical Center (WRAMC),Washington, DC, located in TRICARERegion 1 has been designated a Multi-Regional Specialized TreatmentServices Facility (STSF) for LiverTransplantation and a National STSF forRenal Transplantation. The applicationfor the STSF designation was submittedby WRAMC and approved by theAssistant Secretary of Defense (HealthAffairs). The Lead Agent for Region 1will ensure that the STSF maintains thequality and standards required forspecialized treatment services. Thedesignation covers the followingDiagnosis Related Groups:480—Liver Transplant

302—Kidney Transplant

Travel and lodging for the patientand, if stated to be medically necessaryby a referring physician, for one non-medical attendant, will be reimbursedby WRAMC in accordance with theprovisions of the Joint Federal TravelRegulation. DOD beneficiaries whoreside in the Multi-Regional STSCatchment Area for liver transplantwhich includes TRICARE Regions 1, 2,and 5 must be evaluated by WRAMCbefore receiving TRICARE/CHAMPUScost sharing for liver transplantationthat falls under Diagnosis Related Group480. DOD beneficiaries who reside inthe National STS Catchment Area mustbe evaluated by WRAMC beforereceiving TRICARE/CHAMPUS costsharing for kidney transplantation thatfalls under Diagnosis Related Group302. Evaluation in person is preferred,and travel and lodging expenses for theevaluation will be reimbursed as statedabove. It is possible to conduct theevaluation telephonically if the patientis unable to travel to WRAMC. If theprocedures cannot be performed atWRAMC, the facility will provide amedical necessity review prior toissuance of a Nonavailability Statement.

The STS Multi-Regional CatchmentArea for liver transplant coveringTRICARE Regions 1, 2, and 5 includesall zip codes within those TRICARERegions. The STS National CatchmentArea for kidney transplant is defined asthe continental United States (i.e., 48contiguous states and the District ofColumbia excluding Alaska andHawaii).

EFFECTIVE DATE: March 1, 1999.

FOR FURTHER INFORMATION CONTACT:Ms. Kendra Drew, WRAMC, at (202)782–4302, or Captain D. Michael Jones,TRICARE Region 1 Lead Agent Office, at(202) 782–1483; or Lieutenant ColonelTeresa Sommese, TRICAREManagement Activity, (703) 681–3628,extension 5029; or Mr. Tariq Shahid,TRICARE Management Activity, (303)676–3801.

SUPPLEMENTARY INFORMATION: In FR DOC93–27050, appearing in the FederalRegister on November 5, 1993 (Vol. 58,FR 58955–58964), the final rule on theSTS Program was published. Includedin the final rule was a provision that anotice of all military and civilian STSfacilities be published in the FederalRegister annually. This notice is issuedunder the authority of 10 U.S.C. 1105and 32 CFR 199.4(a)(10).


Dated: November 19, 1998.L.M. Bynum,Alternate OSD Federal Register LiaisonOfficer, Department of Defense.[FR Doc. 98–31419 Filed 11–24–98; 8:45 am]BILLING CODE 5000–04–M





SUMMARY: This notice is to adviseinterested parties that Keesler MedicalCenter, Keesler Air Force Base, Biloxi,Mississippi, has been designated aregional Specialized Treatment ServicesFacility (STSF) for TRICARE RegionFour. The application for this STSFdesignation was submitted by the LeadAgent for TRICARE Region Four andapproved by the Assistant Secretary ofDefense (Health Affairs). The LeadAgent will ensure that the STSFmaintains the quality and standardsrequired for specialized treatmentservices. This designation covers thefollowing Diagnostic Related Groups:001—Craniotomy, Age Greater than 17,

Except for Trauma003—Craniotomy, Age, 0–17004—Spinal Procedures049—Major Head and Neck Procedures191—Pancreas, Liver and Shunt

Procedures with CC209—Major Joint and Limb

Reattachment Procedures of LowerExtremity

286—Adrenal and Pituitary Procedures357—Uterine and Adnexa Procedures

for Ovarian or Adnexal Malignancy491—Major joint and Limb

Reattachment Procedures of UpperExtremity

Keesler Medical Center continues tobe an STS facility for Cardiac Surgery(DRG 104, DRG 105, DRG 106, DRG 107,DRG 108, DRG 110, DRG 111, DRG 112,DRG 124, DRG 125); ComplicatedObstetrics (DRG 370, DRG 372, DRG383); and Neonatal care (DRG 604, DRG607, DRG 611, DRG 612, DRG 613, DRG617, DRG 618, DRG 622, DRG 626, DRG636).

Travel and lodging for the patientand, if stated to be medically necessaryby a referring physician, for onenonmedical attendant, will bereimbursed by Keesler Medical Centerin accordance with the provisions of theJoint Federal Travel Regulation. DoD

beneficiaries who reside in the RegionalSTS Catchment Area for TRICARERegion Four must be evaluated byKeesler Medical Center before receivingTRICARE/CHAMPUS cost sharing forprocedures that fall under the aboveDiagnosis Related Groups. Evaluation inperson in preferred, and travel andlodging expenses for the evaluation willbe reimbursed as stated above. It ispossible to conduct the evaluationtelephonically if the patient is unable totravel to Keesler Medical Center. If theprocedure cannot be performed atKeesler Medical Center, the facility willprovide a medical necessity reviewprior to issuance of a NonavailabilityStatement.

The Regional STS Catchment Areacovering TRICARE Region four isdefined by zip codes in the DefenseMedical Information System STSFacilities Catchment Area Directory.The Catchment Area includes zip codeswithin TRICARE Region Four that fallwithin a 200 mile radius of KeeslerMedical Center.EFFECTIVE DATE: March 1, 1999.FOR FURTHER INFORMATION CONTACT:Captain David Johnson, Keesler MedicalCenter, (228) 377–7685; or Colonel JoeTaylor, Office of the Lead Agent,TRICARE Region Four, (228) 377–9643;or Lieutenant Colonel Teresa Sommese,TRICARE Management Activity, (703)681–3628, extension 5029; or Mr. TariqShahid, TRICARE Management Activity,(303) 676–3801.SUPPLEMENTARY INFORMATION: In FR DOC93–27050, appearing in the FederalRegister on November 5, 1993 (Vol. 58,FR 58955–58964), the final rule on theSTS Program was published. Includedin the final rule was a provision that anotice of all military and civilian STSfacilities be published in the FederalRegister annually. This notice is issuedunder the authority of 10 U.S.C. 1105and 32 CFR 199.4(a)(10).






SUMMARY: This notice is to adviseinterested parties that St. JosephHospital, 5665 Peachtree DunwoodyRoad NE, Atlanta, GA 30342; TheMedical University of South Carolina,171 Ashley Avenue, Charleston, SC29425; Tampa General Hospital, DavisIsland, P.O. Box 1289, Tampa FL 33601;St. Thomas Hospital, 3401 West EndAvenue, Suite 120, Nashville, TN37203; The University of Alabama atBirmingham, Transplant Center, 102Mortimer Jordan Hall, 1825 UniversityBoulevard, Birmingham, AL 35294–2010; Egleston Children’s Hospital, 1405Clifton Road NE, Atlanta, GA 30322–1101; and Jackson Memorial Hospital,1611 NW 12th Avenue, Miami, FL33136–1094, have been designated asRegional Specialized TreatmentServices Facilities (STSFs) for variousTransplant procedures. The applicationfor the STSF designation for thesefacilities was submitted by the HumanaMilitary Health Services, Inc. (HMHS)in coordination with the Lead Agentsfor TRICARE Regions 3 and 4 andapproved by the Assistant Secretary ofDefense (Health Affairs). The HMHSwill oversee that these STSFs maintainthe quality and standards required forspecialized treatment services. Thisdesignation covers the followingDiagnosis Related Groups:103—Heart Transplant (Medical

University of South Carolina,University of Alabama-Birmingham,Egleston Children’s Hospital,Jackson Memorial Hospital, St.Joseph Hospital, St. ThomasHospital, and Tampa GeneralHospital)

480—Liver Transplants (MedicalUniversity of South Carolina,University of Alabama-Birmingham,Egleston Children’s Hospital, andJackson Memorial Hospital)

495—Lung Transplant (University ofAlabama-Birmingham)

495—Heart-Lung Transplant (Universityof Alabama-Birmingham)

As part of the STS program withinTRICARE Regions 3 and 4, HMHS willassume responsibility for transportation,food and lodging for patients within aradius ranging from over 40 miles andup to 200 miles from designated STSTransplantation Centers. Under thisplan, HMHS will reimburse patients themileage allowance for travel, pay up tothe per diem allowed by the governmentfor food and lodging, or the actual cost,whichever is less, and will adjust perdiems and mileage allowancesaccording to government regulations.Whenever possible, HMHS will alsomake lodging arrangements for thepatients and one non-medical attendant.


DoD beneficiaries who reside in thecatchment areas of the designated STSfacilities must be evaluated by theappropriate facility prior to receivingTRICARE/CHAMPUS cost sharing forprocedures that fall under the aboveDiagnosis Related Groups. Evaluation inperson is preferred, and travel andlodging expenses for the evaluation willbe reimbursed as stated above. It may bepossible to conduct the evaluationtelephonically if the patient is unable totravel to the appropriate facility. If aneeded procedure cannot be performedby one of the above facilities, HMHSwill provide a medical necessity reviewprior to issuance of a NonavailabilityStatement or other similarauthorizations. The Catchment Area foreach transplant STS includes zip codeswithin TRICARE Regions 3 and 4 thatfall within a 200 mile radius of thefacility.EFFECTIVE DATE: March 1, 1999.FOR FURTHER INFORMATION CONTACT:Richard Mancini, Director of NetworkDevelopment, Humana MilitaryHealthcare Services, Inc., 500 WestMain St., Louisville, KY 40202,telephone (502) 580–1538; LCDR LeesaKent, Office of the Lead Agent,TRICARE Region 3, (706) 787–3016;Colonel Joe Taylor, Office of the LeadAgent, TRICARE Region 4, (228) 377–9643; Lt. Col. Teresa Sommese,TRICARE Management Activity, (703)681–3628, extension 5029; or Mr. TariqShahid, TRICARE Management Activity,(303) 676–3801.SUPPLEMENTARY INFORMATION: In FR DOC93–27050, appearing in the FederalRegister on November 5, 1993 (Vol. 58,FR 58955–58964), the final rule on theSTS Program was published. Includedin the final rule was a provision that anotice of all military and civilian STSfacilities be published in the FederalRegister annually. This notice is issuedunder the authority of 10 U.S.C. 1105and 32 CFR 199.4(a)(10).





AGENCY: Office of the Secretary, DoD.

ACTION: Notice.

SUMMARY: This notice is to adviseinterested parties that David GrantMedical Center (DGMC), Fairfield,California, has been designated aregional Specialized Treatment ServicesFacility (STSF) for Neurosurgery,General Surgery, CardiovascularSurgery, Orthopedic Surgery andGynecology for TRICARE Region 10.The application for this STSFdesignation was submitted by the LeadAgent for TRICARE Region 10 andapproved by the Assistant Secretary ofDefense (Health Affairs). The LeadAgent will ensure that the STSFmaintains the quality and standardsrequired for specialized treatmentservices. This designation covers thefollowing Diagnostic Related Groups:001–Craniotomy, Age Greater than 17,

Except for Trauma003–Craniotomy, Age 0–17004–Spinal Procedures049–Major Head and Neck Procedures110–Major Cardiovascular Procedures

with CC111–Major Cardiovascular Procedures

without CC191–Pancreas, Liver and Shunt

Procedures with CC209—Major Joint and Limb

Reattachment Procedures of LowerExtremity

286–Adrenal and Pituitary Procedures357–Uterine and Adnexa Procedures for

Ovarian or Adnexal Malignancy491–Major Joint and Limb Reattachment

Procedures of Upper ExtremityDoD beneficiaries who reside in the

DGMC STS Catchment Area forTRICARE Region 10 must be evaluatedby DGMC before receiving TRICARE/CHAMPUS cost sharing for theprocedures that fall under the aboveDiagnostic Related Groups. Travel andlodging for the patient and, if stated tobe medically necessary by a referringphysician, for one nonmedicalattendant, will be reimbursed by DGMCin accordance with the provisions of theJoint Federal Travel Regulation.Although evaluation in person ispreferred, it is possible to conduct theevaluation telephonically if the patientis unable to travel to DGMC. If theprocedure cannot be performed atDGMC, the facility will provide amedical necessity review prior toissuance of a Nonavailability Statement.The DGMC STS Catchment Areacovering TRICARE Region 10 is definedby zip codes in the Defense MedicalInformation System STS FacilitiesCatchment Area Directory. TheCatchment Area includes zip codeswithin TRICARE Region 10 in California

that fall within a 200 mile radius ofDGMC.EFFECTIVE DATE: March 1, 1999.FOR FURTHER INFORMATION CONTACT:Colonel Steve Jennings, DGMC, (707)423–7828; or Lieutenant Colonel PamelaCygan, Office of the Lead Agent,TRICARE Region 10, (707) 424–6533; orLieutenant Colonel Teresa Sommese,TRICARE Management Activity, (703)681–3628, extension 5029; or Mr. TariqShahid, TRICARE Management Activity,(303) 676–3801.SUPPLEMENTARY INFORMATION: In FR DOC93–27050, appearing in the FederalRegister on November 5, 1993 (Vol. 58,FR 58955–58964), the final rule on theSTS Program was published. Includedin the final rule was a provision that anotice of all military and civilian STSfacilities be published in the FederalRegister annually. This notice is issuedunder the authority of 10 U.S.C. 1105and 32 CFR 199.4(a)(10).






SUMMARY: This notice is to adviseinterested parties that Naval MedicalCenter, San Diego (NMCSD), has beendesignated a regional SpecializedTreatment Services Facility (STSF) forTRICARE Region Nine. The applicationfor this STSF designation was submittedby the Lead Agent for TRICARE RegionNine and approved by the AssistantSecretary of Defense (Health Affairs).The Lead Agent will ensure that theSTSF maintains the quality andstandards required for specializedtreatment services. This designationcovers the following Diagnostic RelatedGroups:001—Craniotomy, Age Greater than 17,

Except for Trauma003—Craniotomy, Age 0–17004—Spinal Procedures049—Major Head and Neck Procedures104—Cardiac Valve Procedure with

Cardiac Catheterization105—Cardiac Valve Procedure without

Cardiac Catheterization


106—Coronary Bypass with CardiacCatheterization

107—Coronary Bypass without CardiacCatheterization

110—Major Cardiovascular Procedureswith CC

111—Major Cardiovascular Procedureswithout CC

191—Pancreas, Liver and ShuntProcedures with CC

209—Major Joint and LimbReattachment Procedures of LowerExtremity

286—Adrenal and Pituitary Procedures357—Uterine and Adnexa Procedures

for Ovarian or Adnexal Malignancy491—Major Joint and Limb

Reattachment of Upper ExtremityDoD beneficiaries who reside in the

NMCSD STS Catchment Area forTRICARE Region Nine must beevaluated by NMCSD before receivingTRICARE/CHAMPUS cost sharing forthe procedures that fall under the aboveDiagnostic Related Groups. Travel andlodging for the patient and, if stated tobe medically necessary by a referringphysician, for one nonmedicalattendant, will be reimbursed byNMCSD in accordance with theprovisions of the Joint Federal TravelRegulation. Although evaluation inperson is preferred, it is possible toconduct the evaluation telephonically ifthe patient is unable to travel toNMCSD. If the procedure cannot beperformed at NMCSD, the TRICAREManaged Care Support Contractor forRegion Nine will provide a medicalnecessity review prior to issuance of aNonavailability Statement or othersimilar authorizations. The NMCSDCatchment Area covering TRICARERegion Nine is defined by zip codes inthe Defense Medical Information SystemSTS Facilities Catchment AreaDirectory. The Catchment Area includeszip codes within TRICARE Region Ninein California and Yuma, Arizona, thatfall within a 200 mile radius of NMCSD.EFFECTIVE DATE: March 1, 1999.FOR FURTHER INFORMATION CONTACT:LT Karen Leahy, NMCSD, (619) 532–5344; or Major Kelly Wolgast, Office ofthe Lead Agent, TRICARE Region Nine,(619) 532–6169; or Lt. Col. TeresaSommese, TRICARE ManagementActivity, (703) 681–3628, extension5029; or Mr. Tariq Shahid, TRICAREManagement Activity, (303) 676–3801.SUPPLEMENTARY INFORMATION: In FR DOC93–27050, appearing in the FederalRegister on November 5, 1993 (Vol. 58,FR 58955–58964), the final rule on theSTS Program was published. Includedin the final rule was a provision that anotice of all military and civilian STSfacilities be published in the Federal

Register annually. This notice is issuedunder the authority of 10 U.S.C. 1105and 32 CFR 199.4(a)(10).






SUMMARY: This notice is to adviseinterested parties that National NavalMedical Center (NNMC), Bethesda,Maryland, Walter Reed Army MedicalCenter (WRAMC), Washington, DC. andMalcolm Grow Medical Center (MGMC),Andrews Air Force Base, Maryland,have been designated as the componentsof a Regional Specialized TreatmentServices Facility (STSF) for GeneralSurgery and Orthopedic Surgery forTRICARE Region 1. NNMC andWRAMC have been designated as thecomponents of a Regional STSF forNeurosurgery, OtorhinolaryngologySurgery, and Gynecologic OncologySurgery for TRICARE Region 1. Theapplication for the STSF designation forthese facilities was submitted by theLead Agent for TRICARE Region 1 andapproved by the Assistant Secretary ofDefense (Health Affairs). The LeadAgent will ensure that these facilitiesmaintain the quality and standardsrequired for specialized treatmentservices. The designation covers thefollowing Diagnosis Related Groups:

General Surgery191—Pancreas, Liver and Shunt

Procedures with CC286—Adrenal and Pituitary Procedures

(adrenal only)

Orthopedic Surgery209—Major joint/limb reattachment

procedures lower extremity491—Major joint/limb reattachment

procedures upper extremity

Neurosurgery001—Craniotomy, age greater than 17

except for trauma003—Craniotomy, age 0–17004—Spinal procedures286—Adrenal and pituitary procedures

(pituitary only)

Otorhinolaryngology Surgery049—Major Head and Neck procedures

Gynecologic Oncology Surgery357—Uterine and Adnexa procedures

for Ovarian or Adnexal MalignancyTravel and lodging for the patient

and, if stated to be medically necessaryby a referring physician, for onenonmedical attendant, will bereimbursed by NNMC, WRAMC, orMGMC in accordance with theprovisions of the Joint Federal TravelRegulation. DOD beneficiaries whoreside in the STS catchment area forTRICARE Region 1 must be evaluated byNNMC, WRAMC, or MGMC beforereceiving TRICARE/CHAMPUS costsharing for General Surgery andOrthopedic Surgery procedures that fallunder the above Diagnosis RelatedGroups. These Region 1 beneficiariesmust be evaluated by NNMC orWRAMC before receiving TRICARE/CHAMPUS cost sharing forNeurosurgery, OtorhinolaryngologySurgery, and Gynecologic OncologySurgery procedures that fall under theabove Diagnosis Related Groups.Evaluation in person is preferred, andtravel and lodging expenses for theevaluation will be reimbursed as statedabove. It is possible to conduct theevaluation telephonically if the patientis unable to travel to NNMC, WRAMC,or MGMC. If the procedure cannot beperformed at NNMC, WRAMC, orMGMC, the facility will provide amedical necessity review prior toissuance of a Nonavailability Statement.

The STS Catchment Area coveringTRICARE Region 1 is defined by zipcodes in the Defense MedicalInformation System STS FacilitiesCatchment Area Directory. TheCatchment Area includes zip codeswithin TRICARE Region 1 in the statesof Delaware, Maryland, New Jersey,New York, Pennsylvania, Virginia, andthe District of Columbia that fall withina 200 mile radius of the midpoint of aline between WRAMC and NNMC.EFFECTIVE DATE: March 1, 1999.FOR FURTHER INFORMATION CONTACT:CDR W. Isley (NNMC) at (301) 295–6195, Ms. Kendra Drew (WRAMC) at(202) 782–4302, Capt. R. Warwar(MGMC) at (301) 981–2475, CAPT D.Michael Jones (TRICARE Region 1 LeadAgent Office) at (202) 782–1483, Lt. Col.Teresa Sommese, (TRICAREManagement Activity) at (703) 681–3628, extension 5029; or Mr. TariqShahid, (TRICARE ManagementActivity) at (303) 676–3801.SUPPLEMENTARY INFORMATION: In FR DOC93–27050, appearing in the FederalRegister on November 5, 1993 (Vol. 58,


FR 58955–58964), the final rule on theSTS Program was published. Includedin the final rule was a provision that anotice of all military and civilian STSfacilities by published in the FederalRegister annually. This notice is issuedunder the authority of 10 U.S.C. 1105and 32 CFR 199.4(a)(10).


L.M. Bynum,Alternate OSD Federal Register LiaisonOfficer, Department of Defense.[FR Doc. 98–31424 Filed 11–24–98; 8:45 am]

BILLING CODE 5000–04–M



Renewal of the TelecommunicationsService Priority System OversightCommittee (TSPOC)

ACTION: Notice.

SUMMARY: This TSPOC has beenrenewed in consonance with the publicinterest, and in accordance with theprovisions of Pub. L. 92–463, the‘‘Federal Advisory Committee Act.’’

The TSPOC provides advice andrecommendations to the Secretary ofDefense regarding the priority treatmentof national security and emergencypreparedness telecommunicationsservices. Functions include evaluatingthe currency of policies, procedures andsystem documentation requirements,and assessing the adequacy of thesystem in the light of technologicaladvances.

The TSPOC will continue to becomposed of 18 members, both federal,state and local government, and non-government individuals, who areexperts in telecommunications services.Efforts will be made to ensure that thereis a fairly balanced membership interms of the functions to be performedand the interest groups represented.

For further information, contact: Ms.Debbie Bea, National CommunicationsSystem, telephone: 703–607–4933.


L.M. Bynum,Alternate OSD Federal Register LiaisonOfficer, Department of Defense.[FR Doc. 98–31415 Filed 11–24–98; 8:45 am]




Defense Intelligence Agency, Scienceand Technology Advisory BoardClosed Panel Meeting

AGENCY: Department of Defense, DefenseIntelligence Agency.ACTION: Notice.

SUMMARY: Pursuant to the provisions ofSubsection (d) of Section 10 of PublicLaw 92–463, as amended by Section 5of Public Law 94–409, notice is herebygiven that a closed meeting of the DIAScience and Technology AdvisoryBoard has been scheduled as follows:DATES: 2 December 1998 (0800 am to1600 pm).ADDRESSES: The Defense IntelligenceAgency, 200 MacDill BLVD,Washington, D.C. 20340–5100.FOR FURTHER INFORMATION CONTACT: MajDonald R. Culp, Jr., USAF, ExecutiveSecretary, DIA Science and TechnologyAdvisory Board, Washington, D.C.20340–1328 (202) 231–4930.SUPPLEMENTARY INFORMATION: The entiremeeting is devoted to the discussion ofclassified information as defined inSection 552b(c)(I), Title 5 of the U.S.Code, and therefore will be closed to thepublic. The Board will receive briefingson and discuss several current criticalintelligence issues and advise theDirector, DIA, on related scientific andtechnical matters.




Defense Science Board Task Force onGlobalization and Security

ACTION: Notice of advisory committeemeetings.

SUMMARY: The Defense Science BoardTask Force on Globalization andSecurity will meet in closed session onDecember 17–18, 1998, January 21–22,February 18–19, March 11–12, andApril 7–8, 1999 at Strategic AnalysisInc. (SAI), 4001 N. Fairfax Drive,Arlington, Virginia.

The mission of the Defense ScienceBoard is to advise the Secretary ofDefense through the Under Secretary ofDefense for Acquisition and Technology

on scientific and technical matters asthey affect the perceived needs of theDepartment of Defense. At thesemeetings the Task Force will developadvice to provide to the DepSecDef andUSD (A&T) regarding transformations tothe industrial base serving the DoD—assessing the significant benefits to theDepartment and the risks that ouradversaries will be able to learn aboutour technology.

In accordance with Section 10(d) ofthe Federal Advisory Committee Act,Public Law No. 92–463, as amended (5U.S.C. App. II (1994)), it has beendetermined that these DSB Task Forcemeetings concern matters listed in 5U.S.C. 552b(c)(1) (1994), and that,accordingly, these meetings will beclosed to the public.


DEPARTMENT OF ENERGY

[FE Docket No. 98–76–NG]

Office of Fossil Energy; ChevronU.S.A. Inc.: Order Granting Long-TermAuthorization to Import Natural GasFrom Canada

AGENCY: Office of Fossil Energy, DOE.ACTION: Notice of order.

SUMMARY: The Office of Fossil Energy(FE) of the Department of Energy givesnotice that it has issued an ordergranting Chevron U.S.A. Inc. (Chevron)long-term authorization to import fromCanada up to 1,500 thousand cubic feetper day of natural gas from November 1,1997, through October 31, 2001. Thisnatural gas may be imported fromCanada at the pipeline connection ofTransCanada PipeLines Limited andNorth Country Gas Pipeline nearChamplain, New York (Napierville,Quebec) at the United States/Canadaborder.

This order may be found on the FEweb site at http://www.fe.doe.gov andon our electronic bulletin board at (202)586–7853. It is also available forinspection and copying in the Office ofNatural Gas & Petroleum Import andExport Activities docket room, 3E–042,Forrestal Building, 1000 IndependenceAvenue, S.W., Washington, D.C., 20585,(202) 586–9478. The docket room isopen between the hours of 8:00 a.m. and4:30 p.m., Monday through Friday,except Federal holidays.


Issued in Washington, DC, November 16,1998.John W. Glynn,Manager, Natural Gas Regulation, Office ofNatural Gas & Petroleum Import and ExportActivities, Office of Fossil Energy.[FR Doc. 98–31525 Filed 11–24–98; 8:45 am]BILLING CODE 6450–01–P


Federal Energy RegulatoryCommission

[Docket No. RP99–61–001]

ANR Pipeline Company; Notice ofProposed Changes in FERC Gas Tariff

November 19, 1998.Take notice that on November 16,

1998, ANR Pipeline Company (ANR)tendered for filing as part of its FERCGas Tariff, Second Revised Volume No.1, Second Revised Sheet No. 111A, to beeffective November 2, 1998.

ANR states that this filing is made incompliance with the Commission’sOrder dated October 20, 1998 in thecaptioned proceeding.

ANR states that copies of the filinghave been mailed to all affectedcustomers and state regulatorycommissions.

Any person desiring to protest thisfiling should file a protest with theFederal Energy Regulatory Commission,888 First Street, N.E., Washington, D.C.20426, in accordance with Section385.211 of the Commission’s Rules andRegulations. All such protests must befiled as provided in Section 154.210 ofthe Commission’s Regulations. Protestswill be considered by the Commissionin determining the appropriate action tobe taken, but will not serve to makeprotestants parties to the proceedings.Copies of this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31467 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–M




Canyon Creek Compression Company;Notice of Compliance Filing


1998, Canyon Creek Compression

Company (Canyon) tendered for filing aspart of its FERC Gas Tariff, ThirdRevised Volume No. 1, certain tariffsheets to be effective November 2, 1998.

Canyon states that these tariff sheetswere filed in compliance with theCommission’s order issued October 30,1998, in Docket No. RP99–64–000.

Canyon requests waiver of theCommission’s Regulations to the extentnecessary to permit the tendered tariffsheets to become effective November 2,1998, pursuant to Order No. 587–H.

Canyon states that copies of the filingare being mailed to Canyon’s customersand interested state regulatory agenciesand all parties set out on the officialservice list in Docket No. RP99–64.

Any person desiring to protest thisfiling should file a protest with theFederal Energy Regulatory Commission,888 First Street, NE., Washington, D.C.20426, in accordance with Section385.211 of the Commission’s Rules andRegulations. All such protests must befiled as provided in Section 154.210 ofthe Commission’s Regulations. Protestswill be considered by the Commissionin determining the appropriate action tobe taken, but will not serve to makeprotestants parties to the proceedings.Copies of this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31468 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–M



[Docket No. TM99–2–32–000]

Colorado Interstate Gas Company;Notice of GRI Filing

November 19, 1998.Take notice on November 16, 1998,

Colorado Interstate Gas Company (CIG),tendered for filing FERC Gas Tariff, FirstRevised Volume No. 1, Twelfth RevisedSheet No. 10 and Twenty-Fifth RevisedSheet No. 11. CIG requests that theproposed tariff sheets be made effectiveon January 1, 1999.

CIG states the purpose of this filing isto permit CIG to collect Gas ResearchInstitute (GRI) charges associated withits transportation pursuant to theCommission order issued September 29,1998 in Docket No. RP98–235–000.

CIG states that copies of the filingwere served upon the company’sjurisdictional firm customers andinterested state commissions.

Any person desiring to be heard or toprotest said filing should file a motionto intervene or a protest with theFederal Energy Regulatory Commission,888 First Street, N.E., Washington, D.C.20426, in accordance with Sections385.214 or 385.211 of the Commission’sRules and Regulations. All such motionsor protests must be filed in accordancewith Section 154.210 of theCommission’s Regulations. Protests willbe considered by the Commission indetermining the appropriate action to betaken, but will not serve to makeprotestants parties to the proceedings.Any person wishing to become a partymust file a motion to intervene. Copiesof this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31476 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–M




Columbia Gas TransmissionCorporation; Notice of ComplianceFiling


1998, Columbia Gas TransmissionCorporation (Columbia) tendered forfiling to become part its FERC GasTariff, Second Revised Volume No. 1,the following revised tariff sheet, with aproposed effective date of November 16,1998:Substitute Original Sheet No. 28B

Columbian states that on October 14,1998, it filed sheets in Docket No.RP99–89–000, proposing to initiateinterruptible parking and lendingservices under new Rate Schedule PAL.On November 12, 1998, the Commissionaccepted the filed sheets subject toColumbia filing revised tariff sheets asdiscussed in the body of the order.Specifically, Columbia was required tofile revised sheets to provide for themaximum Rate Schedule PAL rate totrack seasonal fluctuations in themaximum ITS rate. The instant filing isin compliance with the order, whereinColumbia has revised Sheet No. 28B byadding a summer maximum RateSchedule PAL rate equivalent to themaximum summer base ITS rate of14.08 cents.


Columbia states that copies of itsfiling have been mailed to all firmcustomers, interruptible customers,affected state commissions and partieson the official service list in thisproceeding.

Any person desiring to protest thisfiling should file a protest with theFederal Energy Regulatory Commission,888 First Street, NE., Washington, DC20426, in accordance with Section385.211 of the Commission’s Rules andRegulations. All such protests must befiled as provided in Section 154.210 ofthe Commission’s Regulations. Protestswill be considered by the Commissionin determining the appropriate action tobe taken, but will not serve to makeprotestants parties to the proceedings.Copies of this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31473 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–M




Dynegy Midstream Pipeline, Inc.;Notice of Compliance Filing


1998, Dynegy Midstream Pipeline, Inc.(DMP), tendered for filing as part of itsFERC Gas Tariff, First Revised VolumeNo. 1, the following tariff sheets, withan effective date of February 1, 1999:Substitute First Revised Sheet Nos. 64, 65, 68and 70

DMP states that it is submitting thesetariff sheets to comply with the October30, 1998 order issued in the abovereference proceeding. DMP proposes aFebruary 1, 1999 effective date for thesesheets to correspond to the effectivedate of the other tariff provisionsimplementing the intraday nominationand scheduling GISB standards.

Any person desiring to protest thisfiling should file a protest with theFederal Energy Regulatory Commission,888 First Street, N.E., Washington, D.C.20426, in accordance with Section385.211 of the Commission’s Rules andRegulations. All such protest must befiled as provided in Section 154.210 ofthe Commission’s Regulations. Protestswill be considered by the Commissionin determining the appropriate action tobe taken, but will not serve to make

protestants parties to the proceedings.Copies of this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31456 Filed 11–24–98; 8:45 am]





El Paso Natural Gas Company; Noticeof Compliance Filing

November 19, 1998.

Take notice that on November 16,1998, El Paso Natural Gas Company (ElPaso) tendered for filing to become partof its FERC Gas Tariff, Second RevisedVolume No. 1–A, the following tariffsheets, with an effective date ofNovember 1, 1998:

Sub Fourth Revised Sheet No. 202AFifth Revised Sheet No. 210Sub Third Revised Sheet No. 210.01Substitute Third Revised Sheet No. 211Substitute First Revised Sheet No. 211A

El Paso states that the filing is beingmade in compliance with theCommission’s order issued October 30,1998 at Docket No. RM99–41–000.

El Paso states that the tariff sheets arebeing filed to revise intra-day tariffprovisions in compliance with theCommission’s order in this proceeding.

Any person desiring to protest thisfiling should file a protest with theFederal Energy Regulatory Commission,888 First Street, N.E., Washington, D.C.20426, in accordance with Section385.211 of the Commission’s Rules andRegulations. All such protests must befiled as provided in Section 154.210 ofthe Commission’s Regulations. Protestswill be considered by the Commissionin determining the appropriate action tobe taken, but will not serve to makeprotestants parties to the proceedings.Copies of this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31462 Filed 11–24–98; 8:45 am]





Granite State Gas Transmission, Inc.;Notice of Proposed Changes in FERCGas Tariff


1998, Granite State Gas Transmission,Inc. (Granite State), tendered for filingwith the Commission the original andrevised tariff sheets listed below in itsFERC Gas Tariff, Third Revised VolumeNo. 1, for effectiveness on November 2,1998:Second Revised Sheet No. 144Second Revised Sheet No. 201Original Sheet No. 201ASecond Revised Sheet No. 202Second Revised Sheet No. 272Second Revised Sheet No. 273Second Revised Sheet No. 274Original Sheet No. 274AOriginal Sheet No. 274BSecond Revised Sheet No. 275Original Sheet No. 275ASecond Revised Sheet No. 276Original Sheet No. 276AEighth Revised Sheet No. 289

Granite State states that on October 8,1998, it filed certain revised tariff sheetspurporting to comply with therequirements of the Commission’s OrderNo. 587–H. Granite State’s filing wasrejected in a Letter Order issued October28, 1998 which directed Granite State torefile tariff sheets correctly conformingwith Gas Industry Standards BoardVersion 1.3 in the matter of intra-daynomination changes and other relatednomination procedures. According toGranite State, the instant filing is incompliance with the directives in theCommission’s Letter Order of October28, 1998 respecting the prior filing.

Granite State states that copies of itsfiling have been served on its firm andinterruptible customers and on theregulatory agencies of the states ofMaine, Massachusetts and NewHampshire.

Any person desiring to protest thisfiling should file a protest with theFederal Energy Regulatory Commission,888 First Street, NE., Washington, DC20426, in accordance with Section385.211 of the Commission’s Rules andRegulations. All such protests must befiled as provided in Section 154.210 ofthe Commission’s Regulations. Protestswill be considered by the Commissionin determining the appropriate action tobe taken, but will not serve to makeprotestants parties to the proceedings.Copies of this filing are on file with the


Commission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31472 Filed 11–24–98; 8:45 am]




[Project No. 2634–007]

Great Northern Paper, Inc.; NoticeEstablishing Procedures forRelicensing and a Deadline forSubmission of Final Amendments

November 19, 1998.The license for the Storage Project,

FERC No. 2634, located on Ragged

Stream, Caucomgomoc Stream, and theWest Branch and South Branch of thePenobscot River in Somerset andPiscataquis Counties, Maine, will expireon April 30, 2000. On April 28, 1998,an application for new major licensewas filed. The following is anapproximate procedural schedule thatwill be followed in processing theapplication:

Date Action

November 30, 1998 ........................................... Commission notifies applicant that its application has been accepted and specifies the need foradditional information and due date.

November 30, 1998 ........................................... Commission issues public notice of the accepted application establishing dates for filing mo-tions to intervene and protests.

March 31, 1999 .................................................. Commission’s deadline for applicant for filing a final amendment, if any, to its application.September 30, 1999 .......................................... Commission notifies all parties and agencies that the application is ready for environmental

analysis.

Upon receipt of all additionalinformation and the information filed inresponse to the public notices of theapplication, the Commission willevaluate the application in accordancewith applicable statutory requirementsand take appropriate action on theapplication.

Any questions concerning this noticeshould be directed to William Diehl,P.E. at (202) 219–2813, or his e-mailaddress, [email protected] A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31452 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–M




Kentucky West Virginia Gas Company,L.L.C.; Notice of Proposed Changes inFERC Gas Tariff


1998, Kentucky West Virginia GasCompany, L.L.C. (Kentucky West)tendered for filing as part of its FERCGas Tariff, Third Revised Volume No. 1,the following revised tariff sheets tobecome effective January 1, 1999:First Revised Sheet No. 162AOriginal Sheet No. 162B

Kentucky West states that the purposeof this filing is to comply with theJanuary 21, 1998, ‘‘Stipulation and

Agreement Concerning Gas ResearchInstitute (GRI) Funding’’ which theCommission approved on April 29, 1998in Docket No. RP97–149–003, et al. (83FERC ¶61,093). Specifically, a voluntarycontribution mechanism provision hasbeen added to Section 28 of KentuckyWest’s General Terms and Conditions toallow customers to make voluntarycontributions to GRI in such amountsand for such GRI projects as specified bythe customers. Kentucky West’s filing isconsistent with the Stipulation andAgreement, in that the voluntarycontribution mechanism is not apipeline rate, rate provision, or term orcondition of service.

Any person desiring to protest thisfiling should file a protest with theFederal Energy Regulatory Commission,888 First Street, NE., Washington, DC20426, in accordance with Section385.211 of the Commission’s Rules andRegulations. All such protests must befiled as provided in Section 154.210 ofthe Commission’s Regulations. Protestswill be considered by the Commissionin determining the appropriate action tobe taken, but will not serve to makeprotestants parties to the proceedings.Copies of this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31474 Filed 11–24–98; 8:45 am]




[Docket No. TM99–1–46–000]

Kentucky West Virginia Gas Company,L.L.C.; Notice of Proposed Changes inFERC Gas Tariff


1998, Kentucky West Virginia GasCompany, L.L.C. (Kentucky West)tendered for filing as part of its FERCGas Tariff, Third Revised Volume No. 1,the following revised tariff sheets tobecome effective January 1, 1999:Fifth Revised Sheet No. 4Fifth Revised Sheet No. 5Third Revised Sheet No. 162

Kentucky West states that the purposeof this filing is to comply with the‘‘Order Approving the Gas ResearchInstitute’s 1999 Research, Developmentand Demonstration Program and 1999–2003 Five Year Plan’’ issued onSeptember 29, 1998 in Docket No.RP98–235–000. The Commissionauthorized pipeline companies tocollect the Gas Research Institute (GRI)funding unit from their customers. The1999 GRI unit surcharge approved bythe Commission is (1) $0.2300 perdekatherm (Dth) per month demandsurcharge for high load factorcustomers, (2) $0.1420 per Dth monthdemand surcharge for low load factorcustomers, (3) $0.0075 per Dthcommodity/usage surcharge and (4)$0.0180 per Dth for a small customer


surcharge. Also, on Sheet No. 162 thelisting of the GRI charges were changedto a tariff sheet designation.

Any person desiring to be heard or toprotest said filing should file a motionto intervene or a protest with theFederal Energy Regulatory Commission,888 First Street, N.E., Washington, D.C.20426, in accordance with Sections385.214 or 385.211 of the Commission’sRules and Regulations. All such motionsor protests must be filed in accordancewith Section 154.210 of theCommission’s Regulations. Protests willbe considered by the Commission indetermining the appropriate action to betaken, but will not serve to makeprotestants parties to the proceedings.Any person wishing to become a partymust file a motion to intervene. Copiesof this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31475 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–M




Kern River Gas Transmission; Noticeof Compliance Filing


1998, Kern River Gas TransmissionCompany (Kern River) tendered forfiling as part of its FERC Gas Tariff, FirstRevised Volume No. 1, the followingtariff sheets to become effectiveNovember 2, 1998:Substitute Second Revised Sheet No. 90Substitute Fifth Revised Sheet No. 94Substitute Third Revised Sheet No. 94–ASubstitute Second Revised Sheet No. 96Substitute Second Revised Sheet No. 97

Kern River states that the purpose ofthis filing is to comply with theCommission’s letter order dated October30, 1998, in Docket No. RP99–65–000.The letter order was issued in responseto Kern River’s October 2, 1998 filingsubmitted in compliance with Order No.587–H.

Kern River states that a copy of thisfiling has been served each persondesignated on the official service listcompiled by the Secretary in thisproceeding.

Any person desiring to protest thisfiling should file a protest with theFederal Energy Regulatory Commission,

888 First Street, N.E., Washington, D.C.20426, in accordance with Section385.211 of the Commission’s Rules andRegulations. All such protests must befiled as provided in Section 154.210 ofthe Commission’s Regulations. Protestswill be considered by the Commissionin determining the appropriate action tobe taken, but will not serve to makeprotestants parties to the proceedings.Copies of this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31469 Filed 11–24–98; 8:45 am]





Mississippi River TransmissionCorporation; Notice of ProposedChanges in FERC Gas Tariff

November 19, 1998.

Take notice that on November 16,1998, Mississippi River TransmissionCorporation (MRT) tendered for filing aspart of its FERC Gas Tariff, ThirdRevised Volume No. 1, the revised tariffsheets listed on Appendix A to thefiling. These tariff sheets are proposedto be effective on November 1, 1998.

MRT states that the purpose of thisfiling is to comply with theCommissions Letter Order datedOctober 30, 1998 in the above-referenced docket.

Any person desiring to protest thisfiling should file a protest with theFederal Energy Regulatory Commission,888 First Street, N.E., Washington, D.C.20426, in accordance with Section385.211 of the Commission’s Rules andRegulations. All such protests must befiled as provided in Section 154.210 ofthe Commission’s Regulations. Protestswill be considered by the Commissionin determining the appropriate action tobe taken, but will not serve to makeprotestants parties to the proceedings.Copies of this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31470 Filed 11–24–98; 8:45 am]





Mojave Pipeline Company; Notice ofCompliance Filing


1998, Mojave Pipeline Company(Mojave) tendered for filing as part of itsFERC Gas Tariff, Second RevisedVolume No. 1, the following tariffsheets, with an effective date ofNovember 1, 1998:Substitute Second Revised Sheet No. 202First Revised Sheet No. 218Substitute First Revised Sheet No. 219Original Sheet No. 219AOriginal Sheet No. 219B

Mojave states that the filing is beingmade in compliance with theCommission’s order issued October 30,1998 at Docket No. RP99–40–000.

Mojave states that the tariff sheets arebeing filed to revise intra-day tariffprovisions in compliance with theCommission’s order in this proceeding.





Natural Gas Pipeline Company ofAmerica; Notice of Compliance Filing


1998, Natural Gas Pipeline Company ofAmerica (Natural) tendered for filing aspart of its FERC Gas Tariff, SixthRevised Volume No. 1, certain tariffsheets to be effective November 2, 1998.


Natural states that these tariff sheetswere filed in compliance with theCommission’s order issued October 30,1998, in Docket No. RP99–55–000.

Natural requests waiver of theCommission’s Regulations to the extentnecessary to permit the tendered tariffsheets to become effective November 2,1998, pursuant to Order No. 587–H.

Natural states that copies of the filingare being mailed to Natural’s customersand interested state regulatory agenciesand all parties set out on the officialservice list in Docket No. RP99–55.





NorAm Gas Transmission Company;Notice of Proposed Changes in FERCGas Tariff


1998, NorAm Gas TransmissionCompany (NGT) tendered for filing aspart of its FERC Gas Tariff, FourthRevised Volume No. 1, revised tariffsheets listed on Appendix A to thisfiling. These tariff sheets are proposedto be effective on November 1, 1998.

NGT states that the purpose of thisfiling is to comply with theCommissions Letter Order in the above-referenced docket.

Any person desiring to protest thisfiling should file a protest with theFederal Energy Regulatory Commission,888 First Street, N.E., Washington, D.C.20426, in accordance with Section385.211 of the Commission’s Rules andRegulations. All such protests must befiled as provided in Section 154.210 ofthe Commission’s Regulations. Protests

will be considered by the Commissionin determining the appropriate action tobe taken, but will not serve to makeprotestants parties to the proceedings.Copies of this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31471 Filed 11–24–98; 8:45 am]





Northern Border Pipeline Company;Notice of Tariff Filing

November 19, 1998.

Take notice that on November 16,1998, Northern Border PipelineCompany (Northern Border) tenderedfor filing to become part of its FERC GasTariff, First Revised Volume No. 1, thefollowing tariff sheets to be effectiveDecember 15, 1998:

Substitute Fourth Revised Sheet Number 246Substitute First Revised Sheet Number 248JFourth Revised Sheet Number 249Fourth Revised Sheet Number 257

Northern Border states that the filingis in compliance with the Commission’sorder, issued October 30, 1998, in theabove-reference docket. Northern Borderfurther states that the October 30, 1998order required Northern Border toresubmit the above-referenced revisedtariff sheets to include specific GasIndustry Standards Board (GISB)business standard language or toincorporate the entire GISB definitionby reference and reflect certainpagination changes.

Any person desiring to protest thisfiling should file a protest with theFederal Energy Regulatory Commission,888 First Street, N.E., Washington, D.C.20426, in accordance with § 385.211 ofthe Commission’s Rules andRegulations. All such protest must befiled as provided in § 154.210 of theCommission’s Regulations. Protests willbe considered by the Commission indetermining the appropriate action to betaken, but will not serve to makeprotestants parties to the proceedings.Copies of this filing are on file with theCommission and are available for public

inspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31454 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–M



[Docket No. CP99–75–000]

Northern Natural Gas Company; Noticeof Application


1998, Northern Natural Gas Company(Northern), 1111 South 103rd Street,Omaha, Nebraska 68124, filed anapplication pursuant to Section 7(b) ofthe Natural Gas Act (NGA) and theCommission’s Regulations thereunder,requesting authority for Northern: (1) Toabandon, by certain pipeline facilitieswith appurtenances, (2) abandon, byrelocation in some instances, certainsmall volume meter stations withappurtenances, and (3) abandon certainservices rendered thereby, locatedprimarily within the State of Kansas, aswell as some within the States of Iowa,Nebraska, and Texas, all as more fullyset forth in the application on file withthe Commission and open to publicinspection.

Northern states that the subjectfacilities are primarily old 1930’svintage pipeline which wereconstructed using techniques andequipment in use at that time, includingacetylene welding and Dressercouplings. Northern asserts that thesubject facilities have experiencedcorrosion and leakage and that thepipeline segments have either beeninactive or operating at a reducedpressure. Northern further asserts thatcurrent transportation requirements canbe served by its existing B, C, D, and E-lines, thereby making abandonmentrather than repair or replacement moreeconomically and operationally feasible.Northern states that the subject proposalwill not adversely effect capacity sincecurrent flows can be diverted to itsexisting lines.

Any person desiring to be heard or tomake any protest with reference to saidapplication should on or beforeDecember 10, 1998, file with the FederalEnergy Regulatory Commission, 888First Street, NE., Washington, DC 20426,a petition to intervene or a protest inaccordance with the requirements of theCommission’s Rules of Practice andProcedure (18 CFR 385.214 or 385.211)


and Regulations under the Natural GasAct (18 CFR 157.10). All protests filedwith the Commission will be consideredby it in determining the appropriateaction to be taken but will not serve tomake the protestants parties to theproceeding. Any person wishing tobecome a party to a proceeding or toparticipate as a party in any hearingtherein must file a petition to intervenein accordance with the Commission’sRules.

Take further notice that, pursuant tothe authority contained in and subject tothe jurisdiction conferred upon theFederal Energy Regulatory Commissionby Sections 7 and 15 of the Natural GasAct and the Commission’s Rules ofPractice and Procedure, a hearing willbe held without further notice before theCommission or its designee on thisapplication if no petition to intervene isfiled within the time required herein, ifthe Commission on its own review ofthe matter finds that a grant of thecertificate is required by the publicconvenience and necessity. If a petitionfor leave is timely filed, or if theCommission on its own motion believesthat a formal hearing is required, furthernotice of such hearing will be dulygiven.

Under the procedure provided for,unless otherwise advised, it will beunnecessary for Northern to appear orbe represented at the hearing.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31451 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–M




Northern Natural Gas Company; Noticeof Compliance Filing


1998, Northern Natural Gas Company(Northern), submits this filing incompliance with the Commission’sOctober 30, 1998 Letter Order.

Northern further states that copies ofthe filing have been mailed to each ofits customers and interested StateCommissions.

Any person desiring to protest thisfiling should file a protest with theFederal Energy Regulatory Commission,888 First Street, NE., Washington, DC20426, in accordance with Section385.211 of the Commission’s Rules andRegulations. All such protests must befiled as provided in Section 154.210 of

the Commission’s Regulations. Protestswill be considered by the Commissionin determining the appropriate action tobe taken, but will not serve to makeprotestants parties to the proceedings.Copies of this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31458 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–M




Northwest Pipeline Corporation; Noticeof Request Under BlanketAuthorization


1998, Northwest Pipeline Corporation(Northwest), 295 Chipeta Way, Salt LakeCity, Utah 84158, filed in Docket No.CP99–70–000, a request pursuant toSections 157.205 and 157.216 of theCommission’s Regulations under theNatural Gas Act (18 CFR 157.205 and157.212) for authorization to abandonby removal its Green Circle Farms andLambert Farms Meter Stations in Bentonand Yakima Counties, Washington,respectively, under Northwest’s blanketcertificate issued in Docket No. CP82–433–000, pursuant to Section 7(c) of theNatural Gas Act, all as more fully setforth in the request which is on file withthe Commission and open to publicinspection.

Northwest proposes to abandon theGreen Circle Farms and Lambert FarmsMeter Stations because no deliverieshave been made in many years to eithermeter station. By letter dated September8, 1998, Cascade Natural GasCorporation, the local distributioncompany downstream of the meterstations, confirmed that it does notobject to Northwest abandoning andremoving these two meter stations.

Northwest states the cost of removingthe meter stations is estimated to beapproximately $6,400. Northwest relatesthat all removed facilities will bescrapped. Northwest states it has sent acopy of this prior notice request to theWashington Utilities and TransportationCommission.

Any person or the Commission’s staffmay, within 45 days after issuance ofthe instant notice by the Commission,filed with the Federal Energy RegulatoryCommission, 888 First Street, N.E.,

Washington D.C. 20426, pursuant toRule 214 of the Commission’sProcedural Rules (18 CFR 385.214) amotion to intervene or notice ofintervention and pursuant to Section157.205 of the Regulations under theNatural Gas Act (18 CFR 157.205) aprotest to the request. If no protest isfiled within the time allowed therefor,the proposed activity shall be deemed tobe authorized effective the day after thetime allowed for filing a protest. If aprotest is filed and not withdrawnwithin 30 days after the time allowedfor filing a protest, the instant requestshall be treated as an application forauthorization pursuant to Section 7 ofthe Natural Gas Act.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31448 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–M




Northwest Pipeline Corporation; Noticeof Compliance Filing


1998, Northwest Pipeline Corporation(Northwest) tendered for filing as part ofits FERC Gas Tariff, Third RevisedVolume No. 1, the following tariffsheets, to become effective November 2,1998:Substitute First Revised Sheet No. 225–A.01Substitute Original Sheet No. 225–GSubstitute Fourth Revised Sheet No. 228

Northwest states that the purpose ofthis filing is comply with theCommission’s Order Accepting TariffSheets, Subject to Conditions, issuedOctober 30, 1998 in Docket No. RP99–25–000 (Order). The Order was issuedin response to Northwest’s October 1,1998 filing submitted in compliancewith Order No. 587–H.

Northwest states that a copy of thisfiling has been served upon each persondesignated on the official service listcompiled by the Secretary in thisproceeding.

Any person desiring to protest thisfiling should file a protest with theFederal Energy Regulatory Commission,888 First Street, NE., Washington, DC20426, in accordance with Section385.211 of the Commission’s Rules andRegulations. All such protests must befiled as provided in Section 154.210 ofthe Commission’s Regulations. Protestswill be considered by the Commission


in determining the appropriate action tobe taken, but will not serve to makeprotestants parties to the proceedings.Copies of this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31457 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–M




PG & E Gas Transmission, NorthwestCorporation; Notice of ComplianceFiling


1998, PG&E Gas Transmission,Northwest Corporation (PG&E GT–NW)tendered for filing as part of its FERCGas Tariff, First Revised Volume No. 1–A, the following tariff sheets, with aneffective date of November 2, 1998:Third Revised Sheet No. 81A.01Substitute Original Sheet No. 81A.01aSubstitute Original Sheet No. 81A.01bThird Revised Sheet No. 81A.02Substitute Third Revised Sheet No. 84A

PG&E GT–NW states that these tariffsheets are being filed in compliancewith the Commission’s October 30, 1998letter order in this docket.

PG&E GT–NW further states that acopy of this filing has been served uponPG&E GT–NW’s jurisdictionalcustomers, interested state regulatoryagencies and all parties on theCommission’s official service list forthis proceeding.





Questar Pipeline Company; Notice ofRequest Under Blanket Authorization


1998, Questar Pipeline Company(Questar), 180 East 100 South, P.O. Box45360, Salt Lake City, Utah 84145–0360,filed in Docket No. CP99–73–000 arequest pursuant to Sections 157.205and 157.216 of the Commission’sRegulations under the Natural Gas Act(18 CFR 157.205, 157.216) forauthorization to abandon itsJurisdictional Lateral (J.L.) No. 61,located in Summit County, Utah, by saleto JN Exploration and ProductionCompany (JN), an independentproducer, under Questar’s blanketcertificate issued in Docket No. CP82–491–000, pursuant to Section 7(c) of theNatural Gas Act, all as more fully setforth in the request that is on file withthe Commission and open to publicinspection.

Questar proposes to abandon J.L. No.61 by sale to JN, which is located inSections 25 and 26, Township 3 North,Range 7 East, Summit County, Utah.Questar states that J.L. No. 61 comprises630 feet of 3.5-inch O.D. lateral and4,976 feet of 4.5-inch O.D. lateral (a totalof 1.06 miles of 3.5-inch and 4.5-inchdiameter lateral) and includes a 10-inchdrip assembly and a 400 bbl. liquid tanklocated near the main-line junction.Questar also proposes to abandon to JNthe private land-owner rights of wayand easement grants associated with J.L.No. 61.

Questar declares that JN intends toutilize J.L. No. 61 as a gathering lateralto accommodate new development inthe area and enhance JN’s ability tomore effectively serve the needs of itscustomers in the North Pineview Field.Questar states that the abandonment ofJ.L. No. 61 to JN will also improveQuestar’s operating efficiencies in thearea by eliminating the need for them tomaintain this facility, which is notconveniently located for Questar’soperating personnel. Questar asserts thatthe proposal will not result in areduction or abandonment oftransportation service on Questar’stransmission system.

Any person or the Commission’s staffmay, within 45 days after issuance ofthe instant notice by the Commission,file pursuant to Rule 214 of theCommission’s Procedural Rules (18 CFR385.214) a motion to intervene or notice

of intervention and pursuant to Section157.205 of the Regulations under theNatural Gas Act (18 CFR 157.205) aprotest to the request. If no protest isfiled within the time allowed therefor,the proposed activity shall be deemed tobe authorized effective the day after thetime allowed for filing a protest. If aprotest is filed and not withdrawnwithin 30 days after the time allowedfor filing a protest, the instant requestshall be treated as an application forauthorization pursuant to Section 7 ofthe Natural Gas Act.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31450 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–M




Southern Natural Gas Company;Notice of Request Under BlanketAuthorization


1998, Southern Natural Gas Company(Southern), Post Office Box 2563,Birmingham, Alabama 35202–2563,filed in Docket No. CP99–72–000 arequest pursuant to Sections 157.205and 157.211 of the Commission’sRegulations under the Natural Gas Act(18 CFR 157.205, 175.211) forauthorization to construct and operate anew delivery point for service toOglethorpe Company (Oglethorpe),under Southern’s blanket certificateissued in Docket No. CP82–406–000,pursuant to Section 7 of the Natural GasAct, all as more fully set forth in therequest that is on file with theCommission and open to publicinspection.

Southern proposes to construct andoperate certain measurement and otherappurtenant facilities in order toprovide transportation service toOglethorpe at a new delivery point atapproximate Mile Post 9.0 on SouthernOcmulgee—Atlanta Line in MonroeCounty, Georgia. Southern states thatthe estimated cost of the constructionand installation of the facilities isapproximately $1,042,000. Southernalso states the Oglethorpe has compliedwith all of the requirements underSection 36 of the General Terms andConditions of Southern’s FERC GasTariff for the installation of the directdelivery connection by Southern andwill reimburse Southern for the cost of


constructing, installing and operatingthe proposed facilities.

Southern states that it will transportgas on behalf of Oglethorpe under itsRate Schedule IT, and that theinstallation of the proposed facilitieswill have no adverse effect on its abilityto provide firm deliveries.

Any person or the Commission’s staffmay, within 45 days after issuance ofthe instant notice by the Commission,file pursuant to Rule 214 of theCommission’s Procedural Rules (18 CFR385.214) a motion to intervene or noticeof intervention and pursuant to Section157.205 of the Regulations under theNatural Gas Act (18 CFR 157.205) aprotest to the request. If no protest isfiled within the time allowed therefor,the proposed activity shall be deemed tobe authorized effective the day after thetime allowed for filing a protest. If aprotest is field and not withdrawnwithin 30 days after the time allowedfor filing a protest, the instant requestshall be treated as an application forauthorization pursuant to Section 7 ofthe Natural Gas Act.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31449 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–M




Stingray Pipeline Company; Notice ofCompliance Filing


1998, Stingray Pipeline Company(Stingray) tendered for filing as part ofits FERC Gas Tariff, Third RevisedVolume No. 1, certain tariff sheets to beeffective November 2, 1998.

Stingray states that these tariff sheetswere filed in compliance with theCommission’s order issued October 30,1998, in Docket No. RP99–56–000.

Stingray requests waiver of theCommission’s Regulations to the extentnecessary to permit the tendered tariffsheets to become effective November 2,1998, pursuant to Order No. 587–H.

Stingray states that copies of the filingare being mailed to Stingray’s customersand interested state regulatory agenciesand all parties set out on the officialservice list in Docket No. RP99–56.

Any person desiring to protest thisfiling should file a protest with theFederal Energy Regulatory Commission,888 First Street, NE., Washington, DC20426, in accordance with Section

385.211 of the Commission’s Rules andRegulations. All such protests must befiled as provided in Section 154.210 ofthe Commission’s Regulations. Protestswill be considered by the Commissionin determining the appropriate action tobe taken, but will not serve to makeprotestants parties to the proceedings.Copies of this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31465 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–M




Tennessee Gas Pipeline Company;Notice of Request Under BlanketAuthorization


1998, Tennessee Gas Pipeline Company(Applicant), P.O. Box 2511, Houston,Texas, 77252, filed in Docket No. CP99–68–000 a request pursuant to Sections157.205 and 157.211 of theCommission’s Regulations under theNatural Gas Act (18 CFR 157.205 and157.212) for approval to construct andoperate a new delivery point for serviceto New York State Electric & Gas(NYSEG) acting as agent for HerkimerCounty Industrial Development Agency(Herkimer IDA), under Applicant’sblanket certificate issued in Docket No.CP82–413–000, pursuant to Section 7(c)of the Natural Gas Act (NGA), all asmore fully set forth in the request whichis on file with the Commission and opento public inspection.

Applicant proposes to construct andoperate a new delivery point located inHerkimer County, New York to provideup to 1920 Mcf of natural gas per dayto NYSEG pursuant to an existinginterruptible transportation agreement.Applicant specifically proposes toinstall, own, operate, and maintain twotwo-inch hot taps, 88 feet of two-inchdiameter interconnection pipe to theedge of Applicant’s right-of-way, andelectronic gas measurement equipment.Applicant indicates that NYSEG willinstall and maintain the meteringfacilities, which will be owned byHerkimer IDA. It is further indicatedthat NYSEG will install, operate, andmaintain ten feet of two-inchinterconnecting pipe from the edge ofApplicant’s right-of-way to NYSEG’s

measurement building. Applicantasserts that NYSEG will reimburseApplicant $64,200 for this project.

Any person or the Commission’s Staffmay, within 45 days of the issuance ofthe instant notice by the Commission,file pursuant to Rule 214 of theCommission’s Rules of Practice andProcedure (18 CFR 385.214), a motion tointervene and pursuant to Section157.205 of the regulations under theNatural Gas Act (18 CFR 157.205), aprotest to the request. If no protest isfiled within the time allowed therefor,the proposed activities shall be deemedto be authorized effective the day afterthe time allowed for filing a protest. Ifa protest is filed and not withdrawn 30days after the time allowed for filing aprotest, the instant request shall betreated as an application forauthorization pursuant to Section 7 ofthe Natural Gas Act.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31447 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–M




Trailblazer Pipeline Company; Noticeof Compliance Filing


1998, Trailblazer Pipeline Company(Trailblazer) tendered for filing as partof its FERC Gas Tariff, Third RevisedVolume No. 1, certain tariff sheets to beeffective November 2, 1998.

Trailblazer states that these tariffsheets were filed in compliance with theCommission’s order issued October 30,1998, in Docket No. RP99–60–000.

Trailblazer requests waiver of theCommission’s Regulations to the extentnecessary to permit the tendered tariffsheets to become effective November 2,1998, pursuant to Order No. 587–H.

Trailblazer states that copies of thefiling are being mailed to Trailblazer’scustomers and interested stateregulatory agencies and all parties setout on the official service list in DocketNo. RP99–60.

Any person desiring to protest thisfiling should file a protest with theFederal Energy Regulatory Commission,888 First Street, N.E., Washington, D.C.20426, in accordance with Section385.211 of the Commission’s Rules andRegulations. All such protests must befiled as provided in Section 154.210 ofthe Commission’s Regulations. Protests


will be considered by the Commissionin determining the appropriate action tobe taken, but will not serve to makeprotestants parties to the proceedings.Copies of this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31466 Filed 11–24–98; 8:45 am]





TransColorado Gas TransmissionCompany; Notice of Compliance Filing

November 19, 1998.

Take notice that on November 16,1998, TransColorado Gas TransmissionCompany, (TransColorado) tendered forfiling as part of its FERC Gas Tariff,Original Volume No. 1, the followingtariff sheets, with an effective date ofNovember 1, 1998:

Substitute Fifth Revised Sheet No. 203Sub Second Revised Sheet No. 203.01Substitute First Revised Sheet No. 231AOriginal Sheet No. 231B

TransColorado states that the tariffsheets are being filed to revise intra-daytariff provisions in compliance with theCommission’s order in this proceeding.

Any person desiring to protest thisfiling should file a protest with theFederal Energy Regulatory Commission,888 First Street, N.E., Washington, D.C.,20426, in accordance with Section385.211 of the Commission’s Rules andRegulations. All such protests must befiled as provided in Section 154.210 ofthe Commission’s Regulations. Protestswill be considered by the Commissionin determining the appropriate action tobe taken, but will not serve to makeprotestants parties to the proceedings.Copies of this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31460 Filed 11–24–98; 8:45 am]





Transwestern Pipeline Company;Notice of Compliance Filing


1998, Transwestern Pipeline Company(Transwestern), tendered for filing tobecome part of Transwestern’s FERCGas Tariff, Second Revised Volume No.1, the following tariff sheet to beeffective November 1, 1998:Substitute Third Revised Sheet No. 81E

Transwestern states that the instantfiling is made in compliance with theCommission’s Letter Order acceptingtariff sheets, subject to conditions,issued on October 30, 1998 in DocketNo. RP99–32–000 (October 30 Order).

Transwestern states that copies of thefiling were served upon Transwestern’scustomers and interested StateCommissions.

Any person desiring to protest thisfiling should file a protest with theFederal Energy Regulatory Commission,888 First Street, N.E., Washington, D.C.20426, in accordance with § 385.211 ofthe Commission’s Rules andRegulations. All such protests must befiled as provided in § 154.210 of theCommission’s Regulations. Protests willbe considered by the Commission indetermining the appropriate action to betaken, but will not serve to makeprotestants parties to the proceedings.Copies of this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31459 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–M




Venice Gathering System, L.L.C.;Notice of Compliance Filing


1998, Venice Gathering System, L.L.C.(VGS), tendered for filing as part of itsFERC Gas Tariff, Original Volume No. 1,the following tariff sheets:Substitute First Revised Sheet Nos. 79, 80and 83

Substitute Original Sheet Nos. 84 and 85

VGS states that it is submitting thesetariff sheets to comply with the October30, 1998 order issued in the abovereference proceeding. VGS proposes aFebruary 1, 1999 effective date for thesesheets to correspond to the effectivedate of the other tariff provisionsimplementing the intraday nominationand scheduling GISB standards.




[Docket No. TM99–4–76–000]

Wyoming Interstate Company, Ltd.;Notice of GRI Filing

November 19, 1998.Take notice on November 16, 1998,

Wyoming Interstate Company, Ltd.(WIC), tendered for filing as part of itsFERC Gas Tariff, First Revised VolumeNo. 1, First Revised Sheet No. 5.3, andSecond Revised Volume No. 2, FirstRevised Sheet No. 4B, with an effectivedate of January 1, 1999.

WIC states the purpose of this filingis to permit WIC to collect Gas ResearchInstitute (GRI) charges associated withWIC transportation pursuant to theCommission order issued September 29,1998 in Docket No. RP98–235–000.

WIC states that copies of the filingwere served upon the company’sjurisdictional firm customers.

Any person desiring to be heard or toprotest said filing should file a motionto intervene or a protest with theFederal Energy Regulatory Commission,888 First Street, N.E., Washington, D.C.20426, in accordance with Sections385.214 or 385.211 of the Commission’sRules and Regulations. All such motions


or protests must be filed in accordancewith Section 154.210 of theCommission’s Regulations. Protests willbe considered by the Commission indetermining the appropriate action to betaken, but will not serve to makeprotestants parties to the proceedings.Any person wishing to become a partymust file a motion to intervene. Copiesof this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31477 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–M



[Docket No. EG98–110–000, et al.]

Lakota Ridge, L.L.C., et al.; ElectricRate and Corporate Regulation Filings

November 13, 1998.Take notice that the following filings

have been made with the Commission:

1. Lakota Ridge, L.L.C.

[Docket No. EG98–110–000]

Take notice that on November 4,1998, Lakota Ridge, L.L.C. tendered forfiling an amended application to itsAugust 31, 1998, submittal fordetermination of exempt wholesalegenerator status in the above-referenceddocket.

Comment date: November 30, 1998, inaccordance with Standard Paragraph Eat the end of this notice. TheCommission will limit its considerationof comments to those that concern theadequacy or accuracy of the application.

2. Shaokatan Hills, L.L.C.


Take notice that on November 4,1998, Shaokatan Hills, L.L.C. tenderedfor filing an amended application to itsAugust 31, 1998, submittal fordetermination of exempt wholesalegenerator status in the above-referenceddocket.

Comment date: November 30, 1998, inaccordance with Standard Paragraph Eat the end of this notice. TheCommission will limit its considerationof comments to those that concern theadequacy or accuracy of the application.

3. Rockingham Power, LLC


Take notice that on November 5,1998, Rockingham Power, LLC, 1000

Louisiana, Suite 5800, Houston, Texasfiled with the Federal Energy RegulatoryCommission an Application forDetermination of Exempt WholesaleGenerator Status pursuant to Part 365 ofthe Commission’s Regulations.

Rockingham Power, LLC is a limitedliability company, organized under thelaws of the State of Delaware, andengaged directly and exclusively inowning and operating the RockinghamPower, LLC electric generating facility(the Facility) to be located inRockingham County, North Carolina,and selling electric energy and relatedancillary services at wholesale from theFacility, as well as selling at wholesaleelectric energy from sources other thanthe Facility. The Facility will consist offive gas turbine generators, eachnominally rated at approximately 160MW, for a total of 800 MW, a meteringstation, and associated transmissioninterconnection components.

Comment date: December 4, 1998, inaccordance with Standard Paragraph Eat the end of this notice. TheCommission will limits itsconsideration of comments to those thatconcern the adequacy or accuracy of theapplication.

4. Gauley River Power Partners, L.P.

[Docket No. EG99–17–000]Take notice that on November 5,

1998, Gauley River Power Partners, L.P.(GRPP) filed with the Federal EnergyRegulatory Commission an applicationfor determination of exempt wholesalegenerator status pursuant to Part 365 ofthe Commission’s regulations.

GRPP, a Vermont limited partnership,is a wholly-owned subsidiary ofCatamount Energy Corporation, whichin turn is a wholly-owned subsidiary ofCentral Vermont Public Service Corp.,both Vermont corporations.

GRPP will operate a hydroelectricproject with an installed capacity of 80MW to be located on the Gauley Riverin Nicholas County, West Virginia andowned by the City of Summersville,West Virginia. The Facility consists ofone penstock, 17 feet in diameter,connected to the existing outlet of oneHowell-Burger valve conduit of theArmy Corps of Engineers’ SummersvilleDam; a powerhouse containing two 40MW Francis hydraulic turbines with acombined installed capacity of 80 MW;a valve house with one Howell-Bunrgervalve; and a tailrace. The Facility willalso include a step-up transformer,associated breakers and meteringequipment and an approximately 10-mile-long 69 kV transmission line thatis required to connect the Facility to thetransmission system of the AppalachianPower Company.

Comment date: December 4, 1998, inaccordance with Standard Paragraph Eat the end of this notice. TheCommission will limit its considerationof comments to those that concern theadequacy or accuracy of the application.

5. Southern Energy New England, L.L.C.


On November 9, 1998, SouthernEnergy New England, L.L.C. (SouthernNew England), 900 Ashwood Parkway,Suite 500, Atlanta, Georgia 30338–4780,filed with the Federal Energy RegulatoryCommission an application fordetermination of exempt wholesalegenerator status pursuant to Part 365 ofthe Commission’s regulations.

Southern New England is a Delawarelimited liability company that intends toacquire: (a) an indirect 100% ownershipinterest in the Canal Station, a two-unitgeneration facility with installedcapacity of 1131 MW located inSandwich, Massachusetts, (b) anindirect 1.4325% interest (amounting toapproximately 8.9 MW per year ofcapacity) in the William F. Wyman Unit4 generating facility located inYarmouth, Maine, (C) an indirect 100%interest in two diesel-fueled generatingfacilities with a total capacity of 13.8MW located on Martha’s Vineyard,Massachusetts, and (d) an indirect 100%ownership interest in a 113 MWgeneration facility located in Cambridge,Massachusetts. Southern New Englandis engaged directly, or indirectlythrough one or more affiliates, andexclusively in the business of owning oroperating, or both owning andoperating, all or part of one or moreeligible facilities and selling electricenergy at wholesale.


6. Southern Energy Canal, L.L.C.


On November 9, 1998, SouthernEnergy Canal, L.L.C. (Southern Canal),900 Ashwood Parkway, Suite 500,Atlanta, Georgia 30338–4780, filed withthe Federal Energy RegulatoryCommission an application fordetermination of exempt wholesalegenerator status pursuant to Part 365 ofthe Commission’s regulations.

Southern Canal is a Delaware limitedliability company that intends toacquire: (a) a 100% ownership interestin the Canal Station, a two-unitgeneration facility with installedcapacity of 1131 MW located in


Sandwich, Massachusetts, (b) a 1.4325%undivided interest (amounting toapproximately 8.9 MW per year ofcapacity) in the William F. Wyman Unit4 generating facility located inYarmouth, Maine, and (C) a 100%interest in two diesel-fueled generatingfacilities with a total capacity of 13.8MW located on Martha’s Vineyard,Massachusetts. Southern Canal isengaged directly and exclusively in thebusiness of owning or operating, or bothowning and operating, all or part of oneor more eligible facilities and sellingelectric energy at wholesale.

Comment date: December 4, 1998, inaccordance with Standard Paragraph Eat the end of this notice. TheCommission limit its consideration ofcomments to those that concern theadequacy or accuracy of the application.

7. Southern Energy Kendall, L.L.C.


On November 9, 1998, SouthernEnergy Kendall, L.L.C. (SouthernKendall), 900 Ashwood Parkway, Suite500, Atlanta, Georgia 30338–4780, filedwith the Federal Energy RegulatoryCommission an application fordetermination of exempt wholesalegenerator status pursuant to Part 365 ofthe Commission’s regulations.

Southern Kendall is a Delawarelimited liability company that intends toacquire a 100% ownership interest in a113 MW generation facility located inCambridge, Massachusetts. SouthernKendall is engaged directly andexclusively in the business of owning oroperating, or both owning andoperating, all or part of one or moreeligible facilities and selling electricenergy at wholesale.


8. Commonwealth Electric Companyand Cambridge Electric Light Company

[Docket No. ER99–275–000]

Take notice that on November 4,1998, Commonwealth Electric Company(Commonwealth) and CambridgeElectric Light Company (Cambridge),tendered for filing a corrected ServiceAgreement between Southern CompanyEnergy Marketing, L.P., replacing theService Agreement inadvertently filedon October 22, 1998, in the above-referenced docket.

Comment date: November 24, 1998, inaccordance with Standard Paragraph Eat the end of this notice.

9. Boston Edison Company

[Docket No. ER99–333–000]Take notice that on October 27, 1998,

Boston Edison Company (BostonEdison) filed, for informationalpurposes only, amended true-up toactual reports for calendar years 1995and 1996 regarding charges toCambridge Electric Light Company forthe use of Station 509. Boston Edison’scharges for the use of Station 509 aregoverned by its FERC Rate Schedule No.101. A report for calendar year 1995charges was previously accepted forfiling in Docket No. ER97–2067–000. Areport for calendar year 1996 chargeswas previously accepted for filing inDocket No. ER98–1985–000.


10. Southwestern Public ServiceCompany, Northern States PowerCompany, Northeast Utilities ServiceCompany, and California PowerExchange Corporation

[Docket Nos. ER99–482–000, ER99–480–000,ER99–477–000, and ER99–380–000]

Take notice that the followinginformational filings have been madewith the Commission and are availablefor public inspection and copying in theCommission’s Public Reference Room:

On October 30, 1998, SouthwesternPublic Service Company filed certaininformation as required by aCommission order issued in Docket No.ER95–1129–000.

On October 30, 1998, Northern StatesPower Company (Minnesota) andNorthern States Power Company(Wisconsin) filed certain information asrequired by a Commission order issuedin Docket No. ER98–2640–000.

On October 30, 1998, NortheastUtilities Service Company filed certaininformation as required by Commissionorders issued in Docket Nos. ER96–780–000 and ER96–2525–000.

On October 30, 1998, CaliforniaPower Exchange Corporation filedcertain information as required byCommission orders issued in DocketNos. ER98–2095–000 and ER98–4014–000.

11. Sierra Pacific Power Company

[Docket No. ER99–546–000]Take notice that on November 9,

1998, Sierra Pacific Power Company(Sierra), tendered for filing ServiceAgreements (Service Agreements) withthe following entities for Point-to-PointTransmission Service under Sierra’sOpen Access Transmission Tariff(Tariff), for Non Firm Point-to-PointTransmission Service Constellation

Power Source, Inc., PacifiCorp PowerMarketing, Inc., for Short-Term FirmPoint-to-Point Transmission ServiceConstellation Power Source, Inc.

Sierra filed the executed ServiceAgreements with the Commission incompliance with Sections 13.4 and 14.4of the Tariff and applicable Commissionregulations. Sierra also submittedrevised Sheet Nos. 148 and 148A(Attachment E) to the Tariff, which is anupdated list of all current subscribers.

Sierra requests waiver of theCommission’s notice requirements topermit and effective date of November10, 1998 for Attachment E, and to allowthe Service Agreements to becomeeffective according to their terms.

Copies of this filing were served uponthe Public Service Commission ofNevada, the Public Utilities Commissionof California and all interested parties.


12. Duquesne Light Company


Take notice that on November 9,1998, Duquesne Light Company(Duquesne), tendered for filing underDuquesne’s pending Market-Based RateTariff, (Docket No. ER98–4159–000)executed Service Agreement at Market-Based Rates with Cinergy Services, Inc.,(Customer).

Duquesne has requested theCommission waive its noticerequirements to allow the ServiceAgreement to become effective as ofNovember 1, 1998.

Copies of this filing were served uponCustomer.




Take notice that on November 9,1998, Duquesne Light Company(Duquesne), tendered for filing underDuquesne’s pending Market-Based RateTariff, (Docket No. ER98–4159–000)executed Service Agreement at Market-Based Rates with First EnergyCorporation (Customer).







1998, Duquesne Light Company(Duquesne), tendered for filing underDuquesne’s pending Market-Based RateTariff, (Docket No. ER98–4159–000)executed Service Agreement at Market-Based Rates with FirstEnergy Tradingand Power Marketing, Inc., (Customer).






1998, Duquesne Light Company(Dusquesne), tendered for filing underDuquesne’s market-based rate tariff,(Docket No. ER98–4159–000), anexecuted Service Agreement with KochEnergy Trading, Inc., (Customer).

Duquesne has requested theCommission waive its noticerequirements to allow the ServiceAgreement to become effective as ofAugust 24, 1998.

Copies of this filing were served uponthe Customer.




1998, Duquesne Light Company(Duquesne), tendered for filing underDuquesne’s pending Market-Based RateTariff, (Docket No. ER98–4159–000)executed Service Agreement at Market-Based Rates with Merchant EnergyGroup of the Americas, Inc., (Customer).






1998, Duquesne Light Company(Duquesne), tendered for filing underDuquesne’s pending Market-Based Rate

Tariff, (Docket No. ER98–4159–000) anexecuted Service Agreement at Market-Based Rates with Strategic Energy Ltd.(Customer).






Take notice that on November 9,1998, Duquesne Light Company(Duquesne), tendered for filing underDuquesne’s pending Market-Based RateTariff, (Docket No. ER98–4159–000) anexecuted Service Agreement at Market-Based Rates with WPS Energy Services,Inc. (Customer).




19. Niagara Mohawk PowerCorporation


Take notice that on November 9,1998, Niagara Mohawk PowerCorporation (NMPC), tendered for filingwith the Federal Energy RegulatoryCommission an executed TransmissionService Agreement between NMPC andDuke Energy Trading and Marketing,L.L.C. (DETM). This TransmissionService Agreement specifies that DETMhas signed on to and has agreed to theterms and conditions of NMPC’s OpenAccess Transmission Tariff as filed inDocket No. OA96–194–000. This Tariff,filed with FERC on July 9, 1996, willallow NMPC and DETM to enter intoseparately scheduled transactions underwhich NMPC will provide transmissionservice for DETM as the parties maymutually agree.

NMPC requests an effective date ofNovember 4, 1998. NMPC has requestedwaiver of the notice requirements forgood cause shown.

NMPC has served copies of the filingupon the New York State Public ServiceCommission and DETM.




Take notice that on November 9,1998, Niagara Mohawk PowerCorporation (NMPC), tendered for filingwith the Federal Energy RegulatoryCommission an executed TransmissionService Agreement between NMPC andDuke Energy Trading and Marketing,L.L.C., (DETM). This TransmissionService Agreement specifies that DETMhas signed on to and has agreed to theterms and conditions of NMPC’s OpenAccess Transmission Tariff as filed inDocket No. OA96–194–000. This Tariff,filed with FERC on July 9, 1996, willallow NMPC and DETM to enter intoseparately scheduled transactions underwhich NMPC will provide transmissionservice for DETM as the parties maymutually agree.


NMPC has served copies of the filingupon the New York State Public ServiceCommission and DETM.




Take notice that on November 9,1998, Niagara Mohawk PowerCorporation (NMPC), tendered for filingwith the Federal Energy RegulatoryCommission an executed TransmissionService Agreement between NMPC andNorth American Energy Conservation,Inc. This Transmission ServiceAgreement specifies that NorthAmerican Energy Conservation, Inc., hassigned on to and has agreed to the termsand conditions of NMPC’s Open AccessTransmission Tariff as filed in DocketNo. OA96–194–000. This tariff, filedwith FERC on July 9, 1996, will allowNMPC and North American EnergyConservation, Inc., to enter intoseparately scheduled transactions underwhich NMPC will provide transmissionservice for North American EnergyConservation, Inc., as the parties maymutually agree.


NMPC has served copies of the filingupon the New York State Public ServiceCommission and North AmericanEnergy Conservation, Inc.





1998, Niagara Mohawk PowerCorporation (NMPC), tendered for filingwith the Federal Energy RegulatoryCommission an executed TransmissionService Agreement between NMPC andNorth American Energy Conservation,Inc. This Transmission ServiceAgreement specifies that NorthAmerican Energy Conservation, Inc., hassigned on to and has agreed to the termsand conditions of NMPC’s Open AccessTransmission Tariff as filed in DocketNo. OA96–194–000. This Tariff, filedwith FERC on July 9, 1996, will allowNMPC and North American EnergyConservation, Inc., to enter intoseparately scheduled transactions underwhich NMPC will provide transmissionservice for North American EnergyConservation, Inc., as the parties maymutually agree.


NMPC has served copies of the filingupon the New York State Public ServiceCommission and North AmericanEnergy Conservation, Inc.


23. AES NY, L.L.C.


1998, AES NY, L.L.C. (AES NY), c/oHenry Aszklar, AES NY, L.L.C., 1001North 19th Street, Suite 2000, Arlington,Virginia 22209, a Delaware limitedliability company, petitioned theCommission for an order accepting rateschedule for filing and granting waiversand blanket approvals.


24. Arizona Public Service Company


1998, Arizona Public Service Company(APS), tendered for filing revisions to itsOpen Access Transmission Tariffneeded in order to accommodate retaildirect access being implemented by theArizona Corporation Commission.

APS requests an effective date ofJanuary 1, 1999.

A copy of this filing has been servedon the Arizona Corporation Commission

and the parties included on the servicelist attached to this filing letter.


25. New England Power Pool


Take notice that on November 9,1998, the New England Power PoolExecutive Committee filed foracceptance three signature pages to theNew England Power Pool (NEPOOL)Agreement dated September 1, 1971, asamended, signed by Southern EnergyNew England, LLC (SENE); SouthernEnergy Canal, LLC (SE Canal); SouthernEnergy SE Kendall, LLC (SE Kendall).The NEPOOL Agreement has beendesignated NEPOOL FPC No. 2.

The Executive Committee states thatthe Commission’s acceptance of thesignature pages of SENE, SE Canal andSE Kendall would permit NEPOOL toexpand its membership to includeSENE, SE Canal and SE Kendall.NEPOOL further states that the filedsignature pages do not change theNEPOOL Agreement in any manner,other than to make SENE, SE Canal andSE Kendall members in NEPOOL.

NEPOOL requests an effective date ofas of the date of the acquisition by SECanal and SE Kendall of the generatingassets currently owned byCommonwealth Electric Company,Canal Electric Company, MontaupElectric Company and CambridgeElectric Light Company, which isanticipated to occur December 30, 1998.


26. New York State Electric & GasCorporation


Take notice that on November 10,1998, New York State Electric & GasCorporation (NYSEG), tendered forfiling proposed changes in its OpenAccess Transmission Tariff (OATT)filed July 9, 1997 and effective onNovember 27, 1997, in Docket No.ER97–2353–000. The changes include achange in address, revised lists ofcustomers taking Point-to-Point andNetwork Integration TransmissionServices, and a typographical error.

NYSEG has served copies of the filingon the New York State Public ServiceCommission and on the OATTcustomers.


27. Deseret Generation & TransmissionCo-operative


1998, Deseret Generation &Transmission Co-operative tendered forfiling an executed umbrella short-termfirm point-to-point service agreementwith Constellation Power Source, Inc.,under its open access transmissiontariff. Deseret’s open accesstransmission tariff is currently on filewith the Commission in Docket No.OA97–487–000.

Deseret requests a waiver of theCommission’s notice requirements foran effective date of November 10, 1998.

Constellation Power Source, Inc., hasbeen provided a copy of this filing.


28. Deseret Generation & TransmissionCo-operative


1998, Deseret Generation &Transmission Co-operative tendered forfiling an executed umbrella non-firmpoint-to-point service agreement withConstellation Power Source, Inc., underits open access transmission tariff.Deseret’s open access transmission tariffis currently on file with the Commissionin Docket No. OA97–487–000.

Deseret requests a waiver of theCommission’s notice requirements foran effective date of November 10, 1998.

Constellation Power Source, Inc., hasbeen provided a copy of this filing.


29. Virginia Electric and PowerCompany


1998, Virginia Electric and PowerCompany (Virginia Power), tendered forfiling the Service Agreement betweenVirginia Electric and Power Companyand Energy Transfer Group, L.L.C.,under the FERC Electric Tariff (SecondRevised Volume No. 4), which wasaccepted by order of the Commissiondated August 13, 1998 in Docket No.ER98–3771–000. Under the tenderedService Agreement, Virginia Power willprovide services to Energy TransferGroup, L.L.C., under the terms andconditions of the Tariff.

Virginia Power requests an effectivedate of November 10, 1998.

Copies of the filing were served uponEnergy Transfer Group, L.L.C., theVirginia State Corporation Commission


and the North Carolina UtilitiesCommission.


30. St. Joseph Light & Power Company


Take notice that on November 10,1998, St. Joseph Light & Power Co.,tendered for filing nine executedagreements for transmission serviceunder its Open Access TransmissionTariff. One of the service agreementsprovides for firm point-to-pointtransmission service to Nebraska PublicPower District. The other eightagreements provide for non-firm point-to-point transmission service toAmerican Electric Power ServiceCorporation; Amoco Energy TradingCorporation; Avista Energy, Inc.;Continental Energy Services, L.L.C.;Nebraska Public Power District; OGEEnergy Resources, Inc.; The PowerCompany of America; and TennesseeValley Authority.

Copies of the filing were served oneach of these companies and theTennessee Valley Authority.


31. Public Service Company ofColorado

[Docket No. ER98–4590–000]

Take notice that on November 6,1998, Public Service Company ofColorado tendered for filing a responseto the Commission’s letter of deficiencyin the above referenced docket.


Standard Paragraphs

E. Any person desiring to be heard orto protest said filing should file amotion to intervene or protest with theFederal Energy Regulatory Commission,888 First Street, N.E., Washington, D.C.20426, in accordance with Rules 211and 214 of the Commission’s Rules ofPractice and Procedure (18 CFR 385.211and 18 CFR 385.214). All such motionsor protests should be filed on or beforethe comment date. Protests will beconsidered by the Commission indetermining the appropriate action to betaken, but will not serve to makeprotestants parties to the proceeding.Any person wishing to become a partymust file a motion to intervene. Copiesof these filings are on file with the

Commission and are available for publicinspection.David P. Boergers,Secretary.[FR Doc. 98–31445 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–P



[Docket No. EC99–9–000, et al.]

PacifiCorp, et al.; Electric Rate andCorporate Regulation Filings

November 12, 1998.Take notice that the following filings

have been made with the Commission:

1. PacifiCorp

[Docket No. EC99–9–000]Take notice that on November 9,

1998, PacifiCorp tendered for filing inaccordance with 18 CFR Part 33 of theCommission’s Rules and Regulations, anapplication seeking an order authorizingPacifiCorp to sell to the FlatheadElectric Cooperative, Inc. (Flathead)approximately 122.42 miles of 34.5, 115and 230 kilovolt transmission line andtransmission substations located in BigHorn, Flathead and Lincoln Counties,Montana.

Copies of this filing were supplied toFlathead and the Montana PublicService Commission.

Comment date: December 9, 1998, inaccordance with Standard Paragraph Eat the end of this notice.

2. Tri Energy Company Limited

[Docket No. EG99–7–000]Take notice that on November 4,

1998, Tri Energy Company Limited (theApplicant) whose address is GrandAmarin Tower, 16th Floor, 1550 NewPetchburi Road, Ratchathewi, Bangkok10320, Thailand, filed with the FederalEnergy Regulatory Commission anapplication for determination of exemptwholesale generator status pursuant toPart 365 of the Commission’sregulations.

The Applicant states that it will beengaged directly and exclusively in thebusiness of owning a nominal 700 MWcombined cycle power plant located inRatchaburi Province and selling electricenergy at wholesale, as that term hasbeen interpreted by the Commission.The Applicant requests a determinationthat the Applicant is an exemptwholesale generator under Section32(a)(1) of the Public Utility HoldingCompany Act of 1935.

Comment date: December 3, 1998, inaccordance with Standard Paragraph E

at the end of this notice. TheCommission will limit its considerationof comments to those that concern theadequacy or accuracy of the application.

3. CL Power Sales Seven, L.L.C., CLPower Sales Eight, L.L.C., CL PowerSales Nine, L.L.C., CL Power Sales Ten,L.L.C., Hartford Power Sales, CinCapIV, LLC, Cinergy Capital and TradingInc., and Southern Company EnergyMarketing L.P.

[Docket Nos. ER96–2652–017, ER96–2652–018, ER96–2652–019, ER96–2652–020,ER95–393–021, ER98–421–004, ER93–730–010, and ER97–4166–002]


On October 30, 1998, CL Power SalesSeven, L.L.C., CL Power Sales, Eight,L.L.C., CL Power Sales Nine, L.L.C. andCL Power Sales Ten filed certaininformation as required by aCommission order issued in Docket No.ER96–2652–000.

On October 30, 1998, Hartford PowerSales filed certain information asrequired by a Commission order issuedin Docket No. ER95–393–000.

On October 30, 1998, CinCap IV, LLCfiled certain information as required bya Commission order issued in DocketNo. ER98–421–000.

On October 30, 1998, Cinergy Capitaland Trading Inc. filed certaininformation as required by aCommission order issued in Docket No.ER93–730–000.

On October 30, 1998, SouthernCompany Energy Marketing L.P. filedcertain information as required by aCommission order issued in Docket No.ER97–4166–000.

4. Northeast Electricity Inc., The DetroitEdison Company, Dynegy PowerServices, Inc., Commonwealth EnergyCorporation, LG&E Energy MarketingInc., Enserch Energy Services, Inc.,Statoil Energy Trading, Inc., PG&EEnergy Trading—Power, ElectricClearinghouse, Inc., ONEOK PowerMarketing Company, and MerchantEnergy Group of the Americas

[Docket Nos. ER98–3048–001, ER99–516–000, ER94–1612–019, ER97–4253–002,ER94–1188–025, ER98–895–003, ER94–964–020, ER95–1625–016, ER94–968–024, ER98–3897–001, and ER98–1055–003]


On November 2, 1998, NortheastElectricity Inc. filed certain information


as required by a Commission orderissued in Docket No. ER98–3048–000.

On November 2, 1998, The DetroitEdison Company filed certaininformation as required by aCommission order issued in Docket No.ER97–324–000.

On November 2, 1998, Dynegy PowerServices, Inc. filed certain informationas required by a Commission orderissued in Docket No. ER94–1612–000.

On November 2, 1998,Commonwealth Energy Corporationfiled certain information as required bya Commission order issued in DocketNo. ER97–4253–000.

On November 2, 1998, LG&E EnergyMarketing Inc. filed certain informationas required by a Commission orderissued in Docket No. ER94–1188–000.

On November 2, 1998, Enserch EnergyServices, Inc. filed certain informationas required by a Commission orderissued in Docket No. ER98–895–000.

On November 2, 1998, Statoil EnergyTrading, Inc. filed certain information asrequired by a Commission order issuedin Docket No. ER94–964–000.

On November 2, 1998, PG&E EnergyTrading—Power filed certaininformation as required by aCommission order issued in Docket No.ER95–1625–000.

On November 2, 1998, ElectricClearinghouse, Inc. filed certaininformation as required by aCommission order issued in Docket No.ER94–968–000.

On November 2, 1998, ONEOK PowerMarketing Company filed certaininformation as required by aCommission order issued in Docket No.ER98–3897–000.

On November 2, 1998, MerchantEnergy Group of the Americas filedcertain information as required by aCommission order issued in Docket No.ER98–1055–000.

5. California Power ExchangeCorporation

[Docket No. ER98–4607–000]

Take notice that on November 6,1998, California Power ExchangeCorporation (PX), tendered for filing anamendment to its tariff filing in theabove-referenced docket.


6. Sunlaw Cogeneration Partners I


Take notice that on November 9,1998, Sunlaw Cogeneration Partners I(Sunlaw), tendered for filing asupplement to its petition, submitted onOctober 16, 1998, which requested

acceptance of FERC Electric RateSchedule No. 1; the granting of certainblanket approvals, including theauthority to sell electricity at market-based rates; and the waiver of certainCommission Regulations.


7. Carolina Power & Light Company


Take notice that on November 9,1998, Carolina Power & Light Companytendered for filing a supplement to itspower purchase agreement with SouthCarolina Public Service Authority filedon October 23, 1998, in the above-referenced docket.

Copies of the filing were served uponthe North Carolina UtilitiesCommission, the South Carolina PublicService Commission and the SouthCarolina Public Service Authority.


8. Mountain Vista Power GenerationL.L.C., Ormond Beach Generation,L.L.C., Ocean Vista Power GenerationL.L.C., Alta Power Generation, L.L.C.,State Line Energy, L.L.C., Sithe MysticLLC, et al., Commonwealth EdisonCompany, United Power Technologies,Inc., and AG Energy, L.P., et al.

[Docket Nos. ER99–438–000, ER99–439–000,ER99–440–000, ER99–441–000, ER99–442–000, ER99–443–000, ER99–444–000, ER99–445–000, and ER98–2782–000]

Take notice that the followinginformational filings have been filedwith the Commission and are availablefor public inspection and copying in theCommission’s Office of PublicInformation:

On October 30, 1998, Mountain VistaPower Generation L.L.C. filed certaininformation as required by theCommission’s order issued in DocketNo. ER98–930–000.

On October 30, 1998, Ormond BeachGeneration, L.L.C. filed certaininformation as required by theCommission’s order issued in DocketNo. ER98–2878–000.

On October 30, 1998, Ocean VistaPower Generation L.L.C. filed certaininformation as required by theCommission’s order issued in DocketNo. ER98–927–000.

On October 30, 1998, Alta PowerGeneration, L.L.C. filed certaininformation as required by theCommission’s order in Docket No.ER98–931–000.

On October 30, 1998, State LineEnergy, L.L.C. filed certain information

as required by the Commission’s orderissued in Docket No. ER96–2869–000.

On October 30, 1998, Sithe MysticLLC, et al., filed certain information asrequired by the Commission’s orderissued in Docket No. ER98–1943–000.

On October 30, 1998, CommonwealthEdison Company filed certaininformation as required by theCommission’s order issued in DocketNo. ER98–1734–000.

On October 30, 1998, United PowerTechnologies, Inc. filed certaininformation as required by theCommission’s order issued in DocketNo. ER97–122–000.

On October 30, 1998, AG Energy, L.P.,et al., filed certain information asrequired by the Commission’s orderissued in Docket No. ER98–2782–000.

9. Great Bay Power Corporation,Unicom Power Marketing, Inc., CSWPower Marketing, Inc., Edison Source,CSW Energy Services, Inc., TexacoEnergy Services, and Williams EnergyServices Company

[Docket Nos. ER99–446–000, ER97–3954–005, ER97–1238–008, ER96–2150–011,ER98–2075–003, ER95–1787–011, and ER95–305–018]

Take notice that the followinginformational filings have been madewith the Commission and are availablefor public inspection and copying in theCommission’s Office of PublicInformation:

On October 30, 1998, Great Bay PowerCorporation filed certain information asrequired by a Commission order issuedin Docket No. ER98–3470–000.

On October 30, 1998, Unicom PowerMarketing, Inc. filed certain informationas required by a Commission orderissued in Docket No. ER97–3954–000.

On October 30, 1998, CSW PowerMarketing, Inc. filed certain informationas required by a Commission orderissued in Docket No. ER97–1238–000.

On October 30, 1998, Edison Sourcefiled certain information as required bya Commission order issued in DocketNo. ER96–2150–000.

On October 30, 1998, CSW EnergyServices, Inc. filed certain informationas required by a Commission orderissued in Docket No. ER98–2075–000.

On October 30, 1998, Texaco EnergyServices filed certain information asrequired by a Commission order issuedin Docket No. ER95–1787–000.

On October 30, 1998, Williams EnergyServices Company filed certaininformation as required by aCommission order issued in Docket No.ER95–305–000.




Take notice that on November 9,1998, Duquesne Light Company (DLC),tendered for filing a Service Agreementfor Retail Network IntegrationTransmission Service and a NetworkOperating Agreement for Retail NetworkIntegration Transmission Service datedOctober 21, 1998 with Penn PowerEnergy, Inc., under DLC’s Open AccessTransmission Tariff (Tariff). The ServiceAgreement and Network OperatingAgreement adds Penn Power Energy,Inc., as a customer under the Tariff.

DLC requests an effective date ofJanuary 1, 1999, for the ServiceAgreement.


11. Tucson Electric Power Company


Take notice that on November 6,1998, Tucson Electric Power Company(TEP), tendered for filing proposedchanges to its Open AccessTransmission Tariff (OATT), FERCElectric Service Tariff No. 2. TEP hasfiled a revised OATT to include termsand conditions governing the provisionof unbundled retail transmissionservice.

These changes to TEP’s OATT arenecessitated by the opening up ofArizona’s retail electric markets tocompetition effective January 1, 1999.

Copies of the filing were served uponthe TEP’s jurisdictional customers andthe Arizona Corporation Commission.


12. Peco Energy Company


Take notice that on November 6,1998, PECO Energy Company (PECO),tendered for filing a Service Agreementdated June 2, 1997, with Fox IslandsElectric Cooperative, Inc. (FIEC), underPECO’s FERC Electric Tariff OriginalVolume No. 1 (Tariff). The ServiceAgreement adds FIEC as a customerunder the Tariff.

PECO requests an effective date ofOctober 8, 1998, for the ServiceAgreement.

PECO states that copies of this filinghave been supplied to FIEC and to thePennsylvania Public UtilityCommission.


13. Washington Water Power Company


Take notice that on November 9,1998, Washington Water PowerCompany (WWP), tendered for filingwith the Federal Energy RegulatoryCommission pursuant to 18 CFR Part 35of the Commission’s Rules andRegulations, an executed Long TermService Agreement under WWP’s FERCElectric Tariff First Revised Volume No.9, with Duke Energy Trading andMarketing, LLC.

WWP requests an effective date ofJanuary 1, 1999.

Copies of this filing have been servedupon Duke Energy Trading andMarketing, LLC.


14. Arizona Public Service Company


Take notice that on November 9,1998, Arizona Public Service Company(APS), tendered for filing ServiceAgreements under APS’ FERC ElectricTariff, Original Volume No. 3, forservice to the Electric Districts Nos. 1and 3 of Pinal County, Arizona.

A copy of this filing has been servedon the Arizona CorporationCommission, the Electric Districts Nos.1 and 3.


15. Rochester Gas and ElectricCorporation


Take notice that on November 5,1998, Rochester Gas and ElectricCorporation (RG&E), tendered for filinga Service Agreement between RG&E andthe Strategic Energy LTD., (Customer).This Service Agreement specifies thatthe Customer has agreed to the rates,terms and conditions of the RG&E openaccess transmission tariff filed on July 9,1996 in Docket No. OA96–141-000.

RG&E requests waiver of theCommission’s sixty (60) day noticerequirements and an effective date ofNovember 5, 1998, for the StrategicEnergy LTD., Service Agreement.

RG&E has served copies of the filingon the New York State Public ServiceCommission and on the Customer.


16. South Carolina Electric & GasCompany


Take notice that on November 9,1998, South Carolina Electric & GasCompany (SCE&G), tendered for filing aservice agreement establishingSoutheastern Power Administration(SEPA) as a customer under the terms ofSCE&G’s Open Access TransmissionTariff.

SCE&G requests an effective date ofone day subsequent to the filing of theservice agreement. Accordingly, SCE&Grequests waiver of the Commission’snotice requirements.

Copies of this filing were served uponSEPA and the South Carolina PublicService Commission.


17. Allegheny Power ServiceCorporation, on behalf of MonongahelaPower Co., The Potomac EdisonCompany, and West Penn PowerCompany (Allegheny Power)


Take notice that on November 9,1998, Allegheny Power ServiceCorporation on behalf of MonongahelaPower Company, The Potomac EdisonCompany and West Penn PowerCompany (Allegheny Power), filedSupplement No. 39 to add PG&E EnergyTrading—Power, L.P. and TransAltaEnergy Marketing (U.S.) Inc., toAllegheny Power Open AccessTransmission Service Tariff which hasbeen submitted for filing by the FederalEnergy Regulatory Commission inDocket No. OA96–18–000.

The proposed effective date under theService Agreements is November 6,1998.

Copies of the filing have beenprovided to the Public UtilitiesCommission of Ohio, the PennsylvaniaPublic Utility Commission, theMaryland Public Service Commission,the Virginia State CorporationCommission, the West Virginia PublicService Commission.

18. Washington Water Power Company


Take notice that on November 9,1998, Washington Water PowerCompany (WWP), tendered for filingwith the Federal Energy RegulatoryCommission, pursuant to 18 CFRSection 35.13, an executed ServiceAgreement under WWP’s FERC ElectricTariff First Revised Volume No. 9, withMerchant Energy Group of theAmericas, Inc.


1 Central Hudson Gas & Electric Corporation,Consolidated Edison Company of New York, Inc.,Long Island Power Authority, New York PowerAuthority, New York State Electric & GasCorporation, Niagara Mohawk Power Corporation,Orange and Rockland Utilities, Inc. and RochesterGas and Electric Corporation.

WWP requests waiver of the priornotice requirement and requests that theService Agreement with MerchantEnergy Group of the Americas, Inc., beaccepted for filing effective October 22,1998.


19. Delmarva Power & Light Company


Take notice that on November 9,1998, Delmarva Power & Light Company(Delmarva), tendered for filing executedumbrella service agreements with NGEGeneration, Inc., and Northern/AESEnergy, L.L.C., under Delmarva’s marketrate sales tariff.


20. Northern Indiana Public ServiceCompany


Take notice that on November 9,1998, Northern Indiana Public ServiceCompany, tendered for filing anexecuted Standard TransmissionService Agreement for Non-Firm Point-to-Point Transmission Service betweenNorthern Indiana Public ServiceCompany and TransAlta EnergyMarketing (U.S.) Inc. (TransmissionCustomer).

Under the Transmission ServiceAgreement, Northern Indiana PublicService Company will provide Point-to-Point Transmission Service toTransmission Customer pursuant to theTransmission Service Tariff filed byNorthern Indiana Public ServiceCompany in Docket No. OA96–47–000and allowed to become effective by theCommission.

Northern Indiana Public ServiceCompany has requested that the ServiceAgreement be allowed to becomeeffective as of November 30, 1998.

Copies of this filing have been sent tothe Indiana Utility RegulatoryCommission and the Indiana Office ofUtility Consumer Counselor.


21. Public Service Company of NewMexico


Take notice that on November 9,1998, Public Service Company of NewMexico (PNM), tendered for filing anexecuted service agreement datedOctober 30, 1998, for non-firm point-to-point transmission service under theterms of PNM’s Open Access

Transmission Service Tariff, withSouthern California Edison Company.PNM’s filing is available for publicinspection at its offices in Albuquerque,New Mexico.

PNM requests an effective date ofSeptember 25, 1998 for the Serviceagreement.


22. Central Hudson Gas & ElectricCorporation, Consolidated EdisonCompany of New York, Inc., LongIsland Power Authority, New YorkState Electric & Gas Corporation,Niagara Mohawk Power Corporation,Orange and Rockland Utilities, Inc.,Rochester Gas & Electric Corporation,and Power Authority of the state ofNew York

[Docket Nos. ER97–1523–000, OA97–470–000, and ER97–4234–000]

Take notice that on October 23, 1998,the Member Systems of the New YorkPower Pool 1 tendered an ISOGovernance Issues Agreement.

Comment date: December 2, 1998, inaccordance with Standard Paragraph Eat the end of this notice.

Standard Paragraphs

E. Any person desiring to be heard orto protest said filing should file amotion to intervene or protest with theFederal Energy Regulatory Commission,888 First Street, N.E., Washington, D.C.20426, in accordance with Rules 211and 214 of the Commission’s Rules ofPractice and Procedure (18 CFR 385.211and 18 CFR 385.214). All such motionsor protests should be filed on or beforethe comment date. Protests will beconsidered by the Commission indetermining the appropriate action to betaken, but will not serve to makeprotestants parties to the proceeding.Any person wishing to become a partymust file a motion to intervene. Copiesof these filings are on file with theCommission and are available for publicinspection.David P. Boergers,Secretary.[FR Doc. 98–31446 Filed 11–24–98; 8:45 am]




Notice of Application Accepted forFiling and Soliciting Motions ToIntervene, Protests, and Comments

November 19, 1998.Take notice that the following

hydroelectric application has been filedwith the Commission and is availablefor public inspection:

a. Type of Application: PreliminaryPermit.

b. Project No.: 11623–000.c. Date filed: November 3, 1998.d. Applicant: Energy Recycling

Company.e. Name of Project: Klamath County

Water Power Project.f. Location: In Klamath County,

Oregon, partially in Bureau of LandManagement lands. T39S, R11E(sections 35 and 36), T39S, R12E(sections 19, 20, 30, and 31), T40S, R12E(sections 1, 2, 11, 12, 13, 14, 24, 25, and26), T40S, R13E (section 6).

g. Filed Pursuant to: Federal PowerAct, 16 U.S.C. §§ 791(a)–825(r).

h. Applicant Contact: Mr. DouglasSpaulding, Energy Recycling Company,1030 North Tyrol Trail, Minneapolis,MN 55416, (612) 315–6309.

i. FERC Contact: Any questions onthis notice should be addressed toHéctor M. Pérez, E-mail [email protected], or telephone202–219–2843.

j. Deadline for filing motions tointervene and protest: 60 days from theissuance date of this notice.

All documents (original and eightcopies) should be filed with: David P.Boergers, Secretary, Federal EnergyRegulatory Commission, Washington,DC 20426.

The Commission’s Rules of Practiceand Procedure require all intervenorsfiling documents with the Commissionto serve a copy of that document oneach person whose name appears on theofficial service list for the project.Further, if an intervenor files commentsor documents with the Commissionrelating to the merits of an issue thatmay affect the responsibilities of aparticular resource agency, they mustalso serve a copy of the document onthat resource agency.

k. Description of the Project: Theproposed pumped storage project wouldconsist of the following new facilities:(1) An upper reservoir with a maximumstorage capacity of 14,300 acre-feet andan area of 199 acres at maximum normalwater surface elevation of 5,523 feetabove mean sea level (msl), impounded


by two earth and rock fill embankments,178 and 50-foot-high, respectively, witha crest elevation of 5,533 feet msl; (2) a24-foot-diameter, 1,326-foot-longvertical shaft; (3) a 24-foot-diameter,3,200-foot-long concrete-lined tunnel;(4) four, 12-foot-diameter, 355-foot-long,steel-lined penstocks; (5) a powerhousewith four 250-megawatt pump/turbines;(6) a 1,500-foot-long by 38-foot-wide D-shaped tailrace tunnel; (7) a lowerreservoir with a maximum storagecapacity of 16,900 acre-feet and an areaof 405 acres at maximum water surfaceelevation of 4,191 feet msl, impoundedby a 49-foot-high earth and rockfillembankment, with a crest elevation of4,200 feet msl; (8) a 4-mile-long, 500-kilovolt transmission line connectingthe project to Captain Jack substation;and (9) other appurtenances. The projectwould operate as a closed system usingwater obtained from groundwatersources.

l. Locations of the application: A copyof the application is available forinspection and reproduction at theCommission’s Public Reference Room,located at 888 First Street, NE., Room2A, Washington, DC 20426, or by calling(202) 208–1371. The application may beviewed on the web at www.ferc.fed.us.Call (202) 208–2222 for assistance. Acopy is also available for inspection andreproduction at the address in item habove.

m. This notice also consists of thefollowing standard paragraphs: A5, A7,A9, A10, B, C, and D2.

A5. Preliminary Permit—Anyonedesiring to file a competing applicationfor preliminary permit for a proposedproject must submit the competingapplication itself, or a notice of intent tofile such an application, to theCommission on or before the specifiedcomment date for the particularapplication (see 18 CFR 4.36).Submission of a timely notice of intentallows an interested person to file thecompeting preliminary permitapplication no later than 30 days afterthe specified comment date for theparticular application. A completingpreliminary permit application mustconform with 18 CFR 4.30(b) and 4.36.

A7. Preliminary Permit—Anyqualified development applicantdesiring to file a competingdevelopment application must submit tothe Commission, on or before aspecified comment date for theparticular application, either acompeting development application or anotice of intent to file such anapplication. Submission of a timelynotice of intent to file a developmentapplication allows an interested personto file the competing application no

later than 120 days after the specifiedcomment date for the particularapplication. A competing licenseapplication must conform with 18 CFR4.30(b) and 4.36.

A9. Notice of intent—A notice ofintent must specify the exact name,business address, and telephone numberof the prospective applicant, and mustinclude an unequivocal statement ofintent to submit, if such an applicationmay be filed, either a preliminarypermit application or a developmentapplication (specify which type ofapplication). A notice of intent must beserved on the applicant(s) named in thispublic notice.

A10. Proposed Scope of Studies underPermit—A preliminary permit, if issued,does not authorize construction. Theterm of the proposed preliminary permitwould be 36 months. The workproposed under the preliminary permitwould include plans, and a study ofenvironmental impacts. Based on theresults of these studies, the Applicantwould decide whether to proceed withthe preparation of a developmentapplication to construct and operate theproject.

B. Comments, Protests, or Motions toIntervene—Anyone may submitcomments, a protest, or a motion tointervene in accordance with therequirements of Rules of Practice andProcedure, 18 CFR 385.210, .211 .214. Indetermining the appropriate action totake, the Commission will consider allprotests or other comments filed, butonly those who file a motion tointervene in accordance with theCommission’s Rules may become aparty to the proceeding. Any comments,protests, or motions to intervene mustbe received on or before the specifiedcomment date for the particularapplications.

C. Filing and Service of ResponsiveDocuments—Any filings must bear inall capital letters the title‘‘COMMENTS’’, ‘‘NOTICE OF INTENTTO FILE COMPETING APPLICATION’’,‘‘COMPETING APPLICATION’’,‘‘PROTEST’’, ‘‘MOTION TOINTERVENE’’, as applicable, and theProject Number of the particularapplication to which the filing refers.Any of the above-named documentsmust be filed by providing the originaland the number of copies provided bythe Commission’s regulations to: TheSecretary, Federal Energy RegulatoryCommission, 888 First Street, NE.,Washington, DC 20426. An additionalcopy must be sent to Director, Divisionof Project Review, Federal EnergyRegulatory Commission, at the above-mentioned address. A copy of anynotice of intent, competing application

or motion to intervene must also beserved upon each representative of theApplicant specified in the particularapplication.

D2. Agency Comments—Federal,state, and local agencies are invited tofile comments on the describedapplication. A copy of the applicationmay be obtained by agencies directlyfrom the Applicant. If an agency doesnot file comments within the timespecified for filing comments, it will bepresumed to have no comments. Onecopy of an agency’s comments must alsobe sent to the Applicant’srepresentatives.Linwood A. Watson, Jr.,Acting Secretary.[FR Doc. 98–31453 Filed 11–24–98; 8:45 am]BILLING CODE 6717–01–M


[OPP–00551A; FRL–6046–8]

Rodenticide Cluster ReregistrationEligibility Decision Document forComment

AGENCY: Environmental ProtectionAgency (EPA).ACTION: Reopening of Comment Period.

SUMMARY: This notice announces thereopening of the original 60–daycomment period, starting a new 30–daypublic comment period for theRodenticide Cluster ReregistrationEligibility Decision (RED) document (63FR 48729, September 11, 1998)(FRL–6027–7). This document includes theactive ingredients brodifacoum (case2755), bromadiolone (case 2760),bromethalin (case 2765),chlorophacinone (case 2100),diphacinone and its sodium salt (case2205), and pival and its sodium salt(case 2810).DATES: Written comments on the REDdecisions must be submitted byDecember 28, 1998.ADDRESSES: Three copies of commentsidentified with the docket controlnumber ‘‘OPP–00551A’’ and the casenumber (noted below), should besubmitted to: By mail: PublicInformation and Records IntegrityBranch, Information Resources andServices Division (7506C), Office ofPesticide Programs, EnvironmentalProtection Agency, 401 M St., SW.,Washington, DC 20460. In person,deliver comments to the docket on thefirst floor (Room 119), CM #2, 1921Jefferson Davis Highway, Arlington, VA.

Comments and data may also besubmitted electronically by following


the instructions under‘‘SUPPLEMENTARY INFORMATION’’of this document. No ConfidentialBusiness Information (CBI) should besubmitted through e-mail.

Information submitted as a commentin response to this notice may beclaimed confidential by marking anypart or all of that information as CBI.Information so marked will not bedisclosed except in accordance withprocedures set forth in 40 CFR part 2.A copy of the comment that does notcontain CBI must be submitted forinclusion in the public docket.Information not marked confidentialwill be included in the public docketwithout prior notice (includingcomments and data submittedelectronically). The public docket anddocket index, including printed paperversions of electronic comments, whichdoes not include any informationclaimed as CBI will be available forpublic inspection on the first floor(Room 119) at the address given above,from 8:30 a.m. to 4 p.m., Mondaythrough Friday, excluding legalholidays.FOR FURTHER INFORMATION CONTACT:Technical questions on the REDdocuments listed below should bedirected to Dennis Deziel at (703) 308–8173.

To request a copy of any of the REDdocuments listed in the SUMMARY, ora specific RED Fact Sheet, contact theOPP Pesticide Docket, PublicInformation and Records IntegrityBranch, first floor (Room 119), at theaddress given above or call (703) 305–5805.SUPPLEMENTARY INFORMATION:

I. Electronic AvailabilityElectronic copies of the REDs and

RED fact sheets can be downloadedfrom the Pesticide ReregistrationEligibility Decisions (REDs) home pageat http://www.epa.gov/REDs.

II. Reregistration DecisionThe Agency has issued Reregistration

Eligibility Decision (RED) documents forthe pesticidal active ingredients listedin the SUMMARY above. Under theFederal Insecticide, Fungicide, andRodenticide Act, as amended in 1988,EPA is conducting an acceleratedreregistration program to reevaluateexisting pesticides to make sure theymeet current scientific and regulatorystandards. The data base to support thereregistration of each of the chemicalslisted above is substantially complete.

The Agency has received a requestfrom the California Deparment of Foodand Agriculture to exend (or reopen) theRodenticide Cluster RED comment

period due to the extensive nature ofthis RED, and due to the fact that manyregistrants, including California, havemultiple registrations with multipleactive ingredients within therodenticide cluster. The originalcomment period closed on November10, 1998. The Agency believes that anadditional 30-day comment period forthe Rodenticide Cluster RED is justified,therefore, the Agency is reopening thecomment period for an additional 30days.

The official record for this notice, aswell as the public version, has beenestablished for this notice under docketcontrol number ‘‘OPP–00551A’’(including comments and datasubmitted electronically as describedbelow). A public version of this record,including printed, paper versions ofelectronic comments, which does notinclude any information claimed as CBI,is available for inspection from 8:30a.m. to 4 p.m., Monday through Friday,excluding legal holidays. The officialrecord is located at the address in‘‘ADDRESSES’’ at the beginning of thisdocument.

Electronic comments can be sentdirectly to EPA at: [email protected]

Electronic comments must besubmitted as an ASCII file avoiding theuse of special characters and any formof encryption. Comment and data willalso be accepted on disks inWordperfect 6.1 file format or ASCII fileformat. All comments and data inelectronic form must be identified bythe docket control number (OPP–00551A). Electronic comments on thisnotice may be filed online at manyFederal Depository Libraries.

List of SubjectsEnvironmental protection.

Rodenticide.


Jack E. Housenger,

Acting Director, Special Review andReregistration Division, Office of PesticidePrograms.



[OPP–00555; FRL–6038–9]

Pesticide Registration ReinventionMeasures

AGENCY: Environmental ProtectionAgency (EPA).

ACTION: Notice of availability.

SUMMARY: EPA has issued updatedpolicies and procedures concerningcertain types of registrationamendments. This document isavailable in a Pesticide Registration (PR)Notice entitled ‘‘Notifications, Non-notifications, and Minor FormulationAmendments’’ which is available uponrequest. EPA proposed this policy for 30days of public comment on October 1,1997 (62 FR 51467) (FRL–5742–1).Interested parties may request a copy ofthe Agency’s final policy as set forth inthe ADDRESSES unit of this notice.

ADDRESSES: The PR Notice is availablefrom Linda Arrington; by mail:Registration Division (7505C),Environmental Protection Agency, 401M St., SW., Washington, DC 20460.Office location and telephone number:Rm. 713D, CM#2, 1921 Jefferson DavisHighway, Arlington, VA (703) 305–5446, e-mail: [email protected].

FOR FURTHER INFORMATION CONTACT: Bymail: Linda Arrington (7505C),Environmental Protection Agency, 401M St., SW., Washington, DC 20460.Office location and telephone number:Rm. 713D, CM#2, 1921 Jefferson DavisHighway, Arlington, VA (703) 305–5446, e-mail: [email protected].


I. Electronic Availability

A. Internet

Electronic copies of this documentand the PR Notice also are availablefrom the EPA Home page at the FederalRegister - Environmental Documentsentry for this document under ‘‘Lawsand Regulations’’ (http://www.epa.gov/fedrgstr/).

B. Fax-on-Demand

For Fax-on-Demand, use a faxphoneto call 202–401–0527 and select item6118 for a copy of the PR Notice.

II. Purpose

This Federal Register noticeannounces the availability of the finalPR Notice which reinvents theregistration process by expanding thetypes of minor amendments which maybe accomplished by notification, non-notification or minor formula changes.This PR Notice supersedes PR Notice95–2 (May 31, 1995). The goal of thisnotice is to increase the efficiency andtimeliness of the registrationamendment process so as to reduceregulatory burdens while maintainingprotection to human health and theenvironment.


III. ApplicabilityThe PR Notice applies to all

applicants seeking minor registrationamendments which meet the criteria inthe notice.

IV. Contents of the PR NoticeThe PR Notice simply expands the

current PR Notice 95–2 to include morekinds of minor labeling amendmentswhich may be accomplished bynotification or non-notification. Inaddition, the notice revises the processfor submission and review ofnotifications to reflect the newrequirements of the Food QualityProtection Act (FQPA) of 1996, whichrequired a new process be establishedfor antimicrobial products. Finally, thenotice describes a process for expeditingthe review of minor formulationamendments.

V. Public RecordPublic comments submitted

concerning the draft PR Notice werefully considered before this notice wasmade final. All public comments, aswell as a summary of the Agency’sresponses to those comments, are filedin the Office of Pesticide ProgramsDocket Office under docket controlnumber ‘‘OPP-00555.’’ The publicrecord is available for inspection from8:30 a.m. to 4 p.m., Monday throughFriday, excluding legal holidays. Thepublic record is located in Rm. 119,CM#2, 1921 Jefferson Davis Highway,Arlington, VA. To contact the docketoffice by mail, telephone, or e-mail:Public Information and RecordsIntegrity Branch, Information Resources

and Services Division (7502C), Office ofPesticide Programs, EnvironmentalProtection Agency, 401 M St., SW.,Washington, DC 20460; (703) 305–5805;e-mail: [email protected].

List of Subjects

Environmental protection,Administrative practice and procedure,Agricultural commodities, Pesticidesand pests.


Arnold E. Layne,

Acting Director, Registration Division, Officeof Pesticide Programs.



[OPP–30462; FRL–6038–8]

Certain Companies; Applications toRegister Pesticide Products

AGENCY: Environmental ProtectionAgency (EPA).ACTION: Notice.

SUMMARY: This notice announces receiptof applications to register pesticideproducts containing new activeingredients not included in anypreviously registered products pursuantto the provisions of section 3(c)(4) of theFederal Insecticide, Fungicide, andRodenticide Act (FIFRA), as amended.DATES: Written comments must besubmitted by December 28, 1998.

ADDRESSES: By mail, submit writtencomments identified by the documentcontrol number [OPP–30462] and thefile symbols to: Public Information andRecords Intregrity Branch, InformationResources and Services Division(7502C), Office of Pesticide Programs,Environmental Protection Agency, 401M St., SW., Washington, DC 20460. Inperson, bring comments to:Environmental Protection Agency, Rm.119, Crystal Mall #2, 1921 JeffersonDavis Hwy., Arlington, VA.

Comments and data may also besubmitted electronically to: [email protected]. Follow theinstructions under ‘‘SUPPLEMENTARYINFORMATION.’’ No ConfidentialBusiness Information (CBI) should besubmitted through e-mail.

Information submitted as a commentconcerning this notice may be claimedconfidential by marking any part or allof that information as CBI. Informationso marked will not be disclosed exceptin accordance with procedures set forthin 40 CFR part 2. A copy of thecomment that does not contain CBImust be submitted for inclusion in thepublic record. Information not markedconfidential may be disclosed publiclyby EPA without prior notice. The publicdocket is available for public inspectionin Rm. 119 at the Virginia address givenabove, from 8:30 a.m. to 4 p.m., Mondaythrough Friday, excluding holidays.FOR FURTHER INFORMATION CONTACT: TheRegulatory Action Leader, Biopesticidesand Pollution Prevention Division(7511C), in the table listed below:

Regulatory ActionLeader Office location/telephone number Address

Edward Allen .................. 9th floor, CM #2, 703–308–8699, e-mail:[email protected]. 1921 Jefferson Davis Hwy, Ar-lington, VA

Sheila Moats .................. 9th floor, CM #2, 703–308–1259, e-mail: [email protected]. Do.

SUPPLEMENTARY INFORMATION: EPAreceived applications as follows toregister pesticide products containingactive ingredients not included in anypreviously registered products pursuantto the provision of section 3(c)(4) ofFIFRA. Notice of receipt of theseapplications does not imply a decisionby the Agency on the applications.

I. Products Containing ActiveIngredients Not Included In AnyPreviously Registered Products

1. File Symbol: 70724–E. Applicant:Agrium Inc., 402-15 Innovation Blvd.,Saskatoon, Saskatchewan Canada S7N2X8. Product Name: AtEze. MicrobialPesticide. Active ingredient:

Pseudomonas chlororphis strain 63-28at 1.15%. Proposed classification/Use:None. For the suppression of root/stemrot pathogens of greenhouse crops. (E.Allen)

2. File Symbol: 57538–RA. Applicant:Stoller Enterprises, Inc., 8580 KatyFreeway, Suite 200, Houston, TX 70024.Product Name: Adjust I. Biochemical.Active ingredient: Salicylic acid at0.87%. Proposed classification/Use:None. For use on a variety ofagricultural, horticultural applicationsto enchance plant defense againstpathogens. (S. Moats)

Notice of approval or denial of anapplication to register a pesticideproduct will be announced in the

Federal Register. The procedure forrequesting data will be given in theFederal Register if an application isapproved.

Comments received within thespecified time period will be consideredbefore a final decision is made;comments received after the timespecified will be considered only to theextent possible without delayingprocessing of the application.


The official record for this notice, aswell as the public version, has beenestablished for this notice under docketnumber [OPP–30462] (including


comments and data submittedelectronically as described below). Apublic version of this record, includingprinted, paper versions of electroniccomments, which does not include anyinformation claimed as CBI, is availablefor inspection from 8:30 a.m. to 4 p.m.,Monday through Friday, excluding legalholidays. The official notice record islocated at the address in ‘‘ADDRESSES’’at the beginning of this document.

Electronic comments can be sentdirectly to EPA at:

[email protected]

Electronic comments must besubmitted as an ASCII file avoiding theuse of special characters and any formof encryption. Comment and data willalso be accepted on disks inWordperfect 5.1/6.1 or ASCII fileformat. All comments and data inelectronic form must be identified bythe docket number [OPP–30462].Electronic comments on this notice maybe filed online at many FederalDepository Libraries.

Authority: 7 U.S.C. 136.

List of SubjectsEnvironmental protection, Pesticides

and pest, Product registration.Dated: October 22, 1998.

Janet L. Andersen,

Director, Biopesticides and PollutionPrevention Division, Office of PesticidePrograms.



[OPP–30421A; FRL–6038–6]

Babolna Bioenvironmental Centre Ltd.;Approval of a Pesticide ProductRegistration


SUMMARY: This notice announcesAgency approval of an application toregister the pesticide product BabolnaInsect Attractant Trap, containing a newactive ingredient not included anypreviously registered product pursuantto the provisions of section 3(c)(5) of theFederal Insecticide, Fungicide, andRodenticide Act (FIFRA), as amended.FOR FURTHER INFORMATION CONTACT: Bymail: Sheila Moats, Regulatory ActionLeader, Biopesticides and PollutionPrevention Division (7511C), Office ofPesticide Programs, Environmental

Protection Agency, 401 M St., SW.,Washington, DC 20460. Office location,telephone number, and e-mail address:Rm. 9th floor, Crystal Mall #2, 1921Jefferson Davis Hwy., Arlington, VA,22202, (703) 308–1259, e-mail:[email protected] INFORMATION:Electronic Availability: Electroniccopies of this document and the FactSheet are available from the EPA homepage at the Federal Register-Environmental Documents entry for thisdocument under ‘‘Laws andRegulations’’ (http://www.epa.gov/fedrgstr/).

EPA issued a notice, published in theFederal Register of October 9, 1996 (61FR 52942)(FRL–5395–6), whichannounced that BabolnaBioenvironmental Centre Ltd., 1107Budapest X., Szallas U.6, Hungary, hadsubmitted an application to register thepesticide product Babolna InsectAttractant Trap (EPA File Symbol070062–R), containing the activeingredient maple lactone [2-hydroxy-3-methyl-cyclo-pent-2-en-1-one at 1.0%,an active ingredient not included in anypreviously registered product. The U.S.Agent for this company is c/o LandisInternational Inc., P.O. Box 5126,Valdosta, GA 31603-5209.

The application was approved onSeptember 30, 1998, as Babolna InsectAttractant Trap for use as a monitoringdevice and as a control treatment oncockroaches (EPA Registration Number70062–1).

The Agency has considered allrequired data on risks associated withthe proposed use of maple lactone, andinformation on social, economic, andenvironmental benefits to be derivedfrom use. Specifically, the Agency hasconsidered the nature of the chemicaland its pattern of use, applicationmethods and rates, and level and extentof potential exposure. Based on thesereviews, the Agency was able to makebasic health safety determinationswhich show that use of maple lactonewhen used in accordance withwidespread and commonly recognizedpractice, will not generally causeunreasonable adverse effects to theenvironment.

More detailed information on thisregistration is contained in the EPAPesticide Fact Sheet on maple lactone.

A paper copy of the fact sheet, whichprovides a summary description of thepesticides, use patterns andformulations, science findings, and theAgency’s regulatory position andrationale, may be obtained from theNational Technical Information Service

(NTIS), 5285 Port Royal Road,Springfield, VA 22161.

In accordance with section 3(c)(2) ofFIFRA, a copy of the approved label, thelist of data references, the data and otherscientific information used to supportregistration, except for materialspecifically protected by section 10 ofFIFRA, are available for publicinspection in the Public Informationand Records Integrity Branch,Information Resources and ServicesDivision (7502C), Office of PesticidePrograms, Environmental ProtectionAgency, Rm. 119, CM #2, Arlington, VA22202 (703–305–5805). Requests fordata must be made in accordance withthe provisions of the Freedom ofInformation Act and must be addressedto the Freedom of Information Office (A-101), 401 M St., SW., Washington, DC20460. Such requests should: (1)Identify the product name andregistration number and (2) specify thedata or information desired.


List of Subjects

Environmental protection, Pesticidesand pests, Product registration.


Janet L. Andersen,




[OPP–30448A; FRL–6038–7]

Ecogen, Inc.; Approval of a PesticideProduct Registration


SUMMARY: This notice announcesAgency approval of an application toconditionally register the pesticideproduct BTI Technical PowderBioinsecticide containing a new activeingredient not included in anypreviously registered product pursuantto the provisions of section 3(c)(7)(C) ofthe Federal Insecticide, Fungicide, andRodenticide Act (FIFRA), as amended.FOR FURTHER INFORMATION CONTACT: Bymail: Alan Reynolds, Regulatory ActionLeader, Biopesticides and PollutionPrevention Division (7511C), Office ofPesticide Programs, 401 M St., SW.,Washington, DC 20460. Office locationand telephone number: Rm. 9th floor,


Crystal Mall #2, EnvironmentalProtection Agency, 1921 Jefferson DavisHwy, Arlington, VA 22202, 703–605–0515; e-mail:[email protected] INFORMATION:Electronic Availability: Electroniccopies of this document and the FactSheet are available from the EPA homepage at the Federal RegisterEnvironmental Sub-Set entry for thisdocument under ‘‘Laws andRegulations’’ (http://www.epa.gov/fedrgstr/).

EPA issued a notice, published theFederal Register of February 25, 1998(63 FR 9517)(FRL–5773–7), whichannounced that Ecogen Inc., 2005 CabotBlvd., West, P.O. Box 3023 Langhorne,PA 19047–3023, had submitted anapplication to conditionally register thepesticide product BTI Technical PowderBioinsecticide (EPA File Symbol 55638–UR) containing the active ingredientBacillus thuringiensis subspeciesisraelensis strain EG2215 at 20%, anactive ingredient not included in anypreviously registered pesticide product.

The application was approved onSeptember 30, 1998, as BTI TechncialPowder Bioinsecticide, a manufacturinguse product for formulation into end-use products to control mosquitoes(EPA Registration Number 55638–41).

A conditional registration may begranted under section 3(c)(7)(C) ofFIFRA for a new active ingredient wherecertain data are lacking, on conditionthat such data are received by the endof the conditional registration periodand do not meet or exceed the riskcriteria set forth in 40 CFR 154.7; thatuse of the pesticide during theconditional registration period will notcause unreasonable adverse effects; andthat use of the pesticide is in the publicinterest. The Agency has considered theavailable data on the risks associatedwith the proposed use of Bacillusthuringiensis subspecies israelensisstrain EG2215, and information onsocial, economic, and environmentalbenefits to be derived from such use.Specifically, the Agency has consideredthe nature and its pattern of use,application methods and rates, and leveland extent of potential exposure. Basedon these reviews, the Agency was ableto make basic health and safetydeterminations which show that use ofBacillus thuringiensis subspeciesisraelensis strain EG2215 during theperiod of conditional registration willnot cause any unreasonable adverseeffect on the environment, and that useof the pesticide is, in the public interest.

Consistent with section 3(c)(7)(C), theAgency has determined that this

conditional registration is in the publicinterest. Use of the pesticides are ofsignificance to the user community, andappropriate labeling, use directions, andother measures have been taken toensure that use of the pesticides will notresult in unreasonable adverse effects toman and the environment.

The studies listed below must becompleted within 6 months of the dateof the conditional registration:

1. A Daphnia Study.2. An Interperitoneal Injection Study.3. Mosquito Bioassay to Verify the

Potency of the Toxin.4. An Eye/Dermal Irritattion Study.This product is conditionally

registered in accordance with FIFRAsection 3(c)(7)(C). If these conditions arenot complied with, the registration willbe cancelled in accordance with FIFRAsection 6(e).

More detailed information on thisconditional registration is contained inan EPA Pesticide Fact Sheet on Bacillusthuringiensis subspecies israelensisstrain EG2215.

A paper copy of this fact sheet, whichprovides a summary description of thechemical, use patterns andformulations, science findings, and theAgency’s regulatory position andrationale, may be obtained from theNational Technical Information Service(NTIS), 5285 Port Royal Road,Springfield, VA 22161.

In accordance with section 3(c)(2) ofFIFRA, a copy of the approved label, thelist of data references, the data and otherscientific information used to supportregistration, except for materialspecifically protected by section 10 ofFIFRA, are available for publicinspection in the Public Informationand Records Intregrity Branch,Information Resources and ServicesDivision (7502C), Office of PesticidePrograms, Environmental ProtectionAgency, Rm. 119, CM #2, Arlington, VA22202 (703–305–5805). Requests fordata must be made in accordance withthe provisions of the Freedom ofInformation Act and must be addressedto the Freedom of Information Office (A-101), 401 M St., SW., Washington, DC20460. Such requests should: (1)Identify the product name andregistration number and (2) specify thedata or information desired.


List of Subjects

Environmental protection, Pesticidesand pests, Product registration.


Janet L. Andersen,




[PF–841; FRL 6039–7]

Notice of Filing of Pesticide Petition


SUMMARY: This notice announces theinitial filing of a pesticide petition (PP)8G5008 for an exemption from therequirement of a temporary tolerance forresidues of the biopesticide, 2,6-diisopropylnapthalene (2,6-DIPN) whenused to inhibit sprouting in potatoesheld in storage.DATES: Comments, identified by thedocket control number (PF–841), mustbe received on or before December 28,1998.ADDRESSES: By mail submit writtencomments to: Public Information andRecords Integrity Branch (7502C),Information Resources and ServicesDivision, Office of Pesticide Programs,Environmental Protection Agency, 401M St., SW., Washington, DC 20460. Inperson bring comments to: Rm. 119, CM#2, 1921 Jefferson Davis Highway,Arlington, VA.

Comments and data may also besubmitted electronically to: [email protected]. Follow theinstructions under ‘‘SUPPLEMENTARYINFORMATION.’’ No confidentialbusiness information should besubmitted through e-mail.

Information submitted as a commentconcerning this document may beclaimed confidential by marking anypart or all of that information asConfidential Business Information (CBI).CBI should not be submitted through e-mail. Information marked as CBI willnot be disclosed except in accordancewith procedures set forth in 40 CFR part2. A copy of the comment that does notcontain CBI must be submitted forinclusion in the public record.Information not marked confidentialmay be disclosed publicly by EPAwithout prior notice. All writtencomments will be available for publicinspection in Rm. 119 at the addressgiven above, from 8:30 a.m. to 4 p.m.,Monday through Friday, excluding legalholidays.


FOR FURTHER INFORMATION CONTACT: Bymail: Rita Kumar, PM 90, Biopesticidesand Pollution Prevention Division(7511C), Office of Pesticide Programs,Environmental Protection Agency, 401M St., SW., Washington, DC 20460.Office location, telephone number ande-mail: Rm. 902W5, CM#2, 1921Jefferson Davis Hwy., Arlington, VA22202, (703) 308–8291; e-mail:[email protected] INFORMATION: EPA hasreceived a pesticide petition as followsproposing the establishment and/oramendment of regulations for residuesof certain pesticide chemicals in or onvarious food commodities under section408 of the Federal Food, Drug, andComestic Act (FFDCA), 21 U.S.C. 346a.EPA has determined that this petitioncontains data or information regardingthe elements set forth in section408(d)(2); however, EPA has not fullyevaluated the sufficiency of thesubmitted data at this time or whetherthe data support granting of the petition.This petition was submitted to supportan application for an experimental usepermit (EUP) to treat potatoes in closedstorage facilities, to evaluate the controlof sprouting. A notice of receipt for thisEUP is being published elsewhere inthis issue of the Federal Register.Additional data may be needed beforeEPA rules on the petition.

The official record for this notice offiling, as well as the public version, hasbeen established for this notice of filingunder docket control number (PF–841)(including comments and datasubmitted electronically as describedbelow). A public version of this record,including printed, paper versions ofelectronic comments, which does notinclude any information claimed as CBI,is available for inspection from 8:30a.m. to 4 p.m., Monday through Friday,excluding legal holidays. The officialrecord is located at the address in‘‘ADDRESSES’’ at the beginning of thisdocument.


[email protected]

Electronic comments must besubmitted as an ASCII file avoiding theuse of special characters and any formof encryption. Comments and data willalso be accepted on disks inWordperfect 5.1/6.1 or ASCII fileformat. All comments and data inelectronic form must be identified bythe docket number (PF-841) andappropriate petition number. Electroniccomments on this notice may be filedonline at many Federal DepositoryLibraries.

List of SubjectsEnvironmental protection,

Agricultural commodities, Feedadditives, Food additives, Pesticidesand pests, Reporting and recordkeepingrequirements.


Janet L. Andersen,


Summary of the PetitionPetitioners summary of the pesticide

petition is printed below as required bysection 408(d)(3) of the FFDCA. Thesummary of the petition was preparedby the petitioners and represent theviews of the petitioners. EPA ispublishing the petition summaryverbatim with minor non-substantiveeditorial changes. The petiton summaryannounces the availability of adescription of the analytical methodsavailable to EPA for the detection andmeasurement of the pesticide chemicalresidues or an explanation of why nosuch method is needed.

Platte Chemical Company

PP 8G5008EPA has received a pesticide petition

(PP) 8G5008 from Platte ChemicalCompany, 419, 18th Street, Greeley, CO80632, proposing pursuant to section408(d) of the (FFDCA), 21 U.S.C.346a(d), to amend 40 CFR part 180 byestablishing an exemption from therequirement of a temporary tolerance forresidues of 2,6-DIPN in or on the rawagriculture commodity potatoes.

Pursuant to section 408(d)(2)(A)(i) ofthe FFDCA, as amended, PlatteChemical Company has submitted thefollowing summary of information, dataand arguments in support of theirpesticide petition. This summary wasprepared by Platte Chemical Companyand EPA has not fully evaluated themerits of the petition. The summarymay have been edited by EPA if theterminology used was unclear, thesummary contained extraneousmaterial, or the summary was not clearthat it reflected the conclusion of thepetitioner and not necessarily EPA.

A. Proposed Use PracticesThe proposed experimental program

will be conducted in potato storagefacilities located in Idaho, Maine,Minnesota, North Dakota, Oregon,Washington, and Wisconsin. Storedpotatoes will be treated in one or twofacilities in each state. The proposedexperimental program would utilize1,500 pounds of active ingredient on

approximately 90 million pounds ofstored potatoes during 1998 and 1999.The active ingredient, 2,6-DIPN, is aplant growth regulator that will beapplied as an aerosol at a rate of onepound active ingredient per 60,120pounds of potatoes, to achieve an initialresidue of 16.6 parts per million (ppm).A maximum of 3 applications may bemade while the potatoes are held instorage.

B. Product Identity/Chemistry1. Identity of the biopesticide. EPA

has classified DIPN as a biochemicalpesticide. The formulated end product,Amplify Sprout Inhibitor, contains100% DIPN as the active ingredientwhich is an odorless liquid.

C. Residue ChemistryPlatte conducted studies to determine

2,6-DIPN residues in whole potatoesand peels at various times, up to 180days, following 1 to 3 treatments at themaximum application rate. A gaschromatography method was used tomeasure residues of 2,6-DIPN. Potatoeswere treated using a small chambersystem that reproduced a commercialenvironment, including temperaturesand humidity. The 2,6-DIPN wasapplied to the chambers using a foggingdevice that reproduced a commercialoperation, but on a small scale. Whentreated up to 3 times during storage ata rate of 1.2 pounds active ingredientper 60,120 pounds of potatoes andsampled 0 days after treatment (DAT) to180 DAT, residues in the peel rangedfrom 0.15 ppm to 4.05 ppm. Residuesfor whole potatoes ranged from 0.03ppm to 2.43 ppm.

The 2,6-DIPN residues for potato peelwere as follows: Potatoes treated 1 timeat 1.2 pounds active ingredient per60,120 pounds of potato had residues of2.82 ppm, 3.39 ppm, and 4.05 ppm at0 DAT; 1.01 ppm, 2.59 ppm, and 2.77ppm at 30 DAT; 0.33 ppm, 0.46 ppm,and 0.76 ppm at 90 DAT; and 0.15 ppm,0.24 ppm, and 0.24 ppm at 180 DAT.

Potatoes were treated 3 times at 1.2pounds active ingredient per 60,120pounds of potato per treatment at 0 dayand at 60 days, and 120 days after thefirst treatment.

The 2,6-DIPN residues in peels were2.18 ppm, 2.55 ppm, and 3.52 ppm at0 DAT; 1.30 ppm, 1.82 ppm, and 2.59ppm at 30 DAT; 2.43 ppm, 2.71 ppm,and 4.51 ppm at 60 DAT; 0.86 ppm, 1.32ppm, and 1.83 ppm at 90 DAT; 2.41ppm, 3.79 ppm, and 3.49 ppm at 120DAT; and 0.74 ppm, 0.86 ppm, and 0.91ppm at 180 DAT.

The 2,6-DIPN residues for wholepotatoes were as follows: Potatoestreated 1 time at 1.2 pounds active


ingredient per 60,120 pounds of potatohad residues of 0.82 ppm, 1.18 ppm,and 1.27 ppm at 0 DAT; 0.22 ppm, 0.28ppm, and 0.41 ppm at 30 DAT; 0.10ppm, 0.11 ppm, and 0.04 ppm at 90DAT; and 0.03 ppm, 0.03 ppm, and 0.05ppm at 180 DAT.

Potatoes treated 3 times at day 0, 60,and 120, as described above, had 2,6-DIPN residues of 0.83 ppm, 1.28 ppm,and 1.39 ppm at 0 DAT; 0.25 ppm, 0.30ppm, 0.37 ppm at 30 DAT; 0.80 ppm,1.07 ppm, and 2.43 ppm at 60 DAT; 0.28ppm, 0.42 ppm, and 0.62 ppm at 90DAT; 1.16 ppm, 1.79 ppm, and 1.86ppm at 120 DAT; and 0.13 ppm, 0.17ppm, and 0.24 ppm at 180 DAT.

Magnitude of residue at the time ofharvest and method used to determinethe residue. A statement of why ananalytical method for detecting andmeasuring the levels of the pesticideresidue are not needed. Since thepetitioner has requested a toleranceexemption, an analytical method todetect residues is not required.

D. Toxicology Profile1. Acute toxicity. Technical 2,6-DIPN

exhibits low acute toxicity. It is atoxicity category IV biopesticide. The ratoral LD50 is greater than 5,000milligram/kilogram (mg/kg), the rabbitdermal LD50 is greater than 5,000 mg/kg,and the rat inhalation LC50 is greaterthan 2.60 milligram/Liter (mg/L) at themaximum attainable condition. Inaddition, 2,6-DIPN is not a skinsensitizer in guinea pigs, shows nodermal irritation at 72 hours in rabbits,and shows minimal ocular irritation inrabbits. The end use formulation is thesame as the technical formulation; itcontains no intentionally added inertingredients.

2. Genotoxicity. Short-term assays forgenotoxicity consisting of a bacterialreverse mutation assay (Ames test), anin vivo/in vitro unscheduled DNAsynthesis in rat primary hepatocytecultures at 2 time points, and an in vivomouse micronucleus assay have beenconducted for 2,6-DIPN. These studiesshow a lack of genotoxicity for 2,6-DIPN.

3. Other tests. No additionalmammalian toxicology testing has beenconducted. Platte requested a waiverfrom the requirement to submit furthermammalian toxicology studies on thebasis of the favorable toxicologicalprofile for 2,6-DIPN, the low residuesobserved in treated potatoes, thespecific plant growth regulator mode ofaction, and the confined nature of theproposed use. No data were found in theliterature that would indicate 2,6-DIPNhas any adverse effect on mammals. Noincidents of hypersensitivity or any

other adverse effects have been observedin individuals handling the materialover the past 6 years.

E. Aggregate Exposure

In examining aggregate exposure,section 408 of the FFDCA directs EPAto consider available information aboutexposures from the pesticide residue infood and all other non-occupationalexposures, including drinking waterfrom groundwater or surface water andexposure through pesticide use ingardens, lawns, or buildings (residentialand other indoor uses).

1. Dietary exposure from food anddrinking water. Any dietary exposureresulting from applications made underan experimental use permit (EUP)would be through potato consumptionand animal products in which animalsare fed potato feed stocks. Residues intreated potatoes have been shown to below. Residues would be expected tocontinue to decline after potatoes areremoved from storage and beforeconsumption. Cooking and/orprocessing would be expected to furtherlower the residue level in consumedpotatoes or potato products. Since 2,6-DIPN would only be used in commercialstorage warehouses, there is little if anypotential for drinking water exposure.There are no other established U.S.tolerances or exemptions fromtolerances for 2,6-DIPN food or feedcrops in the United States. The Agencyhas classified 2,6-DIPN as a biochemicalpesticide.

2. Non-dietary exposure. The EUPwould only cover use for directapplication to potatoes when stored incommercial warehouses. There arecurrently no other registered uses of 2,6-DIPN. Non-dietary exposure to 2,6-DIPNvia lawn care, topical treatments, etc.,will not occur. Thus, the potential fornon-occupational exposure to thegeneral population is virtually non-existent.

F. Cumulative Exposure

EPA also is required to consider thepotential for cumulative effects of 2,6-DIPN and other substances that have acommon mechanism of toxicity.Consideration of a common mode oftoxicity is not appropriate, given thatthere is no indication of mammaliantoxicity of 2,6-DIPN and no informationthat indicates toxic effects, if any, wouldbe cumulative with any othercompounds. Since, 2,6-DIPN does notexhibit a toxic mode of action in thetarget plant, it is appropriate to consideronly the potential risks of 2,6-DIPN inthis exposure assessment.

G. Endocrine Effects

Platte has no information to suggestthat 2,6-DIPN will adversely affect theimmune or endocrine systems. TheAgency is not requiring information onendocrine effects of this biochemicalpesticide at this time.

H. Safety Determinations

1. U.S. population in general andinfants and children. Since there are noanticipated residues in drinking wateror from other non-occupational sources,and no reliable information exists oncumulative effects due to a commonmechanism of toxicity, the aggregateexposure to 2,6-DIPN is adequatelyrepresented by the dietary route. Thelack of toxicity of 2,6-DIPN has beendemonstrated by the results of acutetoxicity testing in mammals in which2,6-DIPN caused no adverse effectswhen dosed orally, dermally, and viainhalation at the limit dose for eachstudy. Anticipated residues inconsumed potatoes are low. Moreover,2,6-DIPN exhibits close similarity toother plant-based, naturally occurringmethyl and isopropyl naphthalenes.Thus, the dietary exposure to 2,6-DIPNshould pose negligible risks to humanhealth. Based on the lack of toxicity andlow exposure, there is a reasonablecertainty that no harm to infants,children, or adults will result fromaggregate exposure to 2,6-DIPN residues.Exempting 2,6-DIPN from therequirement of a tolerance should poseno significant risk to humans or theenvironment.

I. Analytical Method

An analytical method for residues isnot applicable, as this proposes anexemption from the requirement of atolerance.

J. Existing Tolerances

No codex maximum residue levels areestablished for residues of 2,6-DIPN inor on any food or feed crop.



[OPP–50848; FRL–6043–4]

Experimental Use Permit; Notice ofReceipt of Application


SUMMARY: This notice announces receiptof an application [34704–EUP–RG] from


Platte Chemical Company requesting anexperimental use permit (EUP) for thebiochemical pesticide 2,6–diisopropylnapthalene (2,6–DIPN). TheAgency has determined that theapplication may be of regional andnational significance. Therefore, inaccordance with 40 CFR 172.11(a), theAgency is soliciting comments on thisapplication.DATES: Written comments must bereceived on or before December 28,1998.ADDRESSES: By mail, submit writtencomments to: Public Information andRecords Integrity Branch, InformationResources and Services Division(7502C), Office of Pesticide Programs,Environmental Protection Agency, 401M St., SW., Washington, DC 20460. Inperson, deliver comments to: Rm. 119,CM #2, 1921 Jefferson Davis Hwy.,Arlington, VA.

Comments and data may also besubmitted electronically to: [email protected]. Follow the instructionsunder Unit II. of this document. NoConfidential Business Information (CBI)should be submitted through e-mail.

Information submitted as a commentconcerning this document may beclaimed confidential by marking anypart or all of that information as CBI.Information so marked will not bedisclosed except in accordance withprocedures set forth in 40 CFR part 2.A copy of the comment that does notcontain CBI must be submitted forinclusion in the public record.Information not marked confidentialwill be included in the public docket byEPA without prior notice. The publicdocket is available for public inspectionin Rm. 119 at the Virginia address givenabove, from 8:30 a.m. to 4 p.m., Mondaythrough Friday, excluding legalholidays.FOR FURTHER INFORMATION CONTACT: Bymail: Rita Kumar, PM 90, Biopesticidesand Pollution Prevention Division(7511C), Office of Pesticide Programs,Environmental Protection Agency, 401M St., SW., Washington, DC 20460.Office location, telephone number, ande-mail address: Rm. 902W5, CM #2,1921 Jefferson Davis Hwy., Arlington,VA, Telephone: 703–308–8291, e-mail:[email protected] INFORMATION:

I. BackgroundFollowing the review of the Platte

Chemical Company’s application andany comments received in response tothis notice, EPA will decide whether toissue or deny the EUP request for thisEUP program, and if issued, theconditions under which it is to be

conducted. Any issuance of an EUP willbe announced in the Federal Register.

The proposed program would allowthe use of 1,500 pounds of the plantgrowth regulator 2,6–DIPN onapproximately 90 million pounds ofpotatoes in nine closed storage facilities(representing the harvest ofapproximately 3,160 acres). Platte’sprogram would evaluate the control ofpotato spouting. The program would beauthorized only in the States of Idaho,Maine, Minnesota, North Dakota,Oregon, Washington, and Wisconsin.This EUP is accompanied by a pesticidepetition for an exemption from therequirement of a tolerance for residuesof 2,6–DIPN when used to inhibitsprouting in potato held in storage. Thispesticide petition is being issuedelsewhere in this issue of the FederalRegister.


The official record for this notice, aswell as the public version, has beenestablished for this notice under docketcontrol number ‘‘OPP–50848’’(including comments and datasubmitted electronically as describedbelow). A public version of this record,including printed, paper versions ofelectronic comments, which does notinclude any information claimed as CBI,is available for inspection from 8:30a.m. to 4 p.m., Monday through Friday,excluding legal holidays. The officialrecord is located at the Virginia addressin ‘‘ADDRESSES’’ at the beginning ofthis document.


[email protected]

Electronic comments must besubmitted as an ASCII file avoiding theuse of special characters and any formof encryption. Comment and data willalso be accepted on disks inWordperfect 5.1/6.1 or ASCII fileformat. All comments and data inelectronic form must be identified bythe docket control number ‘‘OPP–50848.’’ Electronic comments on thisnotice may be filed online at manyFederal Depository Libraries.


Janet L. Andersen,


[FR Doc. 98–31249 Filed 11–24–98; 8:45 am]

BILLING CODE 6560–50–F


[FRL–6193–2]

Notice of Proposed De MinimisAdministrative Order on ConsentPursuant to Section 122(g) of theComprehensive EnvironmentalResponse, Compensation and LiabilityAct (CERCLA), Osage MetalsSuperfund Site, Kansas City, Kansas,Docket No. VII–98–F–0023

AGENCY: Environmental ProtectionAgency.ACTION: Notice of Proposed De MinimisAdministrative Order on Consent, OsageMetals Superfund Site, Kansas City,Kansas.

SUMMARY: Notice is hereby given that aproposed administrative order onconsent regarding the Osage MetalsSuperfund Site, was signed by theUnited States Environmental ProtectionAgency (EPA) on September 30, 1998and approved by the United StatesDepartment of Justice (DOJ) on October30, 1998.DATES: EPA will receive comments on orbefore December 28, 1998 relating to theproposed agreement and covenant not tosue.ADDRESSES: Comments should beaddressed to Audrey Asher, SeniorAssistant Regional Counsel, UnitedStates Environmental ProtectionAgency, Region VII, 726 MinnesotaAvenue, Kansas City KS 66101 andshould refer to the Osage MetalsSuperfund Site Administrative Order onConsent, EPA Docket No. VII–98–F–0023.

The proposed agreement may beexamined or obtained in person or bymail at the office of the United StatesEnvironmental Protection Agency,Region VII, 726 Minnesota Avenue,Kansas City, KS 66101 (913–551–7255).SUPPLEMENTARY INFORMATION: Theproposed agreement concerns the 1.7-acre Osage Metals Superfund Site(‘‘Site’’), located at 120 Osage Avenue inKansas City, Kansas. The Site was thelocation of metals salvage andreclamation facilities between 1948 and1993. Samples taken at the Site in 1994found polychlorinated biphenyls(‘‘PCBs’’) in surface soils at levels ashigh as 334 mg/kg, and leadcontamination in levels as high as56,600 mg/kg. The EPA approved aremoval action at the Site on February13, 1995, and began cleanup in Marchof 1995. EPA completed its work inOctober 1995. No further responseaction is anticipated.


As of May 31, 1998, EPA and DOJ hadincurred costs in excess of $1.3 millionexclusive of interest. Each of theproposed settlors arranged with TrinityEnvironmental Technologies, Inc. fordisposal of capacitors contaminatedwith PCBs. Trinity EnvironmentalTechnologies, Inc. in turn arranged fordisposal of these capacitors with PCBTreatment, Inc. In addition to thisarrangement, each settlor arranged fordisposal of capacitors contaminatedwith PCBs directly with PCB Treatment,Inc. PCB Treatment, Inc. then arrangedfor disposal at the Site of scrap metalfrom the capacitors.

EPA has determined that any partywho arranged for disposal of between206 and 89,387 pounds of capacitorscontributed a de minimis volume ofwaste to the Site and that such wastesare not more toxic than any otherhazardous substance at the Site.

Each settler will pay a share of costsbased on its volumetric share ofcapacitor weight compared to allcapacitor weight with an additionalpremium of 15%.

Through this settlement EPA willrecover over $10,000. EPA hasrecovered over $80,000 through aconsent decree with the former owner/operator and will seek the remainingcosts from other potentially responsibleparties at the Site. EPA will berecovering over $180,000 throughAdministrative Order on Consent EPADocket No. VII–98–F0012, whichbecame effective on October 23, 1998.

Dated: November 3, 1998.Dennis Grams, P.E.,Regional Administrator, Region VII.[FR Doc. 98–31539 Filed 11–24–98; 8:45 am]BILLING CODE 6560–50–M


[FRL–6193]

Notice of Proposed De MinimisAdministrative Order on ConsentPursuant to Section 122(g) of theComprehensive EnvironmentalResponse, Compensation and LiabilityAct (CERCLA), Osage MetalsSuperfund Site, Kansas City, Kansas,Docket No. VII–98–F–0019

AGENCY: Environmental ProtectionAgency.ACTION: Notice of Proposed De MinimisAdministrative Order on Consent, OsageMetals Superfund Site, Kansas City,Kansas.

SUMMARY: Notice is hereby given that aproposed administrative order on

consent regarding the Osage MetalsSuperfund Site, was signed by theUnited States Environmental ProtectionAgency (EPA) on September 30, 1998and approved by the United StatesDepartment of Justice (DOJ) on October30, 1998.DATES: EPA will receive comments on orbefore December 28, 1998 related to theproposed agreement and covenant not tosue.ADDRESSES: Comments should beaddressed to Audrey Asher, SeniorAssistant Regional Counsel, UnitedStates Environmental ProtectionAgency, Region VII, 726 MinnesotaAvenue, Kansas City, Kansas 66101 andshould refer to the Osage MetalsSuperfund Site Administrative Order onConsent, EPA Docket No. VII–98–F–0019.

The proposed agreement may beexamined or obtained in person or bymail at the office of the United StatesEnvironmental Protection Agency,Region VII, 726 Minnesota Avenue,Kansas City, KS 66101 (913) 551–7255.SUPPLEMENTARY INFORMATION: Theproposed agreement concerns the 1.7-acre Osage Metals Superfund Site(‘‘Site’’), located at 120 Osage Avenue inKansas City, Kansas. The Site was thelocation of metals salvage andreclamation facilities between 1948 and1993. Samples taken at the Site in 1994found polychlorinated biphenyls(‘‘PCBs’’) in surface soils at levels ashigh as 334 mg/kg, and leadcontamination in levels as high as56,600 mg/kg. The EPA approved aremoval action at the Site on February13, 1995, and began cleanup in Marchof 1995. EPA completed its work inOctober 1995. No further responseaction is anticipated.

As of May 31, 1998, EPA and DOJ hadincurred costs in excess of $1.3 millionexclusive of interest. Each of theproposed settlors arranged with TrinityEnvironmental Technologies, Inc. fordisposal of capacitors contaminatedwith PCBs. Trinity EnvironmentalTechnologies, Inc. in turn arranged fordisposal of the capacitors with PCBTreatment, Inc. PCB Treatment, Inc.then arranged for disposal at the Site ofscrap metal from the capacitors.

EPA has determined that any partywho arranged for disposal of between206 and 89,387 pounds of capacitorscontributed a de minimis volume ofwaste to the Site and that such wastesare not more toxic than any otherhazardous substance at the Site.

Each settlor will pay a share of costsbased on its volumetric share ofcapacitor weight compared to all

capacitor weight with an additionalpremium of 15%.

Through this settlement EPA willrecover over $10,000. EPA hasrecovered $80,000 through a consentdecree with the former owner/operatorand will seek the remaining costs fromother potentially responsible parties atthe Site. EPA will be recovering over$180,000 through Administrative Orderon Consent EPA Docket No. VII–98–F0012, which became effective onOctober 27, 1998.

Dated: November 3, 1998.Dennis Grams, P.E.,Regional Administrator, Region VII.[FR Doc. 98–31538 Filed 11–24–98; 8:45 am]BILLING CODE 6560–50–M


Public Information CollectionsApproved by Office of Managementand Budget

November 16, 1998.The Federal Communications

Commission (FCC) has received Officeof Management and Budget (OMB)approval for the following publicinformation collections pursuant to thePaperwork Reduction Act of 1995,Public Law 104–13. An agency may notconduct or sponsor and a person is notrequired to respond to a collection ofinformation unless it displays acurrently valid control number. Forfurther information contact Shoko B.Hair, Federal CommunicationsCommission, (202) 418–1379.

Federal Communications Commission

OMB Control No.: 3060–0859.Expiration Date: 05/31/99.Title: Suggested Guidelines for

Petitions for Ruling Under Section 253of the Communications Act.

Form No.: N/A.Respondents: Business or other for-

profit; State, local or tribal government.Estimated Annual Burden: 80

respondents; 78.5 hours per response(avg.); 6280 total annual burden hoursfor all collections.

Estimated Annual Reporting andRecordkeeping Cost Burden: $0.

Frequency of Response: On occasion.Description: Section 253 of the

Communications Act of 1934, asamended requires the Commission, withcertain important exceptions, topreempt the enforcement of any state orlocal statute or regulation, or other stateor local legal requirement (to the extentnecessary) that prohibits or has theeffect prohibiting the ability of any


entity to provide any interstate orintrastate telecommunications service.The Commission’s consideration ofpreemption begins with the filing of apetition by an aggrieved party. In orderto render a timely and informeddecision, petitioners and commentersshould submit relevant informationsufficient to describe the legal regimeinvolved in the controversy and toestablish the factual basis necessary fordecision. Factual assertions should besupported by credible evidence,including affidavits, and, whereappropriate, studies or otherdescriptions of the economic effects ofthe legal requirement that is the subjectto the petition. In preparing theirsubmissions, parties should address asappropriate all parts of section 253. Inparticular, parties should first describewhether the challenged requirementfalls within the proscription of section253(a); if it does, parties should describewhether the requirement nevertheless ifpermissible under other sections of thestatute, specifically sections 253(b) and(c). Lastly, parties should submitinformation on whether and how theCommission could tailor a decision topreempt the enforcement of anoffending legal requirement only ‘‘to theextent necessary to correct suchviolation or inconsistency’’ as requiredby section 253(d). (Number ofrespondents filing petitions: 20; annualhour burden per respondent: 125 hours;total annual burden = 2500 hours.Number of respondents filing commentson petitions: 60; annual hour burden perrespondent: 63 hours; total annualburden = 3780). The petition is placedon public notice and commented on byothers. The Commission issued a PublicNotice that establishes guidelinesrelating to its consideration ofpreemption petitions. The Commissionwill use the information to discharge itsstatutory mandate relating to thepreemption of state or local statutes orother state or local legal requirements.Obligation to respond: Voluntary.

Public reporting burden for thecollections of information is as notedabove. Send comments regarding theburden estimate or any other aspect ofthe collections of information, includingsuggestions for reducing the burden toPerformance Evaluation and RecordsManagement, Washington, D.C. 20554.

Federal Communications Commission.

Magalie Roman Salas,Secretary.[FR Doc. 98–31492 Filed 11–24–98; 8:45 am]



[Report No. 2305]

Petitions for Reconsideration andClarification of Action in RulemakingProceedings

November 18, 1998.Petitions for reconsideration and

clarification have been filed in theCommission’s rulemaking proceedingslisted in this Public Notice andpublished pursuant to 47 CFR Section1.429(e). The full text of thesedocuments are available for viewing andcopying in Room 239, 1919 M Street,N.W., Washington, D.C. or may bepurchased from the Commission’s copycontractor, ITS, Inc. (202) 857–3800.Oppositions to these petitions must befiled by December 10, 1998. See Section1.4(b)(1) of the Commission’s rules (47CFR 1.4(b)(1). Replies to an oppositionmust be filed within 10 days after thetime for filing oppositions has expired.

Subject: Amendment of theCommission’s Rules RegardingInstallment Payment Financing forPersonal Communications Services(PCS) Licenses (WT Docket No. 97–82).

Number of Petitions Filed: 6.Subject: Implementation of the

Telecommunications Act of 1996;Telecommunications Carriers’ Use ofCustomer Proprietary NetworkInformation and Other CustomerInformation (CC Docket No. 96–115).

Number of Petitions Filed: 1.Federal Communications Commission.Magalie Roman Salas,Secretary.[FR Doc. 98–31493 Filed 11–24–98; 8:45 am]BILLING CODE 6712–01–M

FEDERAL HOUSING FINANCE BOARD

Sunshine Act Meeting; Announcing anOpen Meeting of the Board

TIME AND DATE: 10:00 a.m., Wednesday,December 2, 1998PLACE: Board Room, Second Floor,Federal Housing Finance Board, 1777 FStreet, N.W., Washington, D.C. 20006.STATUS: The entire meeting will be opento the public.MATTERS TO BE CONSIDERED DURINGPORTIONS OPEN TO THE PUBLIC:

• Office of Finance 1999 DebtAuthorization.

• Approval of 1999 Operating andCapital Expenditure Budgets—Office ofFinance.

• Finance Board 1999 Strategic Plan.• Proposed Rule—Advances

Collateral Changes.

CONTACT PERSON FOR MORE INFORMATION:Elaine L. Baker, Secretary to the Board,(202) 408–2837.

William W. Ginsberg,Managing Director.[FR Doc. 98–31629 Filed 11–23–98; 12:57pm]BILLING CODE 6725–01–P


Change in Bank Control Notices;Acquisitions of Shares of Banks orBank Holding Companies

The notificants listed below haveapplied under the Change in BankControl Act (12 U.S.C. 1817(j)) and §225.41 of the Board’s Regulation Y (12CFR 225.41) to acquire a bank or bankholding company. The factors that areconsidered in acting on the notices areset forth in paragraph 7 of the Act (12U.S.C. 1817(j)(7)).

The notices are available forimmediate inspection at the FederalReserve Bank indicated. The noticesalso will be available for inspection atthe offices of the Board of Governors.Interested persons may express theirviews in writing to the Reserve Bankindicated for that notice or to the officesof the Board of Governors. Commentsmust be received not later thanDecember 9, 1998.

A. Federal Reserve Bank of KansasCity (D. Michael Manies, Assistant VicePresident) 925 Grand Avenue, KansasCity, Missouri 64198-0001:

1. The David J. Duey Trust, and DavidV. Duey, as Trustee, both ofPlattsmouth, Nebraska; to acquire votingshares of Cass County State Company,Plattsmouth, Nebraska, and therebyindirectly acquire voting shares of CassCounty Bank, Plattsmouth, Nebraska.

Board of Governors of the Federal ReserveSystem, November 19, 1998.Robert deV. Frierson,Associate Secretary of the Board.[FR Doc. 98–31425 Filed 11–24–98; 8:45 am]BILLING CODE 6210–01–F


Formations of, Acquisitions by, andMergers of Bank Holding Companies

The companies listed in this noticehave applied to the Board for approval,pursuant to the Bank Holding CompanyAct of 1956 (12 U.S.C. 1841 et seq.)(BHC Act), Regulation Y (12 CFR Part225), and all other applicable statutesand regulations to become a bankholding company and/or to acquire theassets or the ownership of, control of, or


the power to vote shares of a bank orbank holding company and all of thebanks and nonbanking companiesowned by the bank holding company,including the companies listed below.

The applications listed below, as wellas other related filings required by theBoard, are available for immediateinspection at the Federal Reserve Bankindicated. The application also will beavailable for inspection at the offices ofthe Board of Governors. Interestedpersons may express their views inwriting on the standards enumerated inthe BHC Act (12 U.S.C. 1842(c)). If theproposal also involves the acquisition ofa nonbanking company, the review alsoincludes whether the acquisition of thenonbanking company complies with thestandards in section 4 of the BHC Act.Unless otherwise noted, nonbankingactivities will be conducted throughoutthe United States.

Unless otherwise noted, commentsregarding each of these applicationsmust be received at the Reserve Bankindicated or the offices of the Board ofGovernors not later than December 18,1998.

A. Federal Reserve Bank of St. Louis(Randall C. Sumner, Vice President) 411Locust Street, St. Louis, Missouri 63102-2034:

1. Union Planters Corporation, and itswholly owned subsidiary, UnionPlanters Holding Corporation, both ofMemphis, Tennessee; to acquire 100percent of the voting shares of FirstMutual Bancorp, Inc., Decatur, Illinois,and thereby indirectly acquire FirstMutual Bank, S.B., Decatur, Illinois.

B. Federal Reserve Bank of Dallas(W. Arthur Tribble, Vice President) 2200North Pearl Street, Dallas, Texas 75201-2272:

1. Woodlands Bancorp, Inc., Homer,Louisiana; to become a bank holdingcompany by acquiring 100 percent ofthe voting shares of First WoodlandsBank, Homer, Louisiana;



Notice of Proposals to Engage inPermissible Nonbanking Activities orto Acquire Companies that areEngaged in Permissible NonbankingActivities

The companies listed in this noticehave given notice under section 4 of the

Bank Holding Company Act (12 U.S.C.1843) (BHC Act) and Regulation Y, (12CFR Part 225) to engage de novo, or toacquire or control voting securities orassets of a company, including thecompanies listed below, that engageseither directly or through a subsidiary orother company, in a nonbanking activitythat is listed in § 225.28 of RegulationY (12 CFR 225.28) or that the Board hasdetermined by Order to be closelyrelated to banking and permissible forbank holding companies. Unlessotherwise noted, these activities will beconducted throughout the United States.

Each notice is available for inspectionat the Federal Reserve Bank indicated.The notice also will be available forinspection at the offices of the Board ofGovernors. Interested persons mayexpress their views in writing on thequestion whether the proposal complieswith the standards of section 4 of theBHC Act.

Unless otherwise noted, commentsregarding the applications must bereceived at the Reserve Bank indicatedor the offices of the Board of Governorsnot later than December 9, 1998.

A. Federal Reserve Bank of SanFrancisco (Maria Villanueva, Managerof Analytical Support, ConsumerRegulation Group) 101 Market Street,San Francisco, California 94105-1579:

1. Philippine National Bank, MetroManila, The Philippines, and CenturyHolding Corporation, Beverly Hills,California; to acquire PNB RemittanceCenters, Inc., Los Angeles, California,and thereby engage in money remittanceactivities; Philippine CommercialInternational Bank, 77 Fed. Res. Bull.270 (1991); Bergen Bank A/S, 76 Fed.Res. Bull. 457 (1990); and NorwestCorporation, 81 Fed. Res. Bull. 974(1995).


DEPARTMENT OF HEALTH ANDHUMAN SERVICES

Food and Drug Administration[Docket No. 91N–0396]

Agency Information CollectionActivities; Submission for OMBReview; Comment Request; MedicalDevices; Reports of Corrections andRemovals

AGENCY: Food and Drug Administration,HHS.

ACTION: Notice.

SUMMARY: The Food and DrugAdministration (FDA) is announcingthat the proposed collection ofinformation listed in this document hasbeen submitted to the Office ofManagement and Budget (OMB) forreview and clearance under thePaperwork Reduction Act of 1995 (thePRA).

DATES: Submit written comments on thecollection of information by December28, 1998.

ADDRESSES: Submit written commentson the collection of information to theOffice of Information and RegulatoryAffairs, OMB, New Executive OfficeBldg., 725 17th St. NW., rm. 10235,Washington, DC 20503, Attn: DeskOfficer for FDA.

FOR FURTHER INFORMATION CONTACT:Margaret R. Schlosburg, Office ofInformation Resources Management(HFA–250), Food and DrugAdministration, 5600 Fishers Lane,Rockville, MD 20857, 301–827–1223.

SUPPLEMENTARY INFORMATION: Incompliance with section 3507 of thePRA (44 U.S.C. 3507), FDA hassubmitted the following proposedcollection of information to OMB forreview and clearance.

Title: Medical Devices; Reports ofCorrections and Removals.

Description: FDA issued a direct finalrule to amend the reporting andrecordkeeping requirements forcorrections and removals under part 806(21 CFR part 806) to eliminate thoserequirements for distributors of medicaldevices. This amendment implementschanges made by the Food and DrugAdministration Modernization Act of1997 (FDAMA) to section 519(f) of theFederal Food, Drug, and Cosmetic Act(the act) (21 U.S.C. 360i(f)). FDAMA didnot amend section 519(f) of the act withrespect to manufacturers and importers.Manufacturers and importers continueto be subject to the requirements of part806.

Description of Respondents: Businessor other for profit organizations.

In the Federal Register of August 7,1998 (63 FR 42229), the agencyrequested comments on the proposedcollections of information. Nosignificant comments were received.

FDA estimates the burden for thiscollection of information as follows:


TABLE 1.—ESTIMATED ANNUAL REPORTING BURDEN1

21 CFR Section No. ofRespondents

AnnualFrequency per

Response

Total AnnualResponses

Hours perResponse Total Hours

806.10 880 1 880 10 8,800

1There are no capital costs or operating and maintenance costs associated with this collection of information.

TABLE 2.—ESTIMATED ANNUAL RECORDKEEPING BURDEN1

21 CFR Section No. ofRecordkeepers

AnnualFrequency perRecordkeeping

Total AnnualRecords

Hours perRecordkeeper Total Hours

806.20 440 1 440 10 4,400

1There are no capital costs or operating and maintenance costs associated with this collection of information.

The information collectionrequirements in part 806 prior to thedirect final rule (63 FR 42229) havebeen approved by OMB and assignedcontrol number 0910–0359. Whenpreparing the earlier package forapproval of the information collectionrequirements in part 806, FDA reviewedthe reports of corrections and removalssubmitted in the previous 3 years under21 CFR part 7 (the agency’s recallprovisions). During that period of time,no reports of corrections or removalswere submitted by distributors. For thatreason, FDA did not include distributorsamong the respondents estimated in thecollection burden for the requirementspreviously approved by OMB. Becausedistributors were not included in thatearlier estimate and because FDAMAnow has eliminated requirements fordistributor reporting, FDA hasdetermined that estimates of thereporting burden for §§ 806.10 and806.20 should remain the same.

Dated: November 17, 1998.William K. Hubbard,Associate Commissioner for PolicyCoordination.[FR Doc. 98–31411 Filed 11–24–98; 8:45 am]BILLING CODE 4160–01–F


Food and Drug Administration

[Docket No. 98E–0791]

Determination of Regulatory ReviewPeriod for Purposes of PatentExtension; Tisseel VH Kit

AGENCY: Food and Drug Administration,HHSACTION: Notice.

SUMMARY: The Food and DrugAdministration (FDA) has determinedthe regulatory review period for Tisseel

VH Kit and is publishing this notice ofthat determination as required by law.FDA has made the determinationbecause of the submission of anapplication to the Commissioner ofPatents and Trademarks, Department ofCommerce, for the extension of a patentwhich claims that human biologicalproduct.ADDRESSES: Written comments andpetitions should be directed to theDockets Management Branch (HFA–305), Food and Drug Administration,5630 Fishers Lane, rm. 1061, Rockville,MD 20852.FOR FURTHER INFORMATION CONTACT:Brian J. Malkin, Office of Health Affairs(HFY–20), Food and DrugAdministration, 5600 Fishers Lane,Rockville, MD 20857, 301–827–6620.SUPPLEMENTARY INFORMATION: The DrugPrice Competition and Patent TermRestoration Act of 1984 (Pub. L. 98–417)and the Generic Animal Drug and PatentTerm Restoration Act (Pub. L. 100–670)generally provide that a patent may beextended for a period of up to 5 yearsso long as the patented item (humandrug product, animal drug product,medical device, food additive, or coloradditive) was subject to regulatoryreview by FDA before the item wasmarketed. Under these acts, a product’sregulatory review period forms the basisfor determining the amount of extensionan applicant may receive.

A regulatory review period consists oftwo periods of time: A testing phase andan approval phase. For humanbiological products, the testing phasebegins when the exemption to permitthe clinical investigations of thebiological becomes effective and runsuntil the approval phase begins. Theapproval phase starts with the initialsubmission of an application to marketthe human biological product andcontinues until FDA grants permissionto market the biological product.Although only a portion of a regulatory

review period may count toward theactual amount of extension that theCommissioner of Patents andTrademarks may award (for example,half the testing phase must besubtracted as well as any time that mayhave occurred before the patent wasissued), FDA’s determination of thelength of a regulatory review period fora human biological product will includeall of the testing phase and approvalphase as specified in 35 U.S.C.156(g)(1)(B).

FDA recently approved for marketingthe human biological product TisseelVH Kit. Tisseel VH Kit is indicated foruse as an adjunct to hemostasis insurgeries involving cardiopulmonarybypass and treatment of splenic injuriesdue to blunt or penetrating trauma tothe abdomen, when control of bleedingby conventional surgical techniques,including suture, ligature, and cautery isineffective or impractical, and also as anadjunct for the closure of colostomies.Subsequent to this approval, the Patentand Trademark Office received a patentterm restoration application for TisseelVH Kit (U.S. Patent No. 4,362,567) fromImmuno Aktiengesellschaft furchemsih-medizinshe Produkte, and thePatent and Trademark Office requestedFDA’s assistance in determining thispatent’s eligibility for patent termrestoration. In a letter dated October 7,1998, FDA advised the Patent andTrademark Office that this humanbiological product had undergone aregulatory review period and that theapproval of Tisseel VH Kit representedthe first permitted commercialmarketing or use of the product. Shortlythereafter, the Patent and TrademarkOffice requested that FDA determine theproduct’s regulatory review period.

FDA has determined that theapplicable regulatory review period forTisseel VH Kit is 5,065 days. Of thistime, 1,203 days occurred during thetesting phase of the regulatory review


period, while 3,862 days occurredduring the approval phase. Theseperiods of time were derived from thefollowing dates:

1. The date an exemption undersection 351 of the Public Health ServiceAct became effective: June 20, 1984.FDA has verified the applicant’s claimthat the date the investigational newdrug application became effective wason June 20, 1984.

2. The date the application wasinitially submitted with respect to thehuman biological product under section351 of the Public Health Service Act:October 5, 1987. FDA has verified theapplicant’s claim that the productlicense application (PLA) for Tisseel VHKit (PLA 87–0509) was initiallysubmitted on October 5, 1987.

3. The date the application wasapproved: May 1, 1998. FDA hasverified the applicant’s claim that PLA87–0509 was approved on May 1, 1998.

This determination of the regulatoryreview period establishes the maximumpotential length of a patent extension.However, the U.S. Patent andTrademark Office applies severalstatutory limitations in its calculationsof the actual period for patent extension.In its application for patent extension,this applicant seeks 1,827 days of patentterm extension.

Anyone with knowledge that any ofthe dates as published is incorrect may,on or before January 25, 1999, submit tothe Dockets Management Branch(address above) written comments andask for a redetermination. Furthermore,any interested person may petition FDA,on or before May 24, 1999, for adetermination regarding whether theapplicant for extension acted with duediligence during the regulatory reviewperiod. To meet its burden, the petitionmust contain sufficient facts to merit anFDA investigation. (See H. Rept. 857,part 1, 98th Cong., 2d sess., pp. 41–42,1984.) Petitions should be in the formatspecified in 21 CFR 10.30.

Comments and petitions should besubmitted to the Dockets ManagementBranch (address above) in three copies(except that individuals may submitsingle copies) and identified with thedocket number found in brackets in theheading of this document. Commentsand petitions may be seen in theDockets Management Branch between 9a.m. and 4 p.m., Monday throughFriday.

Dated: November 4, 1998.Thomas J. McGinnis,Deputy Associate Commissioner for HealthAffairs.[FR Doc. 98–31413 Filed 11–24–98; 8:45 am]BILLING CODE 4160–01–F



[Docket No. 98C–1017]

International Association of ColorManufacturers; Filing of Color AdditivePetition


ACTION: Notice.

SUMMARY: The Food and DrugAdministration (FDA) is announcingthat the International Association ofColor Manufacturers has filed a petitionproposing that the color additiveregulations be amended to provide forthe safe use of D&C Red No. 28 and itsaluminum lake to color food and dietarysupplements.

FOR FURTHER INFORMATION CONTACT:Andrew D. Laumbach, Center for FoodSafety and Applied Nutrition (HFS–215), Food and Drug Administration,200 C St. SW., Washington, DC 20204,202–418–3071.

SUPPLEMENTARY INFORMATION: Under theFederal Food, Drug, and Cosmetic Act(sec. 721(d)(1) (21 U.S.C. 379e(d)(1))),notice is given that a color additivepetition (CAP 9C0264) has been filed bythe International Association of ColorManufacturers, c/o Daniel R. Thompson,P.C., 1620 I St., suite 925, Washington,DC 20006. The petition proposes toamend the color additive regulations toprovide for the safe use of D&C Red No.28 and its aluminum lake to color foodand dietary supplements.

The agency has determined under 21CFR 25.32(k) that this action is of a typethat does not individually orcumulatively have a significant effect onthe human environment. Therefore,neither an environmental assessmentnor an environmental impact statementis required.


Laura M. Tarantino,Acting Director, Office of PremarketApproval, Center for Food Safety and AppliedNutrition.[FR Doc. 98–31505 Filed 11–24–98; 8:45 am]




[Docket No. 98N–1002]

Center for Biologics Evaluation andResearch Medical Device Action Plan;Public Meeting; Correction

AGENCY: Food and Drug Administration,HHS.ACTION: Notice of meeting; correction.

SUMMARY: The Food and DrugAdministration (FDA) is correcting anotice that appeared in the FederalRegister of November 2, 1998 (63 FR58743). The document announced anupcoming public meeting requestingsuggestions for improvements to theCenter for Biologics Evaluation andResearch’s regulation of medical devicesor reasons to maintain the currentsystems to protect public health. Thenotice inadvertently omitted the dateand addresses for the submissions ofcomments after the meeting. Thisdocument corrects those omissions.FOR FURTHER INFORMATION CONTACT:Kathy A. Eberhart, Center for BiologicsEvaluation and Research (HFM–43),Food and Drug Administration, 1401Rockville Pike, Rockville, MD 20852–1448, 301–827–1317.SUPPLEMENTARY INFORMATION: In theFederal Register of November 2, 1998(63 FR 58743), in FR Doc. 98–29185,FDA announced an upcoming publicmeeting requesting suggestions forimprovements to the the Center forBiologics Evaluation and Research’sregulations of medical devices orreasons to maintain the current systemsto protect public health. The noticeinadvertently omitted the date andaddress for the submissions ofcomments after the meeting.

1. On page 58743, in the thirdcolumn, under the Date and Timecaption, a second sentence is added toread ‘‘Submit written comments byDecember 22, 1998.’’

2. On the same page, after the‘‘Location’’ portion, another paragraphis added to read ‘‘Addresses: Submit byDecember 22, 1998, written commentsto the Dockets Management Branch(HFA–305), Food and DrugAdministration, 5630 Fishers Lane, rm.1061, Rockville, MD 20852. Two copiesof any comments are to be submitted,except that individuals may submit onecopy. Comments are to be identifiedwith the docket number found inbrackets in the heading of thisdocument. A copy and receivedcomments are available for public


examination in the DocketsManagement Branch between 9 a.m. and4 p.m., Monday through Friday.’’


William K. Hubbard,Associate Commissioner for PolicyCoordination.[FR Doc. 98–31412 Filed 11–24–98; 8:45 am]




[Docket No. 98N–0192]

Agency Information CollectionActivities; Announcement of OMBApproval; Establishment and ProductLicense Applications


ACTION: Notice.

SUMMARY: The Food and DrugAdministration (FDA) is announcingthat a collection of information entitled‘‘Establishment and Product LicenseApplications’’ has been approved by theOffice of Management and Budget(OMB) under the Paperwork ReductionAct of 1995 (the PRA).

FOR FURTHER INFORMATION CONTACT:JonnaLynn P. Capezzuto, Office ofInformation Resources Management(HFA–250), Food and DrugAdministration, 5600 Fishers Lane,Rockville, MD 20857, 301–827–4659.

SUPPLEMENTARY INFORMATION: In theFederal Register of September 4, 1998(63 FR 47299), the agency announcedthat the proposed information collectionhad been submitted to OMB for reviewand clearance under section 3507 of thePRA (44 U.S.C. 3507). An agency maynot conduct or sponsor, and a person isnot required to respond to, a collectionof information unless it displays acurrently valid OMB control number.OMB has now approved the informationcollection and has assigned OMBcontrol number 0910–0124. Theapproval expires on November 30, 2001.


William K. Hubbard,Associate Commissioner for PolicyCoordination.[FR Doc. 98–31410 Filed 11–24–98; 8:45 am]



Health Care Financing Administration

[Document Identifier: HCFA–287 & HCFA–1491]

Agency Information CollectionActivities: Proposed Collection;Comment Request

AGENCY: Health Care FinancingAdministration, HHS.

In compliance with the requirementof section 3506(c)(2)(A) of thePaperwork Reduction Act of 1995, theHealth Care Financing Administration(HCFA), Department of Health andHuman Services, is publishing thefollowing summary of proposedcollections for public comment.Interested persons are invited to sendcomments regarding this burdenestimate or any other aspect of thiscollection of information, including anyof the following subjects: (1) Thenecessity and utility of the proposedinformation collection for the properperformance of the agency’s functions;(2) the accuracy of the estimatedburden; (3) ways to enhance the quality,utility, and clarity of the information tobe collected; and (4) the use ofautomated collection techniques orother forms of information technology tominimize the information collectionburden.

(1) Type of Information CollectionRequest: Extension of a currentlyapproved collection;

Title of Information Collection: HomeOffice Cost Statement and SupportingRegulations in 42 CFR Section 413.17;

Form No.: HCFA–287 (OMB# 0938–0202);

Use: Medicare law permitscomponents of chain organizations to bereimbursed for certain costs incurred bythe Home Offices of the chain. TheHome Office Cost Statement is requiredby the fiscal intermediary to verifyHome Office Costs claimed by thecomponents. This requires that theprovider include in its costs, the costsincurred by the related organization infurnishing such services, supplies orfacilities.

Frequency: Annually;Affected Public: Not-for-profit

institutions, Business or other for-profit;Number of Respondents: 1,231;Total Annual Responses: 1,231;Total Annual Hours: 573,646.(2) Type of Information Collection

Request: Extension of a currentlyapproved collection;

Title of Information Collection:Request for Medicare Payment—Ambulance and Supporting Regulationsin 42 CFR Section 410.40 and 424.124;

Form No.: HCFA–1491 (OMB# 0938–0042);

Use: This form is used by physicians,suppliers, and beneficiaries to requestpayment of Part B Medicare services. Itis used to apply for reimbursement forambulance services.

Frequency: On occasion;Affected Public: Business or other for-

profit, Individuals or households, andNot-for-profit Institutions;

Number of Respondents: 9,634,435;Total Annual Responses: 9,634,435;Total Annual Hours: 406,251.To obtain copies of the supporting

statement and any related forms for theproposed paperwork collectionsreferenced above, access HCFA’s WebSite address at http://www.hcfa.gov/regs/prdact95.htm, or E-mail yourrequest, including your address, phonenumber, OMB number, and HCFAdocument identifier, [email protected], or call the ReportsClearance Office on (410) 786–1326.Written comments andrecommendations for the proposedinformation collections must be mailedwithin 60 days of this notice directly tothe HCFA Paperwork Clearance Officerdesignated at the following address:HCFA, Office of Information Services,Security and Standards Group, Divisionof HCFA Enterprise Standards,Attention: Louis Blank, Room N2–14–26, 7500 Security Boulevard, Baltimore,Maryland 21244–1850.

Dated: November 10, 1998.John P. Burke III,HCFA Reports Clearance Officer, HCFA Officeof Information Services, Security andStandards Group, Division of HCFAEnterprise Standards.[FR Doc. 98–31536 Filed 11–24–98; 8:45 am]BILLING CODE 4120–03–P


Health Care Financing Administration

[HCFA–1051–N]

Medicare Program; December 14, 1998,Meeting of the Practicing PhysiciansAdvisory Council

AGENCY: Health Care FinancingAdministration (HCFA), HHS.ACTION: Notice of meeting.

SUMMARY: In accordance with section10(a) of the Federal Advisory CommitteeAct, this notice announces a meeting ofthe Practicing Physicians AdvisoryCouncil. This meeting is open to thepublic.


DATES: The meeting is scheduled forDecember 14, 1998, from 8:30 a.m. until5 p.m., E.S.T.ADDRESSES: The meeting will be held inRoom 800, 8th Floor, Hubert H.Humphrey Building, 200 IndependenceAvenue, SW., Washington, DC 20201.FOR FURTHER INFORMATION CONTACT:Aron Primack, M.D., M.A., F.A.C.P.,Executive Director, PracticingPhysicians Advisory Council, Room435-H, Hubert H. Humphrey Building,200 Independence Avenue, SW.,Washington, DC 20201, (202) 690–7874.SUPPLEMENTARY INFORMATION: TheSecretary of the Department of Healthand Human Services (the Secretary) ismandated by section 1868 of the SocialSecurity Act to appoint a PracticingPhysicians Advisory Council (theCouncil) based on nominationssubmitted by medical organizationsrepresenting physicians. The Councilmeets quarterly to discuss certainproposed changes in regulations andcarrier manual instructions related tophysicians’ services, as identified by theSecretary. To the extent feasible andconsistent with statutory deadlines, theconsultation must occur beforepublication of the proposed changes.The Council submits an annual reporton its recommendations to the Secretaryand the Administrator of the HealthCare Financing Administration not laterthan December 31 of each year.

The Council consists of 15 physicians,each of whom has submitted at least 250claims for physicians’ services underMedicare or Medicaid in the previousyear. Members of the Council includeboth participating and nonparticipatingphysicians, and physicians practicing inrural and underserved urban areas. Atleast 11 members must be doctors ofmedicine or osteopathy authorized topractice medicine and surgery by theStates in which they practice. Membershave been invited to serve foroverlapping 4-year terms. In accordancewith section 14 of the Federal AdvisoryCommittee Act, terms of more than 2years are contingent upon the renewalof the Council by appropriate actionbefore the end of the 2-year term.

The Council held its first meeting onMay 11, 1992.

The current members are: Jerold M.Aronson, M.D.; Richard Bronfman,D.P.M.; Wayne R. Carlsen, D.O.; Gary C.Dennis, M.D.; Mary T. Herald, M.D.;Ardis Hoven, M.D.; Sandral Hullett,M.D.; Jerilynn S. Kaibel, D.C.; Marie G.Kuffner, M.D.; Marc Lowe, M.D.; DerrickK. Latos, M.D.; Sandra B. Reed, M.D.;Susan Schooley, M.D.; Maisie Tam,M.D.; and Kenneth M. Viste, Jr., M.D.The chairperson is Kenneth M. Viste, Jr.,

M.D. The vice chairperson is Marie G.Kuffner, M.D.

Council members will receive updateson the activities of the Center forBeneficiary Services, access to care inmanaged care (provider protection), andY2K. The agenda will provide fordiscussion and comment on thefollowing topics:

• Medicare Integrity ProgramContracting Initiatives (HCFASolicitation RFP 98 0016).

• Proposed regulations to implementthe Medicaid managed care provisionsof the Balanced Budget Act of 1997.

• Using the inherent reasonablenessauthority.

Individuals or organizations that wishto make 5 minute oral presentations onthe agenda issues should contact theExecutive Director by 12 noon,December 3, 1998, to be scheduled. Thenumber of oral presentations may belimited by the time available. A writtencopy of the oral remarks should besubmitted to the Executive Director nolater than 12 noon, December 9, 1998.Anyone who is not scheduled to speakmay submit written comments to theExecutive Director by 12 noon,December 9, 1998. The meeting is opento the public, but attendance is limitedto the space available.(Section 1868 of the Social Security Act (42U.S.C. 1395ee) and section 10(a) of PublicLaw 92–463 (5 U.S.C. App. 2, section 10(a));45 C.F.R. Part 11)(Catalog of Federal Domestic AssistanceProgram No. 93.773, Medicare—HospitalInsurance; and Program No. 93.774,Medicare—Supplementary MedicalInsurance Program)

Dated: November 19, 1998.Nancy-Ann Min DeParle,Administrator, Health Care FinancingAdministration.[FR Doc. 98–31428 Filed 11–24–98; 8:45 am]BILLING CODE 4120–01–P



Notice of Receipt of Applications forPermit

The following applicants haveapplied for a permit to conduct certainactivities with endangered species. Thisnotice is provided pursuant to Section10(c) of the Endangered Species Act of1973, as amended (16 U.S.C. 1531, etseq.):

Applicant: The Field Museum ofNatural History, Chicago, IL, PRT–004641.

The applicant requests a permit toimport 8 scientific specimens of mouse

lemurs (Microcebus sp.) collected in thewild in Madagascar, for the purpose ofscientific research.

Applicant: University of Arizona,Laboratory of Molecular Systematicsand Evolution, Tucson, AZ, PRT–837560.

The applicant requests amendment oftheir permit to import tissue samplestaken from captive-held and/or wildchimpanzees (Pan troglodytes), pygmychimpanzees (Pan paniscus), gorilla(Gorilla gorilla), and orangutan (Pongopygmaeus) for the purpose of scientificresearch.

Applicant: Rhinoceros AdvisoryGroup of the American Zoo andAquarium Association, Cumberland,OH, PRT–004917.

The applicant requests a permit toimport for the Honolulu Zoo, HI, onecaptive-born female black rhinocerosfrom the Asa Hiroshima Zoo Park, JP,for the purpose of captive propagationfor the enhancement of the survival ofthe species.

Applicant: The National Museum ofNatural History, Washington, DC, PRT–004868.

The applicant requests a permit toimport the skin and skull and skeletalelements of one Kara-Tau argali (Ovisammon nigrimontana) and oneKazakhstan argali (Ovis ammon collium)from the Republic of Kasakhstan for thepurpose of scientific research andspecies identification.

Applicant: International AnimalExchange, Ferndale, MI, PRT–004862.

The applicant requests a permit forforeign commerce to purchase one maleand one female jaguar (Panthera onca)from Tierpark Nadermann, Germanyand sell to Taegu Talsung Park Zoo,Korea for the purpose of enhancementof survival of the species throughconservation education and captivepropagation.

Applicant: Howard Covey, Phoenix,AZ, PRT–005201.

The Applicant request a permit toimport sport-hunted trophy of one malebontebok (Damaliscus pygargus dorcas)culled from a captive herd maintainedunder the management program of theRepublic of South Africa, for thepurpose of enchancement of thesurvival of the species.

Applicant: Zoological Society of SanDiego, Escondido, CA, PRT–004996.

The applicant requests a permit toimport 5 Lesser Rheas (Rhea pennata)from Tiergarten Hubertus, Vossberg,Dotlingen, Germany, for theenhancement of the survival of thespecies through captive propagation andconservation education.

Written data or comments should besubmitted to the Director, U.S. Fish and


Wildlife Service, Office of ManagementAuthority, 4401 North Fairfax Drive,Room 700, Arlington, Virginia 22203and must be received by the Directorwithin 30 days of the date of thispublication.

Documents and other informationsubmitted with these applications areavailable for review, subject to therequirements of the Privacy Act andFreedom of Information Act, by anyparty who submits a written request fora copy of such documents to thefollowing office within 30 days of thedate of publication of this notice: U.S.Fish and Wildlife Service, Office ofManagement Authority, 4401 NorthFairfax Drive, Room 700, Arlington,Virginia 22203. Phone: (703/358–2104);FAX: (703/358–2281).

Dated: November 20, 1998.MaryEllen Amtower,Acting Chief, Branch of Permits, Office ofManagement Authority.[FR Doc. 98–31507 Filed 11–24–98; 8:45 am]BILLING CODE 4310–55–U



[WY–050–1430–01; WYW13591, WYW58783,WYW80291, WYW81213]

Notice of Realty Action; Recreationand Public Purposes (R&PP) ActClassification; Wyoming

AGENCY: Bureau of Land Management.ACTION: Notice.

SUMMARY: The following public landslocated near the rural communities ofAtlantic City, Jeffrey City, Lysite, andShoshoni in Fremont County, Wyoming,have been examined and found suitablefor classification for conveyance to theFremont County Solid Waste DisposalDistrict under the provisions of theRecreation and Public Purposes Act, asamended (43 U.S.C. 869 et seq.). TheFremont County Solid Waste DisposalDistrict intends to continue the use ofthe Shoshoni sanitary landfill. SolidWaste Transfer stations would becontinued at the other three sites.

Sixth Principal Meridian

Shoshoni Sanitary LandfillT. 38 N., R. 94 W.,

Sec. 34, E1⁄2SW1⁄4SW1⁄4, W1⁄2SE1⁄4SW1⁄4,W1⁄2W1⁄2E1⁄2SE1⁄4SW1⁄4.

The land described above contains 45acres.

Lysite Transfer StationT. 38 N., R. 91 W.,

Sec. 1, SE1⁄4SW1⁄4SE1⁄4SE1⁄4.The land described above contains 2.5

acres.

Atlantic City Transfer Station

T. 29 N., R. 100 W.,Sec. 15, SW1⁄4NE1⁄4NW1⁄4NW1⁄4NE1⁄4,

SE1⁄4NW1⁄4NW1⁄4NW1⁄4NE1⁄4,N1⁄2NE1⁄4SW1⁄4NW1⁄4NW1⁄4NE1⁄4,N1⁄2NW1⁄4SE1⁄4NW1⁄4NW1⁄4NE1⁄4.

The land described above contains 1.875acres.

Jeffrey City Transfer Station

T. 28 N., R. 92 W.,Sec. 17, SW1⁄4SW1⁄4NE1⁄4.The land described above contains 10

acres.

FOR FURTHER INFORMATION CONTACT:Detailed information concerning thisaction is available for review at theLander Field Office, Bureau of LandManagement, 1335 Main, P.O. Box 589,Lander, Wyoming 82520, or contact BillBartlett at (307) 332–8400.SUPPLEMENTARY INFORMATION: The landsare not needed for Federal purposes.Conveyance is consistent with currentBLM land use planning and would be inthe public interest. The conveyances ofthe four sites, when completed, will besubject to the following terms,conditions and reservations:

1. Provisions of the Recreation andPublic Purposes Act and to allapplicable regulations of the Secretaryof the Interior.

2. All valid existing rightsdocumented on the official public landrecords at the time of patent issuance.

3. All minerals shall be reserved tothe United States, together with theright to prospect for, mine, and removethe minerals.

4. A right-of-way for ditches andcanals constructed by the authority ofthe United States.

Upon publication of this notice in theFederal Register, the lands will besegregated from all other forms ofappropriation under the public landlaws, including the general mining laws,except for conveyance under theRecreation and Public Purposes Act andleasing under the mineral leasing laws.

For a period of 45 days from the dateof publication of this notice in theFederal Register, interested parties maysubmit comments regarding theproposed conveyance or classification ofthe lands to the Field Manager, Bureauof Land Management, Lander FieldOffice, P.O. Box 589, Lander, Wyoming82520.

Classification Comments: Interestedparties may submit comments involvingthe suitability of the lands for a sanitarylandfill site at Shoshoni and for transferstation sites at Lysite, Atlantic City, andJeffrey City. Comments on theclassification should only addresswhether the land is physically suited forthe landfill or transfer station sites (as

appropriate), whether the use willmaximize the future use or uses of theland, whether the use is consistent withlocal planning and zoning, or if the useis consistent with State and Federalprograms.

Application Comments: Interestedparties may submit comments regardingthe specific uses proposed in theconveyance applications and plans ofdevelopment, whether the BLMfollowed proper administrativeprocedures in reaching the decisions, orany other factor not directly related tothe suitability of the land for solid wastedisposal facilities. Any adversecomments will be reviewed by the StateDirector. In the absence of any adversecomments, the classification willbecome effective 60 days from the dateof publication of this notice in theFederal Register.

Dated: November 18, 1998.Jack Kelly,Field Manager.[FR Doc. 98–31433 Filed 11–24–98; 8:45 am]BILLING CODE 4310–22–P


National Park Service

Notice of Intent to Repatriate CulturalItems from Arizona in the Possessionof the Arizona State Museum, TheUniversity of Arizona, Tucson, AZ

AGENCY: National Park ServiceACTION: Notice

Notice is hereby given under theNative American Graves Protection andRepatriation Act, 43 CFR 10.10 (a)(3), ofthe intent to repatriate cultural items inthe possession of the Arizona StateMuseum, The University of Arizona,Tucson, AZ which meets the definitionof ‘‘object of cultural patrimony’’ underSection 2 of the Act.

The eleven cultural items consist ofseven Dilzini Gaan headdresses and fourwands.

In 1937, museum documentationindicates one headdress was collectedby G. Mundinger at East Fork, AZ. In1930, one headdress with wands wascollected by the Donner family atWhiteriver, AZ; and two headdressesand one wand are part of the E.E.Guenther collection of Whiteriver, AZ.Around 1970, three wands and threeheaddresses came to the Arizona StateMuseum from the now-defunct KinishbaMuseum near Fort Apache, AZ.

Museum documentation andconsultation with representatives of theWhite Mountain Apache Tribe of theFort Apache Reservation indicates these


cultural items are White MountainApache. Representatives of the WhiteMountain Apache Tribe of the FortApache Reservation state that the elevencultural items have ongoing traditionaland cultural importance to the tribeitself and could not have been alienatedby any individual. Informationregarding the status of this cultural itemis being withheld from this notice by theArizona State Museum at the request ofthe representatives of the WhiteMountain Apache Tribe of the FortApache Reservation in order not tocompromise the White MountainApache Tribe of the Fort ApacheReservation’s code of religious practice.

Officials of the Arizona State Museumhave determined that, pursuant to 43CFR 10.2 (d)(4), these eleven culturalitems have ongoing historical,traditional, and cultural importancecentral to the culture itself, and couldnot have been alienated, appropriated,or conveyed by any individual. Officialsof the Arizona State Museum have alsodetermined that, pursuant to 43 CFR10.2 (e), there is a relationship of sharedgroup identity which can be reasonablytraced between these items and theWhite Mountain Apache Tribe of theFort Apache Reservation.

This notice has been sent to officialsof the White Mountain Apache Tribe ofthe Fort Apache Reservation, theYavapai-Apache Nation of the CampVerde Indian Reservation, the FortMcDowell Mohave-Apache IndianCommunity of the Fort McDowellIndian Reservation, the Tonto ApacheTribe, and the San Carlos Apache Tribeof the San Carlos Reservation.Representatives of any other Indian tribethat believes itself to be culturallyaffiliated with these objects shouldcontact Alyce Sadongei, ProgramCoordinator, Arizona State Museum,University of Arizona, Tucson, AZ85721; telephone: (520) 621-4609 beforeDecember 28, 1998. Repatriation ofthese objects to the White MountainApache Tribe of the Fort ApacheReservation may begin after that date ifno additional claimants come forward.Dated: November 17, 1998.

Veletta Canouts,Acting Departmental ConsultingArcheologist,Deputy Manager, Archeology andEthnography Program.[FR Doc. 98–31484 Filed 11–24–98; 8:45 am]




Notice of Intent to Repatriate CulturalItems in the Possession of the FowlerMuseum of Cultural History, Universityof California-Los Angeles, LosAngeles, CA


Notice is hereby given under theNative American Graves Protection andRepatriation Act, 43 CFR 10.10 (a)(3), ofthe intent to repatriate cultural items inthe possession of the Fowler Museum ofCultural History, University ofCalifornia-Los Angeles which meet thedefinition of ‘‘sacred object’’ underSection 2 of the Act.

The 17 cultural items consist of 12katsinas, including Qoqto, a CornKatsina, an Apache Katsina, twoChakwainam, Heoto, a ‘‘Mad’’ Katsina,and a Rugan Corn Katsina (X83.8;X83.537; X83.538; X83.539; X84.225;X84.226; X84.227; X84.228; X.84.229;X84.230; X.84.231; and X66.2796); threerattles (X72.1072; X68.504; X68.505);one dance wand (X76.291); and a drumand beater (X68.147A&B).

During 1983-1984, eleven katsinaswere donated by a donor whose nameis withheld at the museum’s request andaccessioned into the Fowler Museum ofCultural History.

In 1966, one Hopi katsina wasdonated by a donor whose name iswithheld at the museum’s request andaccessioned in the Fowler Museum ofCultural History.

In 1972, the one rattle was donated bya donor whose name is withheld at themuseum’s request and accessioned inthe Fowler Museum of Cultural History.

In 1968, the drum and beater and tworattles were purchased from Raleigh W.Applegate and accessioned in theFowler Museum of Cultural History.The accession records state this drumand beater were used in Hopi kivaceremonies.

In 1976, the dance wand wasaccessioned into the collections of theFowler Museum of Cultural History.There is no donor or purchaseinformation for this dance wand.

Based on construction and design,these cultural items have beenidentified as consistent with Hopiceremonial and sacred items as recordedin ethnographic records.Representatives of the Hopi Tribe andthe Katsimomngwit (traditional Hopireligious leaders) have identified theseitems as sacred objects used by them in

the Hopi villages for the practice oftraditional Hopi religion.

Based on the above-mentionedinformation, officials of the FowlerMuseum of Cultural History havedetermined that, pursuant to 43 CFR10.2 (d)(3), these 17 cultural items arespecific ceremonial objects needed bytraditional Native American religiousleaders for the practice of traditionalNative American religions by theirpresent-day adherents. Officials of theFowler Museum of Cultural Historyhave also determined that, pursuant to43 CFR 10.2 (e), there is a relationshipof shared group identity which can bereasonably traced between these itemsand the Hopi Tribe.

This notice has been sent to officialsof the Hopi Tribe. Representatives ofany other Indian tribe that believes itselfto be culturally affiliated with theseobjects should contact Dr. Diana Wilson,c/o NAGPRA Coordinator, Office of theVice Chancellor, Research, Box 951405,Los Angeles, CA 90095-1405; telephone(310) 836-4343 before December 28,1998. Repatriation of these objects to theHopi Tribe may begin after that date ifno additional claimants come forward.Dated: November 18, 1998.Veletta Canouts,Acting Departmental ConsultingArcheologist,Deputy Manager, Archeology andEthnography Program.[FR Doc. 98–31485 Filed 11–24–98; 8:45 am]BILLING CODE 4310–70–F



Notice of Inventory Completion forNative American Human Remains andAssociated Funerary Objects fromPecos Pueblo, NM in the Possession ofthe Maxwell Museum of Anthropology,University of New Mexico,Albuquerque, NM


Notice is hereby given in accordancewith provisions of the Native AmericanGraves Protection and Repatriation Act(NAGPRA), 43 CFR 10.9, of thecompletion of an inventory of humanremains and associated funerary objectsfrom Pecos Pueblo, NM in thepossession of the Maxwell Museum ofAnthropology, University of NewMexico, Albuquerque, NM.

A detailed assessment of the humanremains was made by Maxwell Museumof Anthropology professional staff inconsultation with representatives of the


Apache Tribe of Oklahoma, theComanche Indian Tribe, the Hopi Tribe,the Jicarilla Apache Tribe of the JicarillaApache Indian Reservation, the KiowaIndian Tribe of Oklahoma, theMescalero Apache Tribe of theMescalero Reservation, the NavajoNation, the Pueblo of Cochiti, thePueblo of Jemez, the Pueblo of SantoDomingo, the Pueblo of Zuni, and theWichita and Affiliated Tribes.

In 1939, human remains representingapproximately 51 individuals wererecovered from the mission churches atPecos Pueblo, NM during legallyauthorized excavations conducted by ajoint research team from the Universityof New Mexico and the Museum of NewMexico headed by William B. Witkind.No known individuals were identified.The 26 associated funerary objectsinclude burial wrappings, feathers, fur,human hair, cordage, animal bone,matting, ceramic sherds, adobe withfiber, obsidian chipped stone, workedwood, and beads.

Four Roman Catholic churches wereconstructed as Pecos Pueblo; two ofthese were built prior to the PuebloRevolt of 1680; and two churches wereconstructed after 1680. The majority ofhuman remains recovered in these 1939excavations appear to correspond toburials associated with the second andfourth churches. Based on skeletalmorphology and associated funeraryobjects, 49 of these individuals havebeen determined to be Native American.Historic records indicate thatindividuals from a number of NativeAmerican groups were baptized,married, or buried at the site. The burialrecords include persons with Tewa,Nambe, Picuri, Yuta, Apache,Comanche, and Tano affiliations as wellas people from Pecos and the Pueblo ofJemez. Historic records and familyinformation indicate Plains Indianswere incorporated into the Pecoscommunity through trade, slavery, andmarriage.

Based on material culture, historicrecords and documents, and oral historypresented by representatives of theApache Tribe of Oklahoma, theComanche Indian Tribe, the Hopi Tribe,the Jicarilla Apache Tribe, the KiowaIndian Tribe, the Mescalero ApacheTribe, the Navajo Nation, the Pueblo ofCochiti, the Pueblo of Jemez, the Puebloof Zuni, and the Wichita and AffiliatedTribes, Pecos Pueblo (LA 625) and PecosMission (LA 4444) have been identifiedas a Puebloan occupation dating fromthe Pueblo III period (c. 1100 A.D.) toits abandonment in 1838 when thenative inhabitants left Pecos Pueblo andwent to the Pueblo of Jemez. WhilePecos Pueblo mission churches have

been determined to have shared culturalaffiliation with the consulted tribes, thedescendants and government of PecosPueblo now reside at the Pueblo ofJemez. In 1936, an Act of Congressrecognized the Pueblo of Jemez as a‘‘consolidation’’ and ‘‘merger’’ of thePueblo of Pecos and the Pueblo ofJemez. This Act further recognized thatall property, rights, titles, interests, andclaims of both Pueblos wereconsolidated under the Pueblo of Jemez.

Based on the above mentionedinformation, officials of the MaxwellMuseum of Anthropology havedetermined that, pursuant to 43 CFR10.2 (d)(1), the human remains listedabove represent the physical remains of49 individuals of Native Americanancestry. Officials of the MaxwellMuseum of Anthropology have alsodetermined that, pursuant to 43 CFR10.2 (d)(2), the 26 objects listed aboveare reasonably believed to have beenplaced with or near individual humanremains at the time of death or later aspart of the death rite or ceremony.Lastly, officials of the Maxwell Museumof Anthropology have determined that,pursuant to 43 CFR 10.2 (e), there is arelationship of shared group identitywhich can be reasonably traced betweenthese Native American human remainsand associated funerary objects and thePueblo of Jemez.

This notice has been sent to officialsof the Apache Tribe of Oklahoma, theComanche Indian Tribe, the Hopi Tribe,the Jicarilla Apache Tribe of the JicarillaApache Indian Reservation, the KiowaIndian Tribe of Oklahoma, theMescalero Apache Tribe of theMescalero Reservation, the NavajoNation, the Pueblo of Cochiti, thePueblo of Jemez, the Pueblo of SantoDomingo, the Pueblo of Zuni, and theWichita and Affiliated Tribes.Representatives of any other Indian tribethat believes itself to be culturallyaffiliated with these human remains andassociated funerary objects shouldcontact Brenda A. Dorr, NAGPRAProject Director, Maxwell Museum ofAnthropology, University of NewMexico, Albuquerque, NM 87131-1201;telephone: (505) 277-0195, beforeDecember 28, 1998. Repatriation of thehuman remains and associated funeraryobjects to the Pueblo of Jemez may begin

after that date if no additional claimantscome forward.Dated: November 18, 1998.Veletta Canouts,Acting Departmental ConsultingArcheologist,Deputy Manager, Archeology andEthnography Program.[FR Doc. 98–31482 Filed 11–24–98; 8:45 am]BILLING CODE 4310–70–F



Notice of Inventory Completion forNative American Human Remains andAssociated Funerary Objects from NewMexico in the Possession of theMuseum of Indian Arts and Culture/Laboratory of Anthropology, Museumof New Mexico, Santa Fe, NM


Notice is hereby given in accordancewith provisions of the Native AmericanGraves Protection and Repatriation Act(NAGPRA), 43 CFR 10.9, of thecompletion of an inventory of humanremains and associated funerary objectsfrom New Mexico in the possession ofthe Museum of Indian Arts and Culture/Laboratory of Anthropology, Museum ofNew Mexico, Santa Fe, NM.

A detailed assessment of the humanremains was made by Museum of IndianArts and Culture/Laboratory ofAnthropology professional staff inconsultation with representatives of thePueblo of Nambe, the Pueblo ofPojoaque, the Pueblo of San Ildefonso,the Pueblo of San Juan, the Pueblo ofSanta Clara, and the Pueblo of Tesuque.

In 1952, human remains representing38 individuals were removed fromCuyamungue Pueblo (LA 38) duringlegally authorized excavationsconducted by Museum of New Mexicostaff. No known individuals wereidentified. The five associated funeraryobjects include a cotton textile fragment,two ceramic vessels, a cache of burnedmacro botanical remains, and a necklaceof shell and turquoise beads.

Based on archeological evidence,Spanish Colonial documents,geographic location, continuity ofoccupation, and oral history presentedduring consultation by representativesof the pueblo listed above, CuyamunguePueblo (LA 38) has been identified as apuebloan village occupied from theAnasazi PIII period (1100-1300 A.D.)until the Pueblo Revolt of 1696.Historical documents and oral historyindicates Cuyamungue Pueblo was


abandoned and the survivors wereabsorbed by the pueblos of Nambe,Pojoaque, San Ildefonso, San Juan,Santa Clara, and Tesuque.

Based on the above mentionedinformation, officials of the Museum ofIndian Arts and Culture/Laboratory ofAnthropology have determined that,pursuant to 43 CFR 10.2 (d)(1), thehuman remains listed above representthe physical remains of 38 individualsof Native American ancestry. Officials ofthe Museum of Indian Arts and Culture/Laboratory of Anthropology have alsodetermined that, pursuant to 43 CFR10.2 (d)(2), the five objects listed aboveare reasonably believed to have beenplaced with or near individual humanremains at the time of death or later aspart of the death rite or ceremony.Lastly, officials of the Museum of IndianArts and Culture/Laboratory ofAnthropology have determined that,pursuant to 43 CFR 10.2 (e), there is arelationship of shared group identitywhich can be reasonably traced betweenthese Native American human remainsand associated funerary objects and thePueblo of Nambe, the Pueblo ofPojoaque, the Pueblo of San Ildefonso,the Pueblo of San Juan, the Pueblo ofSanta Clara, and the Pueblo of Tesuque.

This notice has been sent to officialsof the Pueblo of Nambe, the Pueblo ofPojoaque, the Pueblo of San Ildefonso,the Pueblo of San Juan, the Pueblo ofSanta Clara, and the Pueblo of Tesuque.Representatives of any other Indian tribethat believes itself to be culturallyaffiliated with these human remains andassociated funerary objects shouldcontact Patricia House, Director,Museum of Indian Arts and Culture/Laboratory of Anthropology, P.O. Box2087, Santa Fe, NM 87504; telephone:(505) 827-6344, before December 28,1998. Repatriation of the humanremains and associated funerary objectsto the Pueblo of Nambe, the Pueblo ofPojoaque, the Pueblo of San Ildefonso,the Pueblo of San Juan, the Pueblo ofSanta Clara, and the Pueblo of Tesuquemay begin after that date if noadditional claimants come forward.Dated: November 17, 1998.

Veletta Canouts,Acting Departmental ConsultingArcheologist,Deputy Manager, Archeology andEthnography Program.[FR Doc. 98–31486 Filed 11–25–98; 8:45 am]




Notice of Intent to Repatriate a CulturalItem in the Possession of the OlmstedCounty Historical Society, Rochester,MN


Notice is hereby given under theNative American Graves Protection andRepatriation Act, 43 CFR 10.10 (a)(3), ofthe intent to repatriate a cultural item inthe possession of the Olmsted CountyHistorical Society, Rochester, MN whichmeets the definition of ‘‘sacred object’’under Section 2 of the Act.

The cultural item is a IroquoisMedicine Rattle constructed of a cow’shorn with a wooden handle.

In 1966, this item was donated to theOlmsted County Historical Society bythe Mayo Clinic, Rochester, MN. TheMayo Clinic had received this item fromDr. S.A. Barrett of the Milwaukee PublicMuseum. At an earlier unknown date,this item was acquired in western NewYork State.

Museum records indicate this rattle isa Medicine Rattle. Consultation withrepresentatives of the Cayuga Nation ofNew York indicate this item is neededby traditional Native American religiousleaders for practice of traditional NativeAmerican religion by present-dayadherents.

Based on the above-mentionedinformation, officials of the OlmstedCounty Historical Society havedetermined that, pursuant to 43 CFR10.2 (d)(3), this cultural item is aspecific ceremonial object needed bytraditional Native American religiousleaders for the practice of traditionalNative American religions by theirpresent-day adherents. Officials of theOlmsted County Historical Society havealso determined that, pursuant to 43CFR 10.2 (e), there is a relationship ofshared group identity which can bereasonably traced between this item andthe Cayuga Nation of New York.

This notice has been sent to officialsof the Cayuga Nation of New York, theTuscarora Nation of New York, theSeneca Nation of New York, the Seneca-Cayuga Tribe of Oklahoma, the St. RegisBand of Mohawk Indians of New York,the Onondaga Nation of New York, theOneida Nation of New York, and theOneida Tribe of Wisconsin.Representatives of any other Indian tribethat believes itself to be culturallyaffiliated with these objects shouldcontact Margot Ballard, Curator,Olmsted County Historical Society,

1195 Cty. Rd. 22 SW, Rochester, MN55902; telephone (507) 282–9447 beforeDecember 28, 1998. Repatriation ofthese objects to the Cayuga Nation ofNew York may begin after that date if noadditional claimants come forward.Dated: November 18, 1998.Veletta Canouts,Acting Departmental ConsultingArcheologist,Deputy Manager, Archeology andEthnography Program.[FR Doc. 98–31487 Filed 11–24–98; 8:45 am]BILLING CODE 4310–70–F



Notice of Inventory Completion forNative American Human Remains andAssociated Funerary Objects fromBernalillo, Cibola, and SocorroCounties, NM in the Control of theCibola National Forest, United StatesForest Service, Albuquerque, NM


Notice is hereby given in accordancewith provisions of the Native AmericanGraves Protection and Repatriation Act(NAGPRA), 43 CFR 10.9, of thecompletion of an inventory of humanremains and associated funerary objectsfrom Bernalillo, Cibola, and SocorroCounties, NM in the control of theCibola National Forest, United StatesForest Service, Albuquerque, NM.

A detailed assessment of the humanremains was made by Maxwell Museum(University of New Mexico), theMuseum of New Mexico, NorthernArizona University, and U.S. ForestService professional staff inconsultation with representatives of thePueblo of Acoma, the Hopi Tribe, thePueblo of Isleta, the Pueblo of Sandia,and the Pueblo of Zuni.

Between 1977 and 1979, humanremains representing 28 individualswere recovered from sites NA 21566,NA 23177, and NA 23178 during legallyauthorized excavations conducted by J.Richard Ambler of Northern ArizonaUniversity. No known individuals wereidentified. The 11 associated funeraryobjects include ceramic vessels, sherds,and chipped stone.

Based on material culture,architecture, and site organization, sitesNA 21566, NA 23177, and NA 23178have been identified as small Anasazipueblos occupied between 800-1150A.D. Continuities of ethnographicmaterials, technology, and architectureindicate affiliation of Anasazi sites in


1 The imported product subject to theseinvestigations, ESBR, is a synthetic polymer madevia free radical cold emulsion copolymerization of

Continued

west-central New Mexico with historicand present-day Puebloan cultures. Oraltraditions presented by representativesof the Pueblo of Acoma, the Hopi Tribe,and the Pueblo of Zuni support culturalaffiliation with Anasazi sites in west-central New Mexico.

Based on the above mentionedinformation, officials of the USDAForest Service have determined that,pursuant to 43 CFR 10.2 (d)(1), thehuman remains listed above representthe physical remains of 28 individualsof Native American ancestry. Officials ofthe USDA Forest Service have alsodetermined that, pursuant to 43 CFR10.2 (d)(2), the 11 objects listed aboveare reasonably believed to have beenplaced with or near individual humanremains at the time of death or later aspart of the death rite or ceremony.Lastly, officials of the USDA ForestService have determined that, pursuantto 43 CFR 10.2 (e), there is arelationship of shared group identitywhich can be reasonably traced betweenthese Native American human remainsand associated funerary objects and thePueblo of Acoma, the Hopi Tribe, andthe Pueblo of Zuni.

Between 1948 and 1976, humanremains representing 124 individualswere recovered from Tijeras Pueblo (LA581) during legally authorizedexcavations and collections conductedby the University of New MexicoArcheological Field School, theMuseum of New Mexico, and the CibolaNational Forest. These human remainsare currently curated at the MaxwellMuseum of Anthropology (University ofNew Mexico) and the Museum of NewMexico. No known individuals wereidentified. The approximately 360associated funerary objects includeceramic vessels, sherds, stone tools andjewelry, bone tools, botanical samples,corn cobs, and projectile points.

Based on material culture,architecture, and site organization,Tijeras Pueblo has been identified as alarge masonry pueblo occupied between1300-1600 A.D.

Between 1974 and 1977, humanremains representing 33 individualswere recovered from Gallinas SpringsRuin (LA 1178 and LA 1180) duringlegally authorized excavations andcollections conducted by the WesternMichigan University ArcheologicalField School and the University of NewMexico Archeological Field School.These human remains are currentlycurated at the Maxwell Museum ofAnthropology (University of NewMexico). No known individuals wereidentified. The approximately 20associated funerary objects include

ceramic vessels, sherds, stone tools,groundstone, and shell beads.

Based on material culture,architecture, and site organization,Gallinas Springs Ruin has beenidentified as a large masonry pueblooccupied between 1300-1600 A.D.

Between 1982 and 1983, humanremains representing four individualswere recovered from Two Dead JuniperVillage (LA 87432) during legallyauthorized excavations and collectionsby the Center for AnthropologicalStudies. These human remains arecurrently curated at the MaxwellMuseum of Anthropology (Univerity ofNew Mexico). No known individualswere identified. No associated funeraryobjects were present.

Based on material culture,architecture, and site organization, TwoDead Juniper Village has been identifiedas an Anasazi pithouse village occupiedbetween 1150-1250 A.D.

In 1987, human remains representingone individual were recovered from theBear Canyon site (LA 61032) duringlegally authorized excavationsconducted by University of New Mexicopersonnel. No known individual wasidentified. No associated funeraryobjects are present.

Based on material culture,architecture, and site organization, theBear Canyon site has been identified asa small Anasazi pueblo occupiedbetween 1200-1600 A.D.

Continuities of ethnographicmaterials, technology, and architectureindicate affiliation of Anasazi sites inportions of central New Mexico withhistoric and present-day Puebloancultures. Oral traditions presented byrepresentatives of the Pueblo of Isletaand the Pueblo of Sandia supportcultural affiliation with Anasazi sites inthe portions of central New Mexicowhere the preceeding sites are located.

Based on the above mentionedinformation, officials of the USDAForest Service have determined that,pursuant to 43 CFR 10.2 (d)(1), thehuman remains listed above representthe physical remains of 162 individualsof Native American ancestry. Officials ofthe USDA Forest Service have alsodetermined that, pursuant to 43 CFR10.2 (d)(2), the minimum of 380 objectslisted above are reasonably believed tohave been placed with or nearindividual human remains at the time ofdeath or later as part of the death riteor ceremony. Lastly, officials of theUSDA Forest Service have determinedthat, pursuant to 43 CFR 10.2 (e), thereis a relationship of shared groupidentity which can be reasonably tracedbetween these Native American humanremains and associated funerary objects

and the Pueblo of Isleta, the Pueblo ofSandia, and Ysleta del Sur Pueblo.

This notice has been sent to officialsof the Pueblo of Acoma, the Hopi Tribe,the Pueblo of Zuni, the Pueblo of Isleta,the Pueblo of Sandia, and Ysleta del SurPueblo. Representatives of any otherIndian tribe that believes itself to beculturally affiliated with these humanremains and associated funerary objectsshould contact Dr. Frank E. Wozniak,NAGPRA Coordinator, SouthwesternRegion, USDA Forest Service, 517 GoldAve., SW, Albuquerque, NM 87102;telephone: (505) 842-3238, fax (505)842-3800, before December 28, 1998.Repatriation of the human remains andassociated funerary objects to the HopiTribe, the Pueblo of Acoma, the Puebloof Isleta, the Pueblo of Sandia, thePueblo of Zuni, and Ysleta del SurPueblo may begin after that date if noadditional claimants come forward.Dated: November 18, 1998.Veletta Canouts,Acting Departmental ConsultingArcheologist,Deputy Manager, Archeology andEthnography Program.[FR Doc. 98–31483 Filed 11–24–98; 8:45 am]BILLING CODE 4310–70–F

INTERNATIONAL TRADECOMMISSION

[Investigations Nos. 731–TA–794–796(Final)]

Certain Emulsion Styrene-ButadieneRubber From Brazil, Korea, and Mexico

AGENCY: United States InternationalTrade Commission.ACTION: Scheduling of the final phase ofantidumping investigations.

SUMMARY: The Commission hereby givesnotice of the scheduling of the finalphase of antidumping investigationsNos. 731–TA–794–796 (Final) undersection 735(b) of the Tariff Act of 1930(19 U.S.C. 1673d(b)) (the Act) todetermine whether an industry in theUnited States is materially injured orthreatened with material injury, or theestablishment of an industry in theUnited States is materially retarded, byreason of less-than-fair-value importsfrom Brazil, Korea, and Mexico ofcertain emulsion styrene-butadienerubber (‘‘ESBR’’), provided for insubheading 4002.19.00 of theHarmonized Tariff Schedule of theUnited States.1


styrene and butadiene monomers in reactors. Thereaction process involves combining styrene andbutadiene monomers in water, with an initiatorsystem, an emulsifier system, and molecular weightmodifiers. ESBR consists of cold non-pigmentedrubbers and cold oil extended non-pigmentedrubbers that contain at least 1 percent of organicacids from the emulsion polymerization process.ESBR is produced and sold, both inside the UnitedStates and internationally, in accordance with agenerally accepted set of product specificationsissued by the International Institute of SyntheticRubber Producers (IISRP). The universe of productssubject to these investigations are grades of ESBRincluded in the IISRP 1500 series and IISRP 1700series of synthetic rubbers. The 1500 grades arelight in color and are often described as ‘‘Clear’’ or‘‘White Rubber.’’ The 1700 grades are oil-extendedand thus darker in color, and are often called‘‘Brown Rubber.’’ ESBR is used primarily in theproduction of tires. It is also used in a variety ofother products, including conveyor belts, shoesoles, some kinds of hoses, roller coverings, andflooring.

Imported products manufactured by blendingESBR with other polymers, high styrene resinmaster batch, carbon black master batch (i.e., IISRP1600 series and 1800 series) and latex (anintermediate product) are not included within thescope of these investigations.

For further information concerningthe conduct of this phase of theinvestigations, hearing procedures, andrules of general application, consult theCommission’s rules of practice andprocedure, part 201, subparts A throughE (19 CFR part 201), and part 207,subparts A and C (19 CFR part 207).EFFECTIVE DATE: November 2, 1998.FOR FURTHER INFORMATION CONTACT: FredRuggles (202–205–3187), Office ofInvestigations, U.S. International TradeCommission, 500 E Street SW,Washington, DC 20436. Hearing-impaired persons can obtaininformation on this matter by contactingthe Commission’s TDD terminal on 202–205–1810. Persons with mobilityimpairments who will need specialassistance in gaining access to theCommission should contact the Officeof the Secretary at 202–205–2000.General information concerning theCommission may also be obtained byaccessing its internet server (http://www.usitc.gov).SUPPLEMENTARY INFORMATION:

Background.—The final phase ofthese investigations is being scheduledas a result of affirmative preliminarydeterminations by the Department ofCommerce that imports of certainemulsion styrene-butadiene rubber fromBrazil, Korea, and Mexico are being soldin the United States at less than fairvalue within the meaning of section 733of the Act (19 U.S.C. 1673b). Theinvestigation was requested in a petitionfiled on April 1, 1998, by AmeripolSynpol Corp., Akron, OH, and DSMCopolymer, Baton Rouge, LA.

Participation in the investigations andpublic service list.—Persons, including

industrial users of the subjectmerchandise and, if the merchandise issold at the retail level, representativeconsumer organizations, wishing toparticipate in the final phase of theseinvestigations as parties must file anentry of appearance with the Secretaryto the Commission, as provided in§ 201.11 of the Commission’s rules, nolater than 21 days prior to the hearingdate specified in this notice. A partythat filed a notice of appearance duringthe preliminary phase of theinvestigations need not file anadditional notice of appearance duringthis final phase. The Secretary willmaintain a public service list containingthe names and addresses of all persons,or their representatives, who are partiesto the investigations.

Limited disclosure of businessproprietary information (BPI) under anadministrative protective order (APO)and BPI service list.—Pursuant to§ 207.7(a) of the Commission’s rules, theSecretary will make BPI gathered in thefinal phase of these investigationsavailable to authorized applicants underthe APO issued in the investigations,provided that the application is madeno later than 21 days prior to thehearing date specified in this notice.Authorized applicants must representinterested parties, as defined by 19U.S.C. 1677(9), who are parties to theinvestigations. A party granted access toBPI in the preliminary phase of theinvestigations need not reapply for suchaccess. A separate service list will bemaintained by the Secretary for thoseparties authorized to receive BPI underthe APO.

Staff report.—The prehearing staffreport in the final phase of theseinvestigations will be placed in thenonpublic record on March 17, 1999,and a public version will be issuedthereafter, pursuant to § 207.22 of theCommission’s rules.

Hearing.—The Commission will holda hearing in connection with the finalphase of these investigations beginningat 9:30 a.m. on March 30, 1999, at theU.S. International Trade CommissionBuilding. Requests to appear at thehearing should be filed in writing withthe Secretary to the Commission on orbefore March 23, 1999. A nonparty whohas testimony that may aid theCommission’s deliberations may requestpermission to present a short statementat the hearing. All parties andnonparties desiring to appear at thehearing and make oral presentationsshould attend a prehearing conferenceto be held at 9:30 a.m. on March 25,1999, at the U.S. International TradeCommission Building. Oral testimonyand written materials to be submitted at

the public hearing are governed by§§ 201.6(b)(2), 201.13(f), and 207.24 ofthe Commission’s rules. Parties mustsubmit any request to present a portionof their hearing testimony in camera nolater than 7 days prior to the date of thehearing .

Written submissions.—Each partywho is an interested party shall submita prehearing brief to the Commission.Prehearing briefs must conform with theprovisions of § 207.23 of theCommission’s rules; the deadline forfiling is March 24, 1999. Parties mayalso file written testimony in connectionwith their presentation at the hearing, asprovided in § 207.24 of theCommission’s rules, and posthearingbriefs, which must conform with theprovisions of § 207.25 of theCommission’s rules. The deadline forfiling posthearing briefs is April 6, 1999;witness testimony must be filed no laterthan three days before the hearing. Inaddition, any person who has notentered an appearance as a party to theinvestigations may submit a writtenstatement of information pertinent tothe subject of the investigations on orbefore April 16, 1999. On April 16,1999, the Commission will makeavailable to parties all information onwhich they have not had an opportunityto comment. Parties may submit finalcomments on this information on orbefore April 20, 1999, but such finalcomments must not contain new factualinformation and must otherwise complywith § 207.30 of the Commission’s rules.All written submissions must conformwith the provisions of § 201.8 of theCommission’s rules; any submissionsthat contain BPI must also conform withthe requirements of §§ 201.6, 207.3, and207.7 of the Commission’s rules. TheCommission’s rules do not authorizefiling of submissions with the Secretaryby facsimile or electronic means.

In accordance with §§ 201.16(c) and207.3 of the Commission’s rules, eachdocument filed by a party to theinvestigations must be served on allother parties to the investigations (asidentified by either the public or BPIservice list), and a certificate of servicemust be timely filed. The Secretary willnot accept a document for filing withouta certificate of service.

Authority: These investigations are beingconducted under authority of title VII of theTariff Act of 1930; this notice is publishedpursuant to § 207.21 of the Commission’srules.

Issued: November 19, 1998.


1 The record is defined in § 207.2(f) of theCommission’s rules of practice and procedure (19CFR 207.2(f)).

2 Commissioner Crawford determined that there isa reasonable indication that an industry in theUnited States is materially injured.

3 National Steel Corp. is not a petitioner withrespect to Japan.

By order of the Commission.Donna R. Koehnke,Secretary.[FR Doc. 98–31519 Filed 11–24–98; 8:45 am]BILLING CODE 7020–02–P


[Investigation No. 701–TA–384 (Preliminary)and Investigations Nos. 731–TA–806–808(Preliminary)]

Certain Hot-Rolled Steel ProductsFrom Brazil, Japan, and Russia

Determinations

On the basis of the record 1 developedin the subject investigations, the UnitedStates International Trade Commissiondetermines, pursuant to section 703(a)of the Tariff Act of 1930 (19 U.S.C.1671b(a)), that there is a reasonableindication that an industry in theUnited States is threatened withmaterial injury by reason of importsfrom Brazil of certain hot-rolled steelproducts, provided for in headings7208, 7210, 7211, 7212, 7225, and 7226of the Harmonized Tariff Schedule ofthe United States, that are alleged to besubsidized by the Government ofBrazil.2 The Commission alsodetermines, pursuant to section 733(a)of the Tariff Act of 1930 (19 U.S.C.1673b(a)), that there is a reasonableindication that an industry in theUnited States is threatened withmaterial injury by reason of suchimports from Brazil, Japan, and Russiathat are alleged to be sold in the UnitedStates at less than fair value.2

Commencement of Final PhaseInvestigations

Pursuant to § 207.18 of theCommission’s rules, the Commissionalso gives notice of the commencementof the final phase of its investigations.The Commission will issue a final phasenotice of scheduling which will bepublished in the Federal Register asprovided in § 207.21 of theCommission’s rules upon notice fromthe Department of Commerce(Commerce) of affirmative preliminarydeterminations in these investigationsunder section 703(b) and section 733(b)of the Act, or, if the preliminarydeterminations are negative, uponnotice of affirmative finaldeterminations in the investigations

under section 705(a) and section 735(a)of the Act. Parties that filed entries ofappearance in the preliminary phase ofthe investigations need not enter aseparate appearance for the final phaseof the investigations. Industrial users,and, if the merchandise underinvestigation is sold at the retail level,representative consumer organizations,have the right to appear as parties inCommission antidumping andcountervailing duty investigations. TheSecretary will prepare a public servicelist containing the names and addressesof all persons, or their representatives,who are parties to the investigations.

BackgroundOn September 30, 1998, a petition

was filed with the Commission and theDepartment of Commerce by BethlehemSteel Corp., Bethlehem, PA; U.S. SteelGroup, a unit of USX Corp., Pittsburgh,PA; Ispat Inland Steel, East Chicago, IN;LTV Steel Co., Inc., Cleveland, OH;National Steel Corp., Mishawaka, IN; 3

California Steel Industries, Fontana, CA;Gallatin Steel Co., Ghent, KY; GenevaSteel, Vineyard, UT; Gulf States Steel,Inc., Gadsden, AL; IPSCO Steel, Inc.,Muscatine, IA; Steel Dynamics, Butler,IN; Weirton Steel Corp., Weirton, WV;Independent Steelworkers Union,Weirton, WV; and the UnitedSteelworkers of America, Pittsburgh,PA, alleging that an industry in theUnited States is materially injured byreason of subsidized or LTFV imports ofcertain hot-rolled steel products fromBrazil, Japan, and Russia. Sales of suchproduct are allegedly subsidized withrespect to Brazil and made at LTFV withrespect to Brazil, Japan, and Russia.Accordingly, effective September 30,1998, the Commission institutedinvestigation No. 701–TA–384(Preliminary) and investigations Nos.731–TA–806–808 (Preliminary).

Notice of the institution of theCommission’s investigations and of apublic conference to be held inconnection therewith was given byposting copies of the notice in the Officeof the Secretary, U.S. InternationalTrade Commission, Washington, DC,and by publishing the notice in theFederal Register of October 7, 1998 (63FR 53926). The conference was held inWashington, DC, on October 21, 1998,and all persons who requested theopportunity were permitted to appear inperson or by counsel.

The Commission transmitted itsdeterminations in these investigations tothe Secretary of Commerce onNovember 16, 1998. The views of the

Commission are contained in USITCPublication 3142 (November 1998),entitled Certain Hot-rolled SteelProducts from Brazil, Japan, and Russia:Investigations Nos. 701–TA–384 and731–TA–806–808 (Preliminary).

Issued: November 17, 1998.By order of the Commission.

Donna R. Koehnke,Secretary.[FR Doc. 98–31517 Filed 11–24–98; 8:45 am]BILLING CODE 7020–02–P


[Investigation No. AA1921–111 (Review)]

Roller Chain From Japan

AGENCY: United States InternationalTrade Commission.ACTION: Scheduling of a full five-yearreview concerning the antidumpingduty order on roller chain from Japan.

SUMMARY: The Commission hereby givesnotice of the scheduling of a full reviewpursuant to section 751(c)(5) of theTariff Act of 1930 (19 U.S.C. 1675(c)(5))(the Act) to determine whetherrevocation of the antidumping dutyorder on roller chain from Japan wouldbe likely to lead to continuation orrecurrence of material injury. Forfurther information concerning theconduct of this review and rules ofgeneral application, consult theCommission’s rules of practice andprocedure, part 201, subparts A throughE (19 CFR part 201), and part 207,subparts A, D, E, and F (19 CFR part207). Recent amendments to the rules ofpractice and procedure pertinent to five-year reviews, including the text ofsubpart F of part 207, are published at63 FR 30599, June 5, 1998, and may bedownloaded from the Commission’sWorld Wide Web site at http://www.usitc.gov/rules.htm.EFFECTIVE DATE: November 16, 1998.FOR FURTHER INFORMATION CONTACT:Debra Baker (202–205–3180), Office ofInvestigations, U.S. International TradeCommission, 500 E Street SW,Washington, DC 20436. Hearing-impaired persons can obtaininformation on this matter by contactingthe Commission’s TDD terminal on 202–205–1810. Persons with mobilityimpairments who will need specialassistance in gaining access to theCommission should contact the Officeof the Secretary at 202–205–2000.General information concerning theCommission may also be obtained byaccessing its internet server (http://www.usitc.gov).


SUPPLEMENTARY INFORMATION:Background.—On October 8, 1998,

the Commission determined thatresponses to its notice of institution ofthe subject five-year review were suchthat a full review pursuant to section751(c)(5) of the Act should proceed (63FR 56048, October 20, 1998). A recordof the Commissioners’ votes and astatement by Commissioner Carol T.Crawford are available from the Officeof the Secretary and at theCommission’s web site.

Participation in the review and publicservice list.—Persons, includingindustrial users of the subjectmerchandise and, if the merchandise issold at the retail level, representativeconsumer organizations, wishing toparticipate in this review as partiesmust file an entry of appearance withthe Secretary to the Commission, asprovided in § 201.11 of theCommission’s rules, by January 4, 1999.A party that filed a notice of appearancefollowing publication of theCommission’s notice of institution ofthe review need not file an additionalnotice of appearance. The Secretary willmaintain a public service list containingthe names and addresses of all persons,or their representatives, who are partiesto the review.

Limited disclosure of businessproprietary information (BPI) under anadministrative protective order (APO)and BPI service list.—Pursuant to§ 207.7(a) of the Commission’s rules, theSecretary will make BPI gathered in thisreview available to authorizedapplicants under the APO issued in thereview, provided that the application ismade no later than January 4, 1999.Authorized applicants must representinterested parties, as defined by 19U.S.C. 1677(9), who are parties to thereview. A party granted access to BPIfollowing publication of theCommission’s notice of institution ofthe review need not reapply for suchaccess. A separate service list will bemaintained by the Secretary for thoseparties authorized to receive BPI underthe APO.

Staff report.—The prehearing staffreport in the review will be placed inthe nonpublic record on April 19, 1999,and a public version will be issuedthereafter, pursuant to § 207.64 of theCommission’s rules.

Hearing.—The Commission will holda hearing in connection with the reviewbeginning at 9:30 a.m. on May 6, 1999,at the U.S. International TradeCommission Building. Requests toappear at the hearing should be filed inwriting with the Secretary to theCommission on or before April 27, 1999.A nonparty who has testimony that may

aid the Commission’s deliberations mayrequest permission to present a shortstatement at the hearing. All parties andnonparties desiring to appear at thehearing and make oral presentationsshould attend a prehearing conferenceto be held at 9:30 a.m. on April 29,1999, at the U.S. International TradeCommission Building. Oral testimonyand written materials to be submitted atthe public hearing are governed by§§ 201.6(b)(2), 201.13(f), 207.24, and207.66 of the Commission’s rules.Parties must submit any request topresent a portion of their hearingtestimony in camera no later than 7days prior to the date of the hearing.

Written submissions.—Each party tothe review may submit a prehearingbrief to the Commission. Prehearingbriefs must conform with the provisionsof § 207.65 of the Commission’s rules;the deadline for filing is April 28, 1999.Parties may also file written testimonyin connection with their presentation atthe hearing, as provided in § 207.24 ofthe Commission’s rules, and posthearingbriefs, which must conform with theprovisions of § 207.67 of theCommission’s rules. The deadline forfiling posthearing briefs is May 18,1999; witness testimony must be filedno later than three days before thehearing. In addition, any person whohas not entered an appearance as a partyto the review may submit a writtenstatement of information pertinent tothe subject of the review on or beforeMay 18, 1999. On June 9, 1999, theCommission will make available toparties all information on which theyhave not had an opportunity tocomment. Parties may submit finalcomments on this information on orbefore June 11, 1999, but such finalcomments must not contain new factualinformation and must otherwise complywith § 207.68 of the Commission’s rules.All written submissions must conformwith the provisions of § 201.8 of theCommission’s rules; any submissionsthat contain BPI must also conform withthe requirements of §§ 201.6, 207.3, and207.7 of the Commission’s rules. TheCommission’s rules do not authorizefiling of submissions with the Secretaryby facsimile or electronic means.

In accordance with §§ 201.16(c) and207.3 of the Commission’s rules, eachdocument filed by a party to the reviewmust be served on all other parties tothe review (as identified by either thepublic or BPI service list), and acertificate of service must be timelyfiled. The Secretary will not accept adocument for filing without a certificateof service.

Authority: This review is being conductedunder authority of title VII of the Tariff Actof 1930; this notice is published pursuant to§ 207.62 of the Commission’s rules.

Issued: November 17, 1998.By order of the Commission.

Donna R. Koehnke,Secretary.[FR Doc. 98–31518 Filed 11–24–98; 8:45 am]BILLING CODE 7020–02–P


[USITC SE–98–020]


AGENCY HOLDING THE MEETING: UnitedStates International Trade Commission.TIME AND DATE: December 7, 1998 at 2:00p.m.PLACE: Room 101, 500 E Street S.W.,Washington, DC 20436.STATUS: Open to the public.MATTERS TO BE CONSIDERED:

1. Agenda for future meeting: None.2. Minutes.3. Ratification List.4. Inv. No. 731–TA–811 (Preliminary)

(DRAMS of One Megabit and Abovefrom Taiwan)—briefing and vote.

5. Outstanding action jackets:1. Document No. INV–98–080:

Approval of revised work schedule inInv. Nos. 751–TA–21–27 (Ferrosiliconfrom Brazil, China, Kazakhstan, Russia,Ukraine, and Venezuela).

In accordance with Commissionpolicy, subject matter listed above, notdisposed of at the scheduled meeting,may be carried over to the agenda of thefollowing meeting.

By order of the Commission.

Issued: November 23, 1998.Donna R. Koehnke,Secretary.[FR Doc. 98–31630 Filed 11–23–98; 8:45 am]BILLING CODE 7020–02–M


Notice of Lodging of Partial ConsentDecree Under the ComprehensiveEnvironmental Response,Compensation and Liability Act, 42U.S.C. §§ 9601 et seq.; Excel Corp.

Under 28 CFR 50.7, notice is herebygiven that on November 16, 1998 aproposed partial consent decree(‘‘consent decree’’) in United States v.Excel Corp., Civil Action No.3:93CV119RM, was lodged with theUnited States District Court for theNorthern District of Indiana.


In this action the United States soughtcivil penalties and unrecoveredresponse costs in connection with theMain Street Well Field Site in Elkhart,Indiana (‘‘Site’’). The proposed consentdecree provides for the payment bydefendants Joseph S. Beale and JSBCorporation d/b/a Adlake Enterprises,Inc. (collectively ‘‘JSB’’) of $350,000 ofthe United States unrecovered responsecosts at the Site. The proposed consentdecree also resolve the United Statesclaims against JSB for its alleged failureto perform response activities at the Sitepursuant to an administrative orderissued by the United StatesEnvironmental Protection Agency(‘‘EPA’’).

The Department of Justice will receivefor a period of thirty (30) days from thedate of this publication commentsrelating to the proposed consent decree.Comments should be addressed to theAssistant Attorney General of theEnvironment and Natural ResourcesDivision, Department of Justice,Washington, D.C. 20530, and shouldrefer to United States v. Excel Corp., D.J.Ref. No. 90–11–3–799.

The proposed consent decree may beexamined at the Office of the UnitedStates Attorney, 301 Federal Building,204 South Main Street, South Bend,Indiana; at the Region 5 Office of EPA,77 West Jackson Blvd., Chicago, Illinois60604; and at the Consent DecreeLibrary, 1120 G Street, N.W., 3rd Floor,Washington, D.C. 20005, (202) 624–0892. A copy of the proposed consentdecree may be obtained in person or bymail from the Consent Decree Library,1120 G Street, N.W., 3rd Floor,Washington, D.C. 20005. In requesting acopy, please enclose a check in theamount of $7.50 (25 cents per pagereproduction cost) payable to theConsent Decree Library.Joel M. Gross,Chief, Environmental Enforcement Section,Environment and Natural Resources Division.[FR Doc. 98–31432 Filed 11–24–98; 8:45 am]BILLING CODE 4410–15–M


[AAG/A Order 154–98]

Privacy Act of 1974; Notice of ModifiedSystem of Records

Pursuant to the provisions of thePrivacy Act of 1974 (5 U.S.C. 552a),notice is hereby given that theDepartment of Justice, Federal Bureau ofInvestigation (FBI), is modifying thefollowing system of records which waslast published in the Federal Registeron June 4, 1998 (63 FR 30514):

The National Instant CriminalBackground Check System (NICS)JUSTICE/FBI–018.

In the rules section of today’s FederalRegister, the Department of Justice isalso providing a final rule exemptingthe NICS from certain provisions of thePrivacy Act.

This notice addresses commentsreceived by the Department of Justicefollowing publication of the Notice ofNew System of Records for the NICS,published in the Federal Register onJune 4, 1998 (63 FR 30514), in which,in accordance with 5 U.S.C. 552a(e)(4)and (11), the public, the Office ofManagement and Budget, and theCongress were invited to comment onthe new routine uses. The Departmentof Justice/FBI accepted comments onthe NICS system notice from the publicdated on or before July 6, 1998.

Significant CommentsA number of comments raised matters

that were more pertinent to othernotices of proposed rulemaking relatingto the NICS: The National InstantCriminal Background Check SystemRegulation published in the FederalRegister on June 4, 1998 (63 FR 30430),and the National Instant CriminalBackground Check System User FeeRegulation, published in the FederalRegister on August 17, 1998 (63 FR43893). Such comments have beenaddressed in the final NICS rule, theNational Instant Criminal BackgroundCheck System Regulation, published inthe Federal Register on October 30,1998 (63 FR 58303). Other commentsraised matters that were more pertinentto the proposed rule exempting theNICS from certain provisions of thePrivacy Act, published in the FederalRegister on June 4, 1998 (63 FR 30429).Such comments are addressed in a finalrule, Exemption of System of RecordsUnder the Privacy Act, published in therules section of today’s FederalRegister.

A number of comments opposedretention by the NICS of a temporary logof background check transactions thatallow a firearm transfer to proceed. (Fora more detailed discussion of this issue,see the final NICS rule, the NationalInstant Criminal Background CheckSystem Regulation, published in theFederal Register on October 30, 1998(63 FR 58303).) Although the BradyHandgun Violence Prevention Act(Brady Act) mandates the destruction ofall personally identified information inthe NICS associated with approvedfirearms transactions (other than theidentifying number and the date thenumber was assigned), the statute doesnot specify a period of time within

which records of approvals must bedestroyed. At the same time, the BradyAct requires that the Department ensurethe privacy and security of the NICS andthe proper operation of the system. TheDepartment has attempted to balancevarious interests involved and complywith both statutory requirements byretaining such records in the NICSAudit Log for a limited, but sufficient,period of time to conduct audits of theNICS. The original NICS records systemnotice indicated that records of firearmtransaction approvals would bemaintained for eighteen months.However, in recognition of thenumerous comments objecting to thisretention period as too long, theDepartment reexamined the time periodneeded to perform audits of the NICS.The Department determined that thegeneral retention period for records ofallowed transfers in the NICS Audit Logshould be the minimum reasonableperiod for performing audits on thesystem, but in no event more than sixmonths. The final NICS regulationsreflect this (but also provide that suchinformation may be retained for a longerperiod if necessary to pursue identifiedcases of misuse of the system). TheDepartment further determined that theFBI shall work toward reducing theretention period to the shortestpracticable period of time less than sixmonths that will allow basic securityaudits of the NICS. By February 28,1999, the Department will issue a noticeof a proposed revision of the regulationsetting forth a further reduced period ofretention that will be observed by thesystem. The NICS system of records hasbeen modified to reflect these changes.

Various comments expressed concernthat the Audit Log would allow statesacting as NICS Points of Contact (POCs)and law enforcement agencies access torecords of approved transfers. This isnot a well-founded concern becauseonly the FBI will be able to directlyaccess information in the transactionlog. Section 25.9(b)(2) of the final rulewas revised to provide explicitly thatsuch information is directly availableonly to the FBI, and only for thepurposes of conducting audits of the useand performance of the NICS orpursuing cases of misuse of the system.

In addition to several commentswhich objected to particular routineuses, one comment pointed out that thelist of ‘‘routine uses’’ in the originalNICS system notice appeared broaderthan the uses addressed in theregulations for both the National CrimeInformation Center (NCIC) (citing 28CFR 20.20(c) and 20.21(b)) and for theNICS (citing 28 CFR 25.6(j)).Specifically, 28 CFR 25.6(j) limits the


access to the NICS Index for purposesthat are unrelated to NICS backgroundchecks required by the Brady Act toproviding information to criminaljustice agencies in connection with theissuance of firearm-related andexplosives-related permits or licenses orto the ATF in connection withenforcement of the Gun Control Act (18U.S.C. Chapter 44) or the NationalFirearms Act (26 U.S.C. Chapter 53).The comment objected that the originalNICS system notice provided nojustification for any such apparentdifferences and expressed the opinionthat a significant number of the uses are‘‘inconsistent with Congress’ intent.’’

The Department acknowledges thatthese apparent differences warrantclarification. The NICS regulations wereissued to establish policies andprocedures implementing the BradyAct. As explained in the final NICS rule(63 FR 58305), the purpose of thelimitation on access to the NICS Indexwas to prevent checks of the NICS Indexfor general law enforcement purposes.

The NICS Index is a separate databasewithin the NICS which contains recordsprovided by Federal agencies to the FBIon persons prohibited from receivingfirearms under Federal law and recordsprovided voluntarily by some states onpersons who have been denied thepurchase of a firearm or who are knownto be disqualified from possessing afirearm under federal law. Informationin the NICS Index generally relates toindividuals who fall within categories‘‘C’’ through ‘‘G’’ of the categories ofindividuals covered by the systemdescribed in the NICS system noticebelow. For the most part, criminalhistory records are not pertinent to thesecategories; instead the NICS Indexconsists of data relating to such mattersas mental incompetence, renunciationsof citizenship, immigration matters, anddishonorable discharges. Largely due toprivacy-related concerns expressed bythe federal agencies supplying suchsensitive records to the NICS Index, theDepartment will limit generalized non-Brady law enforcement disclosures ofthe NICS Index to those uses providedin 28 CFR 25.6(j) (which are embodiedin this notice as routine uses ‘‘A’’ and‘‘B’’).

However, the NICS Index is only oneof several parts of the NICS, and theexpress language of the regulationclearly limits the scope of 25 CFR 25.6(j)to the contents of the NICS Index. TheNICS Audit Log is separate from theNICS Index. In the course of conductinga NICS search, the NICS will query theNICS Index, and any ‘‘match’’ found inthe NICS Index will be replicated in theNICS Audit Log. The limitations in 28

CFR 25.6(j) do not extend to informationin the NICS Audit Log derived fromindividual ‘‘hits’’ in the NICS Index.(Nor, apart from the NICS Index, dothese limitations extend to othercomponents of the NICS,) Thus—as tothese other NICS components—28 CFR25.6(j) does not preclude the generalizedlaw-enforcement disclosures establishedin routine use ‘‘C.’’ Routine use ‘‘C’’would not, however, apply to the NICSIndex, and this routine use is beingrevised to make this clear.

Nor was 28 CFR 25.6(j) intended tolimit certain other disclosures incidentto management and administration ofthe NICS when properly authorizedpursuant to the Privacy Act. Althoughthis may not be readily apparent fromthe express terms of the NICSregulation, it is clearly evidenced by theDepartment’s publication of the originalNICS Privacy Act system notice—whichincluded the routine uses—simultaneously with the publication ofthe proposed NICS regulations, inwhich the system notice was expresslyreferenced. The NICS regulations are tobe read together with the NICS systemnotice. (Indeed, this same result is amirror of the NCIC, in which disclosuresaddressed in the NCIC regulations aresupplemented in NCIC’s system notice(60 FR 19775).) Thus, for instance, theNICS regulations must be read togetherwith routine use ‘‘D,’’ which providesfor disclosures to contractors, grantees,experts, consultants, volunteers,detailees, and other non-FBI employeesperforming or working on a contract,service, grant, cooperative agreement, orjob for the Federal Government whennecessary to accomplish an agencyfunction related to this system ofrecords and under requirements(including Privacy Act requirements)specified by the FBI. The need to utilizeoutside service providers, particularlyin the creation, maintenance, andmanagement of highly complex systems,is a fact of life for virtually every publicand private entity. Further, when anagency provides by contract for theoperation of a system of records toaccomplish an agency function, thePrivacy Act itself provides forconsidering the contractor and anyemployee of such contractor as anemployee of the agency for purposes ofPrivacy Act sanctions (5 U.S.C.552a(m)). The persons covered by thisuse are the functional equivalent of FBIemployees, and this use confirmsauthority for disclosures to thesepersons to the same extent as if theywere actual FBI employees.

All of the routine uses contained inthe NICS system notice comport withCongress’ intent and are fully

compatible with the Brady Act. Asnoted in House Report 103–344, theBrady Act was enacted in an effort tostem the appalling consequences of anepidemic of gun violence by preventingthe acquisition of firearms by thoseprohibited under federal or state law.The routine uses further the Brady Act’spreventive goals not only by preventingtransfers of firearms to disqualifiedindividuals, but also by enhancing thedeterrent prospect of capture andprosecution of those who pursueunlawful transfers or otherwise seek tounlawfully subvert the Brady Act.Prevention is also furthered by routineuses which could permit prophylacticadvisories to the public and/or potentialvictims. Finally, it is entirelycompatible with the Brady Act toprovide the FBI with the necessaryflexibility to carry out itsresponsibilities, and to facilitateinquiries by Members of Congress toensure their constituents have beentreated appropriately under the BradyAct. Accordingly, except as notedbelow, this notice continues the routineuses as originally published.

Routine use ‘‘C’’ provides thenecessary authority for furthercoordination among law enforcementagencies for the purposes ofinvestigating, prosecuting, and/orenforcing violations of criminal or civillaw or regulation that may come to lightduring the NICS operations. Thisprovides a mechanism for pursuingcriminal or civil sanctions against thoseattempting to thwart governing laws orregulations, which will strengthen andfurther the Brady Act’s deterrence goal.One comment objected to this routineuse’s additional provision for disclosingviolations of contract. Although thisadditional provision was modeled afterother systems where such authority isuseful and appropriate, it does appearnot to be necessary in the NICS. We aremodifying this routine use to delete theprovision relating to disclosures of aviolation or potential violation of acontract. (As previously discussed, weare also modifying this routine use toexpressly provide that it does not applyto the NICS Index.)

Routine use ‘‘E’’ provides forappropriate disclosures to the public(including a victim or potential victim)in furtherance of a legitimate lawenforcement or public safety function,or to keep the public appropriatelyinformed of other law enforcement orFBI matters of legitimate public interestwhere disclosure would not constitute aclearly unwarranted invasion ofpersonal privacy. As for all routine uses,such disclosures would only includethose compatible with the purposes for


collecting the information under theBrady Act. Such disclosures mightinclude local media announcementsasking the public’s assistance in locatinga dangerous fugitive who attempted topurchase a firearm in the area, oralerting a protected spouse when thesubject of a protective order attempts topurchase a firearm. Such disclosureswould fully comport with the violence-prevention goals of Brady Act. Asanother example, providing the publicexamples of the NICS’ effectiveness inparticular cases could help deterdisqualified persons who mightotherwise be tempted to test the system.On further review, however, weconclude that it is unnecessary to alsoprovide for public disseminations notrelated to law enforcement or FBImatters. We are modifying this routineuse to delete the provision allowingdisclosures to the news media or generalpublic in situations not related to lawenforcement or FBI matters. In addition,we are further modifying this routineuse to expressly provide that it does notapply to information in the NICS Index.

ChangesThis notice modifies the NICS system

of records to reflect recent statutory andregulatory changes affecting the NICS,and to make various editorial andclarifying revisions. To the extentpossible, the changes and additions areitalicized throughout the attachedsystem notice, and brief descriptions ofthe more noteworthy ones are providedbelow.

As discussed above, the system hasbeen modified to reflect that the generalretention period for records of allowedtransfers in the NICS Audit Log shouldbe the minimum reasonable period forperforming audits on the system, but inno event more than six months,provided that such information may beretained for a longer period if necessaryto pursue identified cases of misuse ofthe system.

Also as discussed above, routine use‘‘C’’ has been modified to delete theprovision for disclosing violations orpotential violations of contracts, routineuse ‘‘E’’ has been modified to deleteprovisions for public disclosures notrelated to law enforcement or FBImatters, and both of these routine useshave been modified to expressly providethat they do not apply to the NICSIndex.

In consonance with other changesmade in the final NICS rule, the NICSsystem notice has been modified toreplace the term ‘‘password’’ with ‘‘codeword’’; replace words such as‘‘purchase’’ and ‘‘purchaser’’ withwords such as ‘‘transfer’’ and

‘‘transferee’’; change terminologyrelating to NICS denials from ‘‘reason tobelieve’’ to ‘‘informationdemonstrating’’; and to clarify thatallowable non-Brady Act uses of theNICS Index include responding toinquiries by criminal justice agencies inconnection with licenses or permits tocarry a concealed firearm or to import,manufacture, deal in, or purchaseexplosives, and to inquiries by the ATFin connection with enforcement of theGun Control Act (18 U.S.C. Chapter 44)or the National Firearms Act (26 U.S.C.Chapter 53).

The original NICS records systemnotice indicated that NICS’ searches ofthe National Crime Information Center(NCIC) and the Interstate IdentificationIndex (III) would be specificallydirected towards locating informationthat an individual is within the system-notice categories A, B, H, and I ofpersons covered by the system. TheNICS searches of NCIC and III will alsobe directed towards locatinginformation that an individual is withinthe system-notice categories C (unlawfuluser of or addicted to any controlledsubstance), and D (adjudicated as amental defective or has been committedto a mental institution). The NICSsystem notice has been modified toreflect this.

The original NICS records systemnotice indicated that the categories ofindividuals covered by the systemincluded persons who were FFLsauthorized by the FBI to request NICSchecks. The system will also coverpersons who claim on applicationssubmitted to the FBI for NICS access tobe FFLs even though they are not, andFFLs on record with the ATF that havenot been granted authority to requestNICS checks. In addition, the originalnotice may not have been clear thatthese FFL records are separate from theNICS Index and the NICS Audit Log.The NICS system notice has beenmodified to clarify this.

The NICS system notice has beenmodified to expressly confirm that inadvising an FFL that a response will be‘‘delayed,’’ the NICS may apprise anFFL of an estimated time for completingthe analysis.

Dated: November 19, 1998.Stephen R. Colgate,Assistant Attorney General forAdministration.

JUSTICE/FBI–018

SYSTEM NAME:

National Instant Criminal BackgroundCheck System (NICS).

SYSTEM LOCATION:Federal Bureau of Investigation, 1000

Custer Hollow Road, Clarksburg, WestVirginia 26306.

CATEGORIES OF INDIVIDUALS COVERED BY THESYSTEM:

The categories of individuals coveredby the system include any person who:

A. Is under indictment for, or hasbeen convicted in any court of, a crimepunishable by imprisonment for a termexceeding one year;

B. Is a fugitive from justice;C. Is an unlawful user of or addicted

to any controlled substance;D. Has been adjudicated as a mental

defective or has been committed to amental institution;

E. Is an alien who is illegally orunlawfully in the United States;

F. Has been discharged from theArmed Forces under dishonorableconditions;

G. Having been a citizen of the UnitedStates, has renounced such citizenship;

H. Is subject to a court order thatrestrains the person from harassing,stalking, or threatening an intimatepartner or child of such intimate partner(issued after a hearing of which actualnotice was received);

I. Has been convicted in any court ofa misdemeanor crime of domesticviolence (involving the use or attempteduse of physical force committed by acurrent or former spouse, parent, orguardian of the victim or by a personwith a similar relationship with thevictim);

J. Is otherwise disqualified frompossessing a firearm under State law;

K. Is or claims to be a Federal firearmslicensee (FFL), i.e., a person licensed bythe Bureau of Alcohol, Tobacco andFirearms (ATF), United StatesDepartment of Treasury, as amanufacturer, dealer, or importer offirearms; or

L. Has applied for the transfer of afirearm or a firearms-related permit orlicense and has had his or her nameforwarded to the NICS as part of arequest for a NICS background check.(Identifying information about thiscategory of individual is maintained forsystem administration and securitypurposes only in the ‘‘NICS Audit Log,’’a system transaction log describedbelow under the headings‘‘CATEGORIES OF RECORDS IN THESYSTEM’’ AND ‘‘RETENTION ANDDISPOSAL.’’ In cases where the NICSbackground check does not locate adisqualifying record, information aboutthe individual will only be retainedtemporarily for the minimumreasonable period necessary forperforming audits on the system, but in


no event more than six months or suchshorter period of time that theDepartment establishes by regulation,provided that such information may beretained for a longer period if necessaryto pursue identified cases of misuse ofthe system. The system will not containany details about the type of firearmwhich is the subject of the proposedtransfer (other than the fact that it is ahandgun or a long gun) or whether asale or transfer of a firearm has actuallytaken place.

CATEGORIES OF RECORDS IN THE SYSTEM:The ‘‘NICS Index’’ is the only

database maintained by the FBI whichwas created specifically for the NICS.The NICS Index contains recordsobtained by the Attorney General fromFederal agencies or States onindividuals who fall into the categoriesof individuals listed above under theheading ‘‘CATEGORIES OFINDIVIDUALS COVERED BY THESYSTEM,’’ C through G. These recordscontain an individual’s name; sex; race;other personal descriptive data (such asscars and tattoos); complete date ofbirth; state of residence; sometimes aunique identifying number, such as aSocial Security number (but NICS doesnot require it to be furnished), a militarynumber, or a number assigned byFederal, State, or local law enforcementauthorities.

The ‘‘NICS Audit Log’’ is achronological record of system(computer) activities that enables thereconstruction and examination of asequence of events and/or changes in anevent related to the NICS. With regardto a specific NICS transaction, the auditlog will include: The name and otheridentifying information about theprospective transferee; the type oftransaction (inquiry or response); linenumber; time; date of inquiry; header;message key; Originating AgencyIdentifier; and inquiry/response data,such as a NICS Transaction Number (aunique number assigned to each validbackground request inquiry) andinformation found by the NICS search.

In addition, the NICS containsinformation on persons that are FFLs (orclaim to be). This information includesthe FFL name, address, phone numbers,ATF number, access code words, namesof authorized representatives andcontact persons, and similarinformation used by the NICS toidentify, validate, and communicatewith FFLs in the course of NICSoperations.

AUTHORITY FOR MAINTENANCE OF THE SYSTEM:(1) 18 U.S.C. 922, as amended by the

Brady Handgun Violence Prevention

Act (the ‘‘Brady Act’’) (Pub. L. 103–159,Nov. 30, 1993); (2) 28 U.S.C. 534, asamended (Pub. L. 103–322, Title IV,4060(a), Sep. 13, 1994, 105 Stat. 1950).

PURPOSE(S):

The purpose of the NICS, which wasestablished pursuant to the Brady Act,is to provide a means of checkingavailable information to determinewhether a person is disqualified frompossessing a firearm under Federal orState law.

Prior to the transfer of a firearm, aprospective transferee, not licensedunder 18 U.S.C. 923, must obtain afirearms transaction form from an FFLand provide the information required bythe ATF. The firearms transaction formis returned to the FFL, who is requiredby the Brady Act to contact the NICSand furnish the name and certain otheridentifying data provided by thetransferee. NICS conducts a searchwhich compares the information aboutthe transferee with information in oravailable to NICS.

State and local law enforcementagencies may serve as Points of Contact(POCs) for the NICS. Where there is noPOC, the FBI’s NICS Operations Centerserves in its place. The POC (or theNICS Operations Center) receivesinquiries from FFLs, initiates NICSbackground searches, may checkavailable state and local record systems,determines whether matching recordsprovide information demonstrating thatan individual is disqualified frompossessing a firearm under Federal orState law, and responds back to theFFLs.

In addition to a review of the NICSIndex, a NICS search includes a reviewof the pre-existing, separately-managedFBI criminal history databases of theNational Crime Information Center(NCIC)(JUSTICE/FBI–001), includingthe Interstate Identification Index (III),to the extent such searches are possiblewith the available information. NCICand III are cooperative Federal-Stateprograms for the exchange of criminalhistory record and other informationamong criminal justice agencies tolocate wanted and missing persons andfor other identification purposes. Thesearch conducted of the NCIC and III, inconjunction with the search of the NICSIndex, attempts to locate onlyinformation indicating that anindividual firearm transferee is identicalto an individual in one or more ofcategories A through J listed aboveunder the heading CATEGORIES OFINDIVIDUALS IN THE SYSTEM, withthe search of NCIC and III specificallydirected towards locating information

that an individual is within categoriesA, B, C, D, H, and I.

ROUTINE USES OF RECORDS MAINTAINED IN THESYSTEM, INCLUDING CATEGORIES OF USERS ANDTHE PURPOSES OF SUCH USES:

A. Limited information may beprovided by a POC or the NICSOperations Center to an FFL who hascontacted the NICS concerning aprospective firearm transferee. If amatching record found by the NICSprovides information demonstratingthat the prospective transferee isdisqualified from possessing a firearmunder Federal or State law, the FFL willbe notified only that the application is‘‘denied,’’ with none of the underlyinginformation provided. If additionalrecord analysis is required by the NICSrepresentative (e.g to confirm that arecord relates to the potential transfereeor to pursue supplemental informationto clarify whether the potentialtransferee is disqualified from receivinga firearm), the response may read‘‘delayed’’ and may include anestimated time for completing theanalysis. If no disqualifying record islocated by the NICS, the FFL will betold that it may ‘‘proceed.’’ A uniqueidentification number will be providedto the FFL for all responses receivedfrom the NICS, which number shall berecorded on the firearms transactionform.

B. Information in the NICS may beprovided through the NCIC lines toFederal criminal justice agencies,criminal justice agencies in the fiftyStates, the District of Columbia, PuertoRico, U.S. Possessions, and U.S.Territories, including POCs andcontributors of information in the NICSIndex, to enable them to determinewhether the transfer of a firearm to anyperson not licensed under 18 U.S.C. 923would be in violation of Federal or Statelaw; whether the issuance of a licenseor permit for the possession or sale ofa firearm or firearms, or to carry aconcealed firearm, or to import,manufacture, deal in, or purchaseexplosives would be in violation ofFederal or State law or regulation;whether appeals from denials should begranted or denied; and whether to addto, delete from, revise, or updateinformation previously provided by thecontributor. This includes responding toinquiries by the ATF in connection withenforcement of the Gun Control Act (18U.S.C. Chapter 44), or the NationalFirearms Act (26 U.S.C. Chapter 53).

C. If, during the course of any activityor operation of the system authorized bythe regulations governing the system (28CFR, part 25, subpart A), any record isfound by the system which indicates,


either on its face or in conjunction withother information, a violation orpotential violation of law (whethercriminal or civil) and/or regulation, thepertinent record may be disclosed to theappropriate agency/organization/taskforce (whether Federal, State, local,joint, or tribal) and/or to the appropriateforeign or international agency/organization charged with theresponsibility of investigating,prosecuting, and/or enforcing such lawor regulation, e.g., disclosure ofinformation from the system to the ATF,United States Department of Treasury,regarding violations or potentialviolations of 18 U.S.C. 922(a)(6). (Thisroutine use does not apply to the NICSIndex.)

D. System records may be disclosed tocontractors, grantees, experts,consultants, volunteers, detailees, andother non-FBI employees performing orworking on a contract, service, grant,cooperative agreement, or job for theFederal Government when necessary toaccomplish an agency function relatedto this system of records and underrequirements (including Privacy Actrequirements) specified by the FBI.

E. System records may be disclosed tothe news media or members of thegeneral public or to a victim or potentialvictim in furtherance of a legitimate lawenforcement or public safety function,e.g., to assist in locating fugitives; toprovide notification of arrests; toprovide alerts, assessments, or similarinformation on potential threats to life,health, or property; or to keep the publicappropriately informed of other lawenforcement or FBI matters of legitimatepublic interest. (The availability ofinformation in pending criminal caseswill be governed by the provisions of 28CFR 50.2.) (This routine use does notapply to the NICS Index.)

F. Where the disclosure of systemrecords has been determined by the FBIto be reasonable and necessary toresolve a matter in litigation or inanticipation thereof, such records maybe disclosed to a court or adjudicativebody, before which the FBI isauthorized to appear, when: (a) The FBIor any FBI employee in his or herofficial capacity; (b) any FBI employeein his or her individual capacity wherethe Department of Justice has agreed torepresent the employee; or (c) theUnited States, where the FBI determinesit is likely to be affected by thelitigation, is or could be a party to thelitigation, or has an official interest inthe litigation.

G. System records may be madeavailable to a Member of Congress orstaff acting on the Member’s behalfwhen the Member or staff requests the

information on behalf and at the writtenrequest of the individual who is thesubject of the record.

H. System records may be disclosed tothe National Archives and RecordsAdministration for records managementinspections and such other purposesconducted under the authority of 44U.S.C. 2904 and 2906.

POLICIES AND PRACTICES FOR STORING,RETRIEVING, ACCESSING, RETAINING, ANDDISPOSING OF RECORDS IN THE SYSTEM:

STORAGE:Records are stored electronically for

use in a computer environment in areassafe from access by unauthorizedpersons or exposure to environmentalhazards. In general, the security policyfor the NCIC (JUSTICE/FBI–001) isfollowed.

RETRIEVABILITY:Records are retrieved by name, sex,

race, date of birth, state of residence,other personal descriptive data, theNICS Transaction Number, FFL number,and, in some instances, unique numericidentifier, e.g., a Social Security numberor a military identification number. (ASocial Security number is not requiredby the NICS.)

SAFEGUARDS:Records searched by the NICS are

located in secure government buildingswith limited physical access. Access tothe results of a NICS record search isfurther restricted to authorizedemployees of Federal, State, and locallaw enforcement agencies who makeinquiries by use of identificationnumbers and code words.

When a Federal, State, or local agencyplaces information in the NICS Index, ituses its agency identifier and a uniqueagency record identifier for each recordprovided to the NICS. Federal, State, orlocal agencies can modify or cancel onlythe data that they have provided toNICS Index.

RETENTION AND DISPOSAL:Information provided by other Federal

agencies or State or local governmentswill be maintained in the NICS Indexunless updated or deleted by theagency/government which contributedthe data.

The FBI will maintain an Audit Logof all NICS transactions. Firearmstransaction approvals will bemaintained for the minimum reasonableperiod necessary for performing auditson the system, but in no event morethan six months or such shorter periodof time that the Department establishesby regulation (except that suchinformation may be retained for a longer

period if necessary to pursue identifiedcases of misuse of the system). TheNICS Transaction Number (the uniquenumber assigned to the NICStransaction) and the date on which itwas assigned will be maintainedindefinitely. Information related tofirearms transfer denials will be retainedfor 10 years and then disposed of asdirected by the National Archives andRecord Administration.

SYSTEM MANAGER(S) AND ADDRESS:

Director, Federal Bureau ofInvestigation, J. Edgar Hoover FBIBuilding, 935 Pennsylvania Avenue,NW, Washington, DC 20535–0001.

NOTIFICATION PROCEDURES:

This system of records has beenexempted from the notificationprocedures of subsections (d) and(e)(4)(G), to the extent permitted bysubsections (j)(2), (k)(2), and (k)(3) of thePrivacy Act. Requests for notificationshould be addressed to the SystemsManager. Requirements for a request arethe same as set forth below under theheading ‘‘RECORD ACCESSPROCEDURES.’’

RECORD ACCESS PROCEDURES:

This system of records has beenexempted from the access procedures ofsubsections (d) and (e)(4)(H) to theextent permitted by subsections (j)(2),(k)(2), and (k)(3) of the Privacy Act. Arequest for access to a non-exemptrecord from the system should beaddressed to the System Manager, shallbe made in writing, and should have theenvelope and the letter marked ‘‘PrivacyAct Request.’’ The request must includethe full name, complete address, date ofbirth, and place of birth of the requester.The requester must sign the request;and, to verify it, the signature must benotarized or submitted under 28 U.S.C.1746, a law that permits statements tobe made under penalty of perjury as asubstitute for notarization.

Alternative procedures are availableto a person who has been denied thetransfer of, or permit for, a firearm orexplosives because of information in theNICS. The procedures provide for anappeal of a denial and a method to seekthe correction of erroneous datasearched by or maintained in thesystem. The alternative procedures canbe found at 28 CFR, part 25, subpart A.

CONTESTING RECORD PROCEDURES:

This system of records has beenexempted from the contest andamendment procedures of subsections(d) and (e)(4)(H) to the extent permittedby subsections (j)(2),(k)(2), and (k)(3) of


the Privacy Act. Requests should beaddressed to the System Manager andshould clearly and concisely describethe precise information being contested,the reasons for contesting it, and theproposed amendment or correctionproposed to the information. Inaddition, as described above under‘‘RECORD ACCESS PROCEDURES,’’ analternative procedure is available to aperson who has been denied the transferof, or permit for, a firearm or explosivesbecause of information in the NICS, bywhich the individual may seek thecorrection of erroneous data in thesystem. The procedures are furtherdescribed at 28 CFR, part 25, subpart A.

RECORD SOURCE CATEGORIES:Information contained in the NICS is

obtained from local, State, Federal, andinternational records.

SYSTEM EXEMPTED FROM CERTAIN PROVISIONSOF THE ACT:

The Attorney General has exemptedthis system from subsections (c)(3) and(4); (d); (e)(1); (2), and (3) (e)(4)(G) and(H); (e)(5) and (8); and (g) of the PrivacyAct, pursuant to 5 U.S.C. 552a(j)(2). Inaddition, the Attorney General hasexempted his system from subsections(c)(3), (d), (e)(1), and (e)(4)(G) and (H) ofthe Privacy Act, pursuant to 5 U.S.C.552a (k)(2) and (k)(3). Rules have beenpromulgated in accordance with therequirements of 5 U.S.C. 553 (b), (c), and(e), and have been published in theFederal Register. [FR Doc. 98–31503 Filed 11–24–98; 8:45 am]BILLING CODE 4410–12–P


Antitrust Division

United States v. Omnipoint Corp.;United States v. 21st Century BiddingCorp.; United States v. Mercury PCS II,L.L.C.; Proposed Final Judgments andCompetitive Impact Statements

Notice is hereby given pursuant to theAntitrust Procedures and Penalties Act,15 U.S.C. Section 16 (b) through (h), thata proposed Final Judgment, Stipulationand Order, and Competitive ImpactStatement have been filed with theUnited States District Court for theDistrict of Columbia in each of thefollowing civil actions: United States v.Omnipoint Corporation, Civil ActionNo. 1:98CV02750; United States v. 21stCentury Bidding Corp.; Civil Action No.1:98CV02752, and United States v.Mercury PCS II, L.L.C., Civil Action No.1:98CV02751. The proposed FinalJudgments are subject to approval by theCourt after expiration of the statutory

60-day public comment period andcompliance with the AntitrustProcedures and Penalties Act, 15 U.S.C.16(b)–(h).

On November 10, 1998, the UnitedStates filed separate Complaints againsteach defendant that allege thatdefendants used coded bids during aFederal Communications Commissionauction of radio spectrum licenses forpersonal communications services. TheComplaints further allege that, throughthe use of these coded bids, defendantsreached agreements to stop biddingagainst one another in violation ofSection 1 of the Sherman Act, 15 U.S.C.1. The proposal Final Judgments, filedthe same time as the Complaints,prohibit defendants from entering intoanticompetitive agreements and fromusing coded bids in future FCCauctions.

Public comment is invited within 60days of the date of this notice. Suchcomments, and responses thereto, willbe published in the Federal Registerand filed with the Court. Writtencomments should be directed to RogerW. Fones, Chief, Transportation, Energy,and Agriculture Section, AntitrustDivision, 325 Seventh Street, NW., Suite500, Washington, DC 20530 (telephone:(202) 307–6351).

Copies of the Complaint, Stipulationand Order, proposed Final Judgment,and Competitive Impact Statement areavailable for inspection in Room 215 ofthe U.S. Department of Justice, AntitrustDivision, 325 Seventh Street, NW.,Washington, DC 20530 (telephone: (202)514–2481), and at the office of the Clerkof the United States District Court forthe District of Columbia, 333Constitution Avenue, NW., Washington,DC 20001. Copies of any of thesematerials may be obtained upon requestand payment of a copying fee.Rebecca P. Dick,Director of Civil Non-Merger Enforcement.

Stipulation and OrderIt is hereby stipulated by and between

the undersigned parties, by theirrespective attorneys, as follows:

1. The Court has jurisdiction over thesubject matter of this action and overeach of the parties hereto, and venue ofthis action is proper in the United StatesDistrict Court for the District ofColumbia.

2. The parties stipulate that a FinalJudgment in the form hereto attachedmay be filed and entered by the Court,upon the motion of any party or uponthe Court’s own motion, at any timeafter compliance with the requirementsof the Antitrust Procedure and PenaltiesAct (15 U.S.C. § 16), and without furthernotice to any party or other proceedings,

provided that plaintiff has notwithdrawn its consent, which it may doat any time before the entry of theproposed Final Judgment by servingnotice thereof on defendants and byfiling that notice with the Court.

3. The defendant shall abide by andcomply with the provisions of theproposed Final Judgment pending entryof the Final Judgment by the Court andshall, from the date of the signing of thisStipulation by the parties, comply withall the terms and provisions of theproposed Final Judgment as though theywere in full force and effect as an orderof the Court.

4. In the event that plaintiffwithdraws its consent, as provided inparagraph 2 above, then the parties arereleased from all further obligationsunder this Stipulation, and the makingof this Stipulation shall be withoutprejudice to any party in this or anyother proceedings.

5. The parties request that the Courtacknowledge the terms of thisstipulation by entering the Order in thisStipulation and Order.

Respectfully submitted,For Plaintiff United States of America:

Jill A. Ptacek,J. Richard Doidge,Attorneys, Antitrust Division, U.S.Department of Justice, 325 Seventh Street,N.W., Washington, D.C. 20004, (202) 307–0468.

For Defendant Omnipoint Corporation:Michael F. Brockmeyer, Esq.,Piper & Marbury L.L.P. Charles Center South,36 South Charles Street, Baltimore, MD21201–3018, (410) 576–1890.

OrderIt is so ordered, this lll day of

llll, 1998.lllllllllllllllllllllUnited States District Court Judge

Certificate of ServiceI hereby certify that I have caused a

copy of the foregoing Complaint,Competitive Impact Statement andproposed Final Judgment to be servedon counsel for the defendant in thismatter in the manner set forth below:

By first class mail, postage prepaid,and by facsimile:Michael F. Brockmeyer, Esquire, Piper &

Marbury L.L.P., 36 South CharlesStreet, Baltimore, MD 21201–3018

Jill Ptacek,Antitrust Division, U.S. Department of Justice,325 Seventh Street, N.W., Suite 500,Washington, D.C. 20530, (202) 307–6607,(202) 616–2441 (Fax).

Final JudgmentPlaintiff, United States of America,

filed its Complaint on November 10,


1998. Plaintiff and the Defendant, bytheir respective attorneys, haveconsented to the entry of this FinalJudgment without trial or adjudicationof any issue of fact or law. This FinalJudgment shall not be evidence againstor an admission by any party withrespect to any issue of fact or law.Therefore, before the taking of anytestimony, without trial or adjudicationof any issue of fact or law herein, andupon consent of the parties, it is herebyordered, adjudged, and decreed, asfollows:

I. Jurisdiction

This Court has jurisdiction of thesubject matter of this action and of eachof the parties consenting hereto. Venueis proper in the District of Columbia.The Complaint states a claim uponwhich relief may be granted against thedefendant under Section 1 of theSherman Act, 15 U.S.C. 1.

II. Definitions

As used herein, the term:(A) ‘‘Defendant’’ means Omnipoint

Corporation, its successors, assigns,subsidiaries, divisions, groups,affiliates, partnerships and jointventures, directors, officers, managers,agents, and employees.

(B) ‘‘Document’’ means all ‘‘writingsand recordings’’ as that phrase isdefined in Rule 1001(1) of the FederalRules of Evidence.

(C) ‘‘FCC’’ means the FederalCommunications Commission.

(D) ‘‘License-identifying information’’means any number, letter, code ordescription that designates a license orthat links licenses.

(E) ‘‘Person’’ means any naturalperson, corporation, firm, company, soleproprietorship, partnership, association,institution, governmental unit, publictrust, or other legal entity.

III. Applicability

(A) This Final Judgment applies to theDefendant, to its successors, andassigns, and to all other persons inactive concert or participation with anyof them who shall have received actualnotice of the Final Judgment by personalservice or otherwise.

(B) Nothing herein contained shallsuggest that any portion of this FinalJudgment is or has been created for thebenefit of any third party and nothingherein shall be construed to provide anyrights to any third party.

IV. Prohibited Conduct

The Defendant is enjoined andrestrained from:

(A) Entering into any agreement withany other license applicant to fix,

establish, suppress or maintain the pricefor any license to be awarded by theFCC in an auction, or to allocate anysuch licenses amongst competitors,provided, however, that nothing in thisprovision shall prohibit the Defendantfrom participating in any biddingconsortium, teaming arrangement orother joint venture authorized under therules and regulations of the FCCpertaining to future auctions, anddisclosed to the FCC.

(B) In the course of any auctionconducted pursuant to the rules andregulations of the FCC, offering anyprice to the FCC for the lease, purchase,or right to use any FCC-awarded license,that includes within that price anylicense-identifying information, unlessthe inclusion of such information isrequired by the FCC.

V. Compliance Program

The Defendant is ordered to maintainan antitrust compliance program, whichshall include the following:

(A) Designating, within 30 days ofentry of this Final Judgment, anAntitrust Compliance Officer withresponsibility for accomplishing theantitrust compliance program and withthe purpose of achieving compliancewith this Final Judgment. The AntitrustCompliance Officer shall, on acontinuing basis, supervise the reviewof the current and proposed activities ofthe Defendant to ensure that it complieswith this Final Judgment.

(B) The Antitrust Compliance Officershall be responsible for:

(1) Distributing within 60 days of theentry of this Final Judgment, a copy ofthis Final Judgment to (a) all officersand directors of the Defendant, and (b)to all employees who have anyresponsibility for formulating,proposing, recommending, establishing,approving, implementing or submittingthe Defendant’s prices in FCC-conducted license auctions;

(2) Distributing in a timely manner acopy of this Final Judgment to anyofficer, director or employee whosucceeds to a position described inSection V (B)(1);

(3) Obtaining from each present orfuture officer, director or employeedesignated in Section V(B)(1), within 60days of entry of this Final Judgment orof the person’s succession to adesignated position, a writtencertification that he or she: (1) Has read,understands, and agrees to abide by theterms of this Final Judgment; and (2) hasbeen advised and understands that hisor her failure to comply with this FinalJudgment may result in conviction forcriminal contempt of court;

(4) Maintaining a record of persons towhom the Final Judgment has beendistributed and from whom, pursuant toSection V(B)(3), the certification hasbeen obtained; and

(5) Reporting to the Plaintiff anyviolation of the Final Judgment.

VI. CertificationWithin 75 days after the entry of this

Final Judgment, the Defendant shallcertify to the Plaintiff whether it hascomplied with Sections V (B)(1) and(B)(3) above.

VII. Plaintiff Access(A) To determine or secure

compliance with this Final Judgmentand for no other purpose, dulyauthorized representatives of thePlaintiff shall, upon written request ofthe Assistant Attorney General in chargeof the Antitrust Division, and onreasonable notice to the defendant madeto its principal office, be permitted,subject to any legally recognizedprivilege:

(1) Access during the Defendant’soffice hours to inspect and copy alldocuments in the possession or underthe control of the Defendant, who mayhave counsel present, relating to anymatters contained in this FinalJudgment, and

(2) Subject to the reasonableconvenience of the Defendant andwithout restraint or interference from it,to interview officers, employees oragents of the Defendant, who may havecounsel present, regarding such matters.

(B) Upon the written request of theAssistant Attorney General in charge ofthe Antitrust Division made to theDefendant’s principal office, theDefendant shall submit such writtenreports, under oath if requested, relatingto any matters contained in this FinalJudgment as may be reasonablyrequested, subject to any legallyrecognized privilege.

(C) No information or documentsobtained by the means provided inSection VII shall be divulged by thePlaintiff to any person other than a dulyauthorized representative of theExecutive Branch of the United States,except in the course of legal proceedingsto which the United States is a party, orfor the purpose of securing compliancewith this Final Judgment, or asotherwise required by law.

(D) If at the time information ordocuments are furnished by theDefendant to Plaintiff, the Defendantrepresents and identifies in writing thematerial in any such information ordocuments to which a claim ofprotection may be asserted under Rule26(c)(7) of the Federal Rules of Civil


Procedure, and Defendant marks eachpertinent page of such material,‘‘Subject to claim of protection underRule 26(c)(7) of the Federal Rules ofCivil Procedure,’’ then 10 days’ noticeshall be given by Plaintiff to theDefendant prior to divulging suchmaterial in any legal proceeding (otherthan a grand jury proceeding) to whichDefendant is not a party.

VIII. Further Elements of the FinalJudgment

(A) This Final Judgment shall expireten years from the date of its entry.

(B) Jurisdiction is retained by thisCourt for the purpose of enabling theparties to this Final Judgment to applyto this Court at any time for furtherorders and directions as may benecessary or appropriate to carry out orconstrue this Final Judgment, to modifyor terminate any of its provisions, toenforce compliance, and to punishviolations of its provisions.

(C) Entry of this Final Judgment is inthe public interest.

Dated: llll.lllllllllllllllllllllUnited States District Judge

Competitive Impact StatementThe United States of America,

pursuant to Section 2(b) of the AntitrustProcedures and Penalties Act (‘‘APPA’’),15 U.S.C. § 16(b)–(h), files thisCompetitive Impact Statement relatingto the proposed Final Judgmentsubmitted for entry in this civil antitrustproceeding.

I. Nature and Purpose of ThisProceeding

On November 10, 1998, the UnitedStates filed a civil antitrust complaintalleging that the defendant, OmnipointCorporation (‘‘Omnipoint’’), hadviolated Section 1 of the Sherman Act,15 U.S.C. § 1. Omnipoint, through itsaffiliate Omnipoint PCS EntrepreneursTwo, Inc., participated in an auction(the ‘‘DEF auction’’) of broadband radiospectrum licenses for personalcommunication services (‘‘PCS’’) thatwas conducted by the FederalCommunications Commission (‘‘FCC’’)between August 1996 and January 1997.The Complaint alleges that during theDEF auction Omnipoint submitted bidsthat ended with three-digit numericalcodes to communicate with rivalbidders and that, through the use ofthese coded bids, Omnipoint and one ofits rivals reached an agreement torefrain from bidding against oneanother. As a consequence of thisagreement, the complaint allegesOmnipoint and its competitor paid lessfor certain PCS licenses, resulting in a

loss of revenue to the Treasury of theUnited States.

On November 10, 1998, the UnitedStates and Omnipoint filed a Stipulationand Order in which they consented tothe entry of a proposed Final Judgmentthat provides the relief that the UnitedStates seeks in the Complaint. Under theproposed Final Judgment, Omnipointwould be enjoined from submittingcoded bids in future FCC auctions andentering into any agreement related tobidding for FCC licenses that violatesSection 1 of the Sherman Act, 15 U.S.C.§ 1.

The United States and Omnipointhave stipulated that the proposed FinalJudgment may be entered aftercompliance with the APPA. Entry of theFinal Judgment would terminate theaction, except that the Court wouldretain jurisdiction to construe, modify,or enforce its provisions and to punishviolations thereof.

II. Description of the Events Giving Riseto the Alleged Violation

A. Background of the PCS Auctions

In 1993, Congress enacted legislationenabling the FCC to auction licenses forradio spectrum that could be used toprovide PCS. Based on a wireless,digital technology, PCS offers analternative to current traditionaltelephone services.

The FCC designated six bands ofbroadband radio spectrum for PCS: A, B,C, D, E and F. The A, B and C bandsoccupy 30 MHZ each, while the D, Eand F licenses are 10 MHZ each. TheFCC divided the country into 51geographic areas called Market TradingAreas (‘‘MTAs’’), which were eachallotted A and B licenses. The FCCsubdivided the MTAs into 493 smallergeographic units called Basic TradingAreas (‘‘BTAs’’), which were eachallotted C, D, E, and F licenses. EachBTA was assigned a number from 1 to493.

The authorizing legislation requiredthe FCC to adopt rules ensuringcompetitive auctions, and the FCCconsidered numerous auction formatsfor PCS, ultimately adopting asimultaneous, multiple-round, openformat. Under this format, numerouslicenses were offered in a single auction,staged over several rounds, with alllicenses remaining open for biddinguntil the auction closed. Auctionparticipants could observe all of thebidding activity in each round. Theauction ended only when a roundpassed in which no bidder submitted abid on any license.

To keep the auction moving forward,the FCC imposed eligibility limits and

activity rules. The FCC gave eachlicense a population value called‘‘MHZ-pops.’’ Each bidder made downpayments to the FCC, with the size ofthe payment entitling it to bid for acertain amount of MHZ-pops. Aparticipant could bid on anycombination of licenses as long as thecombined MHZ-pops of those licensesdid not exceed the MHZ-pops to whichthe bidder’s down payment entitled it(eligibility). Bidders also had to be‘‘active’’ in each round (bid or have thehigh bid from the prior round) onlicenses representing a set percentage oftheir MHZ-pops; otherwise, the FCCreduced their eligibility for the nextround. As the auction proceeded, thebidders had to bid an increasingpercentage of their MHZ-pops until inthe final stages they had to bid nearlyall of their eligibility.

Each round in the auction began witha bid submission period during whichparticipants submitted bidselectronically or by telephone for any ofthe licenses in which they wereinterested. After each bid submissionperiod, the FCC published electronicallyto all bidders the results for eachlicense, including the name of eachcompany bidding, the amount of eachbid, and the time each bid wassubmitted. The high bidder for a licensein a round became the ‘‘standing high’’bidder for that license with a tie goingto the earliest bidder.

A bid withdrawal period thenfollowed. During this period, bidderswere permitted to withdraw theirstanding high bids from any market,subject to a withdrawal penaltyspecified by the FCC. The FCC thenpublished the results. The bidsubmission and withdrawal periodscomprised an auction round.

At the beginning of an auction, theFCC generally held one round per day.As the auction progressed, the FCCincreased the number of rounds held ina single day, providing a period of timebetween rounds for auction participantsto analyze the bidding from the priorround and to plan for the next round.

One goal of the FCC was to ensure theefficient allocation of licenses, that is,that the licenses would go to the bidderswho valued them most highly. Thesimultaneous, multiple-round format ofthe PCS auctions helped achieve thisgoal in several ways. It allowed biddersto pursue different license aggregationstrategies and change their strategies asthe auction proceeded. In addition, itallowed auction participants to observethe value that other bidders placed onthe licenses and use that information torefine their own assessment of licensevalues. This was particularly useful


given that the technology used for PCSwas new and bidders were uncertainabout both the costs of providing theservices and the prospective revenues.Ultimately, because the licenses wereawarded to the highest bidders, the PCSauction format allowed the marketplaceto determine the most efficientallocation of licenses.

Nothwithstanding these benefits ofthe auction format, the FCC recognizedthe risk that ‘‘collusive conduct bybidders prior to or during the auctionprocess could undermine thecompetitiveness of the biddingprocess.’’ Second Report and Order,FCC 94–61, ¶ 223 (Rel. April 20, 1994).The FCC sought to mitigate the risk ofcollusion by adopting rules restrictingthe disclosure of bidding strategiesduring the auction. The FCC noted,however, that Federal antitrust lawsapplied to the auctions and it wouldrely primarily on those laws to deterand punish collusion in the auctions.Second Report and Order, supra, at ¶225; Second Memorandum Opinion andOrder, FCC 94–215, ¶ 50 (Rel. August15, 1994).

B. Illegal Agreement To AllocateLicenses in the DEF Auction

The auction of the D, E and F licensesfor all 493 BTAs began in August 1996.Because there were three bands beingauctioned, the DEF auction involved atotal of 1479 licenses. Lasting 276rounds, the auction ended in January1997.

Prior to the DEF auction, biddersanalyzed which licenses (or groups oflicenses) would best enable them toprovide effective and competitiveservice, assessed the value they placedon those licenses, and developedstrategies to obtain the desired licensesfor the lowest possible prices. Thebidders also speculated about theirrivals’ business strategies and attemptedto identify the key licenses for thosestrategies, relying on an array ofinformation, including knowledge of thelicenses bidders had acquired in priorauctions.

As the auction proceeded, bidderscarefully observed their rivals’ actionsand often adjusted their own marketvaluations and business strategies,sometimes based on their assessment oftheir rivals’ objectives. Their rivals’ bidshowever, did not necessarily revealtheir true objectives. An auctionparticipant might bid for a particularlicense during a particular round for anumber of reasons: It may have alwayswanted the license, but for strategicreasons refrained from bidding untilthen; it may have changed its businessstrategy and decided that it now wanted

the license; it may have seen anopportunity to acquire an undervaluedlicense; it may have bid simply topreserve its eligibility to bid on otherlicenses later in the auction; it may havebid to raise a rival’s cost to obtain thelicense; or it may have bid to send amessage to the standing high bidder torefrain from bidding against it for adifferent license. Thus, the purpose of aparticular bid might be procompetitiveor anticompetitive.

A bidder’s purpose is making a bidmight, depending on the circumstances,be ambiguous to its rivals. Whereambiguity remains, it can be difficult touse a bid or bidding pattern alone tosend clear messages or invitations tocollude. To eliminate or reduce anyambiguity, Omnipoint sometimesplaced bids during the DEF auction inwhich the final three digits intentionallycorresponded to the number for a BTA(a ‘‘BTA end code’’). Knowing that otherbidders could see the bids and hencethe BTA end codes, Omnipoint used thecodes to better explain the real purposeof certain bids it made—to reach anagreement with a rival. In particular,Omnipoint used the BTA end codes tolink the bidding of licenses in two (ormore) specific BTA markets, highlightthe licenses Omnipoint wanted, andconvey to the competing bidders’ offersto agree with Omnipoint not to bidagainst each other for the linkedlicenses.

Sometimes Omnipoint placed bids inone market with the BTA end code ofanother market to send the message:‘‘I’m bidding for this license becauseyou bid for the one I want (indicated bythe BTA code) and I’ll stop bidding inyour market if you stop bidding inmine.’’ Other times, Omnipoint used theBTA end codes to tell its rival: ‘‘If youdon’t stop bidding for this license, I willbid for the one you want (indicated bythe BTA code).’’

Ominipoint’s use of the BTA endcodes did not serve any legitimatepurpose of the auction. Omnipoint’spurpose for using BTA end codes wasto send clear and unmistakableinvitations to collude to rival biddersand to reach agreements with thoserivals to refrain from bidding againsteach other. Such conduct was notauthorized by the applicable FCC rulesand was inconsistent with the FCC’sgoal to encourage competitive bidding.

Over the course of rounds 167 to 172,Omnipoint reached an agreement withNextWave Telecom, Inc. (‘‘NextWave’’)to allocate between them the F-bandlicenses for Toledo, OH (BTA #444),Salisbury, MD (BTA #398), andLancaster, PA (BTA #240). Omnipointagreed to stop bidding for the Salisbury

and Lancaster-F licenses in exchange forNextWave’s agreement not to bid for theToledo-F license. (The bidding for theToledo, Salisbury, and Lancaster-Flicenses between rounds 167 and 172 isdepicted in the table attached asAppendix A to this Competitive ImpactStatement.)

Prior to round 167, Omnipoint hadthe high bid in Salisbury-F and had bidintermittently in earlier rounds for theF license in Lancaster and Toledo.NextWave had the standing high bidsfor the Lancaster and Toledo-F licenses.In round 167, NextWave placed the highbid for Salisbury-F. Omnipoint bid forToledo-F in round 168. NextWave wonback the Toledo license in round 169.

In round 170, Omnipoint placed bidsfor the Toledo, Salisbury and Lancaster-F licenses. Omnipoint’s bids forSalisbury and Lancaster licenses endedin ‘‘444’’—the BTA number for Toledo.Omnipoint withdrew its Salisbury andLancaster bids that same round, only tobid again for the two licenses in round171, this time for lower prices than ithad bid in round 170. Ominpoint’s useof the BTA end codes established a linkbetween the Salisbury and Lancaster-Flicenses and the Toledo-F license.

NextWave saw the BTA end codesand understood that Omnipointproposed to stop bidding in Salisburyand Lancaster in exchange forNextWave ceasing to bid for the Toledo-F license. In round 171, NextWave bidback over Omnipoint for the Salisburyand Lancaster-F licenses. NextWaveaccepted Omnipoint’s offer and stoppedbidding for Toledo-F even though it waswilling to pay more for the Toledo-Flicense than Omnipoint’s standing highbid for that license. Observing thatNextWave had stopped bidding forToledo-F, Omnipoint then stoppedbidding for Salisbury-F and Lancaster-F.

Omnipoint’s purpose for using theBTA end codes was to link theSalisbury, Lancaster and Toledo-Flicenses, highlight the bids asretaliatory, and communicate an offer tostop bidding for Salisbury and Lancasterif NextWave stopped bidding forToledo-F. Omnipoint believed that theSalisbury and Lancaster licenses wereimportant to NextWave. The Salisburyand Lancaster licenses complementedthe licenses that NextWave was holdingin the Philadelphia and Washington,D.C. areas.

As a consequence of Omnipoint’sagreement with NextWave, competitionfor the Toledo-F license was suppressedand the Treasury received less revenuefor the Toledo-F license. It was inNextWave’s economic self-interest tobid more for the Toledo-F license thanOmnipoint’s winning bid and, but for


1 119 Cong. Rec. 24598 (1973); see also UnitedStates v. Gillette Co., 406 F. Supp. 713, 715 (D.Mass. 1975). A ‘‘public interest’’ determination canbe made properly on the basis of the CompetitiveImpact Statement and Response to Comments filedpursuant to the APPA. Although the APPAauthorizes the use of additional procedures, 15U.S.C. § 16(f), those procedures are discretionary. Acourt need not invoke any of them unless it believesthat the comments have raised significant issuesand that further proceedings would aid the court inresolving those issues. See H.R. 93–1463, 93rdCong. 2d Sess. 8–9, reprinted in 1974 U.S. C.C.A.N.6535, 6538.

the illegal agreement, it would havedone so.

III. Explanation of the Proposed FinalJudgment

The provisions of the proposed FinalJudgment are designed to ensure thatOmnipoint does not enter intoanticompetitive agreements whenparticipating in future FCC auctions.The decree supplements anyprohibitions on bidding conduct setforth in the FCC’s auction rules, and thedefendant may violate the decree evenif its conduct does not violate an agencystatute or rule.

The proposed Final Judgment wouldenjoin Omnipoint from entering into anagreement with another licenseapplicant to fix, establish, suppress ormaintain the price of a license to beawarded by the FCC or to allocate anysuch licenses among competitors(Section IV(A)). The proposed FinalJudgment would not prevent Omnipointfrom entering into any joint-venture orsimilar agreements regarding licenses tobe awarded by the FCC that are bothdisclosed to the FCC and authorizedunder the FCC’s rules and regulations.(Section IV(A)). However, such biddingarrangements would still be subject toscrutiny under the antitrust laws.

The proposed Final Judgment wouldalso prevent Omnipoint from using BTAend codes or any similar signalingmechanism to solicit anticompetitiveagreements in future FCC auctions. Theproposed Final Judgment would enjoinOmnipoint from submitting bids thatcontain ‘‘license-identifyinginformation’’ in future FCC auctions,unless the inclusion of such informationis required by the FCC (Section IV(B)).License-identifying information isdefined as ‘‘any number, letter, code ordescription that designates a license orthat links licenses.’’ (Section II(D)).

The proposed Final Judgment wouldfurther require Omnipoint to establishand maintain an antitrust complianceprogram (Section V). It would alsoprovide that the United States mayobtain information from Omnipointconcerning possible violations of theFinal Judgment (Section VII).

IV. Remedies Available to PotentialPrivate Litigants

Section 4 of the Clayton Act, 15U.S.C. § 15, provides that any personwho has been injured as a result ofconduct prohibited by the antitrust lawsmay bring suit in federal court torecover three times the damages theperson has suffered, as well as costs andreasonable attorneys’ fees. Entry of theproposed Final Judgment will neitherimpair nor assist the bringing of any

private antitrust damage action. Underthe provisions of Section 5(a) of theClayton Act, 15 U.S.C. § 16(a), theproposed Final Judgment has no primafacie effect in any subsequent privatelawsuit that may be brought againstOmnipoint. In this case, the injuredperson is the United States.

V. Procedures Available forModification of the Proposed FinalJudgment

The United States and Omnipointhave stipulated that the proposed FinalJudgment may be entered by the Courtafter compliance with the provisions ofthe APPA, provided that the UnitedStates has not withdrawn its consent.The APPA conditions entry upon theCourt’s determination that the proposedFinal Judgment is in the public interest.

The APPA provides a period of atleast sixty days preceding the effectivedate of the proposed Final Judgmentwithin which any person may submit tothe United States written commentsregarding the proposed Final Judgment.Any person who wishes to commentshould do so within sixty days of thedate of publication of this CompetitiveImpact Statement in the FederalRegister. The United States willevalaute and respond to the comments.All comments will be given dueconsideration by the Department ofJustice, which remains free to withdrawits consent to the proposed FinalJudgment at any time prior to entry. Thecomments and the responses of theUnited States will be filed with theCourt and published in the FederalRegister. Written comments should besubmitted to: Roger W. Fones, Chief,Transportation, Energy & AgricultureSection, Antitrust Division, UnitedStates Department of Justice, 325Seventh Street, N.W., Suite 500,Washington, D.C. 20530.

The proposed Final Judgmentprovides that the Court retainsjurisdiction over this action, and theparties may apply to the Court for anyorder necessary or appropriate for themodification, interpretation, orenforcement of the Final Judgment. Theproposed Final Judgment would expireten (10) years from the date of its entry.

VI. Alternatives to the Proposed FinalJudgment

The United States considered, as analternative to the proposed FinalJudgment, seeking damages in this casepursuant to section 4A of the ClaytonAct, 15 U.S.C. § 15a. Doing so wouldlikely have required a full trial on themerits against Omnipoint. In the view ofthe Department of Justice, undertakingthe substantial cost and the risk

associated with such a trial is notwarranted, considering that theproposed Final Judgment provides fullinjunctive relief for the violations of theSherman Act set forth in the Complaint.

VII. Standard of Review Under theAPPA for Proposed Final Judgment

The APPA requires that proposedconsent judgments in antitrust casesbrought by the United States be subjectto a sixty-day comment period, afterwhich the court shall determinewhether entry of the proposed FinalJudgment ‘‘is in the public interest.’’ Inmaking that determination, the courtmay consider:

(1) The competitive impact of suchjudgment, including termination of allegedviolations, provisions for enforcement andmodification, duration of relief sought,anticipated effects of alternative remediesactually considered, and any otherconsiderations bearing upon the adequacy ofsuch judgment;

(2) The impact of entry of such judgmentupon the public generally and individualsalleging specific injury from the violationsset forth in the compliant includingconsideration of the public benefit, if any, tobe derived from a determination of the issuesat trial.

15 U.S.C. § 16(e). As the Court ofAppeals for the District of ColumbiaCircuit recently held, the APPA permitsa court to consider, among other things,the relationship between the remedysecured and the specific allegations setforth in the government’s complaint,whether the decree is sufficiently clear,whether enforcement mechanisms aresufficient, and whether the decree maypositively harm third parties. SeeUnited States v. Microsoft, 56 F.3d 1448(D.C. Cir. 1995).

In conducting that inquiry, ‘‘the Courtis nowhere compelled to go to trial orto engage in extended proceedingswhich might have the effect of vitiatingthe benefits of prompt and less costlysettlement through the consent decreeprocess.’’ 1 Rather, absent a showing ofcorrupt failure of the government todischarge its duty, the Court, in makingits public interest finding, should * * *carefully consider the explanations ofthe government in the competitive


2 United States v. Bechtel, 648 F.2d at 666(internal citations omitted) (emphasis added); seeUnited States v. BNS, Inc., 858 F.2d at 463; UnitedStates v. National Broadcasting Co., 449 F. Supp.1127, 1143 (C.D. Cal. 1978); Gillette, 406 F. Supp.

at 716; see also United States v. AmericanCyanamid Co., 719 F.2d 558, 565 (2d Cir. 1983).

3 United States v. American Tel. & Tel. Co., 552F. Supp. 131, 150 (D.D.C. 1982), aff’d sub nom,

Maryland v. United States, 460 U.S. 1001 (1983),quoting Gillette, 406 F. Supp. at 716; United Statesv. Alcan Aluminum, Ltd., 605 F. Supp. 619, 622(W.D. Ky. 1985).

impact statement and its responses tocomments in order to determinewhether those explanations arereasonable under the circumstances.United States v. Mid-AmericaDairymen, Inc., 1977–1 Trade Case¶61,508, at 71,980 (W.D. Mo. 1977).

Accordingly, with respect to theadequacy of the relief secured by thedecree, a court may not ‘‘engage in anunrestricted evaluation of what reliefwould best serve the public.’’ UnitedStates v. BNS, Inc., 858 F.2d 456, 462(9th Cir. 1988), quoting United States v.Bechtel Corp., 648 F.2d 660, 666 (9thCir. 1981); see also, Microsoft, 56 F.3d1448 (D.C. Cir. 1995). Precedent requiresthat:[t]he balancing of competing social andpolitical interests affected by a proposedantitrust consent decree must be left, in thefirst instance, to the discretion of the

Attorney General. The court’s role inprotecting the public interest is one ofinsuring that the government has notbreached its duty to the public in consentingto the decree. The court is required todetermine not whether a particular decree isthe one that will best serve society, butwhether the settlement is ‘within the reachesof the public interest.’ More elaboraterequirements might undermine theeffectiveness of antitrust enforcement byconsent decree.2

The proposed Final Judgment,therefore, should not be reviewed undera standard of whether it is certain toeliminate every anticompetitive effect ofa particular practice or whether itmandates certainty of free competitionin the future. Court approval of a finaljudgment requires a standard moreflexible and less strict than the standardrequired for a finding of liability. ‘‘[A]proposed decree must be approved even

if it falls short of the remedy the courtwould impose on its own, as long as itfalls within the range of acceptability oris ‘within the reaches of public interest.’(citations omitted).’’ 3

VIII. Determinative Materials andDocuments

There are no determinative materialsor documents within the meaning of theAPPA that were considered by theUnited States in formulating theproposed Final Judgment.

Dated: lllll.Respectfully submitted,

Jill A. PtacekJ. Richard Doidge,Attorneys, Transportation, Energy, and U.S.Department of Justice, Antitrust Division,Transportation, Energy, and AgricultureSection, 325 7th Street, Suite 500,Washington, D.C. 20530, (202) 307–6351.

APPENDIX A[Bids for Lancaster-F, Salisbury-F, and Toledo-F in rounds 167 through 172]

Round Lancaster-F(BTA #240)

Salisbury-F(BTA #398)

Toledo-F(BTA #444)

166 ................................................ [Standing high bidder as of round47—NextWave].

[Standing high bidder as of round11—Omnipoint].

[Standing high bidder as of round146—NextWave].

167 ................................................ ....................................................... NextWave 51,000 .......................168 ................................................ ....................................................... ....................................................... Omnipoint 1,251,015.169 ................................................ ....................................................... ....................................................... NextWave 1,377,001.170 ................................................ Omnipoint 513,444 ..................... Omnipoint 67,444 ....................... Omnipoint 1,515,002.

Omnipoint Withdrawal ................ Omnipoint Withdrawal ................171 ................................................ NextWave 514,000 ..................... NextWave 68,000 .......................

Omnipoint 512,444 ..................... Omnipoint 66,444 .......................172 and thereafter ........................ No further bids .............................. No further bids .............................. No further bids.

Stipulation and OrderIt is hereby stipulated by and between

the undersigned parties, by theirrespective attorneys, as follows:


2. The parties stipulate that a FinalJudgment in the form hereto attachedmay be filed and entered by the Court,upon the motion of any party or uponthe Court’s own motion, at any timeafter compliance with the requirementsof the Antitrust Procedure and PenaltiesAct (15 U.S.C. § 16), and without furthernotice to any party or other proceeding,provided that plaintiff has notwithdrawn its consent, which it may doat any time before the entry of theproposed Final Judgment by serving

notice thereof on defendants and byfiling that notice with the Court.


4. In the event that plaintiffwithdraws its consent, as provided inparagraph 2 above, then the parties arereleased from all further obligationsunder this Stipulation, and the makingof this Stipulation shall be withoutprejudice to any party in this or anyother proceeding.

5. The parties request that the Courtacknowledge the terms of this

Stipulation by entering the Order in thisStipulation and Order.

Respectfully submitted,For Plaintiff United States of America:

Jill A. PtacekJ. Richard Doidge,Attorneys, Antitrust Division, U.S.Department of Justice, 325 Seventh Street,N.W., Washington, D.C. 20004, (202) 307–0468.

For Defendant Mercury PCS II, L.L.C.:Charles A. James, Esq.,Jones, Day, Reavis & Pogue,Metropolitan Square, 1450 G Street, N.W.,Washington, D.C. 20005, (202) 879–3675.

Order

It is so ordered, this lll day ofllll, 1998.

lllllllllllllllllllllUnited States District Court Judge


Certificate of Service

I hereby certify that I have caused acopy of the foregoing Complaint,Competitive Impact Statement andproposed Final Judgment to be servedon counsel for the defendant in thismatter in the manner set forth below:

By first class mail, postage prepaid,and by facsimile:Charles A. James, Esquire, Jones, Day,

Reavis & Pogue, Metropolitan Square,1450 G Street, Washington, D.C.20005


Final Judgment

Plaintiff, United States of America,filed its Complaint on November 10,1998. Plaintiff and the Defendant, bytheir respective attorneys, haveconsented to the entry of this FinalJudgment without trial or adjudicationof any issue of fact or law. This FinalJudgment shall not be evidence againstor an admission by any party withrespect to any issue of fact or law.Therefore, before the taking of anytestimony, without trial or adjudicationof any issue of fact or law herein, andupon consent of the parties, it is herebyordered, adjudged, and decreed, asfollows:

I. Jurisdiction

This Court has jurisdiction of thesubject matter of this action and of eachof the parties consenting hereto. Venueis proper in the District of Columbia.The Complaint states a claim uponwhich relief may be granted against theDefendant under Section 1 of theSherman Act, 15 U.S.C. § 1.

II. Definitions

As used herein, the term:(A) ‘‘Defendant’’ means Mercury PCS

II, L.L.C., its successors, assigns,subsidiaries, divisions, groups,affiliates, partnerships and jointventures, directors, officers, managers,agents, and employees.



(D) ‘‘License-identifying information’’means any number, letter, code ordescription that designates or identifiesa license or that links licenses.

(E) ‘‘Person’’ means any naturalperson, corporation, firm, company, soleproprietorship, partnership, association,

institution, governmental unit, publictrust, or other legal entity.

III. Applicability





(A) Entering into any agreement withany other license applicant to fix,establish, suppress or maintain the pricefor any license to be awarded by theFCC in an auction, or to allocate anysuch licenses amongst competitors,provided, however, that nothing in thisprovision shall prohibit the Defendantfrom participating in any biddingconsortium, teaming arrangement orother joint venture authorized under therules and regulations of the FCCpertaining to future auctions, anddisclosed to the FCC.

(B) In the course of any auctionconducted pursuant to the rules andregulations of the FCC, offering anyprice to the FCC for the lease, purchase,or right to use any FCC-awarded license,that includes within that price anylicense-identifying information, unlessthe inclusion of such information isrequired by the FCC.





(1) Distributing within 60 days of theentry of this Final Judgment, a copy ofthis Final Judgment to (a) all officersand directors of the Defendant; and (b)to all employees who have anyresponsibility for formulating,

proposing, recommending, establishing,approving, implementing or submittingthe Defendant’s prices in FCC-conducted license auctions;

(2) Distributing in a timely manner acopy of this Final Judgment to anyofficer, director or employee whosucceeds to a position described inSection V(B)(1);

(3) Obtaining from each present orfuture officer, director or employeedesignated in Section V(B)(1), within 60days of entry of this Final Judgment orof the person’s succession to adesignated position, a writtencertification that he or she: (1) has read,understands, and agrees to abide by theterms of this Final Judgment; and (2) hasbeen advised and understands that hisor her failure to comply with this FinalJudgment may result in conviction forcriminal contempt of court;

(4) Maintaining a record of persons towhom the Final Judgment has beendistributed and from whom, pursuant toSection VI(B)(3), the certification hasbeen obtained; and


VI. Certification

Within 75 days after the entry of thisFinal Judgment, the Defendant shallcertify to the Plaintiff whether it hascomplied with Sections V(B)(1) and(B)(3) above.

VII. Plaintiff Access

(A) To determine or securecompliance with this Final Judgmentand for no other purpose, dulyauthorized representatives of thePlaintiff shall, upon written request ofthe Assistant Attorney General in chargeof the Antitrust Division, and onreasonable notice to the defendant madeto its principal office, be permitted,subject to any legally recognizedprivilege:

(1) Access during the Defendant’soffice hours to inspect and copy alldocuments in the possession or underthe control of the Defendant, who mayhave counsel present, relating to anymatters contained in this FinalJudgment; and


(B) Upon the written request of theAssistant Attorney General in charge ofthe Antitrust Division made to theDefendant’s principal office, theDefendant shall submit such writtenreports, under oath if requested, relatingto any matters contained in this Final


Judgment as may be reasonablyrequested, subject to any legallyrecognized privilege.


(D) If at the time information ordocuments are furnished by theDefendant to Plaintiff, the Defendantrepresents and identifies in writing thematerial in any such information ordocuments to which a claim ofprotection may be asserted under Rule26(c)(7) of the Federal Rules of CivilProcedure, and Defendant marks eachpertinent page of such material,‘‘Subject to claim of protection underRule 26(c)(7) of the Federal Rules ofCivil Procedure,’’ then 10 days’ noticeshall be given by Plaintiff to theDefendant prior to divulging suchmaterial in any legal proceeding (otherthan a grand jury proceeding) to whichDefendant is not a party.





Dated: llll.lllllllllllllllllllllUnited States District Judge


pursuant to Section 2(b) of the AntitrustProcedures and Penalties Act (‘‘APPA’’),15 U.S.C. § 16(b)–(h), files thisCompetitive Impact Statement relatingto the proposed Final Judgmentsubmitted for entry in this civil antitrustproceeding.


On November 10, 1998, the UnitedStates filed a civil antitrust complaintalleging that the defendant, MercuryPCS II, L.L.C. (‘‘Mercury’’), had violated

Section 1 of the Sherman Act, 15 U.S.C.§ 1. Mercury participated in an auction(the ‘‘DEF auction’’) of broadband radiospectrum licenses for personalcommunications service (‘‘PCS’’) thatwas conducted by the FederalCommunications Commission (‘‘FCC’’)between August 1996 and January 1997.The Complaint alleges that during theDEF auction Mercury submitted bidsthat ended with three-digit numericalcodes to communicate with rivalbidders and that, through the use ofthese coded bids, Mercury and one of itsrivals reached an agreement to refrainfrom bidding against one another. As aconsequence of this agreement, thecomplaint alleges Mercury and itscompetitor paid less for certain PCSlicenses, resulting in a loss of revenueof the Treasury of the United States.

On November 10, 1998, the UnitedStates and Mercury filed a Stipulationand Order in which they consented tothe entry of a proposed Final Judgmentthat provides the relief that the UnitedStates seeks in the Complaint. Under theproposed Final Judgment, Mercurywould be enjoined from submittingcoded bids in future FCC auctions andentering into any agreement related tobidding for FCC licenses that violatesSection 1 of the Sherman Act, 15 U.S.C.§ 1.

The United States and Mercury havestipulated that the proposed FinalJudgment may be entered aftercompliance with the APPA. Entry of theFinal Judgment would terminate theaction, except that the Court wouldretain jurisdiction to construe, modify,or enforce its provisions and to punishviolations thereof.




The FCC designated six bands ofbroadband radio spectrum for PCS: A, B,C, D, E and F. The A, B and C bandsoccupy 30 MHZ each, while the D, Eand F licenses are 10 MHZ each. TheFCC divided the country into 51geographic areas called Market TradingAreas (‘‘MTAs’’), which were eachallotted A and B licenses. The FCCsubdivided the MTAs into 493 smallergeographic units called Basic TradingAreas (‘‘BTAs’’), which were eachallotted C, D, E, and F licenses. Each

BTA was assigned a number from 1 to493.


To keep the auction moving forward,the FCC imposed eligibility limits andactivity rules. The FCC gave eachlicense a population value called‘‘MHZ-pops.’’ Each bidder made downpayments to the FCC, with the size ofthe payment entitling it to bid for acertain amount of MHZ-pops. Aparticipant could bid on anycombination of licenses as long as thecombined MHZ-pops of those licensesdid not exceed the MHZ-pops to whichthe bidder’s down payment entitled it(eligibility). Bidders also had to be‘‘active’’ in each round (bid or have thehigh bid from the prior round) onlicenses representing a set percentage oftheir MHZ-pops; otherwise, the FCCreduced their eligibility for the nextround. As the auction proceeded, thebidders had to bid an increasingpercentage of their MHZ-pops until inthe final stages they had to bid nearlyall of their eligibility.

Each round in the auction began witha bid submission period during whichparticipants submitted bidselectronically or by telephone for any ofthe licenses in which they wereinterested. After each bid submissionperiod, the FCC published electronicallyto all bidders the results for eachlicense, including the name of eachcompany bidding, the amount of eachbid, and the time each bid wassubmitted. The high bidder for a licensein a round became the ‘‘standing high’’bidder for the license with a tie goingto the earliest bidder.

A bid withdrawal period thenfollowed. During this period, bidderswere permitted to withdraw theirstanding high bids from any market,subject to a withdrawal penaltyspecified by the FCC. The FCC thenpublished the results. The bidsubmission and withdrawal periodscomprised an auction round.

At the beginning of an auction, theFCC generally held one round per day.As the auction progressed, the FCC


increased the number of rounds held ina single day, providing a period of timebetween rounds for auction participantsto analyze the bidding from the priorround and to plan for the next round.

One goal of the FCC was to ensure theefficient allocation of licenses, that is,that the licenses would go to the bidderswho valued them most highly. Thesimultaneous, multiple-round format ofthe PCS auctions helped achieve thisgoal in several ways. It allowed biddersto pursue different license aggregationstrategies and change their strategies asthe auction proceeded. In addition, itallowed auction participants to observethe value that other bidders placed onthe licenses and use that information torefine their own assessment of licensevalues. This was particularly usefulgiven that the technology used for PCSwas new and bidders were uncertainabout both the costs of providing theservices and the prospective revenues.Ultimately, because the licenses wereawarded to the highest bidders, the PCSauction format allowed the marketplaceto determine the most efficientallocation of licenses.

Notwithstanding these benefits of theauction format, the FCC recognized therisk that ‘‘collusive conduct by biddersprior to or during the auction processcould undermine the competitiveness ofthe bidding process.’’ Second Reportand Order, FCC 94–61, ¶ 223 (Rel. April20, 1994). The FCC sought to mitigatethe risk of collusion by adopting rulesrestricting the disclosure of biddingstrategies during the auction. The FCCnoted, however, that Federal antitrustlaws applied to the auctions and itwould rely primarily on those laws todeter and punish collusion in theauctions. Second Report and Order ,supra at ¶ 225; Second MemorandumOpinion and Order, FCC 94–215, ¶ 50(Rel. August 15, 1994).


The auction of the D, E and F licensesfor all 493 BTAs began in August 1996.Because there were three bands beingauctioned, the DEF auction involved atotal of 1479 licenses. Lasting 276rounds, the auction ended in January1997.

Prior to the DEF auction, biddersanalyzed which licenses (or groups oflicenses) would best enable them toprovide effective and competitiveservice, assessed the value they placedon those licenses, and developedstrategies to obtain the desired licensesfor the lowest possible prices. Thebidders also speculated about theirrivals’ business strategies and attemptedto identify the key licenses for those

strategies, relying on an array ofinformation, including knowledge of thelicenses bidders had acquired in priorauctions.

As the auction proceeded, bidderscarefully observed their rivals’ actionsand often adjusted their own marketvaluations and business strategies,sometimes based on their assessment oftheir rivals’ objectives. Their rivals’bids, however, did not necessarilyreveal their true objectives. An auctionparticipant might bid for a particularlicense during a particular round for anumber of reasons: It may have alwayswanted the license, but for strategicreasons refrained from bidding untilthen; it may have changed its businessstrategy and decided that it now wantedthe license; it may have seen anopportunity to acquire an undervaluedlicense; it may have bid simply topreserve its eligibility to bid on otherlicenses later in the auction; it may havebid to raise a rival’s cost to obtain thelicense; or it may have bid to send amessage to the standing high bidder torefrain from bidding against it for adifferent license. Thus, the purpose of aparticular bid might be procompetitiveor anticompetitive.

A bidder’s purpose in making a bidmight, depending on the circumstances,be ambiguous to its rivals. Whereambiguity remains, it can be difficult touse a bid or bidding pattern alone tosend clear messages or invitations tocollude. To eliminate or reduce anyambiguity, Mercury sometimes placedbids during the DEF auction in whichthe final three digits intentionallycorresponded to the number for a BTA(a ‘‘BTA end code’’). Knowing that otherbidders could see the bids and hencethe BTA end codes, Mercury used thecodes to better explain the real purposeof certain bids it made—to reach anagreement with a rival. In particular,Mercury used the BTA end codes to linkthe bidding of licenses in two (or more)specific BTA markets, highlight thelicenses Mercury wanted, and convey tothe competing bidders offers to agreewith Mercury not to bid against eachother for the linked licenses.

Sometimes Mercury placed bids inone market with the BTA end code ofanother market to send the message:‘‘I’m bidding for this license becauseyou bid for the one I want (indicated bythe BTA code) and I’ll stop bidding inyour market if you stop bidding inmine.’’ Other times, Mercury used theBTA end codes to tell its rival: ‘‘If youdon’t stop bidding for this license, I willbid for the one you want (indicated bythe BTA code).’’

Mercury’s use of the BTA end codesdid not serve any legitimate purpose of

the auction. Mercury’s purpose for usingBTA end codes was to send clear andunmistakable invitations to collude torival bidders and to reach agreementswith those rivals to refrain from biddingagainst each other. Such conduct wasnot authorized by the applicable FCCrules and was inconsistent with theFCC’s goal to encourage competitivebidding.

Over the course of rounds 117 to 127,Mercury reached an agreement withHigh Plains Wireless, L.P. (‘‘HighPlains’’) to allocate between them the F-band licenses for Amarillo (BTA 013)and Lubbock (BTA #264). Mercuryagreed to stop bidding for the Amarillo-F license in exchange for High Plains’agreement not to bid for the Lubbock-Flicense. (The bidding for the Lubbock-Fand Amarillo-F licenses between rounds114 and 127 is depicted in the tableattached as appendix A to thisCompetitive Impact Statement.)

Prior to round 114, High Plains,Mercury and a third bidder werebidding for the Lubbock-F license. Afterthe third bidder failed to bid forLubbock-F in rounds 114 through 116,Mercury sought to strike an agreementwith the only remaining active bidderon the license—High Plains. In round117, Mercury attached the AmarilloBTA end code (‘‘013’’) to its bid for theLubbock-F license. By using the BTAend code in round 117, Mercuryintended to communicate to High Plainsthat the bidding for these two licenseswas linked and that Mercury wouldbegin bidding for Amarillo-F if HighPlains did not stop bidding for Lubbock-F.

Mercury believed that Amarillo wasan important license for High Plains.High Plains had placed bids for theAmarillo license in the C auction andhad been the standing high bidder forthe Amarillo-F license since round 68.

After High Plains continued to bid forLubbock-F, Mercury placed a bid inround 121 for the Amarillo-F licensethat ended with the Lubbock BTA end-code (‘‘264’’). Mercury’s purpose forusing the BTA end code was to link thetwo licenses, highlight the bid asretaliatory, and communicate an offer tostop bidding for Amarillo-F if HighPlains stopped bidding for Lubbock-F.Mercury repeated its offer in subsequentrounds by ending its bids in Lubbock-F and Amarillo-F with BTA end codes.In round 128, High Plains acceptedMercury’s offer and stopped bidding forLubbock-F, even though High Plainshad been willing to pay more for theLubbock-F license. (Lying on thesouthern border of the Amarillo BTA,the Lubbock BTA presented a naturalexpansion territory for High Plains.)


1 119 Cong. Rec. 24598 (1973); see also UnitedStates v. Gillette Co., 406 F. Supp. 713, 715 (D.

Continued

Observing that High Plains had stoppedbidding for Lubbock-F, Mercury stoppedbidding for Amarillo-F.

As a consequence of Mercury’sagreement with High Plains,competition for the Lubbock-F licensewas suppressed and the Treasuryreceived less revenue for the Lubbock-F license. It was in High Plains’economic self-interest to bid more forthe Lubbock-F license than Mercury’swinning bid and, but for the illegalagreement, it would have done so.


The provisions of the proposed FinalJudgment are designed to ensure thatMercury does not enter intoanticompetitive agreements whenparticipating in future FCC auctions.The decree supplements anyprohibitions on bidding conduct setforth in the FCC’s auction rules, and thedefendant may violate the decree evenif its conduct does not violate an agencystatute or rule.

The proposed Final Judgment wouldenjoin Mercury from entering into anagreement with another licenseapplicant to fix, establish, suppress ormaintain the price of a license to beawarded by the FCC or to allocate anysuch licenses among competitors(Section IV(A)). The proposed FinalJudgment would not prevent Mercuryfrom entering into any joint-venture orsimilar agreements regarding licenses tobe awarded by the FCC that are bothdisclosed to the FCC and authorizedunder the FCC’s rules and regulations.(Section IV(A)). However, such biddingarrangements would still be subject toscrutiny under the antitrust laws.

The proposed Final Judgment wouldalso prevent Mercury from using BTAend codes or any similar signalingmechanism to solicit anticompetitiveagreements in future FCC auctions. Theproposed Final Judgment would enjoinMercury from submitting bids thatcontain ‘‘license-identifyinginformation’’ in future FCC auctions,unless the inclusion of such informationis required by the FCC (Section IV(B)).License-identifying information isdefined as ‘‘any number, letter, code ordescription that designates or identifiesa license or that links licenses.’’ (SectionII(D)).

The proposed Final Judgment wouldfurther require Mercury to establish andmaintain an antitrust complianceprogram (Section V). It would alsoprovide that the United States mayobtain information from Mercuryconcerning possible violations of theFinal Judgment (Section VII).


Section 4 of the Clayton Act, 15U.S.C. § 15, provides that any personwho has been injured as a result ofconduct prohibited by the antitrust lawsmay bring suit in federal court torecover three times the damages theperson has suffered, as well as costs andreasonable attorneys’ fees. Entry of theproposed Final Judgment will neitherimpair nor assist the bringing of anyprivate antitrust damage action. Underthe provisions of Section 5(a) of theClayton Act, 15 U.S.C. § 16(a), theproposed Final Judgment has no primafacie effect in any subsequent privatelawsuit that may be brought againstMercury. In this case, the injured personis the United States.


The United States and Mercury hasstipulated that the proposed FinalJudgment may be entered by the Courtafter compliance with the provisions ofthe APPA, provided that the UnitedStates has not withdrawn its consent.The APPA conditions entry upon theCourt’s determination that the proposedFinal Judgment is in the public interest.

The APPA provides a period of atleast sixty days preceding the effectivedate of the proposed Final Judgmentwithin which any person may submit tothe United States written commentsregarding the proposed Final Judgment.Any person who wishes to commentshould do so within sixty days of thedate of publication of this CompetitiveImpact Statement in the FederalRegister. The United States willevaluate and respond to the comments.All comments will be given dueconsideration by the Department ofJustice, which remains free to withdrawits consent to the proposed FinalJudgment at any time prior to entry. Thecomments and the responses of theUnited States will be filed with theCourt and published in the FederalRegister. Written comments should besubmitted to: Roger W. Fones, Chief,Transportation, Energy & AgricultureSection, Antitrust Division, UnitedStates Department of Justice, 325Seventh Street, N.W., Suite 500,Washington, D.C. 20530.

The proposed Final Judgmentprovides that the Court retainsjurisdiction over this action, and theparties may apply to the Court for anyorder necessary or appropriate for themodification, interpretation, orenforcement of the Final Judgment. The

proposed Final Judgment would expireten (10) years from the date of its entry.


The United States considered, as analternative to the proposed FinalJudgment, seeking damages in this casepursuant to Section 4A of the ClaytonAct, 15 U.S.C. § 15a. Doing so wouldlikely have required a full trial on themerits against Mercury. In the view ofthe Department of Justice, such a trialwould involve substantial cost and therisk associated with such a trial is notwarranted, considering that theproposed Final Judgment provides fullinjunctive relief for the violations of theSherman Act set forth in the Complaint.


The APPA requires that proposedconsent judgments in antitrust casesbrought by the United States be subjectto a sixty-day comment period, afterwhich the court shall determinewhether entry of the proposed FinalJudgment ‘‘is in the public interest.’’ Inmaking that determination, the courtmay consider:

(1) The competitive impact of suchjudgment, including termination of allegedviolations, provisions for enforcement andmodification, duration or relief sought,anticipated effects of alternative remediesactually considered, and any otherconsiderations bearing upon the adequacy ofsuch judgment;

(2) The impact of entry of such judgmentupon the public generally and individualsalleging specific injury from the violationsset forth in the complaint includingconsideration of the public benefit, if any, tobe derived from a determination of the issuesat trial.

15 U.S.C. § 16(e). As the Court ofAppeals for the District of ColumbiaCircuit recently held, the APPA permitsa court to consider, among other things,the relationship between the remedysecured and the specific allegations setforth in the government’s complaint,whether the decree is sufficiently clear,whether enforcement mechanisms aresufficient, and whether the decree maypositively harm third parties. SeeUnited States v. Microsoft, 56 F.3d 1448(D.C. Cir. 1995).

In conducting this inquiry, ‘‘the Courtis nowhere compelled to go to trial orto engage in extended proceedingswhich might have the effect of vitiatingthe benefits of prompt and less costlysettlement through the consent decreeprocess.’’ 1 Rather, absent a showing of


Mass 1975). A ‘‘public interest’’ determination canbe made properly on the basis of the CompetitiveImpact Statement and Response to Comments filedpursuant to the APPA. Although the APPAauthorizes the use of additional procedures, 15U.S.C. § 16(f), those procedures are discretionary. Acourt need not invoke any of them unless it believesthat the comments have raised significant issuesand that further proceedings would aid the court in

resolving those issues. See H.R. 93–1463, 93rdCong. 2d Sess. 8–9, reprinted in 1974 U.S.C.C.A.N.6535, 6538.

2 United States v.Bechtel, 648 F.2d at 666(internal citations omitted) (emphasis added); seeUnited States v. BNS, Inc., 858 F.2d at 463; UnitedStates v. National Broadcasting Co., 449 F. Supp.1127, 1143 (C.D. Cal. 1978); Gillette, 406, F.Supp.

at 716; see also United States v. AmericanCyanamid Co., 719 F.2d 558, 565 (2d Cir. 1983).

3 United States v. American Tel. & Tel. Co., 552F. Supp. 131, 150 (D.D.C. 1982), aff’d sub nom.Maryland v. United States, 460 U.S. 1001 (1983),quoting Gillette, 406 F. Supp. at 716; United Statesv. Alcan Aluminum, Ltd., 605 F. Supp. 619, 622(W.D. Ky. 1985).

corrupt failure of the government todischarge its duty, the Court, in makingits public interest finding, should * * *carefully consider the explanations ofthe government in the competitiveimpact statement and its responses tocomments in order to determinewhether those explanations arereasonable under the circumstances.United States v. Mid-AmericaDairymen, Inc., 1977–1 Trade Case.¶61,508, at 71,980 (W.D. Mo. 1977).

Accordingly, with respect to theadequacy of the relief secured by thedecree, a court may not ‘‘engage in anunrestricted evaluation of what reliefwould best serve the public.’’ UnitedStates v. BNS, Inc., 858 F.2d 456, 462(9th Cir. 1988), quoting United States v.Bechtel Corp., 648 F. 2d 660, 666 (9thCir. 1981): s ee also, Microsoft, 56 F.3d1448 (D.C. Cir 1995). Precedent requiresthat

[t]he balancing of competing social andpolitical interests affected by a proposedantitrust consent decree must be left, in thefirst instance, to the discretion of theAttorney General. The court’s role inprotecting the public interest is one ofinsuring that the government has notbreached its duty to the public in consentingto the decree. The court is required todetermine not whether a particular decree isthe one that will best serve society, butwhether the settlement is ‘within the reachesof the public interest.’ More elaboraterequirements might undermine theeffectiveness of antitrust enforcement byconsent decree.2

The proposed Final Judgment,therefore, should not be reviewed undera standard of whether it is certain toeliminate every anticompetitive effect ofa particular practice or whether itmandates certainty of free competitionin the future. Court approval of a finaljudgment requires a standard moreflexible and less strict than the standardrequired for a finding of liability. ‘‘[A]

proposed decree must be approved evenif its falls short of the remedy the courtwould impose on its own, as long as itfalls within the range of acceptability oris ‘within the reaches of public interest.’(citations omitted).’’ 3




Respectfully submitted,

Jill A. Ptacek,

J. Richard Doidge,

Attorneys, U.S. Department of Justice,Antitrust Division, Transportation, Energy,and Agriculture Section, 325 7th Street NW.,Suite 500, Washington, DC 20530, (202) 307–6351.

APPENDIX A[Bids for Lubbock-F and Amarillo-F in Rounds 114 through 127]

Round Lubbock-F (BTA #264) Amarillo–F (BTA #013)

114 ............................................................ High Plains 1,033,105 ............................Mercury, 1,032,003 ...................................

[Standing high bidder as of round 68—High Plains].

115 ............................................................ Mercury 1,136,000 .................................116 ............................................................ High Plains 1,250,100 ............................117 ............................................................ Mercury 1,375,013 .................................118 ............................................................ High Plains 1,513,100 ............................119 ............................................................ Mercury 1,664,000 .................................120 ............................................................ High Plains 1,830,101 ............................121 ............................................................ .............................................................. Mercury 1,615,264.122 ............................................................ .............................................................. High Plains 1,777,101.123 ............................................................ Mercury 1,922,013 .................................124 ............................................................ High Plains 2,114,100 ............................125 ............................................................ .............................................................. Mercury 1,866,264.126 ............................................................ .............................................................. High Plains 2,053,100.127 ............................................................ Mercury 2,326,013 .................................Round 128 (and thereafter) ...................... High Plains Never Bids Again .................. Mercury Never Bids Again.

Stipulation and Order

It is hereby stipulated by and betweenthe undersigned parties, by theirrespective attorneys, as follows:


2. The parties stipulate that a FinalJudgment in the form hereto attachedmay be filed and entered by the Court,

upon the motion of any party or uponthe Court’s own motion, at any timeafter compliance with the requirementsof the Antitrust Procedure and PenaltiesAct (15 U.S.C. § 16), and without furthernotice to any party or other proceedings,provided that plaintiff has notwithdrawn its consent, which it may doat any time before the entry of theproposed Final Judgment by servingnotice thereof on defendants and byfiling that notice with the Court.


4. In the event that plaintiffwithdraws its consent, as provided inparagraph 2 above, then the parties are


released from all further obligationsunder this Stipulation, and the makingof this Stipulation shall be withoutprejudice to any party in this or anyother proceeding.

5. The parties request that the Courtacknowledge the terms of thisStipulation by entering the Order in thisStipulation and Order.

Respectfully submitted,For Plaintiff, United States of America:

Jill A. PtacekJ. Richard Doidge,Attorneys, Antitrust Division, U.S.Department of Justice, 325 Seventh Street,N.W., Washington, D.C. 20004, (202) 307–0468.

For Defendant, 21st Century Bidding Corp.:Timothy J. O’Rourke, Esq.,Dow, Lohnes & Albertson, PLLC, 1200 NewHampshire Avenue, N.W., Suite 800,Washington, D.C. 20036, (202) 776–2716.

Order

It is so ordered, this lll day ofllll, 1998.

lllllllllllllllllllllUnited States District Court Judge

Certificate of Service

I hereby certify that I have caused acopy of the foregoing Complaint,Competitive Impact Statement andproposed Final Judgment to be servedon counsel for the defendant in thismatter in the manner set forth below:

By first class mail, postage prepaid,and by facsimile:

Timothy J. O’Rourke, Esquire, Dow,Lohnes & Albertson, 1200 NewHampshire Avenue, N.W., Suite 800,Washington, D.C. 20036–6802.


Final Judgment

Plaintiff, United States of America,filed its Complaint on November 10,1998. Plaintiff and the Defendant, bytheir respective attorneys, haveconsented to the entry of this FinalJudgment without trial or adjudicationof any issue of fact or law. This FinalJudgment shall not be evidence againstor an admission by any party withrespect to any issue of fact or law.Therefore, before the taking of anytestimony, without trial or adjudicationof any issue of fact or law herein, andupon consent of the parties, it is herebyordered, adjudged, and decreed, asfollows:

I. JurisdictionThis Court has jurisdiction of the

subject matter of this action and of eachof the parties consenting hereto. Venueis proper in the District of Columbia.The Complaint states a claim uponwhich relief may be granted against theDefendant under Section 1 of theSherman Act, 15 U.S.C. § 1.

II. DefinitionsAs used herein, the term:(A) ‘‘Defendant’’ means 21st Century

Bidding Corporation, its successors,assigns, subsidiaries, divisions, groupsaffiliates, partnerships and jointventures, directors, officers, managers,agents, and employees.



(D) ‘‘License-identifying information’’means any number, letter, code ordescription that designates or identifiesa license or that links licenses.

(E) ‘‘Person’’ means any naturalperson, corporation, firm, company, soleproprietorship, partnership, association,institution, governmental unit, publictrust, or other legal entity.

III. Applicability





(A) Entering into any agreement withany other license applicant to fix,establish, suppress or maintain the pricefor any license to be awarded by theFCC in an auction, or to allocate anysuch licenses amongst competitors,provided, however, that nothing in thisprovision shall prohibit the Defendantfrom participating in any biddingconsortium, teaming arrangement orother joint venture authorized under therules and regulations of the FCCpertaining to future auctions, anddisclosed to the FCC.

(B) In the course of any auctionconducted pursuant to the rules andregulations of the FCC, offering any

price to the FCC for the lease, purchase,or right to use any FCC-awarded license,that includes within that price anylicense-identifying information, unlessthe inclusion of such information isrequired by the FCC.





(1) Distributing within 60 days of theentry of this Final Judgment, a copy ofthis Final Judgment to (a) all officersand directors of the Defendant; and (b)to all employees who have anyresponsibility for formulating,proposing, recommending, establishing,approving, implementing or submittingthe Defendant’s prices in FCC-conducted license auctions;

(2) Distributing in a timely manner acopy of this Final Judgment to anyofficer, director or employee whosucceeds to a position described inSection V(B)(1);

(3) Obtaining from each present orfuture officer, director or employeedesignated in Section V(B)(1), within 60days of entry of this Final Judgment orof the person’s succession to adesignated position, a writtencertification that he or she: (1) has read,understands, and agrees to abide by theterms of this Final Judgment; and (2) hasbeen advised and understands that hisor her failure to comply with this FinalJudgment may result in conviction forcriminal contempt of court;

(4) Maintaining a record of persons towhom the Final Judgment has beendistributed and from whom, pursuant toSection VI(B)(3), the certification hasbeen obtained; and


VI. Certification

Within 75 days after the entry of thisFinal Judgment, the Defendant shallcertify to the Plaintiff whether it hascomplied with Sections V (B)(1) and (B)(3) above.


VII. Plaintiff Access(A) To determine or secure

compliance with this Final Judgmentand for no other purpose, dulyauthorized representatives of thePlaintiff shall, upon written request ofthe Assistant Attorney General in chargeof the Antitrust Division, and onreasonable notice to the Defendant madeto its principal office, be permitted,subject to any legally recognizedprivilege:

(1) Access during the Defendant’soffice hours to inspect and copy alldocuments in the possession or underthe control of the Defendant, who mayhave counsel present, relating to anymatters contained in this FinalJudgment; and


(B) Upon the written request of theAssistant Attorney General in charge ofthe Antitrust Division made to theDefendant’s principal office, theDefendant shall submit such writtenreports, under oath if requested, relatingto any matters contained in this FinalJudgment as may be reasonablyrequested, subject to any legallyrecognized privilege.


(D) If at the time information ordocuments are furnished by theDefendant to Plaintiff, the Defendantrepresents and identifies in writing thematerial in any such information ordocuments to which a claim ofprotection may be asserted under Rule26(c)(7) of the Federal Rules of CivilProcedure, and Defendant marks eachpertinent page of such material,‘‘Subject to claim of protection underRule 26(c)(7) of the Federal Rules ofCivil Procedure,’’ then 10 days’ noticeshall be given by Plaintiff to theDefendant prior to divulging suchmaterial in any legal proceeding (otherthan a grand jury proceeding) to whichDefendant is not a party.





Dated: lllll.lllllllllllllllllllllUnited States District Judge


pursuant to Section 2(b) of the AntitrustProcedures and Penalties Act (‘‘APPA’’),15 U.S.C. 16(b)–(h), files thisCompetitive Impact Statement relatingto the proposed Final Judgmentsubmitted for entry in this civil antitrustproceeding.


On November 10, 1998, the UnitedStates filed a civil antitrust complaintalleging that the defendant, 21st CenturyBidding Corp. (‘‘21st Century’’), hadviolated Section 1 of the Sherman Act,15 U.S.C. 1. 21st Century participated inan auction (the ‘‘DEF auction’’) ofbroadband radio spectrum licenses forpersonal communication services(‘‘PCS’’) that was conducted by theFederal Communications Commission(‘‘FCC’’) between August 1996 andJanuary 1997. The Complaint allegesthat during the DEF auction 21stCentury submitted bids that ended withthree-digit numerical codes tocommunicate with rival bidders andthat, through the use of these codedbids, 21st Century and one of its rivalsreached an agreement to refrain frombidding against one another. As aconsequence of this agreement, thecomplaint alleges 21st Century and itscompetitor paid less for certain PCSlicenses, resulting in a loss of revenueto the Treasury of the United States.

On November 10, 1998, the UnitedStates and 21st Century filed aStipulation and Order in which theyconsented to the entry of a proposedFinal Judgment that provides the reliefthat the United States seeks in theComplaint. Under the proposed FinalJudgment, 21st Century would beenjoined from submitting coded bids infuture FCC auctions and entering intoany agreement related to bidding forFCC licenses that violates Section 1 ofthe Sherman Act, 15 U.S.C. 1.

The United States and 21st Centuryhave stipulated that the proposed Final

Judgment may be entered aftercompliance with the APPA. Entry of theFinal Judgment would terminate theaction, except that the Court wouldretain jurisdiction to construe, modify,or enforce its provisions and to punishviolations thereof.




The FCC designated six bands ofbroadband radio spectrum for PCS: A, B,C, D, E and F. The A, B and C bandsoccupy 30 MHZ each, while the D, Eand F licenses are 10 MHZ each. TheFCC divided the country into 51geographic areas called Market TradingAreas (‘‘MTAs’’), which were eachallotted A and B licenses. The FCCsubdivided the MTAs into 493 smallergeographic units called Basic TradingAreas (‘‘BTAs’’), which were eachallotted C, D, E, and F licenses. EachBTA was assigned a number from 1 to493.


To keep the auction moving forward,the FCC imposed eligibility limits andactivity rules. The FCC gave eachlicense a population value called‘‘MHZ-pops.’’ Each bidder made downpayments to the FCC, with the size ofthe payment entitling it to bid for acertain amount of MHZ-pops. Aparticipant could bid on anycombination of licenses as long as thecombined MHZ-pops of those licensesdid not exceed the MHZ-pops to whichthe bidder’s down payment entitled it(eligibility). Bidders also had to be‘‘active’’ in each round (bid or have thehigh bid from the prior round) onlicenses representing a set percentage oftheir MHZ-pops; otherwise, the FCCreduced their eligibility for the next


round. As the auction proceeded, thebidders had to bid an increasingpercentage of their MHZ-pops until inthe final stages they had to bid nearlyall of their eligibility.

Each round in the auction began witha bid submission period during whichparticipants submitted bidselectronically or by telephone for any ofthe licenses in which they wereinterested. After each bid submissionperiod, the FCC published electronicallyto all bidders the results for eachlicense, including the name of eachcompany bidding, the amount of eachbid, and the time each bid wassubmitted. The high bidder for a licensein a round became the ‘‘standing high’’bidder for that license with a tie goingto the earliest bidder.

A bidder withdrawal period thenfollowed. During this period, bidderswere permitted to withdraw theirstanding high bids from any market,subject to a withdrawal penaltyspecified by the FCC. The FCC thenpublished the results. The bidsubmission and withdrawal periodscomprised an auction round.

At the beginning of an auction, theFCC generally held one round per day.As the auction progressed, the FCCincreased the number of rounds held ina single day, providing a period of timebetween rounds for auction participantsto analyze the bidding from the priorround and to plan for the next round.

One goal of the FCC was to ensure theefficient allocation of licenses, that is,that the licenses would go to the bidderswho valued them most highly. Thesimultaneous, multiple-round format ofthe PCS auctions helped achieve thisgoal in several ways. It allowed biddersto pursue different license aggregationstrategies and change their strategies asthe auction proceeded. In addition, itallowed auction participants to observethe value that other bidders placed onthe licenses and use that information torefine their own assessment of licensevalues. This was particularly usefulgiven that the technology used for PCSwas new and bidders were uncertainabout both the costs of providing theservices and the prospective revenues.Ultimately, because the licenses wereawarded to the highest bidders, the PCSauction format allowed the marketplaceto determine the most efficientallocation of licenses.

Notwithstanding these benefits of theauction format, the FCC recognized therisk that ‘‘collusive conduct by biddersprior to or during the auction processcould undermine the competitiveness ofthe bidding process.’’ Second Reportand Order, FCC 94–61, ¶ 223 (Rel. April20, 1994). The FCC sought to mitigate

the risk of collusion by adopting rulesrestricting the disclosure of biddingstrategies during the auction. The FCCnoted, however, that Federal antitrustlaws applied to the auctions and itwould rely primarily on those laws todeter and punish collusion in theauctions. Second Report and Order,supra at ¶ 225; Second MemorandumOpinion and Order, FCC 94–215, ¶ 50(Rel. August 15, 1994).


The auction of the D, E and F licensesfor all 493 BTAs began in August 1996.Because there were three bands beingauctioned, the DEF auction involved atotal of 1,479 licenses. Lasting 276rounds, the auction ended in January1997.

Prior to the DEF auction, biddersanalyzed which licenses (or groups oflicenses) would best enable them toprovide effective and competitiveservice, assessed the value they placedon those licenses, and developedstrategies to obtain the desired licensesfor the lowest possible prices. Thebidders also speculated about theirrivals’ business strategies and attemptedto identify the key licenses for thosestrategies, relying on an array ofinformation, including knowledge of thelicenses bidders had acquired in priorauctions.

As the auction proceeded, bidderscarefully observed their rivals’ actionsand often adjusted their own marketvaluations and business strategies,sometimes based on their assessment oftheir rivals’ objectives. Their rivals’bids, however, did not necessarilyreveal their true objectives. An auctionparticipant might bid for a particularlicense during a particular round for anumber of reasons: it may have alwayswanted the license, but for strategicreasons refrained from bidding untilthen; it may have changed its businessstrategy and decided that it now wantedthe license; it may have seen anopportunity to acquire an undervaluedlicense; it may have bid simply topreserve its eligibility to bid on otherlicenses later in the auction; it may havebid to raise a rival’s cost to obtain thelicense; or it may have bid to send amessage to the standing high bidder torefrain from bidding against it for adifferent license. Thus, the purpose of aparticular bid might be procompetitiveor anticompetitive.

A bidder’s purpose in making a bidmight, depending on the circumstances,be ambiguous to its rival. Whereambiguity remains, it can be difficult touse a bid or bidding pattern alone tosend clear messages or invitations to

collude. To eliminate or reduce anyambiguity, 21st Century sometimesplaced bids during the DEF auction inwhich the final three digits intentionallycorresponded to the number for a BTA(a ‘‘BTA end code’’). Knowing that otherbidders could see the bids and hencethe BTA end codes, 21st Century usedthe codes to better explain the realpurpose of certain bids it made—toreach an agreement with a rival. Inparticular, 21st Century used the BTAend codes to link the bidding of licensesin two (or more) specific BTA markets,highlight the license 21st Centurywanted, and convey to the competingbidders offers to agree with 21st Centurynot to bid against each other for thelinked licenses. By placing bids in onemarket with the BTA end code ofanother market, 21st Century sent themessage: ‘‘I’m bidding for this licensebecause you bid for the one I want(indicated by the BTA code) and I’llstop bidding in your market if you stopbidding in mine.’’

21st Century’s use of the BTA endcodes did not serve any legitimatepurpose of the auction. 21st Century’spurpose for using BTA end codes wasto send clear and unmistakableinvitations to collude to rival biddersand to reach agreements with thoserivals to refrain from bidding againsteach other. Such conduct was notauthorized by the applicable FCC rulesand was inconsistent with the FCC’sgoal to encourage competitive bidding.

Over the course of rounds 120 to 125,21st Century reached an agreement withMercury PCS II, L.L.C. (‘‘Mercury’’) toallocate between them the F-bandlicenses for Indianapolis (BTA #204),Baton Rouge (BTA #32), and Biloxi(BTA #42). 21st Century agreed to stopbidding for the Baton Rouge and Biloxi-F licenses in exchange for Mercury’sagreement not to bid for theIndianapolis-F license. (The bidding forthe Baton Rouge, Biloxi andIndianapolis-F between rounds 120 and125 is depicted in the table attached asAppendix A to this Competitive ImpactStatement.)

Prior to round 120, 21st Century hadbeen bidding for the Indianapolis-Flicense and had been the high bidder onthat license since round 85. On theother hand, Mercury had been biddingconsistently for the Baton Rouge andBiloxi-F licenses and was standing highbidder for both licenses. 21st Centuryhad never bid for licenses in BatonRouge or Biloxi; Mercury had never bidin Indianapolis.

In round 120, Mercury bid for the firsttime for the Indianapolis-F license.After 21st Century bid back in round121, Mercury again bid for Indianapolis-


F. In round 123, 21st Century placedbids for the Baton Rouge and Biloxi-Flicenses and attached the IndianapolisBTA end code (‘‘204’’) to these bids.21st Century’s purpose for using theBTA end codes was to link the BatonRouge, Biloxi and Indianapolis-Flicenses, highlight the bids asretaliatory, and communicate an offer tostop bidding for Baton Rouge and Biloxiif Mercury stopped bidding forIndianapolis-F.

21st Century believed that the BatonRouge and Biloxi licenses wereimportant to Mercury. Mercury hadbeen bidding persistently for theselicenses since the start of the auction. Inaddition, Mercury held a number oflicenses from the C block in the vicinityand the Baton Rouge and Biloxi-Flicenses were contiguous to severalother geographic markets whereMercury was the standing high bidderfor the F licenses.

Mercury saw the BTA end code andunderstood that 21st Century proposedto stop bidding for Baton Rouge andBiloxi in exchange for Mercury ceasingto bid for the Indianapolis-F license. Inround 124, Mercury bid back over 21stCentury for the Baton Rouge and Biloxi-F licenses, attaching the IndianapolisBTA end code to its bids. Mercury’s useof the Indianapolis BTA end code inround 124 confirmed that it understoodthe link between the three licenses.Mercury accepted 21st Century’s offerand stopped bidding for Indianapolis-Feven though it was willing to pay morefor the Indianapolis-F license.Observing that Mercury had stoppedbidding for Indianapolis-F, 21st Centurystopped bidding for the Baton Rougeand Biloxi-F licenses.

As a consequence of 21st Century’sagreement with Mercury, competitionfor the Indianapolis-F license wassuppressed and the Treasury receivedless revenue for the Indianapolis-Flicense. It was Mercury’s economic self-interest to bid more for the Indianapolis-F license than 21st Century’s winningbid and, but for the illegal agreement, itwould have done so.


The provisions of the proposed FinalJudgment are designed to ensure that21st Century does not enter intoanticompetitive agreements whenparticipating in future FCC auctions.The decree supplements anyprohibitions on bidding conduct setforth in the FCC’s auction rules, and thedefendant may violate the decree evenif its conduct does not violate an agencystatute or rule.

The proposed Final Judgment wouldenjoin 21st Century from entering intoan agreement with another licenseapplicant to fix, establish, suppress ormaintain the price of a license to beawarded by the FCC or to allocate anysuch licenses among competitors(Section IV(A)). The proposed FinalJudgment would not prevent 21stCentury from entering into any joint-venture or similar agreements regardinglicenses to be awarded by the FCC thatare both disclosed to the FCC andauthorized under the FCC’s rules andregulations (Section IV(A)). However,such bidding arrangements would stillbe subject to scrutiny under the antitrustlaws.

The proposed Final Judgment wouldalso prevent 21st Century from usingBTA end codes or any similar signalingmechanism to solicit anticompetitiveagreements in future FCC auctions. Theproposed Final Judgment would enjoin21st Century from submitting bids thatcontain ‘‘license-identifyinginformation’’ in future FCC auctions,unless the inclusion of such informationis required by the FCC (Section IV(B)).License-identifying information isdefined as ‘‘any number, letter, code, ordescription that designates or identifiesa license or that links licenses.’’ (SectionII (D)).

The proposed Final Judgment wouldfurther require 21st Century to establishand maintain an antitrust complianceprogram (Section V). It would alsoprovide that the United States mayobtain information from 21st Centuryconcerning possible violations of theFinal Judgment (Section VII).


Section 4 of the Clayton Act, 15U.S.C. 15, provides that any person whohas been injured as a result of conductprohibited by the antitrust laws maybring suit in federal court to recoverthree times the damages the person hassuffered, as well as costs and reasonableattorneys’ fees. Entry of the proposedFinal Judgment will neither impair norassist the bringing of any privateantitrust damage action. Under theprovisions of Section 59(a) of theClayton Act, 15 U.S.C. 16(a), theproposed Final Judgment has no primafacie effect in any subsequent privatelawsuit that may be brought against 21stCentury. In this case, the injured personis the United States.


The United States and 21st Centuryhave stipulated that the proposed Final

Judgment may be entered by the Courtafter compliance with the provisions ofthe APPA, provided that the UnitedStates has not withdrawn its consent.The APPA conditions entry upon theCourt’s determination that the proposedFinal Judgment is in the public interest.

The APPA provides a period of atleast sixty days preceding the effectivedate of the proposed Final Judgmentwithin which any person may submit tothe United States written commentsregarding the proposed Final Judgment.Any person who wishes to commentshould do so within sixty days of thedate of publication of this CompetitiveImpact Statement in the FederalRegister. The United States willevaluate and respond to the comments.All comments will be given dueconsideration by the Department ofJustice, which remains free to withdrawits consent to the proposed FinalJudgment at any time prior to entry. Thecomments and the responses of theUnited States will be filed with theCourt and published in the FederalRegister. Written comments should besubmitted to: Roger W. Fones, Chief,Transportation, Energy & AgricultureSection, Antitrust Division, UnitedStates Department of Justice, 325Seventh Street, N.W., Suite 500,Washington, D.C. 20530.

The proposed Final Judgmentprovides that the Court retainsjurisdiction over this action, and theparties may apply to the Court for anyorder necessary or appropriate for themodification, interpretation, orenforcement of the Final Judgment. Theproposed Final Judgment would expireten (10) years from the date of its entry.


The United States considered, as analternative to the proposed FinalJudgment, seeking damages in this casepursuant to Section 4A of the ClaytonAct, 15 U.S.C. 5a. Doing so would likelyhave required a full trial on the meritsagainst 21st Century. In the view of theDepartment of Justice, undertaking thesubstantial cost and the risk associatedwith such a trial is not warranted,considering that the proposed FinalJudgment provides full injunctive relieffor the violations of the Sherman Act setforth in the Complaint.


The APPA requires that proposedconsent judgments in antitrust casesbrought by the United States be subjectto a sixty-day comment period, afterwhich the court shall determinewhether entry of the proposed Final


1 119 Cong. Rec. 24598 (1973), See also UnitedStates v. Gillette Co., 406 F. Supp. 713, 715 (D.Mass. 1975). A ‘‘public interest’’ determination canbe made properly on the basis of the CompetitiveImpact Statement and Response to Comments filedpursuant to the APPA. Although the APPAauthorizes the use of additional procedures, 15U.S.C. 16(f), those procedures are discretionary. Acourt need not invoke any of them unless it believes

that the comments have raised significant issuesand that further proceedings would aid the court inresolving those issues. See H.R. 93–1463, 93rdCong., 2d Sess. 8–9, reprinted in 1974 U.S.C.C.A.N.6535, 6538.

2 United States v. Bechtel, 648 F.2d at 666(internal citations omitted) (emphasis added), seeUnited States v. BNS, Inc., 858 F.2d at 463, UnitedStates v. National Broadcasting Co., 449 F.Supp.

1127, 1143 (C.D. Cal 1978) Gillette, 406 F. Supp. at716, see also United States v. American CyanamidCo., 719 F.2d 558, 565 (2d Cir. 1983).

3 United States v. American Tel. & Tel. Co., 552F. Supp. 131, 150 (D.D.C. 1982), affid sub nom.Maryland v. United States, 460 U.S. 1001 (1983),quoting Gillette, 406 F. Supp. at 716, United Statesv. Alcan Aluminum, Ltd., 605 F. Supp. 619, 622(W.D. Ky. 1985).

Judgment ‘‘is in the public interest.’’ Inmaking that determination, the courtmay consider:

(1) The competitive impact of suchjudgment, including termination of allegedviolations, provisions for enforcement andmodification, duration or relief sought,anticipated effects of alternative remediesactually considered, and any otherconsiderations bearing upon the adequacy ofsuch judgment.

(2) The impact of entry of such judgmentupon the public generally and individualsalleging specific injury from the violationsset forth in the complaint includingconsideration of the public benefit, if any, tobe derived from a determination of the issuesat trial.

15 U.S.C. 16(e). As the Court of Appealsfor the District of Columbia Circuitrecently held, the APPA permits a courtto consider, among other things, therelationship between the remedysecured and the specific allegations setforth in the government’s complaint,whether the decree is sufficiently clear,whether enforcement mechanisms aresufficient, and whether the decree maypositively harm third parties. SeeUnited States v. Microsoft. 56 F.3d 1448(D.C. Cir. 1995).

In conducting this inquiry, ‘‘the Courtis nowhere compelled to go to trial orto engage in extended proceedingswhich might have the effect of vitiatingthe benefits of prompt and less costlysettlement through the consent decree

process.’’ 1 Rather, absent a showing ofcorrupt failure of the government todischarge its duty, the Court, in makingits public interest finding, should * * *carefully consider the explanations ofthe government in the competitiveimpact statement and its responses tocomments in order to determinewhether those explanations arereasonable under the circumstances.United States v. Mid-AmericaDairymen, Inc., 1977–1 Trade Case.¶ 61,508, at 71,980 (W.D. Mo. 1977).

Accordingly, with respect to theadequacy of the relief secured by thedecree, a court may not ‘‘engage in anunrestricted evaluation of what reliefwould best serve the public.’’ UnitedStates v. BNS, Inc., 858 F.2d 456, 462(9th Cir. 1988), quoting United States v.Bechtel Corp., 648 F.2d 660, 666 (9thCir. 1981), see also, Microsoft, 56 F.3d1448 (D.C. Cir. 1995). Precedent requiresthat

[t]he balancing of competing social andpolitical interests affected by a proposedantitrust consent decree must be left, in thefirst instance, to the discretion of theAttorney General. The court’s role inprotecting the public interest is one ofinsuring that the government has notbreached its duty to the public in consentingto the decree. The court is required todetermine not whether a particular decree isthe one that will best serve society, butwhether the settlement is ‘within the reachesof the public interest.’ More elaborate

requirements might undermine theeffectiveness of antitrust enforcement byconsent decree.2

The proposed Final Judgment,therefore, should not be reviewed undera standard of whether it is certain toeliminate every anticompetitive effect ofa particular practice or whether itmandates certainty of free competitionin the future. Court approval of a finaljudgment requires a standard moreflexible and less strict than the standardrequired for a finding of liability. ‘‘[A]proposed decree must be approved evenif it falls short of the remedy the courtwould impose on its own, as long as itfalls within the range of acceptability oris ‘within the reaches of public interest.’(citations omitted.’’ 3



For Plaintiff United States of America.Dated: November 10, 1998.

Respectfully submitted,Jill A. Ptacek,J. Richard Doidge,Attorneys, U.S. Department of Justice,Antitrust Division, Transportation, Energy,and Agriculture Section, 325 7th Street, Suite500, Washington, D.C. 20530, (202) 307–6351.

APPENDIX A[Bids for Baton Rouge-F, Biloxi-F, and Indianapolis-F in rounds 120 through 125]

Round Baton Rouge-F(BTA #032)

Biloxi-F(BTA #042)

Indianapolis-F(BTA #204)

119 ................................................ [Standing high bidder as of round69—Mercury].

[Standing high bidder as of round96—Mercury].

[Standing high bidder as of round85—21st Century].

120 ................................................ ....................................................... ....................................................... Mercury 2,582,000.121 ................................................ ....................................................... ....................................................... 21st Cent. 2,850,021.122 ................................................ ....................................................... ....................................................... Mercury 3,135,123.123 ................................................ 21st Cent. 3,990,204 .................. 21st Cent. 1,650,204 ..................124 ................................................ Mercury 4,389,204 ...................... Mercury 1,815,204 .....................125 ................................................ ....................................................... ....................................................... 21st Cent. 3,300,545.126 and thereafter ........................ No further bids .............................. No further bids .............................. No further bids.


[FR Doc. 98–31431 Filed 11–24–98; 8:45 am]



Antitrust Division

International Competition PolicyAdvisory Committee (ICPAC); Notice ofMeeting

The International Competition PolicyAdvisory Committee (the ‘‘AdvisoryCommittee’’) will hold its third meetingon December 16, 1998. The AdvisoryCommittee was established by theDepartment of Justice to provide adviceregarding issues relating to internationalcompetition policy; specifically, howbest to cooperate with foreignauthorities to eliminate internationalanticompetitive cartel agreements, howbest to coordinate United States’ andforeign antitrust enforcement efforts inthe review of multijurisdictionalmergers, and how best to address issuesthat interface international trade andcompetition policy concerns. Themeeting will be held at The CarnegieEndowment for International Peace,Root Conference Room, 1779Massachusetts Avenue, N.W.,Washington, D.C. 20036 and will beginat 10:00 a.m. EST and end atapproximately 4:00 p.m. The agenda forthe meeting will be as follows:

1. Enforcement Cooperation2. Multijurisdictional Merger Review3. Trade and Competition Policy

Interface Issues4. Work Program: Next Steps

Attendance is open to the interestedpublic, limited by the availability ofspace. Persons needing specialassistance, such as sign languageinterpretation or other specialaccommodations, should notify thecontact person listed below as soon aspossible. Members of the public maysubmit written statements by mail,electronic mail, or facsimile at any timebefore or after the meeting to the contactperson listed below for consideration bythe Advisory Committee. All writtensubmissions will be included in thepublic record of the AdvisoryCommittee. Oral statements from thepublic will not be solicited or acceptedat this meeting. For further informationcontact: Merit Janow, c/o Eric J. Weiner,U.S. Department of Justice, AntitrustDivision, 601 D Street, N.W., Room10011, Washington, D.C. 20530,Telephone: (202) 616–2578, Facsimile:

(202) 514–4508, Electronic mail:[email protected] E. Janow,Executive Director, International CompetitionPolicy Advisory Committee.[FR Doc. 98–31504 Filed 11–24–98; 8:45 am]BILLING CODE 4410–11–U

DEPARTMENT OF LABOR

Pension and Welfare BenefitsAdministration

[Prohibited Transaction Exemption 98–55;Exemption Application No. D–10379, et al.]

Grant of Individual Exemptions; JohnTaylor Fertilizers Company

AGENCY: Pension and Welfare BenefitsAdministration, Labor.

ACTION: Grant of individual exemptions.

SUMMARY: This document containsexemptions issued by the Department ofLabor (the Department) from certain ofthe prohibited transaction restrictions ofthe Employee Retirement IncomeSecurity Act of 1974 (the Act) and/orthe Internal Revenue Code of 1986 (theCode).

Notices were published in the FederalRegister of the pendency before theDepartment of proposals to grant suchexemptions. The notices set forth asummary of facts and representationscontained in each application forexemption and referred interestedpersons to the respective applicationsfor a complete statement of the facts andrepresentations. The applications havebeen available for public inspection atthe Department in Washington, D.C. Thenotices also invited interested personsto submit comments on the requestedexemptions to the Department. Inaddition the notices stated that anyinterested person might submit awritten request that a public hearing beheld (where appropriate). Theapplicants have represented that theyhave complied with the requirements ofthe notification to interested persons.No public comments and no requests fora hearing, unless otherwise stated, werereceived by the Department.

The notices of proposed exemptionwere issued and the exemptions arebeing granted solely by the Departmentbecause, effective December 31, 1978,section 102 of Reorganization Plan No.4 of 1978 (43 FR 47713, October 17,1978) transferred the authority of theSecretary of the Treasury to issueexemptions of the type proposed to theSecretary of Labor.

Statutory Findings

In accordance with section 408(a) ofthe Act and/or section 4975(c)(2) of theCode and the procedures set forth in 29CFR Part 2570, Subpart B (55 FR 32836,32847, August 10, 1990) and based uponthe entire record, the Department makesthe following findings:

(a) The exemptions are administrativelyfeasible;

(b) They are in the interests of the plansand their participants and beneficiaries; and

(c) They are protective of the rights of theparticipants and beneficiaries of the plans.

John Taylor Fertilizers Company, ProfitSharing Plan (the Plan), Sacramento,California

[Prohibited Transaction Exemption 98–55;Exemption Application No. D–10379]

Exemption

The restrictions of sections 406(a),406(b)(1), and 406(b)(2) of the Act andthe sanctions resulting from theapplication of section 4975 of the Code,by reason of section 4975(c)(1)(A)through (E) of the Code, shall not applyto the proposed sale by the Plan of anundivided 16.28% interest (LeaseholdInterest) in a certain leasehold of aprofessional office complex located inSacramento, California, to John TaylorFertilizers Company, a party in interestwith respect to the Plan, provided thatthe following conditions are satisfied:

(A) All terms of the transaction are atleast as favorable to the Plan as thosewhich the Plan could obtain in anarm’s-length transaction with anunrelated party;

(B) The sale is a one-time transactionfor cash;

(C) The Plan pays no commissions orother expenses relating to the sale;

(D) The purchase price is the greaterof: (1) the fair market value of theLeasehold Interest as determined by aqualified, independent appraiser, or (2)the original acquisition cost, plus allcosts attributable to holding theLeasehold Interest through the date ofthe sale; and

(E) The Plan receives rental incomedue and owing to the Plan through thedate of the sale.

For a more complete statement of thefacts and representations supporting theDepartment’s decision to grant thisexemption, refer to the Notice ofProposed Exemption published onSeptember 16, 1998 at 63 FR 49612.

FOR FURTHER INFORMATION CONTACT:Janet L. Schmidt of the Department,telephone (202) 219–8883 (This is not atoll-free number.)


1 Section I.A. provides no relief from sections406(a)(1)(E), 406(a)(2) and 407 for any personrendering investment advice to an Excluded Planwithin the meaning of section 3(21)(A)(ii) andregulation 29 CFR 2510.3–21(c).

2 For purposes of this exemption, each planparticipating in a commingled fund (such as a bankcollective trust fund or insurance company pooledseparate account) shall be considered to own thesame proportionate undivided interest in each assetof the commingled fund as its proportionate interestin the total assets of the commingled fund ascalculated on the most recent preceding valuationdate of the fund.

3 In the case of a private placement memorandum,such memorandum must contain substantially thesame information that would be disclosed in aprospectus if the offering of the certificates weremade in a registered public offering under theSecurities Act of 1933. In the Department’s view,the private placement memorandum must containsufficient information to permit plan fiduciaries tomake informed investment decisions.

Toyota Motor Credit Corporation(TMCC) and certain of its Affiliates,Located in Torrance, California

[Prohibited Transaction Exemption No. 98–56; Application No. D–10438]

Exemption

Section I—Transactions

A. The restrictions of sections 406(a)and 407(a) of the Act and the taxesimposed by section 4975(a) and (b) ofthe Code, by reason of section4975(c)(1)(A) through (D) of the Code,shall not apply, as of September 1, 1997,to the following transactions involvingtrusts and certificates evidencinginterests therein:

(1) The direct or indirect sale,exchange or transfer of certificates in theinitial issuance of certificates betweenthe sponsor or underwriter and anemployee benefit plan when thesponsor, servicer, trustee or insurer of atrust, the underwriter of the certificatesrepresenting an interest in the trust, oran obligor is a party in interest withrespect to such plan;

(2) The direct or indirect acquisitionor disposition of certificates by a plan inthe secondary market for suchcertificates; and

(3) The continued holding ofcertificates acquired by a plan pursuantto Section I.A.(1) or (2).

Notwithstanding the foregoing,Section I.A. does not provide anexemption from the restrictions ofsections 406(a)(1)(E), 406(a)(2) and 407for the acquisition or holding of acertificate on behalf of an ExcludedPlan, as defined in Section III.K. below,by any person who has discretionaryauthority or renders investment advicewith respect to the assets of thatExcluded Plan.1

B. The restrictions of sections406(b)(1) and 406(b)(2) of the Act andthe taxes imposed by section 4975(a)and (b) of the Code, by reason of section4975(c)(1)(E) of the Code, shall notapply, as of September 1, 1997, to:

(1) The direct or indirect sale,exchange or transfer of certificates in theinitial issuance of certificates betweenthe sponsor or underwriter and a planwhen the person who has discretionaryauthority or renders investment advicewith respect to the investment of planassets in the certificates is (a) an obligorwith respect to 5 percent or less of thefair market value of obligations orreceivables contained in the trust, or (b)

an affiliate of a person described in (a);if

(i) The plan is not an Excluded Plan;(ii) Solely in the case of an acquisition

of certificates in connection with theinitial issuance of the certificates, atleast 50 percent of each class ofcertificates in which plans haveinvested is acquired by personsindependent of the members of theRestricted Group, as defined in SectionIII.L., and at least 50 percent of theaggregate interest in the trust is acquiredby persons independent of theRestricted Group;

(iii) A plan’s investment in each classof certificates does not exceed 25percent of all of the certificates of thatclass outstanding at the time of theacquisition; and

(iv) Immediately after the acquisitionof the certificates, no more than 25percent of the assets of a plan withrespect to which the person hasdiscretionary authority or rendersinvestment advice are invested incertificates representing an interest in atrust containing assets sold or servicedby the same entity.2 For purposes of thisparagraph B.(1)(iv) only, an entity shallnot be considered to service assetscontained in a trust if it is merely asubservicer of that trust;

(2) The direct or indirect acquisitionor disposition of certificates by a plan inthe secondary market for suchcertificates, provided that conditions setforth in paragraphs B.(1)(i), (iii), and (iv)are met; and

(3) The continued holding ofcertificates acquired by a plan pursuantto Section I.B.(1) or (2).

C. The restrictions of sections 406(a),(b) and 407(a) of the Act and the taxesimposed by section 4975(a) and (b) ofthe Code, by reason of section 4975(c)of the Code, shall not apply, as ofSeptember 1, 1997, to transactions inconnection with the servicing,management and operation of a trust,provided;

(1) Such transactions are carried outin accordance with the terms of abinding Pooling and ServicingAgreement; and

(2) The Pooling and ServicingAgreement is provided to, or describedin all material respects in the prospectusor private placement memorandumprovided to, investing plans before they

purchase certificates issued by thetrust.3

Notwithstanding the foregoing,Section I.C. does not provide anexemption from the restrictions ofsection 406(b) of the Act, or from thetaxes imposed by reason of section4975(c) of the Code, for the receipt of afee by the servicer of the trust from aperson other than the trustee or sponsor,unless such fee constitutes a ‘‘qualifiedadministrative fee’’ as defined inSection III.S. below.

D. The restrictions of sections 406(a)and 407(a) of the Act and the taxesimposed by sections 4975(a) and (b) ofthe Code, by reason of sections4975(c)(1)(A) through (D) of the Code,shall not apply, as of September 1, 1997,to any transaction to which thoserestrictions or taxes would otherwiseapply merely because a person isdeemed to be a party in interest ordisqualified person (including afiduciary) with respect to a plan byvirtue of providing services to the plan(or by virtue of having a relationship tosuch service provider as described insection 3(14)(F), (G), (H) or (I) of the Actor section 4975(e)(2)(F), (G), (H) or (I) ofthe Code), solely because of the plan’sownership of certificates.

Section II—General Conditions

A. The relief provided under SectionI is available only if the followingconditions are met:

(1) The acquisition of certificates by aplan is on terms (including thecertificate price) that are at least asfavorable to the plan as such termswould be in an arm’s-length transactionwith an unrelated party;

(2) The rights and interests evidencedby the certificates are not subordinatedto the rights and interests evidenced byother certificates of the same trust;

(3) The certificates acquired by theplan have received a rating at the timeof such acquisition that is in one of thethree highest generic rating categoriesfrom either Standard & Poor’s RatingsServices, Moody’s Investor Service, Inc.,Duff & Phelps, Inc., or Fitch IBCA, Inc.,or their successors (collectively, theRating Agencies);

(4) The trustee is not an affiliate ofany other member of the RestrictedGroup. However, the trustee shall not beconsidered to be an affiliate of a servicer


solely because the trustee has succeededto the rights and responsibilities of theservicer pursuant to the terms of thePooling and Servicing Agreementproviding for such succession upon theoccurrence of one or more events ofdefault by the servicer;

(5) The sum of all payments made toand retained by the underwriters inconnection with the distribution orplacement of certificates represents notmore than reasonable compensation forunderwriting or placing the certificates;the sum of all payments made to orretained by the sponsor pursuant to theassignment of obligations (or interesttherein) to the trust represents not morethan the fair market value of suchobligation (or interest); and the sum ofall payments made to and retained bythe servicer represents not more thanreasonable compensation for theservicer’s services under the Poolingand Servicing Agreement andreimbursement of the servicer’sreasonable expenses in connectiontherewith;

(6) The plan investing in suchcertificates is an ‘‘accredited investor’’as defined in Rule 501(a)(1) ofRegulation D of the Securities andExchange Commission under theSecurities Act of 1933;

(7) To the extent that the pool ofleases used to create a portfolio for atrust is not closed on the date of theissuance of certificates by the trust,additional leases may be added duringa period of no more than 15 consecutivemonths from the closing date used forthe initial allocation of leases that wasmade to create such portfolio, providedthat:

(a) All such additional leases meet thesame terms and conditions for eligibilityas the original leases used to create theportfolio (as described in the prospectusor private placement memorandum forsuch certificates), which terms andconditions have been approved by theRating Agencies. Notwithstanding theforegoing, the terms and conditions foran ‘‘eligible lease’’ (as defined inSection III.X below) may be changed ifsuch changes receive prior approvaleither by a majority vote of theoutstanding certificateholders or by theRating Agencies; and

(b) Such additional leases do notresult in the certificates receiving alower credit rating from the RatingAgencies, upon termination of theperiod during which additional leasesmay be added to the portfolio, than therating that was obtained at the time ofthe initial issuance of the certificates bythe trust;

(8) Any additional period described inSection II.A.(7) must be described in the

prospectus or private placementmemorandum provided to investingplans;

(9) The average annual percentagelease rate (the Average Lease Rate) forthe pool of leases in the portfolio for thetrust, after the additional perioddescribed in Section II.A.(7), shall notbe more than 200 basis points greaterthan the Average Lease Rate for theoriginal pool of leases that was used tocreate such portfolio for the trust;

(10) For the duration of the additionalperiod described in Section II.A.(7),principal collections that are reinvestedin additional leases are first reinvestedin the ‘‘eligible lease contract’’ (asdefined in Section III.X. below) with theearliest origination date, then in the‘‘eligible lease contract’’ with the nextearliest origination date, and so forth,beginning with any lease contracts thathave been reserved specifically for suchpurposes at the time of the initialallocation of leases to the pool of leasesused to create the particular portfolio,but excluding those specific leasecontracts reserved for allocation to orallocated to other pools of leases usedto create other portfolios;

(11) The trustee of the trust (or theagent with which the trustee contractsto provide trust services) is a substantialfinancial institution or trust companyexperienced in trust activities and isfamiliar with its duties, responsibilities,and liabilities as a fiduciary under theAct. The trustee, as the legal owner ofthe obligations in the trust, enforces allthe rights created in favor ofcertificateholders of such trust,including employee benefit planssubject to the Act;

(12) The Pooling and ServicingAgreement and other governingdocuments require that funds collectedby the servicer with respect to trustassets be deposited on a monthly basisin a trust account, even thoughdistributions on the certificates may bescheduled to be made less frequentlythan monthly, and invested in certainhighly rated debt instruments known as‘‘permitted investments’’; and

(13) The Pooling and ServicingAgreement expressly provides thatfunds collected by the servicer withrespect to trust assets are required to bedeposited in a trust account within twobusiness days after such collection, ifTMCC’s short-term unsecured debt is nolonger rated P–1 by Moody’s InvestorsService and A–1 by Standard & Poor’sRatings Services (or successors thereto),unless such Rating Agencies accept analternative arrangement.

B. Neither any underwriter, sponsor,trustee, servicer, insurer, or any obligor,unless it or any of its affiliates has

discretionary authority or rendersinvestment advice with respect to theplan assets used by a plan to acquirecertificates, shall be denied the reliefprovided under Section I, if theprovision in Section II.A.(6) above is notsatisfied for the acquisition or holdingby a plan of such certificates, providedthat (1) such condition is disclosed inthe prospectus or private placementmemorandum; and (2) in the case of aprivate placement of certificates, thetrustee obtains a representation fromeach initial purchaser which is a planthat it is in compliance with suchcondition, and obtains a covenant fromeach initial purchaser to the effect that,so long as such initial purchaser (or anytransferee of such initial purchaser’scertificates) is required to obtain fromits transferee a representation regardingcompliance with the Securities Act of1933, any such transferees shall berequired to make a writtenrepresentation regarding compliancewith the condition set forth in SectionII.A.(6).

C. Toyota Motor Credit Corporation(TMCC) and its Affiliates abide by allsecurities and other laws applicable toany offering of interests in securitizedassets, such as certificates in a trust asdescribed herein, including those lawsrelating to disclosure of materiallitigation, investigations and contingentliabilities.

Section III—Definitions

For purposes of this exemption:A. ‘‘Certificate’’ means:(1) A certificate.(a) That represents a beneficial

ownership interest in the assets of atrust; and

(b) That entitles the holder to pass-through payments of principal (exceptduring the period described in SectionII.A.(7), if any), interest, and/or otherpayments made in connection with theassets of such trust; or

(2) A certificate denominated as adebt instrument that is issued by and isan obligation of a trust;

With respect to certificates defined inSection III.A.(1) and (2) above, theunderwriter shall be an entity which hasreceived from the Department anindividual prohibited transactionexemption relating to certificates whichis substantially similar to thisexemption (as noted below in SectionIII.C.) and shall be either (i) the soleunderwriter or the manager or co-manager of the underwriting syndicate,or (ii) a selling or placement agent.

For purposes of this exemption,references to ‘‘certificates representingan interest in a trust’’ include


4 It is the Department’s view that the definitionof ‘‘Trust’’ contained in Section III.B. includes atwo-tier trust structure under which certificatesissued by the first trust, which contains a pool ofreceivables described above, are transferred to asecond trust which issues certificates that are soldto plans. However, the Department is of the furtherview that, since the exemption provides relief forthe direct or indirect acquisition or disposition ofcertificates that are not subordinated, no reliefwould be available if the certificates held by thesecond trust were subordinated to the rights andinterests evidenced by other certificates issued bythe first trust.

5 For a listing of the Underwriter Exemptions, seethe description provided in the text of the operativelanguage of Prohibited Transaction Exemption(PTE) 97–34 (62 FR 39021, July 21, 1997).

certificates denominated as debt whichare issued by a trust.

B. ‘‘Trust’’ means an investment pool,the corpus of which is held in trust andconsists solely of:

(1) Either(a) Qualified motor vehicle leases (as

defined in Section III.T.); or(b) Fractional undivided interests in a

trust containing assets described inparagraph (a) of this Section III.B.(1),where such fractional interest is notsubordinated to any other interest in thesame pool of qualified motor vehicleleases held by such trust; 4

(2) Property which has secured any ofthe obligations described in SectionIII.B.(1);

(3) Undistributed cash or temporaryinvestments made therewith maturingno later than the next date on whichdistributions are to be made tocertificateholders, except during theperiod described in Section II.A.(7)above when temporary investments aremade until such cash can be reinvestedin additional leases described inparagraph (a) of this Section III.B.(1);and

(4) Rights of the trustee under thePooling and Servicing Agreement, andrights under motor vehicle dealeragreements, any insurance policies,third-party guarantees, contracts ofsuretyship and other credit supportarrangements for any obligationsdescribed in Section III.B.(1).

Notwithstanding the foregoing, theterm ‘‘trust’’ does not include anyinvestment pool unless: (i) theinvestment pool consists only of assetsof the type which have been included inother investment pools, (ii) certificatesevidencing interests in such otherinvestment pools have been rated in oneof the three highest categories by theRating Agencies for at least one yearprior to the plan’s acquisition ofcertificates pursuant to this exemption,and (iii) certificates evidencing interestsin such other investment pools havebeen purchased by investors other thanplans for at least one year prior to theplan’s acquisition of certificatespursuant to this exemption.

C. ‘‘Underwriter’’ means anyinvestment banking firm that has

received an individual prohibitedtransaction exemption from theDepartment that provides relief for so-called ‘‘asset-backed’’ securities that issubstantially similar in format andstructure to this exemption (theUnderwriter Exemptions); 5 or anyperson directly or indirectly, throughone or more intermediaries, controlling,controlled by or under common controlwith such investment banking firm; andany member of an underwritingsyndicate or selling group of which suchfirm or person described above is amanager or co-manager with respect tothe certificates.

D. ‘‘Sponsor’’ means an entityaffiliated with Toyota MotorCorporation that organizes a trust bydepositing obligations therein inexchange for certificates.

E. ‘‘Master Servicer’’ means TMCC oran entity affiliated with TMCC that is aparty to the Pooling and ServicingAgreement relating to trust assets and isfully responsible for servicing, directlyor through subservicers, the assets of thetrust.

F. ‘‘Subservicer’’ means TMCC or anentity affiliated with TMCC which,under the supervision of and on behalfof the master servicer, services leasescontained in the trust, but is not a partyto the Pooling and Servicing Agreement.

G. ‘‘Servicer’’ means TMCC or anentity affiliated with TMCC whichservices leases contained in the trust,including the master servicer and anysubservicer.

H. ‘‘Trustee’’ means an entity that isindependent of TMCC and its Affiliateswhich is the trustee of the trust. In thecase of certificates which aredenominated as debt instruments,‘‘trustee’’ also means the trustee of theindenture trust.

I. ‘‘Insurer’’ means the insurer orguarantor of, or provider of other creditsupport for, a trust. Notwithstanding theforegoing, a person is not an insurersolely because it holds securitiesrepresenting an interest in a trust whichare of a class subordinated to certificatesrepresenting an interest in the sametrust. In addition, a person is not aninsurer if such person merely provides:(1) property damage or liabilityinsurance to an Obligor with respect toa lease or leased vehicle; or (2) propertydamage, excess liability or contingentliability insurance to any lessor, sponsoror servicer, if such entities are includedin the same insurance policy, withrespect to a lease or leased vehicle.

J. ‘‘Obligor’’ means any person, otherthan the insurer, that is obligated tomake payments for a lease in the trust.

K. ‘‘Excluded Plan’’ means any planwith respect to which any member ofthe Restricted Group is a ‘‘plan sponsor’’within the meaning of section 3(16)(B)of the Act.

L. ‘‘Restricted Group’’ with respect toa class of certificates means:

(1) Each Underwriter;(2) Each Insurer;(3) The Sponsor;(4) The Trustee;(5) Each Servicer;(6) Any Obligor with respect to

obligations or receivables included inthe trust constituting more than 5percent of the aggregate unamortizedprincipal balance of the assets in thetrust, determined on the date of theinitial issuance of certificates by thetrust and at the end of the perioddescribed in Section II.A.(7); or

(7) Any Affiliate of a person describedin (1)–(6) above.

M. ‘‘Affiliate’’ of another personincludes:

(1) Any person, directly or indirectly,through one or more intermediaries,controlling, controlled by or undercommon control with such otherperson;

(2) Any officer, director, partner,employee, relative (as defined in section3(15) of the Act), a brother, a sister, ora spouse of a brother or sister of suchother person; and

(3) Any corporation or partnership ofwhich such other person is an officer,director or partner.

N. ‘‘Control’’ means the power toexercise a controlling influence over themanagement or policies of a personother than an individual.

O. A person shall be ‘‘independent’’of another person only if:

(1) Such person is not an Affiliate ofthat other person; and

(2) The other person, or an Affiliatethereof, is not a fiduciary who hasinvestment management authority orrenders investment advice with respectto assets of such person.

P. ‘‘Sale’’ includes the entrance into aforward delivery commitment (asdefined in Section III.Q. below),provided:

(1) The terms of the forward deliverycommitment (including any fee paid tothe investing plan) are no less favorableto the plan than they would be in anarm’s-length transaction with anunrelated party;

(2) The prospectus or privateplacement memorandum is provided toan investing plan prior to the time theplan enters into the forward deliverycommitment; and


(3) At the time of the delivery, allconditions of this exemption applicableto sales are met.

Q. ‘‘Forward Delivery Commitment’’means a contract for the purchase orsale of one or more certificates to bedelivered at an agreed future settlementdate. The term includes both mandatorycontracts (which contemplate obligatorydelivery and acceptance of thecertificates) and optional contracts(which give one party the right but notthe obligation to deliver certificates to,or demand delivery of certificates from,the other party).

R. ‘‘Reasonable Compensation’’ hasthe same meaning as that term isdefined in 29 CFR 2550.408c–2.

S. ‘‘Qualified Administrative Fee’’means a fee which meets the followingcriteria:

(1) The fee is triggered by an act orfailure to act by the obligor other thanthe normal timely payment of amountsowing for the obligations;

(2) The servicer may not charge thefee absent the act or failure to actreferred to in (1);

(3) The ability to charge the fee, thecircumstances in which the fee may becharged, and an explanation of how thefee is calculated are set forth in thePooling and Servicing Agreement; and

(4) The amount paid to investors inthe trust shall not be reduced by theamount of any such fee waived by theservicer.

T. ‘‘Qualified Motor Vehicle Lease’’means a lease of a motor vehicle where:

(1) The trust owns or holds a securityinterest in the lease;

(2) The trust owns or holds a securityinterest in the leased motor vehicle; and

(3) The trust’s interest in the leasedmotor vehicle is at least as protective ofthe trust’s rights as the trust wouldreceive under a motor vehicleinstallment loan contract.

U. ‘‘Pooling and ServicingAgreement’’ means, collectively, (i) thesecuritization trust agreement between asponsor and the trustee establishing atrust, (ii) the trust and servicingagreement relating to an originationtrust and the servicing supplementthereto, and (iii) the supplementalagreement establishing a beneficialinterest in certain specified originationtrust assets (referred to herein as a‘‘special unit of beneficial interest’’ or‘‘SUBI’’). In the case of certificateswhich are denominated as debtinstruments, ‘‘Pooling and ServicingAgreement’’ also includes the indentureentered into by the trustee of the trustissuing such certificates and theindenture trustee.

V. ‘‘Lease Rate’’ means an implicitrate in each lease calculated as an

annual percentage rate on a constantyield basis, based on the capitalized costof the leased vehicle as determinedunder the particular lease contract forthe vehicle. With respect to thedetermination of a ‘‘Lease Rate’’, eachlease will provide for equal monthlypayments such that at the end of thelease contract term the capitalized costwill have been amortized to an amountequal to the residual value of the leasedvehicle established at the time oforigination of such contract. Theamount to which the capitalized costhas been amortized at any point in timewill be the outstanding principalbalance for the lease.

W. ‘‘Average Lease Rate’’ means theaverage annual percentage lease rate, asdefined in Section III.V. above, for allleases included at any particular time ina portfolio used to create a trust fromwhich certificates are issued.

X. ‘‘Eligible Lease’’ or ‘‘Eligible LeaseContract’’ means a Qualified MotorVehicle Lease, as defined in SectionIII.T. above, which meets the eligibilitycriteria established for, among otherthings, the term of the lease, place oforigination, date of origination, andprovisions for default, as described inthe particular prospectus or privateplacement memorandum for thecertificates provided to investors, ifsuch terms and conditions have beenapproved by the Rating Agencies priorto the issuance of such certificates.

Y. ‘‘Permitted Investments’’ meansinvestments which: (i) are directobligations of, or obligations fullyguaranteed as to timely payment ofprincipal and interest by, the UnitedStates or any agency or instrumentalitythereof, provided that such obligationsare backed by the full faith and creditof the United States; or (ii) have beenrated (or the obligor has been rated) inone of the three highest generic ratingcategories by a Rating Agency; or (iii)consist of interests in money marketmutual funds that are registeredinvestment companies under theInvestment Company Act of 1940,which are managed by partiesindependent of the Sponsor or Servicer,and which invest in securities describedin item (i) above or highly rated short-term securities of the type described initem (ii) above, or which are ofcomparable credit quality to securitieshaving such ratings; are described in thepooling and servicing agreement; andare permitted by the Rating Agency.

The Department notes that thisexemption is included within themeaning of the term ‘‘UnderwriterExemption’’ as it is defined in SectionV(h) of the Grant of the Class Exemptionfor Certain Transactions Involving

Insurance Company General Accounts,which was published in the FederalRegister on July 12, 1995 (see PTE 95–60, 60 FR 35925).EFFECTIVE DATE: This exemption iseffective for all transactions describedherein occurring on or after September1, 1997.

For a more complete statement of thefacts and representations supporting theDepartment’s decision to grant thisexemption refer to the notice ofproposed exemption published on July8, 1998, at 63 FR 36946.WRITTEN COMMENTS: The applicant (i.e.,TMCC) submitted a written comment onthe notice of proposed exemption (theNotice) relating to the proposeddefinition of ‘‘Permitted Investments’’contained in Section III.Y.

‘‘Permitted Investments’’ weredefined in the Notice as follows:

* * * investments which (i) are directobligations of, or obligations fully guaranteedas to timely payment of principal and interestby, the United States or any agency orinstrumentality thereof, provided that suchobligations are backed by the full faith andcredit of the United States, or (ii) have beenrated (or the obligor has been rated) in oneof the three highest generic rating categoriesby a Rating Agency; are described in thepooling and servicing agreement; and arepermitted by the Rating Agency.

TMCC’s comment states that thisdefinition requires that thesecuritization trust invest directly in thedescribed investments and not througha mutual fund. TMCC states that itprefers to make such investmentsthrough a money market mutual funddesigned for institutional investors.TMCC currently uses a mutual fund(Fund) managed by Federated Investorswhich is called the Prime ObligationsFund. The Fund invests in high qualitymoney market instruments that have anaverage maturity of 90 days or less andare either rated in the highest short-termrating category by one or more of theRating Agencies or are of comparablequality to securities having such ratings.

TMCC believes that a mutual fundinvesting in short-term high qualitymoney market investments should bespecifically included as a ‘‘permittedinvestment’’ for purposes of theexemption. Therefore, TMCC requeststhat the definition in Section III.Y. ofthe Notice be revised as follows:

‘‘Permitted Investments’’ meansinvestments which: (i) are direct obligationsof, or obligations fully guaranteed as totimely payment of principal and interest by,the United States or any agency orinstrumentality thereof, provided that suchobligations are backed by the full faith andcredit of the United States; or (ii) have beenrated (or the obligor has been rated) in one


of the three highest generic rating categoriesby a Rating Agency; or (iii) consist of interestsin money market mutual funds which areregistered investment companies under theInvestment Company Act of 1940, which aremanaged by parties independent of theSponsor or Servicer, and which invest insecurities described in item (i) above orhighly rated short-term securities of the typedescribed in item (ii) above, or which are ofcomparable credit quality to securitieshaving such ratings; are described in thepooling and servicing agreement; and arepermitted by the Rating Agency. [emphasisadded]

The Department agrees with theproposed revision of the definition andhas so revised the language of SectionIII.Y. of the exemption.

The Department received no otherwritten comments, nor any requests fora hearing.

Accordingly, the Department hasdetermined to grant the exemption asmodified.FOR FURTHER INFORMATION CONTACT: Mr.E.F. Williams of the Department,telephone (202) 219–8194. (This is nota toll-free number.)

General InformationThe attention of interested persons is

directed to the following:(1) The fact that a transaction is the

subject of an exemption under section408(a) of the Act and/or section4975(c)(2) of the Code does not relievea fiduciary or other party in interest ordisqualified person from certain otherprovisions to which the exemptionsdoes not apply and the general fiduciaryresponsibility provisions of section 404of the Act, which among other thingsrequire a fiduciary to discharge hisduties respecting the plan solely in theinterest of the participants andbeneficiaries of the plan and in aprudent fashion in accordance withsection 404(a)(1)(B) of the Act; nor doesit affect the requirement of section401(a) of the Code that the plan mustoperate for the exclusive benefit of theemployees of the employer maintainingthe plan and their beneficiaries;

(2) These exemptions aresupplemental to and not in derogationof, any other provisions of the Act and/or the Code, including statutory oradministrative exemptions andtransactional rules. Furthermore, thefact that a transaction is subject to anadministrative or statutory exemption isnot dispositive of whether thetransaction is in fact a prohibitedtransaction; and

(3) The availability of theseexemptions is subject to the expresscondition that the material facts andrepresentations contained in eachapplication accurately describes all

material terms of the transaction whichis the subject of the exemption.

Signed at Washington, D.C., this 20th dayof November, 1998.Ivan Strasfeld,Director of Exemption Determinations,Pension and Welfare Benefits Administration,U.S. Department of Labor.[FR Doc. 98–31510 Filed 11–24–98; 8:45 am]BILLING CODE 4510–29–P

DEPARTMENT OF LABOR


[Application No. D–10372, et al.]

Proposed Exemptions; KeystoneFinancial, Inc.

AGENCY: Pension and Welfare BenefitsAdministration, Labor.ACTION: Notice of Proposed Exemptions.

SUMMARY: This document containsnotices of pendency before theDepartment of Labor (the Department) ofproposed exemptions from certain of theprohibited transaction restrictions of theEmployee Retirement Income SecurityAct of 1974 (the Act) and/or the InternalRevenue Code of 1986 (the Code).

Written Comments and HearingRequests

All interested persons are invited tosubmit written comments or request fora hearing on the pending exemptions,unless otherwise stated in the Notice ofProposed Exemption, within 45 daysfrom the date of publication of thisFederal Register Notice. Comments andrequests for a hearing should state: (1)the name, address, and telephonenumber of the person making thecomment or request, and (2) the natureof the person’s interest in the exemptionand the manner in which the personwould be adversely affected by theexemption. A request for a hearing mustalso state the issues to be addressed andinclude a general description of theevidence to be presented at the hearing.ADDRESSES: All written comments andrequest for a hearing (at least threecopies) should be sent to the Pensionand Welfare Benefits Administration,Office of Exemption Determinations,Room N–5649, U.S. Department ofLabor, 200 Constitution Avenue, N.W.,Washington, D.C. 20210. Attention:Application No. llllll, stated ineach Notice of Proposed Exemption.The applications for exemption and thecomments received will be available forpublic inspection in the PublicDocuments Room of Pension andWelfare Benefits Administration, U.S.

Department of Labor, Room N–5507,200 Constitution Avenue, N.W.,Washington, D.C. 20210.

Notice to Interested PersonsNotice of the proposed exemptions

will be provided to all interestedpersons in the manner agreed upon bythe applicant and the Departmentwithin 15 days of the date of publicationin the Federal Register. Such noticeshall include a copy of the notice ofproposed exemption as published in theFederal Register and shall informinterested persons of their right tocomment and to request a hearing(where appropriate).SUPPLEMENTARY INFORMATION: Theproposed exemptions were requested inapplications filed pursuant to section408(a) of the Act and/or section4975(c)(2) of the Code, and inaccordance with procedures set forth in29 CFR Part 2570, Subpart B (55 FR32836, 32847, August 10, 1990).Effective December 31, 1978, section102 of Reorganization Plan No. 4 of1978 (43 FR 47713, October 17, 1978)transferred the authority of the Secretaryof the Treasury to issue exemptions ofthe type requested to the Secretary ofLabor. Therefore, these notices ofproposed exemption are issued solelyby the Department.

The applications containrepresentations with regard to theproposed exemptions which aresummarized below. Interested personsare referred to the applications on filewith the Department for a completestatement of the facts andrepresentations.

Keystone Financial, Inc., and Certain ofIts Affiliates (Keystone), Located inHarrisburg, Pennsylvania

[Application Nos. D–10372]

Proposed ExemptionThe Department is considering

granting an exemption under theauthority of section 408(a) of the Actand section 4975(c)(2) of the Code andin accordance with the procedures setforth in 29 CFR Part 2570, Subpart B (55FR 32836, 32847, August 10, 1990).

Section I—Proposed Exemption for In-Kind Transfers of CIF Assets

If the exemption is granted, therestrictions of section 406(a) and 406(b)of the Act and the sanctions resultingfrom the application of section 4975 ofthe Code, by reason of section4975(c)(1)(A) through (F) of the Code,shall not apply to the past in-kindtransfers of assets of various employeebenefit plans for which Keystone servedas a fiduciary (the Client Plans), that


1 In this regard, Keystone represents that anyfurther in-kind transfers of CIF assets to the Fundswill comply with the conditions of ProhibitedTransaction Exemption (PTE) 97–41 (62 FR 42830,August 8, 1997.) PTE 97–41 permits the purchaseby an employee benefit plan (i.e. a Client Plan) ofshares of one or more open-end managementinvestment companies (i.e mutual funds) registeredunder the ICA, in exchange for assets of the ClientPlan transferred in-kind to the mutual fund from acollective investment fund (i.e. a CIF) maintainedby a bank or a plan adviser, where the bank or planadviser is the investment adviser to the mutual fundand also a fiduciary to the Client Plan, if theconditions of the exemption are met. However, asnoted further below, Keystone distributed writtenconfirmation to the Client Plans regarding the in-kind transfer of CIF assets made to the Fundswithin 120 days, rather than within the 105-dayperiod required by Section I(g) of PTE 97–41. Thus,an individual exemption to cover these specific CIFconversions is necessary to provide the appropriateretroactive relief.

2 The National Association of Securities DealersAutomated Quotation Nation Market System.

3 See Footnote 1 above.

were held in certain collectiveinvestment funds (CIFs) maintained byKeystone, in exchange for shares of theKeyPremier Funds (the Funds), an open-ended investment company registeredunder the Investment Company Act of1940 (the ICA), for which Keystone is aninvestment adviser and may provideother services (i.e., Secondary Services,as defined below in Section II(h)),which occurred on December 2, 1996,February 3, 1997 and July 1, 1997,1provided that the following conditionswere met:

(a) A fiduciary (the Second Fiduciary)who was acting on behalf of eachaffected Client Plan and who wasindependent of and unrelated toKeystone, as defined in Section II(g)below, received advance written noticeof the in-kind transfer of assets of theCIFs in exchange for shares of the Fundand the disclosures described inparagraph (c) below.

(b) On the basis of the informationdescribed in paragraph (c) below, theSecond Fiduciary provided priorwritten authorization for the in-kindtransfer of the Client Plan’s CIF assets inexchange for shares of the Funds, theinvestment of such assets incorresponding portfolios of the Funds,and the fees to be received by Keystonein connection with its services to theFund. Such authorization by the SecondFiduciary must have been consistentwith the responsibilities, obligations,and duties imposed on fiduciaries byPart 4 of Title I of the Act.

(c) The Second Fiduciary who wasacting on behalf of a Client Planreceived in advance of the investmentby the Plan in any of the Funds, a fulland detailed written disclosure ofinformation concerning the Fundswhich included, but was not limited to:

(1) A current prospectus for eachportfolio of each of the Funds in which

such Client Plan was consideringinvesting;

(2) A statement describing the fees forinvestment management, investmentadvisory, or other similar services, andany fees for Secondary Services, asdefined in Section II(h) below,including the nature and extent of anydifferential between the rates of suchfees;

(3) The reasons why Keystoneconsidered such investments to beappropriate for the Client Plan; and

(4) A statement describing whetherthere were any limitations applicable toKeystone with respect to which assets ofthe Client Plan may be invested in theFunds, and, if so, the nature of suchlimitations.

(d) For each Client Plan, thecombined total of all fees received byKeystone for the provision of services tothe Client Plan, and in connection withthe provision of services to any of theFunds in which the Client Plansinvested, was not in excess of‘‘reasonable compensation’’ within themeaning of section 408(b)(2) of the Act.

(e) Neither Keystone nor an Affiliatereceived any fees payable pursuant toRule 12b–1 under the ICA (the 12b–1Fees) in connection with thetransactions.

(f) All dealings between the ClientPlans and any of the Funds were on abasis no less favorable to such Plansthan dealings between the Funds andother shareholders holding the sameclass of shares as the Client Plans.

(g) No sales commissions were paidby the Client Plans in connection withthe in-kind transfers of CIF assets inexchange for shares of the Funds.

(h) The transferred assets constitutedthe Client Plan’s pro rata portion of allassets that were held by the CIFimmediately prior to the transfer.

(i) Following the termination of eachCIF, each Client Plan received shares ofthe Funds that had a total net assetvalue equal to the Client Plan’s pro ratashare of the assets of the CIFs that wereexchanged for such Fund shares on thedate of transfer.

(j) With respect to each in-kindtransfer of CIF assets to a Fund, eachClient Plan received shares of the Fundwhich had a total net asset value thatwas equal to the value of the Plan’s prorata share of the assets of thecorresponding CIF on the date of thetransfer, based on the current marketvalue of the CIF’s assets, as determinedin a single valuation performed in thesame manner as of the close of the samebusiness day with respect to all suchPlans participating in the transaction onsuch day, using independent sources inaccordance with the procedures set

forth by the Securities and ExchangeCommission (SEC) Rule 17a–7(b) underthe ICA (Rule 17a–7) for the valuationof such assets. Such procedures musthave required that all securities forwhich a current market price was notobtained by reference to the last saleprice for transactions reported on arecognized securities exchange orNASDAQ 2 were to be valued based onan average of the highest currentindependent bid and lowest currentindependent offer, as of the close ofbusiness on the last business day priorto the in-kind transfers, determined onthe basis of reasonable inquiry from atleast three sources that are broker-dealers or pricing services independentof Keystone.

(k) Not later than thirty (30) days aftercompletion of each in-kind transfer ofCIF assets in exchange for shares of theFunds which occurred on December 2,1996, February 3, 1997, and July 1,1997, Keystone sent by regular mail tothe Second Fiduciary, a writtenconfirmation which contained:

(i) The identity of each of the assetsthat was valued for purposes of thetransaction in accordance with SECRule 17a–7(b)(4) under the ICA;

(ii) The price of each of the assetsinvolved in the transaction; and

(iii) The identity of each pricingservice or market maker consulted indetermining the value of such assets.

(l) For each in-kind transfer of CIFassets, Keystone sent by regular mail tothe Second Fiduciary, no later than one-hundred and twenty (120) days aftercompletion of the asset transfer made inexchange for shares of the Funds,3 awritten confirmation which contained:

(1) The number of CIF units held byeach affected Client Plan immediatelybefore the in-kind transfer, the relatedper unit value, and the aggregate dollarvalue of the units transferred; and

(2) The number of shares in the Fundsthat were held by each affected ClientPlan immediately following the in-kindtransfer, the related per share net assetvalue, and the aggregate dollar value ofthe shares received.

(m) Keystone maintains for a period ofsix (6) years the records necessary toenable the persons, as described inparagraph (n) below, to determinewhether the conditions of theexemption have been, except that:

(1) A prohibited transaction will notbe considered to have occurred if, dueto circumstances beyond the control ofKeystone, the records are lost or


destroyed prior to the end of the six (6)year period, and

(2) No party in interest, other thanKeystone, shall be subject to the civilpenalty that may be assessed undersection 502(i) of the Act, or to the taxesimposed by section 4975(a) and (b) ofthe Code, if the records are notmaintained, or are not available forexamination as required by paragraph(n) below.

(n)(1) Except as provided in paragraph(n)(2) and notwithstanding anyprovisions of Section 504(a)(2) and (b)of the Act, the records referred to inparagraph (n) above are unconditionallyavailable at their customary location forexamination during normal businesshours by—

(i) Any duly authorized employee orrepresentative of the Department or theInternal Revenue Service;

(ii) Any fiduciary of each of the ClientPlans who has authority to acquire ordispose of shares of any of the Fundsowned by such Plan, or any dulyauthorized employee or representativeof such fiduciary; and

(iii) Any participant or beneficiary ofthe Client Plans or duly authorizedemployee or representative of suchparticipant or beneficiary; and

(2) None of the persons described inparagraph (n)(1)(ii) and (iii) of thisSection I shall be authorized to examinetrade secrets of Keystone, or commercialor financial information which isprivileged or confidential.

Section II—Definitions

For purposes of this proposedexemption,

(a) The term ‘‘Keystone’’ meansKeystone Financial, Inc., and affiliates,as defined in Section II(b)(1).

(b) An ‘‘affiliate’’ of a person includes:(1) Any person directly or indirectly

through one or more intermediaries,controlling, controlled by, or undercommon control with the person;

(2) any officer, director, employee,relative, or partner in any such person;and

(3) Any corporation or partnership ofwhich such person is an officer,director, partner, or employee.

(c) The term ‘‘control’’ means thepower to exercise a controllinginfluence over the management orpolicies of a person other than anindividual.

(d) The term ‘‘Fund’’ or ‘‘Funds’’means the KeyPremier Funds for whichKeystone served as investment adviser,and provided certain ‘‘SecondaryServices’’ (as defined paragraph (h)below), for the Funds that wereinvolved in the in-kind transfers of CIFassets which occurred on December 2,

1996, February 3, 1997, and July 1,1997.

(e) The term ‘‘net asset value’’ meansthe amount for purposes of pricing allpurchases and sales of Fund Shares, ascalculated by dividing the value of allsecurities, determined by a method asset forth in a Fund’s prospectus andstatement of additional information, andother assets belonging to each of theportfolios in such Fund, less theliabilities charged to each portfolio, bythe number of outstanding shares.

(f) The term ‘‘relative’’ means a‘‘relative’’ as that term is defined insection 3(15) of the Act (or a ‘‘memberof the family’’ as that term is defined insection 4975(e)(6) of the Code), or abrother, a sister, or a spouse of a brotheror a sister.

(g) The term ‘‘Second Fiduciary’’means a fiduciary of a Client Plan whowas independent of and unrelated toKeystone at the time of the subjecttransaction. For purposes of thisproposed exemption, the SecondFiduciary will not be deemed to havebeen independent of and unrelated toKeystone if:

(1) Such Second Fiduciary wasdirectly or indirectly controlled, wascontrolled by, or was under commoncontrol with Keystone;

(2) Such Second Fiduciary, or anyofficer, director, partner, employee, orrelative of such Second Fiduciary wasan officer, director, partner, or employeeof Keystone (or is a relative of suchpersons);

(3) Such Second Fiduciary directly orindirectly received any compensation orother consideration for his or her ownpersonal account in connection withany transaction described in thisproposed exemption.

With respect to the Client Plans, if anofficer, director, partner, or employee ofKeystone (or a relative of such persons),was a director of such SecondFiduciary, and if he or she abstainedfrom participation in (i) the choice ofthe Plan’s investment manager/advisor,(ii) the approval of any purchase or saleby the Plan of shares of the Funds, and(iii) the approval of any fees charged toor paid by the Plan, in connection withany of the transactions described inSection I above, then Section II(g)(2)above shall not apply.

(h) The term ‘‘Secondary Service’’means a service, other than aninvestment management, investmentadvisory, or similar service, which wasprovided by Keystone to the Fundsinvolved in the subject transaction,including but not limited to custodial,accounting, administrative, brokerage orany other service.

EFFECTIVE DATE: This proposedexemption, if granted, will be effectiveas of December 2, 1996, February 3,1997 and July 1, 1997, for transactionsdescribed in Section I.

Summary of Facts and Representations1. Keystone. Keystone Financial, Inc.,

is a bank holding company with itsprincipal offices in Harrisburg,Pennsylvania. Keystone’s subsidiariesinclude Mid-State Bank and TrustCompany, Northern Central Bank andTrust Company, and Martindale Andres& Company, Inc. (collectively,Keystone). Keystone provides trust andbanking services to individuals,corporations, and institutions, bothnationally and internationally. Keystoneserves as trustee, investment manager,and/or custodian to the Plans describedbelow and as an investment adviser tocertain of the Funds. As of August 31,1996, Keystone had total assets undermanagement of approximately $754million.

Other Affiliates of Keystone includingMid-State Bank and Trust Company,and Pennsylvania National Bank andTrust Company, Inc., may offer shares ofthe Funds to their fiduciary customers.However, these Affiliates did not haveClient Plan assets or any other customerassets invested in the CIFs that wereinvolved in the subject in-kind transferof assets to the Funds which occurredon December 2, 1996, February 3, 1997and July 1, 1997.

2. The Client Plans. The Client Planswere retirement plans qualified undersection 401(a) of the Code for whichKeystone served as a trustee orinvestment manager. The Client Planswere considered ‘‘pension plans’’ undersection 3(2) of the Act. The Client Planscovered by this proposed exemptionwere those Plans invested in the subjectCIFs at the time of each in-kind transferof CIF assets to the Funds. The ClientPlans participated in the conversion ofthe CIFs to the Funds based solely uponthe decisions made in each case by aPlan fiduciary independent of Keystone(collectively, the Second Fiduciaries). Inaddition to the Client Plans, the CIFsalso held assets of two qualifiedretirement plans sponsored by Keystone(collectively, the Bank Plans), whichparticipated in the subject CIF assettransfer to the Funds. The Bank Planswere:

(i) The Keystone Financial PensionPlan (the Keystone DB Plan); and

(ii) The Keystone Financial 401(k)Plan (the Keystone DC Plan).

However, as discussed further below,the Bank Plans are not included in therelief that would be provided by thisproposed exemption.


4 The Department is expressing no opinion as towhether the terms and conditions of PTE 77–3 weremet with respect to the conversion of the BankPlans’ pro rata share of CIF assets to the Funds.

In this regard, Keystone filed a request forexemptive relief on October 23, 1996, whichincluded the in-kind transfer of assets of the BankPlans held in CIFs that were exchanged for sharesof the Funds. However, on July 30, 1998, theDepartment issued Advisory Opinion 98–06 (A.O.98–6). A.O. 98–06 states that PTE 77–3 providesrelief for the acquisition of a proprietary mutualfund’s shares by an in-house plan (i.e. an employeebenefit plan sponsored by the mutual fund’sinvestment adviser or an affiliate of such adviser)in exchange for assets that are transferred from aCIF, if the conditions of that exemption are met. Asa result, Keystone withdrew its request for anindividual exemption to cover the in-kind transferof CIF assets by the Bank Plans.

The Department notes that prior to Keystone’swithdrawal of its request for relief to cover the BankPlans, Keystone retained Wilmington TrustCompany (WTC) as a Second Fiduciary for the BankPlans in connection with the in-kind transfer of CIFassets to the Funds. WTC is a banking corporationwith trust powers, organized under the laws of theState of Delaware. As of December 31, 1995, WTCexercised discretionary authority overapproximately $29.8 billion of fiduciary assets,including approximately $15.5 billion of benefitplan investors. WTC made the same determinationand approval for the Bank Plans’ participation inthe CIF asset transfers, prior to each transaction, aswere made by the Second Fiduciary of each ClientPlan. Accordingly, Keystone states that aproportionate share of each CIF’s assetsrepresenting the interests of the Bank Plans thereinwas transferred to the corresponding Fund.

3. The CIFs. The CIFs comprisedcertain individual portfolios of theClient Plans and the Bank Plans.

Specifically, the CIFs were: (i) theEmployee Benefit Intermediate TermIncome Fund (Intermediate TermIncome Fund); (ii) the Employee BenefitCore Equity Fund (Core Equity Fund);(iii) the Employee Benefit GrowthEquity Fund (Growth Equity Fund); and(iv) the Short-Term Income Fund (ShortTerm Fund).

As a result of the transfer of CIF assetsto the Funds, each of these CIFs havebeen terminated and the assets are nowheld in one of the corresponding Fundsdescribed below. These Funds are: (i)the KeyPremier Intermediate TermIncome Fund (‘‘Intermediate Income’’);(ii) the KeyPremier Established GrowthFund (‘‘Growth Fund’’); and (iii) theKeyPremier Aggressive Growth Fund(‘‘Aggressive Growth’’); (iv) theKeyPremier Limited Duration Fund(‘‘Limited Duration Fund’’). Theapplicant states that each CIF’s assetswere transferred to a new Fund that hadinvestment objectives correspondingdirectly to the investment objectives ofthe terminating CIF.

The following table shows whichparticular CIF assets were transferred towhich particular Fund.

CIF Corresponding fundportfolio

Intermediate Term .... KeyPremier.Intermediate Term.Income Fund.

Core Equity Fund ...... KeyPremier.Established Growth.Fund.

Growth Equity Fund .. KeyPremier.Aggressive Growth.Fund.

Short Term Income ... KeyPremier Limited.Duration Government.Bond Fund.

4. The Funds. The Funds are all partof the KeyPremier Funds of the SessionGroup (collectively referred to as the‘‘Trust’’), an open-end investmentcompany registered under the ICA. TheTrust is comprised of a series of Funds(each a ‘‘Fund’’). Each Fund is aseparate investment portfolio availableto the Client Plans, as well as certainother investors. Keystone also performscertain Secondary Services for theFunds, including co-administration andshareholder services, for which itreceives fees.

Martindale Andres & Company, Inc.(Martindale), a wholly-ownedsubsidiary of Keystone, serves asinvestment advisor to the Funds.

Various parties unrelated to Keystonealso provide Secondary Services to the

Funds, including custodial, transferagent, recordkeeping, and other non-advisory services.

Description of the Transactions5. Keystone represents that the CIFs in

which the Client Plans invested weremaintained in accordance with the lawsthat apply to collective investmenttrusts. Keystone decided to terminatethe CIFs and offer to the Client Plansparticipating therein shares of thecorresponding Funds as alternativeinvestments. Because interests in a CIFgenerally must be liquidated orwithdrawn to effect distributions,Keystone believed that the interests ofthe Client Plans invested in the CIFswould be better served by investment inshares of the Funds which could bedistributed in-kind. Keystone alsobelieved that the Funds offered theClient Plans advantages over the CIFs aspooled investment vehicles. Forexample, as shareholders of the Funds,the Client Plans have opportunities toexercise voting and other shareholderrights. In addition, Client Plans canbenefit from lower fees, daily valuationavailable with the Funds as well asmore investment information.

The Plans, as Fund shareholders,periodically receive certain disclosuresconcerning the Funds. Such informationincludes: (i) a copy of the Fundprospectus, which is updated at leastannually; (ii) an annual reportcontaining audited financial statementsof the Funds and information regardingsuch Funds’ investment performance;and (iii) a semi-annual report containingunaudited financial statements. Withrespect to the Client Plans, Keystonereports all transactions in shares of theFunds in periodic account statementsprovided to each Client Plan. Further,Keystone maintains that the net assetvalue of the portfolios of the Funds canbe monitored daily from informationavailable in newspapers of generalcirculation.

Keystone states that the transfers in-kind of the CIF assets in exchange forFund shares were ministerialtransactions which were performed inaccordance with pre-establishedobjective procedures which wereapproved by the Board of Trustees ofeach Fund. Such procedures requiredthat assets transferred to a Fund: (i)must be consistent with the investmentobjectives, policies, and restrictions ofthe Fund; (ii) must be marketablesecurities; (iii) must satisfy theapplicable requirements of the ICA andthe Code; and (iv) must have a readilyascertainable market value. Prior toentering into an in-kind transfer, aSecond Fiduciary of each affected Client

Plan received certain disclosures fromKeystone and approved the transactionin writing.

6. The Conversion Transactions.Keystone specifically requests aretroactive exemption for the in-kindtransfers of CIF assets to certaincorresponding Funds which havealready occurred with respect to ClientPlans. With respect to the Bank Plans,Keystone states that the in-kind transferof CIF assets to the Funds representingthe interest held by the Bank Plans insuch CIFs met the conditions ofProhibited Transaction Exemption (PTE)77–3 (42 FR 18734, April 8, 1977). 4

The in-kind transfers of assets withrespect to the CIFs occurred onDecember 2, 1996, February 3, 1998,and July 1, 1997, respectively (the CIFConversions). Each was a completetermination of the assets held in theCIFs by the Client Plans that elected toparticipate in the CIF Conversions. Nobrokerage commissions, fees orexpenses (other than customary transfercharges paid to parties other thanKeystone) were charged to the Plans orthe CIFs in connection with the in-kindtransfers of CIF assets to the Funds inexchange for shares of the Funds.

Each in-kind transfer of the assets ofeach of the CIFs was completed in asingle transaction on a single day. Ineach case, the in-kind transfertransactions were accomplished by


5 PTE 77–4, in pertinent part, permits thepurchase and sale by an employee benefit plan ofshares of a registered, open-end investmentcompany when a fiduciary with respect to the planis also the investment adviser for the investmentcompany, provided that the conditions of theexemption are met.

In addition, PTE 77–3 permits the acquisition orsale of shares of a registered, open-end investmentcompany by an employee benefit plan coveringonly employees of such investment company,employees of the investment adviser or principalunderwriter for such investment company, oremployees of any affiliated person (as definedtherein) of such investment adviser or principalunderwriter, provided certain conditions are met.

6 In this regard, the Department is expressing noopinion in this proposed exemption regardingwhether any of the transactions with the Funds byKeystone involving either the Bank Plans or theClient Plans met the conditions of PTE 77–3 or PTE77–4, respectively.

transferring from the converting CIF aClient Plan’s proportionate share of allof the assets then held by the CIF to thecorresponding Fund in exchange for anappropriate number of Fund shares.Once all of a CIF’s assets weretransferred to a Fund, the CIF wasterminated and its assets, thenconsisting of Fund shares, weredistributed in-kind to the Plansparticipating in the CIFs based on eachPlan’s pro rata share of the assets of theCIFs on the date of the transaction.

7. Advance Disclosure/Approval forClient Plans. Keystone represents that itprovided disclosures to each affectedPlan in connection with the terminationof the particular CIF, summarized thetransaction, and complied with all ofthe provisions of Section I of thisproposed exemption. Based on thesedisclosures, the Second Fiduciary foreach affected Client Plan approved inwriting the Plan’s participation in theCIF Conversion, including the fees thatwere to be paid by the Funds toKeystone as a result of the CIFConversion.

8. Valuation Procedures. The assetstransferred by a CIF to its correspondingFund consisted entirely of cash andmarketable securities. For purposes of atransfer in-kind, the value of thesecurities in the CIFs were determinedbased on their market value as of theclose of business on the last businessdate prior to the transfer (the CIFValuation Date). The values on the CIFValuation Date were determined usingthe valuation procedures described inSEC Rule 17a–7 under the ICA. In thisregard, the ‘‘current market price’’ forspecific types of CIF securities involvedin the transaction was determined asfollows:

a. If the security was a ‘‘reported security’’as the term is defined in Rule 11Aa3–1 underthe Securities Exchange Act of 1934 (the ’34Act), the last sale price with respect to suchsecurity reported in the consolidatedtransaction reporting system (theConsolidated System) for the CIF ValuationDate; or, if there were no reportedtransactions in the Consolidated System thatday, the average of the highest currentindependent bid and the lowest currentindependent offer for such security (reportedpursuant to Rule 11Ac1–1 under the ’34 Act),as of the close of business on the CIFValuation Date.

b. If the security was not a reportedsecurity, and the principal market for suchsecurity was an exchange, then the last saleon such exchange on the CIF Valuation Dateor, if there were no reported transactions onsuch exchange that day, the average of thehighest current independent bid and lowestcurrent independent offer on the exchange asof the close of business on the CIF ValuationDate.

c. If the security was not a reportedsecurity and was quoted in the NASDAQsystem, then the average of the highestcurrent independent bid and lowest currentindependent offer reported on NASDAQ as ofthe close of business on the CIF ValuationDate.

d. For all other securities, the average ofthe highest current independent bid andlowest current independent offer, as of theclose of business on the CIF valuation date,determined on the basis of reasonableinquiry. For securities in this category,Keystone obtained quotations from at leastthree sources that were either broker-dealersor pricing services independent of andunrelated to Keystone and, when more thanone valid quotation was available, used theaverage of the quotations to value thesecurities, in conformance withinterpretations by the SEC and practicesunder SEC Rule 17a–7.

The securities received by a transfereeFund portfolio were valued by suchportfolio for purposes of the transfer inthe same manner and as of the same dayas such securities were valued by thecorresponding transferor CIF. The pershare value of the shares of each Fundportfolio issued to the CIFs was basedon the corresponding portfolio’s then-current net asset value. Thus, the valueof a Plan’s investment in shares of eachFund was, as of the opening of businesson the first business day after the CIFConversion, equal to the value of suchPlan’s investment in the CIFs as of theclose of business on the last businessday prior to the CIF Conversion.

Not later than thirty (30) businessdays after completion of each in-kindtransfer transaction, Keystone sent byregular mail to each affected Client Plana written statement that included aconfirmation of the transaction. Suchconfirmation contained: (i) the identityof each security that was valued inaccordance with SEC Rule 17a–7(b)(4),as described above; (ii) the price of eachsuch security for purposes of thetransaction; and (iii) the identity of eachpricing service or market-makerconsulted in determining the value ofsuch securities.

Not later than one-hundred andtwenty (120) days after completion ofeach in-kind transfer of CIF assets inexchange for shares of the Funds,Keystone mailed to the Client Plans awritten confirmation of the number ofCIF units held by each affected ClientPlan immediately before the CIFConversion (and the related per unitvalue and the aggregate dollar value ofthe units transferred), and the number ofshares in the Funds that were held byeach affected Plan following the CIFConversion (and the related per sharenet asset value and the aggregate dollarvalue of the shares received). In this

regard, Keystone represents that withrespect to the CIF Conversionsdescribed herein, it was unable todistribute such confirmation to theClient Plans within 105 days, asrequired by Section I(g) of PTE 97–41.However, for purposes of future CIFConversions, Keystone represents that itwill meet this condition (as required bySection II(g) for transactions whichoccur after August 8, 1997), as well asthe other conditions of PTE 97–41.

Receipt of Fees by Keystone From theFunds

9. Keystone represents that PTE 77–4(42 FR 18732, April 8, 1977) 5 permits itto receive fees from the Funds whichresult from investments made by theClient Plans in the Funds, if theconditions of that exemption are met.Section II(c) of PTE 77–4 requires thateither: (i) the Client Plan may not payany investment management,investment advisory, or similar fees forthe assets of such Plan invested inshares of a Fund for the entire period ofsuch investment; or (ii) the Client Planmay pay investment management,investment advisory, or similar fees toKeystone based on the total assets ofsuch Plans invested in shares of a Fundfrom which a credit has been subtractedrepresenting such Plan’s pro rata shareof such investment advisory fees paid toKeystone by the Fund. Further, SectionII(f) of PTE 77–4 requires that thesecond fiduciary be notified of anychange in the rates of fees charged bythe Fund and approve in writing thecontinued holding of shares acquired bythe plan prior to such change.

Keystone represents that its feestructure and any future approval of feeincreases with respect to investments bythe Client Plans in the Funds willcomply with PTE 77–4.6 Accordingly,the Applicant has not requested anindividual exemption for the receipt offees by Keystone from the Funds for


investment management, investmentadvisory, or similar services provided tothe Funds, or for the receipt of fees forany Secondary Services provided byKeystone. Thus, the Department is notproviding relief for the receipt of suchfees attributable to investment in theFunds by the Client Plans in thisproposed exemption.

10. In summary, Keystone representsthat the transactions described hereinsatisfy the statutory criteria for anexemption under section 408(a) of theAct because:

(a) The Funds provide the ClientPlans with a more effective investmentvehicle than the CIFs that weremaintained by Keystone.

(b) With respect to each in-kindtransfer of a Client Plan’s CIF assets intoa Fund in exchange for Fund shares, aSecond Fiduciary for the Client Planauthorized, in writing, such transferprior to the transaction only afterreceiving full written disclosure ofinformation concerning the Fund.

(c) Each Client Plan received shares ofthe Funds, in connection with the in-kind transfer of CIF assets, which had atotal net asset value that was equal tothe value of the Client Plan’s pro ratashare of the CIF on the date of thetransfer, as determined in a singlevaluation performed in the samemanner and at the close of the businessday, using independent sources inaccordance with procedures establishedby the Funds which comply with SECRule 17a–7 of the ICA, as amended, forthe valuation of such assets.

(d) For all in-kind transfers of CIFassets to a Fund covered by theproposed exemption, Keystone sent toeach affected Client Plan writtenconfirmation by regular mail, not laterthan 30 days after the completion of thetransaction, that contained the followinginformation: (1) the identity of eachsecurity that was valued for purposes ofthe transaction in accordance with SECRule 17a–7(b)(4) of the ICA; (2) the priceof each such security involved in thetransaction; and (3) the identity of eachpricing service or market makerconsulted in determining the value ofsuch securities.

(e) For all in-kind transfers of CIFassets to a Fund, made on behalf ofClient Plans, Keystone sent by regularmail, no later than 120 days aftercompletion of each CIF asset transfer, awritten confirmation that contained thefollowing information: (1) the number ofCIF units held by the Client Planimmediately before the transfer, therelated per unit value and the totaldollar amount of such CIF units; and (2)the number of shares in the Funds thatwere held by the Client Plan following

the Conversion, the related per share netasset value and the total dollar amountof such shares.

(f) The price paid or received by aClient Plan for shares of the Funds wasthe net asset value per share at the timeof the transaction and was the sameprice for the Fund shares which waspaid or received by any other investorat that time.

(g) The transferred assets constitutedthe Client Plan’s pro rata portion of allassets that were held by the CIFimmediately prior to the transfer.

(h) No sales commissions were paidby a Client Plan in connection with thein-kind transfers of CIF assets inexchange for shares of the Funds.

(i) Keystone did not receive any12b–1 fees in connection with thetransactions.

(j) All dealings between the ClientPlans and any of the Funds were on abasis no less favorable to such Plansthan dealings between the Funds andother shareholders holding the sameclass of shares as the Client Plans.

Notice to Interested PersonsNotice of the proposed exemption

should be given to Client Plans that hadinvestments in the terminating CIFs,including the Second Fiduciaries fromwhom approval was sought for the in-kind transfer of Client Plan assets to theFunds. Notice will be provided to eachSecond Fiduciary by first class mailwithin 30 days following thepublication of this notice of pendency ofthe proposed exemption in the FederalRegister. The notice should include acopy of this notice of proposedexemption, as published herein, andmake interested persons aware of theirright to comment or request a hearing onthe proposed exemption. Comments andrequests for a public hearing must bereceived by the Department within 60days of the publication date for thisproposed exemption in the FederalRegister.FOR FURTHER INFORMATION CONTACT: Ms.Janet L. Schmidt of the Department,telephone (202) 219–8883. (This is nota toll-free number.)

Bankers Trust Company (BTC), Locatedin New York, New York

[Application Nos. D–10592 through D–10594]

Proposed Exemption

The Department is consideringgranting an exemption under theauthority of section 408(a) of the Actand section 4975(c)(2) of the Code andin accordance with the procedures setforth in 29 CFR Part 2570, Subpart B (55FR 32836, 32847, August 10, 1990). If

the exemption is granted, therestrictions of section 406(a) of the Actand the sanctions resulting from theapplication of section 4975 of the Code,by reason of section 4975(c)(1)(A)through (D) of the Code, shall not applyto (1) the proposed granting to BTC bycertain employee benefit plans (thePlans) investing in Hometown AmericaL.L.C. (the LLC) of security interests inthe capital commitments of the Plans tothe LLC, where BTC is therepresentative of certain lenders (theLenders) that will fund a so-called‘‘credit facility’’ providing loans to theLLC, and the Lenders are parties ininterest with respect to the Plans; and(2) the proposed agreements by thePlans to honor capital calls made to thePlans by BTC, in lieu of the LLC’s solemanaging member, in connection withthe Plan’s capital commitments to theLLC where such capital calls relate tothe security interests in the capitalcommitments previously granted toBTC; provided that (a) the proposedgrants and agreements are on terms noless favorable to the Plans than thosewhich the Plans could obtain in arm’s-length transactions with unrelatedparties; (b) the decisions on behalf ofeach Plan to invest in the LLC and toexecute such grants and agreements infavor of BTC are made by a fiduciarywhich is not included among, and isindependent of and unaffiliated with,the Lenders and BTC; and (c) withrespect to Plans that may invest in theLLC in the future, such Plans will haveassets of not less than $100 million andnot more than 5% of the assets of suchPlan will be invested in the LLC.

Summary of Facts and Representations1. The LLC is a Delaware limited

liability company, the sole managingmember of which is Hometown AmericaCommunities, Inc. (the Manager), aDelaware corporation. The Manager is aseparate affiliate of TranswesternInvestment Company, L.L.C. (TWIC), aDelaware limited liability company,which is the sponsor of the LLC. TheLLC shall have a perpetual existenceuntil it is dissolved, wound up orliquidated in accordance with theagreement dated December 10, 1997which established its organization andfunctions (the Agreement). The LLC wasformed by the Manager (as solemanaging member) and TranswesternHometown America, L.L.C. (TWHA), anaffiliate of TWIC (as non-managingmember), with the intent of seekingcapital commitments from a limitednumber of prospective investors whowould become members (the Members)of the LLC. There are six current andprospective Members having, in the


aggregate, irrevocable, unconditionalcapital commitments of at least$100,000,000; and there are four otherMembers who have contributedproperty to the LLC.

2. The LLC has been organized toestablish an integrated, self-administered and self-managed realestate operating company (see rep. 11,below) to acquire manufactured housingcommunities. The LLC will makeacquisitions and provide propertymanagement services. As described inthe Private Placement Memorandum,the LLC believes that significantopportunities exist to achieve superiorrisk-adjusted returns on its investmentsin excess of 15% over a five-year period.The LLC will identify and commit to allinvestments within five years of closing(the Investment Period). Strategies tomaximize proceeds and create liquidityfor the LLC include single asset sales,portfolio transactions, formation andexchange of assets for equity and apublic offering for shares of the Managerin which Members will be granted theright to convert their membershipinterests into shares of the Manager.

3. The LLC may issue a variety ofsecurities in connection with itsinvestment activities, includingoperating company units, preferredoperating company units, convertiblepreferred operating company units,warrants, options, debt, participatingdebt, convertible debt and othersecurities; the LLC may also purchasereal estate manufactured housing-related securities, including publicly-traded or private debt or equityinstruments. The LLC will distribute tothe Members 100% of the LLC’s taxableincome from operations, dispositions,financing of investments and otherevents giving rise to distributableproceeds. Until a public offering occurs,Members will have the right (but not anobligation) to reinvest all or any part ofany such distributions for an increasedinterest in the LLC.

4. The Agreement requires eachMember to execute a subscriptionagreement that obligates the Member tomake contributions of capital up to aspecified maximum. The Agreementrequires Members to make capitalcontributions to fulfill this obligationupon receipt of notice from theManager. Under the Agreement, theManager may make calls for cashcontributions (Capital Calls) up to thetotal amount of a Member’s capitalcommitment upon 10 business days’notice, subject to certain limitations.The Members’ capital commitments arestructured as unconditional, bindingcommitments to contribute equity whenCapital Calls are made by the Manager.

In the event of a default by a Member,the LLC may exercise any of a numberof specific remedies.

The Members constituting over 90%of the equity interests and theirinvestments in the LLC are:

Name of member

Capitalcommit-

ment(in mil-lions)

Northwestern Mutual Life Ins. Co. $20Public Employees’ Ret. Assn. of

CO ............................................. 25Allstate Life Ins. Co. ..................... 25Ameritech Pension Trust .............. 25The Manager ................................ 1TWHA ........................................... 4

5. The applicant states that the LLCwill incur indebtedness in connectionwith many of its investments. Inaddition to mortgage indebtedness, theLLC will incur short-term indebtednessfor the acquisition of particularinvestments. This indebtedness willtake the form of a credit facility (theCredit Facility) secured by, among otherthings, a pledge and assignment of eachMember’s capital commitment. Thistype of facility will allow the LLC toconsummate investments quicklywithout having to finalize the debt/equity structure for an investment orhaving to arrange for interim orpermanent financing prior to making aninvestment, and will have additionaladvantages to the Members and the LLC.Under the Agreement, the Manager mayencumber Member’s capitalcommitments, including the right to callfor capital contributions, to one or morefinancial institutions as security for theCredit Facility. Each of the Members hasappointed the Manager as its attorney-in-fact to execute all documents andinstruments of transfer necessary toimplement the provisions of theAgreement. In connection with thisCredit Facility, each of the Members isrequired to execute documentscustomarily required in securedfinancings, including an agreement tounconditionally honor Capital Calls.

6. BTC will become agent for a groupof Lenders providing a $63 millionrevolving Credit Facility to the LLC.BTC will also be a participating Lender.Some of the Lenders may be parties ininterest with respect to some of thePlans that invest in the LLC by virtue ofsuch Lenders’ (or their affiliates’)provisions of fiduciary services to suchPlans for assets other than the Plans’interests in the LLC. BTC is requestingan exemption to permit the Plans toenter into security agreements withBTC, as the representative of the

Lenders, whereby such Plans’ capitalcommitments to the LLC will be used ascollateral for loans made by the CreditFacility to the LLC, when such loans arefunded by Lenders who are parties ininterest to one or more of the Plans.

The Credit Facility will be used toprovide immediate funds for real estateacquisitions made by the LLC, as wellas for the payment of LLC expenses.Repayments will be secured generallyby the LLC from the Members’ capitalcontributions, and Capital Calls on theMembers’ capital commitments. TheCredit Facility is intended to beavailable until December 11, 2000. TheLLC can use its credit under the CreditFacility either by direct or indirectborrowings or by requesting that lettersof credit be issued. All Lenders willparticipate on a pro rata basis withrespect to all cash loans and letters ofcredit up to the maximum of theLenders’ respective commitments. Allsuch loans and letters of credit will beissued to the LLC or an entity in whichthe LLC owns a direct or indirectinterest (a Qualified Borrower), and notto any individual Member. Allpayments of principal and interest madeby the LLC or a Qualified Borrower willbe allocated pro rata among all Lenders.The applicant represents that theaggregate capital commitments to bepledged will be at least 1.5 times themaximum amount of the credit availableunder the Credit Facility.

7. The Credit Facility will be arecourse obligation of the LLC, therepayment of which is securedprimarily by the grant of a securityinterest to BTC, as agent under theCredit Facility for the benefit of theLenders, from the LLC, in both: (a) theMembers’ capital commitments and (b)a collateral account (the BorrowerCollateral Account) under which theLLC must deposit all Members’ capitalcontributions when paid. In addition,the LLC and the Manager will grantBTC, as agent under the Credit Facilityfor the benefit of the Lenders, a securityinterest in: (a) the right to call capitalunder the Agreement; (b) Capital Callnotices; and (c) the Members’ capitalcommitments. The Borrower CollateralAccount will be assigned to BTC tosecure repayment of the indebtednessincurred under the Credit Facility. BTChas the right to apply any or all fundsin the Borrower Collateral Accounttoward payment of the indebtedness inany manner it may elect. The capitalcommitments are fully recourse to allthe Members and to the Manager. In theevent of default under the CreditFacility, the agent (i.e., BTC) has theright to unilaterally make capital callson the Members to pay their unfunded


7 The Department notes that the term ‘‘operatingcompany’’ as used in the Department’s plan assetregulation cited above includes an entity that isconsidered a ‘‘real estate operating company’’ asdescribed therein (see 29 CFR 2510.3–101(e)).However, the Department expresses no opinion inthis proposed exemption regarding whether the LLCwould be considered either an operating companyor a real estate operating company under suchregulations. In this regard, the Department notesthat it is providing no relief for either internaltransactions involving the operation of the LLC orfor transactions involving third parties other than

the specific relief proposed herein. In addition, theDepartment encourages potential Plan investors andtheir independent fiduciaries to carefully examineall aspects of the LLC’s proposed real estateinvestment program in order to determine whetherthe requirements of the Department’s regulationswill be met.

capital commitments, and will applycash received from such capital calls toany outstanding debt.

8. Under the Credit Facility, eachMember that is a Plan will execute anacknowledgment (the Estoppel)pursuant to which it acknowledges thatthe LLC and the Manager have pledgedand assigned to BTC, for the benefit ofeach Lender which may be a party ininterest (as defined in Act section 3(14))of such Member, all of their rights underthe Agreement relating to capitalcommitments and Capital Call notices.The Estoppel will include anacknowledgment and covenant by thePlan that, if an event of default exists,such Plan will unconditionally honorany capital call made by BTC inaccordance with the Agreement up tothe unfunded capital commitment ofsuch Plan to the LLC.

9. The applicant represents that at thepresent time the Ameritech PensionTrust (the Ameritech Trust) holds theassets of three defined benefit plans (theAmeritech Plans), which own interestsin the LLC. The Ameritech Trust hasmade a capital commitment of $25million to the LLC. The applicant statesthat some of the Lenders may be partiesin interest with respect to some of theAmeritech Plans in the Ameritech Trustby virtue of such Lenders’ (or theiraffiliates’) provisions of fiduciaryservices to such Ameritech Plans withrespect to Ameritech Trust assets otherthan their membership interests in theLLC. Thus, BTC states that there is animmediate need for the Ameritech Trustto enter into the Estoppel under theterms and conditions described herein.The total number of participants in thethree Ameritech Plans is approximately108,000, and the approximate fairmarket value of the total assets of theAmeritech Plans held in the AmeritechTrust as of December 31, 1996 is $12.15billion.

The applicant represents that thefiduciary of the Ameritech Plansgenerally responsible for investmentdecisions in real estate assets which aremanaged internally could be, dependingon the size and type of the investment,the Ameritech Corporation AssetManagement Committee, the ChiefInvestment Officer of AmeritechCorporation, or the AmeritechCorporation Investment ManagementDepartment’s Real Estate Committee(comprised of the staff real estateprofessionals and another InvestmentManagement Department director). Thefiduciaries responsible for reviewingand authorizing the investments in theLLC under this proposed exemptioncurrently are William M. Stephens,Chief Investment Officer of Ameritech

Corporation, and the AmeritechCorporation Investment ManagementDepartment’s Real Estate Committee.

10. The applicant represents that theAmeritech Plans are currently the onlyemployee benefit plans subject to theAct that are Members of the LLC.However, the applicant states that it ispossible that one or more other Planswill become Members of the LLC in thefuture. Thus, the applicant requestsrelief for any such Plan under thisproposed exemption, provided the Planmeets the standards and conditions setforth herein. In this regard, such Planmust be represented by an independentfiduciary, and the Manager must receivefrom the Plan one of the following:

(1) A representation letter from theapplicable fiduciary with respect tosuch Plan substantially identical to therepresentation letter submitted by thefiduciaries of the Ameritech Trust, inwhich case this proposed exemption, ifgranted, will apply to the investmentsmade by such Plan if the conditionsrequired herein are met; or

(2) Evidence that such Plan and itsresponsible fiduciaries are eligible forrelief under Prohibited TransactionExemption 96–23 (PTE 96–23, 61 FR15975, April 10, 1996), the classexemption for transactions by a planwith certain parties in interest wheresuch plan’s assets are managed by an in-house asset manager (INHAM) that hastotal assets under its management,attributable to plans maintained by itsaffiliates, in excess of $50 million (seePart IV(a) of PTE 96–23); or

(3) Evidence that such Plan is eligiblefor another class exemption or hasobtained an individual exemption fromthe Department covering the potentialprohibited transactions which are thesubject of this proposed exemption.

11. BTC represents that the LLC willobtain an opinion of counsel that theLLC will constitute an ‘‘operatingcompany’’ under the Department’s planasset regulations [see 29 CFR 2510.3–101(c)] if the LLC is operated inaccordance with the Agreement and theprivate placement memorandumdistributed in connection with theprivate placement of the LLCmembership interests.7

12. BTC represents that the Estoppelconstitutes a form of credit securitywhich is customary among financingarrangements for real estate limitedpartnerships or limited liabilitycompanies, wherein the financinginstitutions do not obtain securityinterests in the real property assets ofthe partnership or limited liabilitycompanies. BTC also represents that theobligatory execution of the Estoppel bythe Members for the benefit of theLenders was fully disclosed in thePrivate Placement Memorandum as arequisite condition of investment in theLLC during the private placement of themembership interests. BTC representsthat the only direct relationshipbetween any of the Members and any ofthe Lenders is the execution of theEstoppel. All other aspects of thetransaction, including the negotiation ofall terms of the Credit Facility, areexclusively between the Lenders andthe LLC. BTC represents that theproposed execution of the Estoppel willnot affect the abilities of the Trust towithdraw from investment andparticipation in the LLC. The only Planassets to be affected by the proposedtransactions are any funds which mustbe contributed to the LLC in accordancewith requirements under the Agreementto make Capital Calls to honor aMember’s capital commitments.

13. BTC represents that neither it norany Lender acts or has acted in anyfiduciary capacity with respect to theAmeritech Trust’s investment in theLLC and that BTC is independent of andunrelated to those fiduciaries (theAmeritech Trust Fiduciaries)responsible for authorizing andoverseeing the Ameritech Trust’sinvestments in the LLC. Each AmeritechTrust Fiduciary representsindependently that its authorization ofTrust investments in the LLC was freeof any influence, authority or control bythe Lenders. The Ameritech TrustFiduciaries represent that the AmeritechTrust’s investments in and capitalcommitments to the LLC were madewith the knowledge that each Memberwould be required subsequently to granta security interest in Capital Calls andcapital commitments to the Lenders andto honor requests for cash contributions,also known as ‘‘drawdowns’’, made onbehalf of the Lenders without recourseto any defenses against the Manager.Each Ameritech Trust Fiduciary


8 The applicant represents that under Section202(a)(2) of the Investment Advisers Act of 1940,a ‘‘Bank’’ means (A) banking institution organizedunder the laws of the United States, (B) a memberbank of the Federal Reserve System, (C) any otherinstitution or trust company, whether incorporatedor not, doing business under the laws of any Stateof the United States, a substantial portion of thebusiness of which consists of receiving deposits orexercising fiduciary powers similar to thosepermitted to national banks under the authority ofthe U.S. Comptroller of the Currency, and which issupervised and examined by State or Federalauthority having supervision over banks, and whichis not operated for the purpose of evading theprovisions of this subchapter, and (D) a receiver,conservator, or other liquidating agent of anyinstitution or firm included in clauses (A), (B), or(C) of this paragraph.

individually represents that it isindependent of and unrelated to BTCand the Lenders and that the investmentby the Ameritech Trust for which thatAmeritech Trust Fiduciary isresponsible continues to constitute afavorable investment for the AmeritechPlans participating in that Trust andthat the execution of the Estoppel is inthe best interests and protective of theparticipants and beneficiaries of suchAmeritech Plans. In the event anotherPlan proposes to become a Member, theapplicant represents that it will requiresimilar representations to be made bysuch Plan’s independent fiduciary. AnyPlan proposing to become a Member inthe future and needing to avail itself ofthe exemption proposed herein willhave assets of not less than $100million, and not more than 5% of theassets of such Plan will be invested inthe LLC.

14. In summary, the applicantrepresents that the proposedtransactions satisfy the criteria ofsection 408(a) of the Act for thefollowing reasons: (1) The AmeritechPlans’ investments in the LLC wereauthorized and are overseen by theAmeritech Trust Fiduciaries, which areindependent of the Lenders, and otherPlan investments in the LLC from otheremployee benefit plans subject to theAct will be authorized and monitoredby independent Plan fiduciaries; (2)None of the Lenders have any influence,authority or control with respect to theAmeritech Trust’s investment in theLLC or the Ameritech Trust’s executionof the Estoppel; (3) The Ameritech TrustFiduciaries invested in the LLC onbehalf of the Ameritech Plans with theknowledge that the Estoppel is requiredof all Members investing in the LLC,and all other Plan fiduciaries that investtheir Plan’s assets in the LLC will betreated the same as other Members arecurrently treated with regard to theEstoppel; and (4) Any Plan which mayinvest in the LLC in the future, whichneeds to avail itself of the exemptionproposed herein, will have assets of notless than $100 million, and not morethan 5% of the assets of any such Planwill be invested in the LLC.

FOR FURTHER INFORMATION CONTACT: GaryH. Lefkowitz of the Department,telephone (202) 219–8881. (This is nota toll-free number.)

Toledo Clinic, Inc. Employees 401(k)and Profit Sharing Plan (the T/C Plan);Hart Associates, Inc.; Profit SharingPlan (the H/A Plan); and Midwest FluidPower Company, Inc. Savings andProfit Sharing Plan and Trust (the M/FPlan, collectively; the Plans), Located inToledo, Ohio

[Application Nos. D–10633, D–10634 and D–10635, respectively]

Proposed Exemption

The Department is consideringgranting an exemption under theauthority of section 408(a) of the Actand section 4975(c)(2) of the Code andin accordance with the procedures setforth in 29 CFR Part 2570, Subpart B (55FR 32836, 32847, August 10, 1990). Ifthe exemption is granted, therestrictions of sections 406(a), 406(b)(1)and (b)(2) of the Act and the sanctionsresulting from the application of section4975 of the Code, by reason of section4975(c)(1)(A) through (E) of the Code,shall not apply to: (1) the cash sale ofcertain shares of preferred stock (thePreferred Stock) issued by TTCHoldings Inc. (TTC), by theindividually-directed account of Dr.Edward Orrechio in the T/C Plan (theOrrechio Account), by the individually-directed account of Michael Hart in theH/A Plan (the Hart Account), and by theindividually-directed account of LarryPeterson in the M/F Plan (the PetersonAccount; collectively, the Accounts) toTTC, a party in interest with respect tothe H/A Plan and M/F Plan; and (2) thearrangement for the subsequentpurchase of certain shares of CommonStock (the Common Stock) issued byTTC by Messrs. Orecchio, Hart andPeterson (collectively; the Participants),in their own name, from TTC pursuantto an agreement with TTC that thepurchase will occur immediately afterthe sale of the Preferred Stock by thePlans to TTC; provided that thefollowing conditions are met:

1. The sale of the Preferred Stock toTTC by the Accounts and the purchaseof the Common Stock from TTC by theParticipants, in their individualcapacity, are one-time transactions forcash;

2. The transactions described in (1)above take place on the same businessday;

3. The amount paid to the Accountsby TTC is the fair market value of thePreferred Stock, as determined by aqualified independent appraiser at thetime of the sale;

4. The Participants, in theirindividual capacity, purchase from TTCshares of the Common Stock which areequal in number to the shares of

Preferred Stock sold by the Accounts toTTC;

5. A qualified independent fiduciary(the Independent Fiduciary) determinesthat the transactions described hereinare in the best interest and protective ofthe Accounts at the time of thetransactions; and

6. The Independent Fiduciarysupervises the transactions; assures thatthe conditions of this proposedexemption are met; and takes whateveractions are necessary to protect theinterests of the Accounts, includingreviewing amounts paid by TTC for thePreferred Stock.EFFECTIVE DATE: This exemption, ifgranted, will be effective as of December1, 1998.

Summary of Facts and Representations

1. The Plans are profit sharing,defined contribution plans that providefor individually directed accounts.

The T/C Plan is sponsored by theToledo Clinic, Inc. (the Toledo Clinic),an Ohio corporation with its principalplace of business in Toledo, Ohio. TheToledo Clinic is a large consortium ofphysicians and medical specialistswhich provide a broad range of healthand medical services. Dr. EdwardOrrechio (Dr. Orrechio) is a physicianemployed by the Toledo Clinic.

United Missouri Bank of Kansas City,N.A. is the trustee of the T/C Plan. Asof July 1998, the T/C Plan had 490participants and approximately$79,000,000 in assets. Dr. Orrechio is aparticipant in the T/C Plan. TheOrrechio Account referred to herein ishis individually-directed account in theT/C Plan.

2. TTC, the issuer of the PreferredStock, is an Ohio corporation that wasincorporated in April 1990. The TrustCompany of Toledo (TTCOT) is awholly-owned subsidiary of TTC. Theapplicant represents that TTCOT is a‘‘bank’’ as that term is defined inSection 202(a)(2) of the InvestmentAdvisers Act of 1940.8


9 The Department notes that the holding of theDebentures by the Plans at any time during whichTTCOT was a directed trustee to the Plans wouldhave resulted in a prohibited transaction undersection 406(a)(1)(B) of the Act because TTC, theparent corporation of TTCOT, was the issuer of theDebentures. TTCOT, as the directed trustee of theH/A Plan and the M/F Plan, was a party in interestwith respect to these Plans under section 3(14)(B)of the Act. Thus, TTC was a party in interest undersection 3(14)(H) of the Act as a 10 percent or moreshareholder of a person described in section3(14)(B). However, TTC was not a ‘‘disqualifiedperson’’ under section 4975(e)(2)(H) of the Codebecause that provision of the Code does not includethe parent corporation of a service provider withinthe definition of that term. As a result, the holdingof the Debentures would not constitute a prohibitedtransaction under section 4975(c)(1)(B) of the Code.In addition, the Department notes that undersection 502(i) of the Act, no civil penalty shallapply to a transaction with respect to a plandescribed under section 4975(e)(1) of the Code. Inany event, no relief is being provided herein for thepast acquisition and holding of the Debentures.

3. The H/A Plan is sponsored by HartAssociates, Inc. (the Hart Associates), anOhio corporation in the business ofmarketing and public relations. MichaelHart (Mr. Hart) is the president andchief executive officer of HartAssociates.

TTCOT became the directed trusteefor the H/A Plan effective March 31,1991. As of July 1998, the H/A Plan had30 participants and approximately$2,000,000 in assets. Mr. Hart is aparticipant in the H/A Plan. The HartAccount referred to herein is hisindividually-directed account in the H/A Plan.

4. The M/F Plan is sponsored byMidwest Fluid Power Company, Inc.(the MFP Company), an Ohiocorporation which is a distributor ofindustrial materials and parts used influid power applications in certainindustries. Larry Peterson (Mr. Peterson)is the president and chief executiveofficer of the MFP Company.

As of July 1998, the M/F Plan had 70participants and approximately$4,800,000 in assets. TTCOT became thedirected trustee for the M/F Planeffective July 1, 1993. Mr. Peterson is aparticipant in the M/F Plan. ThePeterson Account referred to herein is

his individually-directed account in theM/F Plan.

5. The following table illustrates thepercentage of assets of each Accountwhich was represented by the shares ofPreferred Stock at the time of originalacquisition by the Accounts, and at thetime of the sale of such Preferred Stockby the Accounts to TTC. In addition,this table shows the percentage of eachAccount’s assets which was representedby the related debentures (theDebentures, as discussed below) at thetime of original acquisition and prior tothe sale of the Preferred Stock.

Accounts in the plansShares ofpreferred

stockCost Debenture

% assets atorig. pur-

chase

% assets atsale

Orrechio .................................................................................................... 200 $20,000 $10,000 9.0 6.4Hart ........................................................................................................... 200 $20,000 10,000 55.5 18.1Peterson .................................................................................................... 200 $20,000 10,000 16.5 10.6

6. It is represented that theParticipants did not own shares ofPreferred Stock as individuals prior tothe subject transactions. In addition, thepurchasing of shares of the CommonStock by the Participants from TTC didnot cause any of the Participants tobecome majority shareholders of TTC.None of the Participants was or iscurrently an officer, director, principalor employee of TTC or TTCOT. At thetime of original acquisition of thePreferred Stock by the Accounts, neitherTTC nor TTCOT was a fiduciary orother party in interest under the Actwith respect to the Plans.

Further, it is represented that TTCOTdoes not have the authority to makeinvestment decisions for any of thePlans to which it acts as directed trustee(i.e., the H/A Plan and the M/F Plan)without written directions from theParticipants.

7. TTC had two classes of Stock—thePreferred Stock and the Common Stock.There were 3,531 shares of the CommonStock outstanding prior to the subjecttransactions, which were owned inequal amounts by Theodore T. Hahn,Julie B. Higgins and David A. Snavely.These individuals are the threefounders, principals and partners ofTTC.

In addition, there were 20,000 sharesof Preferred Stock outstanding prior tothe subject transactions, which wereheld by 65 different shareholders.Among the shareholders of the PreferredStock were the Orrechio Account in theT/C Plan, the Hart Account in the H/APlan, and the Peterson Account in theM/F Plan.

8. The Preferred Stock was issued byTTC through a private offering that wasmade in 1990. The Initial OfferingMemorandum (the Memorandum) wasprepared on May 31, 1990. The offeringallowed an investor to acquire 200shares of Preferred Stock and a $10,000subordinated debenture (the Debenture).The Debenture was issued in October1990, with a due date of December 31,2000. The Debenture accrued a ninepercent (9%) per annum coupon rate,which was payable, along withinstallments of principal, on asemiannual basis. The Stock and theDebenture were offered to investors asconstituent parts of a single offering unitwhich could not be severed by theinvestor. The price for each unit was$30,000, of which $20,000 was allocatedto the Preferred Stock and $10,000 wasallocated to the Debenture. Thus, eachof the Accounts paid TTC $30,000 incash and purchased one unit whichconsisted of 200 shares of the PreferredStock and the Debenture, as describedabove.

Under the information described inthe Memorandum, dividends were notexpected to be paid on the PreferredStock, and no dividends were paid onsuch shares.

It is represented that the Participantswere aware of the identity of TTC as theissuer of the Preferred Stock and theDebentures. As a result of theacquisitions of the Preferred Stock, eachof the Accounts became a minorityshareholder in TTC. No fees orcommissions were incurred or paid inconnection with the acquisition of thePreferred Stock or the Debenture. Nosubsequent acquisitions of Preferred

Stock or other Debentures were made bythe Accounts.

The outstanding principal amount ofthe Debentures held by the Accountsand other investors will be prepaid byTTC in December 1998, prior to thesubject transactions, in accordance withterms of the Debentures. 9

9. The subject transactions wereprecipitated by TTC’s desire to amendits Articles of Incorporation (theArticles). The amendment of theArticles enabled TTC to change its taxstatus to a Subchapter ‘‘S’’ corporationin accordance with Section 1362(a) ofthe Code. The change in tax status willbe effective as of January 1, 1999. TheBoard of Directors of TTC determinedthat by eliminating its ‘‘C’’ Corporationtax status, TTC could increase the returnto its shareholders. Furthermore, theswitch by TTC to a Subchapter ‘‘S’’


status under the Code (the Conversion)required the conversion of theoutstanding shares of the PreferredStock into Common Stock.

The applicant states that theParticipants and their respectiveAccounts in the Plans would havesuffered adverse federal income taxconsequences if they had continued tohold shares of the Preferred Stock intheir Accounts after the Conversion. TheParticipants were informed by TTC thatif the Plans continued to hold shares ofthe Preferred Stock after the Conversion,the Plans would be subject to unrelatedbusiness taxable income on allSubchapter ‘‘S’’ distributions, whichcould have resulted in a loss of eachPlan’s tax-free status under section501(a) of the Code.

Accordingly, the Participantsconcluded that it was in the best interestof their Accounts and of the Plans todispose of the investment in thePreferred Stock, to avoid the taxliabilities that would be incurred, onceTTC becomes a Subchapter ‘‘S’’corporation.

10. On May 1, 1998, TTC sent certaindocuments to its shareholders,including the Participants, as a result oftheir ownership of Preferred Stock andthe Debentures in the Accounts. Thedocuments stated that TTC desired toredeem, via cancellation, all shares ofthe Preferred Stock which were held byany shareholders that would haveadverse tax consequences fromcontinued ownership of shares in an‘‘S’’ corporation after the conversion.

TTC has provided a mechanismwhereby eligible shareholders and thosewho own shares through exemptemployee benefit plans (i.e., theAccounts in the Plans) would designatea related party to purchase shares ofTTC Stock equal to the number of sharessold by the Accounts in the Plans. Suchpurchase would be for cash and wouldbe at the same price per share as thatpaid by TTC for redemption of theStock.

11. Therefore, the Participants andTTC are requesting relief for thefollowing transactions: (1) the proposedcash sale of shares of the Preferred Stockby the Orrechio Account in the T/CPlan, by the Hart Account in the H/APlan, and by the Peterson Account inthe M/F Plan to TTC; and (2) thearrangement for the subsequentpurchase under the above describedagreement with TTC of an equal numberof shares of the Common Stock byMessrs. Orecchio, Hart and Peterson(i.e., the Participants), in their ownname, from TTC immediately after thesale by the Accounts to TTC.

12. The redemption price for theshares of the Preferred Stock wasdetermined by the parties based upon awritten valuation dated May 6, 1998,prepared by Austin Financial Services,Inc. (Austin), a consulting firm withexperience in the financial servicesindustry. Austin was retained by theBoard of Directors of TTC for thepurpose of valuing TTC and its sharesof Preferred Stock and Common Stock(together, the Stock). In determining fairmarket value of the Stock, Austin reliedon the discounted cash flow methodand the capitalization of earningsmethod. After weighing these twomethods, Austin determined that thefair market value of all the outstandingshares of the Stock was approximately$7,263,035. This amount equates to$308.66 per share for each outstandingshare of Preferred and Common Stock.Austin’s valuation of the Stock wasupdated at the time of the transaction,but its conclusions for the fair marketvalue of the Stock were unchanged.Therefore, based on the Austinvaluation, each Account received a totalof $61,732 for its shares of PreferredStock, as of the date of Conversion.

13. TTC also engaged the law firm ofCallister Nebeker & McCullough of SaltLake City, Utah (CNM) to serve as theIndependent Fiduciary for the Plans toreview the offer of redemption of thePreferred stock, to render an opinion asto the prudence of the investmentdecisions relating thereto, and to directthe sale of shares as appropriate. In areport dated April 29, 1998 (the Report),CNM acknowledged its appointment asthe Independent Fiduciary for the Plansin connection with TTC’s proposedchange from a Subchapter ‘‘C’’corporation to a Subchapter ‘‘S’’corporation.

As the Independent Fiduciary for thePlans, CNM determined whether thesubject transactions, and the actionstaken by the Plans in connection withthe transactions, were in the bestinterest of such Plans and the Accounts,in accordance with the requirements ofthe Act. In this regard, each of theParticipants (i.e., Dr. Orrechio, Mr. Hartand Mr. Peterson) made separatedeterminations that the proposedtransactions would be in the bestinterests of their Accounts. Uponarriving at this conclusion, adetermination was made to retain CNMas an independent fiduciary for thePlans in order to ensure that the termsof such transactions, including theappraisal made of the fair market valueof the Stock, would be protective of thePlans and the Accounts.

In a supplemental statement datedAugust 25, 1998 (the Statement), CNM

acknowledged its duties as anindependent fiduciary for thetransactions described herein. CNMrepresented that it had experience inacting as an independent fiduciary foremployee benefit plans. CNMconcluded that the subject transactionswould be prudent and in the bestinterest of each of the Accounts. CNMrepresented that it would ensure, amongother things, that the fair market valueof the Stock, as determined by Austin,would be updated on the date of thetransactions, and that each Accountwould receive the correct amount ofcash for its shares of Preferred Stock.Thus, the Independent Fiduciarysupervised the subject transactions toprotect the interests of the Plans and theAccounts.

14. The applicant also obtained anopinion regarding the subjecttransactions from Houlihan ValuationAdvisors dated June 16, 1998 (theFairness Opinion). The FairnessOpinion stated that the Preferred Stockwas essentially equivalent to theCommon Stock because the PreferredStock: (i) was convertible at the optionof the holder into Common Stock; (ii)had voting privileges identical to theCommon Stock; and (iii) paid nopreferred dividends. The differencesbetween the Preferred Stock and theCommon Stock in terms of theliquidation value of the Preferred Stockwas determined to be meaninglessbecause the fair market value of thePreferred and Common Stock is muchhigher than its liquidation value.

The Fairness Opinion concluded thatthe sale of the Preferred Stock by theAccounts to TTC would be fair to theAccounts because the Accounts wouldreceive adequate consideration for theirshares of the Preferred Stock, based onan independent appraisal.

15. In summary, the applicantrepresents that the subject transactionssatisfied the statutory criteria of section408(a) of the Act and section 4975(c)(2)of the Code because:

a. The sale of the Preferred Stock toTTC by the Accounts and the purchaseof the Common Stock from TTC by theParticipants were one-time transactionsfor cash;

b. The transactions described in (1)above took place on the same businessday;

c. The amount paid to the Accountsby TTC was the fair market value of thePreferred Stock, as determined by aqualified independent appraiser at thetime of the sale; and

d. The Independent Fiduciarydetermined that the subject transactionswere in the best interest and protectiveof the Accounts. The Independent


10 The Department agreed to this provision at therequest of the applicant in order to comply withTexas usury law. However, for purposes of thisproposed exemption, the Department understandsthat the rate on this Loan will in no event be lessthan 9.5% per annum.

Fiduciary supervised the subjecttransactions to protect the interests ofthe Accounts.

Notice to Interested PersonsBecause the only assets of the Plans’

involved in the subject transactions arethose held in the Accounts, and noother participants in the Plans areaffected by the transactions, it has beendetermined that there is no need todistribute this notice of proposedexemption to any interested personsother than the Participants. Commentsand requests for a hearing on theproposed exemption are due 30 daysafter the date of publication of thisnotice in the Federal Register.FOR FURTHER INFORMATION CONTACT:Ekaterina A. Uzlyan of the Department,telephone (202) 219–8883. (This is nota toll-free number.)

Sprinx Inc. Retirement Plan (the Plan),Located in Grand Prairie, Texas

[Application No. D–10660]

Proposed ExemptionThe Department is considering

granting an exemption under theauthority of section 408(a) of the Actand section 4975(c)(2) of the Code andin accordance with the procedures setforth in 29 C.F.R. Part 2570, Subpart B(55 FR 32836, 32847, August 10, 1990).If the exemption is granted, therestrictions of sections 406(a), 406(b)(1)and (b)(2) of the Act and the sanctionsresulting from the application of section4975 of the Code, by reason of section4975(c)(1)(A) through (E) of the Code,shall not apply to: (1) the proposed loanof $90,000 (the Loan) by the Plan toSprinx, Inc. (the Employer), the sponsorof the Plan; and (2) the guarantee ofrepayment of the Loan by Harry D.Spring, a party in interest with respectto the Plan; provided that the followingconditions are satisfied:

1. The Loan does not exceed 25% ofthe total assets of the Plan at any time;

2. The terms of the Loan are at leastas favorable to the Plan as those termswhich would exist in an arm’s-lengthtransaction with an unrelated party;

3. The Loan is secured by commonstock issued by the Employer, whichhas a fair market value, as determinedby an independent qualified appraiser,which will remain at least 200% of theoutstanding principal balance of theLoan throughout its duration;

4. The Plan has a first priorityperfected security interest in the Stock,which is properly filed and perfectedunder applicable state law;

5. An independent fiduciary reviewsthe terms and conditions of the Loanand determines that the Loan is in the

best interest and protective of the Planand its participants and beneficiaries;

6. An independent fiduciary monitorsthe Loan throughout its duration andtakes whatever action is necessary toprotect the interests of the Plan; and

7. The independent fiduciarymonitors the parties’ compliance withthe terms and conditions of thisproposed exemption, if granted.

Summary of Facts and Representations1. The Plan is a pension plan that was

established on August 18, 1993. ThePlan currently has approximatelyeighteen (18) participants andbeneficiaries. As of June 30, 1998, thePlan had total assets of $435,368. HarryD. Spring (Mr. Spring) is the trustee ofthe Plan.

2. The sponsor of the Plan is Sprinx,Inc. (the Employer). The Employer is aSubchapter ‘‘S’’ corporation,incorporated in the State of Texas. TheEmployer is in the business of healthcare consulting and billing. A primarypart of the Employer’s business isconsulting with medical servicecompanies to bill the health careservices provided by these companies.Mr. Spring is an officer and director ofthe Employer, and is the soleshareholder of the Stock.

3. The Loan will have a principalamount of $90,000 and a ten yearduration. The Loan will bear an interestrate equal to the lesser of (i) nine andone-half percent (9.5%) per annum, or(ii) the highest lawful non-usurious rateof interest permitted under Texas lawprovided that such rate is never lessthan 9.5% per annum.10 The Loanprovides for equal amortization ofprincipal and interest, and will bepayable in forty (40) quarterlyinstallments. The first thirty-nine (39)installments, based on an interest rate of9.5% per annum, will be equal to$3,510.20. The 40th and finalinstallment on the Loan will be equal tothe total unpaid balance at that time.The applicant represents that the Loanwill at all times represent less thantwenty-five percent (25%) of the Plan’stotal assets.

The Loan proceeds will be used topurchase additional equipment for theEmployer, and to hire additionalemployees.

4. The Loan will be secured at alltimes by the total outstanding shares ofthe Stock, all of which is owned by Mr.Spring. The Plan will have a first

priority perfected security interest in theStock, which will be properly filed andperfected under applicable state law.

The Stock was appraised by Saville,Dodgen & Company, ProfessionalCorporation, Cerified PublicAccountants (the SDC Appraisal) as ofJune 30, 1998, as having a fair marketvalue of $3.8 million. The SDCAppraisal used the capitalization ofearnings method to estimate the fairmarket value of the Stock, and theEmployer’s business as evidencedthereby. The capitalization of earningsmethod is based on the future estimatedearnings of the Employer. The SDCAppraisal has been supplemented by astatement from Clint Pugh (Mr. Pugh) ofSaville, Dodgen & Company, P.C. (SDC)which states that the procedures andanalysis utilized in the SDC Appraisalrepresent a reasonable estimate of fairmarket value of the Stock and theEmployer’s business at the present time.There are currently 10,800 shares of theStock with an estimated value per shareof $351.85, based on the SDC Appraisal.

In a further statement datedNovember 5, 1998, Mr. Pugh representsthat SDC is independent of theEmployer and Mr. Spring. In this regard,SDC performs tax compliance work forthe Employer, but the fees collectedfrom the Employer for these servicesrepresent less than one percent (1%) ofthe total annual revenue of SDC. Mr.Pugh also states that he is a qualifiedappraiser of the Stock and that he hasbeen performing appraisals for ten (10)years for various corporations. Mr. Pughrepresents that he adheres to theguidelines provided by the AmericanInstitute of Certified Public Accountantsfor business valuations.

5. Frost National Bank (the Bank) hasexamined the terms of the Loan. Byletter dated August 19, 1998, the Bankrepresents that it would make the sameloan on the same terms to the Employer,based on its assumptions regarding thecreditworthiness of the Employer andMr. Spring.

6. The Loan will be monitored byRichard S. Tucker (Mr. Tucker), whowill serve as the independent fiduciary(the Independent Fiduciary) on behalf ofthe Plan for purposes of the Loan. Mr.Tucker has submitted a statement inwhich he discusses his proposed role asthe Independent Fiduciary. Mr. Tuckerstates that the Loan will be in the bestinterest of the Plan and its participantsand beneficiaries. Mr. Tucker believesthat the Loan will be an appropriateinvestment for the Plan with adequatesafeguards and protections to ensurerepayment of all principal and interest.The Loan will also permit the Employerto satisfy its needs for additional


11 In this regard, the applicant makes a requestregarding a successor independent fiduciary.Specifically, if it becomes necessary in the futureto appoint a successor independent fiduciary (theSuccessor) to replace Mr. Tucker, the applicant willnotify the Department sixty (60) days in advance ofthe appointment of the Successor. Any Successorwill have the responsibilities, experience andindependence similar to those of Mr. Tucker.

equipment and employees, which willincrease its profitability.

Mr. Tucker states that the Loan willbe protective of the Plan because theprincipal amount of the Loan will beadequately secured and will representless than twenty-five percent (25%) ofthe Plan’s total assets. The Stock, ascollateral for the Loan, will have a fairmarket value which exceeds theoutstanding principal amount of theLoan by at least two hundred percent(200%) at all times.

With respect to Mr. Tucker’squalifications to act as the IndependentFiduciary for the Plan for purposes ofthe Loan, Mr. Tucker represents that heis attorney with experience inevaluating transactions, such as theLoan, and ensuring that suchtransactions have proper legaldocumentation. Thus, Mr. Tucker statesthat he has experience in protecting therights of the parties involved in suchtransactions.

Mr. Tucker represents that he isindependent of the Employer, Mr.Spring and their affiliates for purposesof his proposed duties as theIndependent Fiduciary. In this regard,Mr. Tucker states that he performs legalservices for the Employer. However, Mr.Tucker’s fees from the Employer forsuch services are less than one percent(1%) of his total revenues. In addition,the fees generated from the Employerrepresent less than one percent (1%) ofthe annual revenues received by Mr.Tucker’s firm.

Mr. Tucker represents that he hasbeen apprised of the duties andresponsibilities of a fiduciary under theAct. Mr. Tucker states that he willobtain, if necessary, appropriate advicefrom an experienced ERISA counsel asto what is required to properly executethe duties of an independent fiduciaryfor the Plan. Mr. Tucker acknowledgesand accepts his responsibilities andduties as the Independent Fiduciary forthis Loan transaction.

As the Independent Fiduciary, Mr.Tucker will represent the interests of thePlan at all times. Mr. Tucker willmonitor compliance by the Employerwith the terms and conditions of theLoan, and take whatever action isnecessary to safeguard the interests ofthe Plan and its participants andbeneficiaries.11

7. Mr. Spring also unconditionallyguarantees the prompt and fullrepayment of the Loan, pursuant to theterms of a written guarantee agreement(the Guarantee). Mr. Tucker, as theIndependent Fiduciary, has examinedthe terms of the Guarantee. Mr. Tuckerbelieves that the Guarantee is in the bestinterest of the Plan for several reasons:(a) it is an unconditional Guarantee,which is not conditioned on any otheractions that may occur on the part of thePlan or the Employer; (b) the Guaranteecovers the full amount of theindebtedness, including any additionalcosts or expenses associated with theliability; (c) if there are any changes inthe collateral provided by the Employerfor the Loan (i.e., the Stock), suchchanges will not affect the obligations ofMr. Spring under the Guarantee; and (d)the Guarantee is a guarantee of payment,under which the guarantor (i.e., Mr.Spring) is immediately required toperform by making payments.

Mr. Tucker represents that theGuarantee satisfies the applicablerequirements for such agreements underTexas law and is protective of the Planbecause it creates the maximumenforceable rights against Mr. Spring, asthe Loan guarantor. Mr. Springrepresents that he has an adequate networth to honor the Guarantee, ifnecessary. Mr. Tucker states that Mr.Spring has sufficient personal assets, inaddition to the Stock, to satisfy hisobligations under the Guarantee. Mr.Tucker also states that he will monitorthe financial status of Mr. Spring, asguarantor, and will ensure that the Loanremains adequately secured by theStock and the Guarantee.

8. In summary, the applicantrepresents that the proposed transactionsatisfies the statutory criteria of section408(a) of the Act and section 4975(c)(2)of the Code because:

a. The Loan will not exceed 25% ofthe total assets of the Plan at any time;

b. The terms of the Loan are at leastas favorable to the Plan as those termswhich would exist in an arm’s-lengthtransaction with an unrelated party;

c. The Loan will be secured by theStock, which has a fair market value, asdetermined by an independent qualifiedappraiser, of at least 200% of theoutstanding principal balance of theLoan;

d. The Plan has a first priorityperfected security interest in the Stock,which will be properly filed andperfected under applicable state law;

e. Mr. Tucker, as the IndependentFiduciary, has reviewed the proposedterms and conditions of the Loan anddetermined that the Loan would be inthe best interest and protective of the

Plan and its participants andbeneficiaries;

f. Mr. Tucker, as the IndependentFiduciary, will monitor the Loanthroughout its duration and takewhatever actions are necessary tosafeguard the interests of the Plan andits participants and beneficiaries; and

g. The Loan is personally andunconditionally guaranteed by Mr.Spring, who has an adequate net worthto honor the Guarantee, if necessary.FOR FURTHER INFORMATION CONTACT:Ekaterina A. Uzlyan of the Department,telephone (202) 219–8883. (This is nota toll-free number.)

General InformationThe attention of interested persons is

directed to the following:(1) The fact that a transaction is the

subject of an exemption under section408(a) of the Act and/or section4975(c)(2) of the Code does not relievea fiduciary or other party in interest ofdisqualified person from certain otherprovisions of the Act and/or the Code,including any prohibited transactionprovisions to which the exemption doesnot apply and the general fiduciaryresponsibility provisions of section 404of the Act, which among other thingsrequire a fiduciary to discharge hisduties respecting the plan solely in theinterest of the participants andbeneficiaries of the plan and in aprudent fashion in accordance withsection 404(a)(1)(b) of the act; nor doesit affect the requirement of section401(a) of the Code that the plan mustoperate for the exclusive benefit of theemployees of the employer maintainingthe plan and their beneficiaries;

(2) Before an exemption may begranted under section 408(a) of the Actand/or section 4975(c)(2) of the Code,the Department must find that theexemption is administratively feasible,in the interests of the plan and of itsparticipants and beneficiaries andprotective of the rights of participantsand beneficiaries of the plan;

(3) The proposed exemptions, ifgranted, will be supplemental to, andnot in derogation of, any otherprovisions of the Act and/or the Code,including statutory or administrativeexemptions and transitional rules.Furthermore, the fact that a transactionis subject to an administrative orstatutory exemption is not dispositive ofwhether the transaction is in fact aprohibited transaction; and

(4) The proposed exemptions, ifgranted, will be subject to the expresscondition that the material facts andrepresentations contained in eachapplication are true and complete, andthat each application accurately


describes all material terms of thetransaction which is the subject of theexemption.

Signed at Washington, DC, this 20th day ofNovember, 1998.Ivan Strasfeld,Director of Exemption Determinations,Pension and Welfare Benefits Administration,U.S. Department of Labor.[FR Doc. 98–31511 Filed 11–24–98; 8:45 am]BILLING CODE 4510–29–P

NATIONAL AERONAUTICS ANDSPACE ADMINISTRATION

[Notice 98–163]

NASA Advisory Council; Meeting

AGENCY: National Aeronautics andSpace Administration.ACTION: Notice of meeting.

SUMMARY: In accordance with theFederal Advisory Committee Act, PublicLaw 92–463, as amended, the NationalAeronautics and Space Administrationannounces a meeting of the NASAAdvisory Council.DATES: Thursday, December 3, 1998,9:00 a.m. to 4:30 p.m. and Friday,December 4, 1998, 9:00 a.m. to Noon.ADDRESSES: Jet Propulsion Laboratory,National Aeronautics and SpaceAdministration, Building 180, Room101, 4800 Oak Grove Drive, Pasadena,CA 91109–8099.FOR FURTHER INFORMATION CONTACT: Ms.Kathy Dakon, Code Z, NationalAeronautics and Space Administration,Washington, DC 20546, 202/358–0732.SUPPLEMENTARY INFORMATION: Themeeting will be open to the public upto the seating capacity of the room. Theagenda for the meeting is as follows:—JPL Update—AXAF—SOHO—TRIANA—MARS Exploration Architecture—Faster-Better-Cheaper—ISS Software—IORTF Status Report—Committee/TaskForce/Working Group

Reports—Discussion of Findings and

RecommendationsIt is imperative that the meeting be

held on these dates to accommodate thescheduling priorities of the keyparticipants. Visitors will be requestedto sign a visitor’s register.

Dated: November 18, 1998.Lori B. Garver,Acting Associate Administrator For Policyand Plans.[FR Doc. 98–31496 Filed 11–24–98; 8:45 am]BILLING CODE 7510–01–P

NATIONAL GAMBLING IMPACT STUDYCOMMISSION

Meeting

AGENCY: National Gambling ImpactStudy Commission, Regulation,Enforcement, & Internet Subcommittee.

ACTION: Notice of public meeting.

DATES: Tuesday, December 1, 1998, 5:00p.m. to 7:00 p.m. (EST).

ADDRESSES: The meeting site will be:800 North Capitol Street, NW, Suite 450,Washington, D.C. 20002.

DATES: Wednesday, December 2, 1998,8:00 a.m. to 4:30 p.m. (EST).

ADDRESSES: The meeting site will be:2358 Rayburn House Office Building,Washington, D.C. 20515.

STATUS: The meeting will take place intwo separate locations on different days.The meeting is open to the public bothdays. However, seating may be limited.Members of the public wishing to attendshould contact Craig Stevens at (202)523–8217 to make arrangements forattendance.

SUMMARY: At the December 1 meeting ofthe Regulation, Enforcement, andInternet Subcommittee of the NationalGambling Impact Study Commission,established under Public Law 104–169,dated August 3, 1996, the Members ofthe Subcommittee will discuss and heartelephonic presentations related togambling and the Internet. On December2, the Subcommittee will hold furtherdiscussions and hear additional in-person presentations, as well as hold apublic comment period.

CONTACT PERSONS: For furtherinformation on the agenda, meetinglocation or other matters contact CraigStevens at (202) 523–8217 or write to800 North Capitol St., N.W., Suite 450,Washington, D.C. 20002.

SUPPLEMENTARY INFORMATION: An openforum for public participation will beheld from 4:00 to 4:30 p.m. onDecember 2. Anyone wishing to makean oral presentation must contact CraigStevens by telephone at (202) 523–8217no later than November 30, 1998.Written comments can be sent to theCommission at any time at 800 NorthCapitol St., N.W., Suite 450,Washington, D.C. 20002. Visit theCommission’s Website atwww.ngisc.gov.Tim Bidwill,Special Assistant to the Chairman.[FR Doc. 98–31548 Filed 11–24–98; 8:45 am]BILLING CODE 6802–ET–U

NUCLEAR REGULATORYCOMMISSION

[Docket Nos. 50–387 and 388]

PP&L, Inc.; Notice of Withdrawal ofApplication for Amendments to FacilityOperating Licenses

The U.S. Nuclear RegulatoryCommission (the Commission) hasgranted the request of PP&L, Inc. (thelicensee) to withdraw its March 20,1996, application for proposedamendments to Facility OperatingLicense Nos. NPF–17 and NPF–22 forthe Susquehanna Steam Electric Station,Unit Nos. 1 and 2, located in LuzerneCounty, Pennsylvania.

The proposed amendments wouldhave revised the Susquehanna SteamElectric Station’s TechnicalSpecifications (TSs) to eliminate thehigh pressure coolant injection pumpauto-transfer on high suppression poollevel.

The Commission had previouslyissued a Notice of Consideration ofIssuance of Amendments published inthe Federal Register on December 18,1996 (61 FR 66713). However, by letterdated October 29, 1998, the licenseewithdrew the proposed change.

For further details with respect to thisaction, see the application foramendments dated March 20, 1996, andthe licensee’s letter dated October 29,1998, which withdrew the applicationfor license amendments. The abovedocuments are available for publicinspection at the Commission’s PublicDocument Room, the Gelman Building,2120 L Street, NW., Washington, DC,and at the local public document roomlocated at the Osterhout Free Library,Reference Department, 71 SouthFranklin Street, Wilkes-Barre, PA 18701.

Dated at Rockville, Maryland, this 18th dayof November 1998.

For The Nuclear Regulatory Commission.Victor Nerses,Senior Project Manager, Project DirectorateI–2, Division of Reactor Projects—I/II, Officeof Nuclear Reactor Regulation.[FR Doc. 98–31500 Filed 11–24–98; 8:45 am]BILLING CODE 7590–01–P


[Docket No. 50–482]

Wolf Creek Nuclear OperatingCorporation; Notice of Withdrawal ofApplication for Amendment to FacilityOperating License

The U.S. Nuclear RegulatoryCommission (the Commission) has


granted the request of Wolf CreekNuclear Operating Corporation (thelicensee) to withdraw its September 2,1997, as supplemented by letter datedJanuary 15, 1998. Application forproposed amendment to FacilityOperating License No. NPF–42 for theWolf Creek Nuclear Generating Station,Unit No. 1, located in Coffey County,Kansas.

The proposed amendment wouldhave revised the technical specificationsrelated to the auxiliary feedwatersystem.

The Commission had previouslyissued a Notice of Consideration ofIssuance of Amendment published inthe Federal Register on October 22,1997 (62 FR 54878). However, by letterdated November 6, 1998, the licenseewithdrew the proposed change.

For further details with respect to thisaction, see the application foramendment dated September 2, 1997,and supplemental letter dated January15, 1998, and the licensee’s letter datedNovember 6, 1998, which withdrew theapplication for license amendment. Theabove documents are available forpublic inspection at the Commission’sPublic Document Room, the GelmanBuilding, 2120 L Street, NW.,Washington, DC, and at the local publicdocument rooms located at the EmporiaState University, William Allen WhiteLibrary, 1200 Commercial Street,Emporia, Kansas 66801 and WashburnUniversity School of Law Library,Topeka, Kansas 66621.


For The Nuclear Regulatory Commission.Kristine M. Thomas,Project Manager, Project Directorate IV–2,Division of Reactor Projects—III/IV, Office ofNuclear Reactor Regulation.[FR Doc. 98–31497 Filed 11–24–98; 8:45 am]BILLING CODE 7590–01–P


[Dockets 70–7001 and 70–7002]

Notice of Renewal for Certificates ofCompliance GDP–1 and GDP–2 for theU.S. Enrichment Corporation, Paducahand Portsmouth Gaseous DiffusionPlants, Paducah, Kentucky, andPortsmouth, Ohio

The U.S. Nuclear RegulatoryCommission (NRC) is issuing acertification decision for the UnitedStates Enrichment Corporation (USEC)to allow continued operation of the twogaseous diffusion plants (GDPs) locatednear Paducah, Kentucky, and Piketon,

Ohio. The Director’s Decision is to issuerenewed Certificates of Compliance forthe GDPs that cover a five-year period.USEC submitted its renewalapplications on April 15, 1998. Noticeof Receipt of the applications appearedin the Federal Register (63 FR 24832) onMay 5, 1998, allowing a 45-day publiccomment period on the applications. Asrequired by the Energy Policy Act, NRCconsulted with the U.S. EnvironmentalProtection Agency (EPA) aboutcertification. EPA did not identify anysignificant compliance issues.

The NRC staff has reviewed thecertificate renewal applications for thegaseous diffusion plants located nearPaducah, Kentucky, and Piketon, Ohio,and concluded that in combination withcertificate conditions, they providereasonable assurance of adequate safety,safeguards, and security, andcompliance with NRC requirements.Therefore, the Director, Office ofNuclear Material Safety and Safeguards,is prepared to issue a renewedCertificate of Compliance for each plant.The staff has prepared ComplianceEvaluation Reports which providedetails of the staff’s evaluations.

The NRC staff has determined that therenewals satisfy the criteria for acategorical exclusion in accordancewith 10 CFR 51.22(c)(19). Therefore,pursuant to 10 CFR 51.22(b), noenvironmental impact statement orenvironmental assessment need beprepared for the renewal.

USEC or any person whose interestmay be affected and who submittedwritten comments in response to theFederal Register Notice on the renewalapplication under Section 76.37 mayfile a petition, not exceeding 30 pages,requesting review of the Director’sDecision. The petition must be filedwith the Commission not later than 15days after publication of this FederalRegister Notice. A petition for review ofthe Director’s Decision shall set forthwith particularity the interest of thepetitioner and how that interest may beaffected by the results of the decision.The petition should specifically explainthe reasons why review of the Decisionshould be permitted with particularreference to the following factors: (1)The interest of the petitioner; (2) howthat interest may be affected by theDecision, including the reasons why thepetitioner should be permitted a reviewof the Decision; and (3) the petitioner’sareas of concern about the activity thatis the subject matter of the Decision.Any person described in this paragraph(USEC or any person who filed apetition) may file a response to anypetition for review, not to exceed 30pages, within 10 days after filing of the

petition. If no petition is receivedwithin the designated 15-day period, theDirector will issue the final amendmentto the Certificate of Compliance withoutfurther delay. If a petition for review isreceived, the decision on theamendment application will becomefinal in 60 days, unless the Commissiongrants the petition for review orotherwise acts within 60 days afterpublication of this Federal RegisterNotice.

A petition for review must be filedwith the Secretary, U.S. NuclearRegulatory Commission, Washington,DC 20555–0001, Attention: Rulemakingsand Adjudications Staff, or may bedelivered to the Commission’s PublicDocument Room, the Gelman Building,2120 L Street, NW, Washington, DC, bythe above date.

For further details with respect to theaction see (1) the applications forrenewal and (2) the Commission’sCompliance Evaluation Reports. Theseitems (except for classified andproprietary portions which are withheldin accordance with 10 CFR 2.790,‘‘Availability of Public Records’’) areavailable for public inspection at theCommission’s Public Document Room,the Gelman Building, 2120 L Street,NW, Washington, DC, and at the LocalPublic Document Rooms established forthese facilities.

Date of renewal requests: April 15,1998.

Brief description of renewalapplications: USEC did not request anychanges to the existing documentation;previous applications, statements, andreports are incorporated by referenceinto the renewal application. Theseinclude the Technical SafetyRequirements, Safety Analysis Report,Compliance Plan, Quality AssuranceProgram, Emergency Plan, Security andSafeguards Plans, Waste ManagementProgram, and DecommissioningFunding Program, etc. Certificate ofCompliance GDP–1 for the PaducahGDP and Certificate of ComplianceGDP–2 for the Portsmouth GDP will berenewed for a 5-year period. This willallow continued operation of the GDPs.

Effective date: The renewal ofCertificates of Compliance GDP–1 andGDP–2 becomes effective immediatelyafter being signed by the Director, Officeof Nuclear Material Safety andSafeguards.

Local Public Document Roomlocations: Paducah Public Library, 555Washington Street, Paducah, Kentucky42003 and Portsmouth Public Library,1220 Gallia Street, Portsmouth, Ohio45662.FOR FURTHER INFORMATION CONTACT: Ms.Merri Horn, (301) 415–8126 or Mr.


Yawar Faraz (301) 415–8113; Office ofNuclear Material Safety and Safeguards,U.S. Nuclear Regulatory Commission,Washington, DC 20555.


For the Nuclear Regulatory Commission.Elizabeth Q. Ten Eyck,Acting Director, Office of Nuclear MaterialSafety and Safeguards.[FR Doc. 98–31498 Filed 11–24–98; 8:45 am]BILLING CODE 7590–01–P


[Docket 70–7001]

Notice of Amendment to Certificate ofCompliance GDP–1 for the U.S.Enrichment Corp., Paducah GaseousDiffusion Plant, Paducah, KY

The Director, Office of NuclearMaterial Safety and Safeguards, hasmade a determination that the followingamendment request is not significant inaccordance with 10 CFR 76.45. Inmaking that determination the staffconcluded that: (1) There is no changein the types or significant increase inthe amounts of any effluents that may bereleased offsite; (2) there is nosignificant increase in individual orcumulative occupational radiationexposure; (3) there is no significantconstruction impact; (4) there is nosignificant increase in the potential for,or radiological or chemicalconsequences from, previously analyzedaccidents; (5) the proposed changes donot result in the possibility of a new ordifferent kind of accident; (6) there is nosignificant reduction in any margin ofsafety; and (7) the proposed changeswill not result in an overall decrease inthe effectiveness of the plant’s safety,safeguards or security programs. Thebasis for this determination for theamendment request is shown below.

The NRC staff has reviewed thecertificate amendment application andconcluded that it provides reasonableassurance of adequate safety, safeguards,and security, and compliance with NRCrequirements. Therefore, the Director,Office of Nuclear Material Safety andSafeguards, is prepared to issue anamendment to the Certificate ofCompliance for the Paducah GaseousDiffusion Plant. The staff has prepareda Compliance Evaluation Report whichprovides details of the staff’s evaluation.

The NRC staff has determined thatthis amendment satisfies the criteria fora categorical exclusion in accordancewith 10 CFR 51.22(c)(19). Therefore,pursuant to 10 CFR 51.22(b), no

environmental impact statement orenvironmental assessment need beprepared for this amendment.

USEC or any person whose interestmay be affected may file a petition, notexceeding 30 pages, requesting reviewof the Director’s Decision. The petitionmust be filed with the Commission notlater than 15 days after publication ofthis Federal Register Notice. A petitionfor review of the Director’s Decisionshall set forth with particularity theinterest of the petitioner and how thatinterest may be affected by the results ofthe decision. The petition shouldspecifically explain the reasons whyreview of the Decision should bepermitted with particular reference tothe following factors: (1) The interest ofthe petitioner; (2) how that interest maybe affected by the Decision, includingthe reasons why the petitioner shouldbe permitted a review of the Decision;and (3) the petitioner’s areas of concernabout the activity that is the subjectmatter of the Decision. Any persondescribed in this paragraph (USEC orany person who filed a petition) mayfile a response to any petition forreview, not to exceed 30 pages, within10 days after filing of the petition. If nopetition is received within thedesignated 15-day period, the Directorwill issue the final amendment to theCertificate of Compliance withoutfurther delay. If a petition for review isreceived, the decision on theamendment application will becomefinal in 60 days, unless the Commissiongrants the petition for review orotherwise acts within 60 days afterpublication of this Federal RegisterNotice.

A petition for review must be filedwith the Secretary of the Commission,U.S. Nuclear Regulatory Commission,Washington, DC 20555–0001, Attention:Rulemakings and Adjudications Staff, ormay be delivered to the Commission’sPublic Document Room, the GelmanBuilding, 2120 L Street, NW,Washington, DC, by the above date.

For further details with respect to theaction see (1) the application foramendment and (2) the Commission’sCompliance Evaluation Report. Theseitems are available for public inspectionat the Commission’s Public DocumentRoom, the Gelman Building, 2120 LStreet, NW, Washington, DC, and at theLocal Public Document Room.

Date of amendment request:September 11, 1998.

Brief description of amendment: Theamendment proposes to deleteTechnical Safety Requirements (TSRs)2.3.2.1, ‘‘Normetex Pump DischargePressure,’’ and 2.3.3.1, ‘‘Normetex PumpHigh Discharge Pressure System.’’ The

request also includes changes to relatedsections of the Safety Analysis Report(SAR) to support deletion of the TSRrequirements.

Basis for finding of no significance:1. The proposed amendment will not

result in a change in the types orsignificant increase in the amounts ofany effluents that may be releasedoffsite.

The proposed amendment deletesTSR requirements for the NormetexPump High Discharge Pressure System.The accident scenario that the systemwas designed to prevent did not changeso uranium hexafluoride (UF6) remainsthe only effluent that may be released,and the amount remains bounded by the250 lbs controlled by the Normetex UF6

Release Detection System. Therefore,there is no change in the effluents thatmay be released offsite.

2. The proposed amendment will notresult in a significant increase inindividual or cumulative occupationalradiation exposure.

The proposed amendment does notpropose any new or unanalyzed activityfor the facility. Therefore, theamendment would not result in asignificant increase in individual orcumulative occupational radiationexposure.

3. The proposed amendment will notresult in a significant constructionimpact.

The proposed amendment does notinvolve any construction, therefore,there will be no construction impacts.

4. The proposed amendment will notresult in a significant increase in thepotential for, or radiological or chemicalconsequences from, previously analyzedaccidents.

The proposed amendment deletesTSR requirements for the NormetexPump High Discharge Pressure System.The accident scenario that the systemwas designed to prevent did not change,and the potential source term for UF6

remains bounded by the 250 lbscontrolled by the Normetex UF6 ReleaseDetection System. The downgrading ofthe Normetex Pump High DischargePressure System from a quality (Q)safety system to a non-safety safetysystem is offset by the upgrading of theNormetex Pump discharge block valveinterlock to a Q safety system. Bothsystems were designed to prevent anoverpressure of the pump discharge linewhen the pump discharge block valvecloses with the pump still running.Worker protection practices would limitany exposure to the worker from anypotential smaller release. Therefore, theproposed change will not result in asignificant increase in the potential for,or radiological or chemical


consequences from, previously analyzedaccidents.

5. The proposed amendment will notresult in the possibility of a new ordifferent kind of accident.

The proposed amendment does notpropose any new or unanalyzed activityfor the facility. The downgrading of theNormetex Pump High DischargePressure System from a quality (Q)safety system to a non-safety safetysystem is offset by the upgrading of theNormetex Pump discharge block valveinterlock to a Q safety system. Bothsystems were designed to prevent anoverpressure of the pump discharge linewhen the pump discharge block valvecloses with the pump still running.Therefore, the amendment does notraise the possibility of a new or differentkind of accident.

6. The proposed amendment will notresult in a significant reduction in anymargin of safety.

The safety limit proposed for deletiondid not change the bounding accidentrelease of 250 lbs. The downgrading ofthe Normetex Pump High DischargePressure System from a quality (Q)safety system to a non-safety safetysystem is offset by the upgrading of theNormetex Pump discharge block valveinterlock to a Q safety system. Bothsystems were designed to prevent anoverpressure of the pump discharge linewhen the pump discharge block valvecloses with the pump still running.With no increase in the potentialamount of hazardous material releasedand the switching of one Q safetysystem for another equivalent system,the accident remains unlikely.Therefore, there is no significantreduction in the margin of safety.

7. The proposed amendment will notresult in an overall decrease in theeffectiveness of the plant’s safety,safeguards or security programs.

The proposed amendment woulddelete a safety limit that was determinednot to be safety significant. The safetymargin remains the same. While onesafety system has been downgraded, anequivalent safety system has beenupgraded. Therefore, the deletion of theTSRs and supporting SAR changes donot decrease the effectiveness of theplant’s safety program. It also does notpropose any change to or affect thesafeguards and security programs.Therefore, the proposed amendmentwill not result in an overall decrease inthe effectiveness of the plant’ssafeguards or security programs.

Effective date: The amendment toCertificate of Compliance GDP–1becomes effective 5 days after beingsigned by the Director, Office of NuclearMaterial Safety and Safeguards.

Certificate of Compliance No. GDP–1:The amendment will delete the safetylimit for the Normetex Pump dischargepressure (TSR 2.3.2.1) and TSR 2.3.3.1,‘‘Normetex Pump High DischargePressure System.’’

Local Public Document Roomlocation: Paducah Public Library, 555Washington Street, Paducah, Kentucky42003.

Dated at Rockville, MD, this 18th day ofNovember 1998.

For the Nuclear Regulatory Commission.Elizabeth Q. Ten Eyck,Acting Director, Office of Nuclear MaterialSafety and Safeguards.[FR Doc. 98–31501 Filed 11–24–98; 8:45 am]BILLING CODE 7590–01–P


[Docket No. 50–305]

Wisconsin Public Service Corporation,Wisconsin Power and Light Company,Madison Gas and Electric Company,Kewaunee Nuclear Power Plant;Environmental Assessment andFinding of No Significant Impact

The U.S. Nuclear RegulatoryCommission (the Commission) isconsidering issuance of an exemptionfrom the requirements of 10 CFR 50.60to Wisconsin Public ServiceCorporation, Wisconsin Power andLight Company, and Madison Gas andElectric Company (the licensee), for theKewaunee Nuclear Power Plant locatedin Kewaunee County, Wisconsin.

Environmental Assessment

Identification of the Proposed Action

By application dated August 6, 1998,the licensee requested an exemptionfrom certain requirements of 10 CFR50.60, ‘‘Acceptance criteria for fractureprevention measures for lightwaternuclear power reactors for normaloperation,’’ and 10 CFR Part 50,Appendix G, ‘‘Fracture ToughnessRequirements.’’ The proposed actionwould permit the licensee to useAmerican Society of MechanicalEngineers (ASME) Code Case N–588 foranalyses used to develop reactorpressure vessel (RPV) pressure-temperature (PT) limits, and the lowtemperature overpressure protection(LTOP) system pressure setpoint .

Note: The application also encompassedthe proposed use of Code Case N–514;however, this assessment applies only to N–588.

The Need for the Proposed Action

Pursuant to 10 CFR 50.60(a), alllightwater nuclear power reactors mustmeet the fracture toughnessrequirements for the reactor coolantpressure boundary as set forth in 10 CFRPart 50, Appendix G. Appendix G of 10CFR Part 50 defines PT limits duringany condition of normal operation,including anticipated operationaloccurrences and system hydrostatictests to which the pressure boundarymay be subjected over its servicelifetime, and Appendix G.IV.2. specifiesthat these PT limits must be at least asconservative as the limits obtained bythe following methods of analysis andthe margins of safety of the ASME Code,Section XI, Appendix G.

By application dated August 6, 1998,the licensee submitted an exemptionrequest to enable use of ASME CodeCase N–588. Code Case N–588 providesbenefits in terms of calculating PT limitsby revising the Section XI, Appendix G,to assume that a circumferential flaw,rather than an axial flaw, exists in eachcircumferential weld in a reactor vessel.This reference flaw is a postulated flawthat accounts for the possibility of aprior existing defect that may have goneundetected during the fabricationprocess. Any significant, undetectedflaw in a circumferential weld in thebeltline region of an RPV would becircumferentially oriented therebyhaving a lesser effect than an assumedaxial flaw.

The effect of the change in referenceflaw orientation for circumferentialwelds, in the calculation of PT limits, isto expand the resulting PT ‘‘operatingwindow.’’ For Kewaunee, this largeroperating window will eliminate thecurrent requirement to disable onereactor coolant pump during conditionsof low reactor coolant systemtemperature.

Environmental Impacts of the ProposedAction

The staff has completed its evaluationof the proposed action and concludesthat it is acceptable because, with theapplication of Code Case N–588, theRPV will continue to be adequatelyprotected against the possibility ofbrittle fracture. The proposed actionwill not increase the probability orconsequences of accidents, nosignificant changes are being made inthe types of any effluents that may bereleased offsite, and there is nosignificant increase in the allowableoccupational or public radiationexposure. The staff has concluded thatthere is no significant radiological


environmental impact associated withthe proposed action.

The proposed action does not affectnonradiological plant effluents and hasno other environmental impact.Accordingly, the Commission concludesthat there are no significantenvironmental impacts associated withthe proposed action.

Alternatives to the Proposed Action

Since the staff has concluded thatthere is no significant environmentalimpact associated with the proposedaction, any alternatives with equal orgreater environmental impact need notbe evaluated. As an alternative to theproposed action, the staff considereddenial of the action (no-actionalternative). Denial of the applicationwould result in no change in currentenvironmental impacts. Theenvironmental impacts of the proposedaction and the alternative action aresimilar.

Alternative Use of Resources

This action does not involve the useof any resources not previouslyconsidered in the Final EnvironmentalStatement which was issued December20, 1972.

Agencies and Persons Consulted

In accordance with its stated policy,on November 19, 1998, the staffconsulted with Ms. Sarah Denkins, ofthe Public Service Commission of theState of Wisconsin, regarding theenvironmental impact of the proposedaction. The State official had nocomments.

Finding of No Significant Impact

Based upon the environmentalassessment, the staff concludes that theproposed action will not have asignificant effect on the quality of thehuman environment. Accordingly, thestaff has determined not to prepare anenvironmental impact statement for theproposed action.

For further details with respect to theproposed action, see the licensee’s letterdated August 6, 1998, which is availablefor public inspection at theCommission’s Public Document Room,The Gelman Building, 2120 L Street,NW, Washington, D.C., and at the localpublic document room located at theUniversity of Wisconsin, Cofrin Library,2420 Nicolet Drive, Green Bay,Wisconsin 54311–7001.


For The Nuclear Regulatory Commission.William O. Long,Senior Project Manager, Project DirectorateIII–1, Division of Reactor Projects—III/IV,Office of Nuclear Reactor Regulation.[FR Doc. 98–31499 Filed 11–24–98; 8:45 am]BILLING CODE 7590–01–P

POSTAL SERVICE


TIMES AND DATES: 1:00 p.m., Monday,December 7, 1998; 8:30 a.m., Tuesday,December 8, 1998.PLACE: Washington, D.C., at U.S. PostalService Headquarters, 475 L’EnfantPlaza, S.W., in the Benjamin FranklinRoom.STATUS: December 7 (Closed); December8 (Open).MATTERS TO BE CONSIDERED:

Monday, December 7—1:00 p.m.(Closed)

1. Audit Committee Report andReview of Year-End FinancialStatements.

2. Compensation Issues.3. Tray Management System.

Tuesday, December 8—8:30 a.m. (Open)

1. Minutes of the Previous Meeting,November 2–3, 1998.

2. Remarks of the Postmaster General/Chief Executive Officer.

3. Consideration of FY 1998 AuditedFinancial Statements.

4. Consideration of the FY 1998Annual Report.

5. Final FY 2000 AppropriationRequest.

6. Tentative Agenda for the January 4–5, 1999 meeting in Washington, D.C.CONTACT PERSON FOR MORE INFORMATION:Thomas J. Koerber, Secretary of theBoard, U.S. Postal Service, 475 L’EnfantPlaza, S.W., Washington, D.C. 20260–1000. Telephone (202) 268–4800.Thomas J. Koerber,Secretary.[FR Doc. 98–31670 Filed 11–23–98; 3:39 pm]BILLING CODE 7710–12–M

SECURITIES AND EXCHANGECOMMISSION

[Rel. No. IC–23540; File No. 812–11258]

INVESCO Value Trust; Notice ofApplication

November 18, 1998.AGENCY: The Securities and ExchangeCommission (‘‘Commission’’).ACTION: Notice of application underSection 17(b) of the Investment

Company Act of 1940 (the ‘‘Act’’) for anexemption from Section 17(a) of the Act.

SUMMARY OF APPLICATION: INVESCOValue Trust (the ‘‘Trust’’) on behalf ofINVESCO Total Return Fund (the‘‘Fund’’), seeks an exemption permittingan in-kind redemption of Fund sharesheld by an affiliated person of the Trust.APPLICANT: The Trust on behalf of theFund.FILING DATE: The application was filedon August 12, 1998.HEARING OR NOTIFICATION OF HEARING: Anorder granting the application will beissued unless the Commission orders ahearing. Interested persons may requesta hearing by writing to the Secretary ofthe Commission and serving Applicantswith a copy of the request, personally orby mail. Hearing requests should bereceived by the Commission by 5:30p.m. on December 14, 1998, and shouldbe accompanied by proof of service onApplicants, in the form of an affidavitor, for lawyers, a certificate of service.Hearing requests should state the natureof the writer’s interest, the reason for therequest, and the issues contested.Persons may request notification of ahearing by writing to the Secretary ofthe Commission.ADDRESSES: Secretary, Securities andExchange Commission, 450 Fifth Street,N.W., Washington, D.C. 20549.Applicant, c/o Glen A. Payne, Esq.,INVESCO Funds Group, Inc., 7800 EastUnion Avenue, Denver, Colorado 80237.FOR FURTHER INFORMATION CONTACT:Ethan D. Corey, Senior Counsel, at (202)942–0675, or Kevin M. Kirchoff, BranchChief, at (202) 942–0672, Office ofInsurance Products, Division ofInvestment Management.SUPPLEMENTARY INFORMATION: Thefollowing is a summary of theapplication; the complete applicationmay be obtained for a fee from thePublic Reference Branch of theCommission, 450 5th Street, N.W.,Washington, D.C. 20549 (tel. (202) 942–8090).

Applicant’s Representations1. The Trust, a Massachusetts

business trust, currently offers threeseries, including the Fund. INVESCOFunds Group, Inc. (‘‘Adviser’’) is theTrust’s investment adviser. INVESCOCapital Management, Inc. serves as theFund’s sub-adviser.

2. Connecticut General Life InsuranceCompany (‘‘Connecticut General’’) is aConnecticut life insurance company.Separate Account 55K is a pooledseparate account established andmaintained by Connecticut General forreceipt of amounts allocated to it in


accordance with the terms of groupannuity contracts and fundingagreements. All amounts allocated toSeparate Account 55K are invested inshares of the Fund. ConnecticutGeneral, on behalf of Separate Account55K (the ‘‘Affiliated Shareholder’’)owned beneficially, as of June 30, 1998,14.15% of the outstanding shares of theFund.

3. Connecticut General hasdetermined that it would be in the bestinterest of pension, profit-sharing andannuity plans invested in SeparateAccount 55K if the shares of the Fundowned by the Affiliated Shareholderwere redeemed and the proceeds placedin Separate Account 55K, whichthereafter will be separately managed byAdviser or its affiliate. Consequently,the Affiliated Shareholder has advisedthe Trust that it expects to redeem all ofits shares of the Fund and reinvest theproceeds in Separate Account 55K.

4. The Fund’s prospectus andstatement of additional informationprovide that shares may be redeemed atthe net asset value per share nextdetermined after receipt of a properredemption request. If, however, theBoard of Trustees of the Trust (the‘‘Board’’) determines that conditionsexist which make payment ofredemption proceeds wholly in cashunwise or undesirable, the Fund maysatisfy all or part of a redemptionrequest by delivering readily marketableportfolio securities to a redeemingshareholder. The Board has determinedthat it would be in the best interests ofthe Fund and its shareholders to redeemthe shares of the Affiliated Shareholderin-kind as described below.

5. Applicant proposes to redeem theshares of the Affiliated Shareholder inthe form of a pro rata distribution ofeach portfolio security held by the Fundafter excluding: (a) Securities which, ifdistributed, would be required to beregistered under the Securities Act of1933; and (b) certain portfolio assets(such as futures and options contractsand repurchase agreements) that,although they may be liquid andmarketable, must be traded through themarketplace or with the counterparty tothe transaction in order to effect achange in beneficial ownership.

6. Securities to be distributed to theAffiliated Shareholder through the in-kind redemption will be further limitedto securities which are traded on apublic securities market or for whichquoted bid prices are available. Cashwill be paid for that portion of theFund’s assets represented by cashequivalents (such as certificates ofdeposit, commercial paper andrepurchase agreements) and other assets

which are not readily distributable(including receivables and prepaidexpenses), net of all liabilities(including accounts payable). Inaddition, the Fund will distribute cashin lieu of securities held in its portfolionot amounting to round lots (or whichwould not amount to round lots ifincluded in the in-kind distribution),fractional shares and accruals on suchsecurities.

Applicant’s Legal Analysis1. Section 17(a)(2) of the Act prohibits

affiliated persons of a registeredinvestment company from knowinglypurchasing any security from thecompany. Section 2(a)(3)(A) of the Actdefines ‘‘affiliated person’’ of anotherperson to include any person owning5% or more of the outstanding votingsecurities of the other person. TheAffiliated Shareholder is an affiliatedperson of the Fund under section2(a)(3)(A) of the Act because it ownsbeneficially in excess of 5% of theFunds shares. In addition, the AffiliatedShareholder may be deemed to be anaffiliated person of the Fund underSection 2(a)(3)(C) of the Act because theAffiliated Shareholder and the Fundmay be deemed to be under the commoncontrol of Adviser, which serves asinvestment adviser of the Fund andwhich (or its affiliate), following theredemption, will be retained by theAffiliated Shareholder to serve asinvestment adviser to Separate Account55K. To the extent that the proposed in-kind redemption would be consideredto involve the ‘‘purchase’’ of portfoliosecurities (of which the Fund is not theissuer) by the Affiliated Shareholder,the proposed in-kind redemption wouldbe prohibited by Section 17(a)(2) of theAct.

2. Section 17(b) of the Act providesthat the Commission shall exempt aproposed transaction from Section 17(a)if evidence establishes that: (a) the termsof the proposed transaction arereasonable and fair and do not involveoverreaching; (b) the proposedtransaction is consistent with the policyof each registered investment companyinvolved; and (c) the proposedtransaction is consistent with thegeneral purposes of the Act. Applicantsubmits that the terms of the proposedin-kind redemption by the AffiliatedShareholder meet the standards set forthin Section 17(b).

3. Applicant asserts that the terms ofthe proposed in-kind redemption do notinvolve overreaching on the part of anyperson and are reasonable and fair to theFund, its shareholders and the AffiliatedShareholder. The Affiliated Shareholderwill have no choice as to the type of

consideration to be received inconnection with its redemption request,and neither the Adviser nor theAffiliated Shareholder will have anyopportunity to select the specificportfolio securities to be distributed. Inaddition, the Fund will use an objective,verifiable standard to value any securityto be distributed pursuant to theproposed in-kind redemption. Inaddition, the proposed in-kindredemption is consistent with theinvestment policies of the Fund, as setforth in its prospectus, which expresslydiscloses the Fund’s ability to redeemshares in-kind. Finally, applicant assertsthat the proposed in-kind redemption isconsistent with the general purposes ofthe Act to protect shareholders ofinvestment companies from self-dealingon the part of investment companyaffiliates to the detriment of othershareholders because the AffiliatedShareholder would not receive anyadvantage not available to othershareholders if the proposed in-kindredemption is permitted.

Applicant’s Conditions1. Applicant has consented to the

following conditions:a. The protfolio securities of the Fund

distributed to the Affiliated Shareholderpursuant to the redemption in-kind (the‘‘In-Kind Securities’’) will be limited tosecurities that are traded on a publicsecurities market or for which quotedbid prices are available.

b. The In-Kind Securities will bedistributed by the Fund on a pro ratebasis after excluding: (1) Securitieswhich, if distributed, would be requiredto be register under the Securities Act of1933; and (2) certain portfolio assets(such as futures and options contractsand repurchase agreements) that,although they may be liquid andmarketable, must be traded through themarketplace or with the counterparty tothe transaction in order to effect achange in beneficial ownership. Cashwill be paid for that portion of theFund’s assets represnted by cashequivalents (such as certificates ofdeposit, commercail paper, andrepurchase agreements) and other assetswhich are not readily distrutable(including receivables and prepaidexpenses), net of all liabilities(including accounts payable.) Inaddition, the Fund will distribute cashin lieu of securities held in its portfolionot amounting to round lots (or whichwould not amount to round lots ifincluded in the in-kind distridution),fractional shares, and accruals on suchsecurities.

c. The In-Kind Securities distributedto the Affiliated Shareholder will be


1 Three of the SunAmerica Series Trust Portfolios,the Equity Income Portfolio, the Equity IndexPortfolio, and the Small Company Value Portfolioare newly organized and have not yet commencedoffering shares to the public. Applicants do not seekrelief with respect to these Portfolios.

2 One Portfolio of Anchor Series Trust, the Target‘98 Portfolio, was liquidated as of November 15,1998. Applicants do not seek relief with respect tothis Portfolio.

valued in the same manner as theywould be valued for purposes ofcomputing the Fund’s net asset value,which, in the case of securities tradedon a public securities market for whichquotations are avaialble, is their lastreported sales price on the exhange onwhich the securities are primarilytraded or at the last sales price on thenational securities market, or, if thesecurities are not listed on an exchangeor the national securities market or ifthere is no such reported price, theaverage of the most recent bid and askedprices (or, if no asked price is available,the last quoted bid price).

2. The Fund will maintain andpreserve for a period of not less than sixyears from the end of the fiscal year inwhich the proposed in-kind redemptionoccurs the first two years in an easilysecurity distributed, the terms of thedistribution, and the information ormaterials upon which the valuation wasmade.

ConclusionFor the reasons summarized above,

Applicant assets that the requestedexemption is appropriate in the publicinterest and consistent with theprotection of investors and the purposesfairly intended by the policy andprovisions of the Act.

For the Commission, by the Division ofInvestment Management, pursuant todelegated authority.Margaret H. McFarland,Deputy Secretary.[FR Doc. 98–31443 Filed 11–24–98; 8:45 am]BILLING CODE 8010–01–M

SECURITIES AND EXCHANGECOMMISSION

[Investment Company Act Release No.23541; 812–11336]

SunAmerica Asset Management Corp.,et al.; Notice of Aapplication

November 19, 1998.AGENCY: Securities and ExchangeCommission (‘‘SEC’’).ACTION: Notice of application forexemption under Section 6(c) of theInvestment Company Act of 1940 (the‘‘Act’’) from Section 15(a) of the Act.

SUMMARY OF APPLICATION: The requestedorder would permit the implementation,without prior shareholder approval, ofnew investment advisory and sub-advisory agreements (the ‘‘NewAgreements’’) for a period of not morethan 120 days beginning on the later ofthe date on which the acquisition byAmerican International Group (‘‘AIG’’)of SunAmerica Inc. (‘‘SunAmerica’’) is

consummated or the date on which therequested order is issued andcontinuing through the date the NewAgreements are approved ordisapproved by the shareholders (but inno event later than April 30, 1999)(‘‘Interim Period’’). The order wouldalso permit payment of all fees earnedunder the New Agreements during theInterim Period following shareholderapproval.APPLICANTS: SunAmerica AssetManagement Corp. (‘‘Adviser’’),SunAmerica Series Trust, Anchor SeriesTrust, Seasons Series Trust, Style SelectSeries, Inc., SunAmerica Equity Funds,SunAmerica Income Funds,SunAmerica Money Market Funds, Inc.(each a ‘‘Fund’’, collectively, the‘‘Funds’’), each on behalf of its separateportfolios (each a ‘‘Portfolio’’,collectively the ‘‘Portfolios’’).FILING DATES: The application was filedon October 2, 1998, and amended onNovember 9, 1998, and November 18,1998.HEARING OR NOTIFICATION OF HEARING: Anorder granting the application will beissued unless the SEC orders a hearing.Interested persons may request ahearing by writing to the SEC’sSecretary and serving applicants with acopy of the request, personally or bymail. Hearing requests should bereceived by the SEC by 5:30 p.m. onDecember 14, 1998, and should beaccompanied by proof of service onapplicants in the form of an affidavit or,for lawyers, a certificate of service.Hearing requests should state the natureof the writer’s interest, the reason for therequest, and the issues contested.Persons who wish to be notified of ahearing may request notification bywriting to the SEC’s Secretary.ADDRESSES: Secretary, SEC, 450 FifthStreet, NW, Washington, DC 20549.Applicants, The SunAmerica Center,733 Third Avenue, New York, NewYork 10017.FOR FURTHER INFORMATION CONTACT:Bruce R. MacNeil, Staff Attorney, at(202) 942–0634, or Edward P.Macdonald, Branch Chief, at (202) 942–0564 (Division of InvestmentManagement, Office of InvestmentCompany Regulation).SUPPLEMENTARY INFORMATION: Thefollowing is a summary of theapplication. The complete applicationmay be obtained for a fee at the SEC’sPublic Reference Branch, 450 FifthStreet, NW, Washington, DC 20549 (tel.no. 202–942–8090).

Applicants’ Representations1. Each Fund is an open-end

management investment company

registered under the Act. SunAmericaSeries Trust is comprised of twenty-fivePortfolios,1 Anchor Series Trust iscomprised of twelve Portfolios,2 StyleSelect Series, Inc. is comprised of ninePortfolios, Seasons Series Trust andSunAmerica Equity Funds each arecomprised of six Portfolios, SunAmericaIncome Funds is comprised of fivePortfolios, and SunAmerica MoneyMarket Funds, Inc. is comprised of onePortfolio. SunAmerica Money MarketFunds and Style Select Series, Inc. areorganized as Maryland corporations. Allother Funds are organized asMassachusetts business trusts.

2. The Adviser, an indirect wholly-owned subsidiary of SunAmerica, isregistered under the InvestmentAdvisers Act of 1940 (‘‘Advisers Act’’).The Adviser manages the assets of eachFund pursuant to an investmentadvisory contract between each Fund,on behalf of each of its Portfolios, andthe Adviser (‘‘Existing ManagementAgreements’’).

3. Certain Portfolios of SunAmericaSeries Trust, Anchor Series Trust,Seasons Series Trust, and Style SelectSeries, Inc. are subadvised by one ormore investment advisers registeredunder the Advisers Act (each a ‘‘Sub-Adviser’’, collectively, the ‘‘Sub-Advisers’’). The Sub-Advisers servepursuant to separate agreements (the‘‘Existing Sub-Advisory Agreements’’).

4. On August 19, 1998, SunAmericaand AIG entered into an agreementpursuant to which SunAmerica willmerge with and into AIG, with AIG asthe surviving entity (‘‘Transaction’’). Asa result of the consummation of theTransaction, the Adviser will become awholly-owned subsidiary of AIG. TheTransaction is expected to beconsummated on or about December 15,1998 (‘‘Closing Date’’). Applicants statethat the Transaction will result in anassignment, and thus automatictermination, of the Existing AdvisoryAgreements and the Existing Sub-Advisory Agreements.

5. Applicant’s request an exemptionto permit (a) the implementation duringthe Interim Period, prior to obtainingshareholder approval, of the NewAgreements between the Funds and theAdviser and Sub-Advisers, and (b) theAdviser and Sub-Advisers to receive


3 Applicants state that if the Closing Dateprecedes the issuance of the requested order, theAdviser, and if applicable the Subadvisers, willserve after the Closing Date and prior to theissuance of the order in a manner consistent withtheir fiduciary duty to provide investment advisoryservices to the Portfolios even though approval ofthe New Agreements has not been secured from thePortfolios’ respective shareholders. Applicants alsostate that the Adviser, and if applicable theSubadviser, will be entitled to receive from eachPortfolio with respect to the period from the ClosingDate until the issuance of the order no more thanthe actual out-of-pocket cost to the Adviser, and ifapplicable the Subadvisers, for providinginvestment advisory services to the Portfolios.

from each Fund, upon approval of theapplicable Portfolio’s shareholders, anyand all fees payable under the NewAgreements during the Interim Period.The requested exemption would coverthe Interim Period of not more than 120days beginning on the later of theClosing Date or the date the requestedorder is issued and continuing, withrespect to each Portfolio, through thedate the New Agreements are approvedor disapproved by the shareholders ofthe Portfolio (but in no event later thanApril 30, 1999).3 The New Agreementswill contain terms and conditionsidentical to those of the ExistingAdvisory Agreements and Existing Sub-Advisory Agreements, except for theeffective and termination dates andescrow provisions described below.

6. On October 15, 1998 and October20, 1998 the boards of directors ortrustees of the Funds (the ‘‘Boards’’),including a majority of the directorswho are not ‘‘interested persons’’ withinthe meaning of section 2(a)(19) of theAct (the ‘‘Independent BoardMembers’’), voted in accordance withsection 15(c) of the Act to approve theNew Agreements and to submit them tothe Funds’ shareholders. Theshareholders meetings are scheduled tobe held on or about December 30, 1998.

7. Applicants propose to enter into anescrow arrangement with an unaffiliatedescrow agent. The fees earned by theAdviser and Sub-Advisers during theInterim Period under the NewAgreements would be paid into aninterest-bearing escrow account. Theamounts in the escrow account withrespect to a Portfolio (including anyinterest earned) will be paid (a) to theAdviser and Sub-Advisers, if any, onlyif shareholders of the Portfolio approvethe applicable New Agreements or (b) tothe Portfolio if the Interim Period hasended and shareholders have notapproved the applicable NewAgreements. Before any such payment ismade, the Board of the relevant Fundwill be notified.

Applicant’s Legal Analysis

1. Section 15(a) of the Act provides,in pertinent part, that it shall beunlawful for any person to serve or actas investment adviser of a registeredinvestment company, except pursuantto a written contract that has beenapproved by the vote of a majority of theoutstanding voting securities of theinvestment company. Section 15(a)further requires that the written contractprovide for automatic termination in theevent of its assignment. Section 2(a)(4)of the Act defines ‘‘assignment’’ toinclude any direct or indirect transfer ofa controlling block of the assignor’soutstanding voting securities by asecurity holder of the assignor.Applicants state that the Transactionwill result in an ‘‘assignment’’ of theExisting Advisory Agreements andExisting Sub-Advisory Agreements, andthat the Agreements will terminate bytheir terms and in accordance with theAct.

2. Rule 15a–4 under the Act provides,in pertinent part, that if an investmentadvisory contract with an investmentcompany is terminated, the adviser maycontinue to serve for up to 120 daysunder a written contract that has notbeen approved by the investmentcompany’s shareholders, provided that:(a) the new contract is approved by theboard of directors (including a majorityof the non-interested directors); (b) thecompensation to be paid under the newcontract does not exceed thecompensation which would have beenpaid under the contract most recentlyapproved by shareholders of theinvestment company; and (c) neither theadviser nor any controlling person ofthe adviser ‘‘directly or indirectlyreceives money or other benefit’’ inconnection with the transaction.Applicants state that they may not relyon rule 15a–4 because of the benefitsarising to SunAmerica, the Adviser’sparent, in connection with theTransaction.

3. Section 6(c) provides that the SECmay exempt any person, security, ortransaction from any provision of theAct, if and to the extent that theexemption is necessary or appropriatein the public interest and consistentwith the protection of investors and thepurposes fairly intended by the policiesand provisions of the Act.

4. Applicants state that the requestedrelief satisfies this standard. Applicantsassert that the structure and timing ofthe Transaction were determined byAIG and SunAmerica in response to anumber of factors beyond the scope ofthe Act and substantially unrelated tothe Funds. Applicants further assert that

the requested relief would permitcontinuity of investment managementfor the Funds following the Transaction.Applicants state that the Funds shouldreceive, during the Interim Period, thesame advisory services, provided in thesame manner, at the same fee level, bysubstantially the same personnel, asthey received prior to the Transaction.Applicants state that if the personnelproviding material services pursuant tothe New Agreements materially change,the Adviser will apprise and consultwith the applicable Board to ensure thatthe Directors (including a majority ofthe Independent Board Members) aresatisfied that the services provided bythe Adviser and Sub-Advisers, if any,will not be diminished in scope orquality.

5. Applicants submit that to deprivethe Adviser and Sub-Advisers of feesearned during the Interim Period wouldbe an unduly harsh result andunreasonable penalty. Applicants alsostate that such fees will be released tothe Adviser and Sub-Advisers only aftershareholder approval of the NewAgreements.

Applicants’ ConditionsApplicants agree that any order of the

SEC granting the requested relief will besubject to the following conditions:

1. Each New Agreement that is ineffect during the Interim Period willhave substantially the same terms andconditions as the correspondingExisting Management Agreement andExisting Sub-Advisory Agreement,except for their respective effective andtermination dates and escrowprovisions.

2. Fees earned by the Advisers andthe Sub-Advisers in respect of the NewAgreements during the Interim Periodwill be maintained in an interest-bearing escrow account, and amounts inthe account (including interest earnedon such paid fees) will be paid (a) to theAdviser and Sub-Advisers inaccordance with the New Agreements,only after the requisite shareholderapprovals are obtained, or (b) to therespective Portfolio, in the absence ofsuch approvals with respect to suchPortfolio.

3. Each Fund will convene a meetingof the shareholders to vote on approvalof the applicable New Agreement on orbefore the 120th day following thetermination of the Existing ManagementAgreements and Existing Sub-AdvisoryAgreements (but in no event later thanApril 30, 1999).

4. Either AIG or the Adviser will bearthe costs of preparing and filing thisapplication and the costs relating to thesolicitation of shareholder approval of


the Portfolios necessitated by theTransaction.

5. The Adviser will, and will causethe Sub-Advisers to, take all appropriatesteps so that the scope and quality of theadvisory and other services provided tothe Portfolios during the Interim Periodwill be at least equivalent, in thejudgment of each Board, including amajority of the Independent BoardMembers, to the scope and quality ofservice previously provided. Ifpersonnel providing material servicesduring the Interim Period changematerially, the Adviser will apprise andconsult with the appropriate Board toassure that the Board, including amajority of the Independent BoardMembers, are satisfied that the servicesprovided will not be diminished inscope or quality.

For the SEC, by the Division ofInvestment Management, underdelegated authority.Margaret H. McFarland,Deputy Secretary.[FR Doc. 98–31442 Filed 11–24–98; 8:45 am]BILLING CODE 8010–01–M

SOCIAL SECURITY ADMINISTRATION

Agency Information CollectionActivities: Proposed CollectionRequests

This notice lists informationcollection packages that will requiresubmission to the Office of Managementand Budget (OMB), in compliance withP.L. 104–13 effective October 1, 1995,The Paperwork Reduction Act of 1995.The information collection listed belowis a proposed new collection requiringOMB approval:

Authorization to Obtain Earnings Datafrom the Social SecurityAdministration—0960–NEW. SSAcollects this information when a wageearner or a third party requests detailedearnings information pertaining to thewage earner from the Social SecurityAdministration. The informationprovided on form SSA–581 is used bySSA to verify the authorization to accessearnings record data and to produce anitemized statement for release to thethird party named on the form. Theinformation is provided by the wageearner and/or the third party.

Number of Respondents: 60,000.Frequency of Response: 1.Average Burden Per Response: 2

minutes.Estimated Annual Burden: 2,000

hours.Written comments and

recommendations regarding theinformation collection(s) should be sent

within 60 days from the date of thispublication, directly to the SSA ReportsClearance Officer at the followingaddress: Social Security Administration,DCFAM, Attn: Frederick W.Brickenkamp, 6401 Security Blvd., 1–A–21 Operations Bldg., Baltimore, MD21235.

In addition to your comments on theaccuracy of the agency’s burdenestimate, we are soliciting comments onthe need for the information; itspractical utility; ways to enhance itsquality, utility and clarity; and on waysto minimize burden on respondents,including the use of automatedcollection techniques or other forms ofinformation technology.

To receive a copy of any of the forms,call the SSA Reports Clearance Officeron (410) 965–4145 or write to him at theaddress listed above.

Dated: November 18, 1998.Frederick W. Brickenkamp,Reports Clearance Officer, Social SecurityAdministration.[FR Doc. 98–31429 Filed 11–24–98; 8:45 am]BILLING CODE 4190–29–P



RTCA, Inc.; Government/Industry FreeFlight Steering Committee

Pursuant to section 10(a)(2) of theFederal Advisory Committee Act (Pub.L. 92–463, 5 U.S.C., Appendix 2), noticeis hereby given for an RTCAGovernment/Industry Free FlightSteering Committee meeting to be heldDecember 10, 1998, starting at 1:00 p.m.The meeting will be held at the FederalAviation Administration, 800Independence Avenue, SW.,Washington, DC, 20591, in the BessieColeman Conference Center, Room 2AB.

The agenda will include: (1) Welcomeand Opening Remarks; (2) ReviewSummary of the Previous Meeting; (3)FAA Report on (a) Controller Pilot DataLink Communications Human FactorsRoadmap and (b) Safe Flight 21; (4)Report and Recommendations from theFree Flight Select Committee; (5)Progress Report on the GPS/WAAS SoleMeans Risk Assessment; (6) OtherBusiness; (7) Date and Location of NextMeeting; (8) Closing Remarks.

Attendance is open to the interestedpublic but limited to space availability.With the approval of the co-chairmen,members of the public may present oralstatements at the meeting. Personswishing to present statements or obtaininformation should contact the RTCA,Inc., at (202) 833–9339 (phone), (202)

833–9434 (facsimile), [email protected] (e-mail). Members ofthe public may present a writtenstatement at any time.

Issued in Washington, DC, on November17, 1998.Janice L. Peters,Designated Official.[FR Doc. 98–31533 Filed 11–24–98; 8:45 am]BILLING CODE 4910–13–M



Public Hearing To Receive PublicComments Concerning theImplementation of the NoiseAbatement Measures at theIndianapolis International Airport

AGENCY: Federal AviationAdministration (FAA), DOT.ACTION: Notice of Public Hearing.

SUMMARY: The Federal AviationAdministration (FAA) is issuing thisnotice to advise the public that a PublicHearing will be held concerning theenvironmental impact of implementingthe Noise Abatement Measuresdescribed in the Draft SupplementalEnvironmental Impact Statement(DSEIS) for Indianapolis InternationalAirport. This hearing is being heldpursuant to the requirements of theNational Environmental Policy Act of1969 (Pub. L. 91–190) and other laws asapplicable.DATES: January 5, 1999, 5:00 p.m.–8:00p.m.ADDRESSES: Holiday Inn Select—Airport, 2501 S. High School Road,Indianapolis, IN.POINT OF CONTACT: Mr. Wally Welter,Environmental Specialist, FAA GreatLakes Region, Air Traffic Division,AGL–520.V, 2300 East Devon Avenue,Des Plaines, IL 60018.SUPPLEMENTARY INFORMATION: A DraftSupplemental Environmental ImpactStatement (DSEIS) has been preparedand will be available for public reviewand comment. This document will beavailable 30 days prior to the hearing atthe following locations:

(1) Federal Aviation Administration,Air Traffic Division Office, 2300 EastDevon Avenue, Des Plaines, IL 60018,

(2) Indianapolis Airport Authority,South High School Road, IndianapolisInternational Airport, Indianapolis, IN,

(3) Decatur Township Branch Library,5301 Kentucky Avenue, Indianapolis,IN 46241,

(4) Marion County Public Library, 40East St. Clair, Indianapolis, IN 46204,


(5) Mooresville Public Library, 220 W.Harrison Street, Mooresville, IN 46158,

(6) Plainfield Public Library, 1120Stafford Road, Plainfield, IN 46208,

(7) Wayne Township Branch Library,198 South Girls School Road,Indianapolis, IN 46214.

The purpose of the hearing is toconsider the social, economic, andenvironmental effects of the proposedactions. During the hearing the publicwill be given an opportunity to presentoral and/or written comments for thepublic record. Additionally, prior toJanuary 8, 1999, written comments maybe addressed to Mr. Wally Welter,Environmental Specialist, FAA GreatLakes Region, Air Traffic Division,AGL–520.V, Des Plaines, IL 60018.

Issued in Des Plaines, Illinois, onNovember 18, 1998.David B. Johnson,Assistant Manager, Air Traffic Division.[FR Doc. 98–31532 Filed 11–24–98; 8:45 am]BILLING CODE 4910–13–M


National Highway Traffic SafetyAdministration

[Docket No. NHTSA–98–4774]

Decision That Nonconforming 1994–1996 Volkswagen Jetta PassengerCars are Eligible for Importation

AGENCY: National Highway TrafficSafety Administration (NHTSA), DOT.ACTION: Notice of decision by NHTSAthat nonconforming 1994–1996Volkswagen Jetta passenger cars areeligible for importation.

SUMMARY: This notice announces thedecision by NHTSA that 1994–1996Volkswagen Jetta passenger cars notoriginally manufactured to comply withall applicable Federal motor vehiclesafety standards are eligible forimportation into the United Statesbecause they are substantially similar tovehicles originally manufactured forimportation into and sale in the UnitedStates and certified by theirmanufacturer as complying with thesafety standards (the U.S. certifiedversion of the 1994–1996 VolkswagenJetta), and they are capable of beingreadily altered to conform to thestandards.DATES: This decision is effective as ofNovember 25, 1998.FOR FURTHER INFORMATION CONTACT:George Entwistle, Office of VehicleSafety Compliance, NHTSA (202–366–5306).SUPPLEMENTARY INFORMATION:

Background

Under 49 U.S.C. 30141(a)(1)(A), amotor vehicle that was not originallymanufactured to conform to allapplicable Federal motor vehicle safetystandards shall be refused admissioninto the United States unless NHTSAhas decided that the motor vehicle issubstantially similar to a motor vehicleoriginally manufactured for importationinto and sale in the United States,certified under 49 U.S.C. 30115, and ofthe same model year as the model of themotor vehicle to be compared, and iscapable of being readily altered toconform to all applicable Federal motorvehicle safety standards.

Petitions for eligibility decisions maybe submitted by either manufacturers orimporters who have registered withNHTSA pursuant to 49 CFR Part 592. Asspecified in 49 CFR 593.7, NHTSApublishes notice in the Federal Registerof each petition that it receives, andaffords interested persons anopportunity to comment on the petition.At the close of the comment period,NHTSA decides, on the basis of thepetition and any comments that it hasreceived, whether the vehicle is eligiblefor importation. The agency thenpublishes this decision in the FederalRegister.

G&K Automotive Conversion, Inc. ofSanta Ana, California (‘‘G.K.’’)(Registered Importer 90–007) petitionedNHTSA to decide whether 1993–1997Volkswagen Jetta passenger carsmanufactured in Mexico for theMexican market are eligible forimportation into the United States.NHTSA published notice of the petitionunder Docket No. NHTSA 97–3290 onJanuary 12, 1998 (63 FR 1880) to affordan opportunity for public comment. Thereader is referred to that notice for athorough description of the petition.

One comment was received inresponse to the notice of the petition,from Volkswagen of America, Inc.(‘‘Volkswagen’’), the United Statesrepresentative of Volkswagenwerke,A.G., the vehicle’s manufacturer. In thiscomment, Volkswagen contended thatG&K’s description of the modificationsthat would be necessary to conform thevehicle to applicable standards isincomplete in a number of significantrespects.

Specifically, with respect to StandardNo. 109, New Pneumatic Tires,Volkswagen contended that non-U.S.certified 1993–1997 Volkswagen Jettasmay be equipped with tires that haveinsufficient load ratings once thevehicle is modified through the additionof air bag systems, side impact

protection, and other required safetyrelated components.

With respect to Standard Nos. 203Impact Protection for the Driver fromthe Steering Control System and 208Occupant Crash Protection, Volkswagennoted that the 1993 model U.S. certifiedJetta is equipped with automatic seatbelts and that all 1994 and later modelyear versions of the vehicle areequipped with driver’s and passenger’sside air bags. Volkswagen contendedthat it is not possible to install air bagsystems in non-U.S. certified 1993Jettas, and that automatic seat belts musttherefore be installed in those vehiclesusing anchorages that conform to all ofthe requirements of Standard No. 210,Seat Belt Assembly Anchorages.Additionally, Volkswagen observed thatin order to comply with the unbeltedtest requirement of Standard Nos. 208,all U.S. certified 1994–1997 Jettas areequipped with knee bar restraints in theinstrument panel which are not presenton non-U.S. certified versions of thevehicle. Volkswagen noted that thepetitioner did not cite the need for theinstallation of this equipment.Volkswagen also noted that it began touse pretensioners in the seat belts forthe front seating positions of U.S.certified Jettas during the 1994 modelyear, and that the petitioner failed toidentify the need to install pretensionerequipped seat belts to conform non-U.S.certified versions of the vehicle toStandard No. 208. Additionally,Volkswagen observed that the seat beltson U.S. certified 1996 Volkswagen Jettasare equipped with convertible lockingretractors in order to meet the childrestraint lockability requirements ofS7.1.1.5 of Standard No. 208. Thecompany asserted that the seat belts inthe front and rear outboard seatingpositions of non-U.S. certified 1996Jettas would have to be changed if theyare not equipped with the sameretractors.

Volkswagen disputed the petitioner’scontention that non-U.S. certified 1993–1997 Jettas meet Standard No. 214 SideImpact Protection in the same manneras their U.S. certified counterparts. Thecompany asserted that beginning withthe 1995 model year, it installedadditional padding and structuralreinforcements in U.S. certified versionsof the vehicle to comply with thedynamic side impact requirements ofthe standard.

Volkswagen further observed thatbeginning with the 1994 model year, theJetta was classified as a high theft linevehicle under the Theft PreventionStandard at 49 CFR Part 541. Thecompany noted that in order to obtainan exemption from the parts marking


requirements of the standard, itinstalled a standard alarm system witha central locking feature thatmechanically locks all doors when thekey in the front door is turned.Volkswagen observed that non-U.S.certified 1994 Jettas may not have thiscentral locking system, as a result ofwhich those vehicles would not beexempt from the parts markingrequirement of the standard, renderingthem, in the Company’s view, ineligiblefor importation.

Aside from these specificobservations, Volkswagen made twogeneral comments with respect to thepetition. In the first of these, theCompany questioned whethermodifications such as the addition of airbags, safety belts, and side impactprotection components can beperformed on a used vehicle outside ofa production line setting at a level ofquality necessary to assure complianceof each vehicle with the Federal motorvehicle safety standards. In addition, thecompany expressed the belief thatNHTSA cannot decide that all modelyear 1993 through 1997 Jettas areeligible for importation due tosignificant differences between vehicleswithin these model years with regard totheir compliance with Standard Nos.208 and 214. Because the modificationsnecessary to achieve compliance withthose standards may differ by modelyear, Volkswagen contends that NHTSAmay not make a single eligibilitydecision that encompasses all vehicleswithin the model years specified in thepetition.

NHTSA accorded G&K an opportunityto respond to Volkswagen’s comments.In its response, G&K notified the agencythat it wished to amend its petition tocover only model years 1994–1996. G&Kstated with respect to the Standard No.109 compliance issues raised byVolkswagen that all vehicles importedwill be inspected to confirm that theyare equipped with tires of the same sizeand load rating as those furnished onthe U.S. certified model, and that thetires will be replaced if necessary tocomply with the standard. Addressingthe Standard Nos. 203 and 208compliance issues raised by Volkswagenwith regard to 1994 through 1996 modelyear Jettas, G&K stated that all parts ofthe automatic restraint system in theU.S. certified version of these vehicleswill be installed on existing mounts innon-U.S. certified models. Asenumerated by G&K, those componentsinclude the dash braces, knee bolsters,wiring harnesses, warning lights, dashpads, air bag assemblies, seat belts inboth front outboard seating positions,and control boxes for the seat belts and

air bags. In addition, G&K stated thatnew door panels that will accommodatethe electric window motors and centrallocking systems will be installed.

With regard to the Standard No. 214compliance issues raised byVolkswagen, G&K stated that doorbarswould be installed on non-U.S. certifiedmodels and dash braces and door panelswill be replaced with U.S. modelcomponents to meet the requirements ofthe standard. After a furthercommunication from Volkswagenidentifying additional parts that werenecessary to achieve compliance, G&Kprovided the agency with a completeparts list identifying all components tobe installed.

Addressing the Theft PreventionStandard issues raised by Volkswagen,G&K stated that U.S. model centrallocking and alarm systems will beinstalled on non-U.S. certified Jettas.

NHTSA believes that G&K’s responseadequately addresses the comments thatVolkswagen has made regarding thepetition. NHTSA further notes that themodifications described by G&K, whichhave been performed with relative easeon thousands of motor vehiclesimported over the years, would notpreclude non-U.S. certified 1994–1996Volkswagen Jettas from being found‘‘capable of being readily altered tocomply with applicable motor vehiclesafety standards.’’ Additionally, NHTSAfinds no merit to Volkswagen’scontention that the agency lacksauthority to make an import eligibilitydecision covering vehicles within arange of model years when differentmodifications may have to be made tovehicles within those model years toachieve compliance with certain of thestandards. Accordingly, NHTSA hasdecided to grant the petition.

Vehicle Eligibility Number for SubjectVehicles

The importer of a vehicle admissibleunder any final decision must indicateon the form HS–7 accompanying entrythe appropriate vehicle eligibilitynumber indicating that the vehicle iseligible for entry. VSP–274 is thevehicle eligibility number assigned tovehicles admissible under this notice offinal decision.

Final DecisionAccordingly, on the basis of the

foregoing, NHTSA hereby decides that1994–1996 Volkswagen Jetta passengercars not originally manufactured tocomply with all applicable Federalmotor vehicle safety standards aresubstantially similar to 1994–1996Volkswagen Jetta passenger carsoriginally manufactured for importation

into and sale in the United States andcertified under 49 U.S.C. 30115, and arecapable of being readily altered toconform to all applicable Federal motorvehicle safety standards.

Authority: 49 U.S.C. 30141(a)(1)(A) and(b)(1); 49 CFR 593.8; delegations of authorityat 49 CFR 1.50 and 501.8.

Issued on: November 19, 1998.Marilynne Jacobs,Director, Office of Vehicle Safety Compliance.[FR Doc. 98–31534 Filed 11–24–98; 8:45 am]BILLING CODE 4910–59–P



[Docket No. NHTSA 98–4275; Notice 2]

American Honda Motor Company, Inc.;Grant of Renewal of TemporaryExemption From Federal Motor VehicleSafety Standard No. 122

This notice grants the application ofAmerican Honda Motor Co., Inc., ofTorrance, California (‘‘Honda’’), for aone-year renewal of its temporaryexemption from the fade and waterrecovery requirements of Federal MotorVehicle Safety Standard No. 122,Motorcycle Brake Systems. The basis ofthe application for renewal was that anexemption would make easier thedevelopment or field evaluation of anew motor vehicle safety featureproviding a safety level at least equal tothe safety level of the standard.

Notice of receipt of an applicationwas published on August 10, 1998, andan opportunity afforded for comment(63 FR 42661).

The agency previously granted HondaNHTSA Temporary Exemption No. 97–1, expiring September 1, 1998, from thefollowing requirements of 49 CFR571.122 Standard No. 122 MotorcycleBrake Systems: S5.4.1 Baseline check—minimum and maximum pedal forces,S5.4.2 Fade, S5.4.3 Fade recovery,S5.7.2 Water recovery test, and S6.10Brake actuation forces (62 FR 52372,October 7, 1997). This exemptioncovered Honda’s 1998 CBR1100XXmotorcycle. Honda has applied for anextension of its exemption to September1, 1999, to cover the 1999 modelCBR1100XX motorcycle, and ‘‘allunsold 1998 model year’’ CBR1100XXvehicles. However, it was unnecessaryfor Honda to have included unsoldvehicles in its request. NHTSA’stemporary exemptions apply as of thedate of manufacture and certification ofan exempted vehicle, and continue tocover that vehicle even if it is sold afterthe expiration date of the exemption.


Honda’s original and renewed requestconcerned exemption ‘‘from therequirement of the minimum hand-leverforce of five pounds in the base linecheck for the fade and water recoverytests.’’ It is evaluating the marketabilityof an ‘‘improved’’ motorcycle brakesystem setting which is currentlyapplied to the model sold in Europe.The difference in setting is limited to asofter master cylinder return spring inthe European version. Using the softerspring results in a ‘‘more predictable(linear) feeling during initial brake leverapplication.’’ Although ‘‘the changeallows a more predictable rise in brakegain, the on-set of braking occurs atlever forces slightly below the fivepound minimum’’ specified in StandardNo. 122. Honda considers thatmotorcycle brake systems havecontinued to evolve and improve sinceStandard No. 122 was adopted in 1972,and that one area of improvement isbrake lever force which has graduallybeen reduced. However, the five-poundminimum specification ‘‘is preventingfurther development and improvement’’of brake system characteristics. Thislimit, when applied to the CBR1100XX‘‘results in an imprecise feeling whenthe rider applies low-level front brakelever inputs.’’ On November 5, 1997,Honda submitted a petition forrulemaking to amend Standard No. 122to eliminate the minimum brakeactuation force requirement. As of June19, 1998, when Honda applied for arenewal of its application, NHTSA hadnot yet decided whether to grant thepetition. The agency notes that itanticipates granting the petition andcommencing a rulemaking proceedingthis fall.

The 1999 model of the CBR1100XX‘‘will be nearly identical’’ to the 1998model ‘‘with two notable exceptions:the engine air/fuel delivery system willchange from carburetors to electronicfuel injection, and the brake system willalso have a minor change.’’ This brakesystem change involves characteristicsof the pressure control valve, but is‘‘limited to high input force range, andit will not affect the baseline checkresult nor other test results in FMVSS122.’’

The CBR1100XX is equipped withHonda’s Linked Brake System (LBS)which is designed to engage both frontand rear brakes when either the frontbrake lever or the rear brake pedal isused. The LBS differs from otherintegrated systems in that it allows therider to choose which wheel gets themajority of braking force, depending onwhich brake control the rider uses.

According to Honda, the overallbraking performance remains

unchanged from a conformingmotorcycle. Exempted CBR1100XXvehicles meet ‘‘the stopping distancerequirement but at lever forces slightlybelow the minimum.’’

Honda argued in 1997 that granting anexemption would be in the publicinterest and consistent with objectivesof traffic safety because it

* * * should improve a rider’s ability toprecisely modulate the brake force at low-level brake lever input forces. Improving thepredictability, even at very low-level brakelever input, increases the rider’s confidencein the motorcycle’s brake system.

This year Honda repeats thosearguments and submits that a renewalallows further refinement anddevelopment of the LBS. It believes thatthe LBS has ‘‘many desirablecharacteristics—especially duringemergency braking—that could reducethe number of rear brake lock-upcrashes.’’ Honda has produced about1200 motorcycles under Exemption 97–1, and anticipates that it will produceabout 1,500 vehicles under a renewal.

No comments were received on theapplication.

The changes that Honda intends tomake to the braking system of its 1999model do not affect the reasoning uponwhich the agency’s findings were basedin granting the original exemption for its1998 motorcycle, and the agency’srationale is hereby incorporated byreference (62 FR 52372, October 7,1997). A renewal should allow furtherrefinement and development of the LBS.

In consideration of the foregoing, it ishereby found that an exemption wouldmake easier the development or fieldevaluation of a new motor vehicle safetyfeature providing a safety level at leastequal to the safety level of Standard No.122. It is also hereby found that therenewal of the temporary exemption isin the public interest and consistentwith the objectives of motor vehiclesafety. Accordingly, NHTSA TemporaryExemption No. 97–1 is extended to, andwill expire on, September 1, 1999.

(49 U.S.C. 30113; delegation of authorityat 49 CFR 1.50.)

Issued on November 18, 1998.

Ricardo Martinez,Administrator.[FR Doc. 98–31523 Filed 11–24–98; 8:45 am]

BILLING CODE 4910–59–U



Annual List of Defect andNoncompliance Decisions AffectingNonconforming Imported Vehicles

AGENCY: National Highway TrafficSafety Administration (NHTSA), DOT.ACTION: Annual list of defect andnoncompliance decisions affectingnonconforming imported vehicles.

SUMMARY: This document contains a listof vehicles recalled by theirmanufacturers during Fiscal Year 1998(October 1, 1997 through September 30,1998) to correct a safety-related defect ora noncompliance with an applicableFederal motor vehicle safety standard(FMVSS). The listed vehicles are thosethat have been decided by NHTSA to besubstantially similar to vehiclesimported into the United States thatwere not originally manufactured toconform to all applicable FMVSS. Theregistered importers of thosenonconforming vehicles are obligated toprovide their owners with notificationof, and a remedy for, the defects ornoncompliances for which the listedvehicles were recalled.FOR FURTHER INFORMATION CONTACT:George Entwistle, Office of VehicleSafety Compliance, NHTSA (202–366–5306).SUPPLEMENTARY INFORMATION: Under 49U.S.C. 30141(a)(1)(A), a motor vehiclethat was not originally manufactured toconform to all applicable Federal motorvehicle safety standards (FMVSS) shallbe refused admission into the UnitedStates unless NHTSA has decided thatthe motor vehicle is substantiallysimilar to a motor vehicle of the samemodel year that was originallymanufactured for importation into andsale in the United States and certifiedunder 49 U.S.C. 30115. Once NHTSAdecides that a nonconforming vehicle iseligible for importation, it may beimported by a person who is registeredwith the agency pursuant to 49 U.S.C.30141(c) (‘‘registered importer’’), whowill undertake to bring the vehicle intoconformity, or by a person who has acontract with a registered importer toperform this work. Before releasing thevehicle for use on public streets, roads,or highways, the registered importermust certify to NHTSA, pursuant to 49U.S.C. 30146(a), that the vehicle hasbeen brought into conformity with allapplicable FMVSS.

If a vehicle originally manufacturedand certified for importation into andsale in the United States is decided to


contain a defect related to motor vehiclesafety, or not to comply with anapplicable FMVSS, 49 U.S.C.30147(a)(1)(A) provides that the samedefect or noncompliance is deemed toexist in any nonconforming vehicle thatNHTSA has decided to be substantiallysimilar and for which a registeredimporter has submitted a certificate ofconformity to the agency. Under 49U.S.C. 30147(a)(1)(B), the registeredimporter is deemed to be thenonconforming vehicle’s manufacturerfor the purpose of providing notificationof, and a remedy for, the defect ornoncompliance.

To apprise registered importers of thevehicles for which they must conduct anotification and remedy (i.e., ‘‘recall’’)campaign, and to apprise the owners ofthose vehicles of the need for suchaction, 49 U.S.C. 30147(a)(2) requiresNHTSA to publish in the FederalRegister notice of any defect ornoncompliance decision that is madewith respect to substantially similarU.S. certified vehicles. Annex Acontains a list of all such decisions thatwere made during Fiscal Year 1998,which ran from October 1, 1997 throughSeptember 30, 1998. The list identifiesthe Recall Number that was assigned to

the recall by NHTSA after the agencyreceived the manufacturer’s notificationof the defect or noncompliance under 49CFR Part 573. After September 30, 1999,NHTSA will publish a comparable listof all defect and noncompliancedecisions affecting nonconformingimported vehicles that are made duringthe current fiscal year.

Authority: 49 U.S.C. 30147(a)(2); 49 CFR593.8; delegations of authority at 49 CFR 1.50and 501.8.

Issued on: November 20, 1998.Marilynne Jacobs,Director, Office of Vehicle Safety Compliance.

ANNEX A—FISCAL YEAR 98 RECALLS AFFECTING VEHICLES IMPORTED BY REGISTERED IMPORTERS

Make Model Year Recall No.

AUDI ............................................................................... A4 .................................................................................. 1996 97V175000.BENTLEY ....................................................................... AZURE .......................................................................... 1996 97V182000.BLUE BIRD ..................................................................... TC2000 .......................................................................... 1990 97V197000.BLUE BIRD ..................................................................... TC2000 .......................................................................... 1990 97V197002.BMW ............................................................................... 325I ............................................................................... 1992 98V178000.BMW ............................................................................... 325IS ............................................................................. 1994 98V178000.BMW ............................................................................... 525I ............................................................................... 1989 98V178000.BMW ............................................................................... 525I ............................................................................... 1990 98V178000.BMW ............................................................................... 525I ............................................................................... 1991 98V178000.BMW ............................................................................... 525I ............................................................................... 1994 98V178000.BMW ............................................................................... 540I ............................................................................... 1994 98V178000.BMW ............................................................................... 540I ............................................................................... 1995 98V178000.BMW ............................................................................... 850I ............................................................................... 1991 98V178000.BUICK ............................................................................. CENTURY ..................................................................... 1998 98V102000.BUICK ............................................................................. REGAL .......................................................................... 1997 97V223000.BUICK ............................................................................. REGAL .......................................................................... 1997 98V102000.BUICK ............................................................................. REGAL .......................................................................... 1998 98V102000.BUICK ............................................................................. ROADMASTER ............................................................. 1992 97V217000.CADILLAC ...................................................................... DEVILLE ........................................................................ 1995 98V115000.CADILLAC ...................................................................... DEVILLE ........................................................................ 1998 97V232000.CADILLAC ...................................................................... DEVILLE ........................................................................ 1998 97V183000.CADILLAC ...................................................................... ELDORADO .................................................................. 1995 98V115000.CADILLAC ...................................................................... SEVILLE ........................................................................ 1995 98V115000.CHEVROLET .................................................................. CAPRICE ...................................................................... 1992 97V217000.CHEVROLET .................................................................. CAVALIER ..................................................................... 1996 98V027000.CHEVROLET .................................................................. CAVALIER ..................................................................... 1996 98V146000.CHEVROLET .................................................................. CAVALIER ..................................................................... 1997 98V032000.CHEVROLET .................................................................. CAVALIER ..................................................................... 1997 98V146000.CHEVROLET .................................................................. CAVALIER ..................................................................... 1998 97V219000.CHRYSLER .................................................................... CIRRUS ......................................................................... 1995 97V201000.CHRYSLER .................................................................... CIRRUS ......................................................................... 1995 98V063000.CHRYSLER .................................................................... CIRRUS ......................................................................... 1995 98V183000.CHRYSLER .................................................................... CIRRUS ......................................................................... 1996 97V201000.CHRYSLER .................................................................... CIRRUS ......................................................................... 1996 98V183000.CHRYSLER .................................................................... CIRRUS ......................................................................... 1997 97V201000.CHRYSLER .................................................................... CIRRUS ......................................................................... 1997 98V183000.CHRYSLER .................................................................... CONCORDE ................................................................. 1993 98V130000.CHRYSLER .................................................................... CONCORDE ................................................................. 1993 98V184000.CHRYSLER .................................................................... CONCORDE ................................................................. 1994 98V184000.CHRYSLER .................................................................... CONCORDE ................................................................. 1995 98V184000.CHRYSLER .................................................................... CONCORDE ................................................................. 1996 98V184000.CHRYSLER .................................................................... CONCORDE ................................................................. 1997 98V184000.CHRYSLER .................................................................... LHS ............................................................................... 1994 98V184000.CHRYSLER .................................................................... LHS ............................................................................... 1995 98V184000.CHRYSLER .................................................................... LHS ............................................................................... 1996 98V184000.CHRYSLER .................................................................... LHS ............................................................................... 1997 98V184000.CHRYSLER .................................................................... SEBRING ...................................................................... 1995 97V201000.CHRYSLER .................................................................... SEBRING ...................................................................... 1996 97V201000.CHRYSLER .................................................................... SEBRING ...................................................................... 1996 98V183000.CHRYSLER .................................................................... SEBRING ...................................................................... 1997 97V201000.CHRYSLER .................................................................... SEBRING ...................................................................... 1997 98V183000.DODGE ........................................................................... INTREPID ...................................................................... 1995 98V184000.DODGE ........................................................................... INTREPID ...................................................................... 1996 98V184000.DODGE ........................................................................... INTREPID ...................................................................... 1997 98V184000.


ANNEX A—FISCAL YEAR 98 RECALLS AFFECTING VEHICLES IMPORTED BY REGISTERED IMPORTERS—Continued


DODGE ........................................................................... INTREPID ...................................................................... 1998 98V049000.DODGE ........................................................................... NEON ............................................................................ 1995 97V169000.DODGE ........................................................................... STRATUS ...................................................................... 1995 97V201000.DODGE ........................................................................... STRATUS ...................................................................... 1995 98V183000.DODGE ........................................................................... STRATUS ...................................................................... 1996 97V201000.DODGE ........................................................................... STRATUS ...................................................................... 1996 98V183000.DODGE ........................................................................... STRATUS ...................................................................... 1997 97V201000.DODGE ........................................................................... STRATUS ...................................................................... 1997 98V183000.DODGE ........................................................................... STRATUS ...................................................................... 1998 98V183000.EAGLE ............................................................................ TALON .......................................................................... 1994 98V069000.EAGLE ............................................................................ TALON .......................................................................... 1994 98V069002.EAGLE ............................................................................ VISION .......................................................................... 1993 98V130000.EAGLE ............................................................................ VISION .......................................................................... 1993 98V184000.EAGLE ............................................................................ VISION .......................................................................... 1994 98V184000.EAGLE ............................................................................ VISION .......................................................................... 1995 98V184000.EAGLE ............................................................................ VISION .......................................................................... 1996 98V184000.EAGLE ............................................................................ VISION .......................................................................... 1997 98V184000.FORD .............................................................................. CONTOUR .................................................................... 1995 97V225000.FORD .............................................................................. CONTOUR .................................................................... 1995 98V233000.FORD .............................................................................. CONTOUR .................................................................... 1996 97V233000.FORD .............................................................................. CONTOUR .................................................................... 1996 97V225000.FORD .............................................................................. CONTOUR .................................................................... 1996 98V233000.FORD .............................................................................. CONTOUR .................................................................... 1997 97V203000.FORD .............................................................................. CONTOUR .................................................................... 1997 98V233000.FORD .............................................................................. CONTOUR .................................................................... 1998 98V028000.FORD .............................................................................. CONTOUR .................................................................... 1998 98V028001.FORD .............................................................................. CONTOUR .................................................................... 1998 98V233000.FORD .............................................................................. MUSTANG .................................................................... 1994 97V180000.FORD .............................................................................. MUSTANG .................................................................... 1995 97V180000.FORD .............................................................................. MUSTANG .................................................................... 1996 97V180000.FORD .............................................................................. MUSTANG .................................................................... 1998 97V216000.FORD .............................................................................. TAURUS ........................................................................ 1993 98V009000.FORD .............................................................................. TAURUS ........................................................................ 1993 98V094000.FORD .............................................................................. TAURUS ........................................................................ 1994 98V009000.FORD .............................................................................. TAURUS ........................................................................ 1997 98V028002.FORD .............................................................................. TAURUS ........................................................................ 1998 98V028002.FREIGHTLINER ............................................................. FREIGHTLINER ............................................................ 1997 98V003000.GMC ............................................................................... JIMMY ........................................................................... 1998 98V053000.GMC ............................................................................... JIMMY ........................................................................... 1998 98V097000.GMC ............................................................................... S15 ................................................................................ 1995 98V150000.GMC ............................................................................... S15 ................................................................................ 1996 98V150000.GMC ............................................................................... SAFARI ......................................................................... 1998 98V165000.GMC ............................................................................... SONOMA ...................................................................... 1998 98V097000.GMC ............................................................................... SUBURBAN .................................................................. 1998 98V033000.GMC ............................................................................... YUKON .......................................................................... 1998 98V033000.HARLEY DAVIDSON ..................................................... FLHT ............................................................................. 1998 98V158000.HARLEY DAVIDSON ..................................................... FLHTC ........................................................................... 1995 98V158000.HARLEY DAVIDSON ..................................................... FLHTC ........................................................................... 1996 98V158000.HARLEY DAVIDSON ..................................................... FLHTC ........................................................................... 1997 98V158000.HARLEY DAVIDSON ..................................................... FLHTC ........................................................................... 1998 98V158000.HARLEY DAVIDSON ..................................................... FLHTCI .......................................................................... 1996 98V158000.HARLEY DAVIDSON ..................................................... FLHTCI .......................................................................... 1997 98V158000.HARLEY DAVIDSON ..................................................... FLHTCI .......................................................................... 1998 98V158000.HARLEY DAVIDSON ..................................................... FLHTCU ........................................................................ 1996 98V158000.HARLEY DAVIDSON ..................................................... FLHTCU ........................................................................ 1997 98V158000.HARLEY DAVIDSON ..................................................... FLHTCU ........................................................................ 1998 98V158000.HARLEY DAVIDSON ..................................................... FLHTCUI ....................................................................... 1997 98V158000.HARLEY DAVIDSON ..................................................... FLHTCUI ....................................................................... 1998 98V158000.HONDA ........................................................................... ACCORD ....................................................................... 1995 98V231000.HONDA ........................................................................... ACCORD ....................................................................... 1996 98V231000.HONDA ........................................................................... ACCORD ....................................................................... 1997 98V231000.HONDA ........................................................................... ACCORD ....................................................................... 1998 98V018000.HONDA ........................................................................... CIVIC ............................................................................. 1998 97V193000.JEEP ............................................................................... CHEROKEE .................................................................. 1990 98V005000.JEEP ............................................................................... CHEROKEE .................................................................. 1991 98V005000.JEEP ............................................................................... CHEROKEE .................................................................. 1997 97V194000.JEEP ............................................................................... CHEROKEE .................................................................. 1997 97V194001.JEEP ............................................................................... CHEROKEE .................................................................. 1998 98V023000.JEEP ............................................................................... CHEROKEE .................................................................. 1997 97V194002.JEEP ............................................................................... GRAND CHEROKEE .................................................... 1993 98V005000.JEEP ............................................................................... GRAND CHEROKEE .................................................... 1996 98V006000.JEEP ............................................................................... GRAND CHEROKEE .................................................... 1997 98V194000.


ANNEX A—FISCAL YEAR 98 RECALLS AFFECTING VEHICLES IMPORTED BY REGISTERED IMPORTERS—Continued


JEEP ............................................................................... GRAND CHEROKEE .................................................... 1997 97V194001.JEEP ............................................................................... GRAND CHEROKEE .................................................... 1997 97V194002.JEEP ............................................................................... GRAND CHEROKEE .................................................... 1998 98V023000.JEEP ............................................................................... WRANGLER .................................................................. 1990 98V005000.JEEP ............................................................................... WRANGLER .................................................................. 1991 98V005000.JEEP ............................................................................... WRANGLER .................................................................. 1997 97V194003.JEEP ............................................................................... WRANGLER .................................................................. 1997 98V046000.KENWORTH ................................................................... T2000 ............................................................................ 1996 98V129000.KENWORTH ................................................................... T2000 ............................................................................ 1997 98V129000.KENWORTH ................................................................... T800 .............................................................................. 1996 97V196003.KENWORTH ................................................................... T800 .............................................................................. 1997 97V196003.KENWORTH ................................................................... W900 ............................................................................. 1997 97V196003.LEXUS ............................................................................ LS400 ............................................................................ 1996 98V016000.LINCOLN ........................................................................ CONTINENTAL ............................................................. 1990 97I003000.LINCOLN ........................................................................ CONTINENTAL ............................................................. 1990 97V174000.LINCOLN ........................................................................ CONTINENTAL ............................................................. 1994 98V009000.LINCOLN ........................................................................ MARK VIII ..................................................................... 1993 98V009000.MAZDA ........................................................................... 626 ................................................................................ 1997 98V206000.MAZDA ........................................................................... 626 ................................................................................ 1998 97V228000.MAZDA ........................................................................... MX6 ............................................................................... 1997 98V206000.MERCURY ...................................................................... MYSTIQUE .................................................................... 1995 97V225000.MERCURY ...................................................................... MYSTIQUE .................................................................... 1995 98V233000.MERCURY ...................................................................... MYSTIQUE .................................................................... 1996 97V225000.MERCURY ...................................................................... MYSTIQUE .................................................................... 1996 98V233000.MERCURY ...................................................................... MYSTIQUE .................................................................... 1997 98V233000.MERCURY ...................................................................... MYSTIQUE .................................................................... 1998 98V028000.MERCURY ...................................................................... MYSTIQUE .................................................................... 1998 98V233000.MERCURY ...................................................................... SABLE ........................................................................... 1989 97I003000.MERCURY ...................................................................... SABLE ........................................................................... 1993 98V009000.MERCURY ...................................................................... SABLE ........................................................................... 1993 98V094000.MERCURY ...................................................................... SABLE ........................................................................... 1994 98V009000.MERCURY ...................................................................... SABLE ........................................................................... 1997 98V028002.MERCURY ...................................................................... SABLE ........................................................................... 1998 98V028002.NAVISTAR ...................................................................... 4700 .............................................................................. 1995 98V119002.NAVISTAR ...................................................................... 4900 .............................................................................. 1993 98V171000.OLDSMOBILE ................................................................ ACHIEVA ....................................................................... 1996 98V027000.PLYMOUTH .................................................................... BREEZE ........................................................................ 1995 97V201000.PLYMOUTH .................................................................... BREEZE ........................................................................ 1996 97V201000.PLYMOUTH .................................................................... BREEZE ........................................................................ 1996 98V183000.PLYMOUTH .................................................................... BREEZE ........................................................................ 1997 97V201000.PLYMOUTH .................................................................... BREEZE ........................................................................ 1997 98V183000.PLYMOUTH .................................................................... BREEZE ........................................................................ 1998 98V183000.PLYMOUTH .................................................................... NEON ............................................................................ 1995 97V169000.PLYMOUTH .................................................................... PROWLER .................................................................... 1997 98V047000.PLYMOUTH .................................................................... PROWLER .................................................................... 1999 98V104000.PONTIAC ........................................................................ GRAND AM ................................................................... 1996 98V027000.PONTIAC ........................................................................ SUNFIRE ....................................................................... 1996 98V027000.PONTIAC ........................................................................ SUNFIRE ....................................................................... 1996 98V146000.PONTIAC ........................................................................ SUNFIRE ....................................................................... 1997 98V032000.PONTIAC ........................................................................ SUNFIRE ....................................................................... 1997 98V146000.PONTIAC ........................................................................ SUNFIRE ....................................................................... 1998 97V219000.PORSCHE ...................................................................... BOXSTER ..................................................................... 1997 98V112000.SAAB .............................................................................. 900 ................................................................................ 1995 98V038000.TOYOTA ......................................................................... CAMRY ......................................................................... 1994 98V155000.TOYOTA ......................................................................... CAMRY ......................................................................... 1997 97V213000.TOYOTA ......................................................................... SIENNA ......................................................................... 1998 97V188000.VOLKSWAGEN .............................................................. GTI ................................................................................ 1995 98V160000.VOLKSWAGEN .............................................................. GTI ................................................................................ 1995 98V195000.VOLKSWAGEN .............................................................. JETTA ........................................................................... 1996 98V160000.VOLKSWAGEN .............................................................. NEW BEETLE ............................................................... 1998 98V100000.




Research and Special ProgramsAdministration

[Notice No. 98–10]

Information Collection Activities

AGENCY: Research and Special ProgramsAdministration (RSPA), DOT.ACTION: Notice and request forcomments.

SUMMARY: In accordance with thePaperwork Reduction Act of 1995,RSPA invites comments on certaininformation collections pertaining tohazardous materials transportation forwhich RSPA intends to request renewalfrom the Office of Management andBudget (OMB).DATES: Interested persons are invited tosubmit comments on or before January25, 1999.ADDRESSES: Address written commentsto the Dockets Unit, Room PL 401,Research and Special ProgramsAdministration, U.S. Department ofTransportation, 400 Seventh St., SW,Washington, DC 20590–0001.Comments may also be submitted by e-mail to: rules @ rspa.dot.gov, or faxed to(202) 366–3753. Comments shouldidentify the Notice number (98–10) andthe appropriate Office of Managementand Budget (OMB) Control Number(s).Mailed written comments should besubmitted in two copies. Personswishing to receive confirmation ofreceipt of their mailed writtencomments should include a self-addressed, stamped postcard showingthe Notice number. The Dockets Unit islocated on the Plaza Level of the NassifBuilding at the U.S. Department ofTransportation at the above address.Public information may be reviewedbetween the hours of 9:00 a.m. and 5:00p.m., Monday through Friday, exceptFederal holidays. Internet users mayaccess all comments received by theU.S. Department of Transportation byusing the Universal Resource Locator(URL) at http://dms.dot.gov. Anelectronic copy of the document may bedownloaded using a modem andsuitable communications software fromthe Government Printing Office’sElectronic Bulletin Board Service at(202) 512–1661.

Requests for a copy of an informationcollection should be directed to DeborahBoothe, Office of Hazardous MaterialsStandards (DHM–10), Research andSpecial Programs Administration, Room

8102, 400 Seventh Street, SW,Washington, DC 20590–0001,Telephone (202) 366–8553.FOR FURTHER INFORMATION CONTACT:Deborah Boothe, Office of HazardousMaterials Standards (DHM–10),Research and Special ProgramsAdministration, Room 8102, 400Seventh Street, SW, Washington, DC20590–0001, Telephone (202) 366–8553.SUPPLEMENTARY INFORMATION: Section1320.8(d), Title 5, Code of FederalRegulations requires that RSPA provideinterested members of the public andaffected agencies an opportunity tocomment on information collection andrecordkeeping requests. This noticeidentifies information collections thatRSPA is submitting to OMB for renewaland extension. These collections arecontained in 49 CFR part 110, part 130,and parts 171–180. RSPA has revisedburden estimates, where appropriate, toreflect current reporting levels oradjustments based on changes inproposed or final rules published sincethe information collections were lastapproved. The following information isprovided for each informationcollection: (1) Title of the informationcollection, including former title if achange is being made; (2) OMB controlnumber; (3) summary of the informationcollection activity; (4) description ofaffected public; (5) estimate of totalannual reporting and recordkeepingburden; and (6) frequency of collection.RSPA will request a three-year term ofapproval for each information collectionactivity and, when approved by OMB,publish notice of the approval in theFederal Register.

RSPA requests comments on thefollowing information collections:

Title: Inspection and Testing ofPortable Tanks and Intermediate BulkContainers.

OMB Control Number: 2137–0018.Summary: This information collection

consolidates provisions fordocumenting qualifications,inspections, tests and approvalspertaining to the manufacture and use ofportable tanks and intermediate bulkcontainers under various provisions ofthe Hazardous Materials Regulations (49CFR Parts 171–180). It is necessary toascertain whether portable tanks andintermediate bulk containers have beenqualified, inspected and retested inaccordance with the HMR. Theinformation is used to verify that certainportable tanks and intermediate bulkcontainers meet required performancestandards prior to their being authorizedfor use and to document periodicrequalification and testing to ensure thepackagings have not deteriorated due to

age or physical abuse to a degree thatwould render them unsafe for thetransportation of hazardous materials.Applicable sections are as follows:§ 173.32—retest, retest marking, andrecord retention for portable tanks;§ 173.32a—approval of IM portabletanks; § 173.32b—periodic inspectionsand testing for IM portable tanks;§ 178.245–6—certification markings forDOT–51 portable tanks; § 178.245–7—manufacturer’s data report for DOT–51portable tanks; § 178.255–14—certification markings for DOT–60portable tanks; § 178.255–15—manufacturer’s data report for DOT–60portable tanks; § 178.270–14—certification marking of IM portabletanks; § 178.801—testing, retesting andrecordkeeping for intermediate bulkcontainers; and § 180.352—periodicretests and inspections for intermediatebulk containers.

Affected Public: Manufacturers andowners of portable tanks andintermediate bulk containers.

Recordkeeping:Number of Respondents: 314.Total Annual Responses: 51,220.Total Annual Burden Hours: 51,340.Frequency of collection: On occasion.Title: Testing, Inspection and Marking

Requirements for Cylinders.OMB Control Number: 2137–0022.Summary: Requirements in § 173.34

for qualification, maintenance and useof cylinders require that cylinders beperiodically inspected and retested toensure continuing compliance withpackaging standards. Informationcollection requirements addressregistration of retesters and marking ofcylinders by retesters with theiridentification number and retest datefollowing conduct of tests. Recordsshowing the results of inspections andretests must be kept by the cylinderowner or designated agent untilexpiration of the retest period or untilthe cylinder is reinspected or retested,whichever occurs first. Theserequirements are intended to ensure thatretesters have the qualifications toperform tests and to identify to cylinderfillers and users that cylinders arequalified for continuing use.Information collection requirements in§ 173.303 require that fillers of acetylenecylinders keep, for at least 30 days, adaily record of the representativepressure to which cylinders are filled.

Affected Public: Fillers, owners, usersand retesters of reusable cylinders.

Annual Reporting Burden:Number of Respondents: 139,352.Total Annual Responses: 153,287.Total Annual Burden Hours: 168,431.Frequency: On occasion.


Title: Hazardous Materials IncidentReports.

OMB Control Number: 2137–0039.Summary: This collection is

applicable upon occurrence of incidentsas prescribed in §§ 171.15 and 171.16.Basically, a Hazardous MaterialsIncident Report, DOT Form F5800.1,must be completed by a carrier ofhazardous materials when a hazardousmaterial transportation incident occurs,such as a release of materials, seriousaccident, evacuation or highwayshutdown. Serious incidents meetingcriteria in § 171.15 also require atelephonic report by the carrier. Thisinformation collection enhances theDepartment’s ability to evaluate theeffectiveness of its regulatory program,determine the need for regulatorychanges, and address emerginghazardous materials transportationsafety issues. The requirements apply toall interstate and intrastate carriersengaged in the transportation ofhazardous materials by rail, air, water,and highway.

Affected Public: Carriers of hazardousmaterials.

Annual Reporting and Recordkeeping:Number of Respondents: 803.Total Annual Responses: 22,500.Total Annual Burden Hours: 33,811.Frequency of collection: On occasion.Title: Flammable Cryogenic Liquids.OMB Control Number: 2137–0542.Summary: Provisions in § 177.818

require the carriage on a motor vehicleof written procedures for ventingflammable cryogenic liquids and forresponding to emergencies. Paragraph(h) of § 177.840 specifies certain safetyprocedures and documentationrequirements for drivers of these motorvehicles. These requirements areintended to ensure a high level of safetywhen transporting flammablecryogenics due to their extremeflammability and high compressionratio when in a liquid state.

Affected Public: Carriers of cryogenicmaterials.

Annual Reporting and Recordkeeping:Total Respondents: 65.Total Annual Responses: 18,200.Total Annual Burden Hours: 1,213.Frequency of collection: On occasion.Title: Approvals for Hazardous

Materials.OMB Control Number: 2137–0557.Summary: Without these

requirements there is no means to: (1)determine whether applicants whoapply to become designated approvalagencies are qualified to evaluatepackage design, test packages, classifyhazardous materials, etc.; (2) verify thatvarious containers and special loading

requirements for vessels meet therequirements of the HMR; and (3) assurethat regulated hazardous materials poseno danger to life and property duringtransportation.

Affected Public: Businesses and otherentities who must meet the approvalrequirements in the HMR.

Annual Reporting and Recordkeeping:Total Respondents: 3,503.Total Annual Responses: 3,853.Total Annual Burden Hours: 18,302.Frequency of collection: On occasion.Title: Testing Requirements for Non-

bulk Packaging (Formerly entitledTesting Requirements for Packaging).

OMB Control Number: 2137–0572.Summary: Detailed packaging

manufacturing specifications have beenreplaced by a series of performance teststhat a non-bulk packaging must becapable of passing before it isauthorized to be used for transportinghazardous materials. The HMR requireproof that packagings meet these testingrequirements. Manufacturers mustretain records of design qualificationtests and periodic retests. Manufacturersmust notify, in writing, persons towhom packagings are transferred of anyspecification requirements that have notbeen met at the time of transfer.Subsequent distributors, as well asmanufacturers must provide writtennotification. Performance-orientedpackaging standards allowmanufacturers and shippers muchgreater flexibility in selecting moreeconomical packagings.

Affected Public: Each non-bulkpackaging manufacturer that testspackagings to ensure compliance withthe HMR.

Annual Reporting and Recordkeeping:Annual Respondents: 5,000.Annual Responses: 15,000.Annual Burden Hours: 30,000.Frequency of collection: On occasion.Title: Container Certification

Statement.OMB Control Number: 2137–0582.Summary: Shippers of explosives, in

freight containers or transport vehiclesby vessel, are required to certify onshipping documentation that the freightcontainer or transport vehicle meetsminimal structural serviceabilityrequirements. This requirement isintended to ensure an adequate level ofsafety for transport of explosives aboardvessel and ensure consistency withsimilar requirements in internationalstandards.

Affected Public: Shippers ofexplosives in freight containers ortransport vehicles by vessel.

Annual Reporting and Recordkeeping:Annual Respondents: 630.

Annual Responses: 835,000 HMContainers & 4400 Explosive Containers.

Annual Burden Hours: 13,989.Frequency of collection: On occasion.Title: Hazardous Materials Public

Sector Training and Planning Grants.OMB Control Number: 2137–0586.Summary: Part 110 of 49 CFR sets for

the procedures for reimbursable grantsfor public sector planning and trainingin support of the emergency planningand training efforts of States, Indiantribes and local communities to dealwith hazardous materials emergencies,particularly those involvingtransportation. Sections in this partaddress information collection andrecordkeeping with regard to applyingfor grants, monitoring expenditures,reporting and requesting modifications.

Affected Public: State and localgovernments, Indian tribes.

Annual Reporting and Recordkeeping:Annual Respondents: 66.Annual Responses: 1.Annual Burden Hours: 4,082.Frequency of collection: On occasion.Title: Response Plans for Shipments

of Oil.OMB Control Number: 2137–0591.Summary: In recent years several

major oil discharges damaged themarine environment of the UnitedStates. Under authority of the FederalWater Pollution Control Act, asamended by the Oil Pollution Act of1990, RSPA issued regulations in 49CFR Part 130 that require preparation ofwritten spill response plans.

Affected Public: Carriers thattransport oil in bulk, by motor vehicleor rail.

Annual Reporting and Recordkeeping:Annual Respondents: 8,000.Annual Responses: 8,000.Annual Burden Hours: 10,560.Frequency of collection: On occasion.Issued in Washington, DC on November 19,

1998.Edward T. Mazzullo,Director, Office of Hazardous MaterialsStandards.[FR Doc. 98–31480 Filed 11–24–98; 8:45 am]BILLING CODE 4910–60–P


Internal Revenue Service

Proposed Collection; CommentRequest for Form 5329

AGENCY: Internal Revenue Service (IRS),Treasury.ACTION: Notice and request forcomments.

SUMMARY: The Department of theTreasury, as part of its continuing effort


to reduce paperwork and respondentburden, invites the general public andother Federal agencies to take thisopportunity to comment on proposedand/or continuing informationcollections, as required by thePaperwork Reduction Act of 1995,Public Law 104–13 (44 U.S.C.3506(c)(2)(A)). Currently, the IRS issoliciting comments concerning Form5329, Additional Taxes Attributable toIRAs, Other Qualified Retirement Plans,Annuities, Modified EndowmentContracts, and MSAs.DATES: Written comments should bereceived on or before January 25, 1999,to be assured of consideration.ADDRESSES: Direct all written commentsto Garrick R. Shear, Internal RevenueService, room 5571, 1111 ConstitutionAvenue NW., Washington, DC 20224.FOR FURTHER INFORMATION CONTACT:Requests for additional information orcopies of the form and instructionsshould be directed to Martha R. Brinson,(202) 622–3869, Internal RevenueService, room 5571, 1111 ConstitutionAvenue NW., Washington, DC 20224.SUPPLEMENTARY INFORMATION:

Title: Additional Taxes Attributable toIRAs, Other Qualified Retirement Plans,Annuities, Modified EndowmentContracts, and MSAs.

OMB Number: 1545–0203.Form Number: 5329.Abstract: Form 5329 is used to

compute and collect taxes related to:early distributions from individualretirement arrangements (IRAs) andother qualified retirement plans;distributions from education (ED) IRAsnot used for educational expenses;excess contributions to traditional IRAs,Ed IRAs, and medical savings accounts(MSAs); and excess accumulations inqualified retirement plans.

Current Actions: There are no changesbeing made to the form at this time.

Type of Review: Extension of acurrently approved collection.

Affected Public: Individuals orhouseholds.

Estimated Number of Respondents:1,000,000.

Estimated Time Per Respondent: 1 hr.,3 min.

Estimated Total Annual BurdenHours: 1,042,400.

The following paragraph applies to allof the collections of information coveredby this notice:

An agency may not conduct orsponsor, and a person is not required torespond to, a collection of informationunless the collection of informationdisplays a valid OMB control number.Books or records relating to a collectionof information must be retained as long

as their contents may become materialin the administration of any internalrevenue law. Generally, tax returns andtax return information are confidential,as required by 26 U.S.C. 6103.REQUEST FOR COMMENTS: Commentssubmitted in response to this notice willbe summarized and/or included in therequest for OMB approval. Allcomments will become a matter ofpublic record. Comments are invited on:(a) Whether the collection ofinformation is necessary for the properperformance of the functions of theagency, including whether theinformation shall have practical utility;(b) the accuracy of the agency’s estimateof the burden of the collection ofinformation; (c) ways to enhance thequality, utility, and clarity of theinformation to be collected; (d) ways tominimize the burden of the collection ofinformation on respondents, includingthrough the use of automated collectiontechniques or other forms of informationtechnology; and (e) estimates of capitalor start-up costs and costs of operation,maintenance, and purchase of servicesto provide information.

Approved: November 19, 1998.Garrick R. Shear,IRS Reports Clearance Officer.[FR Doc. 98–31526 Filed 11–24–98; 8:45 am]BILLING CODE 4830–01–U



Proposed Collection; CommentRequest for Form 8839

AGENCY: Internal Revenue Service (IRS),Treasury.ACTION: Notice and request forcomments.

SUMMARY: The Department of theTreasury, as part of its continuing effortto reduce paperwork and respondentburden, invites the general public andother Federal agencies to take thisopportunity to comment on proposedand/or continuing informationcollections, as required by thePaperwork Reduction Act of 1995,Public Law 104–13 (44 U.S.C.3506(c)(2)(A)). Currently, the IRS issoliciting comments concerning Form8839, Qualified Adoption Expenses.DATES: Written comments should bereceived on or before January 25, 1999,to be assured of consideration.ADDRESSES: Direct all written commentsto Garrick R. Shear, Internal RevenueService, room 5571, 1111 ConstitutionAvenue NW., Washington, DC 20224.

FOR FURTHER INFORMATION CONTACT:Requests for additional information orcopies of the form and instructionsshould be directed to Martha R. Brinson,(202) 622–3869, Internal RevenueService, room 5571, 1111 ConstitutionAvenue NW., Washington, DC 20224.SUPPLEMENTARY INFORMATION:

Title: Qualified Adoption Expenses.OMB Number: 1545–1552.Form Number: 8839.Abstract: Section 23 of the Internal

Revenue Code allows taxpayers to claima nonrefundable tax credit for qualifiedadoption expenses paid or incurred bythe taxpayer. Code section 137 allowstaxpayers to exclude amounts paid orexpenses incurred by an employer forthe qualified adoption expenses of theemployee which are paid under anadoption assistance program. Form 8839is used to figure the credit and/orexclusion.

Current Actions: There are no changesbeing made to the form at this time.

Type of Review: Extension of acurrently approved collection.

Affected Public: Individuals orhouseholds.

Estimated Number of Respondents:50,000.

Estimated Time Per Respondent: 3 hr.,11 min.

Estimated Total Annual BurdenHours: 159,500.

The following paragraph applies to allof the collections of information coveredby this notice:

An agency may not conduct orsponsor, and a person is not required torespond to, a collection of informationunless the collection of informationdisplays a valid OMB control number.Books or records relating to a collectionof information must be retained as longas their contents may become materialin the administration of any internalrevenue law. Generally, tax returns andtax return information are confidential,as required by 26 U.S.C. 6103.REQUEST FOR COMMENTS: Commentssubmitted in response to this notice willbe summarized and/or included in therequest for OMB approval. Allcomments will become a matter ofpublic record. Comments are invited on:(a) Whether the collection ofinformation is necessary for the properperformance of the functions of theagency, including whether theinformation shall have practical utility;(b) the accuracy of the agency’s estimateof the burden of the collection ofinformation; (c) ways to enhance thequality, utility, and clarity of theinformation to be collected; (d) ways tominimize the burden of the collection ofinformation on respondents, including


through the use of automated collectiontechniques or other forms of informationtechnology; and (e) estimates of capital

or start-up costs and costs of operation,maintenance, and purchase of servicesto provide information.

Approved: November 18, 1998.Garrick R. Shear,IRS Reports Clearance Officer.[FR Doc. 98–31527 Filed 11–24–98; 8:45 am]BILLING CODE 4830–01–U

This section of the FEDERAL REGISTERcontains editorial corrections of previouslypublished Presidential, Rule, Proposed Rule,and Notice documents. These corrections areprepared by the Office of the FederalRegister. Agency prepared corrections areissued as signed documents and appear inthe appropriate document categorieselsewhere in the issue.

Corrections Federal Register

65281

Vol. 63, No. 227



12 CFR Part 225

[Regulations H, K, O, and Y; Docket No.R-1021]

Membership of State BankingInstitutions in the Federal ReserveSystem; International BankingOperations; Loans to ExecutiveOfficers, Directors, and PrincipalShareholders of Member Banks; BankHolding Companies and Change inBank Control; Rules of Practice forHearings; and Rules RegardingDelegation of Authority

CorrectionIn rule document 98–29097,

beginning on page 58620, in the issue ofMonday, November 2, 1998, make thefollowing correction:

§ 225.4 [Corrected]On page 58621, in the second column,

under § 225.4 [Amended], in

amendatory instruction 2, in the sixthline, ‘‘§ 208.8(0)-’’ should read‘‘§ 208.8(f)-’’.BILLING CODE 1505-01-D



[CO–930–4214–010; COC–61627]

Proposed Withdrawal: Opportunity forPublic Meeting; Colorado

Correction

In notice document 98–30526,appearing on page 63745, in the issue ofMonday, November 16, 1998, make thefollowing correction:

On page 63745, in the third column,in the eighth line,‘‘W1⁄2NW1⁄4NE1⁄4SE1⁄4’’ should read‘‘W1⁄2NW1⁄4NE1⁄4NE1⁄4SE1⁄4’’.BILLING CODE 1505-01-D

fede

ral r

egiste

r

65283


Part II

Department of LaborOffice of Workers’ CompensationPrograms

20 CFR Parts 10 and 25Claims for Compensation Under theFederal Employees’ Compensation Act;Compensation for Disability and Death ofNoncitizen Federal Employees Outsidethe United States; Final Rule


DEPARTMENT OF LABOR

Office of Workers’ CompensationPrograms

20 CFR Parts 10 and 25

RIN 1215–AB07

Claims for Compensation Under theFederal Employees’ CompensationAct; Compensation for Disability andDeath of Noncitizen FederalEmployees Outside the United States

AGENCY: Office of Workers’Compensation Programs, Labor.ACTION: Final rule.

SUMMARY: On December 23, 1997, theDepartment of Labor proposed revisionsto the regulations governing theadministration of the FederalEmployees’ Compensation Act (FECA)(62 FR 67120). The FECA providesbenefits to all civilian Federalemployees and certain other groups ofemployees and individuals who areinjured or killed while performing theirjobs.

The proposed changes weresummarized in that publication. Theycontain a major revision of the medicalfee schedule to include pharmacy andinpatient hospital bills. Othersignificant new provisions addresssuspension of benefits duringincarceration and termination ofbenefits for conviction of fraud againstthe program; changes to thecontinuation of pay (COP) provisions;paying for an attendant as a medicalexpense; inclusion of OWCP nurseservices in the definition of vocationalrehabilitation services; clarifying thereconsideration process; restrictingentitlement to postpone oral hearings;clarification of subpoena authority;streamlining the standards for review ofrepresentatives’ fees; provision of moredetailed guidance for claims involvingthe liability of a third party; andclarification of procedures for claimsfiled by non-Federal law enforcementofficers.

Finally, in light of commentsreceived, the proposal to remove allreferences to leave repurchase has beenabandoned in favor of including a briefmention of this practice.EFFECTIVE DATE: January 4, 1999.FOR FURTHER INFORMATION CONTACT:Thomas M. Markey, Director for FederalEmployees’ Compensation, EmploymentStandards Administration, U.S.Department of Labor, Room S–3229, 200Constitution Avenue N.W., Washington,DC 20210; Telephone (202) 693–0040.SUPPLEMENTARY INFORMATION: Proposedregulations were published in the

Federal Register on December 23, 1997(62 FR 67120). They allowed a 60-dayperiod for comment, during which theDepartment of Labor received timelycomments from 24 parties. Thirteenwere submitted by Federal employingagencies, seven by labor organizationswhich represent Federal employees, twoby attorneys, one by a physician, andone by a Department of Labor employee.Four untimely comments from Federalemploying agencies were also received;many of the points they made were alsomade by other commenters.

The comments centered on timeframes for use of continuation of pay(COP), time frames for submittal offorms by agencies, and postponement ofhearing requests. None of the commentsrepresented a profound challenge to theproposed rules.

This final rule applies to cases wherethe injury or death occurred before theeffective date, but only when an initialdecision on a particular issue is madeon or after the effective date. This finalrule does not apply, however, to issuesdecided for the first time in one of thesecases before the effective date, evenwhen such decision is being reviewedafter a hearing before an OWCPrepresentative, on reconsiderationbefore OWCP, or on appeal to theEmployees’ Compensation AppealsBoard (ECAB).

Several changes were made which didnot result from the comments. One isthe addition of nine new OMB clearancenumbers to § 10.3 since publication ofthe Notice of Proposed Rulemaking.Another is that § 10.500 has beensubdivided for clarity into four differentsubsections, and the contents have beenrearranged slightly. Also, the title ofsubpart F has been changed to‘‘Continuing Benefits’’, and the title ofsubpart G has been changed to ‘‘AppealsProcess’’ for clarity. Several of thequestions have been modified slightlyfor clarity, or so that they will beunderstandable on their own, withoutreference to the section where theyappear.

Finally, after reviewing the decisionof the United States District Court forthe District of Massachusetts in Jones-Booker v. United States (C.A. No.97cv10616–PBS, May 20, 1998), aprovision is being added as new§ 10.607(c). This provision will toll therunning of the one-year time limitationfor requesting reconsideration duringany period for which the claimant canestablish through the submission ofprobative medical evidence that he orshe was unable to communicate in anyway, and that his or her testimony wasnecessary to obtain modification of theprior decision. Any such period is not

counted as part of the year in which aclaimant has to timely requestreconsideration. To establish eligibilityfor such tolling, the claimant will havethe burden of proving both that he orshe was unable to communicate in anyway and that his or her testimony wasnecessary to establish factual mattersthat could not be established in anyother way.

Overall, the parties who commentedon the organization of the proposedregulations, the new question-and-answer format, and the ‘‘plain English’’approach approved of these changes.However, one agency stated that thequestion-and-answer format might wellbe problematical, and that subjectheadings would be easier to follow.

The Department’s analysis of thecomments received is set forth below.Unless otherwise stated, sectionnumbers refer to the revised regulations.No comments were received withrespect to part 25.

Section 10.0One labor organization asked that

OWCP clarify the introduction to theregulations at § 10.0 by adding‘‘including an officer or employee of aninstrumentality wholly owned by theUnited States’’ to the first sentence.However, this same phrase alreadyappears in the definition of ‘‘Employee’’at § 10.5(h)(1), and it is not felt thatrepeating it in § 10.0 would provide anyfurther clarification. Therefore, thischange is not being made.

Section 10.5(a)Two labor organizations noted

OWCP’s efforts to streamline itsregulations and suggested dropping theterm ‘‘Compensation’’ from the first lineof § 10.5(a) since ‘‘Compensation’’ isdefined at section 8101(12) of the FECA.While it is true that the FECA containsa general definition of ‘‘Compensation,’’§ 10.5(a) provides a more precisedefinition of this term (which is usedinterchangeably with ‘‘Benefits’’throughout these regulations) that takesinto account the construction given tothis particular section since the FECAwas first amended to include it in 1924.Therefore, dropping the term‘‘Compensation’’ from § 10.5(a) wouldnot be consistent with OWCP’sstreamlining effort, and the suggestion isnot adopted.

Two labor organizations also arguedthat § 10.5(a) should not include‘‘medical treatment’’ paid for out of theEmployees’’ Compensation Fund sincebeneficiaries are entitled to medicaltreatment for employment-relatedinjuries and illnesses regardless ofwhether or not they sustain any


disability. However, this argumentignores the fact that, as one of the‘‘benefits paid for from the Employees’’Compensation Fund,’’ medicaltreatment clearly falls within thestatutory definition of ‘‘Compensation’’set out at section 8101(12). Also, theregulatory definition of ‘‘Benefits orCompensation’’ in use since 1987 (20CFR 10.5(a)(6)) includes ‘‘medicaltreatment’’ and, as there was no intentto change this aspect of the definition inthese regulations, the suggestion is notaccepted.

Section 10.5(f)

One commenter disagreed with thedual economic and medical nature ofthe definition of ‘‘Disability’’ in § 10.5(f)and argued that the definition of thisword should focus solely on clinicalfindings. However, such a change wouldbe contrary to settled precedent of theECAB that has emphasized both theeconomic and medical aspects ofdisability for work under the FECA.Also, the regulatory definition of‘‘Disability’’ in use since 1987 (20 CFR10.5(a)(17)) was essentially identical to§ 10.5(f), and as there was no intent tochange this definition in theseregulations, the suggestion is notadopted.

Section 10.5(g)

While one labor organizationcommended OWCP for providingfurther helpful explanation of the term‘‘Earnings from employment or self-employment’’ in the definition at§ 10.5(g), another labor organizationasserted that ‘‘reimbursed expenses’’ are‘‘commonly not considered to beincome’’ and asked that they be deletedfrom the list of examples contained in§ 10.5(g)(1) because they are not paid for‘‘services’’ as that word is used insection 8114(e) of the FECA. There isnothing in the language referenced insection 8114(e) that would necessarilytake precedence over the generalrequirement in section 8106(b) of theFECA that an employee must includeany ‘‘other advantages which are part ofhis earnings in employment or self-employment and which can beestimated in money’’ in his reports toOWCP. The regulatory definition of‘‘Earnings from employment or self-employment’’ in use since 1987 (20 CFR10.125(c)) has included ‘‘reimbursedexpenses’’, and as there was no intent tochange this definition in theseregulations, the request to delete thisspecific example from the list in§ 10.5(g)(1) is not adopted.

Section 10.5(q)

One labor organization requested thatthe word ‘‘by’’ in the definition of‘‘Occupational disease or illness’’ at§ 10.5(q) be changed to ‘‘in’’ as itappeared in the prior regulatorydefinition in use since 1987. However,using the word ‘‘in’’ would notadequately convey the requirement insection 8101(5) of the FECA thatoccupational diseases or illnesses be‘‘proximately caused by theemployment’’ (emphasis added) ratherthan merely occurring during or ‘‘in’’ aperiod of employment in order to becompensable. Therefore, while therewas no intent in these regulations tochange the prior definition of‘‘Occupational disease or illness’’ in anysignificant way, the requested changewould not clarify § 10.5(q) in a mannerconsistent with the FECA, and it istherefore not adopted.

Section 10.5(x)

One Federal agency and two labororganizations expressed concern aboutthe intended effect of the word‘‘material’’ in the definition of‘‘Recurrence of disability’’ andrequested further clarification fromOWCP. After considering the practicalimpact of the word ‘‘material’’ on thedefinition of this term, it does notappear that this particular word addsany further precision to § 10.5(x), andtherefore it is deleted.

One labor organization suggested thatconfusion might result from the use ofthe term ‘‘intervening injury’’ in§ 10.5(x) given the precise meaning ofthis term in the adjudication of claimsfor consequential injuries. However,since the context of § 10.5(x) makes itclear that the term ‘‘intervening injury’’merely refers to a type of work stoppagethat is not due to a ‘‘spontaneous changein a medical condition,’’ and there wasno intent to limit this term to themeaning it has with respect toconsequential injuries, modification ofthis particular term is not warranted.

The same labor organization alsosuggested that the reductions-in-forcereferred to § 10.5(x) as not resulting inrecurrences of disability be limited to‘‘officially mandated’’ actions. As theagency responsible for adjudicatingFECA claims for the entire Federalworkforce, OWCP must be able to relyupon employers (and claimants) toadvise it of any relevant and pertinentpersonnel actions that might have somebearing on the outcome of a FECAclaim. OWCP has neither the resourcesnor the expertise to ascertain whetherreductions-in-force are ‘‘officiallymandated’’ (presumably, this phrase is

equivalent to ‘‘duly authorized’’), andmust leave disputes about individualreductions-in-force to be resolved in theproper forum. Moreover, the words‘‘general’’ or ‘‘officially mandated’’ addnothing to the sense of this section or itslegal force. Under these circumstances,the requested modification of‘‘reductions-in-force’’ would not beworkable and is therefore not adopted.

Finally, two Federal agenciessuggested that language be added to§ 10.5(x) to highlight that a ‘‘Recurrenceof disability’’ does not occur after anemployee recuperates from surgery foran employment-related condition orinjury if he or she has no entitlement tomonetary benefits for refusing an offerof suitable work. Another commenterdisagreed with the concept ofrecurrences altogether. This group ofcomments about the effect of changes inan employee’s accepted medicalcondition indicates that it would behelpful to add another definition toanswer the concerns raised. Therefore,§ 10.5 is revised to add a new § 10.5(y),‘‘Recurrence of medical condition’’, andsubsequent paragraphs are renumberedaccordingly.

Section 10.5(dd)One labor organization suggested that

a portion of the definition of‘‘Temporary aggravation’’ in § 10.5(cc)(renumbered § 10.5(dd) in accordancewith the revision noted above) bechanged from ‘‘caused that condition’’to ‘‘caused that preexisting condition.’’This same organization also suggestedthat the second part of this section bechanged from ‘‘no greater impairmentthan existed prior to the employmentinjury’’ to ‘‘no greater impairment ordisability than existed prior to theaggravation.’’ The first wording changeis redundant, given the context, and thesecond wording change would modifythe sense of the definition in use since1987 (20 CFR 10.5(a)(18)), which theprogram had no intent to change. Forthese reasons, the suggested changes arenot adopted.

Section 10.5(ee)One Federal agency assumed that the

proposed definition of ‘‘Traumaticinjury’’ in § 10.5(dd) (renumbered§ 10.5(ee) in accordance with therevision noted above) differed from theprior regulatory definition of this termin that it now included the phrase‘‘external force,’’ and requested furtherclarification regarding the meaning ofthis phrase. However, the definition of‘‘Traumatic injury’’ has included thephrase ‘‘external force’’ since 1975 andno further definition of this phrase isrequired since it does not represent an


attempt to change the existingdefinition.

Section 10.6

One Federal agency felt that thestatement that ‘‘certain other benefitsare payable’’ in § 10.6(b) was notconsistent with the language of section8148(b)(3) of the FECA, which providesOWCP with discretionary authority inthis area, and should be changed to‘‘certain other benefits may be payable* * *.’’ We agree that the statute doesgive OWCP discretion in this matter,and § 10.6(b) is therefore revisedconsistent with the suggestion.

The same agency also felt that§ 10.6(c) should refer only to personswho live in the beneficiary’s household‘‘and are’’ dependent on the beneficiaryfor support. Adoption of this idea wouldeliminate compensation payable fordependents living in another householdthrough no fault of their own, e.g.,minor children whose non-custodialparent is a beneficiary. In any event, thisinterpretation of the term ‘‘dependent’’does not conform to the statutory test fordependency contained in section8110(a) of the FECA, and the suggestedrevision is not adopted.

Finally, this agency suggestedaddition of a means test for dependentsto this section and to § 10.405. TheFECA contains no basis for such ameasure.

Section 10.7

Three agencies commented on the useof Form CA–3, two stating that theywould like to see continued use of theform, and one stating that there shouldbe some way to report return to duty inits place. If the form is not to berequired, one agency said that it shouldbe removed from the list. On balance,OWCP does not believe that use of theform should be required, since agenciesroutinely notify the district offices whenemployees return to work. Form CA–3is therefore being removed from the list.However, OWCP is looking intoalternative means of collecting theinformation requested on this form.

One agency inquired about thepurpose of Form CA–12, and anothersuggested that it simply be deleted fromthe list. A labor organization suggestedthat its purpose be clarified. OWCP usesthis form to obtain reports ofdependents in death cases. As the formis used exclusively by OWCP, andemployers have no need to stock it, itis being removed from the list.

Two employee organizationssuggested that this section include astatement that employers may notmodify forms prescribed by OWCP, or

use substitute forms. A statement to thateffect is being added to paragraph (a).

Forms CA–7a and CA–7b have beenadded to the list (see the commentsconcerning leave buy-back at the end ofthis analysis).

Sections 10.10, 10.11, and 10.12Two agencies commented on the

statement that all records related toclaims filed under the FECA are coveredby the Government-wide system ofrecords established by the Departmentof Labor. More specifically, they statedthat an employer generates andmaintains a variety of records systemsin connection with claims filed underthe FECA. The agencies suggested that§ 10.10 be revised to provide that DOL/GOVT–1 covers only those recordswhose primary purpose is to generate,record or report data required by OWCPin its adjudication of claims. All otherrecords an agency may generate as aresult of a claim, such as those neededfor personnel actions, payroll actions,safety records and investigative reports,should be subject only to the agency’sPrivacy Act regulations.

Similar comments were submitted toOWCP in connection with its proposalto amend former § 10.12 of the FECAregulations. In the final rulepromulgated in the Federal Register onOctober 22, 1998, OWCP concluded thatall records collected because a claimwas filed seeking benefits under theFECA, including copies of recordsmaintained by the employing agency,were official records of OWCP and, withone limited exception, covered by DOL/GOVT–1.

OWCP recognized, however, that arecord may be created to satisfy two ormore purposes, and therefore may becovered by other systems of recordseven though the subject matter of thedocument relates to an on-the-job injurysustained by a Federal employee. Thus,for example, records collected by anagency as part of a safety, personnel, orcriminal investigation conductedpursuant to statutory or regulatoryauthority other than the FECA wouldnot be covered by DOL/GOVT–1, unlessthey are submitted by the employee orthe agency to OWCP for considerationin connection with the FEC claim.Readers are directed to the commentsset forth at 63 FR 56752.

As noted above, the Department’sproposed amendments to former § 10.12have been adopted as a final rule. Toensure consistency, the provisions ofthat rule are being included in thispublication.

With respect to § 10.12, a commenteralleged that he had experienceddifficulty obtaining copies of case

records from OWCP and recommendedthat this provision be revised to includea time limitation. The Department ofLabor’s regulations at 29 CFR part 71contain the pertinent time limitationsapplicable to Privacy Act requests, andrepeating them in these regulationswould serve no useful purpose.

The same commenter also suggestedthat § 10.12 be revised to require OWCPto suspend the adjudication processuntil it complies with a request forcopies under this section, and also toprovide claimants with an opportunityto ‘‘review and respond to the finaldecision after being provided with therequested documents.’’ However, thereis no reason given to support therecommendation that case adjudicationshould be interrupted until OWCPresponds to a request under thisprovision, and the time periods withinwhich claimants can exercise theirappeal rights are set out in either theFECA itself or the ECAB’s regulationsand cannot be altered in theseregulations. Accordingly, this secondgroup of suggested revisions to § 10.12have also not been made.

Section 10.16One Federal agency requested the

addition of a sentence at the end of§ 10.16(a) to ‘‘clarify’’ that OWCP bothcooperates with and supports theDepartment of Justice’s efforts to enforcethe criminal provisions that apply toclaims under the FECA. However,OWCP already cooperates with andsupports these efforts to vigorouslyenforce the criminal provisions referredto in § 10.16(a). Therefore, since theaddition of an essentially hortatorysentence will not ‘‘clarify’’ OWCP’spolicy any further, the suggestion is notadopted.

One labor organization suggesteddeleting the phrase ‘‘for making a falsereport’’ from the question asked by§ 10.16 to clarify that one of the criminalprovisions referenced in this section, 18U.S.C. 1922, applies to employer actionsthat wrongfully impede a claim. Sincethe question asked by proposed § 10.16refers only to penalties that arise fromfiling a false report, it is revisedconsistent with the suggestion.

The same labor organization alsosuggested that a new subsection (c) beadded to § 10.16 to further clarify thatcriminal penalties apply to actions byemployers that wrongfully impede aclaim. However, § 10.16(a) already lists18 U.S.C. 1922 as one of the criminalprovisions that can apply in connectionwith a claim under the FECA, so theaddition of a new subsection to addressthis one provision is not seen asnecessary. Instead, this subsection is


revised to clarify that criminal penaltiesalso apply to actions of employers thatwrongfully impede a claim.

Section 10.17One Federal agency inquired whether

the forfeiture of benefits provided for in§ 10.17 applied to both Federal andState crimes and requested clarificationif that was indeed the case. In light ofthe fact that section 8148(a) of the FECArefers to any ‘‘Federal or State criminalstatute,’’ § 10.17 is revised consistentwith the suggestion. The same agencyalso requested that a reportingrequirement be added to this section sobeneficiaries would have to informOWCP of their convictions, and such arequirement will in fact be added toForm CA–1032.

Section 10.18One Federal agency asked whether

benefits inadvertently paid to anincarcerated beneficiary would beconsidered an overpayment ofcompensation, and also asked whetherthe forfeiture described in § 10.18(a)would apply to a period of time alreadyserved prior to conviction that is laterincluded in the sentence of a convictedfelon. As for the overpayment inquiry,an incarcerated felon is not entitled tocompensation during the period of hisor her incarceration, and therefore anycompensation paid to such anindividual would clearly constitute anoverpayment of compensation undersection 8129 and would be recoverableas such.

With respect to the possibleretroactive application of any suchforfeiture, section 8148(b)(1) specifiesthe potential range of these forfeituresby providing that ‘‘no benefits * * *shall be paid or provided to anyindividual during any period’’ ofincarceration, not for any period ofincarceration. This temporal limitationmeans that the forfeiture provided for bysection 8148(b)(1) of the FECA willresult only in a cessation of currentpayments that would otherwise havebeen made ‘‘during’’ a period ofincarceration based on a felonyconviction, and will not also result in aretroactive forfeiture for a period of timealready served prior to conviction ifsubsequently included in the sentence.

Four Federal agencies objected toOWCP’s blanket decision in § 10.18(b)to exercise the discretion granted it bysection 8148(b)(3) of the FECA in sucha way as to require the payment ofbenefits to eligible dependents of allincarcerated beneficiaries, since this is a‘‘benefit’’ that was not available tofamily members of uninjured Federalemployees incarcerated for felony

convictions. One of these agencieswanted OWCP to restrict payments ofthis sort to dependents of felons who areincarcerated for periods of up to sixmonths only, while two of the fouragencies complained that there wouldbe ‘‘no reduction in compensationbenefits’’ in certain situations under§ 10.18(b).

OWCP’s policy is consistent with boththe remedial aspect of the FECA andCongress’s decision in section8148(b)(3) to provide OWCP with thediscretion necessary to make these typesof payments. Also, these commentsinclude no recognition that OWCP hasexercised this discretion in such a waythat these payments to dependents willnever exceed 75% of the incarceratedfelon’s gross current entitlement (whichis less than their monthly pay), and willtherefore always result in a reduction ofcompensation benefits. To clarifymatters, § 10.18(b) is revised to pointout that dependents under thisparagraph will not be paid the sameamount of compensation as otherdependents.

One of these four Federal agenciesalso requested that a reportingrequirement be added to this section soincarcerated felons would have toinform OWCP when they wereincarcerated, and such a requirementwill be added to Form CA–1032.

Section 10.100With respect to paragraph (b)(1), one

agency requested some examples ofverbal notifications of injury, askingspecifically what would happen if anemployee claimed to have told asupervisor that an injury occurred, butthe supervisor died before the factscould be determined. In practice, verbalnotification very seldom forms the basisfor a claim. In problematic situationssuch as the one cited, OWCP wouldneed to explore the surroundingcircumstances and make a findingconsistent with all of the evidence.Since such situations are so individualin nature, as well as quite rare inoccurrence, OWCP does not believe thata fuller discussion of this matter in theregulations is warranted.

A commenter objected to the three-year time limit, which is set by law. Amodification to it would require achange to the FECA itself.

Sections 10.101 Through 10.106An employer stated that proposed

§ 10.103 is redundant, since itessentially repeats the contents ofproposed § 10.101. This point is welltaken. The positions of proposed§ 10.102 and § 10.101 have beenreversed, the title of proposed § 10.101

(now § 10.102) has been reworded, andproposed § 10.104 through § 10.106have been renumbered § 10.103 through§ 10.105. (The suggestion from a labororganization that the heading in§ 10.103 be rephrased to include onlycompensable injuries therefore becomesmoot). The following comments refer tothe provisions as renumbered.

Sections 10.100(b)(3), 10.101(a), and10.105(a)

Three labor organizations objected tothe provision allowing for withdrawal ofclaims on the grounds that employersmay pressure employees to drop claims.While the program continues to believethat there are valid reasons for retainingthis provision, the text of § 10.117(b) hasbeen modified to prohibit employersfrom compelling or inducing employeesto withdraw claims.

Two agencies suggested that languagebe added to § 10.100(b)(3) to indicatethat any COP granted to an employeeafter a claim is withdrawn must becharged to sick leave, annual leave orleave without pay as chosen by theemployee. This suggestion has beenadopted with respect to annual or sickleave, and the last part of the sentencehas been reworded in accordance with§ 10.223, which says that COP paid inerror may be considered anoverpayment of pay consistent with 5U.S.C. 5584.

One agency asked about theimplications of withdrawal of caseswhich were closed ‘‘short form’’, on thebasis that OWCP does not formally‘‘determine eligibility for benefits’’ inthese cases. While no case-specificdetermination is made in these cases,eligibility has been established usingpre-determined criteria, and theprogram does not believe that theproposed language compromises theability to withdraw a case which isclosed ‘‘short form’’. Should thishappen, any monies paid for medicalcare would be declared an overpayment,which would be handled according tothe usual procedures.

Section 10.101 (b) and (c)

A labor organization stated that,because latent conditions may resultfrom traumatic injuries, the discussionof timeliness with respect to latentconditions should not appear solely inthe paragraph dealing with occupationaldisease. The point is well taken, and thelanguage of paragraph (c) is being addedto § 10.100 as new paragraph (c). Theorganization also favors removing theword ‘‘injurious’’ from the first sentenceof paragraph (b). As the concept of‘‘injury’’ is integral to workers’


compensation claims, OWCP believesthat the use of this word is appropriate.

Section 10.102A labor organization suggested that

the heading be rephrased to includeonly compensable injuries. When aForm CA–7 is filed, OWCP has notnecessarily determined thecompensability of the claim. Thesuggested change would therefore beunnecessarily restrictive and confusing.

Section 10.102(a)One agency suggested that this section

be amended to include a statement thatForm CA–7 is not needed during theinitial period of disability, which iscovered by COP. The first sentence isbeing modified to clarify this point.

A labor organization states that therequirement to submit Form CA–7 nomore than 14 days after pay stopssuggests a legal time limit which areader might confuse with the timelimits specified by the FECA for makingclaim for compensation, which aredescribed in § 10.100(b). Section10.101(a) is exclusively concerned withthe mechanics of filing a particularform, and makes no reference to timelimitations under the FECA. OWCP doesnot believe that readers will be misledby the wording of this section when itis read in context.

Section 10.102(b)(3)One agency asked for clarification as

to whether the medical evidence shouldbe submitted to the employer or toOWCP. As OWCP is the properrecipient, this paragraph has beenchanged to so state. The agency alsostated that the employee should berequired to provide the medicalevidence to the employer. OWCPstrenuously disagrees, as it is theadjudicator of claims for compensationand employers do not have a globalneed for medical reports supportingsuch payments. The agency may,however, obtain copies of such medicalevidence directly from OWCP.Therefore, this change has not beenmade.

Section 10.103One agency proposed that Form CA–

7 always be required to file claims forschedule awards, as they are tracked fortimely processing and letters are not,and a request for a schedule awardconveyed in a letter might beoverlooked. While this suggestion hasmerit, it does not take into account thatschedule awards are initiated by claimspersonnel as well as by claimants, orthat a schedule award may be claimedwhether or not the employee is

receiving compensation for disability.Given the variety of ways in which aclaim for a schedule award mayoriginate, OWCP does not think it isprudent to restrict the method of filingthe claim to Form CA–7.

One employee organization noted thatthe phrase ‘‘compensated according tothe schedule’’ is redundant. The phraseis being removed and the word ‘‘such’’is being added before ‘‘impairment’’ toensure that the meaning of theparagraph is clear.

Section 10.104

A commenter objected to the conceptof recurrences. Removal of this conceptwould require a change to the FECAitself.

Section 10.104(a)

An agency desired clarification ofwhether an employee must both losetime from work and incur a wage lossfor the submittal of a Form CA–2a to benecessary. This in fact is the case, andno change is made to this paragraph.

Another agency noted that thissection addresses only recurrences ofdisability, and does not considerrecurrences of medical conditions(although Form CA–2a is designed toclaim both). This agency proposedadding a phrase to the end of the firstsentence to address recurrences ofmedical conditions, and this change hasbeen made.

Three agencies and a labororganization noted a contradictionbetween a statement in this section anda statement in § 10.207(a), with respectto whether a Form CA–2a, Notice ofRecurrence, must be filed during theCOP period. One agency noted thatsubmittal of the form is a workload itemboth for the employer and for OWCP,while another agency noted OWCP’scomment in the Preamble to theProposed Rule that it is difficult forOWCP to intervene in cases when itdoes not know that time loss isoccurring. The statement in § 10.207(a)is correct, and the second sentence ofproposed § 10.105(a) (now § 10.104(a))has been removed.

A labor organization suggestedrewording the sentence addressingsituations where a Form CA–2a neednot be filed. From the suggested text itis clear that three situations (newtraumatic injuries, new occupationaldiseases, and new events contributing toalready-existing occupational diseases),rather than the two specified in theproposed rule, need to be addressed inthis regard, and the paragraph has beenreworded accordingly.

Section 10.104(b)

An agency asked whether thestatement accompanying Form CA–2a isto be submitted as a separate narrative,since the information listed in thisparagraph is also listed on Form CA–2a.The paragraph is being reworded so thatit refers to the specific requirementsstated on Form CA–2a, just as§ 10.104(b)(2) refers to specificrequirements stated on Form CA–2awith reference to the submittal of amedical report.

Section 10.105(a)

A labor organization suggested thatthis section be reworded to refer to theclaimant as the ‘‘survivor claimant’’throughout. As the referent changesfrom ‘‘survivor’’ to ‘‘claimant’’ in themiddle of the paragraph, differentwording would clearly be desirable.Therefore, ‘‘claimant’’ has been changedto ‘‘survivor’’ both in this paragraph andin paragraph (c). The point that SSNsare to be provided for all survivors onwhose behalf benefits are being claimedhas been clarified, though this issue wasnot raised by the labor organization.

Section 10.105(d)

A labor organization suggested thatthe first sentence of this paragraph,which parallels the language of section8122(c), be expanded to includeoccupational diseases, and this changehas been made. However, the meaningof the statutory text has not beenexpanded as suggested, by changing‘‘the same injury’’ to ‘‘the samecompensable condition’’.

The organization also proposed thatthis section address the entitlement of asurvivor to the remainder of a scheduleaward after an employee dies. That isnot the subject of this section, however,and its inclusion here would not begermane.

The organization also asked whatprovision of the FECA bars a claim fordisability which is not filed while theemployee is alive. In Anna Palestro(Vincent Palestro), 15 ECAB 241 (1964),the Employees’ Compensation AppealsBoard established that an individualmust be alive to claim benefits fordisability. The only provision forpayments to carry over from a disabilityclaim after death is found in section8109.

Section 10.110 (a) and (b)

Nine employing agencies, oneemployee organization, and one othercommenter objected to the reduction oftime for submitting Forms CA–1 andCA–2 from 10 to five days. Manyreasons were cited for this objection.


Practical concerns includedobservations that decentralizedoperations make it difficult to meetcurrent time standards, much lesstightened ones, and that delivery by thePostal Service can take five days. Also,injuries occurring on a night shift orweekend cannot always receiveadministrative attention until the nextday, when the employee and/orwitnesses may not be available; a five-day time frame may result in incompleteand/or inaccurate submittals ofinformation; the quality of claimsreview by employers might suffer; andthe proposed standards would bedifficult to enforce.

With respect to traumatic injury cases,it was stated that a five-day period forsubmittal would be at variance with the10-day period allowed employees toproduce prima facie evidence ofdisability. It was further stated that,given that OWCP closes most traumaticinjury cases ‘‘short form’’, and OWCPnurses are not assigned unless and untila Form CA–7 is submitted, theadvantage of a five-day period over a 10-day period was not evident.

With respect to occupational diseasecases, it was stated that 15 days shouldbe allowed for submittal of Forms CA–2 for former employees, on the basis thatit takes more than 10 days to compileeven minimal information for thesepeople. This longer time period wouldbe consistent with the longer timeframes OWCP allows for developing andadjudicating claims for occupationaldisease.

Concerns about the effect on employermorale included the observations thatwhile a reduced time period is a worthygoal, less than half of claims submittedGovernment-wide meet the 10-day goalnow; that employers trying to improvetheir performance in this area would besubject to criticism for inability tocomply with this time limit; and thatreducing the time limit would changeemployers’ focus from the needs ofinjured employees to the need to meetthe regulatory requirements.

As a related matter, an employerpredicted with respect to § 10.117 thata five-day submittal requirement wouldresult in more erroneous controversions,or more controversions after the initialsubmittal. This employer juxtaposed thefive-day period to the 30-day periodallowed for controversion, but thisjuxtaposition differs little from thatpresented by the current requirement tosubmit notices of injury within 10 days.Also, there is a difference betweencontroverting the case, which can bedone quickly, and providing supportingevidence, which may in fact take moretime.

Finally, § 10.110(b) indicates that theemploying agency will ‘‘transmit’’ thecompleted form to OWCP (as does§ 10.113(c)). The word ‘‘transmit’’ isused specifically to allow for electronictransmission of forms. It was suggestedthat a five-day time frame would bemore appropriate when electronictransmission is a reality. It is thisargument which seemed most salient,and given the evolutionary nature of theprogram’s electronic data processingefforts, the proposal to reduce thenumber of days allowed for submittalfrom 10 working days to five calendardays will be set aside until OWCP hasthe capacity to receive the notices inelectronic format from all agencies. Atthat time OWCP will revisit this issuefrom the regulatory standpoint. The 10-day submittal period is very muchwithin the norm by comparison withworkers’ compensation programs in theStates and the District of Columbia.Nineteen states also set a 10-daysubmittal period, while 19 states set ashorter period and 13 states set a longerone.

A commenter stated that the employercannot know if ‘‘the need for more thantwo appointments’’ as stated in§ 10.110(b)(3) will develop, and suggestsa more general rewording. The programhas followed this practice for a numberof years, and it has proven to be quiteserviceable. Therefore, OWCP does notbelieve that a change is warranted.

Two labor organizations suggestedthat the employer be required to furnishthe employee with a copy of both sidesof Form CA–1 or CA–2 when theemployer completes its portion of theform. A phrase to this effect is beingadded.

Section 10.111Concerning paragraph (a), a labor

organization suggested that language beadded to explicitly require the employerto advise the employee of his or herrights under the FECA, as the currentregulations provide at § 10.106(a).Employers are required at various placesin these regulations to provide specificinformation and forms to injuredworkers, and inclusion of a generalstatement is superfluous.

Concerning paragraph (b), an agencysuggested that the time frame forsubmitting Form CA–7 to OWCP remainas stated in current § 10.106(b), whichallows for submittal by the tenthcalendar day of wage loss rather thanduring the COP period. The proposedregulation represents long-standingpolicy in accordance with guidance firstissued by FPM Letter 810–6 in May1985. OWCP does not believe that thispolicy needs to be changed.

Concerning paragraph (c), threeagencies objected to the five-day timeframe for submitting Form CA–7.However, this time frame is the same asthat found in the current regulations,and the program is striving to shortenthe time frames for submittal of noticesof injury and claims for compensation.Therefore, OWCP believes that it wouldbe counterproductive to specify a periodgreater than the five days currentlyallowed for submittal of claim forms.

One employee organization suggestedthat the time frame be expressed ascalendar days, rather than working days,to be consistent with § 10.110(a). As thelatter section will be changed to read‘‘10 working days’’ (see commentsabove), the wording in § 10.111(c) willremain ‘‘working days’’ as well.

Section 10.112

Two agencies objected to the five-daytime frame for submitting Form CA–8.As noted in the comments about§ 10.111(c) above, however, this timeframe is the same as the one found inthe current regulations, and the programis striving to shorten the time frames forsubmittal of claims for compensation.Here, too, the program believes that itwould be counterproductive to specify aperiod greater than the five dayscurrently allowed for submittal of claimforms.

As with § 10.111(c), one employeeorganization suggested that the timeframe be expressed as calendar days,rather than working days, to beconsistent with § 10.110(a). As the lattersection will be changed to read ‘‘10working days’’ (see comments above),the wording in § 10.112(b) will remain‘‘working days’’ as well.

Section 10.115

Current § 10.104 requires theemployee to submit medical evidence inall cases. One agency stated that thisrequirement is not clearly enunciated inthe proposed regulations, in spite ofspecific references in proposed§§ 10.210, 10.101, and 10.105, andsuggested a change to proposed§ 10.115. The program concurs, and asentence is being added to clarify thispoint.

A commenter recommended thatForms CA–1, CA–2, and CA–2c(perhaps CA–2a was intended) becombined, and that Forms CA–5 andCA–5b be combined, and that FormsCA–7, CA–8, and CA–12 be combined.Each of these forms serves a specificpurpose and is accompanied by specificinstructions. Any of the combinationssuggested would result in much longerforms which would be more difficult to


use and understand, both for employeesand employers.

A labor organization objected to theremoval of the language found at current§ 10.110(a) concerning the employee’sburden of proof, and suggested that it berestored. Most of the material in thecurrent rule is covered in proposed§ 10.115, but the sentences pertaining tothe belief of the claimant and emergenceof a condition during a period of Federalemployment with respect to causalrelationship have been added toproposed § 10.115(e), and the latter partof that paragraph as proposed has beenrelettered (f). Also, a statement that theclaimant must establish the five basicrequirements of the claim to meet his orher burden of proof has been added tothe introductory paragraph of thissection.

Section 10.117

One agency read this section asapplying only to occupational diseaseclaims, as this is the subject of thesection immediately preceding it, andproposed that § 10.117 be retitled tomake clear that it applies to bothtraumatic injuries and occupationaldiseases. OWCP concurs, and thischange has been made.

The same agency proposed a newparagraph providing that ‘‘OWCP willpromptly respond’’ to an agency’sobjection to acceptance of a claim, andalso that the agency and the claimantmay review each other’s responses tothe agency’s objections. Section 10.119already addresses OWCP’sresponsibility to advise all of the partiesto the claim when a claim is contested,and the remainder of this suggestionwould add another layer of review byclaimants and agencies. For thesereasons OWCP has not adopted thissuggestion.

One labor organization suggested thatthe last sentence of paragraph (b) bemodified to include withdrawal of aclaim. OWCP concurs with thissuggestion and believes that it willaddress the issues raised with respect to§§ 10.100(b)(3), 10.101(a), and 10.105(a)(see the comments above with respect tothese sections).

Section 10.118

One employee organization suggestedthat the language which appears incurrent § 10.140 with respect to the non-adversarial nature of proceedings underthe FECA be added to this section.OWCP agrees that it should appear, butas this language applies to many aspectsof claims processing, it is being addedto § 10.0.

Section 10.119An agency made two comments about

delayed controversion which apparentlyflowed from the proposal to reduce thenumber of days allowed for filingnotices of injury and occupationaldisease from 10 to five days. It askedwhether OWCP would provide writtenexplanation of an acceptance if theagency contested the claim within 30days of receiving the notice from theclaimant, even if the claim was notcontested on the notice itself. OWCPwill in fact provide such writtenexplanation, and this section has beenmodified accordingly.

Section 10.121Two employee organizations

suggested that the phrase ‘‘up to’’ beremoved, so that employees will alwayshave 30 days to respond to a request forinformation. OWCP concurs, and thelanguage of the current § 10.110(b)regulation is being retained in thisregard.

Section 10.127One employee organization suggested

that the word ‘‘should’’ in the secondsentence be changed to ‘‘will’’, both toensure that the employee’srepresentative is properly notified andto be consistent with the language in thelast sentence. This change has beenmade.

Section 10.200One agency requested amplification of

when an agency can make preliminarydeterminations on an employee’sentitlement to COP other than in thesituations described in § 10.220 and§ 10.221. Another agency suggested thatthe proposed language did not make itclear enough that the employing agencymust pay COP, even while controvertingit, except for certain delineated reasons.A labor organization also suggestedclarifying language in this regard.

The policy behind the proposed rulewas and remains that there are nocircumstances under which an agencycan refuse to pay COP, except for thoselisted in § 10.220 and § 10.221. Theconfusion and doubt expressed in thecomments, however, pointed to a needfor clarification. OWCP found languagesuggested by an employing agency to behelpful in this regard and changed§ 10.200(b) accordingly.

Moreover, in paragraph (a), the phrase‘‘workers’’ compensation benefits’’ hasbeen changed to ‘‘wage loss benefits’’ tomake the meaning more clear. Finally,paragraph (e) lacks the words‘‘employing agency’s’’ before the word‘‘premises’’. This oversight has beencorrected.

Sections 10.205 and 10.207

These sections elicited the mostcomments with respect to COP (six andseven, respectively). These sectionspropose that, to use COP: Disabilitymust either (1) begin within 30 daysafter the date of injury (§ 10.205(a)(3));or (2) recur within 30 days after the firstreturn to work (§ 10.207(c)).

One agency objected to shortening thetime frame for commencing COP aftersuffering a recurrence of disability, andnoted that since a Form CA–2a wasrequired, OWCP would be put on noticeof the recurrence. That agency alsopointed out that neither the current northe proposed rules address the situationwhere an employee returns to work buttakes intermittent COP for medicalappointments only, and it suggested thata new section be added to specificallyallow for this. COP is appropriatelyused for medical appointments, andwhile OWCP does not believe a separatesection is needed, a phrase to this effecthas been added to § 10.205(a)(1).

Finally, that agency also suggestedthat employees should document thesemedical visits. Since bills will besubmitted to OWCP for any medicaltreatment and the dates of treatmentwill be specified on these bills, noadditional documentation will berequired.

Six labor organizations addressed thereduction in the time period forcommencing COP in both § 10.205 and§ 10.207. One organization noted thatdisability may not begin right awaybecause, for example, of difficulty inscheduling surgery, and that therestriction in both sections was contraryto the remedial purpose of COP.Another noted that complete healingfollowing surgery may take longer thanthe 30-day time frame would allow, andsuggested that a special extension to 180days be allowed where COP is used formedical appointments only. A thirdorganization challenged OWCP’s statedrationale, noting that agencies do notuniformly submit claim forms in atimely manner. This organization statedfurther that early intervention isvaluable in cases involving extensivedisability, not where disability isinfrequent, and suggested that theintention was really to save agenciesCOP payments.

A fourth organization felt that thechange would deprive the employee ofone of the Act’s benefits and insteadallow agencies to return employees towork before they were physically able todo so. A fifth organization expresseddeep concern with the proposal, statingthat it failed to recognize that someconditions result in delayed disability,


and while it applauded efforts tominimize lost time, it asked that othermethods be used. The fifth organizationsuggested that the period be reduced to60 rather than 30 days. A sixthorganization also registered graveconcerns with this change, stating thatit ran counter to the remedial intent ofCOP and noting that medical treatmentmay be delayed beyond 30 days fromthe date of the injury.

COP is intended to prevent aninterruption of income in traumaticinjury cases during the time period ittakes for an employee to submit a claimand for OWCP to adjudicate the claim.While the legislative history does notspecify why a 45-day maximum waschosen, the history, supported by theplain language of the statute, makes itclear that Congress was concerned aboutinterruption of an employee’s salarywhile a claim was filed and adjudicated,but had no intention of providing anentitlement to the entire 45-day periodif wage-loss benefits could be paidinstead. Section 8118(b)(3) furtherprovides that COP is to be paid ‘‘underaccounting procedures and such otherregulations as the Secretary mayrequire,’’ giving the Secretary broadauthority to establish the ground rulesunder which COP will be paid.

However, to mitigate any problemswhich a 30-day maximum time framefor beginning to use COP might cause,the time frame in the final rule has beenchanged to 45 days. Despite this change,OWCP believes that it will still be ableto fulfill its goal of returning employeesto work at the earliest possible time. Asnoted in the Preamble to the ProposedRule, it is best if OWCP learns of lost-time cases as soon as possible so thatearly intervention can facilitate an earlyreturn to work. Continued disability-related absences, even intermittentabsences, can prevent OWCP fromintervening during this crucial time.OWCP recognizes that this need must bebalanced against the need to ensure anincome stream. The two are notmutually exclusive, however, and theefforts of the agencies and OWCP toshorten the time period required toprocess claims and pay benefits willprevent interruptions to the incomestream.

One example put forth in favor ofretaining the existing period forpayment of COP when disability doesnot begin right after the date of injuryis that of a claimant whose surgerycannot be scheduled within 30 days. Ifthe claimant continues to work, losttime does not begin until the date ofsurgery, and if this date is more than 30days past the date of injury, the

individual will have no entitlement toCOP and no income.

In this scenario, however, the incomestream would not be interrupted. OWCPwould note that surgery is pending, andthe anticipated lost time would allowthe agency and OWCP to process claimforms for wage-loss benefits so that theincome stream would not beinterrupted. Indeed, this is the very kindof scenario in which COP would not beappropriate, since such lost time isanticipated well in advance and theagency and OWCP have time to processthe claim to provide the wage-lossbenefits under the Act.

Finally, several commenters notedthat employees in some cases lose timeintermittently just to attend medicalappointments, and cited this kind oftime loss as a reason for not reducingthe period for commenting use of COP.OWCP does not disagree with thisargument, but after carefulconsideration, it concluded thatadministration of a provision withdifferent time frames with respect todisability and medical care would betoo complicated, both for employingagencies and for OWCP itself. Therefore,the time frame for beginning to use COPwill be 45 days in all circumstances.

Three agencies and a labororganization noted a contradictionbetween a statement in this section anda statement in § 10.105(a), with respectto whether a Form CA–2a, Notice ofRecurrence, must be filed during theCOP period. As noted in the commentsabout § 10.105, the statement in§ 10.207(a) is correct.

Section 10.205(a)(2)An employing agency inquired as to

what would constitute ‘‘another form’’acceptable to OWCP, and whether aletter would suffice. This language isincluded so that the regulations reflectOWCP’s position that a Form CA–2,CA–7 or CA–8 (all of which containwords of claim) fulfills the requirementthat notice be given ‘‘in writing’’ underthe appropriate circumstances. Theword ‘‘form’’ does in fact denote anOWCP-approved claim form, and aletter would not serve the purposedescribed herein.

Section 10.206One agency expressed concern with

the retroactive election of COP in thosecases OWCP terms ‘‘short form closure’’cases, that is, cases where there is nowage loss claim and the medical bills donot exceed a certain dollar amount. Inthese cases, no formal acceptance isissued. The agency points out that insuch cases, the wording in § 10.206(a)should be revised to reflect this by

adding the parenthetical clause ‘‘(ifwritten approval is issued).’’ Thissuggestion is accepted and the languagehas been changed accordingly.

Section 10.210An employing agency argued that

employees should submit medicalreports to employing agencies as well asto OWCP. This issue is addressed in thecomments about § 10.331(b). Severalcommenters pointed out a typographicalerror (‘‘employer’’ instead of‘‘employee’’), which is corrected in thefinal rule.

A labor organization objected tochanging the period within whichmedical evidence supporting disabilitymust be submitted to the employer from10 working days to 10 calendar days.This change was made because it isimportant to obtain this evidence assoon as possible. Using working days,which do not include Saturdays,Sundays and Federal governmentholidays, can easily result in a period of15 or more calendar days elapsingbefore a medical report is received, aperiod during which the employeecontinues to be absent from work.OWCP has discussed the importance ofearly intervention, and the earlier thesubmittal, the better. This section isentitled ‘‘Employee’s Responsibilities’’to emphasize that return-to-work effortsare required by employees as well asemployers and OWCP. Certainly theemployee, who has chosen his or herphysician, has the most leverage overthe physician at this crucial time andcan best ensure that such medicalevidence is submitted. The newlanguage requiring the report to containa statement as to when the employeecan return to work is consistent withand essential to this goal.

Section 10.211One labor organization suggested

wording changes to subsection (c) thatwould have the effect of eliminating thedistinction between controverting aclaim for COP and other objections anemployer might raise to a claim underthe FECA. Unlike a general objectionthat would have no immediateconsequences for a claimant pendingaction by OWCP, controverting a claimfor COP is a preliminary determinationby an employer that stops a claimant’sregular pay. Therefore, OWCP wants toretain the distinctive nature of thisparticular type of objection, and thesuggested changes have not beenadopted.

In subsection (d), several commentersasked what the phrase ‘‘other formsapproved by the Secretary’’ meant. Thisphrase was added to ensure that the


regulations reflected OWCP’s positionthat a Form CA–2, CA–7 or CA–8 (all ofwhich contain words of claim) willfulfill the requirement that notice begiven ‘‘in writing’’ under theappropriate circumstances. In addition,one labor organization suggestedchanging ‘‘return’’ to ‘‘transmit’’, andthis change has been made. Finally,three agencies objected to therequirement that Form CA–1 besubmitted to OWCP within five calendardays. For the reasons stated in theresponse to the comments received to§ 10.110, OWCP has decided to keep thetime frame of 10 working days, and thelanguage of paragraph (d) has beenchanged accordingly.

Section 10.215One agency noted with respect to

paragraph (d) that there appeared to bea change in how COP days arecalculated in this section as proposed.The section states that days off arecounted toward COP if COP was used inthe days immediately before and afterthe days off. The comment pointed to aninadvertent modification in how daysare calculated and the final version hasbeen changed to read that if COP is usedon the day before or the day after daysoff and disability is supported bymedical evidence, the days off arecounted toward COP.

The same agency suggested languageon calculating COP days for part-time orintermittent employees, and thatlanguage has been adopted. However,this agency’s suggestion that OWCP adda new paragraph to § 10.215 to addressthe circumstances under which COPmay be used for obtaining medicaltreatment would both limit the scope ofparagraph (c) and unnecessarily restrictOWCP’s ability to monitor the provisionof medical treatment, and therefore therequested addition has not been made.

Sections 10.216 and 10.217Two Federal agencies noted that the

inclusion of differential and/or Sundaypremium pay in the pay rate for COPwas contrary to provisions in twoappropriation bills passed by Congress,Pub. L. 104–208, section 630, 110 Stat.3009, 3362 (1996) and Pub. L. 105–61,section 636, 111 Stat. 1272, 1316 (1997),which prohibited Federal agenciesfunded by those bills from payingdifferential and/or Sunday premium payto their employees unless they actuallyperformed work during the time periodrelevant to such pay. These agenciestherefore suggested that both§§ 10.216(a)(1) and 10.217 be changed toreflect that these particular incrementsof pay are not to be included in the payrate for COP.

Ever since Congress amended theFECA in 1974 to provide for COP,OWCP has directed agencies to includepremium, night or shift differential,Sunday or holiday pay, and other extrapay in their calculations of the pay ratefor COP. However, in several recentappropriation bills, Congress hasincluded language similar to theprohibitions cited by the two Federalagencies, without actually amending theunderlying statutory authority for suchincrements of pay or overturning courtdecisions construing such statutoryauthority.

Therefore, while it is clear in theabsence of such appropriations languagethat it would still be proper for OWCPto require the inclusion of these twoincrements of pay in the pay rate forCOP, it is also clear that the statutoryauthority for the payment of suchincrements is not derived from theFECA itself, nor are these incrementscurrently being paid in a consistentmanner throughout the entire Federalworkforce due to the varied scope ofagency legal authority to spendappropriated funds. In addition, theagencies funded by the appropriationbills in question would again berequired to include these increments ofpay in the pay rate for COP should theprohibition on their payment not beincluded in future appropriation bills.

From an administrative standpoint,there is little justification for OWCPinvolvement in payroll functions amongthe various agencies, only some ofwhich are affected by the appropriationbills noted above, since COP constitutesa continuation of an employee’s ‘‘pay’’that is calculated and paid by his or heragency rather than a form of‘‘compensation’’ that is calculated andpaid by OWCP. Accordingly,§§ 10.216(a)(1) and 10.217 are revised toreflect these circumstances.

One of the same two Federal agenciesalso suggested adding language to§ 10.216(a) to emphasize that ‘‘weeklypay’’ is based on an average of theemployee’s weekly pay over the prior 52weeks. However, § 10.216(a) alreadyexplains this very point, and thus thesuggested addition is not made. Onelabor organization urged that § 10.216include a reference to paid leave indetermining how COP is calculated, forfear that agencies would exclude it fromtheir calculations. Certainly, paid leavemust be included in the calculation ofCOP. While neither OWCP’s regulationsissued since 1975 nor the Federal(FECA) Procedure Manual makereference to paid leave, there is noindication that this absence has causedthe feared exclusions to occur.

Therefore, OWCP sees no need to addthe requested reference.

Sections 10.220, 10.221 and 10.222One labor organization recommended

changes to § 10.221 regarding therequirement that an agency controvert aclaim for COP before it stops anemployee’s pay. However, the suggestedchanges, which involve retention oflanguage in current § 10.203(b), wouldnot maintain the desired distinctionbetween controverting and otherwiseobjecting to a claim, and they havetherefore not been incorporated.

A number of labor organizationsnoted that the existing rules directagencies to retroactively reinstate COPwhich it had stopped because medicalevidence showing disability had notbeen received within 10 days, when thatmedical report is received. The languagehas been added to § 10.222(a)(1).

One agency asked about the type ofmedical evidence necessary to supportthe continued payment of COP andrequested further guidance from OWCP.The evaluation of medical evidence bythe employing agency is limited to adetermination of whether, on its face,the medical report supports disability.Agencies do not properly considermedical rationale. Given this limitedinvolvement, further guidance of thetype requested is seen as unnecessary.

One labor organization objected to theprovision in § 10.222(a)(1) that wouldallow an agency to stop paying COP ifthe claimant fails to submit the requiredmedical evidence within 10 calendardays and requested that the time frameof 10 working days be retained.However, as noted previously in theresponse to this labor organization’sobjection to the equivalent language in§ 10.210(b), the change to calendar daysfrom working days was made because itis important to obtain this evidence assoon as possible. Therefore, for the samereasons that supported maintaining theequivalent change in § 10.210(b), therequested change in § 10.222(a)(1) hasnot been made.

Another labor organization objected tothe change allowing the termination ofCOP when a personnel action—initiatedbefore the injury and including aremoval action—becomes finalfollowing the injury and during the COPperiod. No reason was offered for theobjection, however, and the programbelieves that this clarification isnecessary to ensure that employees whowould otherwise not have receivedsalary do not receive it merely becauseof the COP provisions. This change wassupported by one agency.

Yet another labor organization, alongwith an agency, suggested that the


proposed rules clarify the employingagencies’ authority to terminate COP.An agency noted that § 10.222(a)(3),regarding refusal of a written offer ofsuitable work, appears to change thecurrent authority for an agency to stopCOP. Such a change was not intended,and so new language has been added tothis section which makes it clear that anagency can stop COP when an employeerefuses a written offer of suitable work,but that OWCP has final authority todetermine whether the termination wasappropriate and can order retroactiverestoration of COP benefits improperlyterminated.

The labor organization noted that thelanguage preventing an agency fromterminating COP except under thecircumstances listed in existing § 10.203and § 10.204 does not appear in theproposed rules. The reasons fortermination have remained essentiallythe same (except for termination forpersonnel actions initiated before theinjury which become final after theinjury). While the language in § 10.220and § 10.222 is phrased to limitauthority of the agency not to pay(§ 10.220) or to stop paying (§ 10.222) inthose circumstances listed, thecomments show that the program’sintent was not clear. Therefore,additional language has been added to§ 10.220 and § 10.222(c), clarifying thatthe agency cannot stop COP to whichthe employee is otherwise entitledexcept for the reasons set out in thesetwo sections, or unless OWCP directsCOP to stop, or unless the individualhas returned to work.

Sections 10.223Two agencies noted that this section

failed to address disruptions by theemployee’s representative. Thatlanguage has been added. A labororganization noted that the ‘‘requiredmedical examination’’ is one requiredby OWCP and the regulations should sostate, and this change has been made.The organization also suggested makingclear that the suspension is subject to allappeal and review rights. This languageis unnecessary, since all adversedecisions by OWCP are subject to thereview and appeal processes set forthunder the Act.

Section 10.300(b)While agreeing with the proposed

language that Form CA–16 need not beissued more than a week after the injuryoccurs, one agency suggested that thissection be changed to state that the formneed not be issued if the employeereports the injury more than one weekafter its occurrence. The currentlanguage covers this situation as well as

the situation where an employee reportsan injury right away but does not appearto need medical care for up to a weekafterwards. Therefore, OWCP does notbelieve that the suggested change isnecessary.

Another agency suggested that thetime for issuing Form CA–16 beincreased from four to 24 hours, citingdistances among supervisors, injuredemployees, medical treatment facilities,and those authorized to sign Forms CA–16. The four-hour time frame is thesame as currently provided, and asnoted in the second sentence of thisparagraph, verbal authorization may begiven if necessary. In view of theexcellent telephone and facsimilecommunications generally available inthe United States, OWCP sees no reasonto increase this time frame.

A commenter also objected to the timeframe stated, claiming that reachingOWCP may take a week, that carecannot be authorized unless the specificprocedures are known ahead of time,and that employees injured at night andon weekends are denied equal access tocare. These arguments are notpersuasive, especially as the proposedrule is unchanged from the existing rule,and the commenter’s suggestion that theemployer authorize one visit for medicalcare until OWCP can approve furthercare is impractical.

Three labor organizations argued thatthe proposed rule limiting issuance ofForm CA–16 to one week following theinjury is inconsistent with the statutory30-day requirement for claiming COP.Still another labor organization statedthat changing to a one-week limit fromwhat it considered to be the currenttime frame of six months from the dateof injury to be ‘‘radical andinappropriate’’. OWCP does not agree.The purpose of Form CA–16 is toauthorize urgently-needed medical carein connection with a work-relatedtraumatic injury, not to provide blanketmedical coverage. An employee whoseneed for medical care develops sogradually that it is not apparent until aweek after the injury occurred cannotaccurately be said to require urgentmedical care. The time requirements forclaiming COP have no relation to thosegoverning issuance of Form CA–16.

Section 10.300(d)

Three employee organizationssuggested that the employer bespecifically instructed to ‘‘advise theemployee of the right to initial choice ofphysician’’, parallel to the language ofproposed § 10.211(b) with respect to theemployee’s right to COP. This changehas been made.

Another employee organizationsuggested that this paragraph allow forinitial choice of medical facility as wellas physician. Inasmuch as a report froma physician is needed to support a claimfor compensation, the inclusion of theterm ‘‘medical facility’’ is irrelevant atbest, and might prove misleading aswell.

A commenter stated that this sectiondoes not indicate how OWCP will notifyphysicians that they have beenexcluded. This information is providedin subpart I, which is referenced in thisparagraph.

Section 10.303Two agencies expressed their

appreciation for the clear statement withrespect to issuing Forms CA–16 forsimple workplace exposures tohazardous substances when injurieshave not occurred.

Section 10.310Two agencies stated their support for

the changes in this section with respectto appliances, supplies, and genericequivalents for prescribed medications,indicating their belief that thesemeasures would assist in costcontainment (and, in the view of one ofthem, sound fiscal management).Another agency stated its approval ofthe program’s cost containment effortsin general. Another commenter, on theother hand, questioned how OWCPwould apply the test of cost-effectiveness.

A commenter also questioned thestatement that OWCP ‘‘will not approvean elaborate appliance or service wherea more basic one is suitable’’, positingthat OWCP will oppose use of higher-cost diagnostic tests (for instance MRIs,in comparison with x-rays) in amisguided attempt to cut costs. Thisconclusion is incorrect. The statement isintended to address requests for specialequipment, such as exercise bicycles,and special services, such as health clubmemberships, when prescribed to treatthe effects of an injury. OWCP will notpay for a top-of-the-line appliance orservice where a less expensiveequivalent exists. However, in mattersof diagnosis and treatment, OWCP doesnot and will not attempt to second-guessphysicians.

Section 10.310(b)The last sentence in this paragraph

gives OWCP the authority to require theuse of generic equivalents whereavailable. An agency suggested thatOWCP require the use of genericequivalents where available for allprescribed medications, unless theemployee shows good cause for not


doing so. Another commenter, on theother hand, stated that OWCP shouldnot be allowed to require the use ofgeneric equivalents if they do notrepresent the ‘‘SOC’’ (presumably‘‘standard of care’’), since doing so ‘‘setsMDs up for malpractice’’.

As the purpose of adding thisprovision to the regulations is toprovide OWCP with the flexibility toimplement such a policy in the future,the first comment is not adopted. Withrespect to the second comment, use ofgeneric equivalents is a commonlyaccepted practice in many health plansand medical benefit programs, and theprogram has no intent to subvertgenerally accepted standards of care.The statement will therefore remainunchanged.

Section 10.311With respect to § 10.311(a), two

agencies stated their disagreement withwhat they considered the expansion ofchiropractic services and suggested thatthe first sentence be reworded to moreclosely follow the statutory language.However, the proposed change isvirtually identical to the last sentence ofsection 8101(2), and as there is no intentto expand the meaning of the statute,and the costs involved are consistentwith the statute and with OWCP’s pastpractice, OWCP does not believe thatthe language of this section needs to bemodified.

Another commenter objected to§§ 10.311(a) and (b) on the basis thatchiropractors cannot treat subluxations.Such treatment is authorized at section8101(2).

Section 10.313An agency asked that this section

more clearly define when preventivetreatment may be authorized and whenit may not, particularly in the contextthat a work-related injury must bepresent before treatment may beauthorized. Paragraphs (b) and (d)already refer to specific injuries, andparagraph (a) addresses complicationsof agency-sponsored preventivemeasures, which are considered to beinjuries. Paragraph (c) refers toconversion of tuberculin reaction afterexposure to tuberculosis in theperformance of duty. Since tuberculosisis transmitted invisibly, through the air,a specific injury is inferred from theconversion. For these reasons, OWCPdoes not believe that changes to thisparagraph are necessary.

Section 10.314Two employee organizations objected

to the change in method of payment toattendants as represented by this

section, given the language of section8111(a). The Preamble to the ProposedRule (62 FR 67123–67124) sets forth indetail OWCP’s reasons for making thischange, and OWCP continues to believethat this exercise of the Director’sdiscretion will be beneficial in severalways. As noted in the Preamble,employees currently receiving anattendant’s allowance under section8111(a) will not be affected by thischange.

Two agencies stated that they supportthe changes noted in this section, oneindicating its belief that this provisionwill help OWCP to monitor and controlmedical costs in the future. The othersuggested that this section address thedesired billing method, eitherspecifically or by cross-reference tosubpart I. OWCP concurs, and a cross-reference to § 10.801 has been added.

The second agency also suggested thatthe new provision apply to all cases,and that attendants’ allowancescurrently being paid under section8111(a) be discontinued. In thisagency’s view, such a change wouldreduce workload and avoid anyconfusion which might result fromhaving two methods of payment. Giventhe relatively small number of casesaffected by this provision, OWCP doesnot believe that the benefits whichwould result from changing the methodof payment to claimants now receivingaugmented compensation for attendantswould outweigh the disruption whichmight result.

Section 10.320An agency questioned whether an

employee’s spouse may attend a secondopinion examination, and if not, askedthat this be stated in the regulation (andin the letters notifying claimants ofappointments). The proposed paragraphstates that ‘‘the employee is not entitledto have anyone else present at theexamination * * *.’’ OWCP believesthat the word ‘‘anyone’’ is inclusiveenough to convey the intended meaningof this sentence, and that clarification isunnecessary.

A labor organization commented thatit is unlikely that personal physicianswill participate in second opinionexaminations, due to othercommitments, and that is unfair for anemployee to be ‘‘be denied anopportunity to have a second personpresent during the examination.’’Another organization expressed similarconcerns and stated that the language of§ 10.323 is sufficient to address anyimproper behavior.

Section 8123(a) provides that ‘‘Theemployee may have a physiciandesignated and paid by him present to

participate in the examination.’’ TheFECA says nothing about otherindividuals participating in theexamination. Of course, it is perfectlypermissible for any individual toaccompany the employee to theexamination and remain nearby, in thewaiting room, if the employee sodesires.

On another subject covered by thissection, an employee organizationargued that the provision for sending acase file for second opinion evaluationwithout actual examination of theclaimant is counter to the clear languageof section 8123, and should therefore beremoved. Evaluation of the case filewithout examination of the claimant canassist claims staff in resolving suchissues as causal relationship inoccupational disease cases, or makingretroactive determination of whethersurgery should be authorized.Furthermore, in Melvina Jackson, 38ECAB 443 (1987), the ECABauthoritatively held that this section ofthe FECA is not limited to physicalexaminations of a claimant andspecifically construed section 8123(a) asproviding for evaluations of theevidence in a claimant’s record withoutan actual physical examination.Therefore, the suggested deletion is notmade.

Section 10.321

One agency asked that a statement beadded to this section clarifying that notevery difference in medical opinionresults in a referee examination. Therequested clarification is consistent withdecisions of both the ECAB (Andrea KayRoberts, Docket No. 95–1839 (October22, 1997)) and federal courts that haveaddressed this point (McDougal-Saddlerv. Herman, No.Civ.A. 97–1908 (E.D.Pa.December 24, 1997), and Chaklos v.Reich, et al., No. Civ.A. 95–1763(W.D.Pa. August 25, 1997)). OWCPagrees that clarifying this section wouldbe useful and therefore a new paragraph(a) has been added. Also, the currenttext has been relettered paragraph (b),and the title of this section has beenslightly revised to more accuratelyreflect its subject matter.

One labor organization argued that theprovision for sending a case file forreferee evaluation without actualexamination of the claimant is counterto the clear language of section 8123,and should therefore be removed.However, in Melvina Jackson, 38 ECAB443 (1987), the ECAB noted that it hadnever held that an actual physicalexamination of a claimant wasnecessary to resolve disagreementsusing the medical referee provisions of


section 8123(a). Therefore, the suggesteddeletion is not made.

In paragraph (b), the reference tosection 8123(a) has been replaced witha reference to § 10.502.

Section 10.322

An agency asked that a statement beadded to this paragraph noting that thecosts of second opinion and refereeexaminations are eventually chargedback to employers. However, the costsassociated with medical examinationsare no different from other benefitsunder the FECA, as all expenses arecharged back to employers. Themechanism for doing so is described inthe FECA at section 8147. In line withOWCP’s attempt to avoid repeatingstatutory provisions in the regulationswherever possible, the program does notbelieve that addition of language aboutchargeback of costs associated withmedical examinations is necessary ordesirable.

Section 10.323

An agency suggested that the title ofthis section be revised to include theword ‘‘penalties’’, and this change hasbeen made.

Section 10.324

A labor organization argued forinclusion of language which would barthe results of medical examinationsrequested by the employer from beingused to reduce or terminate OWCPbenefits, unless those results werecorroborated by medical examinationsdirected by OWCP. The program’sprocedures have stated for some timethat such examinations will not be usedin this way, and OWCP is not aware ofany problems which have arisen withrespect to this policy. Therefore, theprogram does not believe that it isnecessary to address it by regulation.

Section 10.330

See the discussion above concerning§ 10.115. This section is being modifiedto make clear that in all cases theemployee is responsible for submittingmedical evidence, or arranging for itssubmittal.

A commenter suggested that medicalreports require the disclosure ofprevious claims for the same condition,pre-existing conditions of the same partof the body, and hobbies or otheroccupations which may contribute tothe condition claimed. OWCP alreadyhas the capacity to identify previousFederal workers’ compensation claimsfor injuries to the same part of the body.Where necessary, OWCP requestsinformation about pre-existing

conditions, hobbies and other jobs aspart of evaluating claims for disability.

The same commenter stated thatexamining physicians should berequired to state whether the conditionfound is causally related toemployment. In fact, such a requirementalready exists. The commenter alsosuggested that OWCP physicians reviewall claims to ensure that causalrelationship is properly established.OWCP will shortly begin usingautomated decision tables, which willcompare the condition claimed on thebill with the condition accepted in orderto identify problematical acceptances.

Section 10.331(b)An agency suggested that the

employee or treating physician submitcopies of medical reports to theemployer, stating that while Form CA–17 is useful, physicians do not alwayscomplete it. The agency also suggestedthat OWCP should be required to submitto the employer a copy of any medicalreport showing that the employee canreturn to work in some capacity.

Another agency characterized therequirement that reports be sent directlyto OWCP as ‘‘directing employees andmedical providers to circumvent theemploying agencies’’ and claimed thatthis represents a detrimental change,although current § 10.410(b) alsorequires submittal of reports to OWCP.This agency also stated that this policywill hinder agencies from helpingclaimants with requests for surgery andclaims for wage loss and from becomingaware of new medical conditions whichneed to be considered in making offersof reemployment.

A third agency stated that it hasdifficulty managing cases withoutimmediate access to medical reports,which it cannot always obtain rightaway from OWCP. Another commentermakes this argument as well.

This set of comments speaks to theneed for careful information-gatheringand for close coordination amongemployers, employees and OWCP. Theyalso speak to the rights andresponsibilities of all parties in theclaims process. In its proposedregulations, OWCP has tried to strike abalance among these sometimescompeting interests. Employers usuallyneed copies of medical reports primarilyto identify jobs to which their injuredemployees may return, and Form CA–17is designed explicitly for this purpose.That medical providers do not alwayscomplete forms and reports as requestedis an experience shared by OWCP, andthe program does not believe thatadding another requirement forinformation submittal will truly address

this issue, particularly when themedical reports may not accuratelydescribe work limitations.

With respect to managing claims andthe need for up-to-date informationwhen offering reemployment, one of thereasons that OWCP uses the services ofregistered nurses is to facilitatecoordination and exchange of medicalinformation among claimants,employers, and medical providers.When a claimant can return to work,whether to full or light duty, full or parttime, it has been OWCP’s experiencethat the nurses are able to provideinformation quickly and accurately sothat reemployment can take place assoon as possible.

For all of these reasons the programdoes not believe that a change in thissection is warranted. The agency may,however, obtain copies of such medicalevidence directly from OWCP.

Another issue raised by severalemploying agencies is whether FormCA–17 may be used only for traumaticinjuries. One agency notes that it mightwell be used to determine worklimitations in certain kinds ofoccupational illness cases. OWCPconcurs, and the word ‘‘traumatic’’ hasbeen removed from this paragraph.

Section 10.333

One employee organization suggestedthat this section state that medicalreports in support of claims for scheduleawards must be based on the AmericanMedical Administration’s (actually,American Medical Association’s)Guides to the Evaluation of PermanentImpairment. OWCP concurs, and thisreference has been added to this section.

Section 10.336

A commenter stated that the timeframes for submittal of bills are too longand suggested that OWCP requiresubmittal within 30 days of the servicedate. However, the time frames set forthin the regulations are consistent withthe practice of the insurance industry ingeneral, and OWCP sees no reason tochange them. The commenter alsosuggested that OWCP be required toprocess bills within 60 days of receipt.OWCP adheres to internal standardswhich require that 90 percent ofmedical payments be made within 28days of receipt and that 95 percent bemade within 60 days of receipt. For thisreason, OWCP does not see the benefitof including specific time periods in theregulations. Requiring an ‘‘attachedmedical report’’, as is also suggested, isimpractical in an automated billprocessing environment.


Section 10.337

An employer and another commenterobjected to the provision forreimbursement on the basis that it isunfair to both the agency, which willhave to pay the chargeback bill, and toproviders who adhere to the feeschedule. While OWCP does notconsistently and/or routinely reimburseemployees for these excess charges,paragraphs (b) and (c) have been revisedso that the employee will be responsiblefor contacting the provider to obtainrefund or credit. If the provider does notcomply with this request, the claimantwill need to submit documentation ofthe attempt to OWCP. OWCP may in itsdiscretion make up the difference to theclaimant, after reviewing the facts andcircumstances of the case. Once such apayment is made, the employee wouldbe aware of the monetary costs ofcontinuing to seek treatment with sucha provider, and OWCP might considernot reimbursing the employee for anysubsequent excess charges, therebyminimizing the impact of § 10.337 on anagency’s chargeback costs. (Section10.802 has been modified consistentwith these changes.)

Two labor organizations suggestedthat the language of § 10.813 be repeatedfor claimants in this section. Sections10.337 and 10.813 are intended to beparallel in structure, and OWCP doesnot believe that repeating § 10.813would serve any useful purpose.

Section 10.401

With respect to the period ofdisability which must elapse before theclaimant may be compensated for thefirst three days of wage loss, an agencyasked that the method of counting thedays be clarified. The word ‘‘calendar’’is being inserted to make the meaningclear. The agency also inquired as towhether the 14 days may beintermittent, and in fact they may.

One agency suggested a cross-reference to § 10.6. A specific referenceto section 8110(a) would probably bemore useful, and one is therefore beingadded.

Section 10.403(a)

One agency commented, apparentlywith respect to this section, thatdeterminations of wage-earning capacityshould be tied to the minimum wagerate. However, the FECA has noprovision for establishing such a link.

Two labor organizations argued that,consistent with ECAB decisions in thisarea, any position selected asrepresenting an employee’s wage-earning capacity must be actuallyavailable to the employee within his or

her commuting area. However, this is anincorrect interpretation of the ECAB’srulings, which have consistently heldthat OWCP only needs to find that aposition is being performed in sufficientnumbers in the area in which theemployee lives so as to be consideredreasonably available before it candetermine that the job represents theemployee’s wage-earning capacity [e.g.,Kenneth H. Cummings, Sr., 28 ECAB284 (1977); James B. Stewart, 32 ECAB36 (1980)]. Accordingly, since there isno requirement that the selectedposition actually be available to theemployee, the suggested change is notmade.

Section 10.404Two agencies objected to the

inclusion of pre-existing impairments inpayments made under the scheduleaward provisions of the FECA. Theseagencies argued that employees who arecompensated for the full extent of theirimpairments actually receive benefitsfor non-occupational impairment.

It is a well-settled principle ofworkers’ compensation law that eachemployee is hired ‘‘as is’’. The employeeis a whole person, with variousstrengths and weaknesses, some ofwhich pre-exist employment and somewhich develop concurrently with it.Apart from the practical difficultieswhich the commenting agencies admitwould result from any attempt todifferentiate work-related from non-work-related impairment to a schedulemember, such an attempt would violatethe remedial nature and spirit of theFECA.

One agency suggested re-writing thissection to reflect a means test fordependency. The FECA contains noprovision for such a test (see thecomments about § 10.6).

A labor organization suggestedrestoring text concerning payment forschedule impairment which appears incurrent § 10.304(c). This materialalready appears in section 8107(a), andOWCP sees no reason to repeat it here.

Another commenter objected to theprogram’s use of the AMA’s Guides tothe Evaluation of PermanentImpairment for determining scheduleawards under the FECA, indicating thatit focuses on the extent of the initialinjury or illness, not the degree ofrecovery. This, however, is not true. TheAMA states on page 1/1 of the fourthedition that ‘‘The Guides defines‘permanent impairment’ as one that hasbecome static or stabilized during aperiod of time sufficient to allowoptimal tissue repair, and one that isunlikely to change in spite of furthermedical or surgical therapy.’’ OWCP

does not agree with the commenter’ssuggestion that the program use anotherpublication for determining scheduleawards.

The commenter also questionedwhether medical benefits are payable incases where the claimant has reachedmaximum medical improvement. Suchexpenses are in fact payable as long astreatment is found to be necessary andreasonable.

Section 10.405

An agency suggested addition of ameans test for dependents to thissection and to § 10.6. The FECAcontains no basis for such a measure.

Section 10.406

A commenter suggested use ofdifferent percentages than thoseprovided by law for payment ofcompensation for disability. Suchmodifications would require a change tothe FECA itself.

Section 10.410

One labor organization requested thatOWCP restore the partial description ofthe compensation payable in deathcases that was set out at § 10.306 of the1987 regulations (the organization wasapparently unaware that the FECA wasamended in 1990 to change the age ofremarriage noted in section 8133(b)(1) to55). Since the proposed rule waspublished in the Federal Register onDecember 23, 1997, the ECAB issued adecision construing section 8133(a)(5) ofthe FECA for the first time. Thatdecision is Clyde Stevenson (Donna R.Stevenson), Docket No. 95–3016 (issuedFebruary 4, 1998). In light of theauthoritative construction of this sectionof the FECA provided by the ECAB inStevenson, and to address the concernsof the labor organization, the headingand text of § 10.410 are revisedconsistent with the request.

Section 10.417

A commenter suggested that thissection should state whether ahandicapped child continues to beentitled to benefits if the employee dies.If this happens, payments end unlessdeath benefits are awarded. No changeis necessary as a result of this comment.

Section 10.420

In all four subsections, the statutoryreference has been changed to section8146a, not 8146(a).

Section 10.421

Two Federal agencies recommendedthat the election provision in § 10.421(a)be modified to make it either partiallyor fully irrevocable, citing the Office of


Personnel Management’s (OPM’s) rulethat elections of benefits in death casesare irrevocable, while anothercommenter recommended that theprovision be removed entirely. OPMand OWCP have adopted theirrespective policies for particularreasons, and neither agency is unawareof the other’s position.

While it is understandable thatagencies would desire that OPM andOWCP policy be the same, the changesproposed by these commenters wouldnot be consistent with the settledconstruction given to section 8116 of theFECA by the ECAB in such leadingcases as Adeline N. Etzel (Bernard E.Etzel), 21 ECAB 151 (1969); Charles W.Akers, 24 ECAB 316 (1973); LouisTeplitsky, 29 ECAB 826 (1978); andGary J. Bartolucci, 34 ECAB 1569 (1983).Therefore, the suggested modificationsare not adopted.

The latter commenter recommendedthat both subsections (a) and (d) of§ 10.421 be modified to automaticallyend compensation payments atretirement age (except for permanentlytotally disabled individuals), at whichtime such beneficiaries would ‘‘revert’’to their respective retirement systems.The commenter also recommended thatthe dual benefit restrictions set out in§ 10.421(a) also apply to the militarypayments described in § 10.421(b).Absent an act of Congress amendingsection 8116, however, such changescannot be made, and OWCP is thereforenot adopting them.

Finally, the same commenterrecommended that the first sentence of§ 10.421(e) be modified to add therequirement that beneficiaries provide‘‘information on any othercompensation or injury.’’ However, suchinformation would have no effect on abeneficiary’s entitlement tocompensation under the provisions ofsection 8116, and the requestedmodification is therefore consideredunwarranted.

Section 10.430(a)One labor organization suggested that

the word ‘‘clear’’ be added before‘‘indication of the period * * *’’, andOWCP is making this change. Theorganization also suggested that thesection specify that periodic checks areto show any deductions or adjustmentsaffecting the amount of the payment.OWCP is working on automatedenhancements which will allow thisinformation to be shown, but thecapacity to do so is not yet available.

Sections 10.433, 10.436, and 10.437Three agencies objected to being held

financially accountable, through the

chargeback process, for waivers ofoverpayments which resulted fromerrors made by OWCP. They suggestedthat when OWCP waives such anoverpayment, the agency should receivea credit to its chargeback bill in theamount of the overpayment. For tworeasons, OWCP does not concur withthis suggestion.

First, the FECA is remedial in nature,and OWCP considers requests forwaiver according to carefully definedprocedures which are intended toprotect the interests of both the claimantand the Government. The granting orwithholding of a waiver is not intendedto be a punishment or a reward, butrather the result of an administrativeprocess as provided by law. Secondly,the FECA contains no provision forcrediting the chargeback with moniesreflecting either the commission oferrors or the waiver of overpayments byOWCP.

Section 10.441A commenter objected to inclusion of

overpayment amounts in agencies’chargeback bills when the claimant isnot at fault and the employercontroverted the claim or detected theoverpayment. The FECA contains noprovision for crediting the chargebackbecause of such actions by theemployer. In paragraph (b), thereference to the Debt Collection Act of1982 has been replaced with the FederalClaims Collection Act of 1966 (asamended).

Section 10.500As noted above, the proposed section

has been subdivided into four newsections (§ 10.500 through 10.503) forclarity, and the contents have beenslightly rearranged.

One agency objected to what itbelieved to be a new criterion fordefining suitable work, namely that it be‘‘appropriate to the nature of theemployee’s usual employment’’. Thisphrase represents a misreading of theactual text, which is taken from section8115, as follows: ‘‘appropriate to thenature of the injury; the degree ofphysical impairment; the employee’susual work; * * *’’ The regulatorylanguage contains nothing novel.

Four labor organizations argued thatany position found to constitute suitablework should be available within theemployee’s commuting area. Theavailability of suitable work within theemployee’s ‘‘commuting area’’, a termwhich has been extensively addressedby the ECAB, is required. See ArquelioPacheco, 40 ECAB 277 (1988); Fred L.Nelly, 46 ECAB 142 (1994). OWCP ismodifying this section accordingly.

Section 10.501One labor organization suggested

rewording paragraph (a) to state thatOWCP’s requests for medical evidencein long-term disability cases willordinarily occur not less than once ayear. OWCP is making this change, asthe suggested wording reflects long-termOWCP policy with respect to certainseverely disabled employees.

One agency and another commenternoted that, while the Preamble to theProposed Rule states that benefits maybe suspended for failure to undergonon-invasive testing directed by OWCP,the text of paragraph (b) itself does notso state. A sentence is being added tothis section to correct this oversight.

Section 10.505One agency stated that this section

combines two subsections of section8151(b) in error, and a labororganization made the same point bysuggesting that this section berephrased. The word ‘‘within’’ is beingreplaced by the word ‘‘after’’ to correctthis oversight.

The same agency noted that, becauseof the importance of making job offersin writing, § 10.505(c) is better placed in§ 10.507, ‘‘How should the employermake an offer of suitable work?’’ OWCPconcurs, and the language has beenmoved accordingly.

Section 10.505(a)One labor organization suggested that

this section require the employer toadvise the employee in writing of thespecific duties involved. This changehas been made.

Section 10.506An employer suggested that agencies

not be limited to the use of Form CA–17 in gathering medical informationfrom physicians. The form is usuallyadequate for this purpose, and thissection has been revised to so state.Another agency wanted to remove thewords ‘‘in writing’’ from this section, onthe basis that return to work might bedelayed or improper job placementsmight result from unclear descriptionsof restrictions from physicians. Theneed for clarity in such descriptions isone of the two main reasons forrequiring such offers to be made inwriting, the other being the need fordiligent attention to due processrequirements. The suggested change hasnot been made.

A labor organization asked whether itis appropriate to use Form CA–17 foroccupational diseases as well astraumatic injuries. OWCP has revised§ 10.331(b) to allow its use in both kindsof situations.


This organization, along with oneother, also suggested that employers beallowed to contact employees only inwriting. Also, two labor organizationsstated that employers should beexplicitly prohibited from contactingphysicians through phone calls orpersonal visits. OWCP concurs withboth of these ideas, and the suggestedchanges have been added to this section.

Another labor organization objected tothe provision allowing employers tocontact employees at reasonableintervals to obtain medical evidence,due to a perceived possibility ofharassment. While reasonable peoplemay interpret the phrase ‘‘at reasonableintervals’’ differently, the phrase clearlydoes not provide license for harassment.OWCP does not believe that there ismerit to the suggestion that thisprovision be removed.

Section 10.507Two labor organizations stated that

employers should be required to adviseemployees in writing of the informationspecified in paragraphs (a) and (b). Thischange has been made. (Also, ‘‘should’’in (a) has been changed to ‘‘shall’’ forconsistency with (b).)

Section 10.507(c)An agency asked whether a job offer

can be made verbally and followed upin writing. As discussed with respect to§ 10.331(b), OWCP has tried to strike abalance among the sometimescompeting interests of employers,employees, and OWCP itself.

In this case, the time gained byallowing verbal job offers must bebalanced against the need to protect theemployee’s due process rights. TheFECA provides a severe and permanentpenalty for refusing an offered job, andthe ECAB has remanded cases whereOWCP has not scrupulously followedvarious procedural requirements. Jobduties must be defined with greatprecision so that both employer andemployee correctly understand them,and the potential for miscommunicationis always higher in verbal than inwritten exchanges. However, as apractical matter, verbal job offers canexpedite the process of reemployment,which benefits both the employer andthe employee.

To both allow this flexibility andprovide due process rights, this sectionhas been modified to state that a joboffer may be made verbally as long asthe employing agency follows it up witha detailed written job offer within twobusiness days of the verbal offer. Thisamount of time should be sufficient forthe claimant to consider the job dutiesand assess whether he or she can

perform them. The second half of thissection has also been relettered ‘‘(d)’’.

Section 10.508A labor organization stated that, since

relocation expenses may be paid only toindividuals who have been separatedfrom the employer’s rolls, the title ofthis section should be modified.However, the program believes that thequestion should continue to be phrasedmore generally, since it will arise withrespect to employees still on theemployer’s rolls as well as to separatedemployees.

The same organization, and twoothers as well, proposed that theregulations require OWCP to notifyemployees that relocation expenses arepayable when the job is offered. OWCPconcurs that such notification should beprovided in any case where a finding ismade that the job is suitable, and texthas been added to this effect.

Section 10.509Three labor organizations suggested

that the term ‘‘reduction-in-force’’ in§ 10.509(a) be further modified byadding language that would limit itsapplication to ‘‘general’’ or ‘‘officiallymandated’’ actions. Using thesemodifiers, however, would not beconsistent with ECAB decisions findingthat employees do not sustaincompensable recurrences of disabilitywhen they lose their light-dutypositions pursuant to many differenttypes of reductions-in-force.

Moreover, OWCP must be able to relyupon employers (and claimants) toadvise it of any personnel actions thatmight affect the outcome of a FECAclaim. OWCP has neither the resourcesnor the expertise to determine whetherreductions-in-force are ‘‘officiallymandated’’ (presumably, this phrase isequivalent to ‘‘duly authorized’’), andmust leave disputes about individualreductions-in-force to be resolved in theproper forum. The suggested changewould therefore not be workable, norwould it enhance either the sense of thissection or its legal force.

Two of the same organizationssuggested that OWCP simply assumethat eliminated light-duty positionshave been abolished because ofemployment-related disability. It is notOWCP’s practice to make assumptionswhere the facts can be determined, andOWCP sees no merit in this idea.

Another labor organization objected tothe underlying premise in § 10.509(a)that a reduction-in-force will not lead toa compensable recurrence of disability.However, as noted above, the ECAB hasconsistently ruled that employees wholose their light-duty positions in a

reduction-in-force do not sustaincompensable recurrences of disability.

A labor organization suggested thatthis section be modified so thatemployers would be prohibited fromeliminating only light-duty positions.This is a personnel matter, and onewhich is outside the scope of theseregulations.

One labor organization argued that apartially disabled employee who loseshis or her Federal job will not be ableto find another job in private industryand should therefore be entitled toreceive compensation. Because thisstatement is hypothetical, OWCP cannotaddress it. An employee whose light-duty job is withdrawn, except inreduction-in-force situations, will in factbe entitled to claim compensation for arecurrence of disability.

An agency noted that employees maybe performing light-duty work inclassified positions while they are stillreceiving ‘‘retained pay’’ based on theirdate-of-injury positions and questionedwhether OWCP should use their actualearnings in such circumstances todetermine their wage-earning capacitiesconsistent with the language found in§ 10.509(a). However, using anemployee’s actual earnings while he orshe is receiving ‘‘retained pay’’ has beenapproved by the ECAB in cases such asDomenick Pezzetti, 45 ECAB 787,petition for recon. denied, Docket No.92–2037 (issued November 2, 1994),which held that the use of actualearnings under these circumstances todetermine an employee’s wage-earningcapacity was consistent with section8115(a) of the FECA.

The same agency also suggested that§ 10.509(b) specifically note that aninjured employee must ‘‘encumber’’ aclassified light-duty position beforeOWCP will use the actual earnings insuch a position to determine the wage-earning capacity under § 10.509(a). Thissuggestion reflects OWCP’s existingpolicy in this area, and § 10.509(b) isrevised accordingly.

A labor organization raised a concernthat pursuant to § 10.509(b), OWCPmight be tempted to use an ‘‘odd-lot’’ or‘‘sheltered’’ position created specificallyfor a particular injured employee todetermine that employee’s wage-earningcapacity. However, the ECAB has longrejected use of such a position, andnothing in this subsection is meant tothwart this legal prohibition, which iswidely recognized in the field ofworkers’ compensation law. If a job iswithdrawn after OWCP has determinedthe employee’s loss of wage-earningcapacity, and the job was in fact an odd-lot or sheltered job, the employee mayfile a claim for a recurrence of disability.


Finally, one commenter disagreedwith the use of the term ‘‘light-duty’’ inthis section and argued that it should bereplaced with a term such as‘‘modified’’ or ‘‘restricted duty’’ thatwould be based solely on medicalrestrictions. However, the term ‘‘light-duty’’ has a very specific meaning in§ 10.509(b) that is obviously based on anumber of medical and factualcircumstances, and for these reasonsOWCP does not accept the argumentthat it be replaced with a purely medicalterm.

Section 10.515(a)

A labor organization suggested thatthe word ‘‘total’’ be replaced by ‘‘his orher compensable’’ disability. In fact,neither the original phrase nor theproposed revision adds value to thisparagraph, and the phrase ‘‘becausetotal disability has ceased’’ is thereforebeing removed.

Section 10.515(b)

An agency suggested that this sectionbe reworded to require claimants to seeksuitable employment, as well as toaccept it. This change, which isconsistent with section 8106(c), hasbeen made.

A labor organization suggested thatthis paragraph be expanded to includethe effects of an ‘‘other acceptablemedical condition’’ as well as the effectsof the work-related injury. Thesuggested wording both obscures themeaning of the paragraph andintroduces extraneous concerns, and nochange is being made to it.

Section 10.515(c) and (d)

An agency noted that employees donot always advise attending physiciansthat work may be available for them,and asks whether the agency can contactthe physician when there is a writtenjob offer or the employee’s worklimitations can be accommodated.Section 10.331(b) allows employers tocontact physicians to obtaindescriptions of work limitations onForm CA–17.

Section 10.516

Two agencies argued that the 30-dayperiod provided by OWCP for anemployee to accept or decline an offeredposition is too long. One suggested thatthis period be shortened to five days,while the other suggested that it beshortened to 15 days.

Where a job is to be accepted ordeclined, and termination of benefitsmay be at issue, OWCP does notconsider a period of less than 30 dayssufficient, across the board, for responsefrom employees. For instance, if the

employee objects to the position offeredfor medical reasons and thus needs toobtain a medical report, it isunreasonable to expect that thephysician will conform to a five or evena 15-day deadline to prepare and submita medical report.

Although the circumstances in aparticular case may not in fact warranta 30-day period for response, clear andconsistent procedures are especiallyimportant in this area of the program’soperations, given the need to providedue process at every step. For thesereasons, OWCP does not believe achange to this paragraph is warranted.

Sections 10.518 and 10.519While one Federal agency strongly

supported the inclusion of nursingservices as one of the many vocationalrehabilitation services that OWCP mayprovide to injured employees, one labororganization noted that such inclusionwould change nursing services from avoluntary choice to an obligatory coursethat OWCP could ‘‘direct’’ an employeeto undergo, and argued that OWCPshould not make this change. It statedthat such an approach would be ‘‘deeplyunproductive’’ without giving anyreason for this belief. The organizationalso posited that the mandatory aspectwas proposed so that the costsassociated with OWCP nurses would beshifted to the employing agencies, but infact, the costs are already charged backto the agencies.

In addition, the organization arguedthat since section 8104(a) of the FECAonly allows OWCP to direct‘‘permanently disabled’’ employees toundergo vocational rehabilitation,OWCP could not impose the sanctionsdescribed in § 10.519 (which are derivedfrom section 8113(b) against employeeswho refuse to cooperate with OWCPnurses unless they were ‘‘permanentlydisabled.’’

Pursuant to section 8104(a), OWCPhas the discretionary authority to‘‘direct a permanently disabledindividual whose disability iscompensable’’ to undergo vocationalrehabilitation. The ECAB has repeatedlyheld that a ‘‘permanently disabledindividual’’ refers to an employee witha loss of wage-earning capacity, sincethe intent of Congress in enactingsection 8104(a) was to provide disabledemployees with the services necessaryto overcome or lessen their disability.See, e.g., Wayne E. Vincent, 6 ECAB1024 (1954); Joseph C. Reuter, 11 ECAB296 (1960); Gary L. Loser, 38 ECAB 673(1987).

Consistent with these rulings,OWCP’s policy is to presume that aninjured employee who has a loss of

wage-earning capacity is ‘‘permanentlydisabled,’’ for purposes of § 10.519 only,unless and until the employee provesthat the disability is not permanent, andto intervene in the early stages ofdisability cases to help employeesreturn to some type of work as soon aspossible. Since nursing services havebeen shown to be one of the mosteffective vocational rehabilitationservices that can be provided toemployees in the weeks immediatelyfollowing their injuries, § 10.519 allowsOWCP to impose sanctions againstemployees who refuse to cooperate withits nurses. However, in light of theapparent confusion regarding the scopeof this regulation, § 10.519 is revised tobetter describe OWCP’s policy.

Section 10.520A labor organization asked that this

section be reworded to state thatpositions must be available within theemployee’s commuting area. OWCPbelieves that this point is sufficientlyaddressed in the response to thecomments to § 10.403 set out above.

Section 10.525(a)Two agencies asked that this section

include the authority for OWCP torequest copies of employees’ tax returns,though neither agency includes a reasonfor this request. The programoccasionally finds it necessary torequest tax returns, for instance to verifyself-employment or to ensure that anemployee has not earned income for alengthy period for which retroactivecompensation is claimed. When asked,employees have submitted the copieswithout protest. OWCP does not believethat an addition of regulatory authorityis necessary.

Section 10.526One agency asked OWCP to clarify the

language of this section regarding theapplicability and frequency of theintended reporting requirement, whileanother agency noted the similarity ofthis section to § 10.525 and suggestedsimply combining the two sections. Toclarify § 10.526 consistent with the firstsuggestion, the text of this section hasbeen modified to specifically state thatthis is a periodic reporting requirementwhich applies to both partially andtotally disabled employees. However,the suggestion to combine §§ 10.525 and10.526 is not adopted since the text of§ 10.526 is intended to focus onvolunteer activities, and keeping thesesections separate will further highlightthis intentional distinction.

The second agency also suggested thatthis section include OWCP’sexpectation that employees will report


any information which mightreasonably affect their benefit levels.The program believes that this last pointis better left to procedural guidance.

One labor organization argued thatemployees should not be required toreport volunteer activities because suchactivities may help them cope with theirdisabilities. While agreeing that theseactivities may be beneficial to anemployee’s self-esteem, OWCP is of theopinion that they are also a usefulindicator of an employee’s ability toperform some form of work andtherefore should be reported.

Section 10.527One agency suggested strengthening

the wording of this section by removingthe words ‘‘attempt to’’ with respect toverifying employees earnings. Thosetwo words have been removed. Anotheragency stated that this section should bereworded so as not to limit the kinds ofcomputer matches which may beperformed with records of Stateagencies. This suggestion is beingadopted as well.

Section 10.540(b)One labor organization suggested that

the second sentence of § 10.540(b) bechanged from ‘‘a claim has been madefor a specific period of time’’ to ‘‘a claimhas been approved for a specific periodof time * * *’’ However, therecommended change would change thefocus of this portion of § 10.540(b) fromthe reasonable expectation of thebeneficiary to a determination of OWCP,and would therefore be inconsistentwith the remainder of this subsection,which states that OWCP will notprovide written notice before itterminates compensation ‘‘when thebeneficiary has no reasonable basis toexpect that payment of compensationwill continue.’’ Therefore, the suggestedchange is not made. However, twominor wording changes have been madeto clarify the meaning of two clauses inthe third sentence.

Section 10.540(c)A labor organization suggested

wording changes that would, in essence,provide employees who refuse to acceptor perform suitable work additionalprocedural safeguards that exceededthose described in § 10.516. However,the procedures in § 10.516 are based onthe ECAB’s decision in Maggie L. Moore,42 ECAB 484 (1991), reaffirmed onrecon., 43 ECAB 818 (1992). OWCP seesno basis to add further procedures inthis area.

One agency was under the impressionthat this section, which states (amongother things) that OWCP will not

provide written notice before itterminates compensation based on a‘‘failure or refusal to either continueperforming suitable work or to accept anoffer of suitable work,’’ was inconsistentwith the notice provided in thesesituations pursuant to § 10.516.However, the two regulations are notinconsistent since the notice providedunder § 10.516 informs the employee ofOWCP’s determination that a particularposition is suitable, whereas the noticecontemplated by § 10.540 informs theemployee of the impending cessation ofhis or her compensation rather than afinding on a preliminary issue such assuitability.

Therefore, for example, once anemployee has received the noticerequired by § 10.516 and has refused anoffer of suitable work, OWCP will issuea decision terminating the employee’smonetary benefits without any priorwritten notice to that effect. The firstsentence of § 10.540(c) is beingamended to include the word‘‘terminated’’ before ‘‘suspended orforfeited’’ to account for all of thepossible ways in which OWCP may endcompensation payments.

Section 10.541(b)

An agency suggested that the word‘‘Substantial’’ be inserted before theword ‘‘Evidence’’ at the beginning ofthis section, which addresses the kindsof evidence which will affect OWCP’sproposed action to reduce or terminatebenefits. In practice, evaluations ofevidence received when pre-terminationnotice has been issued always requirejudgment and discretion on the part ofOWCP staff. This wording changewould have no effect of any significanceon the meaning of this subsection.

A labor organization suggestedsubstituting ‘‘finding and award under 5U.S.C. 8124’’ for ‘‘decision’’, but hereagain, such a wording change wouldhave no apparent effect of anysignificance on the meaning of thissubsection.

Section 10.600

One agency proposed giving agenciesthe right to seek review of decisions.Since proceedings under the FECA arenon-adversarial, there is no statutorybasis for providing the agencies with theright to seek review of benefitdeterminations.

Two employing agencies suggestedthat the phrase ‘‘initial final decision’’in the first sentence is confusing. OWCPconcurs, and the phrase has beenchanged to ‘‘formal decision’’.

Section 10.607The existing rule, unchanged in the

proposal, is that the claimant has a rightto reconsideration of any decision ifrequested within one year of the date ofthe last merit decision. Three labororganizations noted that the proposaldoes not reflect OWCP’s practice ofincluding ECAB decisions among the‘‘merit decisions’’ the date from whichthe one year begins to run.

Any suggestion that OWCP shouldreview or reconsider an ECAB decisionis inappropriate. OWCP and ECAB areseparate and distinct entities. The ECABis the highest appellate authority underthe FECA and its decisions are bindingon OWCP. Since OWCP has noauthority to review decisions of theECAB, OWCP has interpreted itslimitation provision as liberally aspossible, such that a merit decision ofthe ECAB will renew the one-year timeperiod within which a claimant mayrequest reconsideration before OWCP,with the date of the ECAB’s meritdecision serving as the new startingpoint from which the one-year periodwill run. OWCP will continue to do so,but because ECAB decisions cannot bereviewed by anyone, including OWCP,the language in this section has not beenchanged.

Section 10.609One commenter suggested that the

amount of time allowed for employersto comment on the application forreconsideration be expanded from 15 to30 days, due to time constraints on thepart of agency staff. While such achange would lengthen a process whichis already time-consuming, OWCPrecognizes that the 15-day period hasbeen problematical. Therefore, theperiod for commenting on theapplication for reconsideration has beenchanged to 20 days in the final rule.This commenter also advocatedallowing employers to ‘‘question’’claims (presumably by requestingreconsideration). The FECA makes noprovision for appeal rights foremployers.

Section 10.610One employing agency suggested that

this section include appeal rights foremployers. The FECA contains noprovision for granting such rights.

Section 10.615One agency objected to the proposal

that a hearing representative may directthat the hearing be conducted bytelephone or teleconference. A labororganization said that this should be arecommendation but not done at thehearing representative’s option. Neither


the agency nor the labor organizationgives a basis for its objection. OWCPbelieves that this option will allow it tobetter control an ever-increasingworkload and to provide hearings at anearlier time than it otherwise could,without limiting claimants’ rights in anyway.

Sections 10.616 and 10.619Several labor organizations objected

to recognizing forms of date markingother than postmarks. Since requests arebeing submitted through carriers otherthan the Postal Service, and electronictransmission is likely to become routinein the future, the text has not beenchanged.

With respect to § 10.616, onecommenter noted that the claimantcould ask for a change to an oral hearingafter the case was far along in thewritten review process, thusundercutting efficiency and allowing forpurposeful delays. The point is welltaken, and the time frame for suchrequests has been shortened to 30 daysafter the Branch of Hearings and Reviewacknowledges the request.

Sections 10.617 and 10.618Several comments about time frames

were received. One commenter notedthat the time frames set forth in§ 10.617(f) for submitting evidence wereconfusing and potentially never-ending,because they would allow new evidenceto be submitted up to the date of thedecision, which in turn would requirecomments by the agency or theemployee, and so forth. The final ruleshave been changed to clarify thatevidence in cases where oral hearingsare held is to be submitted up to 30 daysafter the date on which the hearing isheld (unless the hearing representativespecifically grants an extension of time).Similarly, § 10.618(a) has been changedto provide that OWCP will designate adate by which evidence is to besubmitted in reviews of the writtenrecord.

Another commenter noted that theservice provisions in § 10.618(b)represent a change from the currentpractice of having the agency serve theircomments directly on the claimant (orthe claimant’s representative, if any)and provide OWCP with a certificationof service. That section has been slightlymodified to reflect this practice.

With respect to the agencies’comments that 15 days is not enoughtime to adequately review and analyzethe transcript (§ 10.617(e)), OWCPrecognizes that this time frame has beenproblematical and has thereforeextended the period for response to 20days. For consistency, the time frame for

claimants to respond to agencycomments has also been changed to 20days.

A labor organization suggested thatthe notice of hearing be mailed 60 days,rather than 30 days, before the date ofthe scheduled hearing. The argumentoffered is that seven to 10 days canelapse between the hearingrepresentative’s determination of thedate of the hearing and the employee’sreceipt of the notice. However, anyincrease in the period of notice adds anincrement of delay to a process whichOWCP is attempting to streamline. Theprogram does not believe that thischange is necessary, and it has not beenadopted.

Finally, one labor organization notedthat language from the statute (section8124(b)(2)) which appears in the currentrules (at existing § 10.133) should beincluded in § 10.617. The phrase ‘‘butmay conduct the hearing in such amanner as to best ascertain the rights ofthe claimant’’ has been added to§ 10.617(c).

Section 10.621One employing agency noted that the

agency’s role in teleconferencedhearings and the number ofrepresentatives an agency may send tothe hearing needed to be clarified(another agency made the latter point aswell). Section 10.621 has been changedto allow more than one representative,where appropriate. The comments alsostated that the agency and the claimantshould each be given copies of theother’s comments, and both should havethe same amount of time to review andrespond to transcripts and comments.The current practice of sending agencycomments to the claimant reflects thenon-adversarial nature of the FECAclaims process, and the fact that theagency is not a party to the claim.Because the agency is a source ofinformation, however, it is allowedlimited participation, but expansion ofthat role would not be appropriate.

Section 10.621(a)One labor organization objected to the

statement allowing hearingrepresentatives to ask employing agencyrepresentatives to testify, on the basisthat the employee cannot easilyanticipate what issues the hearingrepresentative will raise and thatemploying agency representatives, whoare often compensation specialists, mayconfuse employees with sophisticatedarguments. The organization also arguesthat active participation by the agencywill compromise the non-adversarialnature of the hearing process and hinderthe ability of claimants to present

evidence. These arguments do not takeinto consideration the role of thehearing representative, which is touphold the non-adversarial nature of theprocess and adjudicate the issues basedon the evidence. OWCP does not findthese arguments persuasive, and thelanguage of this section has not beenmodified.

Section 10.622The provision prohibiting

cancellations of hearings drewconsiderable criticism from four labororganizations and three commenters,and support from one Federal agency.Most of the comments suggested that theblanket prohibition againstpostponements was too harsh andsuggested that postponements beallowed under ‘‘exceptionalcircumstances.’’

OWCP is concerned about providingany opportunity to further delay thehearing process or to add yet anotherissue for potential review. Nevertheless,it is recognized that very narrowcircumstances exist which are truly outof the control of the claimant and wouldjustify a postponement. Accordingly,§ 10.622(b) has been changed to allow apostponement for exceptionalcircumstances, defined in § 10.622(c) asmedically documented non-electivehospitalization of the claimant, or deathof the claimant’s parent, spouse orchild.

One labor organization commented onthe period for rescheduling a hearing.However, nothing in this section of theregulations refers to time periods.

The first sentence in § 10.622(b) hasbeen slightly reworded and divided intotwo sentences for clarity.

Section 10.701A labor organization questioned

whether representational activityundertaken in connection with a claimunder the FECA is exempt from theprohibitions set forth at 18 U.S.C. 205.The organization asserted that ‘‘theadjudication of a claim under the FECAis an administrative proceeding andthereby such representation meets theexceptions noted in the applicable law’’.OWCP believes that the organizationwas referring to section 205(d), whichpermits a Federal employee to representanother employee in ‘‘disciplinary,loyalty, or other personneladministration proceedings’’ so long asthe person acts without compensation.Based on OWCP’s reading of InformalAdvisory Letter 85 x 1, issued January7, 1995, by the Office of GovernmentEthics (OGE) (representation of personsseeking to establish entitlement tobenefits under laws administered by the


Veterans Administration is not coveredby section 205(d)), the program is of theopinion that proceedings under theFECA do not come within theexception. For these reasons, no changewill be made to § 10.701.

Section 10.701(b)

A labor organization noted that thephrase ‘‘conflict with any otherprovision of law’’ is redundant, giventhat it appears in the first paragraph ofthis section. Therefore, the phrase hasbeen removed from paragraph (b).

Section 10.703

One commenter objected to assigningthe task of approving fee petitions to thebody before which the services forwhich fees are charged were performed.However, the office before which thework was performed is in the bestposition to evaluate the usefulness ofservices, the nature and complexity ofthe claim and the other criteria set outin this section. Thus, the text remainsunchanged in this regard.

Section 10.705

One Federal agency asked whetherclaims examiners exercise anydiscretion in requiring an employee toprosecute an action against a third partyin regard to minor injury claims, notingthat § 10.709 references the proceduresunder which a FECA beneficiary whohas been directed to pursue an actionagainst a third party can be releasedfrom that obligation. Section 10.705(a)provides that an injured claimant ‘‘canbe required to take action’’ against athird party responsible for an injurycovered under the FECA. It does,however, allow OWCP to exercisediscretion in determining whether torequire a FECA beneficiary to takeaction against a third party.

Section 10.711

One Federal agency pointed out that‘‘Subtotal B’’ in the example should be‘‘72,000’’ and not ‘‘-72,000’’, and that‘‘Disbursement’’ in line 4 of the exampleshould be ‘‘Disbursements.’’ Theseobservations are correct, and § 10.711 isrevised accordingly.

Section 10.714

One commenter objected to theinclusion of costs for both secondopinion medical examinations andreferee medical examinations within therefundable disbursements used tocalculate any required refund or anycredit against future benefits. Theobjection is based upon the fact that thedamages requested from a third party inany litigation are not based upon thoseexpenditures. Inclusion of such costs

within the refundable disbursementsused to calculate both required refundand credit against future benefits is alongstanding practice based upon thefact that such costs are paid from theEmployees’ Compensation Fund andcontribute to the ability of OWCP to‘‘furnish to an employee who is injuredwhile in the performance of duty, theservices, appliances, and suppliesprescribed or recommended by aqualified physician, which the Secretaryof Labor considers likely to cure, giverelief, reduce the degree or the period ofdisability, or aid in lessening theamount of the monthly compensation’’as set forth in section 8103(a) of theFECA.

Furthermore, the Supreme Court inUnited States v. Lorrenzetti, 467 U.S.167 (1984), has specifically rejected anyattempt to limit the calculation of eitherthe refund required to be paid by FECAbeneficiaries or any credit against futurebenefits based upon whether or not theexpenditures at issue were within theelements of damages for which recoverywas sought against a third party in thelitigation that resulted in a recoverysubject to section 8132. Accordingly, therequested change to this section is notmade.

Section 10.717

One commenter disagreed with thestatement that ‘‘an injury caused bymedical malpractice in treating aninjury covered by the FECA is also aninjury covered under the FECA,’’ andargued that such coverage should notresult from the medical malpractice of aprivate physician. However, since thestatement in question is based on ECABcases where coverage has been foundunder these circumstances, such as inBonnie D. Jefferson, 34 ECAB 1426(1983), the suggested modification of§ 10.717 would be directly contrary tothe ECAB’s interpretation of the FECA,and it is therefore consideredunwarranted.

Sections 10.730 and 10.731

An agency objected to the eliminationof a number of redundant provisionsthat involved the Peace Corps and statedthat without their inclusion in theseregulations, it would not be able toeffectively administer the workers’compensation claims of its personnel.However, the retention of the provisionsin question would not be consistentwith OWCP’s efforts to streamline itsregulations and would not provide anysignificant assistance with respect tothis class of claims since the eliminatedprovisions merely repeat statutorylanguage without adding anything. The

suggested changes to this section aretherefore not adopted.

Section 10.800One agency recommended that OWCP

expand the list of issues addressed bymedical records to include ‘‘disability.’’The recommended change would beconsistent with § 10.330(j), which statesthat a medical report from an attendingphysician must address ‘‘the extent ofdisability,’’ and therefore § 10.800 isrevised to reflect this suggestion.

Section 10.801One agency supported the changes to

OWCP’s fee schedule, but asked howthe requirement to use the specificbilling forms listed in § 10.801 would becommunicated to providers andemployees. These regulationsthemselves are the primary vehicle forinforming providers and employees ofOWCP’s billing requirements, whichwill also be communicated via theInternet (from which copies of the formscan be downloaded) and throughroutine contacts with OWCP claims staffand bill processing units in the variousdistrict offices across the country.

Section 10.802One agency asked if there were any

consequences for providers whoconsistently refused to reimburseemployees for amounts charged inexcess of the fee schedule. Since theinception of the fee schedule in 1986,OWCP has specified such consequences,and § 10.815(e) of these regulationsstates that providers may be excludedfrom participating in the FECA programif they knowingly fail to reimburseemployees for amounts charged inexcess of the fee schedule. Anotheragency thought that allowing OWCP toconsider reimbursing an employee forthe amount in excess of the fee schedulein § 10.802(g) contravened the feeschedule and would lead to anundesirable increase in agencychargeback costs. As noted above inresponse to similar comments regarding§ 10.337, subsections (e), (f), and (g) of§ 10.802 have been modified consistentwith the changes to § 10.337.

Section 10.805One agency asked if some providers

might be exempt from the OWCP feeschedule. In § 10.805(b) and (c), OWCPnotes that its fee schedule does notcurrently cover services provided innursing homes, nor does it coverappliances, supplies, services ortreatment furnished by medical facilitiesof the U.S. Public Health Service or theDepartments of the Army, Navy, AirForce and Veterans Affairs.


Another agency disagreed with thefact that the fee schedule did not applyto Government medical facilities, sincethis meant that agencies would paymore if they encouraged theiremployees to seek treatment foremployment-related injuries or illnessesat such facilities. However, this agencydid not seem to be aware that pursuantto section 8103(a), employees have theright to make an initial selection of aphysician to provide medical treatment,and would presumably not choose to betreated in a Government medical facilityif other sources were available.Furthermore, there seems to be littlerationale for applying OWCP’s feeschedule to these facilities since theyare, to a large extent, designed toprovide specific types of medicalservices to rather limited groups ofpatients and are not currently operatedunder any recognizable billing system.

Finally, one commenter disagreedwith the development and applicationof OWCP’s fee schedule. Referencing aFebruary 1994 article in the Journal ofOccupational Medicine, this commenteralleged that using the schedule wouldcause providers to choose not to treatinjured Federal employees, thusresulting in a diminished quality ofcare. OWCP’s medical fee schedule hasbeen in use since 1986 and is currentlybased on the relative value scale (RVS)used by the Health Care FinancingAdministration (HCFA), which includesgeographic index factors. These datawere developed by HCFA throughstudies and consultations with nationalphysicians’ groups and others. They areupdated yearly through the regulatoryprocess. While OWCP has incorporatedthe HCFA RVS in its medical feeschedule, the conversion factors thattranslate the RVS into maximum dollaramounts are based on OWCP programdata, data from other Federal programs,reimbursements under State workers’compensation programs, and commonbilling data.

The article referenced by thecommenter discusses the comparativecost savings of a corporate medicaldepartment versus outside services andtherefore has no relevance to theprogram administered by OWCP givenits national scope and the restrictionsimposed by the physician selectionprovision of section 8103(a).

In the years since 1986, OWCP hasnot received any evidence that the feeschedule has jeopardized the quality ofcare provided injured employees, andthe program only rarely receives acomplaint about the maxima allowablethat is not satisfactorily resolved.Therefore, no changes to § 10.805 willbe made.

Section 10.809

One agency recommended that OWCPreimburse employees only forprescription drugs that they purchasefor employment-related injuries andillnesses at the lower of either the feeschedule or the employee’s individualhealth insurance plan charges. Asalready provided in § 10.809, OWCPwill not reimburse an employee for anamount that exceeds the price he or sheactually paid, nor will it reimburse anemployee for an amount that exceedsthe fee schedule. However, furtherlimitations of the sort recommendedwould not be feasible due to the widevariation in health insurance plancharges and the fact that most plans donot cover prescription drugs needed foremployment-related injuries andillnesses.

One labor organization noted thatsome small pharmacies lack the meansto submit bills electronically to OWCPor to wait for the assignment of a claimnumber before submitting bills forpayment by OWCP. However, there isno requirement that pharmacies billOWCP electronically in theseregulations, nor is there a likelihoodthat a problem involving claim numberswill occur since these numbers arecurrently being assigned in anexpeditious manner.

The same labor organization askedthat this section be amended to providethat pharmacies be notified of therequirement to refund any charges inexcess of the fee schedule whenemployees are only partially reimbursedfor prescription drugs. However,§ 10.802(e) already provides for thisnotice to pharmacies and repeating thisprovision in § 10.809 is seen asunnecessary.

Another labor organization wantedOWCP to give employees notice of thefee schedule and an explanation of howit works, presumably in addition to thelegal notice of these matters provided bythe publication of the regulations in theFederal Register. However, additionalnotice of the sort requested would notbe practical and is not seen asnecessary, since current beneficiarieswill be informed of these matters as partof the routine administration of theirclaims by OWCP. Therefore, therequested changes to § 10.809 will notbe made.

Section 10.810

As with § 10.809, one labororganization wanted OWCP to notifyemployees of the fee schedule forinpatient medical services in § 10.810and explain how it works, in additionto the legal notice of these matters

provided by the publication of theregulations in the Federal Register.However, additional notice of the sortrequested would not be practical and isnot seen as necessary, since currentbeneficiaries will be informed of thesematters as part of the routineadministration of their claims by OWCP.

One commenter criticized thedecision to use the HCFA ProspectivePayment System (PPS) using DiagnosticRelated Groups (DRGs) as thefoundation of OWCP’s own PPS in§ 10.810. However, this decision wasbased on research that exploredavailable options and a study of FECAinpatient bills which revealed that theHCFA PPS using DRGs is well-suited toOWCP’s efforts to monitor and controlits inpatient costs. Accordingly, therequested changes to § 10.810 have notbeen adopted.

Section 10.816One commenter suggested that a new

paragraph (c) be added to § 10.816requiring that the ‘‘partner or group’’ ofa physician automatically excludedfrom the FECA program under§ 10.816(a) also be excluded fromparticipating in the program. However,the situations that would lead OWCP toautomatically exclude a physicianunder § 10.816(a) would be specific tothat physician, and therefore theywould not form a proper legal basis forautomatically excluding that physician’s‘‘partner or group’’ under thisregulation. Therefore, the suggestedaddition of a new subsection is notadopted.

Leave Buy-Back ProvisionTwo employing agencies and two

labor organizations objected to theremoval of the leave buy-back provisionfound at current § 10.310. Mostimportant among the reasons for thisremoval, which are stated in thePreamble to the Proposed Rule, is thatleave buy-back is neither authorized norrequired by the FECA, nor is itcontrolled by OWCP.

The commenters argued that agencieswould not have the authority to convertperiods of leave to LWOP without theequivalent of the current § 10.310, andthat in remaining silent about this issue,OWCP is abandoning its ownprocedures. It was also stated thatcompensation would have to be paiddirectly to employees, withoutreimbursement to agencies, and thatemployees would have to pay the entirecost of leave to agencies before leaverestoration, instead of compensationdue being paid to agencies. Finally, thetwo agencies stated that the currentprocedure, where OWCP pays the


agency directly, aids in debt collection,and that removal of the leave buy-backprovision from OWCP’s regulationswould add work for agencies.

As an ancillary issue, several agenciesasked that Forms CA–7a and CA–7b beadded to the list in § 10.7(a).

The reasons for removal of the leavebuy-back provision have not changed.However, since OWCP does in fact havea procedure for paying compensationwhen leave is restorable, a brief mentionof this process in this rule is consideredwarranted, and it is being added as new§ 10.425. For similar reasons, FormsCA–7a and CA–7b are being added tothe list in § 10.7(a). Current practice isnot altered.

Miscellaneous CommentsOWCP also received comments and

suggestions which did not pertaindirectly to the proposed regulations.Many would require legislativeamendments before they could beimplemented, or concern proceduralmatters. Because they are not germaneto this final rule, no further commentsare appropriate.

One commenter addressed the sectionabout Executive Order 12866,questioning whether compliance will bepossible with existing personnel. To theextent that the comment refers to thestaff needed by pharmacies to complywith the fee schedule, OWCP does notagree since similar fee schedules arealready widely used. If the commentrefers to federal personnel whoadminister the FECA, OWCP alsodisagrees but, in any event, theExecutive Order does not concern theimpact of regulations on federalagencies.

The commenter also stated that theproposed pharmacy fee schedule willadversely affect claimants since themost advanced drugs formusculoskeletal disorders are veryexpensive. However, the providers willbe required to accept the amount offeredunder the fee schedule, and if they donot, the regulations contain a provisionfor reimbursement to the claimant of thedifference between the amount chargedand the amount allowed by the feeschedule (see the comments about§ 10.337 above).

This commenter also addressed thesection about the Unfunded MandatesReform Act, referring to the above-notedproposal for establishing ‘‘centers ofexcellence’’ as well as to occupationalhealth personnel matters. The firstconcern is misplaced (unfundedmandates apply to Federal requirementsimposing a burden on States). Thesecond concern is not germane to theregulations at hand.

Finally, with regard to the sectionabout the Paperwork Reduction Act, thiscommenter made a generalrecommendation that existing forms beeliminated and consolidated. Since nospecific forms are named or specificcriticisms offered, OWCP is unable toaddress this comment.

Publication in Final Re Non-Substantive Changes

The Department of Labor hasdetermined, pursuant to 5 U.S.C.553(b)(B), that good cause exists forwaiving the public comment on thisrule with respect to the followingchanges:

(a) Typographical errors.(b) Other minor wording changes and

clarifications which do not affect thesubstance of the rules.

Executive Order 12866This final rule constitutes a

‘‘significant’’ rule within the meaning ofExecutive Order 12866. The Departmentbelieves, however, that this rule will nothave a significant economic impact onthe economy, or any person ororganization subject to the proposedchanges. The changes will have little orno effect on the level of benefits paid(which in any case involve paymentsalmost exclusively to Federal employeesfrom funds appropriated by Congress);nor will there be a significant economicimpact upon the hospitals andpharmacies which, for the first time,will be subject to the fee schedulesestablished by these rules. The totaldollar amount paid for inpatienthospital services in fiscal year 1996 was$81,955,562.00, and subjecting thesecharges to the DRG schedule is expectedto result in a 20 percent decrease in theamount paid, or about $16.4 million.The total dollar amount paid forpharmacy costs in fiscal year 1996 was$31.9 million, and subjecting thesecharges to the fee schedule is expectedto result in a 10 to 15 percent decreasein the amount paid, or about $3–4.5million. Insofar as the new rules makeit easier to seek benefits under the FECAand streamline the administration of theprogram, they would decreaseadministrative costs. These changeshave been reviewed by the Office ofManagement and Budget for consistencywith the President’s priorities and theprinciples set forth in Executive Order12866.

Unfunded Mandates Reform Act andFederalism Executive Order

For purposes of the UnfundedMandates Reform Act of 1995, as wellas E.O. 12875, this rule does not includeany Federal mandate that may result in

increased expenditures by State, localand tribal Governments, or increasedexpenditures by the private sector ofmore than $100 million.

Paperwork Reduction ActThe new collection of information

contained in this rulemaking has beenapproved by the Office of Managementand Budget (OMB) in accordance withthe Paperwork Reduction Act of 1995.No person is required to respond to acollection of information request unlessthe collection of information displays avalid OMB control number.

The new information collectionrequirements contained in this proposedrule are set forth in §§ 10.801 and10.802, and they relate to informationrequired to be submitted by pharmaciesand hospitals covering certain inpatientbills. The Department has adopted anew form (Universal Pharmacy BillingForm) which will be used bypharmacies in submitting claims forpayment. Another form (the claimantreimbursement form) will be used byclaimants seeking reimbursement formedical expenses for which they havepaid the providers directly. The publicreporting burden for these collections ofinformation is estimated to average asfollows: Universal Pharmacy BillingForm—It will take five (5) minutes tocomplete the form, including time forreviewing instructions, searchingexisting data sources, gathering andmaintaining the data needed andcompleting and reviewing the collectionof information; ClaimantReimbursement Form—It will take anaverage of ten (10) minutes to completethis form, including reviewinginstructions, searching for existing datasources, gathering and maintaining thedata needed, and completing andreviewing the collection of information.

Type of Review: New Collection.Agency: Employment Standards

Administration.Title: Claimant Medical

Reimbursement Form (CA–915).OMB Number: 1215–0193.Affected Public: Individuals or

households, Federal Government.Total Respondents: 40,500.Frequency: On occasion.Total Responses: 40,500.Average Time per Response: 10

minutes.Total Hours: 6,723.Total Burden Cost (capital/startup): 0.Total Burden Cost (operating/

maintenance): 0.Type of Review: New Collection.Agency: Employment Standards

Administration.Title: NCPDP Universal Pharmacy

Billing Form (79–1A) .


OMB Number: 1215–0194.Affected Public: Businesses or other

for-profit; Not-for-profit Institutions;Individuals or households; FederalGovernment; State, Local or TribalGovernment.

Total Respondents: 406,198.Frequency: On occasion.Total Responses: 406,198.Average Time per Response: 5

minutes.Total Hours: 33,714.Total Burden Cost (capital/startup): 0.Total Burden Cost (operating/

maintenance): 0.

Regulatory Flexibility ActThe Department believes that the rule

will have ‘‘no significant economicimpact upon a substantial number ofsmall entities’’ within the meaning ofsection 3(a) of the Regulatory FlexibilityAct Pub. L. 96–354, 91 Stat. 1164 (5U.S.C. 605(b)). The provision of the finalrules extending cost control measures tohospital inpatient services andpharmacies is the only provision of theregulations which may have a monetaryeffect on small businesses. That effectwill not be significant for a substantialnumber of those businesses, however,for no one business bills a significantamount to OWCP for FECA-relatedservices, and the effect on those billswhich are submitted, while aworthwhile savings for the Governmentin the aggregate, will be not besignificant for individual businessesaffected.

The two new cost containmentprovisions are: (1) A set schedule forpayment of pharmacy bills; and (2) aprospective payment system for hospitalinpatient services. The twomethodologies are fully explained in thetext of the Preamble to the ProposedRule, including the fact that the use ofDiagnostic Related Groups (DRGs) forsetting payment for inpatient hospitalcharges essentially is an adaptation of asystem used by the Health Care FinanceAgency (HCFA) in payment of Medicarebills. The use of Average WholesalePrices (AWP) in setting the maximumreimbursable amount for pharmacy billsis also commonplace in the industry.

The method selected by OWCP istherefore one which containsefficiencies both for the Governmentand providers. The Government benefitsbecause OWCP did not develop a newsystem, but rather minimized the use ofresources by adopting existing and well-recognized systems already in place.The providers benefit becausesubmitting a bill to OWCP and receivingpayment will be almost the sameprocess as submitting it to Medicare, aprogram with which hospitals are

already familiar and have in place forbilling, so they will not have to learn anew process and the FECA bills will notrepresent an unnecessary administrativecost because the FECA bill process willnot be essentially distinguished fromthat for Medicare. Similarly, thepharmacies are used to billing throughclearing houses and having chargessubject to limits by private insurers. Byadopting the uniform billing statementand a familiar cost control methodology,OWCP has kept close to theenvironment with which thepharmacies are already familiar. Themethods chosen, therefore, represent afamiliar environment to the providers.

The costs savings resulting from theimplementation of these costcontainment methods will have nosignificant effect on any individualbusiness. First, the need for costcontainment in the FECA program isself-evident and these methods arealready used by Medicare, CHAMPUSand the Department of Veterans Affairs,among Government entities, and for theprivate insurance carriers which coverFederal employees as part of the Federalemployees’ health benefit insuranceprograms. The costs to providers whosecharges may be reduced are relativelysmall, both in incremental and in actualterms.

Incrementally, FECA bills simply donot represent a large share of any oneprovider’s total business. Since Federalemployees are spread throughout theUnited States and this system coversonly those Federal employees who areinjured on the job and require eitherprescription drugs or inpatient hospitalcare (a tiny subset of all employees), thenumber of bills submitted by any oneprovider which may be subject to theseprovisions is likely to be very small.

Second, in actual terms, the amountby which these bills might be reducedwill not have a significant impact onany business. In fiscal year (FY) 1998,the program paid $100.1 million dollarson about 13,150 bills received forinpatient hospital services (an averagecharge of $7,600.00 per stay). The totalnumber of hospitals on the program’sprovider files is about 5,000, for anaverage patient load of slightly overthree FECA-claimant patients perhospital. If we assume that no hospitalhad more than three patients, then theaverage annual billings subject to theserules for any hospital would be about$22,800 (3 X $7,600). As noted in thePreamble to the Proposed Rule, the DRGmethod will reduce the $100.1 millionby about 20 percent, or $20.2 million.Thus, the average dollar amount of thereduction in bills submitted by any one

hospital resulting from these ruleswould be about $4,560.00.

A similarly small actual dollarreduction applies to pharmacy charges.OWCP paid about $32,000,000 forpharmacy charges, although theprogram cannot identify exactly whatportion of this amount was paid toinstitutions, since much of this dollarfigure represents reimbursementsdirectly to claimants. OWCP cannotidentify with certainty the number ofpharmacies who provided supplies, forthe same reason, but there are about4,000 pharmacies in the program’sprovider files. Similarly, OWCP cannotdetermine the exact number of billspaid, since the program captures onlythose submitted by a provider for directpayment and not those submitted by aclaimant for reimbursement. Assumingfor purposes of this analysis that thereimbursements were evenly dividedamong pharmacies already part of ourprovider files, we divide 4,000providers into the total number ofdollars paid to get an average annualaggregate of charges paid to a providerof about $8,000. It is estimated that theschedule would result in an averagereduction of five percent in pharmacycharges; based on these figures, theaverage pharmacy would see areduction in the total amount receivedof about $400.

These figures illustrate that the ‘‘cost’’of these rules to any one provider isnegligible. On the other hand, OWCPwill see substantial aggregate costsavings as a result (estimated at$18,000,000). These savings benefitOWCP (by strengthening the integrity ofthe program), the employing agencies(which ultimately foot the bill for FECAthrough the chargeback system), andtaxpayer and rate payers to whom theultimate costs of the program areeventually charged throughappropriations.

The Assistant Secretary forEmployment Standards has certified tothe Chief Counsel for Advocacy of theSmall Business Administration thatthese rules will not have a significantimpact on a substantial number of smallentities. The factual basis for thiscertification has been provided above.Accordingly, no regulatory impactanalysis is required.

Executive Order 13045 Protection ofChildren From Environmental, HealthRisks and Safety Risks

In accordance with Executive Order13045, OWCP has evaluated theenvironmental health and safety effectsof the rule on children. The agency hasdetermined that the final rule will haveno effect on children.


Submission to Congress and theGeneral Accounting Office

In accordance with the SmallBusiness Regulatory EnforcementFairness Act, the Department willsubmit to each House of the Congressand to the Comptroller General a reportregarding the issuance of today’s finalrule prior to the effective date set forthat the outset of this notice. The reportwill note that this rule does notconstitute a ‘‘major rule’’ as defined by5 U.S.C. 804(2).

List of Subjects in 20 CFR Parts 10 and25

Administrative practices andprocedures, Claims, Governmentemployees, Labor, Workers’compensation.

For reasons set forth in the preamble,20 Chapter I is amended to read asfollows:

1. Part 10 is revised to read as follows:

PART 10—CLAIMS FORCOMPENSATION UNDER THEFEDERAL EMPLOYEES’COMPENSATION ACT, AS AMENDED

Subpart A—General Provisions

Sec.

Introduction

10.0 What are the provisions of the FECA,in general?

10.1 What rules govern the administrationof the FECA and this chapter?

10.2 What do these regulations contain?10.3 Have the collection of information

requirements of this part been approvedby the Office of Management and Budget(OMB)?

Definitions and Forms

10.5 What definitions apply to theseregulations?

10.6 What special statutory definitionsapply to dependents and survivors?

10.7 What forms are needed to processclaims under the FECA?

Information in Program Records

10.10 Are all documents relating to claimsfiled under the FECA consideredconfidential?

10.11 Who maintains custody and controlof FECA records?

10.12 How may a FECA claimant orbeneficiary obtain copies of protectedrecords?

10.13 What process is used by a person whowants to correct FECA-relateddocuments?

Rights and Penalties

10.15 May compensation rights be waived?10.16 What criminal penalties may be

imposed in connection with a claimunder the FECA?

10.17 Is a beneficiary who defrauds theGovernment in connection with a claimfor benefits still entitled to thosebenefits?

10.18 Can a beneficiary who is incarceratedbased on a felony conviction still receivebenefits?

Subpart B—Filing Notices and Claims;Submitting Evidence

Notices and Claims for Injury, Disease andDeath—Employee or Survivor’s Actions

10.100 How and when is a notice oftraumatic injury filed?

10.101 How and when is a notice ofoccupational disease filed?

10.102 How and when is a claim for wageloss compensation filed?

10.103 How and when is a claim forpermanent impairment filed?

10.104 How and when is a claim forrecurrence filed?

10.105 How and when is a notice of deathand claim for benefits filed?

Notices and Claims for Injury, Disease andDeath—Employer’s Actions

10.110 What should the employer do whenan employee files a notice of traumaticinjury or occupational disease?

10.111 What should the employer do whenan employee files an initial claim forcompensation due to disability orpermanent impairment?

10.112 What should the employer do whenan employee files a claim for continuingcompensation due to disability?

10.113 What should the employer do whenan employee dies from a work-relatedinjury or disease?

Evidence and Burden of Proof

10.115 What evidence is needed toestablish a claim?

10.116 What additional evidence is neededin cases based on occupational disease?

10.117 What happens if, in any claim, theemployer contests any of the facts asstated by the claimant?

10.118 Does the employer participate in theclaims process in any other way?

10.119 What action will OWCP take withrespect to information submitted by theemployer?

10.120 May a claimant submit additionalevidence?

10.121 What happens if OWCP needs moreevidence from the claimant?

Decisions on Entitlement to Benefits

10.125 How does OWCP determineentitlement to benefits?

10.126 What does the decision contain?10.127 To whom is the decision sent?

Subpart C—Continuation of Pay

10.200 What is continuation of pay?

Eligibility for COP

10.205 What conditions must be met toreceive COP?

10.206 May an employee who uses leaveafter an injury later decide to use COPinstead?

10.207 May an employee who returns towork, then stops work again due to theeffects of the injury, receive COP?

Responsibilities

10.210 What are the employee’sresponsibilities in COP cases?

10.211 What are the employer’sresponsibilities in COP cases?

Calculation of COP

10.215 How does OWCP compute thenumber of days of COP used?

10.216 How is the pay rate for COPcalculated?

10.217 Is COP charged if the employeecontinues to work, but in a different jobthat pays less?

Controversion and Termination of COP

10.220 When is an employer not required topay COP?

10.221 How is a claim for COPcontroverted?

10.222 When may an employer terminateCOP which has already begun?

10.223 Are there other circumstances underwhich OWCP will not authorize paymentof COP?

10.224 What happens if OWCP finds thatthe employee is not entitled to COP afterit has been paid?

Subpart D—Medical and Related Benefits

Emergency Medical Care

10.300 What are the basic rules forauthorizing emergency medical care?

10.301 May the physician designated onForm CA–16 refer the employee toanother medical specialist or medicalfacility?

10.302 Should the employer authorizemedical care if he or she doubts that theinjury occurred, or that it is work-related?

10.303 Should the employer use a FormCA–16 to authorize medical testing whenan employee is exposed to a workplacehazard just once?

10.304 Are there any exceptions to theseprocedures for obtaining emergencymedical care?

Medical Treatment and Related Issues

10.310 What are the basic rules forobtaining medical care?

10.311 What are the special rules for theservices of chiropractors?

10.312 What are the special rules for theservices of clinical psychologists?

10.313 Will OWCP pay for preventivetreatment?

10.314 Will OWCP pay for the services ofan attendant?

10.315 Will OWCP pay for transportation toobtain medical treatment?

10.316 After selecting a treating physician,may an employee choose to be treated byanother physician instead?

Directed Medical Examinations

10.320 Can OWCP require an employee tobe examined by another physician?


10.321 What happens if the opinion of thephysician selected by OWCP differs fromthe opinion of the physician selected bythe employee?

10.322 Who pays for second opinion andreferee examinations?

10.323 What are the penalties for failing toreport for or obstructing a secondopinion or referee examination?

10.324 May an employer require anemployee to undergo a physicalexamination in connection with a work-related injury?

Medical Reports

10.330 What are the requirements formedical reports?

10.331 How and when should the medicalreport be submitted?

10.332 What additional medicalinformation will OWCP require tosupport continuing payment of benefits?

10.333 What additional medicalinformation will OWCP require tosupport a claim for a schedule award?

Medical Bills

10.335 How are medical bills submitted?10.336 What are the time frames for

submitting bills?10.337 If OWCP reimburses an employee

only partially for a medical expense,must the provider refund the balance ofthe amount paid to the employee?

Subpart E—Compensation and RelatedBenefits

Compensation for Disability and Impairment

10.400 What is total disability?10.401 When and how is compensation for

total disability paid?10.402 What is partial disability?10.403 When and how is compensation for

partial disability paid?10.404 When and how is compensation for

a schedule impairment paid?10.405 Who is considered a dependent in a

claim based on disability or impairment?10.406 What are the maximum and

minimum rates of compensation indisability cases?

Compensation for Death

10.410 Who is entitled to compensation incase of death, and what are the rates ofcompensation payable in death cases?

10.411 What are the maximum andminimum rates of compensation in deathcases?

10.412 Will OWCP pay the costs of burialand transportation of the remains?

10.413 If a person dies while receiving aschedule award, to whom is the balanceof the schedule award payable?

10.414 What reports of dependents areneeded in death cases?

10.415 What must a beneficiary do if thenumber of beneficiaries decreases?

10.416 How does a change in the number ofbeneficiaries affect the amount ofcompensation paid to the otherbeneficiaries?

10.417 What reports are needed whencompensation payments continue forchildren over age 18?

Adjustments to Compensation

10.420 How are cost-of-living adjustmentsapplied?

10.421 May a beneficiary receive otherkinds of payments from the FederalGovernment concurrently withcompensation?

10.422 May compensation payments beissued in a lump sum?

10.423 May compensation payments beassigned to, or attached by, creditors?

10.424 May someone other than thebeneficiary be designated to receivecompensation payments?

10.425 May compensation be claimed forperiods of restorable leave?

Overpayments

10.430 How does OWCP notify anindividual of a payment made?

10.431 What does OWCP do when anoverpayment is identified?

10.432 How can an individual presentevidence to OWCP in response to apreliminary notice of an overpayment?

10.433 Under what circumstances canOWCP waive recovery of anoverpayment?

10.434 If OWCP finds that the recipient ofan overpayment was not at fault, whatcriteria are used to decide whether towaive recovery of it?

10.435 Is an individual responsible for anoverpayment that resulted from an errormade by OWCP or another Governmentagency?

10.436 Under what circumstances wouldrecovery of an overpayment defeat thepurpose of the FECA?

10.437 Under what circumstances wouldrecovery of an overpayment be againstequity and good conscience?

10.438 Can OWCP require the individualwho received the overpayment to submitadditional financial information?

10.439 What is addressed at a pre-recoupment hearing?

10.440 How does OWCP communicate itsfinal decision concerning recovery of anoverpayment, and what appeal rightaccompanies it?

10.441 How are overpayments collected?

Subpart F—Continuing Benefits

Rules and Evidence

10.500 What are the basic rules forcontinuing receipt of compensationbenefits and return to work?

10.501 What medical evidence is necessaryto support continuing receipt ofcompensation benefits?

10.502 How does OWCP evaluate evidencein support of continuing receipt ofcompensation benefits?

10.503 Under what circumstances mayOWCP reduce or terminatecompensation benefits?

Return to Work—Employer’sResponsibilities

10.505 What actions must the employertake?

10.506 May the employer monitor theemployee’s medical care?

10.507 How should the employer make anoffer of suitable work?

10.508 May relocation expenses be paid foran employee who would need to moveto accept an offer of reemployment?

10.509 If an employee’s light-duty job iseliminated due to downsizing, what isthe effect on compensation?

Return to Work—Employee’sResponsibilities10.515 What actions must the employee

take with respect to returning to work?10.516 How will an employee know if

OWCP considers a job to be suitable?10.517 What are the penalties for refusing

to accept a suitable job offer?10.518 Does OWCP provide services to help

employees return to work?10.519 What action will OWCP take if an

employee refuses to undergo vocationalrehabilitation?

10.520 How does OWCP determinecompensation after an employeecompletes a vocational rehabilitationprogram?

Reports of Earnings From Employment andSelf-Employment10.525 What information must the

employee report?10.526 Must the employee report volunteer

activities?10.527 Does OWCP verify reports of

earnings?10.528 What action will OWCP take if the

employee fails to file a report of activityindicating an ability to work?

10.529 What action will OWCP take if theemployee files an incomplete report?

Reports of Dependents10.535 How are dependents defined, and

what information must the employeereport?

10.536 What is the penalty for failing tosubmit a report of dependents?

10.537 What reports are needed whencompensation payments continue forchildren over age 18?

Reduction and Termination ofCompensation10.540 When and how is compensation

reduced or terminated?10.541 What action will OWCP take after

issuing written notice of its intention toreduce or terminate compensation?

Subpart G—Appeals Process

10.600 How can final decisions of OWCP bereviewed?

Reconsiderations and Reviews by theDirector10.605 What is reconsideration?10.606 How does a claimant request

reconsideration?10.607 What is the time limit for requesting

reconsideration?10.608 How does OWCP decide whether to

grant or deny the request forreconsideration?

10.609 How does OWCP decide whethernew evidence requires modification ofthe prior decision?

10.610 What is a review by the Director?


Hearings

10.615 What is a hearing?10.616 How does a claimant obtain a

hearing?10.617 How is an oral hearing conducted?10.618 How is a review of the written

record conducted?10.619 May subpoenas be issued for

witnesses and documents?10.62 Who pays the costs associated with

subpoenas?10.621 What is the employer’s role when an

oral hearing has been requested?10.622 May a claimant withdraw a request

for or postpone a hearing?

Reviews by the Employees’ CompensationAppeals Board (ECAB)

10.625 What kinds of decisions may beappealed?

10.626 Who has jurisdiction of cases onappeal to the ECAB?

Subpart H—Special Provisions

Representation

10.70 May a claimant designate arepresentative?

10.701 Who may serve as a representative?10.702 How are fees for services paid?10.703 How are fee applications approved?

Third Party Liability

10.705 When must an employee or otherFECA beneficiary take action against athird party?

10.706 How will a beneficiary know ifOWCP or SOL has determined thataction against a third party is required?

10.707 What must a FECA beneficiary whois required to take action against a thirdparty do to satisfy the requirement thatthe claim be ‘‘prosecuted’’?

10.708 Can a FECA beneficiary who refusesto comply with a request to assign aclaim to the United States or to prosecutethe claim in his or her own name bepenalized?

10.709 What happens if a beneficiarydirected by OWCP or SOL to take actionagainst a third party does not believe thata claim can be successfully prosecuted ata reasonable cost?

10.71 Under what circumstances must arecovery of money or other property inconnection with an injury or death forwhich benefits are payable under theFECA be reported to OWCP or SOL?

10.711 How much of any settlement orjudgment must be paid to the UnitedStates?

10.712 What amounts are included in thegross recovery?

10.713 How is a structured settlement (thatis, a settlement providing for receipt offunds over a specified period of time)treated for purposes of reporting thegross recovery?

10.714 What amounts are included in therefundable disbursements?

10.715 Is a beneficiary required to payinterest on the amount of the refund dueto the United States?

10.716 If the required refund is not paidwithin 30 days of the request forrepayment, can it be collected frompayments due under the FECA?

10.717 Is a settlement or judgment receivedas a result of allegations of medicalmalpractice in treating an injury coveredby the FECA a gross recovery that mustbe reported to OWCP or SOL?

10.718 Are payments to a beneficiary as aresult of an insurance policy which thebeneficiary has purchased a grossrecovery that must be reported to OWCPor SOL?

10.719 If a settlement or judgment isreceived for more than one wound ormedical condition, can the refundabledisbursements paid on a single FECAclaim be attributed to differentconditions for purposes of calculatingthe refund or credit owed to the UnitedStates?

Federal Grand and Petit Jurors

10.725 When is a Federal grand or petitjuror covered under the FECA?

10.726 When does a juror’s entitlement todisability compensation begin?

10.727 What is the pay rate of jurors forcompensation purposes?

Peace Corps Volunteers

10.73 What are the conditions of coveragefor Peace Corps volunteers and volunteerleaders injured while serving outside theUnited States?

10.731 What is the pay rate of Peace Corpsvolunteers and volunteer leaders forcompensation purposes?

Non-Federal Law Enforcement Officers

10.735 When is a non-Federal lawenforcement officer (LEO) covered underthe FECA?

10.736 What are the time limits for filing aLEO claim?

10.737 How is a LEO claim filed, and whocan file a LEO claim?

10.738 Under what circumstances arebenefits payable in LEO claims?

10.739 What kind of objective evidence ofa potential Federal crime must exist forcoverage to be extended?

10.740 In what situations will OWCPautomatically presume that a lawenforcement officer is covered by theFECA?

10.741 How are benefits calculated in LEOclaims?

Subpart I—Information for MedicalProviders

Medical Records and Bills

10.800 What kind of medical records mustproviders keep?

10.801 How are medical bills to besubmitted?

10.802 How should an employee prepareand submit requests for reimbursementfor medical expenses, transportationcosts, loss of wages, and incidentalexpenses?

10.803 What are the time limitations onOWCP’s payment of bills?

Medical Fee Schedule

10.805 What services are covered by theOWCP fee schedule?

10.806 How are the maximum fees defined?10.807 How are payments for particular

services calculated?10.808 Does the fee schedule apply to every

kind of procedure?10.809 How are payments for medicinal

drugs determined?10.810 How are payments for inpatient

medical services determined?10.811 When and how are fees reduced?10.812 If OWCP reduces a fee, may a

provider request reconsideration of thereduction?

10.813 If OWCP reduces a fee, may aprovider bill the claimant for thebalance?

Exclusion of Providers

10.815 What are the grounds for excludinga provider from payment under theFECA?

10.816 What will cause OWCP toautomatically exclude a physician orother provider of medical services andsupplies?

10.817 When are OWCP’s exclusionprocedures initiated?

10.818 How is a provider notified ofOWCP’s intent to exclude him or her?

10.819 What requirements must theprovider’s reply and OWCP’s decisionmeet?

10.820 How can an excluded providerrequest a hearing?

10.821 How are hearings assigned andscheduled?

10.822 How are subpoenas or advisoryopinions obtained?

10.823 How will the administrative lawjudge conduct the hearing and issue therecommended decision?

10.824 How can a party request review bythe Director of the administrative lawjudge’s recommended decision?

10.825 What are the effects of exclusion?10.826 How can an excluded provider be

reinstated?Authority: 5 U.S.C. 301, 8103, 8145 and

8149; 31 U.S.C. 3716 and 3717;Reorganization Plan No. 6 of 1950, 15 FR3174, 64 Stat. 1263; Secretary’s Order 5–96,62 FR 107.


Introduction

§ 10.0 What are the provisions of theFECA, in general?

The Federal Employees’Compensation Act (FECA) as amended(5 U.S.C. 8101 et seq.) provides for thepayment of workers’ compensationbenefits to civilian officers andemployees of all branches of theGovernment of the United States. Theregulations in this part describe therules for filing, processing, and payingclaims for benefits under the FECA.Proceedings under the FECA are non-adversarial in nature.


(a) The FECA has been amended andextended a number of times to provideworkers’ compensation benefits tovolunteers in the Civil Air Patrol (5U.S.C. 8141), members of the ReserveOfficers’ Training Corps (5 U.S.C. 8140),Peace Corps Volunteers (5 U.S.C. 8142),Job Corps enrollees and Volunteers inService to America (5 U.S.C. 8143),members of the National Teachers Corps(5 U.S.C. 8143a), certain studentemployees (5 U.S.C. 5351 and 8144),certain law enforcement officers notemployed by the United States (5 U.S.C.8191–8193), and various other classes ofpersons who provide or have providedservices to the Government of theUnited States.

(b) The FECA provides for payment ofseveral types of benefits, includingcompensation for wage loss, scheduleawards, medical and related benefits,and vocational rehabilitation servicesfor conditions resulting from injuriessustained in performance of duty whilein service to the United States.

(c) The FECA also provides forpayment of monetary compensation tospecified survivors of an employeewhose death resulted from a work-related injury and for payment of certainburial expenses subject to the provisionsof 5 U.S.C. 8134.

(d) All types of benefits andconditions of eligibility listed in thissection are subject to the provisions ofthe FECA and of this part. This sectionshall not be construed to modify orenlarge upon the provisions of theFECA.

§ 10.1 What rules govern theadministration of the FECA and thischapter?

In accordance with 5 U.S.C. 8145 andSecretary’s Order 5–96, theresponsibility for administering theFECA, except for 5 U.S.C. 8149 as itpertains to the Employees’Compensation Appeals Board, has beendelegated to the Assistant Secretary forEmployment Standards. The AssistantSecretary, in turn, has delegated theauthority and responsibility foradministering the FECA to the Directorof the Office of Workers’ CompensationPrograms (OWCP). Except as otherwiseprovided by law, the Director, OWCPand his or her designees have theexclusive authority to administer,interpret and enforce the provisions ofthe Act.

§ 10.2 What do these regulations contain?This part 10 sets forth the regulations

governing administration of all claimsfiled under the FECA, except to theextent specified in certain particularprovisions. Its provisions are intended

to assist persons seeking compensationbenefits under the FECA, as well aspersonnel in the various Federalagencies and the Department of Laborwho process claims filed under theFECA or who perform administrativefunctions with respect to the FECA.This part 10 applies to part 25 of thischapter except as modified by part 25.The various subparts of this part containthe following:

(a) Subpart A: The general statutoryand administrative framework forprocessing claims under the FECA. Itcontains a statement of purpose andscope, together with definitions ofterms, descriptions of basic forms,information about the disclosure ofOWCP records, and a description ofrights and penalties under the FECA,including convictions for fraud.

(b) Subpart B: The rules for filingnotices of injury and claims for benefitsunder the FECA. It also addressesevidence and burden of proof, as well asthe process of making decisionsconcerning eligibility for benefits.

(c) Subpart C: The rules governingclaims for and payment of continuationof pay.

(d) Subpart D: The rules governingemergency and routine medical care,second opinion and referee medicalexaminations directed by OWCP, andmedical reports and records in general.It also addresses the kinds of treatmentwhich may be authorized and howmedical bills are paid.

(e) Subpart E: The rules relating to thepayment of monetary compensationbenefits for disability, impairment anddeath. It includes the provisions foridentifying and processingoverpayments of compensation.

(f) Subpart F: The rules governing thepayment of continuing compensationbenefits. It includes provisionsconcerning the employee’s and theemployer’s responsibilities in returningthe employee to work. It also containsprovisions governing reports of earningsand dependents, recurrences, andreduction and termination ofcompensation benefits.

(g) Subpart G: The rules governing theappeals of decisions under the FECA. Itincludes provisions relating to hearings,reconsiderations, and appeals before theEmployees’ Compensation AppealsBoard.

(h) Subpart H: The rules concerninglegal representation and for adjustmentand recovery from a third party. It alsocontains provisions relevant to threegroups of employees whose statusrequires special application of theprovisions of the FECA: Federal grandand petit jurors, Peace Corps volunteers,

and non-Federal law enforcementofficers.

(i) Subpart I: Information for medicalproviders. It includes rules for medicalreports, medical bills, and the OWCPmedical fee schedule, as well as theprovisions for exclusion of medicalproviders.

§ 10.3 Have the collection of informationrequirements of this part been approved bythe Office of Management and Budget(OMB)?

The collection of informationrequirements in this part have beenapproved by OMB and assigned OMBcontrol numbers 1215–0055, 1215–0067,1215–0078, 1215–0103, 1215–0105,1215–0115, 1215–0116, 1215–0144,1215–0151, 1215–0154, 1215–0155,1215–0161, 1215–0167, 1215–0176,1215–0178, 1215–0182, 1215–0193 and1215–0194.

Definitions and Forms

§ 10.5 What definitions apply to theseregulations?

Certain words and phrases found inthis part are defined in this section orin the FECA. Some other words andphrases that are used only in limitedsituations are defined in the latersubparts of these regulations.

(a) Benefits or Compensation meansthe money OWCP pays to or on behalfof a beneficiary from the Employees’Compensation Fund for lost wages, aloss of wage-earning capacity or apermanent physical impairment, as wellas the money paid to beneficiaries for anemployee’s death. These two terms alsoinclude any other amounts paid out ofthe Employees’ Compensation Fund forsuch things as medical treatment,medical examinations conducted at therequest of OWCP as part of the claimsadjudication process, vocationalrehabilitation services, services of anattendant and funeral expenses, butdoes not include continuation of pay.

(b) Beneficiary means an individualwho is entitled to a benefit under theFECA and this part.

(c) Claim means a written assertion ofan individual’s entitlement to benefitsunder the FECA, submitted in a mannerauthorized by this part.

(d) Claimant means an individualwhose claim has been filed.

(e) Director means the Director ofOWCP or a person designated to carryout his or her functions.

(f) Disability means the incapacity,because of an employment injury, toearn the wages the employee wasreceiving at the time of injury. It may bepartial or total.

(g) Earnings from employment or self-employment means:


(1) Gross earnings or wages before anydeductions and includes the value ofsubsistence, quarters, reimbursedexpenses and any other goods orservices received in kind asremuneration; or

(2) A reasonable estimate of the costto have someone else perform the dutiesof an individual who accepts noremuneration. Neither lack of profits,nor the characterization of the duties asa hobby, removes an unremuneratedindividual’s responsibility to report theestimated cost to have someone elseperform his or her duties.

(h) Employee means, but is notlimited to, an individual who fits withinone of the following listed groups:

(1) A civil officer or employee in anybranch of the Government of the UnitedStates, including an officer or employeeof an instrumentality wholly owned bythe United States;

(2) An individual rendering personalservice to the United States similar tothe service of a civil officer or employeeof the United States, without pay or fornominal pay, when a statute authorizesthe acceptance or use of the service, orauthorizes payment of travel or otherexpenses of the individual;

(3) An individual, other than anindependent contractor or an individualemployed by an independent contractor,employed on the Menominee IndianReservation in Wisconsin in operationsconducted under a statute relating totribal timber and logging operations onthat reservation;

(4) An individual appointed to aposition on the office staff of a formerPresident; or

(5) An individual selected and servingas a Federal petit or grand juror.

(i) Employer or Agency means anycivil agency or instrumentality of theUnited States Government, or any otherorganization, group or institutionemploying an individual defined as an‘‘employee’’ by this section. These termsalso refer to officers and employees ofan employer having responsibility forthe supervision, direction or control ofemployees of that employer as an‘‘immediate superior,’’ and to otheremployees designated by the employerto carry out the functions vested in theemployer under the FECA and this part,including officers or employeesdelegated responsibility by an employerfor authorizing medical treatment forinjured employees.

(j) Entitlement means entitlement tobenefits as determined by OWCP underthe FECA and the procedures describedin this part.

(k) FECA means the FederalEmployees’ Compensation Act, asamended.

(l) Hospital services means servicesand supplies provided by hospitalswithin the scope of their practice asdefined by State law.

(m) Impairment means any anatomicor functional abnormality or loss. Apermanent impairment is any suchabnormality or loss after maximummedical improvement has beenachieved.

(n) Knowingly means with knowledge,consciously, willfully or intentionally.

(o) Medical services means servicesand supplies provided by or under thesupervision of a physician.Reimbursable chiropractic services arelimited to physical examinations (andrelated laboratory tests), x-raysperformed to diagnose a subluxation ofthe spine and treatment consisting ofmanual manipulation of the spine tocorrect a subluxation.

(p) Medical support services meansservices, drugs, supplies and appliancesprovided by a person other than aphysician or hospital.

(q) Occupational disease or Illnessmeans a condition produced by thework environment over a period longerthan a single workday or shift.

(r) OWCP means the Office ofWorkers’ Compensation Programs.

(s) Pay rate for compensationpurposes means the employee’s pay, asdetermined under 5 U.S.C. 8114, at thetime of injury, the time disability beginsor the time compensable disabilityrecurs if the recurrence begins morethan six months after the injuredemployee resumes regular full-timeemployment with the United States,whichever is greater, except asotherwise determined under 5 U.S.C.8113 with respect to any period.

(t) Physician means an individualdefined as such in 5 U.S.C. 8101(2),except during the period for which hisor her license to practice medicine hasbeen suspended or revoked by a Statelicensing or regulatory authority.

(u) Qualified hospital means anyhospital licensed as such under Statelaw which has not been excluded underthe provisions of subpart I of this part.Except as otherwise provided byregulation, a qualified hospital shall bedeemed to be designated or approved byOWCP.

(v) Qualified physician means anyphysician who has not been excludedunder the provisions of subpart I of thispart. Except as otherwise provided byregulation, a qualified physician shallbe deemed to be designated or approvedby OWCP.

(w) Qualified provider of medicalsupport services or supplies means anyperson, other than a physician or ahospital, who provides services, drugs,

supplies and appliances for whichOWCP makes payment, who possessesany applicable licenses required underState law, and who has not beenexcluded under the provisions ofsubpart I of this part.

(x) Recurrence of disability means aninability to work after an employee hasreturned to work, caused by aspontaneous change in a medicalcondition which had resulted from aprevious injury or illness without anintervening injury or new exposure tothe work environment that caused theillness. This term also means aninability to work that takes place whena light-duty assignment madespecifically to accommodate anemployee’s physical limitations due tohis or her work-related injury or illnessis withdrawn (except when suchwithdrawal occurs for reasons ofmisconduct, non-performance of jobduties or a reduction-in-force), or whenthe physical requirements of such anassignment are altered so that theyexceed his or her established physicallimitations.

(y) Recurrence of medical conditionmeans a documented need for furthermedical treatment after release fromtreatment for the accepted condition orinjury when there is no accompanyingwork stoppage. Continuous treatmentfor the original condition or injury is notconsidered a ‘‘need for further medicaltreatment after release from treatment,’’nor is an examination withouttreatment.

(z) Representative means anindividual properly authorized by aclaimant in writing to act for theclaimant in connection with a claim orproceeding under the FECA or this part.

(aa) Student means an individualdefined at 5 U.S.C. 8101(17). Two termsused in that particular definition arefurther defined as follows:

(1) Additional type of educational ortraining institution means a technical,trade, vocational, business orprofessional school accredited orlicensed by the United StatesGovernment or a State Government orany political subdivision thereofproviding courses of not less than threemonths duration, that prepares theindividual for a livelihood in a trade,industry, vocation or profession.

(2) Year beyond the high school levelmeans:

(i) The 12-month period beginning themonth after the individual graduatesfrom high school, provided he or shehad indicated an intention to continueschooling within four months of highschool graduation, and each successive12-month period in which there isschool attendance or the payment of


compensation based on suchattendance; or

(ii) If the individual has indicated thathe or she will not continue schoolingwithin four months of high schoolgraduation, the 12-month periodbeginning with the month that theindividual enters school to continue hisor her education, and each successive12-month period in which there isschool attendance or the payment ofcompensation based on suchattendance.

(bb) Subluxation means anincomplete dislocation, off-centering,misalignment, fixation or abnormalspacing of the vertebrae which must bedemonstrable on any x-ray film to anindividual trained in the reading of x-rays.

(cc) Surviving spouse means thehusband or wife living with ordependent for support upon a deceasedemployee at the time of his or her death,or living apart for reasonable cause orbecause of the deceased employee’sdesertion.

(dd) Temporary aggravation of a pre-existing condition means that factors ofemployment have directly caused thatcondition to be more severe for a limitedperiod of time and have left no greaterimpairment than existed prior to theemployment injury.

(ee) Traumatic injury means acondition of the body caused by aspecific event or incident, or series ofevents or incidents, within a singleworkday or shift. Such condition mustbe caused by external force, includingstress or strain, which is identifiable asto time and place of occurrence andmember or function of the bodyaffected.

§ 10.6 What special statutory definitionsapply to dependents and survivors?

(a) 5 U.S.C. 8133 provides that certainbenefits are payable to certainenumerated survivors of employees whohave died from an injury sustained inthe performance of duty.

(b) 5 U.S.C. 8148 also provides thatcertain other benefits may be payable tocertain family members of employeeswho have been incarcerated due to afelony conviction.

(c) 5 U.S.C. 8110(b) further providesthat any employee who is found to beeligible for a basic benefit shall beentitled to have such basic benefitaugmented at a specified rate for certainpersons who live in the beneficiary’shousehold or who are dependent uponthe beneficiary for support.

(d) 5 U.S.C. 8101, 8110, 8133 and8148, which define the nature of suchsurvivorship or dependency necessaryto qualify a beneficiary for a survivor’s

benefit or an augmented benefit, applyto the provisions of this part.

§ 10.7 What forms are needed to processclaims under the FECA?

(a) Notice of injury, claims and certainspecified reports shall be made on formsprescribed by OWCP. Employers shallnot modify these forms or use substituteforms. Employers are expected tomaintain an adequate supply of thebasic forms needed for the properrecording and reporting of injuries.

Form No. Title

(1) CA–1 ........ Federal Employee’s Notice ofTraumatic Injury and Claimfor Continuation of Pay/Compensation.

(2) CA–2 ........ Notice of Occupational Dis-ease and Claim for Com-pensation.

(3) CA–2a ...... Notice of Employee’s Recur-rence of Disability andClaim for Pay/ Compensa-tion.

(4) CA–5 ........ Claim for Compensation byWidow, Widower and/orChildren.

(5) CA–5b ...... Claim for Compensation byParents, Brothers, Sisters,Grandparents, or Grand-children.

(6) CA–6 ........ Official Superior’s Report ofEmployee’s Death.

(7) CA–7 ........ Claim for Compensation Dueto Traumatic Injury or Oc-cupational Disease.

(8) CA–7a ...... Time Analysis Form.(9) CA–7b ...... Leave Buy Back (LBB) Work-

sheet/Certification andElection.

(10) CA–8 ...... Claim for Continuing Com-pensation on Account ofDisability.

(11) CA–16 .... Authorization of Examinationand/or Treatment.

(12) CA–17 .... Duty Status Report.(13) CA–20 .... Attending Physician’s Report.(14) CA–20a .. Attending Physician’s Sup-

plemental Report.

(b) Copies of the forms listed in thisparagraph are available for publicinspection at the Office of Workers’Compensation Programs, EmploymentStandards Administration, U.S.Department of Labor, Washington, DC20210. They may also be obtained fromdistrict offices, employers (i.e., safetyand health offices, supervisors), and theInternet, at www.dol.gov./dol/esa/owcp.htm.

Information in Program Records

§ 10.10 Are all documents relating toclaims filed under the FECA consideredconfidential?

All records relating to claims forbenefits, including copies of suchrecords maintained by an employer, areconsidered confidential and may not be

released, inspected, copied or otherwisedisclosed except as provided in theFreedom of Information Act and thePrivacy Act of 1974.

§ 10.11 Who maintains custody andcontrol of FECA records?

All records relating to claims forbenefits filed under the FECA, includingany copies of such records maintainedby an employing agency, are covered bythe government-wide Privacy Actsystem of records entitled DOL/GOVT–1 (Office of Workers’ CompensationPrograms, Federal Employees’Compensation Act File). This system ofrecords is maintained by and under thecontrol of OWCP, and, as such, allrecords covered by DOL/GOVT–1 areofficial records of OWCP. Theprotection, release, inspection andcopying of records covered by DOL/GOVT–1 shall be accomplished inaccordance with the rules, guidelinesand provisions of this part, as well asthose contained in 29 CFR parts 70 and71, and with the notice of the system ofrecords and routine uses published inthe Federal Register. All questionsrelating to access/disclosure, and/oramendment of FECA recordsmaintained by OWCP or the employingagency, are to be resolved in accordancewith this section.

§ 10.12 How may a FECA claimant orbeneficiary obtain copies of protectedrecords?

(a) A claimant seeking copies of his orher official FECA file should address arequest to the District Director of theOWCP office having custody of the file.A claimant seeking copies of FECA-related documents in the custody of theemployer should follow the proceduresestablished by that agency.

(b) (1) While an employing agencymay establish procedures that aninjured employee or beneficiary shouldfollow in requesting access todocuments it maintains, any decisionissued in response to such a requestmust comply with the rules andregulations of the Department of Laborwhich govern all other aspects ofsafeguarding these records.

(2) No employing agency has theauthority to issue determinations withrespect to requests for the correction oramendment of records contained in orcovered by DOL/GOVT–1. Thatauthority is within the exclusive controlof OWCP. Thus, any request forcorrection or amendment received by anemploying agency must be referred toOWCP for review and decision.

(3) Any administrative appeal takenfrom a denial issued by the employingagency or OWCP shall be filed with the


Solicitor of Labor in accordance with 29CFR 71.7 and 71.9.

§ 10.13 What process is used by a personwho wants to correct FECA-relateddocuments?

Any request to amend a recordcovered by DOL/GOVT–1 should bedirected to the district office havingcustody of the official file. No employerhas the authority to issuedeterminations with regard to requestsfor the correction of records containedin or covered by DOL/GOVT–1. Anyrequest for correction received by anemployer must be referred to OWCP forreview and decision.

Rights and Penalties

§ 10.15 May compensation rights bewaived?

No employer or other person mayrequire an employee or other claimantto enter into any agreement, eitherbefore or after an injury or death, towaive his or her right to claimcompensation under the FECA. Nowaiver of compensation rights shall bevalid.

§ 10.16 What criminal penalties may beimposed in connection with a claim underthe FECA?

(a) A number of statutory provisionsmake it a crime to file a false orfraudulent claim or statement with theGovernment in connection with a claimunder the FECA, or to wrongfullyimpede a FECA claim. Included amongthese provisions are sections 287, 1001,1920, and 1922 of title 18, United StatesCode. Enforcement of these and othercriminal provisions that may apply toclaims under the FECA are within thejurisdiction of the Department of Justice.

(b) In addition, administrativeproceedings may be initiated under theProgram Fraud Civil Remedies Act of1986 (PFCRA), 31 U.S.C. 3801–12, toimpose civil penalties and assessmentsagainst persons who make, submit, orpresent, or cause to be made, submittedor presented, false, fictitious orfraudulent claims or written statementsto OWCP in connection with a claimunder the FECA. The Department ofLabor’s regulations implementing thePFRCA are found at 29 CFR part 22.

§ 10.17 Is a beneficiary who defrauds theGovernment in connection with a claim forbenefits still entitled to those benefits?

When a beneficiary either pleadsguilty to or is found guilty on eitherFederal or State criminal charges ofdefrauding the Federal Government inconnection with a claim for benefits, thebeneficiary’s entitlement to any furthercompensation benefits will terminateeffective the date either the guilty plea

is accepted or a verdict of guilty isreturned after trial, for any injuryoccurring on or before the date of suchguilty plea or verdict. Termination ofentitlement under this section is notaffected by any subsequent change in orrecurrence of the beneficiary’s medicalcondition.

§ 10.18 Can a beneficiary who isincarcerated based on a felony convictionstill receive benefits?

(a) Whenever a beneficiary isincarcerated in a State or Federal jail,prison, penal institution or othercorrectional facility due to a State orFederal felony conviction, he or sheforfeits all rights to compensationbenefits during the period ofincarceration. A beneficiary’s right tocompensation benefits for the period ofhis or her incarceration is not restoredafter such incarceration ends, eventhough payment of compensationbenefits may resume.

(b) If the beneficiary has eligibledependents, OWCP will paycompensation to such dependents at areduced rate during the period of his orher incarceration, by applying thepercentages of 5 U.S.C. 8133(a)(1)through (5) to the beneficiary’s grosscurrent entitlement rather than to thebeneficiary’s monthly pay.

(c) If OWCP’s decision on entitlementis pending when the period ofincarceration begins, and compensationis due for a period of time prior to suchincarceration, payment for that periodwill only be made to the beneficiaryfollowing his or her release.

Subpart B—Filing Notices and Claims;Submitting Evidence

Notices and Claims for Injury, Disease,and Death—Employee or Survivor’sActions

§ 10.100 How and when is a notice oftraumatic injury filed?

(a) To claim benefits under the FECA,an employee who sustains a work-related traumatic injury must givenotice of the injury in writing on FormCA–1, which may be obtained from theemployer or from the Internet atwww.dol.gov./dol/esa/owcp.htm. Theemployee must forward this notice tothe employer. Another person,including the employer, may give noticeof injury on the employee’s behalf. Theperson submitting a notice shall includethe Social Security Number (SSN) of theinjured employee.

(b) For injuries sustained on or afterSeptember 7, 1974, a notice of injurymust be filed within three years of theinjury. (The form contains the necessarywords of claim.) The requirements for

filing notice are further described in 5U.S.C. 8119. Also see § 10.205concerning time requirements for filingclaims for continuation of pay.

(1) If the claim is not filed withinthree years, compensation may still beallowed if notice of injury was givenwithin 30 days or the employer hadactual knowledge of the injury or deathwithin 30 days after occurrence. Thisknowledge may consist of writtenrecords or verbal notification. An entryinto an employee’s medical record mayalso satisfy this requirement if it issufficient to place the employer onnotice of a possible work-related injuryor disease.

(2) OWCP may excuse failure tocomply with the three-year timerequirement because of trulyexceptional circumstances (for example,being held prisoner of war).

(3) The claimant may withdraw his orher claim (but not the notice of injury)by so requesting in writing to OWCP atany time before OWCP determineseligibility for benefits. Any continuationof pay (COP) granted to an employeeafter a claim is withdrawn must becharged to sick or annual leave, orconsidered an overpayment of payconsistent with 5 U.S.C. 5584, at theemployee’s option.

(c) However, in cases of latentdisability, the time for filing claim doesnot begin to run until the employee hasa compensable disability and is aware,or reasonably should have been aware,of the causal relationship between thedisability and the employment (see 5U.S.C. 8122(b)).

§ 10.101 How and when is a notice ofoccupational disease filed?

(a) To claim benefits under the FECA,an employee who has a disease whichhe or she believes to be work-relatedmust give notice of the condition inwriting on Form CA–2, which may beobtained from the employer or from theInternet at www.dol.gov./dol/esa/owcp.htm. The employee must forwardthis notice to the employer. Anotherperson, including the employer, may doso on the employee’s behalf. The personsubmitting a notice shall include theSocial Security Number (SSN) of theinjured employee. The claimant maywithdraw his or her claim (but not thenotice of occupational disease) by sorequesting in writing to OWCP at anytime before OWCP determines eligibilityfor benefits.

(b) For occupational diseasessustained as a result of exposure toinjurious work factors that occurs on orafter September 7, 1974, a notice ofoccupational disease must be filedwithin three years of the onset of the


condition. (The form contains thenecessary words of claim.) Therequirements for timely filing aredescribed in § 10.100(b)(1) through (3).

(c) However, in cases of latentdisability, the time for filing claim doesnot begin to run until the employee hasa compensable disability and is aware,or reasonably should have been aware,of the causal relationship between thedisability and the employment (see 5U.S.C. 8122(b)).

§ 10.102 How and when is a claim for wageloss compensation filed?

(a) Form CA–7 is used to claimcompensation for periods of disabilitynot covered by COP.

(1) An employee who is disabled withloss of pay for more than three calendardays due to an injury, or someone actingon his or her behalf, must file Form CA–7 before compensation can be paid.

(2) The employee shall complete thefront of Form CA–7 and submit the formto the employer for completion andtransmission to OWCP. The form shouldbe completed as soon as possible, but nomore than 14 calendar days after thedate pay stops due to the injury ordisease.

(3) The requirements for filing claimsare further described in 5 U.S.C. 8121.

(b) Form CA–8 is used to claimcompensation for additional periods ofdisability after Form CA–7 is submittedto OWCP.

(1) It is the employee’s responsibilityto submit Form CA–8. Without receiptof such claim, OWCP has no knowledgeof continuing wage loss. Therefore,while disability continues, theemployee should submit a claim onForm CA–8 each two weeks untilotherwise instructed by OWCP.

(2) The employee shall complete thefront of Form CA–8 and submit the formto the employer for completion andtransmission to OWCP.

(3) The employee is responsible forsubmitting, or arranging for thesubmittal of, medical evidence to OWCPwhich establishes both that disabilitycontinues and that the disability is dueto the work-related injury. Form CA–20ais attached to Form CA–8 for thispurpose.

§ 10.103 How and when is a claim forpermanent impairment filed?

Form CA–7 is used to claimcompensation for impairment to a bodypart covered under the scheduleestablished by 5 U.S.C. 8107. If FormCA–7 has already been filed to claimdisability compensation, an employeemay file a claim for such impairment bysending a letter to OWCP whichspecifies the nature of the benefitclaimed.

§ 10.104 How and when is a claim forrecurrence filed?

(a) A recurrence should be reportedon Form CA–2a if it causes theemployee to lose time from work andincur a wage loss, or if the employeeexperiences a renewed need fortreatment after previously beingreleased from care. However, a notice ofrecurrence should not be filed when anew injury, new occupational disease,or new event contributing to an already-existing occupational disease hasoccurred. In these instances, theemployee should file Form CA–1 orCA–2.

(b) The employee has the burden ofestablishing by the weight of reliable,probative and substantial evidence thatthe recurrence of disability is causallyrelated to the original injury.

(1) The employee must include adetailed factual statement as describedon Form CA–2a. The employer maysubmit comments concerning theemployee’s statement.

(2) The employee should arrange forthe submittal of a detailed medicalreport from the attending physician asdescribed on Form CA–2a. Theemployee should also submit, or arrangefor the submittal of, similar medicalreports for any examination and/ortreatment received after returning towork following the original injury.

§ 10.105 How and when is a notice ofdeath and claim for benefits filed?

(a) If an employee dies from a work-related traumatic injury or anoccupational disease, any survivor mayfile a claim for death benefits usingForm CA–5 or CA–5b, which may beobtained from the employer or from theInternet at www.dol.gov./dol/esa/owcp.htm. The survivor must providethis notice in writing and forward it tothe employer. Another person,including the employer, may do so onthe survivor’s behalf. The survivor mayalso submit the completed Form CA–5or CA–5b directly to OWCP. Thesurvivor shall disclose the SSNs of allsurvivors on whose behalf claim forbenefits is made in addition to the SSNof the deceased employee. The survivormay withdraw his or her claim (but notthe notice of death) by so requesting inwriting to OWCP at any time beforeOWCP determines eligibility forbenefits.

(b) For deaths that occur on or afterSeptember 7, 1974, a notice of deathmust be filed within three years of thedeath. The form contains the necessarywords of claim. The requirements fortimely filing are described in§ 10.100(b)(1) through (3).

(c) However, in cases of death due tolatent disability, the time for filing theclaim does not begin to run until thesurvivor is aware, or reasonably shouldhave been aware, of the causalrelationship between the death and theemployment (see 5 U.S.C. 8122(b)).

(d) The filing of a notice of injury oroccupational disease will satisfy thetime requirements for a death claimbased on the same injury oroccupational disease. If an injuredemployee or someone acting on theemployee’s behalf does not file a claimbefore the employee’s death, the right toclaim compensation for disability otherthan medical expenses ceases and doesnot survive.

(e) A survivor must be alive to receiveany payment; there is no vested right tosuch payment. A report as described in§ 10.414 of this part must be filed onceeach year to support continuingpayments of compensation.

Notices and Claims for Injury, Disease,and Death—Employer’s Actions

§ 10.110 What should the employer dowhen an employee files a notice oftraumatic injury or occupational disease?

(a) The employer shall complete theagency portion of Form CA–1 (fortraumatic injury) or CA–2 (foroccupational disease) no more than 10working days after receipt of notice fromthe employee. The employer shall alsocomplete the Receipt of Notice and giveit to the employee, along with copies ofboth sides of Form CA–1 or Form CA–2.

(b) The employer must complete andtransmit the form to OWCP within 10working days after receipt of notice fromthe employee if the injury or diseasewill likely result in:

(1) A medical charge against OWCP;(2) Disability for work beyond the day

or shift of injury;(3) The need for more than two

appointments for medical examinationand/or treatment on separate days,leading to time loss from work;

(4) Future disability;(5) Permanent impairment; or(6) Continuation of pay pursuant to 5

U.S.C. 8118.(c) The employer should not wait for

submittal of supporting evidence beforesending the form to OWCP.

(d) If none of the conditions inparagraph (b) of this section applies, theForm CA–1 or CA–2 shall be retained asa permanent record in the EmployeeMedical Folder in accordance with theguidelines established by the Office ofPersonnel Management.


§ 10.111 What should the employer dowhen an employee files an initial claim forcompensation due to disability orpermanent impairment?

(a) When an employee is disabled bya work-related injury and loses pay formore than three calendar days, or has apermanent impairment or seriousdisfigurement as described in 5 U.S.C.8107, the employer shall furnish theemployee with Form CA–7 for thepurpose of claiming compensation.

(b) If the employee is receivingcontinuation of pay (COP), the employershould give Form CA–7 to the employeeby the 30th day of the COP period andsubmit the form to OWCP by the 40thday of the COP period. If the employeehas not returned the form to theemployer by the 40th day of the COPperiod, the employer should ask him orher to submit it as soon as possible.

(c) Upon receipt of Form CA–7 fromthe employee, or someone acting on hisor her behalf, the employer shallcomplete the appropriate portions of theform. As soon as possible, but no morethan five working days after receiptfrom the employee, the employer shallforward the completed Form CA–7 andany accompanying medical report toOWCP.

§ 10.112 What should the employer dowhen an employee files a claim forcontinuing compensation due to disability?

(a) If the employee continues in aleave-without-pay status due to a work-related injury after the period ofcompensation initially claimed on FormCA–7, the employer shall furnish theemployee with Form CA–8 for thepurpose of claiming continuingcompensation.

(b) Upon receipt of Form CA–8 fromthe employee, or someone acting on hisor her behalf, the employer shallcomplete the appropriate portions of theform. As soon as possible, but no morethan five working days after receiptfrom the employee, the employer shallforward the completed Form CA–8 andany accompanying medical report toOWCP.

§ 10.113 What should the employer dowhen an employee dies from a work-relatedinjury or disease?

(a) The employer shall immediatelyreport a death due to a work-relatedtraumatic injury or occupational diseaseto OWCP by telephone, telegram, orfacsimile (fax). No more than 10working days after notification of thedeath, the employer shall complete andsend Form CA–6 to OWCP.

(b) When possible, the employer shallfurnish a Form CA–5 or CA–5b to allpersons likely to be entitled tocompensation for death of an employee.

The employer should also supplyinformation about completing and filingthe form.

(c) The employer shall promptlytransmit Form CA–5 or CA–5b toOWCP. The employer shall alsopromptly transmit to OWCP any otherclaim or paper submitted which appearsto claim compensation on account ofdeath.

Evidence and Burden of Proof

§ 10.115 What evidence is needed toestablish a claim?

Forms CA–1, CA–2, CA–5 and CA–5bdescribe the basic evidence required.OWCP may send any request foradditional evidence to the claimant andto his or her representative, if any.Evidence should be submitted inwriting. The evidence submitted mustbe reliable, probative and substantial.Each claim for compensation must meetfive requirements before OWCP canaccept it. These requirements, which theemployee must establish to meet his orher burden of proof, are as follows:

(a) The claim was filed within thetime limits specified by the FECA;

(b) The injured person was, at thetime of injury, an employee of theUnited States as defined in 5 U.S.C.8101(1) and § 10.5(h) of this part;

(c) The fact that an injury, disease ordeath occurred;

(d) The injury, disease or deathoccurred while the employee was in theperformance of duty; and

(e) The medical condition for whichcompensation or medical benefits isclaimed is causally related to theclaimed injury, disease or death. Neitherthe fact that the condition manifestsitself during a period of Federalemployment, nor the belief of theclaimant that factors of employmentcaused or aggravated the condition, issufficient in itself to establish causalrelationship.

(f) In all claims, the claimant isresponsible for submitting, or arrangingfor submittal of, a medical report fromthe attending physician. For wage lossbenefits, the claimant must also submitmedical evidence showing that thecondition claimed is disabling. Therules for submitting medical reports arefound in §§ 10.330 through 10.333.

§ 10.116 What additional evidence isneeded in cases based on occupationaldisease?

(a) The employee must submit thespecific detailed information describedon Form CA–2 and on any checklist(Form CA–35, A–H) provided by theemployer. OWCP has developed thesechecklists to address particularoccupational diseases. The medical

report should also include theinformation specified on the checklistfor the particular disease claimed.

(b) The employer should submit thespecific detailed information describedon Form CA–2 and on any checklistpertaining to the claimed disease.

§ 10.117 What happens if, in any claim, theemployer contests any of the facts asstated by the claimant?

(a) An employer who has reason todisagree with any aspect of theclaimant’s report shall submit astatement to OWCP that specificallydescribes the factual allegation orargument with which it disagrees andprovide evidence or argument tosupport its position. The employer mayinclude supporting documents such aswitness statements, medical reports orrecords, or any other relevantinformation.

(b) Any such statement shall besubmitted to OWCP with the notice oftraumatic injury or death, or within 30calendar days from the date notice ofoccupational disease or death isreceived from the claimant. If theemployer does not submit a writtenexplanation to support thedisagreement, OWCP may accept theclaimant’s report of injury asestablished. The employer may not usea disagreement with an aspect of theclaimant’s report to delay forwardingthe claim to OWCP or to compel orinduce the claimant to change orwithdraw the claim.

§ 10.118 Does the employer participate inthe claims process in any other way?

(a) The employer is responsible forsubmitting to OWCP all relevant andprobative factual and medical evidencein its possession, or which it mayacquire through investigation or othermeans. Such evidence may be submittedat any time.

(b) The employer may ascertain theevents surrounding an injury and theextent of disability where it appears thatan employee who alleges total disabilitymay be performing other work, or maybe engaging in activities which wouldindicate less than total disability. Thisauthority is in addition to that given in§ 10.118(a). However, the provisions ofthe Privacy Act apply to any endeavorby the employer to ascertain the facts ofthe case (see §§ 10.10 and 10.11).

(c) The employer does not have theright, except as provided in subpart C ofthis part, to actively participate in theclaims adjudication process.


§ 10.119 What action will OWCP take withrespect to information submitted by theemployer?

OWCP will consider all evidencesubmitted appropriately, and OWCPwill inform the employee, theemployee’s representative, if any, andthe employer of any action taken. Wherean employer contests a claim within 30days of the initial submittal and theclaim is later approved, OWCP willnotify the employer of the rationale forapproving the claim.

§ 10.120 May a claimant submit additionalevidence?

A claimant or a person acting on hisor her behalf may submit to OWCP atany time any other evidence relevant tothe claim.

§ 10.121 What happens if OWCP needsmore evidence from the claimant?

If the claimant submits factualevidence, medical evidence, or both, butOWCP determines that this evidence isnot sufficient to meet the burden ofproof, OWCP will inform the claimantof the additional evidence needed. Theclaimant will be allowed at least 30 daysto submit the evidence required. OWCPis not required to notify the claimant asecond time if the evidence submittedin response to its first request is notsufficient to meet the burden of proof.

Decisions on Entitlement to Benefits

§ 10.125 How does OWCP determineentitlement to benefits?

(a) In reaching any decision withrespect to FECA coverage orentitlement, OWCP considers the claimpresented by the claimant, the report bythe employer, and the results of suchinvestigation as OWCP may deemnecessary.

(b) OWCP claims staff apply the law,the regulations, and its procedures tothe facts as reported or obtained uponinvestigation. They also apply decisionsof the Employees’ CompensationAppeals Board and administrativedecisions of OWCP as set forth in FECAProgram Memoranda.

§ 10.126 What does the decision contain?The decision shall contain findings of

fact and a statement of reasons. It isaccompanied by information about theclaimant’s appeal rights, which mayinclude the right to a hearing, areconsideration, and/or a review by theEmployees’ Compensation AppealsBoard. (See subpart G of this part.)

§ 10.127 To whom is the decision sent?A copy of the decision shall be mailed

to the employee’s last known address. Ifthe employee has a designatedrepresentative before OWCP, a copy of

the decision will also be mailed to therepresentative. Notification to either theemployee or the representative will beconsidered notification to both. A copyof the decision will also be sent to theemployer.

Subpart C—Continuation of Pay

§ 10.200 What is continuation of pay?

(a) For most employees who sustain atraumatic injury, the FECA providesthat the employer must continue theemployee’s regular pay during anyperiods of resulting disability, up to amaximum of 45 calendar days. This iscalled continuation of pay, or COP. Theemployer, not OWCP, pays COP. Unlikewage loss benefits, COP is subject totaxes and all other payroll deductionsthat are made from regular income.

(b) The employer must continue thepay of an employee who is eligible forCOP, and may not require the employeeto use his or her own sick or annualleave, unless the provisions of§§ 10.200(c), 10.220, or § 10.222 apply.However, while continuing theemployee’s pay, the employer maycontrovert the employee’s COPentitlement pending a finaldetermination by OWCP. OWCP has theexclusive authority to determinequestions of entitlement and all otherissues relating to COP.

(c) The FECA excludes certainpersons from eligibility for COP. COPcannot be authorized for members ofthese excluded groups, which includebut are not limited to: persons renderingpersonal service to the United Statessimilar to the service of a civil officer oremployee of the United States, withoutpay or for nominal pay; volunteers (forinstance, in the Civil Air Patrol andPeace Corps); Job Corps and YouthConservation Corps enrollees;individuals in work-study programs,and grand or petit jurors (unlessotherwise Federal employees).

Eligibility for COP

§ 10.205 What conditions must be met toreceive COP?

(a) To be eligible for COP, a personmust:

(1) Have a ‘‘traumatic injury’’ asdefined at § 10.5(ee) which is job-relatedand the cause of the disability, and/orthe cause of lost time due to the needfor medical examination and treatment;

(2) File Form CA–1 within 30 days ofthe date of the injury (but if that formis not available, using another formwould not alone preclude receipt); and

(3) Begin losing time from work dueto the traumatic injury within 45 daysof the injury.

(b) OWCP may find that the employeeis not entitled to COP for other reasonsconsistent with the statute (see§ 10.220).

§ 10.206 May an employee who uses leaveafter an injury later decide to use COPinstead?

On Form CA–1, an employee mayelect to use accumulated sick or annualleave, or leave advanced by the agency,instead of electing COP. The employeecan change the election between leaveand COP for prospective periods at anypoint while eligibility for COP remains.The employee may also change theelection for past periods and requestCOP in lieu of leave already taken forthe same period. In either situation, thefollowing provisions apply:

(a) The request must be made to theemployer within one year of the date theleave was used or the date of the writtenapproval of the claim by OWCP (ifwritten approval is issued), whicheveris later.

(b) Where the employee is otherwiseeligible, the agency shall restore leavetaken in lieu of any of the 45 COP days.Where any of the 45 COP days remainunused, the agency shall continue payprospectively.

(c) The use of leave may not be usedto delay or extend the 45-day COPperiod or to otherwise affect the timelimitation as provided by 5 U.S.C. 8117.Therefore, any leave used during theperiod of eligibility counts towards the45-day maximum entitlement to COP.

§ 10.207 May an employee who returns towork, then stops work again due to theeffects of the injury, receive COP?

If the employee recovers fromdisability and returns to work, thenbecomes disabled again and stops work,the employer shall pay any of the 45days of entitlement to COP not usedduring the initial period of disabilitywhere:

(a) The employee completes FormCA–2a and elects to receive regular pay;

(b) OWCP did not deny the originalclaim for disability;

(c) The disability recurs and theemployee stops work within 45 days ofthe time the employee first returned towork following the initial period ofdisability; and

(d) Pay has not been continued for theentire 45 days.

Responsibilities

§ 10.210 What are the employee’sresponsibilities in COP cases?

An employee who sustains atraumatic injury which he or sheconsiders disabling, or someoneauthorized to act on his or her behalf,


must take the following actions toensure continuing eligibility for COP.The employee must:

(a) Complete and submit Form CA–1to the employing agency as soon aspossible, but no later than 30 days fromthe date the traumatic injury occurred.

(b) Ensure that medical evidencesupporting disability resulting from theclaimed traumatic injury, including astatement as to when the employee canreturn to his or her date of injury job,is provided to the employer within 10calendar days after filing the claim forCOP.

(c) Ensure that relevant medicalevidence is submitted to OWCP, andcooperate with OWCP in developing theclaim.

(d) Ensure that the treating physicianspecifies work limitations and providesthem to the employer and/orrepresentatives of OWCP.

(e) Provide to the treating physician adescription of any specific alternativepositions offered the employee, andensure that the treating physicianresponds promptly to the employer and/or OWCP, with an opinion as to whetherand how soon the employee couldperform that or any other specificposition.

§ 10.211 What are the employer’sresponsibilities in COP cases?

Once the employer learns of atraumatic injury sustained by anemployee, it shall:

(a) Provide a Form CA–1 and FormCA–16 to authorize medical care inaccordance with § 10.300. Failure to doso may mean that OWCP will notuphold any termination of COP by theemployer.

(b) Advise the employee of the rightto receive COP, and the need to electamong COP, annual or sick leave orleave without pay, for any period ofdisability.

(c) Inform the employee of anydecision to controvert COP and/orterminate pay, and the basis for doingso.

(d) Complete Form CA–1 and transmitit, along with all other availablepertinent information, (including thebasis for any controversion), to OWCPwithin 10 working days after receivingthe completed form from the employee.

Calculation of COP

§ 10.215 How does OWCP compute thenumber of days of COP used?

COP is payable for a maximum of 45calendar days, and every day used iscounted toward this maximum. Thefollowing rules apply:

(a) Time lost on the day or shift of theinjury does not count toward COP.

(Instead, the agency must keep theemployee in a pay status for thatperiod);

(b) The first COP day is the first daydisability begins following the date ofinjury (providing it is within the 30days following the date of injury),except where the injury occurs beforethe beginning of the work day or shift,in which case the date of injury ischarged to COP;

(c) Any part of a day or shift (exceptfor the day of the injury) counts as a fullday toward the 45 calendar day total;

(d) Regular days off are included ifCOP has been used on the regular workdays immediately preceding orfollowing the regular day(s) off, andmedical evidence supports disability;and

(e) Leave used during a period whenCOP is otherwise payable is countedtoward the 45-day COP maximum as ifthe employee had been in a COP status.

(f) For employees with part-time orintermittent schedules, all calendar dayson which medical evidence indicatesdisability are counted as COP days,regardless of whether the employee wasor would have been scheduled to workon those days. The rate at which COPis paid for these employees is calculatedaccording to § 10.216(b).

§ 10.216 How is the pay rate for COPcalculated?

The employer shall calculate COPusing the period of time and the weeklypay rate.

(a) The pay rate for COP purposes isequal to the employee’s regular‘‘weekly’’ pay (the average of the weeklypay over the preceding 52 weeks).

(1) The pay rate excludes overtimepay, but includes other applicable extrapay except to the extent prohibited bylaw.

(2) Changes in pay or salary (forexample, promotion, demotion, within-grade increases, termination of atemporary detail, etc.) which wouldhave otherwise occurred during the 45-day period are to be reflected in theweekly pay determination.

(b) The weekly pay for COP purposesis determined according to the followingformulas:

(1) For full or part-time workers(permanent or temporary) who work thesame number of hours each week of theyear (or of the appointment), the weeklypay rate is the hourly pay rate (A) ineffect on the date of injury multiplied by(×) the number of hours worked eachweek (B): A × B = Weekly Pay Rate.

(2) For part-time workers (permanentor temporary) who do not work thesame number of hours each week, butwho do work each week of the year (or

period of appointment), the weekly payrate is an average of the weeklyearnings, established by dividing (÷) thetotal earnings (excluding overtime) fromthe year immediately preceding theinjury (A) by the number of weeks (orpartial weeks) worked in that year (B):A ÷ B = Weekly Pay Rate.

(3) For intermittent, seasonal and on-call workers, whether permanent ortemporary, who do not work either thesame number of hours or every week ofthe year (or period of appointment), theweekly pay rate is the average weeklyearnings established by dividing (÷) thetotal earnings during the full 12-monthperiod immediately preceding the dateof injury (excluding overtime) (A), bythe number of weeks (or partial weeks)worked during that year (B) (that is, A÷ B); or 150 times the average dailywage earned in the employment duringthe days employed within the full yearimmediately preceding the date ofinjury divided by 52 weeks, whicheveris greater.

§ 10.217 Is COP charged if the employeecontinues to work, but in a different job thatpays less?

If the employee cannot perform theduties of his or her regular position, butinstead works in another job withdifferent duties with no loss in pay,then COP is not chargeable. COP mustbe paid and the days counted againstthe 45 days authorized by law wheneveran actual reduction of pay results fromthe injury, including a reduction of payfor the employee’s normaladministrative workweek that resultsfrom a change or diminution in his orher duties following an injury. However,this does not include a reduction of paythat is due solely to an employer beingprohibited by law from paying extra payto an employee for work he or she doesnot actually perform.

Controversion and Termination of COP

§ 10.220 When is an employer not requiredto pay COP?

An employer shall continue theregular pay of an eligible employeewithout a break in time for up to 45calendar days, except when, and onlywhen:

(a) The disability was not caused bya traumatic injury;

(b) The employee is not a citizen ofthe United States or Canada;

(c) No written claim was filed within30 days from the date of injury;

(d) The injury was not reported untilafter employment has been terminated;

(e) The injury occurred off theemploying agency’s premises and wasotherwise not within the performance ofofficial duties;


(f) The injury was caused by theemployee’s willful misconduct, intent toinjure or kill himself or herself oranother person, or was proximatelycaused by intoxication by alcohol orillegal drugs; or

(g) Work did not stop until more than30 days following the injury.

§ 10.221 How is a claim for COPcontroverted?

When the employer stops anemployee’s pay for one of the reasonscited in § 10.220, the employer mustcontrovert the claim for COP on FormCA–1, explaining in detail the basis forthe refusal. The final determination onentitlement to COP always rests withOWCP.

§ 10.222 When may an employer terminateCOP which has already begun?

(a) Where the employer has continuedthe pay of the employee, it may bestopped only when at least one of thefollowing circumstances is present:

(1) Medical evidence which on itsface supports disability due to a work-related injury is not received within 10calendar days after the claim issubmitted (unless the employer’s owninvestigation shows disability to exist).Where the medical evidence is laterprovided, however, COP shall bereinstated retroactive to the date oftermination;

(2) The medical evidence from thetreating physician shows that theemployee is not disabled from his or herregular position;

(3) Medical evidence from the treatingphysician shows that the employee isnot totally disabled, and the employeerefuses a written offer of a suitablealternative position which is approvedby the attending physician. If OWCPlater determines that the position wasnot suitable, OWCP will direct theemployer to grant the employee COPretroactive to the termination date.

(4) The employee returns to workwith no loss of pay;

(5) The employee’s period ofemployment expires or employment isotherwise terminated (as establishedprior to the date of injury);

(6) OWCP directs the employer to stopCOP; and/or

(7) COP has been paid for 45 calendardays.

(b) An employer may not interrupt orstop COP to which the employee isotherwise entitled because of adisciplinary action, unless a preliminarynotice was issued to the employeebefore the date of injury and the actionbecomes final or otherwise takes effectduring the COP period.

(c) An employer cannot otherwisestop COP unless it does so for one of the

reasons found in this section or§ 10.220. Where an employer stops COP,it must file a controversion with OWCP,setting forth the basis on which itterminated COP, no later than theeffective date of the termination.

§ 10.223 Are there other circumstancesunder which OWCP will not authorizepayment of COP?

When OWCP finds that an employeeor his or her representative refuses orobstructs a medical examinationrequired by OWCP, the right to COP issuspended until the refusal orobstruction ceases. COP already paid orpayable for the period of suspension isforfeited. If already paid, the COP maybe charged to annual or sick leave orconsidered an overpayment of payconsistent with 5 U.S.C. 5584.

§ 10.224 What happens if OWCP finds thatthe employee is not entitled to COP after ithas been paid?

Where OWCP finds that the employeeis not entitled to COP after it has beenpaid, the employee may chose to havethe time charged to annual or sick leave,or considered an overpayment of payunder 5 U.S.C. 5584. The employermust correct any deficiencies in COP asdirected by OWCP.

Subpart D—Medical and RelatedBenefits

Emergency Medical Care

§ 10.300 What are the basic rules forauthorizing emergency medical care?

(a) When an employee sustains awork-related traumatic injury thatrequires medical examination, medicaltreatment, or both, the employer shallauthorize such examination and/ortreatment by issuing a Form CA–16.This form may be used for occupationaldisease or illness only if the employerhas obtained prior permission fromOWCP.

(b) The employer shall issue FormCA–16 within four hours of the claimedinjury. If the employer gives verbalauthorization for such care, he or sheshould issue a Form CA–16 within 48hours. The employer is not required toissue a Form CA–16 more than oneweek after the occurrence of the claimedinjury. The employer may not authorizeexamination or medical or othertreatment in any case that OWCP hasdisallowed.

(c) Form CA–16 must contain the fullname and address of the qualifiedphysician or qualified medical facilityauthorized to provide service. Theauthorizing official must sign and datethe form and must state his or her title.Form CA–16 authorizes treatment for 60

days from the date of issuance, unlessOWCP terminates the authorizationsooner.

(d) The employer should advise theemployee of the right to his or her initialchoice of physician. The employer shallallow the employee to select a qualifiedphysician, after advising him or her ofthose physicians excluded undersubpart I of this part. The physician maybe in private practice, including a healthmaintenance organization (HMO), oremployed by a Federal agency such asthe Department of the Army, Navy, AirForce, or Veterans Affairs. Any qualifiedphysician may provide initial treatmentof a work-related injury in anemergency. See also § 10.825(b).

§ 10.301 May the physician designated onForm CA–16 refer the employee to anothermedical specialist or medical facility?

The physician designated on FormCA–16 may refer the employee forfurther examination, testing, or medicalcare. OWCP will pay this physician orfacility’s bill on the authority of FormCA–16. The employer should not issuea second Form CA–16.

§ 10.302 Should the employer authorizemedical care if he or she doubts that theinjury occurred, or that it is work-related?

If the employer doubts that the injuryoccurred, or that it is work-related, heor she should authorize medical care bycompleting Form CA–16 and checkingblock 6B of the form. If the medical andfactual evidence sent to OWCP showsthat the condition treated is not work-related, OWCP will notify the employee,the employer, and the physician orhospital that OWCP will not authorizepayment for any further treatment.

§ 10.303 Should the employer use a FormCA–16 to authorize medical testing when anemployee is exposed to a workplace hazardjust once?

(a) Simple exposure to a workplacehazard, such as an infectious agent, doesnot constitute a work-related injuryentitling an employee to medicaltreatment under the FECA. Theemployer therefore should not use aForm CA–16 to authorize medicaltesting for an employee who has merelybeen exposed to a workplace hazard,unless the employee has sustained anidentifiable injury or medical conditionas a result of that exposure. OWCP willauthorize preventive treatment onlyunder certain well-definedcircumstances (see § 10.313).

(b) Employers may be required underother statutes or regulations to providetheir employees with medical testingand/or other services in situationsdescribed in paragraph (a) of thissection. For example, regulations issued


by the Occupational Safety and HealthAdministration at 29 CFR chapter XVIIrequire employers to provide theiremployees with medical consultationsand/or examinations when they eitherexhibit symptoms consistent withexposure to a workplace hazard, orwhen an identifiable event such as aspill, leak or explosion occurs andresults in the likelihood of exposure toa workplace hazard. In addition, 5U.S.C. 7901 authorizes employers toestablish health programs whose staffcan perform tests for workplace hazards,counsel employees for exposure orfeared exposure to such hazards, andprovide health care screening and otherassociated services.

§ 10.304 Are there any exceptions to theseprocedures for obtaining medical care?

In cases involving emergencies orunusual circumstances, OWCP mayauthorize treatment in a manner otherthan as stated in this subpart.

Medical Treatment and Related Issues

§ 10.310 What are the basic rules forobtaining medical care?

(a) The employee is entitled to receiveall medical services, appliances orsupplies which a qualified physicianprescribes or recommends and whichOWCP considers necessary to treat thework-related injury. The employee neednot be disabled to receive suchtreatment. If there is any doubt as towhether a specific service, appliance orsupply is necessary to treat the work-related injury, the employee shouldconsult OWCP prior to obtaining it.

(b) Any qualified physician orqualified hospital may provide suchservices, appliances and supplies. Aqualified provider of medical supportservices may also furnish appropriateservices, appliances, and supplies.OWCP may apply a test of cost-effectiveness to appliances andsupplies. With respect to prescribedmedications, OWCP may require the useof generic equivalents where they areavailable.

§ 10.311 What are the special rules for theservices of chiropractors?

(a) The services of chiropractors thatmay be reimbursed are limited by theFECA to treatment to correct a spinalsubluxation. The costs of physical andrelated laboratory tests performed by orrequired by a chiropractor to diagnosesuch a subluxation are also payable.

(b) In accordance with 5 U.S.C.8101(3), a diagnosis of spinal‘‘subluxation as demonstrated by X-rayto exist’’ must appear in thechiropractor’s report before OWCP can

consider payment of a chiropractor’sbill.

(c) A chiropractor may interpret his orher x-rays to the same extent as anyother physician. To be given any weight,the medical report must state that x-rayssupport the finding of spinalsubluxation. OWCP will not necessarilyrequire submittal of the x-ray, or areport of the x-ray, but the report mustbe available for submittal on request.

(d) A chiropractor may also provideservices in the nature of physicaltherapy under the direction of aqualified physician.

§ 10.312 What are the special rules for theservices of clinical psychologists?

A clinical psychologist may serve asa physician only within the scope of hisor her practice as defined by State law.Therefore, a clinical psychologist maynot serve as a physician for conditionsthat include a physical componentunless the applicable State law allowsclinical psychologists to treat physicalconditions. A clinical psychologist mayalso perform testing, evaluation andother services under the direction of aqualified physician.

§ 10.313 Will OWCP pay for preventivetreatment?

The FECA does not authorizepayment for preventive measures suchas vaccines and inoculations, and ingeneral, preventive treatment may be aresponsibility of the employing agencyunder the provisions of 5 U.S.C. 7901(see § 10.303). However, OWCP canauthorize treatment for the followingconditions, even though such treatmentis designed, in part, to prevent furtherinjury:

(a) Complications of preventivemeasures which are provided orsponsored by the agency, such as anadverse reaction to prophylacticimmunization.

(b) Actual or probable exposure to aknown contaminant due to an injury,thereby requiring disease-specificmeasures against infection. Examplesinclude the provision of tetanusantitoxin or booster toxoid injections forpuncture wounds; administration ofrabies vaccine for a bite from a rabid orpotentially rabid animal; or appropriatemeasures where exposure to humanimmunodeficiency virus (HIV) hasoccurred.

(c) Conversion of tuberculin reactionfrom negative to positive followingexposure to tuberculosis in theperformance of duty. In this situation,the appropriate therapy may beauthorized.

(d) Where injury to one eye hasresulted in loss of vision, periodic

examination of the uninjured eye todetect possible sympatheticinvolvement of the uninjured eye at anearly stage.

§ 10.314 Will OWCP pay for the services ofan attendant?

Yes, OWCP will pay for the servicesof an attendant up to a maximum of$1,500 per month, where the need forsuch services has been medicallydocumented. In the exercise of thediscretion afforded by 5 U.S.C. 8111(a),the Director has determined that, exceptwhere payments were being made priorto January 4, 1999, direct payments tothe claimant to cover such services willno longer be made. Rather, the cost ofproviding attendant services will bepaid under section 8103 of the Act, andmedical bills for these services will beconsidered under § 10.801. Thisdecision is based on the followingfactors:

(a) The additional paymentsauthorized under section 8111(a) shouldnot be necessary since OWCP willauthorize payment for personal careservices under 5 U.S.C. 8103, whetheror not such care includes medicalservices, so long as the personal careservices have been determined to bemedically necessary and are providedby a home health aide, licensedpractical nurse, or similarly trainedindividual.

(b) A home health aide, licensedpractical nurse, or similarly trainedindividual is better able to providequality personal care services, includingassistance in feeding, bathing, and usingthe toilet. In the past, provision ofsupplemental compensation directly toinjured employees may haveencouraged family members to take onthese responsibilities even though theymay not have been trained to providesuch services. By paying for the servicesunder section 8103, OWCP can betterdetermine whether the servicesprovided are necessary and/or adequateto meet the needs of the injuredemployee. In addition, a systemrequiring the personal care provider tosubmit a bill to OWCP, where theamount billed will be subject to OWCP’sfee schedule, will result in greater fiscalaccountability.

§ 10.315 Will OWCP pay for transportationto obtain medical treatment?

The employee is entitled toreimbursement of reasonable andnecessary expenses, includingtransportation needed to obtainauthorized medical services, appliancesor supplies. To determine what is areasonable distance to travel, OWCPwill consider the availability of services,


the employee’s condition, and themeans of transportation. Generally, 25miles from the place of injury, the worksite, or the employee’s home, isconsidered a reasonable distance totravel. The standard form designated forFederal employees to claim travelexpenses should be used to seekreimbursement under this section.

§ 10.316 After selecting a treatingphysician, may an employee choose to betreated by another physician instead?

(a) When the physician originallyselected to provide treatment for a work-related injury refers the employee to aspecialist for further medical care, theemployee need not consult OWCP forapproval. In all other instances,however, the employee must submit awritten request to OWCP with his or herreasons for desiring a change ofphysician.

(b) OWCP will approve the request ifit determines that the reasons submittedare sufficient. Requests that are oftenapproved include those for transfer ofcare from a general practitioner to aphysician who specializes in treatingconditions like the work-related one, orthe need for a new physician when anemployee has moved. The employermay not authorize a change ofphysicians.

Directed Medical Examinations

§ 10.320 Can OWCP require an employeeto be examined by another physician?

OWCP sometimes needs a secondopinion from a medical specialist. Theemployee must submit to examinationby a qualified physician as often and atsuch times and places as OWCPconsiders reasonably necessary. Theemployee may have a qualifiedphysician, paid by him or her, presentat such examination. However, theemployee is not entitled to have anyoneelse present at the examination unlessOWCP decides that exceptionalcircumstances exist. For example, wherea hearing-impaired employee needs aninterpreter, the presence of aninterpreter would be allowed. Also,OWCP may send a case file for secondopinion review where actualexamination is not needed, or where theemployee is deceased.

§ 10.321 What happens if the opinion ofthe physician selected by OWCP differsfrom the opinion of the physician selectedby the employee?

(a) If one medical opinion holds moreprobative value, OWCP will base itsdetermination of entitlement on thatmedical conclusion (see § 10.502). Adifference in medical opinion sufficientto be considered a conflict occurs when

two reports of virtually equal weightand rationale reach opposingconclusions (see James P. Roberts, 31ECAB 1010 (1980)).

(b) If a conflict exists between themedical opinion of the employee’sphysician and the medical opinion ofeither a second opinion physician or anOWCP medical adviser or consultant,OWCP shall appoint a third physician tomake an examination (see § 10.502).This is called a referee examination.OWCP will select a physician who isqualified in the appropriate specialtyand who has had no prior connectionwith the case. The employee is notentitled to have anyone present at theexamination unless OWCP decides thatexceptional circumstances exist. Forexample, where a hearing-impairedemployee needs an interpreter, thepresence of an interpreter would beallowed. Also, a case file may be sent forreferee medical review where there is noneed for an actual examination, orwhere the employee is deceased.

§ 10.322 Who pays for second opinion andreferee examinations?

OWCP will pay second opinion andreferee medical specialists directly.OWCP will reimburse the employee allnecessary and reasonable expensesincident to such an examination,including transportation costs andactual wages lost for the time needed tosubmit to an examination required byOWCP.

§ 10.323 What are the penalties for failingto report for or obstructing a secondopinion or referee examination?

If an employee refuses to submit to orin any way obstructs an examinationrequired by OWCP, his or her right tocompensation under the FECA issuspended until such refusal orobstruction stops. The action of theemployee’s representative is consideredto be the action of the employee forpurposes of this section. The employeewill forfeit compensation otherwisepaid or payable under the FECA for theperiod of the refusal or obstruction, andany compensation already paid for thatperiod will be declared an overpaymentand will be subject to recovery pursuantto 5 U.S.C. 8129.

§ 10.324 May an employer require anemployee to undergo a physicalexamination in connection with a work-related injury?

The employer may have authorityindependent of the FECA to require theemployee to undergo a medicalexamination to determine whether he orshe meets the medical requirements ofthe position held or can perform theduties of that position. Nothing in the

FECA or in this part affects suchauthority. However, no agency-requiredexamination or related activity shallinterfere with the employee’s initialchoice of physician or the provision ofany authorized examination ortreatment, including the issuance ofForm CA–16.

Medical Reports

§ 10.330 What are the requirements formedical reports?

In all cases reported to OWCP, amedical report from the attendingphysician is required. This reportshould include:

(a) Dates of examination andtreatment;

(b) History given by the employee;(c) Physical findings;(d) Results of diagnostic tests;(e) Diagnosis;(f) Course of treatment;(g) A description of any other

conditions found but not due to theclaimed injury;

(h) The treatment given orrecommended for the claimed injury;

(i) The physician’s opinion, withmedical reasons, as to causalrelationship between the diagnosedcondition(s) and the factors orconditions of the employment;

(j) The extent of disability affectingthe employee’s ability to work due tothe injury;

(k) The prognosis for recovery; and(l) All other material findings.

§ 10.331 How and when should themedical report be submitted?

(a) Form CA–16 may be used for theinitial medical report; Form CA–20 maybe used for the initial report and forsubsequent reports; and Form CA–20amay be used where continuedcompensation is claimed. Use ofmedical report forms is not required,however. The report may also be madein narrative form on the physician’sletterhead stationery. The report shouldbear the physician’s signature orsignature stamp. OWCP may require anoriginal signature on the report.

(b) The report shall be submitteddirectly to OWCP as soon as possibleafter medical examination or treatmentis received, either by the employee orthe physician. (See also § 10.210.) Theemployer may request a copy of thereport from OWCP. The employershould use Form CA–17 to obtaininterim reports concerning the dutystatus of an employee with a disablinginjury.


§ 10.332 What additional medicalinformation will OWCP require to supportcontinuing payment of benefits?

In all cases of serious injury ordisease, especially those requiringhospital treatment or prolonged care,OWCP will request detailed narrativereports from the attending physician atperiodic intervals. The physician will beasked to describe continuing medicaltreatment for the condition accepted byOWCP, a prognosis, a description ofwork limitations, if any, and thephysician’s opinion as to the continuingcausal relationship between theemployee’s condition and factors of hisor her Federal employment.

§ 10.333 What additional medicalinformation will OWCP require to support aclaim for a schedule award?

To support a claim for a scheduleaward, a medical report must containaccurate measurements of the functionof the organ or member, in accordancewith the American MedicalAssociation’s Guides to the Evaluationof Permanent Impairment. Thesemeasurements may include: The actualdegree of loss of active or passivemotion or deformity; the amount ofatrophy; the decrease, if any, instrength; the disturbance of sensation;and pain due to nerve impairment.

Medical Bills

§ 10.335 How are medical bills submitted?Usually, medical providers submit

bills directly to OWCP. The rules forsubmitting and paying bills are stated insubpart I of this part. An employeeclaiming reimbursement of medicalexpenses should submit an itemized billas described in § 10.802.

§ 10.336 What are the time frames forsubmitting bills?

To be considered for payment, billsmust be submitted by the end of thecalendar year after the year when theexpense was incurred, or by the end ofthe calendar year after the year whenOWCP first accepted the claim ascompensable, whichever is later.

§ 10.337 If OWCP reimburses an employeeonly partially for a medical expense, mustthe provider refund the balance of theamount paid to the employee?

(a) The OWCP fee schedule setsmaximum limits on the amountspayable for many services (see § 10.805).The employee may be only partiallyreimbursed for medical expensesbecause the amount he or she paid tothe medical provider for a serviceexceeds the maximum allowable chargeset by the OWCP fee schedule.

(b) If this happens, OWCP shall advisethe employee of the maximum

allowable charge for the service inquestion and of his or her responsibilityto ask the provider to refund to theemployee, or credit to the employee’saccount, the amount he or she paidwhich exceeds the maximum allowablecharge. The provider may requestreconsideration of the fee determinationas set forth in § 10.812.

(c) If the provider does not refund tothe employee or credit to his or heraccount the amount of money paid inexcess of the charge which OWCPallows, the employee should submitdocumentation of the attempt to obtainsuch refund or credit to OWCP. OWCPmay make reasonable reimbursement tothe employee after reviewing the factsand circumstances of the case.

Subpart E—Compensation and RelatedBenefits

Compensation for Disability andImpairment

§ 10.400 What is total disability?

(a) Permanent total disability ispresumed to result from the loss of useof both hands, both arms, both feet, orboth legs, or the loss of sight of botheyes. However, the presumption ofpermanent total disability as a result ofsuch loss may be rebutted by evidenceto the contrary, such as evidence ofcontinued ability to work and to earnwages despite the loss.

(b) Temporary total disability isdefined as the inability to return to theposition held at the time of injury orearn equivalent wages, or to performother gainful employment, due to thework-related injury. Except as presumedunder paragraph (a) of this section, anemployee’s disability status is alwaysconsidered temporary pending return towork.

§ 10.401 When and how is compensationfor total disability paid?

(a) Compensation is payable when theemployee starts to lose pay if the injurycauses permanent disability or if payloss continues for more than 14 calendardays. Otherwise, compensation ispayable on the fourth day after paystops. Compensation may not be paidwhile an injured employee is in acontinuation of pay status or receivespay for leave.

(b) Compensation for total disability ispayable at the rate of 662⁄3 percent of thepay rate if the employee has nodependents, or 75 percent of the payrate if the employee has at least onedependent. (‘‘Dependents’’ are definedat 5 U.S.C. 8110(a).)

§ 10.402 What is partial disability?An injured employee who cannot

return to the position held at the timeof injury (or earn equivalent wages) dueto the work-related injury, but who isnot totally disabled for all gainfulemployment, is considered to bepartially disabled.

§ 10.403 When and how is compensationfor partial disability paid?

(a) 5 U.S.C. 8115 outlines howcompensation for partial disability isdetermined. If the employee has actualearnings which fairly and reasonablyrepresent his or her wage-earningcapacity, those earnings may form thebasis for payment of compensation forpartial disability. (See §§ 10.500 through10.520 concerning return to work.) If theemployee’s actual earnings do not fairlyand reasonably represent his or herwage-earning capacity, or if theemployee has no actual earnings, OWCPuses the factors stated in 5 U.S.C. 8115to select a position which represents hisor her wage-earning capacity. However,OWCP will not secure employment forthe employee in the position selectedfor establishing a wage-earning capacity.

(b) Compensation for partial disabilityis payable as a percentage of thedifference between the employee’s payrate for compensation purposes and theemployee’s wage-earning capacity. Thepercentage is 662⁄3 percent of thisdifference if the employee has nodependents, or 75 percent of thisdifference if the employee has at leastone dependent.

(c) The formula which OWCP uses tocompute the compensation payable forpartial disability employs the followingterms: Pay rate for compensationpurposes, which is defined in § 10.5(s)of this part; current pay rate, whichmeans the salary or wages for the jobheld at the time of injury at the time ofthe determination; and earnings, whichmeans the employee’s actual earnings,or the salary or pay rate of the positionselected by OWCP as representing theemployee’s wage-earning capacity.

(d) The employee’s wage-earningcapacity in terms of percentage iscomputed by dividing the employee’searnings by the current pay rate. Thecomparison of earnings and ‘‘current’’pay rate for the job held at the time ofinjury need not be made as of thebeginning of partial disability. OWCPmay use any convenient date for makingthe comparison as long as both wagerates are in effect on the date used forcomparison.

(e) The employee’s wage-earningcapacity in terms of dollars is computedby first multiplying the pay rate forcompensation purposes by the


percentage of wage-earning capacity.The resulting dollar amount is thensubtracted from the pay rate forcompensation purposes to obtain theemployee’s loss of wage-earningcapacity.

§ 10.404 When and how is compensationfor a schedule impairment paid?

Compensation is provided forspecified periods of time for thepermanent loss or loss of use of certainmembers, organs and functions of thebody. Such loss or loss of use is knownas permanent impairment.Compensation for proportionate periodsof time is payable for partial loss or lossof use of each member, organ orfunction. OWCP evaluates the degree ofimpairment to schedule members,organs and functions as defined in 5U.S.C. 8107 according to the standardsset forth in the specified (by OWCP)edition of the American MedicalAssociation’s Guides to the Evaluationof Permanent Impairment.

(a) 5 U.S.C. 8107(c) provides a list ofschedule members. Pursuant to theauthority provided by 5 U.S.C.8107(c)(22), the Secretary has added thefollowing organs to the compensationschedule for injuries that were sustainedon or after September 7, 1974:

Member Weeks

Breast (one) .................................. 52Kidney (one) ................................. 156Larynx ........................................... 160Lung (one) .................................... 156Penis ............................................. 205Testicle (one) ................................ 52Tongue .......................................... 160Ovary (one) ................................... 52Uterus/cervix and vulva/vagina ..... 205

(b) Compensation for schedule awardsis payable at 662⁄3 percent of theemployee’s pay, or 75 percent of the paywhen the employee has at least onedependent.

(c) The period of compensationpayable under 5 U.S.C. 8107(c) shall bereduced by the period of compensationpaid or payable under the schedule foran earlier injury if:

(1) Compensation in both cases is forimpairment of the same member orfunction or different parts of the samemember or function, or fordisfigurement; and

(2) OWCP finds that compensationpayable for the later impairment inwhole or in part would duplicate thecompensation payable for the pre-existing impairment.

(d) Compensation not to exceed$3,500 may be paid for seriousdisfigurement of the face, head or neck

which is likely to handicap a person insecuring or maintaining employment.

§ 10.405 Who is considered a dependent ina claim based on disability or impairment?

(a) Dependents include a wife orhusband; an unmarried child under 18years of age; an unmarried child over 18who is incapable of self-support; astudent, until he or she reaches 23 yearsof age or completes four years of schoolbeyond the high school level; or awholly dependent parent.

(b) Augmented compensation payablefor an unmarried child, which wouldotherwise terminate when the childreached the age of 18, may be continuedwhile the child is a student as definedin 5 U.S.C. 8101(17).

§ 10.406 What are the maximum andminimum rates of compensation indisability cases?

(a) Compensation for total or partialdisability may not exceed 75 percent ofthe basic monthly pay of the higheststep of grade 15 of the GeneralSchedule. (Basic monthly pay does notinclude locality adjustments.) However,this limit does not apply to disabilitysustained in the performance of dutywhich was due to an assault whichoccurred during an attemptedassassination of a Federal officialdescribed under 10 U.S.C. 351(a) or1751(a).

(b) Compensation for total disabilitymay not be less than 75 percent of thebasic monthly pay of the first step ofgrade 2 of the General Schedule oractual pay, whichever is less. (Basicmonthly pay does not include localityadjustments.)

Compensation for Death

§ 10.410 Who is entitled to compensationin case of death, and what are the rates ofcompensation payable in death cases?

(a) If there is no child entitled tocompensation, the employee’s survivingspouse will receive compensation equalto 50 percent of the employee’s monthlypay until death or remarriage beforereaching age 55. Upon remarriage, thesurviving spouse will be paid a lumpsum equal to 24 times the monthlycompensation payment (excludingcompensation payable on account ofanother individual) to which thesurviving spouse was entitledimmediately before the remarriage. Ifremarriage occurs at age 55 or older, thelump-sum payment will not be paid andcompensation will continue until death.

(b) If there is a child entitled tocompensation, the compensation for thesurviving spouse will equal 45 percentof the employee’s monthly pay plus 15

percent for each child, but the totalpercentage may not exceed 75 percent.

(c) If there is a child entitled tocompensation and no surviving spouse,compensation for one child will equal40 percent of the employee’s monthlypay. Fifteen percent will be awarded foreach additional child, not to exceed 75percent, the total amount to be sharedequally among all children.

(d) If there is no child or survivingspouse entitled to compensation, theparents will receive compensation equalto 25 percent of the employee’s monthlypay if one parent was wholly dependenton the employee at the time of deathand the other was not dependent to anyextent, or 20 percent each if both werewholly dependent on the employee, ora proportionate amount in the discretionof the Director if one or both werepartially dependent on the employee. Ifthere is a child or surviving spouseentitled to compensation, the parentswill receive so much of thecompensation described in thepreceding sentence as, when added tothe total percentages payable to thesurviving spouse and children, will notexceed a total of 75 percent of theemployee’s monthly pay.

(e) If there is no child, survivingspouse or dependent parent entitled tocompensation, the brothers, sisters,grandparents and grandchildren willreceive compensation equal to 20percent of the employee’s monthly payto such dependent if one was whollydependent on the employee at the timeof death; or 30 percent if more than onewas wholly dependent, divided amongsuch dependents equally; or 10 percentif no one was wholly dependent but oneor more was partly dependent, dividedamong such dependents equally. If thereis a child, surviving spouse ordependent parent entitled tocompensation, the brothers, sisters,grandparents and grandchildren willreceive so much of the compensationdescribed in the preceding sentence as,when added to the total percentagespayable to the children, survivingspouse and dependent parents, will notexceed a total of 75 percent of theemployee’s monthly pay.

(f) A child, brother, sister orgrandchild may be entitled to receivedeath benefits until death, marriage, orreaching age 18. Regarding entitlementafter reaching age 18, refer to § 10.417 ofthese regulations.

§ 10.411 What are the maximum andminimum rates of compensation in deathcases?

(a) Compensation for death may notexceed the employee’s pay or 75 percentof the basic monthly pay of the highest


step of grade 15 of the GeneralSchedule, except that compensationmay exceed the employee’s basicmonthly pay if such excess is created byauthorized cost-of-living increases.(Basic monthly pay does not includelocality adjustments.) However, themaximum limit does not apply whenthe death occurred during anassassination of a Federal officialdescribed under 18 U.S.C. 351(a) or 18U.S.C. 1751(a).

(b) Compensation for death iscomputed on a minimum pay rate equalto the basic monthly pay of an employeeat the first step of grade 2 of the GeneralSchedule. (Basic monthly pay does notinclude locality adjustments.)

§ 10.412 Will OWCP pay the costs of burialand transportation of the remains?

In a case accepted for death benefits,OWCP will pay up to $800 for funeraland burial expenses. When anemployee’s home is within the UnitedStates and the employee dies outsidethe United States, or away from home orthe official duty station, an additionalamount may be paid for transporting theremains to the employee’s home. Anadditional amount of $200 is paid to thepersonal representative of the decedentfor reimbursement of the costs ofterminating the decedent’s status as anemployee of the United States.

§ 10.413 If a person dies while receiving aschedule award, to whom is the balance ofthe schedule award payable?

The circumstances under which thebalance of a schedule award may bepaid to an employee’s survivors aredescribed in 5 U.S.C. 8109. Therefore, ifthere is no surviving spouse or child,OWCP will pay benefits as follows:

(a) To the parent, or parents, whollydependent for support on the decedentin equal shares with any whollydependent brother, sister, grandparentor grandchild;

(b) To the parent, or parents, partiallydependent for support on the decedentin equal shares when there are nowholly dependent brothers, sisters,grandparents or grandchildren (or otherwholly dependent parent); and

(c) To the parent, or parents, partiallydependent upon the decedent, 25percent of the amount payable, sharedequally, and the remaining 75 percent toany wholly dependent brother, sister,grandparent or grandchild (or whollydependent parent), shared equally.

§ 10.414 What reports of dependents areneeded in death cases?

If a beneficiary is receivingcompensation benefits on account of anemployee’s death, OWCP will ask himor her to complete a report once each

year on Form CA–12. The reportrequires the beneficiary to note changesin marital status and dependents. If thebeneficiary fails to submit the form (oran equivalent written statement) within30 days of the date of request, OWCPshall suspend compensation until therequested form or equivalent writtenstatement is received. The suspensionwill include compensation payable foror on behalf of another person (forexample, compensation payable to awidow on behalf of a child). When theform or statement is received,compensation will be reinstated at theappropriate rate retroactive to the dateof suspension, provided the beneficiaryis entitled to such compensation.

§ 10.415 What must a beneficiary do if thenumber of beneficiaries decreases?

The circumstances under whichcompensation on account of death shallbe terminated are described in 5 U.S.C.8133(b). A beneficiary in a claim fordeath benefits should promptly notifyOWCP of any event which would affecthis or her entitlement to continuedcompensation. The terms ‘‘marriage’’and ‘‘remarriage’’ include common-lawmarriage as recognized and defined byState law in the State where thebeneficiary resides. If a beneficiary, orsomeone acting on his or her behalf,receives a check which includespayment of compensation for any periodafter the date when entitlement ended,he or she must promptly return thecheck to OWCP.

§ 10.416 How does a change in the numberof beneficiaries affect the amount ofcompensation paid to the otherbeneficiaries?

If compensation to a beneficiary isterminated, the amount of compensationpayable to one or more of the remainingbeneficiaries may be reapportioned.Similarly, the birth of a posthumouschild may result in a reapportionment ofthe amount of compensation payable toother beneficiaries. The parent, orsomeone acting on the child’s behalf,shall promptly notify OWCP of the birthand submit a copy of the birthcertificate.

§ 10.417 What reports are needed whencompensation payments continue forchildren over age 18?

(a) Compensation payable on behalf ofa child, brother, sister, or grandchild,which would otherwise end when theperson reaches 18 years of age, shall becontinued if and for so long as he or sheis not married and is either a student asdefined in 5 U.S.C. 8101(17), orphysically or mentally incapable of self-support.

(b) At least twice each year, OWCPwill ask a beneficiary receivingcompensation based on the studentstatus of a dependent to provide proofof continuing entitlement to suchcompensation, including certification ofschool enrollment.

(c) Likewise, at least twice each year,OWCP will ask a beneficiary or legalguardian receiving compensation basedon a dependent’s physical or mentalinability to support himself or herself tosubmit a medical report verifying thatthe dependent’s medical conditionpersists and that it continues topreclude self-support.

Adjustments to Compensation

§ 10.420 How are cost-of-livingadjustments applied?

(a) In cases of disability, a beneficiaryis eligible for cost-of-living adjustmentsunder 5 U.S.C. 8146a where injury-related disability began more than oneyear prior to the date the cost-of-livingadjustment took effect. The employee’suse of continuation of pay as providedby 5 U.S.C. 8118, or of sick or annualleave, during any part of the period ofdisability does not affect thecomputation of the one-year period.

(b) Where an injury does not result indisability but compensation is payablefor permanent impairment of a coveredmember, organ or function of the body,a beneficiary is eligible for cost-of-livingadjustments under 5 U.S.C. 8146a wherethe award for such impairment beganmore than one year prior to the date thecost-of-living adjustment took effect.

(c) In cases of recurrence of disability,where the pay rate for compensationpurposes is the pay rate at the timedisability recurs, a beneficiary is eligiblefor cost-of-living adjustments under 5U.S.C. 8146a where the effective date ofthat pay rate began more than one yearprior to the date the cost-of livingadjustment took effect.

(d) In cases of death, entitlement tocost-of-living adjustments under 5U.S.C. 8146a begins with the first suchadjustment occurring more than oneyear after the date of death. However, ifthe death was preceded by a period ofinjury-related disability, compensationpayable to the survivors will beincreased by the same percentages asthe cost-of-living adjustments paid orpayable to the deceased employee forthe period of disability, as well as bysubsequent cost-of-living adjustments towhich the survivors would otherwise beentitled.


§ 10.421 May a beneficiary receive otherkinds of payments from the FederalGovernment concurrently withcompensation?

(a) 5 U.S.C. 8116(a) provides that abeneficiary may not receive wage-losscompensation concurrently with aFederal retirement or survivor annuity.The beneficiary must elect the benefitthat he or she wishes to receive, and theelection, once made, is revocable.

(b) An employee may receivecompensation concurrently withmilitary retired pay, retirement pay,retainer pay or equivalent pay forservice in the Armed Forces or otheruniformed services, subject to thereduction of such pay in accordancewith 5 U.S.C. 5532(b).

(c) An employee may not receivecompensation for total disabilityconcurrently with severance pay orseparation pay. However, an employeemay concurrently receive compensationfor partial disability or permanentimpairment to a schedule member,organ or function with severance pay orseparation pay.

(d) Pursuant to 5 U.S.C. 8116(d), abeneficiary may receive compensationunder the FECA for either the death ordisability of an employee concurrentlywith benefits under title II of the SocialSecurity Act on account of the age ordeath of such employee. However, thisprovision of the FECA also requiresOWCP to reduce the amount of any suchcompensation by the amount of anySocial Security Act benefits that areattributable to the Federal service of theemployee.

(e) To determine the employee’sentitlement to compensation, OWCPmay require an employee to submit anaffidavit or statement as to the receipt ofany Federally funded or Federallyassisted benefits. If an employee fails tosubmit such affidavit or statementwithin 30 days of the date of therequest, his or her right to compensationshall be suspended until such time asthe requested affidavit or statement isreceived. At that time compensationwill be reinstated retroactive to the dateof suspension provided the employee isentitled to such compensation.

§ 10.422 May compensation payments beissued in a lump sum?

(a) In exercise of the discretionafforded under 5 U.S.C. 8135(a), OWCPhas determined that lump-sumpayments will not be made to personsentitled to wage-loss benefits (that is,those payable under 5 U.S.C. 8105 and8106). Therefore, when OWCP receivesrequests for lump-sum payments forwage-loss benefits, OWCP will notexercise further discretion in the matter.

This determination is based on severalfactors, including:

(1) The purpose of the FECA, whichis to replace lost wages;

(2) The prudence of providing wage-loss benefits on a regular, recurringbasis; and

(3) The high cost of the long-termborrowing that is needed to pay outlarge lump sums.

(b) However, a lump-sum paymentmay be made to an employee entitled toa schedule award under 5 U.S.C. 8107where OWCP determines that such apayment is in the employee’s bestinterest. Lump-sum payments ofschedule awards generally will beconsidered in the employee’s bestinterest only where the employee doesnot rely upon compensation paymentsas a substitute for lost wages (that is, theemployee is working or is receivingannuity payments). An employeepossesses no absolute right to a lump-sum payment of benefits payable under5 U.S.C. 8107.

(c) Lump-sum payments to survivingspouses are addressed in 5 U.S.C.8135(b).

§ 10.423 May compensation payments beassigned to, or attached by, creditors?

(a) As a general rule, compensationand claims for compensation are exemptfrom the claims of private creditors.This rule does not apply to claimssubmitted by Federal agencies. Further,any attempt by a FECA beneficiary toassign his or her claim is null and void.However, pursuant to provisions of theSocial Security Act, 42 U.S.C. 659, andregulations issued by the Office ofPersonnel Management (OPM) at 5 CFRpart 581, FECA benefits, includingsurvivor’s benefits, may be garnished tocollect overdue alimony and childsupport payments.

(b) Garnishment for child support andalimony may be requested by providinga copy of the State agency or court orderto the district office handling the FECAclaim.

§ 10.424 May someone other than thebeneficiary be designated to receivecompensation payments?

A beneficiary may be incapable ofmanaging or directing the managementof his or her benefits because of amental or physical disability, or becauseof legal incompetence, or because he orshe is under 18 years of age. In thissituation, absent the appointment of aguardian or other party to manage thefinancial affairs of the claimant by acourt or administrative body authorizedto do so, OWCP in its sole discretionmay approve a person to serve as therepresentative payee for funds due thebeneficiary.

§ 10.425 May compensation be claimed forperiods of restorable leave?

The employee may claimcompensation for periods of annual andsick leave which are restorable inaccordance with the rules of theemploying agency. Forms CA–7a andCA–7b are used for this purpose.

Overpayments

§ 10.430 How does OWCP notify anindividual of a payment made?

(a) In addition to providing narrativedescriptions to recipients of benefitspaid or payable, OWCP includes oneach periodic check a clear indication ofthe period for which payment is beingmade. A form is sent to the recipientwith each supplemental check whichstates the date and amount of thepayment and the period for whichpayment is being made. For paymentssent by electronic funds transfer (EFT),a notification of the date and amount ofpayment appears on the statement fromthe recipient’s financial institution.

(b) By these means, OWCP puts therecipient on notice that a payment wasmade and the amount of the payment.If the amount received differs from theamount indicated on the written noticeor bank statement, the recipient isresponsible for notifying OWCP of thedifference. Absent affirmative evidenceto the contrary, the beneficiary will bepresumed to have received the notice ofpayment, whether mailed or transmittedelectronically.

§ 10.431 What does OWCP do when anoverpayment is identified?

Before seeking to recover anoverpayment or adjust benefits, OWCPwill advise the beneficiary in writingthat:

(a) The overpayment exists, and theamount of overpayment;

(b) A preliminary finding showseither that the individual was or was notat fault in the creation of theoverpayment;

(c) He or she has the right to inspectand copy Government records relatingto the overpayment; and

(d) He or she has the right to presentevidence which challenges the fact oramount of the overpayment, and/orchallenges the preliminary finding thathe or she was at fault in the creation ofthe overpayment. He or she may alsorequest that recovery of theoverpayment be waived.

§ 10.432 How can an individual presentevidence to OWCP in response to apreliminary notice of an overpayment?

The individual may present thisevidence to OWCP in writing or at a pre-recoupment hearing. The evidence must


be presented or the hearing requestedwithin 30 days of the date of the writtennotice of overpayment. Failure torequest the hearing within this 30-daytime period shall constitute a waiver ofthat right.

§ 10.433 Under what circumstances canOWCP waive recovery of an overpayment?

(a) OWCP may consider waiving anoverpayment only if the individual towhom it was made was not at fault inaccepting or creating the overpayment.Each recipient of compensation benefitsis responsible for taking all reasonablemeasures to ensure that payments he orshe receives from OWCP are proper. Therecipient must show good faith andexercise a high degree of care inreporting events which may affectentitlement to or the amount of benefits.A recipient who has done any of thefollowing will be found to be at faultwith respect to creating anoverpayment:

(1) Made an incorrect statement as toa material fact which he or she knew orshould have known to be incorrect; or

(2) Failed to provide informationwhich he or she knew or should haveknown to be material; or

(3) Accepted a payment which he orshe knew or should have known to beincorrect. (This provision applies onlyto the overpaid individual.)

(b) Whether or not OWCP determinesthat an individual was at fault withrespect to the creation of anoverpayment depends on thecircumstances surrounding theoverpayment. The degree of careexpected may vary with the complexityof those circumstances and theindividual’s capacity to realize that heor she is being overpaid.

§ 10.434 If OWCP finds that the recipient ofan overpayment was not at fault, whatcriteria are used to decide whether to waiverecovery of it?

If OWCP finds that the recipient of anoverpayment was not at fault,repayment will still be required unless:

(a) Adjustment or recovery of theoverpayment would defeat the purposeof the FECA (see § 10.436), or

(b) Adjustment or recovery of theoverpayment would be against equityand good conscience (see § 10.437).

§ 10.435 Is an individual responsible for anoverpayment that resulted from an errormade by OWCP or another Governmentagency?

(a) The fact that OWCP may haveerred in making the overpayment, orthat the overpayment may have resultedfrom an error by another Governmentagency, does not by itself relieve theindividual who received the

overpayment from liability forrepayment if the individual also was atfault in accepting the overpayment.

(b) However, OWCP may find that theindividual was not at fault if failure toreport an event affecting compensationbenefits, or acceptance of an incorrectpayment, occurred because:

(1) The individual relied onmisinformation given in writing byOWCP (or by another Governmentagency which he or she had reason tobelieve was connected with theadministration of benefits) as to theinterpretation of a pertinent provision ofthe FECA or its regulations; or

(2) OWCP erred in calculating cost-of-living increases, schedule award lengthand/or percentage of impairment, or lossof wage-earning capacity.

§ 10.436 Under what circumstances wouldrecovery of an overpayment defeat thepurpose of the FECA?

Recovery of an overpayment willdefeat the purpose of the FECA if suchrecovery would cause hardship to acurrently or formerly entitledbeneficiary because:

(a) The beneficiary from whom OWCPseeks recovery needs substantially all ofhis or her current income (includingcompensation benefits) to meet currentordinary and necessary living expenses;and

(b) The beneficiary’s assets do notexceed a specified amount asdetermined by OWCP from datafurnished by the Bureau of LaborStatistics. A higher amount is specifiedfor a beneficiary with one or moredependents.

§ 10.437 Under what circumstances wouldrecovery of an overpayment be againstequity and good conscience?

(a) Recovery of an overpayment isconsidered to be against equity andgood conscience when any individualwho received an overpayment wouldexperience severe financial hardship inattempting to repay the debt.

(b) Recovery of an overpayment isalso considered to be against equity andgood conscience when any individual,in reliance on such payments or onnotice that such payments would bemade, gives up a valuable right orchanges his or her position for theworse. In making such a decision,OWCP does not consider theindividual’s current ability to repay theoverpayment.

(1) To establish that a valuable righthas been relinquished, it must be shownthat the right was in fact valuable, thatit cannot be regained, and that theaction was based chiefly or solely inreliance on the payments or on the

notice of payment. Donations tocharitable causes or gratuitous transfersof funds to other individuals are notconsidered relinquishments of valuablerights.

(2) To establish that an individual’sposition has changed for the worse, itmust be shown that the decision madewould not otherwise have been madebut for the receipt of benefits, and thatthis decision resulted in a loss.

§ 10.438 Can OWCP require the individualwho received the overpayment to submitadditional financial information?

(a) The individual who received theoverpayment is responsible forproviding information about income,expenses and assets as specified byOWCP. This information is needed todetermine whether or not recovery of anoverpayment would defeat the purposeof the FECA, or be against equity andgood conscience. This information willalso be used to determine the repaymentschedule, if necessary.

(b) Failure to submit the requestedinformation within 30 days of therequest shall result in denial of waiver,and no further request for waiver shallbe considered until the requestedinformation is furnished.

§ 10.439 What is addressed at a pre-recoupment hearing?

At a pre-recoupment hearing, theOWCP representative will consider allissues in the claim on which a formaldecision has been issued. Such ahearing will thus fulfill OWCP’sobligation to provide pre-recoupmentrights and a hearing under 5 U.S.C.8124(b). Pre-recoupment hearings shallbe conducted in exactly the samemanner as provided in § 10.615 through§ 10.622.

§ 10.440 How does OWCP communicateits final decision concerning recovery of anoverpayment, and what appeal rightaccompanies it?

(a) OWCP will send a copy of the finaldecision to the individual from whomrecovery is sought; his or herrepresentative, if any; and theemploying agency.

(b) The only review of a final decisionconcerning an overpayment is to theEmployees’ Compensation AppealsBoard. The provisions of 5 U.S.C.8124(b) (concerning hearings) and 5U.S.C. 8128(a) (concerningreconsiderations) do not apply to sucha decision.

§ 10.441 How are overpayments collected?(a) When an overpayment has been

made to an individual who is entitled tofurther payments, the individual shallrefund to OWCP the amount of the


overpayment as soon as the error isdiscovered or his or her attention iscalled to same. If no refund is made,OWCP shall decrease later payments ofcompensation, taking into account theprobable extent of future payments, therate of compensation, the financialcircumstances of the individual, andany other relevant factors, so as tominimize any hardship. Should theindividual die before collection hasbeen completed, collection shall bemade by decreasing later payments, ifany, payable under the FECA withrespect to the individual’s death.

(b) When an overpayment has beenmade to an individual who is notentitled to further payments, theindividual shall refund to OWCP theamount of the overpayment as soon asthe error is discovered or his or herattention is called to same. Theoverpayment is subject to the provisionsof the Federal Claims Collection Act of1966 (as amended) and may be reportedto the Internal Revenue Service asincome. If the individual fails to makesuch refund, OWCP may recover thesame through any available means,including offset of salary, annuitybenefits, or other Federal payments,including tax refunds as authorized bythe Tax Refund Offset Program, orreferral of the debt to a collectionagency or to the Department of Justice.

Subpart F—Continuing Benefits

Rules and Evidence

§ 10.500 What are the basic rulesgoverning continuing receipt ofcompensation benefits and return to work?

(a) Benefits are available only whilethe effects of a work-related conditioncontinue. Compensation for wage lossdue to disability is available only forany periods during which anemployee’s work-related medicalcondition prevents him or her fromearning the wages earned before thework-related injury. Payment of medicalbenefits is available for all treatmentnecessary due to a work-related medicalcondition.

(b) Each disabled employee isobligated to perform such work as he orshe can, and OWCP’s goal is to returneach disabled employee to suitable workas soon as he or she is medically able.In determining what constitutes‘‘suitable work’’ for a particular disabledemployee, OWCP considers theemployee’s current physical limitations,whether the work is available within theemployee’s demonstrated commutingarea, the employee’s qualifications toperform such work, and other relevantfactors. (See § 10.508 with respect to thepayment of relocation expenses.)

§ 10.501 What medical evidence isnecessary to support continuing receipt ofcompensation benefits?

(a) The employee is responsible forproviding sufficient medical evidence tojustify payment of any compensationsought.

(1) To support payment of continuingcompensation, narrative medicalevidence must be submitted wheneverOWCP requests it but ordinarily not lessthan once a year. It must contain aphysician’s rationalized opinion as towhether the specific period of allegeddisability is causally related to theemployee’s accepted injury or illness.

(2) The physician’s opinion must bebased on the facts of the case and thecomplete medical background of theemployee, must be one of reasonablemedical certainty and must includeobjective findings in support of itsconclusions. Subjective complaints ofpain are not sufficient, in and ofthemselves, to support payment ofcontinuing compensation. Likewise,medical limitations based solely on thefear of a possible future injury are alsonot sufficient to support payment ofcontinuing compensation. See § 10.330for a fuller discussion of medicalevidence.

(b) OWCP may require any kind ofnon-invasive testing to determine theemployee’s functional capacity. Failureto undergo such testing will result in asuspension of benefits. In addition,OWCP may direct the employee toundergo a second opinion or refereeexamination in any case it deemsappropriate (see §§ 10.320 and 10.321).

§ 10.502 How does OWCP evaluateevidence in support of continuing receipt ofcompensation benefits?

In considering the medical and factualevidence, OWCP will weigh theprobative value of the attendingphysician’s report, any second opinionphysician’s report, any other medicalreports, or any other evidence in thefile. If OWCP determines that themedical evidence supporting oneconclusion is more consistent, logical,and well-reasoned than evidencesupporting a contrary conclusion,OWCP will use the conclusion that issupported by the weight of the medicalevidence as the basis for awarding ordenying further benefits. If medicalreports that are equally well-reasonedsupport inconsistent determinations ofan issue under consideration, OWCPwill direct the employee to undergo areferee examination to resolve the issue.The results of the referee examinationwill be given special weight indetermining the issue.

§ 10.503 Under what circumstances mayOWCP reduce or terminate compensationbenefits?

Once OWCP has advised theemployee that it has accepted a claimand has either approved continuation ofpay or paid medical benefits orcompensation, benefits will not beterminated or reduced unless the weightof the evidence establishes that:

(a) The disability for whichcompensation was paid has ceased;

(b) The disabling condition is nolonger causally related to theemployment;

(c) The employee is only partiallydisabled;

(d) The employee has returned towork;

(e) The beneficiary was convicted offraud in connection with a claim underthe FECA, or the beneficiary wasincarcerated based on any felonyconviction; or

(f) OWCP’s initial decision was inerror.

Return to Work—Employer’sResponsibilities

§ 10.505 What actions must the employertake?

Upon authorizing medical care, theemployer should advise the employee inwriting as soon as possible of his or herobligation to return to work under§ 10.210 and as defined in this subpart.The term ‘‘return to work’’ as used inthis subpart is not limited to returningto work at the employee’s normalworksite or usual position, but mayinclude returning to work at otherlocations and in other positions. Ingeneral, the employer should make allreasonable efforts to place the employeein his or her former or an equivalentposition, in accordance with 5 U.S.C.8151(b)(2), if the employee has fullyrecovered after one year. The Office ofPersonnel Management (not OWCP)administers this provision.

(a) Where the employer has specificalternative positions available forpartially disabled employees, theemployer should advise the employee inwriting of the specific duties andphysical requirements of thosepositions.

(b) Where the employer has nospecific alternative positions availablefor an employee who can performrestricted or limited duties, theemployer should advise the employee ofany accommodations the agency canmake to accommodate the employee’slimitations due to the injury.


§ 10.506 May the employer monitor theemployee’s medical care?

The employer may monitor theemployee’s medical progress and dutystatus by obtaining periodic medicalreports. Form CA–17 is usuallyadequate for this purpose. To aid inreturning an injured employee tosuitable employment, the employer mayalso contact the employee’s physician inwriting concerning the work limitationsimposed by the effects of the injury andpossible job assignments. (However, theemployer shall not contact thephysician by telephone or throughpersonal visit.) When such contact ismade, the employer shall send a copy ofany such correspondence to OWCP andthe employee, as well as a copy of thephysician’s response when received.The employer may also contact theemployee at reasonable intervals torequest periodic medical reportsaddressing his or her ability to return towork.

§ 10.507 How should the employer makean offer of suitable work?

Where the attending physician orOWCP notifies the employer in writingthat the employee is partially disabled(that is, the employee can perform somework but not return to the position heldat date of injury), the employer shouldact as follows:

(a) If the employee can perform in aspecific alternative position available inthe agency, and the employer hasadvised the employee in writing of thespecific duties and physicalrequirements, the employer shall notifythe employee in writing immediately ofthe date of availability.

(b) If the employee can performrestricted or limited duties, theemployer should determine whethersuch duties are available or whether anexisting job can be modified. If so, theemployer shall advise the employee inwriting of the duties, their physicalrequirements and availability.

(c) The employer must make any joboffer in writing. However, the employermay make a job offer verbally as long asit provides the job offer to the employeein writing within two business days ofthe verbal job offer.

(d) The offer must include adescription of the duties of the position,the physical requirements of thoseduties, and the date by which theemployee is either to return to work ornotify the employer of his or herdecision to accept or refuse the job offer.The employer must send a completecopy of any job offer to OWCP when itis sent to the employee.

§ 10.508 May relocation expenses be paidfor an employee who would need to moveto accept an offer of reemployment?

If possible, the employer should offersuitable reemployment in the locationwhere the employee currently resides. Ifthis is not practical, the employer mayoffer suitable reemployment at theemployee’s former duty station or otherlocation. Where the distance betweenthe location of the offered job and thelocation where the employee currentlyresides is at least 50 miles, OWCP maypay such relocation expenses as areconsidered reasonable and necessary ifthe employee has been terminated fromthe agency’s employment rolls andwould incur relocation expenses byaccepting the offered reemployment.OWCP may also pay such relocationexpenses when the new employer isother than a Federal employer. OWCPwill notify the employee that relocationexpenses are payable if it makes afinding that the job is suitable. Todetermine whether a relocation expenseis reasonable and necessary, OWCPshall use as a guide the Federal travelregulations for permanent changes ofduty station.

§ 10.509 If an employee’s light-duty job iseliminated due to downsizing, what is theeffect on compensation?

(a) In general, an employee will not beconsidered to have experienced acompensable recurrence of disability asdefined in § 10.5(x) merely because hisor her employer has eliminated theemployee’s light-duty position in areduction-in-force or some other form ofdownsizing. When this occurs, OWCPwill determine the employee’s wage-earning capacity based on his or heractual earnings in such light-dutyposition if this determination isappropriate on the basis that suchearnings fairly and reasonably representthe employee’s wage-earning capacityand such a determination has notalready been made.

(b) For the purposes of this sectiononly, a light-duty position means aclassified position to which the injuredemployee has been formally reassignedthat conforms to the establishedphysical limitations of the injuredemployee and for which the employerhas already prepared a written positiondescription such that the positionconstitutes ‘‘regular’’ Federalemployment. In the absence of a ‘‘light-duty position’’ as described in thisparagraph, OWCP will assume that theemployee was instead engaged in non-competitive employment which doesnot represent the employee’s wage-earning capacity, i.e., work of the typeprovided to injured employees who

cannot otherwise be employed by theFederal Government or in any well-known branch of the general labormarket.

Return to Work—Employee’sResponsibilities

§ 10.515 What actions must the employeetake with respect to returning to work?

(a) If an employee can resume regularFederal employment, he or she must doso. No further compensation for wageloss is payable once the employee hasrecovered from the work-related injuryto the extent that he or she can performthe duties of the position held at thetime of injury, or earn equivalent wages.

(b) If an employee cannot return to thejob held at the time of injury due topartial disability from the effects of thework-related injury, but has recoveredenough to perform some type of work,he or she must seek work. In thealternative, the employee must acceptsuitable work offered to him or her. (See§ 10.500 for a definition of ‘‘suitablework’’.) This work may be with theoriginal employer or through jobplacement efforts made by or on behalfof OWCP.

(c) If the employer has advised anemployee in writing that specificalternative positions exist within theagency, the employee shall provide thedescription and physical requirementsof such alternate positions to theattending physician and ask whetherand when he or she will be able toperform such duties.

(d) If the employer has advised anemployee that it is willing toaccommodate his or her worklimitations, the employee shall soadvise the attending physician and askhim or her to specify the limitationsimposed by the injury. The employee isresponsible for advising the employerimmediately of these limitations.

(e) From time to time, OWCP mayrequire the employee to report his or herefforts to obtain suitable employment,whether with the Federal Government,State and local Governments, or in theprivate sector.

§ 10.516 How will an employee know ifOWCP considers a job to be suitable?

OWCP shall advise the employee thatit has found the offered work to besuitable and afford the employee 30days to accept the job or present anyreasons to counter OWCP’s finding ofsuitability. If the employee presentssuch reasons, and OWCP determinesthat the reasons are unacceptable, it willnotify the employee of thatdetermination and that he or she has 15days in which to accept the offeredwork without penalty. At that point in


time, OWCP’s notification need not statethe reasons for finding that theemployee’s reasons are not acceptable.

§ 10.517 What are the penalties forrefusing to accept a suitable job offer?

(a) 5 U.S.C. 8106(c) provides that apartially disabled employee who refusesto seek suitable work, or refuses to orneglects to work after suitable work isoffered to or arranged for him or her, isnot entitled to compensation. Anemployee who refuses or neglects towork after suitable work has beenoffered or secured for him or her has theburden to show that this refusal orfailure to work was reasonable orjustified.

(b) After providing the two noticesdescribed in § 10.516, OWCP willterminate the employee’s entitlement tofurther compensation under 5 U.S.C.8105, 8106, and 8107, as provided by 5U.S.C. 8106(c)(2). However, theemployee remains entitled to medicalbenefits as provided by 5 U.S.C. 8103.

§ 10.518 Does OWCP provide services tohelp employees return to work?

(a) OWCP may, in its discretion,provide vocational rehabilitationservices as authorized by 5 U.S.C. 8104.These services include assistance fromregistered nurses working under thedirection of OWCP. Among other things,these nurses visit the worksite, ensurethat the duties of the position do notexceed the medical limitations asrepresented by the weight of medicalevidence established by OWCP, andaddress any problems the employee mayhave in adjusting to the work setting.The nurses do not evaluate medicalevidence; OWCP claims staff performthis function.

(b) Vocational rehabilitation servicesmay also include vocational evaluation,testing, training, and placement serviceswith either the original employer or anew employer, when the injuredemployee cannot return to the job heldat the time of injury. These services alsoinclude functional capacity evaluations,which help to tailor individualrehabilitation programs to employees’physical reconditioning and behavioralmodification needs, and help employeesto meet the demands of current orpotential jobs.

§ 10.519 What action will OWCP take if anemployee refuses to undergo vocationalrehabilitation?

Under 5 U.S.C. 8104(a), OWCP maydirect a permanently disabled employeeto undergo vocational rehabilitation. Toensure that vocational rehabilitationservices are available to all who mightbe entitled to benefit from them, aninjured employee who has a loss of

wage-earning capacity shall bepresumed to be ‘‘permanentlydisabled,’’ for purposes of this sectiononly, unless and until the employeeproves that the disability is notpermanent. If an employee without goodcause fails or refuses to apply for,undergo, participate in, or continue toparticipate in a vocational rehabilitationeffort when so directed, OWCP will actas follows:

(a) Where a suitable job has beenidentified, OWCP will reduce theemployee’s future monetarycompensation based on the amountwhich would likely have been his or herwage-earning capacity had he or sheundergone vocational rehabilitation.OWCP will determine this amount inaccordance with the job identifiedthrough the vocational rehabilitationplanning process, which includesmeetings with the OWCP nurse and theemployer. The reduction will remain ineffect until such time as the employeeacts in good faith to comply with thedirection of OWCP.

(b) Where a suitable job has not beenidentified, because the failure or refusaloccurred in the early but necessarystages of a vocational rehabilitationeffort (that is, meetings with the OWCPnurse, interviews, testing, counseling,functional capacity evaluations, andwork evaluations), OWCP cannotdetermine what would have been theemployee’s wage-earning capacity.

(c) Under the circumstances identifiedin paragraph (b) of this section, in theabsence of evidence to the contrary,OWCP will assume that the vocationalrehabilitation effort would have resultedin a return to work with no loss of wage-earning capacity, and OWCP will reducethe employee’s monetary compensationaccordingly (that is, to zero). Thisreduction will remain in effect untilsuch time as the employee acts in goodfaith to comply with the direction ofOWCP.

§ 10.520 How does OWCP determinecompensation after an employee completesa vocational rehabilitation program?

After completion of a vocationalrehabilitation program, OWCP mayadjust compensation to reflect theinjured worker’s wage-earning capacity.Actual earnings will be used if theyfairly and reasonably reflect the earningcapacity. The position determined to bethe goal of a training plan is assumed torepresent the employee’s earningcapacity if it is suitable and performedin sufficient numbers so as to bereasonably available, whether or not theemployee is placed in such a position.

Reports of Earnings From Employmentand Self-Employment

§ 10.525 What information must theemployee report?

(a) An employee who is receivingcompensation for partial or totaldisability must advise OWCPimmediately of any return to work,either part-time or full-time. In addition,an employee who is receivingcompensation for partial or totaldisability will periodically be requiredto submit a report of earnings fromemployment or self-employment, eitherpart-time or full-time. (See § 10.5(g) fora definition of ‘‘earnings’’.)

(b) The employee must report eventhose earnings which do not seem likelyto affect his or her level of benefits.Many kinds of income, though not all,will result in reduction of compensationbenefits. While earning income will notnecessarily result in a reduction ofcompensation, failure to report incomemay result in forfeiture of all benefitspaid during the reporting period.

§ 10.526 Must the employee reportvolunteer activities?

An employee who is receivingcompensation for partial or totaldisability is periodically required toreport volunteer activity or any otherkind of activity which shows that theemployee is no longer totally disabledfor work.

§ 10.527 Does OWCP verify reports ofearnings?

To make proper determinations of anemployee’s entitlement to benefits,OWCP may verify the earnings reportedby the employee through a variety ofmeans, including but not limited tocomputer matches with the Office ofPersonnel Management and inquiries tothe Social Security Administration.Also, OWCP may perform computermatches with records of State agencies,including but not limited to workers’compensation administrations, todetermine whether private employersare paying workers’ compensationinsurance premiums for recipients ofbenefits under the FECA.

§ 10.528 What action will OWCP take if theemployee fails to file a report of activityindicating an ability to work?

OWCP periodically requires eachemployee who is receivingcompensation benefits to complete anaffidavit as to any work, or activityindicating an ability to work, which theemployee has performed for the prior 15months. If an employee who is requiredto file such a report fails to do so within30 days of the date of the request, hisor her right to compensation for wage


loss under 5 U.S.C. 8105 or 8106 issuspended until OWCP receives therequested report. At that time, OWCPwill reinstate compensation retroactiveto the date of suspension if theemployee remains entitled tocompensation.

§ 10.529 What action will OWCP take if theemployee files an incomplete report?

(a) If an employee knowingly omits orunderstates any earnings or workactivity in making a report, he or sheshall forfeit the right to compensationwith respect to any period for which thereport was required. A false or evasivestatement, omission, concealment, ormisrepresentation with respect toemployment activity or earnings in areport may also subject an employee tocriminal prosecution.

(b) Where the right to compensation isforfeited, OWCP shall recover anycompensation already paid for theperiod of forfeiture pursuant to 5 U.S.C.8129 and other relevant statutes.

Reports of Dependents

§ 10.535 How are dependents defined, andwhat information must the employeereport?

(a) Dependents in disability cases aredefined in § 10.405. While the employeehas one or more dependents, theemployee’s basic compensation for wageloss or for permanent impairment shallbe augmented as provided in 5 U.S.C.8110. (The rules for death claims arefound in § 10.414.)

(b) An employee who is receivingaugmented compensation on account ofdependents must advise OWCPimmediately of any change in thenumber or status of dependents. Theemployee should also promptly refundto OWCP any amounts received onaccount of augmented compensationafter the right to receive augmentedcompensation has ceased. Anydifference between actual entitlementand the amount already paid beyond thedate entitlement ended is anoverpayment of compensation and maybe recovered pursuant to 5 U.S.C. 8129and other relevant statutes.

(c) An employee who is receivingaugmented compensation shall beperiodically required to submit astatement as to any dependents, or tosubmit supporting documents such asbirth or marriage certificates or courtorders, to determine if he or she is stillentitled to augmented compensation.

§ 10.536 What is the penalty for failing tosubmit a report of dependents?

If an employee fails to submit arequested statement or supportingdocument within 30 days of the date of

the request, OWCP will suspend his orher right to augmented compensationuntil OWCP receives the requestedstatement or supporting document. Atthat time, OWCP will reinstateaugmented compensation retroactive tothe date of suspension, provided thatthe employee is entitled to receiveaugmented compensation.

§ 10.537 What reports are needed whencompensation payments continue forchildren over age 18?

(a) Compensation payable on behalf ofa child that would otherwise end whenthe child reaches 18 years of age willcontinue if and for so long as he or sheis not married and is either a student asdefined in 5 U.S.C. 8101(17), orphysically or mentally incapable of self-support.

(b) At least twice each year, OWCPwill ask an employee who receivescompensation based on the studentstatus of a child to provide proof ofcontinuing entitlement to suchcompensation, including certification ofschool enrollment.

(c) Likewise, at least twice each year,OWCP will ask an employee whoreceives compensation based on achild’s physical or mental inability tosupport himself or herself to submit amedical report verifying that the child’smedical condition persists and that itcontinues to preclude self-support.

(d) If an employee fails to submitproof within 30 days of the date of therequest, OWCP will suspend theemployee’s right to compensation untilthe requested information is received.At that time OWCP will reinstatecompensation retroactive to the date ofsuspension, provided the employee isentitled to such compensation.

Reduction and Termination ofCompensation

§ 10.540 When and how is compensationreduced or terminated?

(a) Except as provided in paragraphs(b) and (c) of this section, where theevidence establishes that compensationshould be either reduced or terminated,OWCP will provide the beneficiary withwritten notice of the proposed actionand give him or her 30 days to submitrelevant evidence or argument tosupport entitlement to continuedpayment of compensation. This noticewill include a description of the reasonsfor the proposed action and a copy ofthe specific evidence upon whichOWCP is basing its determination.Payment of compensation will continueuntil any evidence or argumentsubmitted has been reviewed and anappropriate decision has been issued, oruntil 30 days have elapsed if no

additional evidence or argument issubmitted.

(b) OWCP will not provide suchwritten notice when the beneficiary hasno reasonable basis to expect thatpayment of compensation will continue.For example, when a claim has beenmade for a specific period of time andthat specific period expires, no writtennotice will be given. Written notice willalso not be given when a beneficiarydies, when OWCP either reduces orterminates compensation upon anemployee’s return to work, when OWCPterminates only medical benefits after aphysician indicates that further medicaltreatment is not necessary or has ended,or when OWCP denies payment for aparticular medical expense.

(c) OWCP will also not provide suchwritten notice when compensation isterminated, suspended or forfeited dueto one of the following: A beneficiary’sconviction for fraud in connection witha claim under the FECA; a beneficiary’sincarceration based on any felonyconviction; an employee’s failure toreport earnings from employment orself-employment; an employee’s failureor refusal to either continue performingsuitable work or to accept an offer ofsuitable work; or an employee’s refusalto undergo or obstruction of a directedmedical examination or treatment forsubstance abuse.

§ 10.541 What action will OWCP take afterissuing written notice of its intention toreduce or terminate compensation?

(a) If the beneficiary submits evidenceor argument prior to the issuance of thedecision, OWCP will evaluate it in lightof the proposed action and undertakesuch further development as it maydeem appropriate, if any. Evidence orargument which is repetitious,cumulative, or irrelevant will notrequire any further development. If thebeneficiary does not respond within 30days of the written notice, OWCP willissue a decision consistent with its priornotice. OWCP will not grant any requestfor an extension of this 30-day period.

(b) Evidence or argument whichrefutes the evidence upon which theproposed action was based will result inthe continued payment ofcompensation. If the beneficiary submitsevidence or argument which fails torefute the evidence upon which theproposed action was based but whichrequires further development, OWCPwill not provide the beneficiary withanother notice of its proposed actionupon completion of such development.Once any further development of theevidence is completed, OWCP willeither continue payment or issue adecision consistent with its prior notice.


Subpart G—Appeals Process

§ 10.600 How can final decisions of OWCPbe reviewed?

There are three methods for reviewinga formal decision of the OWCP(§§ 10.125–10.127 discuss howdecisions are made). These methods are:reconsideration by the district office; ahearing before an OWCP hearingrepresentative; and appeal to theEmployees’ Compensation AppealsBoard (ECAB). For each method thereare time limitations and otherrestrictions which may apply, and notall options are available for alldecisions, so the employee shouldconsult the requirements set forthbelow. Further rules governing appealsto the ECAB are found at part 501 of thistitle.

Reconsiderations and Reviews by theDirector

§ 10.605 What is reconsideration?The FECA provides that the Director

may review an award for or againstcompensation upon application by anemployee (or his or her representative)who receives an adverse decision. Theemployee shall exercise this rightthrough a request to the district office.The request, along with the supportingstatements and evidence, is called the‘‘application for reconsideration.’’

§ 10.606 How does a claimant requestreconsideration?

(a) An employee (or representative)seeking reconsideration should send theapplication for reconsideration to theaddress as instructed by OWCP in thefinal decision.

(b) The application forreconsideration, including allsupporting documents, must:

(1) Be submitted in writing;(2) Set forth arguments and contain

evidence that either:(i) Shows that OWCP erroneously

applied or interpreted a specific point oflaw;

(ii) Advances a relevant legalargument not previously considered byOWCP; or

(iii) Constitutes relevant and pertinentnew evidence not previously consideredby OWCP.

§ 10.607 What is the time limit forrequesting reconsideration?

(a) An application for reconsiderationmust be sent within one year of the dateof the OWCP decision for which reviewis sought. If submitted by mail, theapplication will be deemed timely ifpostmarked by the U.S. Postal Servicewithin the time period allowed. If thereis no such postmark, or it is not legible,

other evidence such as (but not limitedto) certified mail receipts, certificate ofservice, and affidavits, may be used toestablish the mailing date.

(b) OWCP will consider an untimelyapplication for reconsideration only ifthe application demonstrates clearevidence of error on the part of OWCPin its most recent merit decision. Theapplication must establish, on its face,that such decision was erroneous.

(c) The year in which a claimant hasto timely request reconsideration shallnot include any period subsequent to anOWCP decision for which the claimantcan establish through probative medicalevidence that he or she is unable tocommunicate in any way and that his orher testimony is necessary in order toobtain modification of the decision.

§ 10.608 How does OWCP decide whetherto grant or deny the request forreconsideration?

(a) A timely request forreconsideration may be granted ifOWCP determines that the employeehas presented evidence and/or argumentthat meets at least one of the standardsdescribed in § 10.606(b)(2). Ifreconsideration is granted, the case isreopened and the case is reviewed on itsmerits (see § 10.609).

(b) Where the request is timely butfails to meet at least one of the standardsdescribed in § 10.606(b)(2), or where therequest is untimely and fails to presentany clear evidence of error, OWCP willdeny the application for reconsiderationwithout reopening the case for a reviewon the merits. A decision denying anapplication for reconsideration cannotbe the subject of another application forreconsideration. The only review forthis type of non-merit decision is anappeal to the ECAB (see § 10.625), andOWCP will not entertain a request forreconsideration or a hearing on thisdecision denying reconsideration.

§ 10.609 How does OWCP decide whethernew evidence requires modification of theprior decision?

When application for reconsiderationis granted, OWCP will review thedecision for which reconsideration issought on the merits and determinewhether the new evidence or argumentrequires modification of the priordecision.

(a) After OWCP decides to grantreconsideration, but before undertakingthe review, OWCP will send a copy ofthe reconsideration application to theemployer, which will have 20 days fromthe date sent to comment or submitrelevant documents. OWCP will provideany such comments to the employee,who will have 20 days from the date the

comments are sent to him or her withinwhich to comment. If no comments arereceived from the employer, OWCP willproceed with the merit review of thecase.

(b) A claims examiner who did notparticipate in making the contesteddecision will conduct the merit reviewof the claim. When all evidence hasbeen reviewed, OWCP will issue a newmerit decision, based on all theevidence in the record. A copy of thedecision will be provided to the agency.

(c) An employee dissatisfied with thisnew merit decision may again requestreconsideration under this subpart orappeal to the ECAB. An employee maynot request a hearing on this decision.

§ 10.610 What is a review by the Director?

The FECA specifies that an award foror against payment of compensationmay be reviewed at any time on theDirector’s own motion. Such reviewmay be made without regard to whetherthere is new evidence or information. Ifthe Director determines that a review ofthe award is warranted (including, butnot limited to circumstances indicatinga mistake of fact or law or changedconditions), the Director (at any timeand on the basis of existing evidence)may modify, rescind, decrease orincrease compensation previouslyawarded, or award compensationpreviously denied. A review on theDirector’s own motion is not subject toa request or petition and none shall beentertained.

(a) The decision whether or not toreview an award under this section issolely within the discretion of theDirector. The Director’s exercise of thisdiscretion is not subject to review by theECAB, nor can it be the subject of areconsideration or hearing request.

(b) Where the Director reviews anaward on his or her own motion, anyresulting decision is subject asappropriate to reconsideration, ahearing and/or appeal to the ECAB.Jurisdiction on review or on appeal toECAB is limited to a review of themerits of the resulting decision. TheDirector’s determination to review theaward is not reviewable.

Hearings

§ 10.615 What is a hearing?

A hearing is a review of an adversedecision by a hearing representative.Initially, the claimant can choosebetween two formats: An oral hearing ora review of the written record. At thediscretion of the hearing representative,an oral hearing may be conducted bytelephone or teleconference. In additionto the evidence of record, the employee


may submit new evidence to the hearingrepresentative.

§ 10.616 How does a claimant obtain ahearing?

(a) A claimant, injured on or after July4, 1966, who has received a finaladverse decision by the district officemay obtain a hearing by writing to theaddress specified in the decision. Thehearing request must be sent within 30days (as determined by postmark orother carrier’s date marking) of the dateof the decision for which a hearing issought. The claimant must not havepreviously submitted a reconsiderationrequest (whether or not it was granted)on the same decision.

(b) The claimant may specify the typeof hearing desired when making theoriginal hearing request. If the requestdoes not specify a format, OWCP willschedule an oral hearing. The claimantcan request a change in the format of thehearing by making a written request tothe Branch of Hearings and Review.OWCP will grant a request received bythe Branch of Hearings and Reviewwithin 30 days of: The date OWCPacknowledges the initial hearingrequest, or the date OWCP issues anotice setting a date for an oral hearing,in cases where the initial request wasfor, or was treated as a request for, anoral hearing. A request received afterthose dates will be subject to OWCP’sdiscretion. The decision to grant or denya change of format is not reviewable.

§ 10.617 How is an oral hearingconducted?

(a) The hearing representative retainscomplete discretion to set the time andplace of the hearing, including theamount of time allotted for the hearing,considering the issues to be resolved.

(b) Unless otherwise directed inwriting by the claimant, the hearingrepresentative will mail a notice of thetime and place of the oral hearing to theclaimant and any representative at least30 days before the scheduled date. Theemployer will also be mailed a notice atleast 30 days before the scheduled date.

(c) The hearing is an informal process,and the hearing representative is notbound by common law or statutory rulesof evidence, by technical or formal rulesof procedure or by section 5 of theAdministrative Procedure Act, but thehearing representative may conduct thehearing in such manner as to bestascertain the rights of the claimant.During the hearing process, the claimantmay state his or her arguments andpresent new written evidence in supportof the claim.

(d) Testimony at oral hearings isrecorded, then transcribed and placed in

the record. Oral testimony shall be madeunder oath.

(e) OWCP will furnish a transcript ofthe oral hearing to the claimant and theemployer, who have 20 days from thedate it is sent to comment. Anycomments received from the employershall be sent to the claimant, who willbe given an additional 20 days tocomment from the date OWCP sendsany agency comments.

(f) The hearing remains open for thesubmittal of additional evidence until30 days after the hearing is held, unlessthe hearing representative, in his or hersole discretion, grants an extension.Only one such extension may begranted. A copy of the decision will bemailed to the claimant’s last knownaddress, to any representative, and tothe employer.

(g) The hearing representativedetermines the conduct of the oralhearing and may terminate the hearingat any time he or she determines that allrelevant evidence has been obtained, orbecause of misbehavior on the part ofthe claimant and/or representative at ornear the place of the oral presentation.

§ 10.618 How is a review of the writtenrecord conducted?

(a) The hearing representative willreview the official record and anyadditional evidence submitted by theclaimant and by the agency. The hearingrepresentative may also conductwhatever investigation is deemednecessary. New evidence and argumentsare to be submitted at any time up to thetime specified by OWCP, but theyshould be submitted as soon as possibleto avoid delaying the hearing process.

(b) The claimant should submit, withhis or her application for review, allevidence or argument that he or shewants to present to the hearingrepresentative. A copy of all pertinentmaterial will be sent to the employer,which will have 20 days from the dateit is sent to comment. (Medical evidenceis not considered ‘‘pertinent’’ for reviewand comment by the agency, and it willtherefore not be furnished to the agency.OWCP has sole responsibility forevaluating medical evidence.) Theemployer shall send any comments tothe claimant, who will have 20 moredays from the date of the agency’scertificate of service to comment.

§ 10.619 May subpoenas be issued forwitnesses and documents?

A claimant may request a subpoena,but the decision to grant or deny sucha request is within the discretion of thehearing representative. The hearingrepresentative may issue subpoenas forthe attendance and testimony of

witnesses, and for the production ofbooks, records, correspondence, papersor other relevant documents. Subpoenasare issued for documents only if theyare relevant and cannot be obtained byother means, and for witnesses onlywhere oral testimony is the best way toascertain the facts.

(a) A claimant may request asubpoena only as part of the hearingsprocess, and no subpoena will be issuedunder any other part of the claimsprocess. To request a subpoena, therequestor must:

(1) Submit the request in writing andsend it to the hearing representative asearly as possible but no later than 60days (as evidenced by postmark,electronic marker or other objective datemark) after the date of the originalhearing request.

(2) Explain why the testimony orevidence is directly relevant to theissues at hand, and a subpoena is thebest method or opportunity to obtainsuch evidence because there are noother means by which the documents ortestimony could have been obtained.

(b) No subpoena will be issued forattendance of employees of OWCPacting in their official capacities asdecision-makers or policyadministrators. For hearings taking theform of a review of the written record,no subpoena for the appearance ofwitnesses will be considered.

(c) The hearing representative issuesthe subpoena under his or her ownname. It may be served in person or bycertified mail, return receipt requested,addressed to the person to be served athis or her last known principal place ofbusiness or residence. A decision todeny a subpoena can only be appealedas part of an appeal of any adversedecision which results from the hearing.

§ 10.620 Who pays the costs associatedwith subpoenas?

(a) Witnesses who are not employeesor former employees of the FederalGovernment shall be paid the same feesand mileage as paid for like services inthe District Court of the United Stateswhere the subpoena is returnable,except that expert witnesses shall bepaid a fee not to exceed the localcustomary fee for such services.

(b) Where OWCP asked that thewitness submit evidence into the caserecord or asked that the witness attend,OWCP shall pay the fees and mileage.Where the claimant requested thesubpoena, and where the witnesssubmitted evidence into the record atthe request of the claimant, the claimantshall pay the fees and mileage.


§ 10.621 What is the employer’s role whenan oral hearing has been requested?

(a) The employer may send one (ormore, where appropriate)representative(s) to observe theproceeding, but the agencyrepresentative cannot give testimony orargument or otherwise participate in thehearing, except where the claimant orthe hearing representative specificallyasks the agency representative to testify.

(b) The hearing representative maydeny a request by the claimant that theagency representative testify where theclaimant cannot show that thetestimony would be relevant or wherethe agency representative does not havethe appropriate level of knowledge toprovide such evidence at the hearing.The employer may also comment on thehearing transcript, as described in§ 10.617(e).

§ 10.622 May a claimant withdraw arequest for or postpone a hearing?

(a) The claimant and/or representativemay withdraw the hearing request atany time up to and including the daythe hearing is held, or the decisionissued. Withdrawing the hearing requestmeans the record is returned to thejurisdiction of the district office and nofurther requests for a hearing on theunderlying decision will be considered.

(b) OWCP will entertain anyreasonable request for scheduling theoral hearing, but such requests shouldbe made at the time of the originalapplication for hearing. Scheduling is atthe sole discretion of the hearingrepresentative, and is not reviewable.Once the oral hearing is scheduled andOWCP has mailed appropriate writtennotice to the claimant, the oral hearingcannot be postponed at the claimant’srequest for any reason except thosestated in paragraph (c) of this section,unless the hearing representative canreschedule the hearing on the samedocket (that is, during the same hearingtrip). When the request to postpone ascheduled hearing does not meet thetest of paragraph (c) of this section andcannot be accommodated on the docket,no further opportunity for an oralhearing will be provided. Instead, thehearing will take the form of a reviewof the written record and a decisionissued accordingly. In the alternative, ateleconference may be substituted forthe oral hearing at the discretion of thehearing representative.

(c) Where the claimant is hospitalizedfor a reason which is not elective, orwhere the death of the claimant’sparent, spouse, or child preventsattendance at the hearing, apostponement may be granted uponproper documentation.

Review by the Employees’Compensation Appeals Board (ECAB)

§ 10.625 What kinds of decisions may beappealed?

Only final decisions of OWCP may beappealed to the ECAB. However, certaintypes of final decisions, described inthis part as not subject to further review,cannot be appealed to the ECAB.Decisions that are not appealable to theECAB include: Decisions concerning theamounts payable for medical services,decisions concerning exclusion andreinstatement of medical providers,decisions by the Director to review anaward on his or her own motion, anddenials of subpoenas independent of theappeal of the underlying decision. Inappeals before the ECAB, attorneys fromthe Office of the Solicitor of Labor shallrepresent OWCP.

§ 10.626 Who has jurisdiction of cases onappeal to the ECAB?

While a case is on appeal to theECAB, OWCP has no jurisdiction overthe claim with respect to issues whichdirectly relate to the issue or issues onappeal. The OWCP continues toadminister the claim and retainsjurisdiction over issues unrelated to theissue or issues on appeal and issueswhich arise after the appeal as a resultof ongoing administration of the case.Such issues would include, for example,the ability to terminate benefits wherean individual returns to work while anappeal is pending at the ECAB.

Subpart H—Special Provisions

Representation

§ 10.700 May a claimant designate arepresentative?

(a) The claims process under theFECA is informal. Unlike many workers’compensation laws, the employer is nota party to the claim, and OWCP acts asan impartial evaluator of the evidence.Nevertheless, a claimant may appointone individual to represent his or herinterests, but the appointment must bein writing.

(b) There can be only onerepresentative at any one time, so afterone representative has been properlyappointed, OWCP will not recognizeanother individual as representativeuntil the claimant withdraws theauthorization of the first individual. Inaddition, OWCP will recognize onlycertain types of individuals (see§ 10.701).

(c) A properly appointedrepresentative who is recognized byOWCP may make a request or givedirection to OWCP regarding the claimsprocess, including a hearing. This

authority includes presenting oreliciting evidence, making arguments onfacts or the law, and obtaininginformation from the case file, to thesame extent as the claimant. Any noticerequirement contained in this part orthe FECA is fully satisfied if served onthe representative, and has the sameforce and effect as if sent to theclaimant.

§ 10.701 Who may serve as arepresentative?

A claimant may authorize anyindividual to represent him or her inregard to a claim under the FECA,unless that individual’s service as arepresentative would violate anyapplicable provision of law (such as 18U.S.C. 205 and 208). A Federalemployee may act as a representativeonly:

(a) On behalf of immediate familymembers, defined as a spouse, children,parents, and siblings of therepresentative, provided no fee orgratuity is charged; or

(b) While acting as a unionrepresentative, defined as any officiallysanctioned union official, and no fee orgratuity is charged.

§ 10.702 How are fees for services paid?

A representative may charge theclaimant a fee and other costs associatedwith the representation before OWCP.The claimant is solely responsible forpaying the fee and other charges. Theclaimant will not be reimbursed byOWCP, nor is OWCP in any way liablefor the amount of the fee.

Administrative costs (mailing,copying, messenger services, travel andthe like, but not including secretarialservices, paralegal and other activities)need not be approved before therepresentative collects them. Before anyfee for services can be collected,however, the fee must be approved bythe Secretary. (Collecting a fee withoutthis approval may constitute amisdemeanor under 18 U.S.C. 292.)

§ 10.703 How are fee applicationsapproved?

(a) Fee Application. (1) Therepresentative must submit the feeapplication to the district office and/orthe Branch of Hearings and Review,according to where the work for whichthe fee is charged was performed. Theapplication shall contain the following:

(i) An itemized statement showing therepresentative’s hourly rate, the numberof hours worked and specificallyidentifying the work performed and atotal amount charged for therepresentation (excludingadministrative costs).


(ii) A statement of agreement ordisagreement with the amount charged,signed by the claimant. The statementmust also acknowledge that theclaimant is aware that he or she mustpay the fees and that OWCP is notresponsible for paying the fee or othercosts.

(2) An incomplete application will bereturned with no further comment.

(b) Approval where there is nodispute. Where a fee application isaccompanied by a signed statementindicating the claimant’s agreementwith the fee as described in paragraph(a)(1)(ii) of this section, the applicationis deemed approved.

(c) Disputed requests. (1) Where theclaimant disagrees with the amount ofthe fee, as indicated in the statementaccompanying the submittal, OWCPwill evaluate the objection and decidewhether or not to approve the request.OWCP will provide a copy of therequest to the claimant and ask him orher to submit any further information insupport of the objection within 15 daysfrom the date the request is forwarded.After that period has passed, OWCP willevaluate the information received todetermine whether the amount of thefee is substantially in excess of the valueof services received by looking at thefollowing factors:

(i) Usefulness of the representative’sservices;

(ii) The nature and complexity of theclaim;

(iii) The actual time spent ondevelopment and presentation of theclaim; and

(iv) Customary local charges forsimilar services.

(2) Where the claimant disputes therepresentative’s request and files anobjection with OWCP, an appealabledecision will be issued.

Third Party Liability

§ 10.705 When must an employee or otherFECA beneficiary take action against a thirdparty?

(a) If an injury or death for whichbenefits are payable under the FECA iscaused, wholly or partially, by someoneother than a Federal employee actingwithin the scope of his or heremployment, the claimant can berequired to take action against that thirdparty.

(b) The Office of the Solicitor of Labor(SOL) is hereby delegated authority toadminister the subrogation aspects ofcertain FECA claims for OWCP. EitherOWCP or SOL can require a FECAbeneficiary to assign his or her claim fordamages to the United States or toprosecute the claim in his or her ownname.

§ 10.706 How will a beneficiary know ifOWCP or SOL has determined that actionagainst a third party is required?

When OWCP determines that anemployee or other FECA beneficiarymust take action against a third party, itwill notify the employee or beneficiaryin writing. If the case is transferred toSOL, a second notification may beissued.

§ 10.707 What must a FECA beneficiarywho is required to take action against athird party do to satisfy the requirementthat the claim be ‘‘prosecuted’’?

At a minimum, a FECA beneficiarymust do the following:

(a) Seek damages for the injury ordeath from the third party, eitherthrough an attorney or on his or her ownbehalf;

(b) Either initiate a lawsuit within theappropriate statute of limitations periodor obtain a written release of thisobligation from OWCP or SOL unlessrecovery is possible through anegotiated settlement prior to filing suit;

(c) Refuse to settle or dismiss the casefor any amount less than the amountnecessary to repay OWCP’s refundabledisbursements, as defined in § 10.714,without receiving permission fromOWCP or SOL;

(d) Provide periodic status updatesand other relevant information inresponse to requests from OWCP orSOL;

(e) Submit detailed information aboutthe amount recovered and the costs ofthe suit on a ‘‘Statement of Recovery’’form approved by OWCP; and

(f) Pay any required refund.

§ 10.708 Can a FECA beneficiary whorefuses to comply with a request to assigna claim to the United States or to prosecutethe claim in his or her own name bepenalized?

When a FECA beneficiary refuses arequest to either assign a claim orprosecute a claim in his or her ownname, OWCP may determine that he orshe has forfeited his or her right to allpast or future compensation for theinjury with respect to which the requestis made. Alternatively, OWCP may alsosuspend the FECA beneficiary’scompensation payments until he or shecomplies with the request.

§ 10.709 What happens if a beneficiarydirected by OWCP or SOL to take actionagainst a third party does not believe thata claim can be successfully prosecuted ata reasonable cost?

If a beneficiary consults an attorneyand is informed that a suit for damagesagainst a third party for the injury ordeath for which benefits are payable isunlikely to prevail or that the costs of

such a suit are not justified by thepotential recovery, he or she shouldrequest that OWCP or SOL release himor her from the obligation to proceed.This request should be in writing andprovide evidence of the attorney’sopinion. If OWCP or SOL agrees, thebeneficiary will not be required to takefurther action against the third party.

§ 10.710 Under what circumstances must arecovery of money or other property inconnection with an injury or death for whichbenefits are payable under the FECA bereported to OWCP or SOL?

Any person who has filed a FECAclaim that has been accepted by OWCP(whether or not compensation has beenpaid), or who has received FECAbenefits in connection with a claim filedby another, is required to notify OWCPor SOL of the receipt of money or otherproperty as a result of a settlement orjudgment in connection with thecircumstances of that claim. Thisincludes an injured employee, and inthe case of a claim involving the deathof an employee, a spouse, children orother dependents entitled to receivesurvivor’s benefits. OWCP or SOLshould be notified in writing within 30days of the receipt of such money orother property or the acceptance of theFECA claim, whichever occurs later.

§ 10.711 How much of any settlement orjudgment must be paid to the UnitedStates?

The statute permits a FECAbeneficiary to retain, as a minimum,one-fifth of the net amount of money orproperty remaining after a reasonableattorney’s fee and the costs of litigationhave been deducted from the third-partyrecovery. The United States shares inthe litigation expense by allowing thebeneficiary to retain, at the time ofdistribution, an amount equivalent to areasonable attorney’s fee proportionateto the refund due the United States.After the refund owed to the UnitedStates is calculated, the FECAbeneficiary retains any surplusremaining, and this amount is credited,dollar for dollar, against futurecompensation for the same injury, asdefined in § 10.719. OWCP will resumethe payment of compensation only afterthe FECA beneficiary has been awardedcompensation which exceeds theamount of the surplus.

(a) The refund to the United States iscalculated as follows, using theStatement of Recovery form approvedby OWCP:

(1) Determine the gross recovery as setforth in § 10.712;

(2) Subtract the amount of attorney’sfees actually paid, but not more than themaximum amount of attorney’s fees


considered by OWCP or SOL to bereasonable, from the gross recovery(Subtotal A);

(3) Subtract the costs of litigation, asallowed by OWCP or SOL (Subtotal B);

(4) Subtract one fifth of Subtotal Bfrom Subtotal B (Subtotal C);

(5) Compare Subtotal C and therefundable disbursements as defined in§ 10.714. Subtotal D is the lower of thetwo amounts.

(6) Multiply Subtotal D by apercentage that is determined bydividing the gross recovery into theamount of attorney’s fees actually paid,but not more than the maximum amount

of attorney’s fees considered by OWCPor SOL to be reasonable, to determinethe Government’s allowance forattorney’s fees, and subtract this amountfrom Subtotal D.

(b) The credit against future benefits(also referred to as the surplus) iscalculated as follows:

(1) If Subtotal C, as calculatedaccording to paragraph (a)(4) of thissection, is less than the refundabledisbursements, as defined in § 10.714,there is no credit to be applied againstfuture benefits;

(2) If Subtotal C is greater than therefundable disbursements, the credit

against future benefits (or surplus)amount is determined by subtracting therefundable disbursements from SubtotalC.

(c) An example of how thesecalculations are made follows. In thisexample, a Federal employee suesanother party for causing injuries forwhich the employee has received$22,000 in benefits under the FECA,subject to refund. The suit is settled andthe injured employee receives $100,000,all of which was for his injury. Theinjured worker paid attorney’s fees of$25,000 and costs for the litigation of$3,000.

(1) Gross recovery ..................................................................................................................................................................................... $100,000Attorney’s fees ................................................................................................................................................................................... ¥25,000

(2) Subtotal A ............................................................................................................................................................................................ 75,000(3) Costs of suit ......................................................................................................................................................................................... ¥3,000

Subtotal B ........................................................................................................................................................................................... 72,000One-fifth of Subtotal B ...................................................................................................................................................................... ¥14,400

(4) Subtotal C ............................................................................................................................................................................................ 57,600Refundable Disbursements ................................................................................................................................................................ 22,000

(5) Subtotal D (lower of Subtotal C or refundable disbursements) ....................................................................................................... 22,000(6) Government’s allowance for attorney’s fees [25,000/100,000) × 22,000] (attorney’s fees divided by gross recovery then mul-

tiplied by Subtotal D) ........................................................................................................................................................................... ¥5,500

Refund to the United States .............................................................................................................................................................. 16,500(7) Credit against future benefits [57,600–22,000] (Subtotal C minus refundable disbursements) ..................................................... 35,600

§ 10.712 What amounts are included in thegross recovery?

(a) When a settlement or judgment ispaid to, or for, one individual, the entireamount, except for the portionrepresenting damage to real or personalproperty, is reported as the grossrecovery. If a settlement or judgment ispaid to or for more than one individualor in more than one capacity, such as ajoint payment to a husband and wife forpersonal injury and loss of consortiumor a payment to a spouse representingboth loss of consortium and wrongfuldeath, the gross recovery to be reportedis the amount allocated to the injuredemployee. If a judge or jury specifies thepercentage of a contested verdictattributable to each of several plaintiffs,OWCP or SOL will accept that division.

(b) In any other case, where ajudgment or settlement is paid to or onbehalf of more than one individual,OWCP or SOL will determine theappropriate amount of the FECAbeneficiary’s gross recovery and advisethe beneficiary of its determination.FECA beneficiaries may accept OWCP’sor SOL’s determination or demonstrategood cause for a different allocation.Whether to accept a specific allocationis at the discretion of SOL or OWCP.

§ 10.713 How is a structured settlement(that is, a settlement providing for receipt offunds over a specified period of time)treated for purposes of reporting the grossrecovery?

In this situation, the gross recovery tobe reported is the present value of theright to receive all of the paymentsincluded in the structured settlement,allocated in the case of multiplerecipients in the same manner as singlepayment recoveries.

§ 10.714 What amounts are included in therefundable disbursements?

The refundable disbursements of aspecific claim consist of the total moneypaid by OWCP from the Employees’Compensation Fund with respect to thatclaim to or on behalf of a FECAbeneficiary, less charges for any medicalfile review (i.e., the physician does notexamine the employee) done at therequest of OWCP. Charges for medicalexaminations also may be subtracted ifthe FECA beneficiary establishes thatthe examinations were required to bemade available to the employee under astatute other than the FECA by theemploying agency or at the employingagency’s cost.

§ 10.715 Is a beneficiary required to payinterest on the amount of the refund due tothe United States?

If the refund due to the United Statesis not submitted within 30 days ofreceiving a request for payment fromSOL or OWCP, interest shall accrue onthe refund due to the United States fromthe date of the request. The rate ofinterest assessed shall be the rate of thecurrent value of funds to the UnitedStates Treasury as published in theFederal Register (as of the date therequest for payment is sent). Waiver ofthe collection of interest shall be inaccordance with the provisions of theDepartment of Labor regulations onFederal Claims Collection governingwaiver of interest, 29 CFR 20.61.

§ 10.716 If the required refund is not paidwithin 30 days of the request for repayment,can it be collected from payments dueunder the FECA?

If the required refund is not paidwithin 30 days of the request forpayment, OWCP can, in its discretion,collect the refund by withholding all orpart of any payments currently payableto the beneficiary under the FECA withrespect to any injury. The waiverprovisions of §§ 10.432 through 10.440do not apply to such determinations.


§ 10.717 Is a settlement or judgmentreceived as a result of allegations ofmedical malpractice in treating an injurycovered by the FECA a gross recovery thatmust be reported to OWCP or SOL?

Since an injury caused by medicalmalpractice in treating an injurycovered by the FECA is also an injurycovered under the FECA, any recoveryin a suit alleging such an injury istreated as a gross recovery that must bereported to OWCP or SOL.

§ 10.718 Are payments to a beneficiary asa result of an insurance policy which thebeneficiary has purchased a gross recoverythat must be reported to OWCP or SOL?

Since payments received by a FECAbeneficiary pursuant to an insurancepolicy purchased by someone other thana liable third party are not payments insatisfaction of liability for causing aninjury covered by the FECA, they arenot considered a gross recovery coveredby section 8132 that requires filing aStatement of Recovery and paying anyrequired refund.

§ 10.719 If a settlement or judgment isreceived for more than one wound ormedical condition, can the refundabledisbursements paid on a single FECA claimbe attributed to different conditions forpurposes of calculating the refund or creditowed to the United States?

(a) All wounds, diseases or othermedical conditions accepted by OWCPin connection with a single claim aretreated as the same injury for thepurpose of computing any requiredrefund and any credit against futurebenefits in connection with the receiptof a recovery from a third party, exceptthat an injury caused by medicalmalpractice in treating an injurycovered under the FECA will be treatedas a separate injury for purposes ofsection 8132.

(b) If an injury covered under theFECA is caused under circumstancescreating a legal liability in more thanone person, other than the UnitedStates, to pay damages, OWCP or SOLwill determine whether recoveriesreceived from one or more third partiesshould be attributed to separateconditions for which compensation ispayable in connection with a singleFECA claim. If such an attribution isboth practicable and equitable, asdetermined by OWCP or SOL, in itsdiscretion, the conditions will be treatedas separate injuries for purposes ofcalculating the refund and credit owedto the United States under section 8132.

Federal Grand and Petit Jurors

§ 10.725 When is a Federal grand or petitjuror covered under the FECA?

(a) Federal grand and petit jurors arecovered under the FECA when they arein performance of duty as a juror, whichincludes that time when a juror is:

(1) In attendance at court pursuant toa summons;

(2) In deliberation;(3) Sequestered by order of a judge; or(4) At a site, by order of the court, for

the taking of a view.(b) A juror is not considered to be in

the performance of duty while travelingto or from home in connection with theactivities enumerated in paragraphs(a)(1) through (4) of this section.

§ 10.726 When does a juror’s entitlementto disability compensation begin?

Pursuant to 28 U.S.C. 1877,entitlement to disability compensationdoes not commence until the day afterthe date of termination of service as ajuror.

§ 10.727 What is the pay rate of jurors forcompensation purposes?

For the purpose of computingcompensation payable for disability ordeath, a juror is deemed to receive payat the minimum rate for Grade GS–2 ofthe General Schedule unless his or heractual pay as an ‘‘employee’’ of theUnited States while serving on courtleave is higher, in which case the payrate for compensation purposes isdetermined in accordance with 5 U.S.C.8114.

Peace Corps Volunteers

§ 10.730 What are the conditions ofcoverage for Peace Corps volunteers andvolunteer leaders injured while servingoutside the United States?

(a) Any injury sustained by avolunteer or volunteer leader while heor she is located abroad shall bepresumed to have been sustained in theperformance of duty, and any illnesscontracted during such time shall bepresumed to be proximately caused bythe employment. However, thispresumption will be rebutted byevidence that:

(1) The injury or illness was causedby the claimant’s willful misconduct,intent to bring about the injury or deathof self or another, or was proximatelycaused by the intoxication by alcohol orillegal drugs of the injured claimant; or

(2) The illness is shown to have pre-existed the period of service abroad; or

(3) The injury or illness claimed is amanifestation of symptoms of, orconsequent to, a pre-existing congenitaldefect or abnormality.

(b) If the presumption that an injuryor illness was sustained in theperformance of duty is rebutted asprovided by paragraph (a) of thissection, the claimant has the burden ofproving by the submittal of substantialand probative evidence that such injuryor illness was sustained in theperformance of duty with the PeaceCorps.

(c) If an injury or illness, or episodethereof, comes within one of theexceptions described in paragraph (a)(2)or (3) of this section, the claimant maynonetheless be entitled tocompensation. This will be so providedhe or she meets the burden of provingby the submittal of substantial,probative and rationalized medicalevidence that the illness or injury wasproximately caused by factors orconditions of Peace Corps service, orthat it was materially aggravated,accelerated or precipitated by factors ofPeace Corps service.

§ 10.731 What is the pay rate of PeaceCorps volunteers and volunteer leaders forcompensation purposes?

The pay rate for these claimants isdefined as the pay rate in effect on thedate following separation, provided thatthe rate equals or exceeds the pay rateon the date of injury. It is defined inaccordance with 5 U.S.C. 8142(a), not8101(4).

Non-Federal Law Enforcement Officers

§ 10.735 When is a non-Federal lawenforcement officer (LEO) covered underthe FECA?

(a) A law enforcement officer (officer)includes an employee of a State or localGovernment, the Governments of U.S.possessions and territories, or anemployee of the United Statespensioned or pensionable undersections 521–535 of Title 4, D.C. Code,whose functions include the activitieslisted in 5 U.S.C. 8191.

(b) Benefits are available to officerswho are not ‘‘employees’’ under 5U.S.C. 8101, and who are determined inthe discretion of OWCP to have beenengaged in the activities listed in 5U.S.C. 8191 with respect to theenforcement of crimes against theUnited States. Individuals who onlyperform administrative functions insupport of officers are not consideredofficers.

(c) Except as provided by 5 U.S.C.8191 and 8192 and elsewhere in thispart, the provisions of the FECA and ofsubparts A, B, and D through I of thispart apply to officers.


§ 10.736 What are the time limits for filinga LEO claim?

OWCP must receive a claim forbenefits under 5 U.S.C. 8191 within fiveyears after the injury or death. This five-year limitation is not subject to waiver.The tolling provisions of 5 U.S.C.8122(d) do not apply to these claims.

§ 10.737 How is a LEO claim filed, and whocan file a LEO claim?

A claim for injury or occupationaldisease should be filed on Form CA–721; a death claim should be filed onForm CA–722. All claims should besubmitted to the officer’s employer forcompletion and forwarding to OWCP. Aclaim may be filed by the officer, theofficer’s survivor, or any person orassociation authorized to act on behalfof an officer or an officer’s survivors.

§ 10.738 Under what circumstances arebenefits payable in LEO claims?

(a) Benefits are payable when anofficer is injured while apprehending, orattempting to apprehend, an individualfor the commission of a Federal crime.However, either an actual Federal crimemust be in progress or have beencommitted, or objective evidence (ofwhich the officer is aware at the time ofinjury) must exist that a potentialFederal crime was in progress or hadalready been committed. The actual orpotential Federal crime must be anintegral part of the criminal activitytoward which the officer’s actions aredirected. The fact that an injury to anofficer is related in some way to thecommission of a Federal crime does notnecessarily bring the injury within thecoverage of the FECA. The FECA is notintended to cover officers who aremerely enforcing local laws.

(b) For benefits to be payable when anofficer is injured preventing, orattempting to prevent, a Federal crime,there must be objective evidence that aFederal crime is about to be committed.An officer’s belief, unsupported byobjective evidence, that he or she isacting to prevent the commission of aFederal crime will not result incoverage. Moreover, the officer’ssubjective intent, as measured by allavailable evidence (including theofficer’s own statements and testimony,if available), must have been directedtoward the prevention of a Federalcrime. In this context, an officer’s ownstatements and testimony are relevantto, but do not control, the determinationof coverage.

§ 10.739 What kind of objective evidenceof a potential Federal crime must exist forcoverage to be extended?

Based on the facts available at thetime of the event, the officer must have

an awareness of sufficient informationwhich would lead a reasonable officer,under the circumstances, to concludethat a Federal crime was in progress, orwas about to occur. This awarenessneed not extend to the preciseparticulars of the crime (the section ofTitle 18, United States Code, forexample), but there must be sufficientevidence that the officer was in factengaged in actual or attemptedapprehension of a Federal criminal orprevention of a Federal crime.

§ 10.740 In what situations will OWCPautomatically presume that a lawenforcement officer is covered by theFECA?

(a) Where an officer is detailed by acompetent State or local authority toassist a Federal law enforcementauthority in the protection of thePresident of the United States, or anyother person actually provided orentitled to U.S. Secret Serviceprotection, coverage will be extended.

(b) Coverage for officers of the U.S.Park Police and those officers of theUniformed Division of the U.S. SecretService who participate in the District ofColumbia Retirement System isadjudicated under the principles setforth in paragraph (a) of this section,and does not extend to numeroustangential activities of law enforcement(for example, reporting to work,changing clothes). However, officers ofthe Non-Uniformed Division of the U.S.Secret Service who participate in theDistrict of Columbia Retirement Systemare covered under the FECA during theperformance of all official duties.

§ 10.741 How are benefits calculated inLEO claims?

(a) Except for continuation of pay,eligible officers and survivors areentitled to the same benefits as if theofficer had been an employee under 5U.S.C. 8101. However, such benefitsmay be reduced or adjusted as OWCP inits discretion may deem appropriate toreflect comparable benefits which theofficer or survivor received or wouldhave been entitled to receive by virtueof the officer’s employment.

(b) For the purpose of this section, acomparable benefit includes any benefitthat the officer or survivor is entitled toreceive because of the officer’semployment, including pension anddisability funds, State workers’compensation payments, Public SafetyOfficers’ Benefits Act payments, andState and local lump-sum payments.Health benefits coverage and proceedsof life insurance policies purchased bythe employer are not considered to becomparable benefits.

(c) The FECA provides that, where anofficer receives comparable benefits,compensation benefits are to be reducedproportionally in a manner that reflectsthe relative percentage contribution ofthe officer and the officer’s employer tothe fund which is the source of thecomparable benefit. Where the source ofthe comparable benefit is a retirement orother system which is not fully funded,the calculation of the amount of thereduction will be based on a per capitacomparison between the contribution bythe employer and the contribution by allcovered officers during the year prior tothe officer’s injury or death.

(d) The non-receipt of compensationduring a period where a dual benefit(such as a lump-sum payment on thedeath of an officer) is being offsetagainst compensation entitlement doesnot result in an adjustment of therespective benefit percentages ofremaining beneficiaries because of acessation of compensation under 5U.S.C. 8133(c).

Subpart I—Information for MedicalProviders

Medical Records and Bills

§ 10.800 What kind of medical recordsmust providers keep?

Agency medical officers, privatephysicians and hospitals are required tokeep records of all cases treated by themunder the FECA so they can supplyOWCP with a history of the injury, adescription of the nature and extent ofinjury, the results of any diagnosticstudies performed, the nature of thetreatment rendered and the degree ofany impairment and/or disability arisingfrom the injury.

§ 10.801 How are medical bills to besubmitted?

(a) All charges for medical andsurgical treatment, appliances orsupplies furnished to injuredemployees, except for treatment andsupplies provided by nursing homes,shall be supported by medical evidenceas provided in § 10.800. The physicianor provider shall itemize the charges onthe standard Health Insurance ClaimForm, HCFA 1500 or OWCP 1500, (forprofessional charges), the UB–92 (forhospitals), the Universal Claim Form(for pharmacies), or other form aswarranted, and submit the formpromptly to OWCP.

(b) The provider shall identify eachservice performed using the Physician’sCurrent Procedural Terminology (CPT)code, the Health Care FinancingAdministration Common ProcedureCoding System (HCPCS) code, theNational Drug Code (NDC), or the


Revenue Center Code (RCC), with a briefnarrative description. Where no code isapplicable, a detailed description ofservices performed should be provided.

(c) The provider shall also state eachdiagnosed condition and furnish thecorresponding diagnostic code using the‘‘International Classification of Disease,9th Edition, Clinical Modification’’(ICD–9-CM), or as revised. A separatebill shall be submitted when theemployee is discharged from treatmentor monthly, if treatment for the work-related condition is necessary for morethan 30 days.

(1) (i) Hospitals shall submit chargesfor medical and surgical treatment orsupplies promptly to OWCP on theUniform Bill (UB–92). The providershall identify each outpatient radiologyservice, outpatient pathology serviceand physical therapy service performed,using HCPCS/CPT codes with a briefnarrative description. The charge foreach individual service, or the totalcharge for all identical services, shouldalso appear in the UB–92.

(ii) Other outpatient hospital servicesfor which HCPCS/CPT codes exist shallalso be coded individually using thecoding scheme noted in this paragraph.Services for which there are no HCPCS/CPT codes available can be presentedusing the RCCs described in the‘‘National Uniform Billing DataElements Specifications’’, currentedition. The provider shall also furnishthe diagnostic code using the ICD–9–CM. If the outpatient hospital servicesinclude surgical and/or invasiveprocedures, the provider shall code eachprocedure using the proper CPT/HCPCScodes and furnishing the correspondingdiagnostic codes using the ICD–9–CM.

(2) Pharmacies shall itemize chargesfor prescription medications,appliances, or supplies on the UniversalClaim Form and submit them promptlyto OWCP. Bills for prescriptionmedications must include the NDCassigned to the product, the generic ortrade name of the drug provided, theprescription number, the quantityprovided, and the date the prescriptionwas filled.

(3) Nursing homes shall itemizecharges for appliances, supplies orservices on the provider’s billheadstationery and submit them promptly toOWCP.

(d) By submitting a bill and/oraccepting payment, the providersignifies that the service for whichreimbursement is sought was performedas described and was necessary. Inaddition, the provider thereby agrees tocomply with all regulations set forth inthis subpart concerning the rendering oftreatment and/or the process for seeking

reimbursement for medical services,including the limitation imposed on theamount to be paid for such services.

(e) In summary, bills submitted byproviders must: be itemized on theHealth Insurance Claim Form (forphysicians), the UB–92 (for hospitals),or the Universal Claim Form (forpharmacies); contain the signature orsignature stamp of the provider; andidentify the procedures using HCPCS/CPT codes, RCCs, or NDCs. Otherwise,OWCP may return the bill to theprovider for correction andresubmission.

§ 10.802 How should an employee prepareand submit requests for reimbursement formedical expenses, transportation costs,loss of wages, and incidental expenses?

(a) If an employee has paid bills formedical, surgical or dental services,supplies or appliances due to an injurysustained in the performance of duty, heor she may submit an itemized bill onthe Health Insurance Claim Form, HCFA1500 or OWCP 1500, together with amedical report as provided in § 10.800,to OWCP for consideration.

(1) The provider of such service shallstate each diagnosed condition andfurnish the applicable ICD–9–CM codeand identify each service performedusing the applicable HCPCS/CPT code,with a brief narrative description of theservice performed, or, where no code isapplicable, a detailed description of thatservice.

(2) The bill must be accompanied byevidence that the provider receivedpayment for the service from theemployee and a statement of the amountpaid. Acceptable evidence that paymentwas received includes, but is not limitedto, a signed statement by the provider,a mechanical stamp or other deviceshowing receipt of payment, a copy ofthe employee’s canceled check (bothfront and back) or a copy of theemployee’s credit card receipt.

(b) If services were provided by ahospital, pharmacy or nursing home, theemployee should submit the bill inaccordance with the provisions of§ 10.801(a). Any request forreimbursement must be accompanied byevidence, as described in paragraph (a)of this section, that the providerreceived payment for the service fromthe employee and a statement of theamount paid.

(c) OWCP may waive therequirements of paragraphs (a) and (b) ofthis section if extensive delays in thefiling or the adjudication of a claimmake it unusually difficult for theemployee to obtain the requiredinformation.

(d) OWCP will not accept copies ofbills for reimbursement unless they bearthe original signature of the provider,with evidence of payment. Payment formedical and surgical treatment,appliances or supplies shall in generalbe no greater than the maximumallowable charge for such servicedetermined by the Director, as set forthin § 10.805.

(e) An employee will be only partiallyreimbursed for a medical expense if theamount he or she paid to a provider forthe service exceeds the maximumallowable charge set by the Director’sschedule. If this happens, OWCP shalladvise the employee of the maximumallowable charge for the service inquestion and of his or her responsibilityto ask the provider to refund to theemployee, or credit to the employee’saccount, the amount he or she paidwhich exceeds the maximum allowablecharge. The provider may requestreconsideration of the fee determinationas set forth in § 10.812.

(f) If the provider fails to makeappropriate refund to the employee, orto credit the employee’s account, within60 days after the employee requests arefund of any excess amount, or the dateof a subsequent reconsiderationdecision which continues to disallow allor a portion of the appealed amount,OWCP shall initiate exclusionprocedures as provided by § 10.815.

(g) If the provider does not refund tothe employee or credit to his or heraccount the amount of money paid inexcess of the charge which OWCPallows, the employee should submitdocumentation of the attempt to obtainsuch refund or credit to OWCP. OWCPmay make reasonable reimbursement tothe employee after reviewing the factsand circumstances of the case.

§ 10.803 What are the time limitations onOWCP’s payment of bills?

OWCP will pay providers andreimburse employees promptly for allbills received on an approved form andin a timely manner. However, no billwill be paid for expenses incurred if thebill is submitted more than one yearbeyond the end of the calendar year inwhich the expense was incurred or theservice or supply was provided, or morethan one year beyond the end of thecalendar year in which the claim wasfirst accepted as compensable by OWCP,whichever is later.

Medical Fee Schedule

§ 10.805 What services are covered by theOWCP fee schedule?

(a) Payment for medical and otherhealth services furnished by physicians,hospitals and other providers for work-


related injuries shall not exceed amaximum allowable charge for suchservice as determined by the Director,except as provided in this section.

(b) The schedule of maximumallowable charges does not apply tocharges for services provided in nursinghomes, but it does apply to charges fortreatment furnished in a nursing homeby a physician or other medicalprofessional.

(c) The schedule of maximumallowable charges also does not apply tocharges for appliances, supplies,services or treatment furnished bymedical facilities of the U.S. PublicHealth Service or the Departments of theArmy, Navy, Air Force and VeteransAffairs.

§ 10.806 How are the maximum feesdefined?

For professional medical services, theDirector shall maintain a schedule ofmaximum allowable fees for proceduresperformed in a given locality. Theschedule shall consist of: An assignmentof a value to procedures identified byHealth Care Financing AdministrationCommon Procedure Coding System/Current Procedural Terminology(HCPCS/CPT) code which represents therelative skill, effort, risk and timerequired to perform the procedure, ascompared to other procedures of thesame general class; an index based on arelative value scale that considers skill,labor, overhead, malpractice insuranceand other related costs; and a monetaryvalue assignment (conversion factor) forone unit of value in each of thecategories of service.

§ 10.807 How are payments for particularservices calculated?

Payment for a procedure identified bya HCPCS/CPT code shall not exceed theamount derived by multiplying therelative values for that procedure by thegeographic indices for services in thatarea and by the dollar amount assignedto one unit in that category of service.

(a) The ‘‘locality’’ which serves as abasis for the determination of averagecost is defined by the Bureau of CensusMetropolitan Statistical Areas. TheDirector shall base the determination ofthe relative per capita cost of medicalcare in a locality using informationabout enrollment and medical cost percounty, provided by the Health CareFinancing Administration (HCFA).

(b) The Director shall assign therelative value units (RVUs) published byHCFA to all services for which HCFAhas made assignments, using the mostrecent revision. Where there are noRVUs assigned to a procedure, theDirector may develop and assign any

RVUs that he or she considersappropriate. The geographic adjustmentfactor shall be that designated byGeographic Practice Cost Indices forMetropolitan Statistical Areas asdevised for HCFA and as updated orrevised by HCFA from time to time. TheDirector will devise conversion factorsfor each category of service, and indoing so may adapt HCFA conversionfactors as appropriate using OWCP’sprocessing experience and internal data.

(c) For example, if the unit values fora particular surgical procedure are 2.48for physician’s work (W), 3.63 forpractice expense (PE), and 0.48 formalpractice insurance (M), and thedollar value assigned to one unit in thatcategory of service (surgery) is $61.20,then the maximum allowable charge forone performance of that procedure is theproduct of the three RVUs times thecorresponding geographical indices forthe locality times the conversion factor.If the geographic indices for the localityare 0.988(W), 0.948 (PE), and 1.174 (M),then the maximum payment calculationis:[(2.48)(0.988) + (3.63)(0.948) +

(0.48)(1.174)] × $61.20[2.45 + 3.44 + .56] × $61.206.45 × $61.20 = $394.74

§ 10.808 Does the fee schedule apply toevery kind of procedure?

Where the time, effort and skillrequired to perform a particularprocedure vary widely from oneoccasion to the next, the Director maychoose not to assign a relative value tothat procedure. In this case theallowable charge for the procedure willbe set individually based onconsideration of a detailed medicalreport and other evidence. At itsdiscretion, OWCP may set fees withoutregard to schedule limits for speciallyauthorized consultant examinations, forexaminations performed under 5 U.S.C.8123, and for other specially authorizedservices.

§ 10.809 How are payments for medicinaldrugs determined?

Payment for medicinal drugsprescribed by physicians shall notexceed the amount derived bymultiplying the average wholesale priceof the medication by the quantity oramount provided, plus a dispensing fee.

(a) All prescription medicationsidentified by National Drug Code (NDC)will be assigned an average wholesaleprice representing the product’snationally recognized wholesale price asdetermined by surveys of manufacturersand wholesalers. The Director willestablish the dispensing fee.

(b) The NDCs, the average wholesaleprices, and the dispensing fee shall bereviewed from time to time and updatedas necessary.

§ 10.810 How are payments for inpatientmedical services determined?

(a) OWCP will pay for inpatientmedical services according to pre-determined, condition-specific ratesbased on the Prospective PaymentSystem (PPS) devised by HCFA (42 CFRparts 412, 413, 424, 485, and 489). Usingthis system, payment is derived bymultiplying the diagnosis-related group(DRG) weight assigned to the hospitaldischarge by the provider-specificfactors.

(1) All hospital discharges will beclassified according to the DRGsprescribed by the HCFA in the form ofthe DRG Grouper software program. Onthis list, each DRG represents theaverage resources necessary to providecare in a case in that DRG relative to thenational average of resources consumedper case.

(2) The provider-specific factors willbe provided by HCFA in the form oftheir PPS Pricer software program. Thesoftware takes into consideration thetype of facility, census division, actualgeographic location (MSA) of thehospital, case mix cost per discharge,number of hospital beds, intern/bedsratio, operating cost to charge ratio, andother factors used by HCFA todetermine the specific rate for a hospitaldischarge under their PPS. The Directormay devise price adjustment factors asappropriate using OWCP’s processingexperience and internal data.

(3) OWCP will base payments tofacilities excluded from HCFA’s PPS onconsideration of detailed medicalreports and other evidence.

(4) The Director shall review the pre-determined hospital rates at least oncea year, and may adjust any or allcomponents when he or she deems itnecessary or appropriate.

(b) The Director shall review theschedule of fees at least once a year, andmay adjust the schedule or any of itscomponents when he or she deems itnecessary or appropriate.

§ 10.811 When and how are fees reduced?(a) OWCP shall accept a provider’s

designation of the code to identify abilled procedure or service if the codeis consistent with medical reports andother evidence. Where no code issupplied, OWCP may determine thecode based on the narrative descriptionof the procedure on the billing form andin associated medical reports. OWCPwill pay no more than the maximumallowable fee for that procedure.


(b) If the charge submitted for aservice supplied to an injured employeeexceeds the maximum amountdetermined to be reasonable accordingto the schedule, OWCP shall pay theamount allowed by the schedule for thatservice and shall notify the provider inwriting that payment was reduced forthat service in accordance with theschedule. OWCP shall also notify theprovider of the method for requestingreconsideration of the balance of thecharge.

§ 10.812 If OWCP reduces a fee, may aprovider request reconsideration of thereduction?

(a) A physician or other providerwhose charge for service is onlypartially paid because it exceeds amaximum allowable amount set by theDirector may, within 30 days, requestreconsideration of the feedetermination.

(1) The provider should make such arequest to the OWCP district office withjurisdiction over the employee’s claim.The request must be accompanied bydocumentary evidence that theprocedure performed was incorrectlyidentified by the original code, that thepresence of a severe or concomitantmedical condition made treatmentespecially difficult, or that the providerpossessed unusual qualifications. Initself, board-certification in a specialtyis not sufficient evidence of unusualqualifications to justify an exception.These are the only three circumstanceswhich will justify reevaluation of thepaid amount.

(2) A list of OWCP district offices andtheir respective areas of jurisdiction isavailable upon request from the U.S.Department of Labor, Office of Workers’Compensation Programs, Washington,DC 20210, or from the Internet atwww.dol.gov./dol/esa/owcp.htm.Within 30 days of receiving the requestfor reconsideration, the OWCP districtoffice shall respond in writing statingwhether or not an additional amountwill be allowed as reasonable,considering the evidence submitted.

(b) If the OWCP district office issuesa decision which continues to disallowa contested amount, the provider mayapply to the Regional Director of theregion with jurisdiction over the OWCPdistrict office. The application must befiled within 30 days of the date of suchdecision, and it may be accompanied byadditional evidence. Within 60 days ofreceipt of such application, the RegionalDirector shall issue a decision in writingstating whether or not an additionalamount will be allowed as reasonable,considering the evidence submitted.

This decision shall be final, and shallnot be subject to further review.

§ 10.813 If OWCP reduces a fee, may aprovider bill the claimant for the balance?

A provider whose fee for service ispartially paid by OWCP as a result ofthe application of its fee schedule orother tests for reasonableness inaccordance with this part shall notrequest reimbursement from theemployee for additional amounts.

(a) Where a provider’s fee for aparticular service or procedure is lowerto the general public than as providedby the schedule of maximum allowablecharges, the provider shall bill at thelower rate. A fee for a particular serviceor procedure which is higher than theprovider’s fee to the general public forthat same service or procedure will beconsidered a charge ‘‘substantially inexcess of such provider’s customarycharges’’ for the purposes of § 10.815(d).

(b) A provider whose fee for serviceis partially paid by OWCP as the resultof the application of the schedule ofmaximum allowable charges and whocollects or attempts to collect from theemployee, either directly or through acollection agent, any amount in excessof the charge allowed by OWCP, andwho does not cease such action or makeappropriate refund to the employeewithin 60 days of the date of thedecision of OWCP, shall be subject tothe exclusion procedures provided by§ 10.815(h).

Exclusion of Providers

§ 10.815 What are the grounds forexcluding a provider from payment underthe FECA?

A physician, hospital, or provider ofmedical services or supplies shall beexcluded from payment under the FECAif such physician, hospital or providerhas:

(a) Been convicted under any criminalstatute of fraudulent activities inconnection with any Federal or Stateprogram for which payments are madeto providers for similar medical,surgical or hospital services, appliancesor supplies;

(b) Been excluded or suspended, orhas resigned in lieu of exclusion orsuspension, from participation in anyFederal or State program referred to inparagraph (a) of this section;

(c) Knowingly made, or caused to bemade, any false statement ormisrepresentation of a material fact inconnection with a determination of theright to reimbursement under the FECA,or in connection with a request forpayment;

(d) Submitted, or caused to besubmitted, three or more bills or

requests for payment within a twelve-month period under this subpartcontaining charges which the Directorfinds to be substantially in excess ofsuch provider’s customary charges,unless the Director finds there is goodcause for the bills or requests containingsuch charges;

(e) Knowingly failed to timelyreimburse employees for treatment,services or supplies furnished underthis subpart and paid for by OWCP;

(f) Failed, neglected or refused onthree or more occasions during a 12-month period to submit full andaccurate medical reports, or to respondto requests by OWCP for additionalreports or information, as required bythe FECA and § 10.800;

(g) Knowingly furnished treatment,services or supplies which aresubstantially in excess of the employee’sneeds, or of a quality which fails to meetprofessionally recognized standards; or

(h) Collected or attempted to collectfrom the employee, either directly orthrough a collection agent, an amount inexcess of the charge allowed by OWCPfor the procedure performed, and hasfailed or refused to make appropriaterefund to the employee, or to cease suchcollection attempts, within 60 days ofthe date of the decision of OWCP.

§ 10.816 What will cause OWCP toautomatically exclude a physician or otherprovider of medical services and supplies?

(a) OWCP shall automatically excludea physician, hospital, or provider ofmedical services or supplies who hasbeen convicted of a crime described in§ 10.815(a), or has been excluded orsuspended, or has resigned in lieu ofexclusion or suspension, fromparticipation in any program asdescribed in § 10.815(b).

(b) The exclusion applies toparticipating in the program and toseeking payment under the FECA forservices performed after the date of theentry of the judgment of conviction ororder of exclusion, suspension orresignation, as the case may be, by thecourt or agency concerned. Proof of theconviction, exclusion, suspension orresignation may consist of a copythereof authenticated by the seal of thecourt or agency concerned.

§ 10.817 When are OWCP’s exclusionprocedures initiated?

Upon receipt of informationindicating that a physician, hospital orprovider of medical services or supplies(hereinafter the provider) has engaged inactivities enumerated in paragraphs (c)through (h) of § 10.815, the RegionalDirector, after completion of inquirieshe or she deems appropriate, may


initiate procedures to exclude theprovider from participation in the FECAprogram. For the purposes of thissection, ‘‘Regional Director’’ mayinclude any officer designated to act onhis or her behalf.

§ 10.818 How is a provider notified ofOWCP’s intent to exclude him or her?

The Regional Director shall initiatethe exclusion process by sending theprovider a letter, by certified mail andwith return receipt requested, whichshall contain the following:

(a) A concise statement of the groundsupon which exclusion shall be based;

(b) A summary of the information,with supporting documentation, uponwhich the Regional Director has reliedin reaching an initial decision thatexclusion proceedings should begin;

(c) An invitation to the provider to:(1) Resign voluntarily from

participation in the FECA programwithout admitting or denying theallegations presented in the letter; or

(2) Request that the decision onexclusion be based upon the existingrecord and any additional documentaryinformation the provider may wish tofurnish;

(d) A notice of the provider’s right, inthe event of an adverse ruling by theRegional Director, to request a formalhearing before an administrative lawjudge;

(e) A notice that should the providerfail to answer (as described in § 10.819)the letter of intent within 30 calendardays of receipt, the Regional Directormay deem the allegations made thereinto be true and may order exclusion ofthe provider without conducting anyfurther proceedings; and

(f) The name and address of theOWCP representative who shall beresponsible for receiving the answerfrom the provider.

§ 10.819 What requirements must theprovider’s reply and OWCP’s decisionmeet?

(a) The provider’s answer shall be inwriting and shall include an answer toOWCP’s invitation to resign voluntarily.If the provider does not offer to resign,he or she shall request that adetermination be made upon theexisting record and any additionalinformation provided.

(b) Should the provider fail to answerthe letter of intent within 30 calendardays of receipt, the Regional Directormay deem the allegations made thereinto be true and may order exclusion ofthe provider.

(c) By arrangement with the officialrepresentative, the provider may inspector request copies of information in the

record at any time prior to the RegionalDirector’s decision.

(d) The Regional Director shall issuehis or her decision in writing, and shallsend a copy of the decision to theprovider by certified mail, return receiptrequested. The decision shall advise theprovider of his or her right to request,within 30 days of the date of the adversedecision, a formal hearing before anadministrative law judge under theprocedures set forth in § 10.820. Thefiling of a request for a hearing withinthe time specified shall stay theeffectiveness of the decision to exclude.

§ 10.820 How can an excluded providerrequest a hearing?

A request for a hearing shall be sentto the official representative namedunder § 10.818(f) and shall contain:

(a) A concise notice of the issues onwhich the provider desires to giveevidence at the hearing;

(b) Any request for a more definitestatement by OWCP;

(c) Any request for the presentation oforal argument or evidence; and

(d) Any request for a certification ofquestions concerning professionalmedical standards, medical ethics ormedical regulation for an advisoryopinion from a competent recognizedprofessional organization or Federal,State or local regulatory body.

§ 10.821 How are hearings assigned andscheduled?

(a) If the designated OWCPrepresentative receives a timely requestfor hearing, the OWCP representativeshall refer the matter to the ChiefAdministrative Law Judge of theDepartment of Labor, who shall assignit for an expedited hearing. Theadministrative law judge assigned to thematter shall consider the request forhearing, act on all requests therein, andissue a Notice of Hearing and HearingSchedule for the conduct of the hearing.A copy of the hearing notice shall beserved on the provider by certified mail,return receipt requested. The Notice ofHearing and Hearing Schedule shallinclude:

(1) A ruling on each item raised in therequest for hearing;

(2) A schedule for the promptdisposition of all preliminary matters,including requests for more definitestatements and for the certification ofquestions to advisory bodies; and

(3) A scheduled hearing date not lessthan 30 days after the date the scheduleis issued, and not less than 15 days afterthe scheduled conclusion of preliminarymatters, provided that the specific timeand place of the hearing may be set on10 days’ notice.

(b) The purpose of the designation ofissues is to provide for an effectivehearing process. The provider is entitledto be heard on any matter placed inissue by his or her response to theNotice of Intent to Exclude, and maydesignate ‘‘all issues’’ for purposes ofhearing. However, a specific designationof issues is required if the providerwishes to interpose affirmative defenses,or request the issuance of subpoenas orthe certification of questions for anadvisory opinion.

§ 10.822 How are subpoenas or advisoryopinions obtained?

(a) The provider may apply to theadministrative law judge for theissuance of subpoenas upon a showingof good cause therefor.

(b) A certification of a request for anadvisory opinion concerningprofessional medical standards, medicalethics or medical regulation to acompetent recognized or professionalorganization or Federal, State or localregulatory agency may be made:

(1) As to an issue properly designatedby the provider, in the sound discretionof the administrative law judge,provided that the request will notunduly delay the proceedings;

(2) By OWCP on its own motion eitherbefore or after the institution ofproceedings, and the results thereofshall be made available to the providerat the time that proceedings areinstituted or, if after the proceedings areinstituted, within a reasonable time afterreceipt. The opinion, if rendered by theorganization or agency, is advisory onlyand not binding on the administrativelaw judge.

§ 10.823 How will the administrative lawjudge conduct the hearing and issue therecommended decision?

(a) To the extent appropriate,proceedings before the administrativelaw judge shall be governed by 29 CFRpart 18.

(b) The administrative law judge shallreceive such relevant evidence as maybe adduced at the hearing. Evidenceshall be presented under oath, orally orin the form of written statements. Theadministrative law judge shall considerthe Notice and Response, including allpertinent documents accompanyingthem, and may also consider anyevidence which refers to the provider orto any claim with respect to which theprovider has provided medical services,hospital services, or medical servicesand supplies, and such other evidenceas the administrative law judge maydetermine to be necessary or useful inevaluating the matter.

(c) All hearings shall be recorded andthe original of the complete transcript


shall become a permanent part of theofficial record of the proceedings.

(d) Pursuant to 5 U.S.C. 8126, theadministrative law judge may:

(1) Issue subpoenas for and compelthe attendance of witnesses within aradius of 100 miles;

(2) Administer oaths;(3) Examine witnesses; and(4) Require the production of books,

papers, documents, and other evidencewith respect to the proceedings.

(e) At the conclusion of the hearing,the administrative law judge shall issuea written decision and cause it to beserved on all parties to the proceeding,their representatives and the Director.

§ 10.824 How can a party request reviewby the Director of the administrative lawjudge’s recommended decision?

(a) Any party adversely affected oraggrieved by the decision of theadministrative law judge may file apetition for discretionary review withthe Director within 30 days afterissuance of such decision. Theadministrative law judge’s decision,however, shall be effective on the dateissued and shall not be stayed exceptupon order of the Director.

(b) Review by the Director shall not bea matter of right but of the sounddiscretion of the Director.

(c) Petitions for discretionary reviewshall be filed only upon one or more ofthe following grounds:

(1) A finding or conclusion of materialfact is not supported by substantialevidence;

(2) A necessary legal conclusion iserroneous;

(3) The decision is contrary to law orto the duly promulgated rules ordecisions of the Director;

(4) A substantial question of law,policy, or discretion is involved; or

(5) A prejudicial error of procedurewas committed.

(d) Each issue shall be separatelynumbered and plainly and conciselystated, and shall be supported bydetailed citations to the record whenassignments of error are based on therecord, and by statutes, regulations orprincipal authorities relied upon.Except for good cause shown, noassignment of error by any party shallrely on any question of fact or law uponwhich the administrative law judge hadnot been afforded an opportunity topass.

(e) A statement in opposition to thepetition for discretionary review may befiled, but such filing shall in no waydelay action on the petition.

(f) If a petition is granted, review shallbe limited to the questions raised by thepetition.

(g) A petition not granted within 20days after receipt of the petition isdeemed denied.

(h) The decision of the Director shallbe final with respect to the provider’sparticipation in the program, and shallnot be subject to further review by anycourt or agency.

§ 10.825 What are the effects of exclusion?(a) OWCP shall give notice of the

exclusion of a physician, hospital orprovider of medical services or suppliesto:

(1) All OWCP district offices;(2) All Federal employers;(3) The HCFA;(4) The State or local authority

responsible for licensing or certifyingthe excluded party; and

(5) All employees who are known tohave had treatment, services or suppliesfrom the excluded provider within thesix-month period immediatelypreceding the order of exclusion.

(b) Notwithstanding any exclusion ofa physician, hospital, or provider ofmedical services or supplies under thissubpart, OWCP shall not refuse anemployee reimbursement for anyotherwise reimbursable medicaltreatment, service or supply if:

(1) Such treatment, service or supplywas rendered in an emergency by anexcluded physician; or

(2) The employee could notreasonably have been expected to haveknown of such exclusion.

(c) An employee who is notified thathis or her attending physician has beenexcluded shall have a new right to selecta qualified physician.

§ 10.826 How can an excluded provider bereinstated?

(a) If a physician, hospital, or providerof medical services or supplies has beenautomatically excluded pursuant to§ 10.816, the provider excluded willautomatically be reinstated upon noticeto OWCP that the conviction orexclusion which formed the basis of theautomatic exclusion has been reversedor withdrawn. However, an automaticreinstatement shall not preclude OWCPfrom instituting exclusion proceedingsbased upon the underlying facts of thematter.

(b) A physician, hospital, or providerof medical services or supplies excludedfrom participation as a result of an orderissued pursuant to this subpart mayapply for reinstatement one year afterthe entry of the order of exclusion,unless the order expressly provides fora shorter period. An application forreinstatement shall be addressed to theDirector for Federal Employees’Compensation, and shall contain a

concise statement of the basis for theapplication. The application should beaccompanied by supporting documentsand affidavits.

(c) A request for reinstatement may beaccompanied by a request for oralargument. Oral argument will beallowed only in unusual circumstanceswhere it will materially aid the decisionprocess.

(d) The Director for FederalEmployees’ Compensation shall orderreinstatement only in instances wheresuch reinstatement is clearly consistentwith the goal of this subpart to protectthe FECA program against fraud andabuse. To satisfy this requirement theprovider must provide reasonableassurances that the basis for theexclusion will not be repeated.

2. Part 25 is revised to read as follows:

Part 25—Compensation for Disabilityand Death of Noncitizen FederalEmployees Outside the United States


Sec.25.1 How are claims of Federal employees

who are neither citizens nor residentsadjudicated?

25.2 In general, what is the Director’s policyregarding such claims?

25.3 What is the authority to settle and paysuch claims?

25.4 What type of evidence is required toestablish a claim under this part?

25.5 What special rules does OWCP applyto claims of third and fourth countrynationals?

25.6 How does OWCP adjudicate claims ofnon-citizen residents of possessions?

Subpart B—The Special Schedule ofCompensation

25.100 How is compensation for disabilitypaid?

25.101 How is compensation for deathpaid?

25.102 What general provisions does OWCPapply to the Special Schedule?

Subpart C—Extensions of the SpecialSchedule of Compensation

25.200 How is the Special Schedule appliedfor employees in the Republic of thePhilippines?

25.201 How is the Special Schedule appliedfor employees in Australia?

25.202 How is the Special Schedule appliedfor Japanese seamen?

25.203 How is the Special Schedule appliedto non-resident aliens in the Territory ofGuam?

Authority: 5 U.S.C. 301, 8137, 8145 and8149; 1946 Reorganization Plan No. 2, sec. 3,3 CFR 1943–1948 Comp., p. 1064; 60 Stat.1095; Reorganization Plan No. 19 of 1950,sec. 1, 3 CFR 1943–1953 Comp., p. 1010; 64Stat. 1271; Secretary’s Order 5–96, 62 FR 107.



§ 25.1 How are claims of Federalemployees who are neither citizens norresidents adjudicated?

This part describes how OWCP payscompensation under the FECA toemployees of the United States who areneither citizens nor residents of theUnited States, any territory or Canada,as well as to any dependents of suchemployees. It has been determined thatthe compensation provided under theFECA is substantially disproportionateto the compensation for disability ordeath which is payable in similar casesunder local law, regulation, custom orotherwise, in areas outside the UnitedStates, any territory or Canada.Therefore, with respect to the claims ofsuch employees whose injury (or injuryresulting in death) has occurredsubsequent to December 7, 1941, or mayoccur, the regulations in this part shallapply.

§ 25.2 In general, what is the Director’spolicy regarding such claims?

(a) Pursuant to 5 U.S.C. 8137, thebenefit features of local workers’compensation laws, or provisions in thenature of workers’ compensation, ineffect in areas outside the United States,any territory or Canada shall, effectiveas of December 7, 1941 and asrecognized by the Director, be adoptedand apply in the cases of employees ofthe United States who are neithercitizens nor residents of the UnitedStates, any territory or Canada, unless aspecial schedule of compensation forinjury or death has been establishedunder this part for the particularlocality, or for a class of employees inthe particular locality.

(b) The benefit provisions adoptedunder paragraph (a) of this section arethose dealing with money payments forinjury and death (including medicalbenefits), as well as those dealing withservices and purposes forming anintegral part of the local plan, providedthey are of a kind or character similarto services and purposes authorized bythe FECA.

(1) Procedural provisions,designations of classes of beneficiariesin death cases, limitations (except thoseaffecting amounts of benefit payments),and any other provisions not directlyaffecting the amounts of the benefitpayments, in such local plans, shall notapply, but in lieu thereof the pertinentprovisions of the FECA shall apply,unless modified in this section.

(2) However, the Director may at anytime modify, limit or redesignate theclass or classes of beneficiaries entitledto death benefits, including the

designation of persons, representativesor groups entitled to payment underlocal statute or custom whether or notincluded in the classes of beneficiariesotherwise specified by this subchapter.

(c) Compensation in all cases of suchemployees paid and closed prior toJanuary 4, 1999 shall be deemedcompromised and paid under 5 U.S.C.8137. In all other cases, compensationmay be adjusted to conform with theregulations in this part, or thebeneficiary may by compromise oragreement with the Director havecompensation continued on the basis ofa previous adjustment of the claim.

(d) Persons employed in a country orarea having no well-defined workers’compensation benefits structure shall beaccorded the benefits provided—eitherby local law or special schedule—in anearby country as determined by theDirector. In selecting the benefitstructure to be applied, equity andadministrative ease will be givenconsideration, as well as local custom.

(e) Compensation for disability anddeath of non-citizens outside the UnitedStates under this part, whether paidunder local law or special schedule,shall in no event exceed that generallypayable under the FECA.

§ 25.3 What is the authority to settle andpay such claims?

In addition to the authority to receive,process and pay claims, when delegatedsuch representative or agency receivingdelegation of authority shall, in respectto cases adjudicated under this part, andwhen so authorized by the Director,have authority to make lump-sumawards (in the manner prescribed by 5U.S.C. 8135) whenever such authorizedrepresentative shall deem suchsettlement to be for the best interest ofthe United States, and to compromiseand pay claims for any benefitsprovided for under this part, includingclaims in which there is a dispute as toquestions of fact or law. The Directorshall, in instructions to the particularrepresentative concerned, establish suchprocedures in respect to action underthis section as he or she may deemnecessary, and may specify the scope ofany administrative review of suchaction.

§ 25.4 What type of evidence is required toestablish a claim under this part?

Claims of employees of the UnitedStates who are neither citizens norresidents of the United States, anyterritory or Canada, if otherwisecompensable, shall be approved onlyupon evidence of the following naturewithout regard to the date of injury ordeath for which claim is made:

(a) Appropriate certification by theFederal employing establishment; or

(b) An armed service’s casualty ormedical record; or

(c) Verification of the employmentand casualty by military personnel; or

(d) Recommendation of an armedservice’s ‘‘Claim Service’’ based oninvestigations conducted by it.

§ 25.5 What special rules does OWCPapply to claims of third and fourth countrynationals?

(a) Definitions. A ‘‘third countrynational’’ is a person who is neither acitizen nor resident of the United Stateswho is hired by the United States in theperson’s country of citizenship orresidence for employment in anotherforeign country, or in a possession orterritory of the United States. A ‘‘fourthcountry national’’ is a person who isneither a citizen nor resident of eitherthe country of hire or the place ofemployment, but who otherwise meetsthe definition of third country national.‘‘Benefits applicable to local hires’’ arethe benefits provided in this part bylocal law or special schedule, asdetermined by the Director. Withrespect to a United States territory orpossession, ‘‘local law’’ means only thelaw of the particular territory orpossession.

(b) Benefits payable. Third and fourthcountry nationals shall be paid thebenefits applicable to local hires in thecountry of hire or the place ofemployment, whichever benefits aregreater, provided that all benefitspayable on account of one injury mustbe paid under the same benefitstructure.

(1) Where no well-defined workers’compensation benefits structure isprovided in either the country of hire orthe place of employment, the provisionsof § 25.2(d) shall apply.

(2) Where equitable considerations asdetermined by the Director so warrant,a fourth country national may beawarded benefits applicable to localhires in his or her home country.

§ 25.6 How does OWCP adjudicate claimsof non-citizen residents of possessions?

An employee who is a bona fidepermanent resident of any United Statespossession, territory, commonwealth ortrust territory will receive the fullbenefits of the FECA, as amended,except that the application of theminimum benefit provisions providedtherein shall be governed by therestrictions set forth in 5 U.S.C. 8138.


Subpart B—The Special Schedule ofCompensation

§ 25.100 How is compensation fordisability paid?

Compensation for disability shall bepaid to the employee as follows:

(a) Permanent total disability. In casesof permanent total disability, 662⁄3percent of the monthly pay during theperiod of such disability.

(b) Temporary total disability. In casesof temporary total disability, 662⁄3percent of the monthly pay during theperiod of such disability.

(c) Permanent partial disability. Incases of permanent partial disability,662⁄3 percent of the monthly pay, for thefollowing losses and periods:

(1) Arm lost: 280 weeks’compensation.

(2) Leg lost: 248 weeks’ compensation.(3) Hand lost: 212 weeks’

compensation.(4) Foot lost: 173 weeks’

compensation.(5) Eye lost: 140 weeks’

compensation.(6) Thumb lost: 51 weeks’

compensation.(7) First finger lost: 28 weeks’

compensation.(8) Great toe lost: 26 weeks’

compensation.(9) Second finger lost: 18 weeks’

compensation.(10) Third finger lost: 17 weeks’

compensation.(11) Toe, other than great toe, lost: 8

weeks’ compensation.(12) Fourth finger lost: 7 weeks’

compensation.(13) Loss of hearing: One ear, 52

weeks’ compensation; both ears, 200weeks’ compensation.

(14) Phalanges: Compensation for lossof more than one phalanx of a digit shallbe the same as for the loss of the entiredigit. Compensation for loss of the firstphalanx shall be one-half of thecompensation for the loss of the entiredigit.

(15) Amputated arm or leg:Compensation for an arm or a leg, ifamputated at or above the elbow or theknee, shall be the same as for the lossof the arm or leg; but, if amputatedbetween the elbow and the wrist, orbetween the knee and the ankle, thecompensation shall be the same as forthe loss of the hand or the foot.

(16) Binocular vision or percent ofvision: Compensation for loss ofbinocular vision, or for 80 percent ormore of the vision of an eye shall be thesame as for the loss of the eye.

(17) Two or more digits:Compensation for loss of two or moredigits, one or more phalanges of two or

more digits of a hand or foot may beproportioned to the loss of use of thehand or foot occasioned thereby, butshall not exceed the compensation forthe loss of a hand or a foot.

(18) Total loss of use: Compensationfor a permanent total loss of use of amember shall be the same as for loss ofthe member.

(19) Partial loss or partial loss of use:Compensation for permanent partialloss or loss of use of a member may befor proportionate loss of use of themember.

(20) Consecutive awards: In any casein which there shall be a loss or loss ofuse of more than one member or partsof more than one member set forth inparagraphs (c)(1) through (19) of thissection, but not amounting topermanent total disability, the award ofcompensation shall be for the loss orloss of use of each such member or partthereof, which awards shall runconsecutively, except that where theinjury affects only two or more digits ofthe same hand or foot, paragraph (c)(17)of this section shall apply.

(21) Other cases: In all other caseswithin this class of disability thecompensation during the continuance ofdisability shall be that proportion ofcompensation for permanent totaldisability, as determined underparagraph (a) of this section, which isequal in percentage to the degree orpercentage of physical impairmentcaused by the disability.

(22) Compensation under paragraphs(c)(1) through (21) of this section forpermanent partial disability shall be inaddition to any compensation fortemporary total or temporary partialdisability under this section, andawards for temporary total, temporarypartial, and permanent partial disabilityshall run consecutively.

(d) Temporary partial disability. Incases of temporary partial disability,during the period of disability, thatproportion of compensation fortemporary total disability, asdetermined under paragraph (b) of thissection, which is equal in percentage tothe degree or percentage of physicalimpairment caused by the disability.

§ 25.101 How is compensation for deathpaid?

If the disability causes death, thecompensation shall be payable in theamount and to or for the benefit of thefollowing persons:

(a) To the undertaker or personentitled to reimbursement, reasonablefuneral expenses not exceeding $200.

(b) To the surviving spouse, if there isno child, 35 percent of the monthly payuntil his or her death or remarriage.

(c) To the surviving spouse, if there isa child, the compensation payableunder paragraph (b) of this section, andin addition thereto 10 percent of themonthly wage for each child, not toexceed a total of 662⁄3 percent for suchsurviving spouse and children. If a childhas a guardian other than the survivingspouse, the compensation payable onaccount of such child shall be paid tosuch guardian. The compensation of anychild shall cease when he or she dies,marries or reaches the age of 18 years,or if over such age and incapable of self-support, becomes capable of self-support.

(d) To the children, if there is nosurviving spouse, 25 percent of themonthly pay for one child and 10percent thereof for each additionalchild, not to exceed a total of 662⁄3percent thereof, divided among suchchildren share and share alike. Thecompensation of each child shall bepaid until he or she dies, marries orreaches the age of 18, or if over such ageand incapable of self-support, becomescapable of self-support. Thecompensation of a child under legal ageshall be paid to its guardian, if there isone, otherwise to the person having thecustody or care of such child, for suchchild, as the Director in his or herdiscretion shall determine.

(e) To the parents, if one is whollydependent for support upon thedeceased employee at the time of his orher death and the other is notdependent to any extent, 25 percent ofthe monthly pay; if both are whollydependent, 20 percent thereof to each;if one is or both are partly dependent,a proportionate amount in the discretionof the Director. The compensation to aparent or parents in the percentagesspecified shall be paid if there is nosurviving spouse or child, but if there isa surviving spouse or child, there shallbe paid so much of such percentages fora parent or parents as, when added tothe total of the percentages of thesurviving spouse and children, will notexceed a total of 662⁄3 percent of themonthly pay.

(f) To the brothers, sisters,grandparents and grandchildren, if oneis wholly dependent upon the deceasedemployee for support at the time of hisor her death, 20 percent of the monthlypay to such dependent; if more than oneare wholly dependent, 30 percent ofsuch pay, divided among suchdependents share and share alike; ifthere is no one of them whollydependent, but one or more are partlydependent, 10 percent of such paydivided among such dependents shareand share alike. The compensation tosuch beneficiaries shall be paid if there


is no surviving spouse, child ordependent parent. If there is a survivingspouse, child or dependent parent, thereshall be paid so much of the abovepercentages as, when added to the totalof the percentages payable to thesurviving spouse, children anddependent parents, will not exceed atotal of 662⁄3 percent of such pay.

(g) The compensation of eachbeneficiary under paragraphs (e) and (f)of this section shall be paid until he orshe, if a parent or grandparent, dies,marries or ceases to be dependent, or, ifa brother, sister or grandchild, dies,marries or reaches the age of 18 years,or if over such age and incapable of self-support, becomes capable of self-support. The compensation of a brother,sister or grandchild under legal age shallbe paid to his or her guardian, if thereis one, otherwise to the person havingthe custody or care of such person, forsuch person, as the Director in his or herdiscretion shall determine.

(h) Upon the cessation of any person’scompensation for death under thissubpart, the compensation of anyremaining person entitled to continuingcompensation in the same case shall beadjusted, so that the continuingcompensation shall be at the same ratesuch person would have received hadno award been made to the personwhose compensation ceased.

(i) In cases where there are two ormore classes of persons entitled tocompensation for death under thissubpart, and the apportionment of suchcompensation as provided in thissection would result in injustice, theDirector may in his or her discretionmodify the apportionments to meet therequirements of the case.

§ 25.102 What general provisions doesOWCP apply to the Special Schedule?

(a) The definitions of terms in theFECA, as amended, shall apply to termsused in this subpart.

(b) The provisions of the FECA,unless modified by this subpart orotherwise inapplicable, shall be appliedwhenever possible in the application ofthis subpart.

(c) The provisions of the regulationsfor the administration of the FECA, asamended or supplemented from time totime by instructions applicable to thissubpart, shall apply in theadministration of compensation underthis subpart, whenever they canreasonably be applied.

Subpart C—Extensions of the SpecialSchedule of Compensation

§ 25.200 How is the Special Scheduleapplied for employees in the Republic of thePhilippines?

(a) Modified special schedule ofcompensation. Except for injury ordeath of direct-hire employees of theU.S. Military Forces covered by thePhilippine Medical Care Program andthe Employees’ Compensation Programpursuant to the agreement signed by theUnited States and the Republic of thePhilippines on March 10, 1982 who arealso members of the Philippine SocialSecurity System, the special schedule ofcompensation established in subpart Bof this part shall apply, with themodifications or additions specified inparagraphs (b) through (k) of thissection, in the Republic of thePhilippines, to injury or death occurringon or after July 1, 1968, with thefollowing limitations:

(1) Temporary disability. Benefits forpayments accruing on and after July 1,1969, for injuries causing temporarydisability and which occurred on andafter July 1, 1968, shall be payable at therates in the special schedule as modifiedin this section.

(2) Permanent disability and death.Benefits for injuries occurring on andafter July 1, 1968, which causepermanent disability or death, shall bepayable at the rates specified in thespecial schedule as modified in thissection for all awards not paid in fullbefore July 1, 1969, and any award paidin full prior to July 1, 1969: Provided,that application for adjustment is made,and the adjustment will result inadditional benefits of at least $10. In thecase of injuries or death occurring on orafter December 8, 1941 and prior to July1, 1968, the special schedule asmodified in this section may be appliedto prospective awards for permanentdisability or death, provided that themonthly and aggregate maximumprovisions in effect at the time of injuryor death shall prevail. These maxima are$50 and $4,000, respectively.

(b) Death benefits. 400 weeks’compensation at two-thirds of theweekly wage rate, shared equally by theeligible survivors in the same class.

(c) Death beneficiaries. Benefits arepayable to the survivors in the followingorder of priority (all beneficiaries in thehighest applicable classes are entitled toshare equally):

(1) Surviving spouse and unmarriedchildren under 18, or over 18 and totallyincapable of self-support.

(2) Dependent parents.(3) Dependent grandparents.

(4) Dependent grandchildren, brothersand sisters who are unmarried andunder 18, or over 18 and totallyincapable of self-support.

(d) Burial allowance. 14 weeks’ wagesor $400, whichever is less, payable tothe eligible survivor(s), regardless of theactual expense. If there is no eligiblesurvivor, actual burial expenses may bepaid or reimbursed, in an amount not toexceed what would be paid to aneligible survivor.

(e) Permanent total disability. 400weeks’ compensation at two-thirds ofthe weekly wage rate.

(f) Permanent partial disability.Where applicable, the compensationprovided in paragraphs (c)(1) through(19) of § 25.100, subject to an aggregatelimitation of 400 weeks’ compensation.In all other cases, provided forpermanent total disability thatproportion of the compensation(paragraph (e) of this section) which isequivalent to the degree or percentage ofphysical impairment caused by thedisability.

(g) Temporary partial disability. Two-thirds of the weekly loss of wage-earning capacity.

(h) Compensation period fortemporary disability. Compensation fortemporary disability is payable for amaximum period of 80 weeks.

(i) Maximum compensation. The totalaggregate compensation payable in anycase, for injury or death or both, shallnot exceed $8,000, exclusive of medicalcosts and burial allowance. The weeklyrate of compensation for disability ordeath shall not exceed $35.

(j) Method of payment. Onlycompensation for temporary disabilityshall be payable periodically.Compensation for permanent disabilityand death shall be payable in full at thetime the extent of entitlement isestablished.

(k) Exceptions. The Director in his orher discretion may make exceptions tothe regulations in this section by:

(1) Reapportioning death benefits, forthe sake of equity.

(2) Excluding from considerationpotential death beneficiaries who arenot available to receive payment.

(3) Paying compensation forpermanent disability or death on aperiodic basis, where this method ofpayment is considered to be in the bestinterest of the beneficiary.

§ 25.201 How is the Special Scheduleapplied for employees in Australia?

(a) The special schedule ofcompensation established by subpart Bof this part shall apply in Australia withthe modifications or additions specifiedin paragraph (b) of this section, as of


December 8, 1941, in all cases of injury(or death from injury) which occurredbetween December 8, 1941 andDecember 31, 1961, inclusive, and shallbe applied retrospectively in all suchcases of injury (or death from injury).Compensation in all such cases pendingas of July 15, 1946, shall be readjustedaccordingly, with credit taken in theamount of compensation paid prior tosuch date. Refund of compensation shallnot be required if the amount ofcompensation paid in any such case,otherwise than through fraud,misrepresentation or mistake, and priorto July 15, 1946, exceeds the amountprovided for under this paragraph, andsuch case shall be deemed compromisedand paid under 5 U.S.C. 8137.

(b) The total aggregate compensationpayable in any case under paragraph (a)of this section, for injury or death orboth, shall not exceed the sum of$4,000, exclusive of medical costs. Themaximum monthly rate ofcompensation in any such case shall notexceed the sum of $50.

(c) The benefit amounts payableunder the provisions of theCommonwealth Employees’Compensation Act of 1930–1964,Australia, shall apply as of January 1,1962, in Australia, as the exclusivemeasure of compensation in cases ofinjury (or death from injury) accordingon and after January 1, 1962, and shallbe applied retrospectively in all suchcases, occurring on and after such date:Provided, that the compensationpayable under the provisions of thisparagraph shall in no event exceed thatpayable under the FECA.

§ 25.202 How is the Special Scheduleapplied for Japanese seamen?

(a) The special schedule ofcompensation established by subpart Bof this part shall apply as of November1, 1971, with the modifications oradditions specified in paragraphs (b)through (i) of this section, to injuriessustained outside the continentalUnited States or Canada by direct-hireJapanese seamen who are neithercitizens nor residents of the UnitedStates or Canada and who are employedby the Military Sealift Command inJapan.

(b) Temporary total disability. Weeklycompensation shall be paid at 75percent of the weekly wage rate.

(c) Temporary partial disability.Weekly compensation shall be paid at75 percent of the weekly loss of wage-earning capacity.

(d) Permanent total disability.Compensation shall be paid in a lumpsum equivalent to 360 weeks’ wages.

(e) Permanent partial disability.

(1) The provisions of § 25.100 shallapply to the types of permanent partialdisability listed in paragraphs (c)(1)through (19) of that section: Providedthat weekly compensation shall be paidat 75 percent of the weekly wage rateand that the number of weeks allowedfor specified losses shall be changed asfollows:

(i) Arm lost: 312 weeks.(ii) Leg lost: 288 weeks.(iii) Hand lost: 244 weeks.(iv) Foot lost: 205 weeks.(v) Eye lost: 160 weeks.(vi) Thumb lost: 75 weeks.(vii) First finger lost: 46 weeks.(viii) Second finger lost: 30 weeks.(ix) Third finger lost: 25 weeks.(x) Fourth finger lost: 15 weeks.(xi) Great toe lost: 38 weeks.(xii) Toe, other than great toe lost: 16

weeks.(2) In all other cases, that proportion

of the compensation provided forpermanent total disability in paragraph(d) of this section which is equivalent tothe degree or percentage of physicalimpairment caused by the injury.

(f) Death. If there are two or moreeligible survivors, compensationequivalent to 360 weeks’ wages shall bepaid to the survivors, share and sharealike. If there is only one eligiblesurvivor, compensation equivalent to300 weeks’ wages shall be paid. Thefollowing survivors are eligible for deathbenefits:

(1) Spouse who lived with or wasdependent upon the employee.

(2) Unmarried children under 21 wholived with or were dependent upon theemployee.

(3) Adult children who weredependent upon the employee by reasonof physical or mental disability.

(4) Dependent parents, grandparentsand grandchildren.

(g) Burial allowance. $1,000 payableto the eligible survivor(s), regardless ofactual expenses. If there are no eligiblesurvivors, actual expenses may be paidor reimbursed, up to $1,000.

(h) Method of payment. Onlycompensation for temporary disabilityshall be payable periodically, asentitlement accrues. Compensation forpermanent disability and death shall bepayable in a lump sum.

(i) Maxima. In all cases, the maximumweekly benefit shall be $130. Also,except in cases of permanent totaldisability and death, the aggregatemaximum compensation payable forany injury shall be $40,000.

(j) Prior injury. In cases where injuryor death occurred prior to November 1,1971, benefits will be paid inaccordance with regulationspromulgated, contained in 20 CFR parts

1–399, edition revised as of January 1,1971.

§ 25.203 How is the Special Scheduleapplied to non-resident aliens in theTerritory of Guam?

(a) The special schedule ofcompensation established by subpart Bof this part shall apply, with themodifications or additions specified inparagraphs (b) through (k) of thissection, to injury or death occurring onor after July 1, 1971 in the Territory ofGuam to non-resident alien employeesrecruited in foreign countries foremployment by the militarydepartments in the Territory of Guam.However, the Director may, in his or herdiscretion, adopt the benefit featuresand provisions of local workers’compensation law as provided insubpart A of this part, or substitute thespecial schedule in subpart B of thispart or other modifications of thespecial schedule in this subpart C, ifsuch adoption or substitution would beto the advantage of the employee or hisor her beneficiary. This schedule shallnot apply to any employee whobecomes a permanent resident in theTerritory of Guam prior to the date ofhis or her injury or death.

(b) Death benefits. 400 weeks’compensation at two-thirds of theweekly wage rate, shared equally by theeligible survivors in the same class.

(c) Death beneficiaries. Beneficiariesof death benefits shall be determined inaccordance with the laws or customs ofthe country of recruitment.

(d) Burial allowance. 14 weeks’ wagesor $400, whichever is less, payable tothe eligible survivor(s), regardless of theactual expense. If there is no eligiblesurvivor, actual burial expenses may bepaid or reimbursed, in an amount not toexceed what would be paid to aneligible survivor.

(e) Permanent total disability. 400weeks’ compensation at two-thirds ofthe weekly wage rate.

(f) Permanent partial disability. Whereapplicable, the compensation providedin paragraphs (c)(1) through (19) of§ 25.100, subject to an aggregatelimitation of 400 weeks’ compensation.In all other cases, that proportion of thecompensation provided for permanenttotal disability (paragraph (e) of thissection) which is equivalent to thedegree or percentage of physicalimpairment caused by the disability.

(g) Temporary partial disability. Two-thirds of the weekly loss of wage-earning capacity.

(h) Compensation period fortemporary disability. Compensation fortemporary disability is payable for amaximum period of 80 weeks.


(i) Maximum compensation. The totalaggregate compensation payable in anycase, for injury or death or both, shallnot exceed $24,000, exclusive ofmedical costs and burial allowance. Theweekly rate of compensation fordisability or death shall not exceed $70.

(j) Method of payment. Compensationfor temporary disability shall be payableperiodically. Compensation forpermanent disability and death shall bepayable in full at the time the extent ofentitlement is established.

(k) Exceptions. The Director may inhis or her discretion make exception tothe regulations in this section by:

(1) Reapportioning death benefits forthe sake of equity.

(2) Excluding from considerationpotential beneficiaries of a deceasedemployee who are not available toreceive payment.

(3) Paying compensation forpermanent disability or death on aperiodic basis, where this method ofpayment is considered to be in the best

interest of the employee or his or herbeneficiary(ies).

Signed at Washington, D.C., this 17th dayof November, 1998.

Alexis M. Herman,Secretary of Labor.

Bernard E. Anderson,Assistant Secretary for EmploymentStandards Administration.[FR Doc. 98–31190 Filed 11–24–98; 8:45 am]


fede

ral r

egiste

r

65347


Part III

Department ofCommerceInternational Trade Administration

19 CFR Part 351Countervailing Duties; Final Rule


1 The prior notices published by the Departmentas part of its URAA rulemaking activity are: (1)Advance Notice of Proposed Rulemaking andRequest for Public Comments (Antidumping Duties;Countervailing Duties; Article 1904 of the NorthAmerican Free Trade Agreement), 60 FR 80(January 3, 1995); (2) Advance Notice of ProposedRulemaking; Extension of Comment Period(Antidumping Duties; Countervailing Duties; Article1904 of the North American Free Trade Agreement),60 FR 9802 (February 22, 1995); (3) InterimRegulations; Request for Comments (Antidumpingand Countervailing Duties), 60 FR 25130 (May 11,1995); (4) Proposed Rule; Request for Comments(Antidumping and Countervailing DutyProceedings; Administrative Protective OrderProcedures; Procedures for Imposing Sanctions forViolation of a Protective Order), 61 FR 4826(February 8, 1996); (5) Notice of ProposedRulemaking and Request for Public Comments(Antidumping Duties; Countervailing Duties), 61 FR7308 (February 27, 1996); (6) Extension of Deadlineto File Public Comments on Proposed Antidumpingand Countervailing Duty Regulations andAnnouncement of Public Hearing (AntidumpingDuties; Countervailing Duties), 61 FR 18122 (April24, 1996); (7) Announcement of Opportunity to FilePublic Comments on the Public Hearing ofProposed Antidumping and Countervailing DutyRegulations (Antidumping Duties; CountervailingDuties), 61 FR 28821 (June 6, 1996); (8) Notice ofProposed Rulemaking and Request for PublicComment (Countervailing Duties), 62 FR 8818(February 26, 1997); (9) Final Rules (AntidumpingDuties; Countervailing Duties), 62 FR 27295 (May19, 1997); (10) Extension of Deadline to File PublicComments on Proposed Countervailing DutyRegulations, (Countervailing Duties), 62 FR 19719(April 23, 1997); (11) Extension of Deadline to FilePublic Comments on Proposed Countervailing DutyRegulations, (Countervailing Duties), 62 FR 25874(May 12, 1997); (12) Notice of Public Hearing onProposed Countervailing Duty Regulations andAnnouncement of Opportunity to File Post-HearingComments, (Countervailing Duties), 62 FR 38948(July 21, 1997); (13) Notice of Public Hearing onProposed Countervailing Duty Regulations andAnnouncement of Opportunity to File Post-HearingComments; Correction, (Countervailing Duties), 62FR 41322 (August 1, 1997); (14) Notice ofPostponement of Public Hearing on ProposedCountervailing Duty Regulations and ofOpportunity to File Post-Hearing Comments,(Countervailing Duties), 62 FR 46451 (September 3,1997); (15) Interim Final Rules; Request forComments (Procedures for Conducting Five-Year(‘‘Sunset’’) Reviews of Antidumping andCountervailing Duty Orders), 63 FR 13516 (March20, 1998); and (16) Final Rule; AdministrativeProtective Order Procedures; Procedures forImposing Sanctions for Violation of a ProtectiveOrder, (Antidumping and Countervailing DutyProceedings), 63 FR 24391 (May 4, 1998).

2 See Statement of Administrative Actionaccompanying H.R. 5110, H.R. Doc. No. 316, Vol.1, 103d Cong., 2d Sess. 911–955 (1994).

3 See Notice of Proposed Rulemaking and Requestfor Public Comments (Countervailing Duties), 54 FR23366 (May 31, 1989).



19 CFR Part 351

[Docket No. 950306068–8205–05]

RIN 0625–AA45

Countervailing Duties

AGENCY: International TradeAdministration, Department ofCommerce.ACTION: Final rule.

SUMMARY: The Department of Commerce(‘‘the Department’’) hereby issues finalcountervailing duty regulations toconform to the Uruguay RoundAgreements Act, which implementedthe results of the Uruguay Roundmultilateral trade negotiations. TheDepartment has sought to issueregulations that: Where appropriate andfeasible, translate the principles of theimplementing legislation into specificand predictable rules, therebyfacilitating the administration of theselaws and providing greaterpredictability for private parties affectedby these laws; simplify and streamlinethe Department’s administration ofcountervailing duty proceedings in amanner consistent with the purpose ofthe statute and the President’sregulatory principles; and codify certainadministrative practices determined tobe appropriate under the new statuteand under the President’s RegulatoryReform Initiative.DATES: The effective date of this finalrule is December 28, 1998, except that§ 351.301(d) is effective on November25, 1998. See § 351.702 for applicabilitydates.FOR FURTHER INFORMATION CONTACT:Jennifer A. Yeske at (202) 482–1032 orJeffrey May at (202) 482–4412.SUPPLEMENTARY INFORMATION:

Background

The publication of this notice of finalrules, which deals with countervailingduty (‘‘CVD’’) methodology, completes asignificant portion of the process ofdeveloping regulations under theUruguay Round Agreements Act(‘‘URAA’’). The process began when theDepartment took the unusual step ofrequesting advance public comments inorder to ensure that, at the earliestpossible stage, we could consider andtake into account the views of theprivate sector entities that are affectedby the antidumping (‘‘AD’’) and CVDlaws. On February 26, 1997, theDepartment published proposed rulesdealing with CVD methodology (‘‘1997

Proposed Regulations’’). TheDepartment received over 200 writtenpublic comments regarding the 1997Proposed Regulations. On October 17,1997, the Department held a publichearing, and thereafter, received over 50additional post-hearing written publiccomments on the 1997 ProposedRegulations.1

In drafting these final rules, theDepartment has carefully reviewed andconsidered each of the comments itreceived. While we have not alwaysadopted suggestions made bycommenters, we found the comments tobe very useful in helping us to work ourway through the many legal and policy

issues addressed in the regulation.Therefore, we are extremely grateful tothose who took the time and trouble toexpress their views regarding how theDepartment should administer the CVDlaws in the future.

In addition, in these final rules, theDepartment has continued to be guidedby the objectives described in the 1997Proposed Regulations. Specifically,these objectives are: (1) Conformity withthe statutory amendments made by theURAA; (2) the elaboration throughregulation of certain statementscontained in the Statement ofAdministrative Action (‘‘SAA’’); 2 and(3) consistency with President Clinton’sRegulatory Reform Initiative and hisdirective to identify and eliminateobsolete and burdensome regulations.

In the case of CVD methodology, theDepartment previously issued proposedregulations in 1989 (‘‘1989 ProposedRegulations’’).3 Because the Departmentnever issued final rules, the 1989Proposed Regulations were not bindingon the Department or private parties.Nevertheless, to some extent both theDepartment and private parties relied onthe 1989 Proposed Regulations as arestatement of the Department’s CVDmethodology as it existed at the time.Thus, notwithstanding statutoryamendments made by the URAA andsubsequent developments in theDepartment’s administrative practice,the 1989 Proposed Regulations stillserve as a point of departure for anynew regulations dealing with CVDmethodology.

In an earlier rulemaking (see item 9 innote 1), we consolidated the AD andCVD regulations into a single part 351.For the most part, the regulationscontained in this notice constitutesubpart E of part 351.

Explanation of the Final RulesIn drafting these Final Regulations,

the Department carefully consideredeach of the comments received. Inaddition, we conducted our ownindependent review of those provisionsof the 1997 Proposed Regulations thatwere not the subject of publiccomments. The following sectionscontain a summary of the comments wereceived and the Department’sresponses to those comments. Inaddition, these sections contain anexplanation of changes the Departmenthas made to the 1997 ProposedRegulations either in response to


comments or on its own initiative.Finally, these sections contain arestatement of principles that remainunchanged from the 1997 ProposedRegulations and that were not thesubject of any public comments.

The Department is also hereby issuinginterim final rules to set forth certainprocedures for establishing the non-countervailable status of allegedsubsidies or subsidy programs pursuantto section 771(5B) of the Tariff Act of1930, as amended (‘‘the Act’’). Pursuantto authority at 5 U.S.C. 553(b)(A), theAssistant Secretary for ImportAdministration waives the requirementto provide prior notice and anopportunity for public commentbecause this action is a rule of agencyprocedure. This interim final rule is notsubject to the 30-day delay in itseffective date under 5 U.S.C. 553(d)because it is not a substantive rule. Theanalytical requirements of theRegulatory Flexibility Act (5 U.S.C. 601note) are inapplicable to this rulemakingbecause it is not one for which a Noticeof Proposed Rulemaking is requiredunder 5 U.S.C. 553 or any other statute.

Section 351.102

These regulations add severaldefinitions to § 351.102. Many of thesedefinitions are identical (or virtuallyidentical) to definitions contained in§ 355.41 of the 1989 ProposedRegulations, and some are based ondefinitions contained in the IllustrativeList of Export Subsidies (‘‘IllustrativeList’’) annexed to the Agreement onSubsidies and Countervailing Measures(‘‘SCM Agreement’’). We have madesome changes to the definitionscontained in the 1997 ProposedRegulations.

While we have not changed thedefinition of consumed in theproduction process, we are clarifyingthat the definition is not to be used asa way to expand significantly the rightsof countries to apply border adjustmentsfor a broad range of taxes on energy,particularly in the developed world. SeeSAA at 915.

The definition of firm is based on§ 355.41(a) of the 1989 ProposedRegulations, but an additional clausehas been added to clarify that thepurpose of this term is to serve as ashorthand expression for the recipientof an alleged subsidy. While other termscould be used, the use of the term‘‘firm’’ in this manner has become anaccepted part of CVD nomenclature. Forclarification, we have added ‘‘company’’and ‘‘joint venture’’ to the entities listedin the definition in the 1997 ProposedRegulations.

Similarly, the term government-provided is used as a shorthandadjective to distinguish the act orpractice being analyzed as a possiblecountervailable subsidy from the act orpractice being used as a benchmark. Asmade clear in the regulation, the use of‘‘government-provided’’ does not meanthat a subsidy must be directly providedby a government. This definition isunchanged from our 1997 ProposedRegulations.

As in our 1997 Proposed Regulations,loan is defined to include forms of debtfinancing other than what one normallyconsiders to be a ‘‘loan,’’ such as bondsor overdrafts. Again, this definition isintended as a shorthand expression inorder to avoid repetitive use of morecumbersome phrases, such as ‘‘loans orother debt instruments.’’

In this regard, the Departmentconsidered codifying its approach withrespect to so-called ‘‘hybridinstruments,’’ financial instruments thatdo not readily fall into the basiccategories of grant, loan, or equity. Inthe 1993 steel determinations (seeCertain Steel Products from Austria(General Issues Appendix), 58 FR37062, 37254 (July 9, 1993) (‘‘GIA’’)),the Department developed ahierarchical approach for categorizinghybrid instruments, an approach thatwas sustained in Geneva Steel v. UnitedStates, 914 F. Supp. 563 (CIT 1996).However, notwithstanding this judicialimprimatur, the Department hasrelatively little experience with hybridinstruments. Therefore, although theDepartment has no present intention ofdeviating from the approach set forth inthe GIA, the codification of thisapproach in the form of a regulationwould be premature at this time.

Many commenters proposeddefinitions of the phrase ‘‘entrusts ordirects’’ as it is used in section771(5)(B)(iii) of the Act, which dealswith ‘‘indirect subsidies.’’ Indirectsubsidies generally involve situationswhere a government provides afinancial contribution through a privatebody. Under section 771(5)(B)(iii) of theAct, a subsidy exists when, inter alia, agovernment ‘‘makes a payment to afunding mechanism to provide afinancial contribution, or entrusts ordirects a private entity to make afinancial contribution * * *’’ (emphasisadded). In our 1997 ProposedRegulations, we did not address indirectsubsidies in detail. Instead, we notedthat the SAA directs the Department toproceed on a case-by-case basis (seeSAA at 925–26), and we requestedcomments on the factors we shouldconsider in making our case-by-casedeterminations.

One commenter suggested that anindirect subsidy need only be linked toa government action or program tosatisfy the ‘‘entrusts or directs’’standard. This same commenter askedthe Department to include anillustrative list of situations that wouldmeet the ‘‘entrusts or directs’’ standard.A second commenter believed that thestandard is met when a governmenttakes an action that causes a privateparty to confer a benefit. This samecommenter asked the Department toclarify that the term ‘‘private body’’ isnot limited to a single entity, but alsoincludes a group of entities or persons.A third commenter proposed that the‘‘entrusts or directs’’ standard beconsidered satisfied whenever agovernment takes an action thatproximately results in a private entityproviding a financial contribution.Certain commenters also asked theDepartment to confirm that the standardis no narrower than the prior U.S.standard for finding an indirect subsidy.

The issue of what ‘‘entrusts ordirects’’ means was debated extensivelyat the Department’s hearing on its 1997Proposed Regulations. This debateprompted the submission of additionalproposed definitions. Two commentersargued that an indirect subsidy occurswhenever a government action has theinevitable result of compelling a privateparty to provide a benefit. A secondcommenter proposed a ‘‘but for’’ test,i.e., if the government did not act, thesubsidy would not exist.

As the extensive comments on thisissue indicate, the phrase ‘‘entrusts ordirects’’ could encompass a broad rangeof meanings. As such, we do not believeit is appropriate to develop a precisedefinition of the phrase for purposes ofthese regulations. Rather, we believethat we should follow the guidanceprovided in the SAA to examineindirect subsidies on a case-by-casebasis. We will, however, enforce thisprovision vigorously.

We agree with those commenters whourged the Department to confirm thatthe current standard is no narrower thanthe prior U.S. standard for finding anindirect subsidy as described in CertainSteel Products from Korea, 58 FR 37338(July 9, 1993) and Certain SoftwoodLumber Products from Canada, 57 FR22570 (May 28, 1992). Also, we believethat the phrase ‘‘entrusts or directs’’subsumes many elements of thedefinitions proposed by commenters.With respect to the suggestion that weinclude an illustrative list of situationsthat would fall under the ‘‘entrusts ordirects’’ standard, we do not believe thisis necessary. The SAA at 926 lists anumber of cases where the Department


has found indirect subsidies in the past,and these cases serve to provideexamples of situations where we believethe statute would permit theDepartment to reach the same result.Similarly, regarding the request that wedefine the phrase ‘‘private entity’’ toinclude groups of entities or persons,the SAA is clear that groups areincluded (see SAA at 926). Therefore,we have not promulgated a regulationwith this definition.

Although the indirect subsidies thatwe have countervailed in the past havenormally taken the form of a foreigngovernment requiring an intermediateparty to provide a benefit to the industryproducing the subject merchandise,often to the detriment of theintermediate party, indirect subsidiescould also take the form of a foreigngovernment causing an intermediateparty to provide a benefit to the industryproducing the subject merchandise in away that is also in the interest of theintermediate party. We believe thephrase ‘‘entrusts or directs’’ couldencompass government actions thatprovide inducements, other thanupstream subsidies, to a private party toprovide a benefit to another party.

One commenter argued that the FinalRegulations should include a definitionof consultations. Consistent with Article13 of the SCM Agreement, section702(b)(4)(A)(ii) of the Act requires theDepartment to provide the governmentof the exporting country named in apetition an opportunity forconsultations with respect to thepetition. This commenter suggested thatthe definition of consultations shouldinclude a statement of purpose asarticulated in the SCM Agreement (i.e.,clarifying the allegations in the petitionand arriving at a mutually agreedsolution). Furthermore, the commenterargued, in the Final Regulations theDepartment should commit to consultwith the foreign government both priorto initiating and during the course of theinvestigation. Finally, the commenterproposed that the definition contain arequirement that all government-to-government exchanges (oral andwritten) be placed on the record of theproceeding.

We do not believe that a regulation isrequired to define ‘‘consultations.’’ Weagree that, in accordance with Article 13of the SCM Agreement, the purpose ofconsultations is to clarify the allegationspresented in a petition and arrive at amutually agreed solution. Section351.202(h)(2)(i)(2) of AntidumpingDuties; Countervailing Duties; Finalrule, 62 FR 27295, 27384 (May 19, 1997)clearly states that the Department willinvite the government of any exporting

country named in a CVD petition tohold consultations with respect to thepetition. Further, consistent with Article13.2 of the SCM Agreement, theDepartment affords foreign governmentsreasonable opportunities to consultthroughout the period of investigation.In regard to communications, it is theDepartment’s longstanding practice thatall ex parte communications withDepartment decisionmakers be placedon the record of a proceeding throughmemoranda to the file.

Section 351.501Section 351.501 restates very

generally the subject matter of subpartE. To be more specific, the arrangementof subpart E is as follows. After dealingwith the specificity of domesticsubsidies in § 351.502 and the conceptof ‘‘benefit’’ in § 351.503, §§ 351.504through 351.513 deal with theidentification and measurement ofvarious general types of subsidypractices. Sections 351.514 through351.520 focus on export subsidies,incorporating the appropriate standardsfrom the Illustrative List of ExportSubsidies contained in Annex I of theSCM Agreement. Sections 351.521through 351.523 deal with importsubstitution subsidies (currentlydesignated as ‘‘Reserved’’), green lightand green box subsidies, and upstreamsubsidies, respectively. Section 351.524addresses the allocation of benefits to aparticular time period. Section 351.525sets forth rules regarding the calculationof an ad valorem subsidy rate and theattribution of a subsidy to theappropriate sales value of a product.Finally, §§ 351.526 and 351.527 containrules regarding program-wide changesand transnational subsidies,respectively. The section numbering inthese Final Regulations reflects minorchanges from the 1997 ProposedRegulations. As discussed below, wehave decided to codify a final rule onthe concept of ‘‘benefit.’’ This rule isnow § 351.503. We have also moved therules regarding the allocation ofbenefits, which were included in thesection on grants in the 1997 ProposedRegulations to a separate section,§ 351.524. Finally, we have moved§ 351.520 of the 1997 ProposedRegulations to § 351.514(b) becausegeneral export promotion activities aremore appropriately addressed as anexception to export subsidies.

The last sentence of § 351.501acknowledges that subpart E does notaddress every possible type of subsidypractice. However, the same sentenceprovides that in dealing with allegedsubsidies that are not expressly coveredby these regulations, the Secretary will

be guided by the underlying principlesof the Act and subpart E.

In this regard, the Act and the SCMAgreement serve to eliminate much ofthe confusion and controversysurrounding the necessary elements of acountervailable subsidy. First, undersection 771(5)(B) of the Act and Article1.1(a)(1) and (2) of the SCM Agreement,there must be a financial contributionthat a government provides eitherdirectly or indirectly, or an income orprice support in the sense of Article XVIof the General Agreement on Tariffs andTrade 1994 (‘‘GATT 1994’’). Althoughthe precise parameters will have to bedetermined on a case-by-case basis, thiselement provides a framework foranalysis that previously was not directlyaddressed.

Second, under section 771(5)(B) of theAct and Article 1.1(b) of the SCMAgreement, the financial contribution(or income or price support) must confera benefit. Section 351.503 sets out theprinciples we will generally follow indetermining whether a benefit has beenconferred.

Finally, under section 771(5)(A) of theAct and Article 1.2 of the SCMAgreement, a subsidy must be specificin order to be countervailable. The‘‘specificity test’’ is addressed in§ 351.502, but we note here that byclarifying the purpose of the specificitytest and the manner in which it is to beapplied, the URAA, the SAA and theSCM Agreement should serve to reducethe controversies and volume oflitigation concerning this issue.

In the preamble to our 1997 ProposedRegulations we discussed our decisionnot to include two topics in ourproposed changes to subpart E: Indirectsubsidies (with the exception ofupstream subsidies) and privatization.The numerous comments regarding ourdecision not to promulgate regulationson these two topics are addressedbelow.

Indirect SubsidiesIn our 1997 Proposed Regulations, we

discussed only briefly the topic ofindirect subsidies. We received severalcomments on this issue. Commentsconcerning the adoption of a definitionof the phrase ‘‘entrusts or directs’’ havebeen addressed previously (see§ 351.102). The remaining commentsrelating to indirect subsidies areaddressed here.

One commenter asked the Departmentto codify a rule stating that indirectsubsidies are countervailable. In thiscommenter’s view, this would eliminateany uncertainty that could become thecause of litigation. Another commenterrequested that the Department include a


broad definition of indirect subsidies inour regulations.

We have not adopted eithersuggestion. We believe that section771(5)(B)(iii) of the Act clearly statesthat subsidies provided by governmentsthrough private parties are covered bythe CVD law. Additionally, section771(5)(C) of the Act states that thedetermination of whether a subsidyexists shall be made ‘‘without regard towhether the subsidy is provided directlyor indirectly * * *’’ (emphasis added).Therefore, no regulation is needed onthis point. Regarding the secondcomment, as discussed previously, thephrase ‘‘entrusts or directs’’ as used insection 771(5)(B)(iii) of the Act couldencompass a broad range of meanings.As such, we do not believe it isappropriate to develop a precisedefinition of the phrase for purposes ofthese regulations.

One commenter singled out subsidiesinvolving the provision of goods andservices for less than adequateremuneration and asked the Departmentto confirm that indirect subsidies can beconferred through the provision ofgoods or services by private parties.This same commenter also asked theDepartment to state in the preamble tothe Final Regulations that the newstatute will not alter the Department’spractice of finding export restraints tobe countervailable. Other commentersobjected to this position. They arguedthat: (1) The practices constitutingfinancial contributions under the Actare payments of cash or cashequivalents, while governmentregulatory measures do not entail anyfinancial contribution; (2) exportrestraints do not direct private parties tomake any type of payment; they simplylimit the parties’ ability to export; (3)regulatory measures that distort tradeare separately covered by other WorldTrade Organization (‘‘WTO’’)Agreements (e.g., GATT 1994 Articles I–V, VII–IX, Agreement on Sanitary andPhytosanitary Measures, Agreement onTechnical Barriers to Trade, andAgreement on Trade-Related InvestmentMeasures); and (4) expanding thedefinition of subsidy to includeregulatory measures would extend thatterm to absurd dimensions far beyondthe limited scope intended by the SCMAgreement and the Act. These samecommenters urged the Department toissue a regulation which clarifies whatthey see as a conflict between the clearlanguage in the statute (regulatorymeasures are not financial contributionswithin the meaning of the Act and,hence, cannot confer subsidies) and thelanguage in the SAA at 926 (suggesting

that regulatory measures can becountervailed as indirect subsidies).

Regarding the issue of whetherindirect subsidies can arise through theprovision of goods and services, webelieve this is clearly answered by theAct. Section 771(5)(D)(iii) states thatfinancial contributions include theprovision of goods or services. Hence, ifa private entity is entrusted or directedto provide a good or service toproducers of the merchandise underinvestigation, a financial contributionexists. With regard to export restraints,while they may be imposed to limitparties’ ability to export, they can also,in certain circumstances, lead thoseparties to provide the restrained good todomestic purchasers for less thanadequate remuneration. This wasrecognized by the Department in CertainSoftwood Lumber Products fromCanada, 57 FR 22570 (May 28, 1992)(‘‘Lumber’’) and Leather from Argentina,55 FR 40212 (October 2, 1990)(‘‘Leather’’). Further, as indicated by theSAA (at 926), and as we confirm inthese Final Regulations, if theDepartment were to investigatesituations and facts similar to thoseexamined in Lumber and Leather in thefuture, the new statute would permit theDepartment to reach the same result.

We agree that regulatory measuresthat distort trade normally may besubject to the provisions of other WTOAgreements. We do not believe,however, that this negates our ability toaddress them through the application ofour CVD law when such measures meetthe definition of a countervailablesubsidy. We disagree that countervailingsuch measures goes beyond the ambit ofthe SCM Agreement and the Act. Asdiscussed above in response to anearlier comment, the SCM Agreementclearly permits, and the Act clearlyrequires, that we countervail subsidiesprovided through private parties. Also,Article VI of GATT 1994 continues torefer to subsidies provided ‘‘directly orindirectly’’ by a government.

Change in OwnershipThe SAA and the House and Senate

Reports emphasize the importance ofconsidering the facts of individual casesto determine whether, and to whatextent, change-in-ownershiptransactions eliminate previouslyconferred countervailable subsidies. Inthe 1997 Proposed Regulations, we didnot include a provision dealing withchange in ownership. Rather, we invitedcomment on a broad array of factorsconcerning this topic and whether weshould promulgate a final rule thatintegrates some or all of the factorsidentified in the preamble.

The comments we received on thisissue largely fell along two lines. On theone hand, several commenters arguedthat the Department should promulgatea regulation stating that change-in-ownership transactions, even ifconducted at arm’s-length and at fairmarket value, have no effect on non-recurring subsidies bestowed prior tothe sale of a firm, and that non-recurringsubsidies, in most instances, passthrough in their entirety to the sold orprivatized entity. Conversely, othercommenters contended that a change-in-ownership regulation should establish arebuttable presumption that, in general,the sale or change in ownership of afirm at fair market value eliminates thebenefit conferred by prior non-recurringsubsidies.

According to the first group ofcommenters, under section 771(5)(F) ofthe Act, the change in ownership of afirm has no effect on the Department’sability to countervail fully subsidiesbestowed prior to the change inownership. In fact, in these commenters’view, Congress expected the Departmentto continue countervailing priorsubsidies, unless something serves toeliminate those subsidies. The sale of afirm at fair market value does not serveto eliminate prior subsidies; thus, aftersuch a sale, prior subsidies wouldcontinue to be countervailed until fullyamortized. The only instance wherepartial repayment of prior subsidies canexist is where economic resources havebeen returned to the government, i.e.,where the investor has paid more thanfair market value for a productive unit.The Department should specify this inits regulations.

These same commenters argued thatrecent court decisions support theconclusion that subsidies continue to becountervailable after the privatization ofa firm at fair market value. See, e.g.,Saarstahl AG v. United States, 78 F.3d1539 (Fed. Cir. 1996); British Steel plcv. United States, 127 F.3d 1471 (Fed.Cir. 1997). In light of these decisions,one commenter stated that it would beironic for the Department now toconclude under the URAA thatsubsidies are no longer countervailableafter the sale of a firm at fair marketvalue. This commenter also claimed thatsuch a conclusion would result in anti-subsidy practices weaker than those ofthe European Union (‘‘EU’’), because EUGuidelines on State Aid recognize thatthe sale of a company does notextinguish previously bestowedsubsidies. Rather, according to thiscommenter, the EU requires subsidyrecipients to repay illegal subsidies,including principal and interest, fromthe time the aid was disbursed, without


4 In support of this proposition, the commentercites Community Guidelines on State Aid forRescuing and Restructuring Firms in Difficulty, O.J.Eur. Comm. No. C283/2 at 283/4 (September 19,1997) (‘‘The assessment of rescue or restructuringaid is not affected by changes in the ownership ofthe business aided. Thus, it will not be possible toevade control by transferring the business toanother legal entity or owner.’’)

regard to whether the recipient is latersold or privatized.4

These commenters opposed theDepartment’s attempt to develop a‘‘flexible’’ approach towardprivatization. They expressed concernthat ascribing any significance to thebroad array of factors listed in the 1997Proposed Regulations may lead to all orsome pre-privatization subsidies beingextinguished in a fair marketprivatization, which would involvereevaluating the amount, and possiblythe existence, of prior subsidies basedon post-bestowal events and conditions.This would violate the statute’sprohibition against considering theeffects of subsidies and theDepartment’s practice of not examiningsubsequent events to determine whetherthe subject merchandise continues tobenefit from subsidies. See section771(5)(C) of the Act and GIA at 37261.For example, one commenter stated thattaking account of current marketconditions, such as global overcapacity,in determining the extent to which pre-privatization subsidies pass through, istantamount to considering effects.Similarly, another commenter rejectedthe suggestion that subsidies that reduceexcess capacity are not countervailablebecause this too depends on animpermissible ‘‘use’’ analysis. Whateverthe use of the subsidy, thesecommenters argued, the benefit from thesubsidy continues unabated afterprivatization.

Finally, this first group of commentersasserted that the privatization or sale ofa productive unit, even at fair marketvalue, does not result in any partial orfull repayment of prior subsidies. Toconclude otherwise would conflict withCongress’ mandate that theDepartment’s privatization methodologybe ‘‘consistent with the principles of thecountervailing duty statute.’’ S. Rep. No.103–412, at 92 (1994). Those principlesinclude prohibitions against (1) focusingon subsequent events, (2) analyzingalleged effects of subsidies, (3) grantingoffsets not included in the exclusivestatutory list, and (4) valuing subsidiesbased on the cost-to-governmentstandard. Some in this first group ofcommenters asserted that the logicalreading of Congress’ instruction toevaluate change-in-ownershiptransactions on a case-by-case basis is to

determine whether a privatization orsale involving a productive unit elicitssome non-commercial activity, i.e.,whether under- or overpayment for theproductive unit has occurred. In thecase of underpayment, the Departmentshould find that additional subsidieshave been bestowed; in the case ofoverpayment, the Department shouldfind that certain prior subsidies havebeen repaid.

In contrast to these arguments, thesecond group of commenters assertedthat the Department should issueregulations establishing a rebuttablepresumption that the arm’s-length saleof a firm, including a government-owned enterprise, at a price that reflectsthe current market value of its assets, inmost cases extinguishes any previouslyreceived subsidies. This group arguedthat Congress’ instruction to examinechange-in-ownership transactions on acase-by-case basis indicates that theURAA contemplates extinguishment ofprior subsidies, at least in certaincircumstances. In these commenters’view, the arm’s-length sale of acompany at full market value is such acircumstance, because the market pricetakes into account prior subsidies, andthe benefit is, therefore, eliminated.However, if the price paid for the firmdoes not reflect full market value, thequestion of a continuing benefit canreasonably be raised. According toseveral of these commenters, any otherapproach would be counterproductive,because it would discourage potentialbuyers from bidding on subsidizedgovernment-owned enterprises about tobe privatized. One commenter furtherstressed that restructuring of, andforeign investment in, countries such asthose in Eastern Europe, may beinhibited, which is a concern for U.S.investors and the United States’ widereconomic and political interests.

One member of this group ofcommenters found support for theproposition that an arm’s-length sale atfair market value must extinguish priorsubsidies with the following statutoryanalysis. The commenter claimed thatthe URAA requires the Department todetermine whether and to what extentgovernment financial contributionsconfer a benefit on the production orsale of the investigated merchandise ineach CVD proceeding. Such adetermination is based on the nature ofthe subsidy benefit, which is theartificially reduced cost of an input usedin the production of the merchandise.Thus, where the subsidy is provided fora specific use, e.g., the acquisition ofcapital assets, the continuing subsidybenefit is the reduced cost of that assetallocated over the useful life of the

asset. Where government financialcontributions are not tied to specificapplications, as in the case of an equityinfusion, the Department shouldnormally view the money itself as thecontinuing subsidy benefit.

In light of this, the commentercontended that the Department’sprivatization analysis must firstexamine what inputs were acquired bythe subsidy recipient at an artificiallyreduced cost. Then, the Departmentmust determine whether the cost forthose inputs was artificially reduced forthe privatized company as well.According to this commenter, where theprivatization transaction occurs atarm’s-length and at fair market value,the privatized company would notcontinue to benefit from the pastsubsidies. Similarly, where governmentfinancial contributions are not tied tospecific applications, meaning that themoney itself is the continuing subsidybenefit, the Department’s focus shouldbe on the price and terms of theprivatization transaction. If theprivatization of the company, includingall its physical and financial assets, wasat fair market value, the Departmentwould not find any benefit to havepassed through, because the privatizedcompany would not be operating withany capital for which it paid less thanmarket value. According to thiscommenter, if the privatization of a firmwere at full market value, the newowners of the company have paid for allof the inputs at market value. Therefore,the privatized firm no longer operateswith inputs acquired at a cost that isless than what would have been paidwithout a government financialcontribution.

This commenter stressed that thereare several possible exceptions to thisrule. For example, where an asset wouldnot have been created or acquiredabsent the government financialcontribution, and where the creation oracquisition of the asset was noteconomically viable, the Departmentmay conclude that the very existence ofthe asset is the continuing benefit andnot the reduced costs of the asset. Insuch an instance, the benefit could bedeemed to continue, even after a fullmarket privatization. However, thiscommenter asserted that this wouldrepresent an exception to the generalrule.

This commenter rejected theargument that this analysis istantamount to an ‘‘effects’’ test. If asubsequent event does in fact eliminatesubsidization, limited Departmentalresources should not preventexamination of that event. Thecommenter stated that, in the case of


5 Citing Commission notice pursuant to Article93(2) of the EC Treaty to other Member States andinterested parties concerning aid which Germanyhas granted to Fritz Egger SpanplattenindustrieGmbH & Co. KG at Brilon, O.J. Eur. Comm. No.C369/6, 369/8–369/9 (1994), and AgreementRespecting Normal Competitive Conditions in theCommercial Shipbuilding and Repair Industry,opened for signature December 21, 1994, art. 8, ¶ 5.

subsidies not tied to any particular use,the only event that the Departmentwould need to consider is one whichwould eliminate the artificially reducedcost of the company’s inputs as a whole.The sale of an entire company formarket value is such an event, in thecommenter’s view. Where a subsidy istied to a particular use, the only eventthat the Department would need toconsider is one that would affect oreliminate the benefit arising from thatspecific use. Moreover, according to thecommenter, in numerous contexts theDepartment traces the use of a subsidy.These include instances wheresubsidies are provided for certain usesthat may be greenlighted or that maybenefit a company over time, i.e., non-recurring subsidies.

Most commenters also found faultwith the Department’s existingrepayment or reallocation methodology,under which pre-sale subsidies arepartially repaid to the seller as part ofthe purchase price. Several commentersargued that the repayment/reallocationmethodology should be abandoned,because it is not defensible,economically or legally. According tothese commenters, the repayment/reallocation methodology violates theoffset provision of the statute (section771(6) of the Act), because thisprovision does not include repaymentor reallocation of subsidies in thecontext of a privatization at fair marketvalue. Moreover, a fair-market-valueprivatization does not offset thedistortion caused by governmentsubsidies, a fact recognized by EU law,according to which subsidy repaymentcan occur only if the illegal aid isreturned.5 According to thesecommenters, the repayment/reallocationmethodology is also inconsistent withthe Department’s and the Court’s‘‘conceptual model of subsidies,’’ whichpresumes that subsidies distort marketprocesses and result in a misallocationof resources (citing Carbon Steel WireRod from Poland, 49 FR 19374, 19375(May 7, 1984), and Georgetown SteelCorp. v. United States, 801 F.2d 1308,1315–16 (Fed. Cir. 1986) (‘‘GeorgetownSteel’’). Under this model, repayment orreallocation can only occur if anequivalent ‘‘distortion’’ takes place, thatis, a return of the illegally providedresources from the subsidized entity.

This does not occur, the commentersemphasized, in a fair-marketprivatization. Further, the repayment/reallocation methodology is inconsistentwith the benefit-to-recipient standardbecause it is based on the assumptionthat the government was paid moremoney upon privatization than it wouldhave received absent the subsidy, a factthat is only relevant under a cost-to-government standard. Thesecommenters stated that while the cost ofthe subsidy to the government may bediminished in a fair-marketprivatization, the value of the subsidy tothe recipient is unchanged. Accordingto these commenters, by finding thatrepayment/reallocation occurs in a fair-market-value transaction, theDepartment is encouragingsubsidization. This violates the basicpurpose of the CVD law, which isintended to deter subsidization. Thesecommenters also argued that the Courtof International Trade’s (‘‘CIT’’) decisionin British Steel plc vs. United States,879 F. Supp. 1254, 1277 (CIT 1995),aff’d in part and rev’d in part, 127 F.3d1471 (Fed. Cir. 1997), casts doubt on thepermissibility of finding repayment inthe context of a privatization at fairmarket value. One commenter alsoargued that the repayment/reallocationmethodology is inconsistent with theURAA and the SAA’s instruction toexamine carefully the facts of each casein determining the effects ofprivatization on prior subsidies, becauseit is an automatic rule that alwaysassumes a portion of the purchase pricerepresents repayment or reallocation ofprior subsidies.

Another commenter asserted that therepayment/reallocation methodologydoes not capture the full extent of thebenefit bestowed upon a companybecause it does not capture the benefitfrom the government’s assumption ofrisk. According to this commenter, toencourage investment in risky industrysectors, governments can assume someof the risk, for example by providingstart-up capital. If the governmentprivatizes the company, the trade-distorting effect of the governmentaction continues, and the production ofthe company continues to enjoy thebenefit of the government subsidy. Thiscommenter argued that if theDepartment maintains the repayment/reallocation methodology, it should alsoconsider whether the industry couldattract private capital at the time thesubsidies were provided. Where anindustry could not attract privatecapital, the Department should find thatall subsidies passed through afterprivatization. Alternatively, if the

Department finds that privatization canextinguish or repay a subsidy, thisshould only be permitted when theprice paid for the privatized company isequal to the net worth of the firmwithout the subsidy, plus the residualvalue of the subsidy. For example, afirm receives a $1 millioncountervailable subsidy, which theDepartment allocates over 10 years. Inyear two, the residual value of thesubsidy (for countervailing dutypurposes) is $900,000. In that year, thefirm is privatized and its pre-subsidyassets are valued at $18 million. If thefirm is sold for $18.9 million, thesubsidy would be repaid. If it is sold for$18 million, the subsidy would passthrough in its entirety. According to thiscommenter, this approach recognizesthat the buyer of a firm is paying for theassets as well as the residual value ofthe subsidy, while the currentrepayment/reallocation approach fails todo this.

Another modification suggested bysome commenters to the repayment/reallocation methodology is to alter thecalculation of ‘‘gamma,’’ whichmeasures the proportion of the purchaseprice that the Department considers tobe repaid to the government in aprivatization transaction, or reallocatedto the previous owner in a private-to-private sale. This commenter stated thatthe gamma ratio should be calculatedusing the total remaining value of thesubsidies at the time of the privatizationto the company’s total net worth in thesame year, rather than using the averageof the historical values of the subsidiesto the firm’s net worth starting in theyears the subsidies were received. Thisapproach would give more weight tosubsidies received immediatelypreceding privatization.

Finally, several commentersaddressed the issue of whethersubsidies provided in anticipation, or inthe process, of privatization should begiven special consideration. On the onehand, one commenter argued thatsubsidies provided shortly before, andin preparation for, the sale, such as debtforgiveness, asset revaluations, taxbreaks, and other measures to ‘‘cleanup’’ balance sheets, should beconsidered new subsidies and not ‘‘pre-privatization’’ subsidies. According tothis commenter, under no circumstanceshould these subsidies be eliminated aspart of the privatization transaction. Onthe other hand, another commentersuggested that steps taken by agovernment just prior to privatization tomake a company more ‘‘saleable,’’ suchas closing inefficient operations, shouldnot by themselves be considered


subsidies that pass through to theprivatized company.

Except for the comments on ourcurrent repayment/reallocationmethodology and the comments onsubsidies given in the process ofprivatization, which we address below,the commenters have presented twogeneral positions with respect to theimpact of changes in ownership onsubsidies bestowed prior to the sale: (1)That the arm’s-length sale of a companyat fair market value has no effect on thecountervailability of prior subsidies;and (2) that the fair-market sale of afirm, in general, excuses the purchaserfrom any CVD liability for priorsubsidies. While the commenterssuggest possible exceptions to thesegeneral positions that theoreticallywould give effect to the statutorydirection to consider the facts of eachcase, the exceptions are narrowlydefined to fit improbable circumstances.In most cases, the proposals, with theirnarrowly defined exceptions, wouldlead to either total pass-through or totalextinguishment of pre-sale subsidies.

Although we see merit in some of thearguments presented, we believe thatadopting either of these extremepositions would require a strainedinterpretation of the statute. The statute,SAA, and legislative history plainlystate that the arm’s-length sale of a firmdoes not by itself require adetermination that prior subsidies havebeen extinguished. See section771(5)(F), SAA at 928, and S. Rep. No.103–412, at 92 (1994); see also thediscussion in the 1997 ProposedRegulations at 8821. Moreover, wecontinue to disagree with the claim thatin order to impose countervailing dutieson a privatized or post-sale firm, theDepartment must affirmativelydemonstrate how subsidies continue tobenefit the subject merchandise after thefair-market sale of a company. See GIAat 37263. Our refusal to read acontinuing competitive benefit test(sometimes called an ‘‘effects test’’) intothe CVD law was upheld by the FederalCircuit in Saarstahl v. United States, 78F.3d 1539 (Fed. Cir. 1996) (‘‘Saarstahl’’)and British Steel plc v. United States,879 F. Supp. 1254 (CIT 1995), aff’d inpart and rev’d in part 127 F.3d 1471(Fed. Cir. 1997) (‘‘British Steel’’). As theCIT explained in British Steel plc v.United States, ‘‘Commerce hasconsistently maintained that it does notmeasure the effects of subsidies oncethey have been determined byCommerce. In other words, whethersubsequent events mitigate these effectsis irrelevant. This Court, for thepurposes of this proceeding, has noquarrel with that practice.’’ 879 F. Supp.

at 1273. Further, section 771(5)(C) of theAct specifically states that theDepartment ‘‘* * * is not required toconsider the effect of the subsidy indetermining whether a subsidy exists* * *’’ See also Certain Hot-RolledLead and Bismuth Carbon SteelProducts from the United Kingdom, 61FR 58377, 58379 (November 14, 1996)(1994 Administrative Review UK LeadBar).

In this regard, it is useful to clarifywhat we mean in saying that we wouldnot attempt to determine whether asubsidy had any ‘‘effect’’ on therecipient, or whether ‘‘subsequentevents’’ might have mitigated oreliminated any potential effects from thesubsidy. The term ‘‘effect,’’ as used inthe statute and SAA, and the term‘‘subsequent events,’’ as used by theCourts, refer to the question of whethera subsidy confers a competitive benefitupon the subsidy recipient or itssuccessor. There is no requirement thatthe Department determine whetherthere is a competitive benefit, as is madeclear in the SAA (at 926):* * * the new definition of subsidy does notrequire that Commerce consider or analyzethe effect (including whether there is anyeffect at all) of a government action on theprice or output of the class or kind ofmerchandise under investigation or review.

In the course of the 1993 steelinvestigations, certain respondentsargued that: (1) A subsidy cannot becountervailed unless it bestows a‘‘competitive benefit’’ on merchandiseexported to the United States; (2) thearm’s-length sale of a subsidizedcompany eliminates any competitivebenefit from prior subsidies (because theprice paid for the company includespayment for any continuing value thesubsidies might have); and (3) therefore,the arm’s-length sale of a subsidizedcompany frees the new owner from anycountervailing duty liability for priorsubsidies to that company. We rejectedthis argument (see GIA at 37260–61),explaining that the statute did notrequire that a subsidy bestow acompetitive benefit on imports to theUnited States as a condition of liabilityfor countervailing duties. Just as wewould not attempt to determine whethera subsidy conferred a competitivebenefit on the original recipient in thefirst place (that is, whether the subsidyhad any effect on the original recipient’ssubsequent performance (usually aneffect upon its output or prices)), wewould not attempt to determine whetherany potential competitive benefitcontinued with respect to the newowner in light of a subsequent eventsuch as a change in ownership. The

Federal Circuit upheld this position inSaarstahl and British Steel. As onecommenter noted, the law is concernedwith the benefit originally received, notwith what the recipient does with it.

When we say we do not consider‘‘subsequent events’’ in the calculationof a subsidy, we generally are referringto events that arguably affect thesubsequent performance (normally interms of output or prices) of the subsidyrecipient or its successor. We havenever implied, however, that nosubsequent event could ever affect theallocation of a subsidy. The Departmentmay consider whether government orprivate actions occurring after thereceipt of a subsidy should result in thereallocation of a subsidy as long as thereis no tracing of the uses of the subsidyor the effect of the subsidy on the outputor price of subject merchandise. Clearly,a post-subsidy change in ownership isan event that occurs subsequent to thereceipt of the subsidy, and we havereallocated subsidies based on changesin ownership. It is entirely appropriateand consistent with the statute toconsider whether a change in ownershipis an appropriate occasion to reallocatecountervailing duty liability for priorsubsidies to the company that is sold.Section 771(5)(F) of the Act implies thatsuch an exercise is warranted and, asexplained above, a post-subsidy changein ownership is not the type ofsubsequent event or effect that isenvisioned in section 771(5)(C).

The language of section 771(5)(F) ofthe Act purposely leaves muchdiscretion to the Department withregard to the impact of a change inownership on the countervailability ofpast subsidies. Specifically, a change inownership neither requires norprohibits a determination that priorsubsidies are no longer countervailable.Rather, the Department is left with thediscretion to determine, on a case-by-case basis, the impact of a change inownership on the countervailability ofpast subsidies. The SAA at 928specifically states that ‘‘Commerceretain[s] the discretion to determinewhether, and to what extent, theprivatization of a government-ownedfirm eliminates any previouslyconferred countervailablesubsidies. . . .’’

The repayment/reallocationmethodology that we currently useachieves this objective. See 1994Administrative Review UK Lead Bar at58379–80. Depending on the amount ofprior subsidies in relation to thecompany’s net worth and the amountpaid for the company, we might findthat a considerable amount of priorsubsidies passes through or that a


significant amount of subsidies has beenrepaid to the government or reallocatedto the previous owner. Nonetheless, weare not codifying the current repayment/reallocation methodology. Thismethodology has been heavily criticizedby various parties, and we recognizethat it may not provide sufficientflexibility to deal with the ‘‘extremelycomplex and multifaceted’’ nature ofchanges in ownership. See SAA at 928.We will address comments related tothe calculation of gamma in the contextof specific cases.

While we have developed someexpertise on the issue of changes inownership over the past five years, andthe comments submitted in response tothe 1997 Proposed Regulations haveprovided us with additional ideas toconsider, we do not think it isappropriate to promulgate a regulationon this issue at this time. As notedabove, many of the ideas presented bythe commenters would move us in thedirection of adopting extreme positions.Another factor weighing againstcodification of any privatizationmethodology at this time is that theCourts may, in the course of theirreview of the current methodology,adopt an interpretation of the law thatwould either validate or overturn someof the options that we have considered,including those proposed by thecommenters. Finally, given the rapidlychanging economic conditions aroundthe world, particularly with respect tothe issue of state ownership, we believewe should continue to develop ourpolicy in this area through theresolution of individual cases. Thesechanging economic conditions poseadditional challenges in developing aunified framework in which to analyzechange-in-ownership transactions. Inthe 1997 Proposed Regulations, weidentified many of these additionalissues and new challenges that maywarrant consideration in this contextand raised questions about them.However, it is our view that thecomments we received did notsufficiently address many of theseconcerns.

An additional issue that merits furtherdiscussion concerns subsidies receivedjust prior to, or in conjunction with, theprivatization of a firm. While we havenot developed guidelines on how totreat this category of subsidies, we notea special concern because this class ofsubsidies can, in our experience, beconsiderable and can have a significantinfluence on the transaction value,particularly when a significant amountof debt is forgiven in order to make thecompany attractive to prospectivebuyers. As our thinking on changes in

ownership continues to evolve, we willgive careful consideration to the issue ofwhether subsidies granted inconjunction with planned changes inownership should be given specialtreatment.

Our decision not to include aprovision on changes in ownership inthese Final Regulations does notpreclude us from issuing such aregulation at a later date. We willcontinue to examine this issue andconsider whether an alternativeanalytical framework can be developedthat addresses the variety of change-in-ownership scenarios we haveencountered and that, like the presentmethodology, satisfies Congressionalintent that we examine changes inownership on a case-by-case basis. Inthe interim, we will continue to applyour current methodology for ongoingCVD cases and carefully examine thefacts of each case. However, we willconsider whether modifications to themethodology may be appropriate.

Section 351.502Section 351.502 deals with the

‘‘specificity’’ of domestic subsidies.Unlike its predecessor, § 355.43 of the1989 Proposed Regulations, § 351.502does not contain a ‘‘general’’ specificitytest. As we noted in the preamble to the1997 Proposed Regulations, section771(5A) of the Act and the SAA providemuch more detail and clarity regardingthe application of the ‘‘specificity test’’than did the prior statute and itslegislative history. Thus, on the subjectof specificity, there are far fewerinterpretative gaps for the Department tofill than there were in 1989 and, thus,less need for regulations.

We received numerous commentsarguing that we should codify thepolicies articulated in the preamble tothe 1997 Proposed Regulations,especially those dealing with sequentialanalysis, purposeful government action,characteristics of a ‘‘group,’’ and integrallinkage. These commenters claimed thateven where the SAA is clear on aparticular point, it is unclear how theCourts will view the SAA. In theiropinion, detailed specificity regulationswould prevent costly litigation of theseissues.

We have continued to limit § 351.502to those aspects of the specificity testthat are not addressed explicitly in thestatute or the SAA. Section 102(d) of theURAA provides that the SAA ‘‘shall beregarded as an authoritative expressionby the United States concerning theinterpretation and application of (theAgreements and the URAA) in anyjudicial proceeding in which a questionarises concerning such interpretation or

application.’’ 19 U.S.C. § 3512(d).Therefore, we see no need to repeat thisprinciple. However, in reviewing thecomments and the relevant provisionsof the statute and the SAA, we haveidentified particular issues on which theSAA may usefully be clarified. Inparticular, we found that the statute andthe SAA do not fully address sequentialanalysis and the characteristics of agroup. Accordingly, we have includedfinal regulations on these topics.

Sequential analysis: Paragraph (a) is anew paragraph which addresses the‘‘sequential approach’’ to specificity. Wereceived several requests that we codifythe sequential approach. Under thisapproach, if a subsidy is de jure specificor meets any one of the enumerated defacto specificity factors, in order of theirappearance in section 771(5A)(D)(iii) ofthe Act, further analysis is unnecessaryand is not undertaken. In support oftheir position, these commentersemphasized the language containedboth in section 771(5A)(D)(iii) of the Actand the SAA that a subsidy will beconsidered specific ‘‘if one or more’’ ofthe factors exists. See SAA at 931.Furthermore, these commenterscontended, the SAA and the legislativehistory of the URAA make clear that thespecificity test was intended to begenerally consistent with theDepartment’s previous practice, apractice that included this sequentialapproach. SAA at 929–31; S. Rep. No.103–412, at 93–94 (1994).

In opposition to this view, othercommenters maintained that thesequential approach contradicts theSAA, because the SAA states that theDepartment will ‘‘seek and considerinformation relevant’’ to all four of thede facto specificity factors. SAA at 931.Moreover, these commentersmaintained, the language in the SCMAgreement requires that all of the defacto specificity factors be consideredand that any specificity determination‘‘shall be clearly substantiated on thebasis of positive evidence.’’ Articles2.1(c) and 2.4 of the SCM Agreement.

The apparent disagreement over theinterpretation of the SAA regarding theuse of a sequential approach indicatesthat it is necessary to clarify ourposition in a regulation. Therefore,§ 351.502(a) provides that the de factospecificity factors will be examined insequence, in order of their appearancein section 771(5A)(D)(iii) of the Act, andthat the Department may find adomestic subsidy to be specific based onthe presence of a single de factospecificity factor. For example, theDepartment will first look to see if thereis a limited number of users. If thenumber of users is limited, we will look


no further. In accordance with the SAA,the Department will continue itspractice of collecting informationregarding each of the four de factospecificity factors; however, ouranalysis of the issue will stop if wedetermine that a single factor justifies afinding of specificity. As for the SCMAgreement, none of the provisions citedprecludes a finding of specificity basedon the presence of a single factor.Moreover, a finding that a certainindustry receives disproportionateamounts under a particular governmentprogram, for example, constitutespositive evidence of specificity even ifthere are numerous users of the programand there is little discretion in awardingbenefits.

Discretion: In endorsing the use of asequential approach in the preamble tothe 1997 Proposed Regulations, westated, ‘‘with the exception of thegovernment discretion factor, theDepartment may find a domesticsubsidy to be specific based on thepresence of a single de facto specificityfactor.’’ (1997 Proposed Regulations at8824.) Certain commenters objected tothe exception of the discretion factor,arguing that the statute accords theexercise of government discretion equalstatus with the other de facto specificityfactors. They asked the Department toclarify that the Department may find asubsidy to be specific solely based onthe degree of discretion exercised in theadministration of a subsidy program.

There appears to be a great deal ofconfusion and controversy over the roleof the fourth factor, discretion, in thefinding of de facto specificity. Based onthe comments received and a review ofthe statute and SAA, we are elaboratingon the statements we made in thepreamble to the 1997 ProposedRegulations. As stated in the 1997Proposed Regulations, we do not believethat a finding of specificity may bebased solely on the fact that somemeasure of discretion may have beenexercised in the administration of asubsidy program. This position isconsistent with the SAA, which statesthat if a subsidy program is broadlyavailable and widely used and there isno evidence of dominant ordisproportionate use, the mere fact thatgovernment officials may have exerciseddiscretion in administering the programis insufficient to justify a finding ofspecificity. SAA at 931.

Based on our experience inadministering the CVD law, somemeasure of administrative discretionexists in the operation of almost everyalleged subsidy program. At the mostbasic level, an administrator of aprogram typically must exercise

judgment or discretion in evaluating thefacts and merits of an application for asubsidy to determine whether theapplicant qualifies for the subsidy. If wewere to find specificity based simply onthe exercise of this type of discretion,the other de facto factors would berendered meaningless, because virtuallyevery subsidy program in the worldcould be declared specific on the basisof the discretion factor alone. This isclearly an absurd result and could nothave been the intent of Congress.

Instead, section 771(5A)(D)(iii)(IV) ofthe Act provides that a subsidy isspecific if:

The manner in which the authorityproviding the subsidy has exerciseddiscretion in the decision to grant thesubsidy indicates that an enterprise orindustry is favored over others. (Emphasisadded.)

This language does not focus ondiscretion alone. Rather, it states thatdiscretion is relevant only to the extentthat it is exercised in a manner thatfavors one enterprise or industry overothers. This distinction is importantbecause it supports the statements madein the SAA and the position we aretaking in these regulations. Haphazard,random, or purposeless discretioncannot by itself indicate specificity.Only discretion that shows favoritismtoward some enterprises or industriesover others can inform the question ofspecificity. In the Department’sexperience, favoritism generally willmanifest itself as one of the first threede facto factors: A limited number ofusers, dominant users, or one or a fewusers receiving a disproportionateamount of the subsidy. For example,administrators of a program couldexercise discretion in selecting someindustries instead of others asbeneficiaries. If the selected industriesconstituted a limited number ofindustries, there would be specificity.Similarly, if benefits were distributedsuch that there was a predominant useror such that certain users receiveddisproportionate benefits, there wouldbe specificity. However, if the selectedindustries constituted more than alimited number of industries, if therewere no dominant users ordisproportionate benefits to certainusers, or if there were no otherindication that one or a group ofenterprises or industries was favoredover others, the program would not bespecific.

As indicated in the SAA at 931, thediscretion factor is generally morevaluable as an analytical tool thatenhances the analysis of the other defacto specificity factors and criteria. The

example given in the SAA is the case ofa new subsidy program for which therehave been few applicants and fewrecipients. In accordance with section771(5A)(D)(iii) of the Act, in evaluatingthe four de facto factors, the Departmentmust take into account ‘‘* * * thelength of time during which the subsidyprogram has been in operation.’’ In thecase of a new program, the first threefactors—limited number of users,dominant user, or disproportionatelylarge user—may provide little ormisleading indication regardingwhether the program is de factospecific. Therefore, the manner inwhich authorities have exercised theirdiscretion in the early days of a newprogram (e.g., by excluding certainapplicants and limiting the benefit to aparticular industry) might be moreuseful for the Department in making aspecificity determination. See SAA at931.

Discretion can also come into playwhere evidence relating to the first threefactors is inconclusive. As an example,where the number of users is borderline,discretion may help to inform whetherthere is specificity. In this situation, thefactors we might consider in analyzingthe relevance of discretion include thenumber of applicants that are turneddown, the reasons they are turneddown, and the reasons successfulapplicants are chosen.

Characteristics of a ‘‘group’’: Newparagraph (b) clarifies the Department’sposition regarding whether theDepartment must examine the ‘‘actualmake-up’’ of a group of beneficiarieswhen performing a specificity analysis.Citing PPG Industries, Inc. v. UnitedStates, 978 F.2d 1232, 1240–41 (Fed.Cir. 1992) (‘‘PPG II’’), one group ofcommenters argued that, to beconsistent with judicial precedent, theDepartment must undertake such ananalysis. According to thesecommenters, if a group of recipientsdoes not share similar characteristicsbut, instead, consists of companies in avariety of industries, the Departmentcannot conclude that the subsidy inquestion is limited to a ‘‘group ofindustries.’’ Moreover, they argued,nothing in the Act or the SAA requiresthe Department to ignore thecharacteristics of the group receiving thebenefits from an alleged subsidyprogram.

Other commenters argued that theDepartment can identify a ‘‘group’’ ofsubsidy recipients without regard to anyshared characteristics of the individualgroup members. According to thesecommenters, a proper understanding ofwhat may constitute a specific ‘‘group ofindustries’’ flows directly from the


purpose of the specificity test asarticulated in Carlisle Tire & Rubber Co.v. United States, 564 F. Supp. 834 (CIT1983) (‘‘Carlisle’’); namely, that subsidyrecipients should be considered aspecific group unless the recipientindustries are numerous and distributedvery broadly throughout the economy.Moreover, these commentersmaintained that the Department has onseveral occasions found subsidyprograms specific even when the‘‘group’’ of recipients has not sharedcommon characteristics. See, e.g., SteelWheels from Brazil, 54 FR 15523, 15526(April 18, 1989) and Cold-Rolled CarbonSteel Flat-Rolled Products from Korea,49 FR 47284, 47287 (December 3, 1984).

As noted in the preamble to the 1997Proposed Regulations, we disagree withthe first set of comments. Section771(5A)(D) of the Act provides that asubsidy may be found to be specific ifit is limited to a ‘‘group’’ of enterprisesor industries. There is no requirementthat the members of a group sharesimilar characteristics. The purpose ofthe specificity test is simply to ensurethat subsidies that are distributed verywidely throughout an economy are notcountervailed. There is no basis foradding the further requirement thatsubsidies that are not widely distributedare also confined to a group ofenterprises or industries that sharesimilar characteristics. See, e.g., CertainRefrigeration Compressors from theRepublic of Singapore, 61 FR 10315(March 13, 1996).

Assuming, arguendo, that PPG II isrelevant under the new law, thisdecision upheld the Department’sdetermination that the program inquestion was not specific. To put PPGII in its proper context, it is necessaryto understand the facts presented in theunderlying CVD case. In that case, therewere numerous enterprises that used theprogram under investigation. Therefore,when looked at in terms of the numberof enterprises, the actual recipiententerprises did not appear to be limited.However, this conclusion says nothingabout whether the number of industriesthat received benefits under the programwas limited. To answer this question,the Department (and the Court) correctlyfocused on the makeup of the users. Ifthe numerous enterprises that receivedbenefits had comprised a limitednumber of industries, then the programwould have been specific. However,because the users represented numerousand diverse industries, the program wasfound not to be specific. There is nobasis in PPG II or in the language ofsection 771(5A)(D) of the Act forconcluding that there is a requirementthat the limited users also share similar

characteristics. Moreover, such arequirement would undermine thepurpose of the specificity test asarticulated in the SAA.

Several commenters have urged theDepartment to codify our position withrespect to this issue. Because this issueis not addressed in the statute or theSAA, we have adopted this suggestion.Accordingly, § 351.502(b) provides thatthe Secretary is not required todetermine whether there are sharedcharacteristics among enterprises orindustries that are eligible for, oractually receive, a subsidy indetermining whether that subsidy isspecific.

Integral linkage: Paragraph (c) is anew paragraph which sets out ourrevised test for considering two or moresubsidy programs to be ‘‘integrallylinked.’’ Section 355.43(b)(6) of the 1989Proposed Regulations provided that, forpurposes of applying the specificity test,the Department would consider two ormore subsidy programs as a singleprogram if the Secretary determined thatthe programs were ‘‘integrally linked.’’Section 355.43(b)(6) also set forthfactors to be considered in making thisdetermination.

In the 1997 Proposed Regulations, weopted not to incorporate § 355.43(b)(6)into these regulations. We noted thatclaims of integral linkage were relativelyrare, and that when they did arise, wedid not find the factors set forth in§ 355.43(b)(6) particularly helpful. Wedid not, however, rule out thepossibility of considering two or moreostensibly separate subsidy programs asconstituting a single program forspecificity purposes, and we outlinedcircumstances that might lead us to doso.

We received a number of commentsrequesting that we promulgate aregulation which allows for integrallinkage. Two commenters argued that,in addition to the factors discussed inthe preamble, the regulation should re-codify certain of the factors found in the1989 Proposed Regulations. Thesecommenters also suggested thatprograms should not be considered to beintegrally linked unless they werelinked ‘‘at their inception.’’ Thesecommenters asked the Department toclarify that it will view claims ofintegral linkage narrowly and thatrespondents will be required toestablish that the programs are linked byclear and convincing evidence. Othercommenters argued that the factorsenumerated in both the 1989 ProposedRegulations and in the preamble to the1997 Proposed Regulations are toorestrictive and that any integral linkagetest should not be applied narrowly.

We have given further considerationto our earlier decision not to codify anintegral linkage test. In light of theinterest in this issue, and the fact thatwe have had experience with aregulation on this topic, we haveconcluded that it would be beneficial toparties to promulgate a rule describingwhen two or more separate programsmay be integrally linked and treated asone program for specificity purposes.We have not codified the 1989 rulebecause, as we stated in the preamble toour 1997 Proposed Regulations, we didnot find the factors enumerated in thatprovision to be particularly useful.Instead, § 351.502(c) provides thatintegral linkage is possible in situationswhere the subsidy programs have thesame purpose (e.g., to promotetechnological innovation), bestow thesame type of benefit (e.g., long-termloans or tax credits), confer similarlevels of benefits on similarly situatedfirms, and were linked at theirinception.

We believe these factors are moreuseful for finding integral linkage thanthose contained in the 1989 ProposedRegulations because they requireevidence of similarities in the purposesand administration of the programswhich are more than coincidental. Forexample, where a government claimsthat a program is integrally linked withanother program, § 351.502(c)(4), whichcalls for the programs to be linked atinception, requires evidence that, inestablishing the most recent program,the government’s clear and expresspurpose was to complement the otherprogram.

As stated in the preamble to the 1997Proposed Regulations, when aninterested party believes that two ormore programs should be considered incombination for purposes of theDepartment’s specificity analysis, thatparty will have the burden ofidentifying the relevant programs andsupporting its contention that theprograms are integrally linked byproviding information anddocumentation regarding the purpose,type and levels of benefit associatedwith the programs.

Agricultural subsidies: Paragraph (d)is based on § 355.43(b)(8) of the 1989Proposed Regulations and is the same as§ 351.502(a) of the 1997 ProposedRegulations. It provides that theSecretary will not consider a domesticsubsidy to be specific solely because itis limited to the agricultural sector.Instead, as under prior practice, theSecretary will find an agriculturalsubsidy to be countervailable only if itis specific within the agricultural sector,e.g., a subsidy is limited to livestock, or


livestock receive disproportionatelylarge amounts of the subsidy. See, e.g.,Lamb Meat from New Zealand, 50 FR37708, 37711 (September 17, 1985).

One commenter suggested that theDepartment should abandon the specialspecificity rule for agriculturalsubsidies, citing the fact that undersection 771(5B)(F) of the Act and Article13(a) of the WTO Agreement onAgriculture, so-called ‘‘green box’’agricultural subsidies are non-countervailable. With respect to thiscomment, we note that the Department’sapplication of the specificity test toagricultural subsidies was upheld inRoses, Inc. v. United States, 774 F.Supp. 1376 (CIT 1991) (‘‘Roses’’). Giventhe absence of any indication thatCongress intended the ‘‘green box’’ rulesto change the Department’s practice orto overturn Roses, we are retaining thespecial specificity rule for agriculturalsubsidies.

Subsidies to small- and medium-sizedbusinesses: Paragraph (e) is based on§ 355.43(b)(7) of the 1989 ProposedRegulations, and continues to providethat the Secretary will not consider asubsidy to be specific merely because itis limited to small or small- andmedium-sized firms. Instead, as underprior practice, the Secretary will findsuch a subsidy to be countervailable if,either on a de jure or a de facto basis,the subsidy is limited to certain small orsmall- and medium-sized firms. As inthe case of the special specificity rulefor agricultural subsidies, there is noindication that Congress intended toalter this aspect of the Department’sspecificity practice. We received nocomments regarding this rule.

Disaster relief: Paragraph (f) providesthat the Secretary will not regarddisaster relief as a specific subsidy if therelief constitutes general assistanceavailable to anyone in the affected area.Although paragraph (f) has nocounterpart in the 1989 ProposedRegulations, the rule contained inparagraph (f) has been part of theDepartment’s specificity practice sinceCertain Steel Products from Italy, 47 FR39356, 39360 (September 7, 1982), inwhich the Department stated that‘‘[d]isaster relief is not selective in thesame manner as other regional programssince there is no predetermination ofeligible areas and no part of the country,and no industry, is excluded fromeligibility in principle.’’ However,before declaring a subsidy to be non-specific under paragraph (f), theDepartment would have to be satisfiedthat the subsidy in question was, in fact,bona fide disaster relief. See CertainSteel Products from Italy, 58 FR 37327,

37332 (July 9, 1993). We received nocomments regarding this rule.

Purpose of the specificity test: Somecommenters requested that theDepartment restate in the regulationsthe policy rationale behind thespecificity test. According to thesecommenters, the underlying purpose ofthe specificity test is to identify thosedomestic subsidies that confer acompetitive advantage and therebydistort international trade. Othercommenters pointed out that the newstatute expressly states that theDepartment is not required to examinethe effects of a subsidy or establish thatthe subsidy has any effect at all. Thesecommenters, citing the reference to theCarlisle decision in the SAA, maintainthat the sole purpose of the specificitytest is to ‘‘winnow out only thoseforeign subsidies which truly arebroadly available and widely usedthroughout an economy.’’ SAA at 929–30.

In our view, the language from theSAA cited above makes the purpose ofthe specificity test abundantly clear.Given the clarity of the SAA on thispoint, the authoritative nature of theSAA (see 19 U.S.C. 3512(d)), and ourgeneral reluctance to issue regulationsthat merely repeat the statute or theSAA, we do not consider it appropriateto issue a regulation that restates thepurpose of the specificity test.

Use of presumptions: Somecommenters suggested that in applyingthe specificity test, the Departmentshould employ certain presumptions.These commenters maintained that,when investigating a domestic subsidyprogram (and when consideringwhether to initiate an investigation ofsuch a program), the Department shouldpresume that the foreign government inquestion exercises discretion in theadministration of the program, and thatthe program is specific. Thesecommenters maintained that, becauseinformation regarding applications andapprovals generally is not available topetitioners prior to the filing of apetition, the burden should be onrespondent interested parties to providesuch information and to rebut thepresumption of specificity. Onecommenter also suggested that the FinalRegulations should state that a previousfinding that a subsidy was de facto non-specific should have no relevance whenthe same subsidy program is alleged ina new investigation involving differentmerchandise and different facts.

Other commenters argued that there isno legal basis for making presumptionsregarding specificity. With respect to defacto specificity, the SAA states that theDepartment is obligated to ‘‘seek and

consider’’ information relevant to eachof the four factors listed in section771(5A)(D)(iii) of the Act. SAA at 931.One of these commenters also assertedthat a petitioner alleging that a subsidyis specific should be required to providea reasonable amount of informationsupporting the allegation.

As was true under the law prior to theURAA, we note that a petition to initiatean investigation of alleged domesticsubsidies must provide reasonablyavailable information supporting theallegation that the subsidy is specific.See section 702(b) of the Act. On theother hand, we recognize that becausedetailed information regarding thedistribution of program benefits usuallyeither is not published or is not widelyavailable, information supportingspecificity often is not reasonablyavailable to a petitioner at the time apetition is filed. Therefore, in decidingwhether to include alleged domesticsubsidies in our investigation, wecarefully consider the information thepetitioner has put forward, the reasonsthat more information may not beavailable, and any arguments thepetitioner makes regarding thespecificity of the program. Because thetypes of allegations and informationavailable will vary from case to case, itis not possible to state a general rule foraccepting or rejecting specificityallegations. However, we believe thatthe threshold we have used in the pastfor including alleged subsidies in CVDinvestigations has been sufficient toensure that all potentiallycountervailable subsidies areinvestigated. We intend to continueemploying this initiation threshold.

In this regard, we note that when asubsidy program has been previouslyinvestigated and found to be non-specific, it would be a waste ofadministrative resources to re-investigate that program without areasonable basis to believe that the factssupporting the previous finding havechanged. In situations where a previousfinding may be pertinent to oneindustry, e.g., that the paper clipindustry did not receive dominant ordisproportionate benefits under aparticular program, petitioners seekinginvestigation of benefits under thatprogram to the staple industry shouldallege that the program has changed orthat the situation of the staple industrydiffers, and they should support theirallegation with reasonably availableinformation.

Where domestic subsidy programs areincluded in an investigation, we willnot presume such programs are specific.Instead, we will seek in ourquestionnaire all of the information


necessary to apply the specificity testaccording to section 771(5A)(D) of theAct. Based on our analysis of theinformation provided in thequestionnaire responses, verification,and other information that may becollected, we will make the necessaryspecificity determination. If arespondent refuses to provide theinformation requested by theDepartment to conduct its specificityanalysis, we may draw adverseinferences in the application of ‘‘factsavailable.’’ See section 776(b) of the Act.However, the use of an adverseinference in these situations is not thesame thing as relying on a rebuttablepresumption of specificity.

Purposeful government action: In our1997 Proposed Regulations, we notedthat certain commenters, citing suchcases as Saudi Iron and Steel Co.(Hadeed) v. United States, 675 F. Supp.1362, 1367 (CIT 1987), maintained thata finding of specificity does not requirea finding of targeting or some other sortof purposeful government action thatlimits the number of subsidy programbeneficiaries. They cited the statute andits legislative history for the propositionthat the Department should deemirrelevant the fact that program usagemay be limited by the ‘‘inherentcharacteristics’’ of the thing beingprovided by the government. SAA at932; S. Rep. No. 103–412 at 94 (1994).

In the preamble to the 1997 ProposedRegulations, we agreed with thesecommenters, stating:[e]xcept in the special circumstancesdescribed in section 771(5A), i.e., whererespondents request the Department to takeinto account the extent of economicdiversification in the jurisdiction of thegranting authority or the length of timeduring which the program has been inoperation, the Department is not required toexplain why the users of a subsidy may belimited in number.

Several of the same commentersobjected to this statement, arguing thatit could be misinterpreted to mean thatevidence of purposeful action isrequired in some instances. Thesecommenters requested that theDepartment clarify, in a regulation, thatpurposeful government action is neverrequired.

As we stated in the 1997 ProposedRegulations, the SAA and otherlegislative history are clear on thispoint. The SAA clearly indicates thatthe Department does not need to find‘‘targeting’’ or ‘‘purposeful governmentaction’’ to conclude that a domesticsubsidy is specific. See SAA at 932(‘‘(E)vidence of government intent totarget or otherwise limit benefits wouldbe irrelevant in de facto specificity

analysis’’). Thus, for example, the factthat users may be limited due to theinherent characteristics of what is beingoffered would not be a basis for findingthe subsidy non-specific. SAA at 932; S.Rep. No. 103–412 at 94 (1994).Regarding situations where theDepartment is asked to consider theeconomic diversification in thejurisdiction or the length of time duringwhich the program has been inoperation, neither purposefulgovernment action nor targeting isrequired to find specificity. However,evidence indicating that the governmenthas taken or will take actions to limitbenefits to certain industries would besufficient to find specificity.

Universe: One commenter argued that,in determining whether subsidies arespecific, the Department generallyshould focus on the level of benefitsprovided to recipients, rather than thenumber of recipients to whom subsidiesare provided. This commenter alsoargued that, in analyzing the level ofbenefits provided, the Department’spoint of reference should be theeconomy as a whole, as it was for thepreferential loan programs used by theKorean steel industry in Certain SteelProducts from Korea, 58 FR 37338 (July9, 1993) (‘‘Korean Steel’’), rather thanthose enterprises or industries that wereeligible to receive the subsidy.

For the most part, we disagree. Thestarting point of the Department’sanalysis of specificity will always be thenumber of users. We normally will notanalyze the level of benefits provided(that is, whether the recipients weredominant or disproportionate users ofthe program) unless the subsidy inquestion was provided to numerous anddiverse industries. Even in thatsituation, it may be impracticable orimpossible to determine the relativelevel of benefits.

Once we have decided to analyze thelevel of benefits provided, our point ofreference normally will be theenterprises or industries that receivedbenefits under the program. In otherwords, we will attempt to determinewhether one or a limited number of therecipient enterprises or industries were,in fact, dominant or disproportionateusers. In certain limited circumstances,however, it may be appropriate todetermine whether the benefits receivedby a particular enterprise or industry orgroup thereof were disproportionate inrelation to the economy as a whole. TheDepartment employed this approach inKorean Steel, because the type ofsubsidy under investigation—governmental use of the economy-widebanking system to direct credit to steelproducers—required the broader

analysis. We consider the Koreansituation to be unusual compared withthe majority of cases in which we haveanalyzed specificity. In addition, weagree that the analysis of whether anenterprise or industry or group thereofis a dominant user of, or has receiveddisproportionate benefits under, asubsidy program should normally focuson the level of benefits provided ratherthan on the number of subsidies givento different industries.


concept of benefit. Under section771(5)(B) of the Act and Article 1.1(b) ofthe SCM Agreement, a governmentaction must confer a benefit in order tobe considered a countervailable subsidy.Hence, the notion of benefit is central tothe administration of the CVD law. Inthe preamble to the 1997 ProposedRegulations, we included a lengthydiscussion of this topic. We described abenefit as being conferred when a firmpays less for an input than it otherwisewould pay or receives more revenuethan it otherwise would earn. Given thecrucial role that benefit plays in ouranalysis of whether a government actionconfers a countervailable subsidy, wehave decided to codify a final ruleregarding benefit that reflects theprinciples outlined in the 1997Proposed Regulations.

Paragraph (a) states that, where aspecific rule for the measurement of abenefit is contained in these regulations,we will determine the benefit asprovided in that rule. Where agovernment program is covered by aspecific rule contained in theseregulations, such as a programproviding grants, loans, equity, directtax exemptions, or worker-relatedsubsidies, we will not seek to establish,nor entertain arguments related to,whether or how that program comportswith the definition of benefit containedin this section.

Paragraph (b) outlines the principleswe will follow when dealing withalleged subsidies for which theseregulations do not establish a specificrule. In such instances, we willnormally consider a benefit to beconferred where a firm pays less for itsinputs (e.g., money, a good, or a service)than it otherwise would pay in theabsence of the government program, orreceives more revenues than itotherwise would earn.

We have adopted this definitionbecause it captures an underlying themebehind the definition of benefitcontained in section 771(5)(E) of the Actand, in our estimation, reflects thefundamental principles that we have


articulated over the years with respectto programs and practices that we havedetermined confer either direct orindirect countervailable subsidies. Onecommon element the four illustrativeexamples set forth in the statute shareis that, in the overwhelming majority ofcases, the recipient of a governmentfinancial contribution, income or pricesupport, or indirect subsidy, enjoys areduction in input costs or revenueenhancement that it would nototherwise have enjoyed absent thegovernment action. As explained below,we are using the terms ‘‘input’’ and‘‘cost’’ broadly.

While we believe that this definitionwill provide useful guidance, werecognize that there may be programs orpractices not fitting the input costreduction or revenue enhancementdefinition in some economic oraccounting senses that may still giverise to a benefit in the sense that theprogram or practice is similar to theillustrative examples listed in section771(5)(E) of the Act. For example,without attempting to create ahypothetical program or practice not yetencountered in our experience, wewould argue that a program that issimilar to a countervailable equityinfusion constitutes a reduction in afirm’s cost of capital, or that a programthat is similar to a countervailableprovision of a freight forwarding serviceconstitutes a reduction in a firm’s inputcosts. Since both practices constitute areduction in the cost of an input, therewould be a benefit. We recognize thatsome might take issue with whetherequity or a freight forwarding service isin fact an input into subjectmerchandise, or whether equity orfreight forwarding constitutes a cost ofproducing subject merchandise.Nonetheless, in these and otherinstances in which a program orpractice contains elements similar tothose in the illustrative examples in thestatute, a benefit would still exist. Asexplained further below, when we talkabout input costs in the context of thedefinition of benefit, we are notreferring to cost of production in a strictaccounting sense. Nor are we referringexclusively to inputs into subjectmerchandise. Instead, we intend theterm ‘‘input’’ to extend broadly to anyinput into a firm that produces subjectmerchandise.

When we talk about a firm paying lessfor its inputs than it otherwise wouldpay (or receiving more revenues than itotherwise would earn), we are referringto the lower price it pays to acquire thething provided by the government (e.g.,money, a good, or a service), or theincreased revenue it receives as a result

of a government action. We believe thatthe definition of benefit outlined here isconsistent with the various standards(or ‘‘benchmarks’’) used to identify andmeasure the benefit from differentsubsidy programs that are contained insection 771(5)(E) of the Act and Article14 of the SCM Agreement. For example,when the amount that a firm pays on agovernment-provided loan is less thanwhat the firm ‘‘would pay on acomparable commercial loan that the(firm) could actually obtain on themarket,’’ the firm’s cost of borrowingmoney is reduced. See section771(5)(E)(ii) of the Act. Similarly, whena firm sells its goods to the governmentand ‘‘such goods are purchased for morethan adequate remuneration,’’ the firm’srevenues are increased beyond what itwould otherwise earn. See section771(5)(E)(iv) of the Act. In neitherinstance need the Department do morethan apply the test enumerated by thestatute in order to find that a benefit hasbeen conferred.

Paragraph (b)(2) cautions that thedefinition of benefit as an input costreduction or revenue enhancement doesnot limit our ability to imposecountervailing duties when the facts ofa particular case indicate that a financialcontribution has conferred a benefit,even if that benefit does not take theform of a reduction in input costs or anenhancement of revenues. We willexamine the concept of benefit in thisbroader sense by looking to see whetherthe alleged program or practice containselements similar to the examples listedin sections 771(5)(E)(i) through (iv) ofthe Act. We cannot possibly foresee allthe types of government actions we willencounter in administering the CVD lawand, hence, cannot write a definition ofbenefit that would be sufficiently broadto capture all possible countervailablesubsidies.

In this regard, it is important to notehere our practice of not applying theCVD law to non-market economies. TheCAFC upheld this practice inGeorgetown Steel Corp. v. United States,801 F.2d 1308 (Fed. Cir. 1986). See alsoGIA at 37261. We intend to continue tofollow this practice. Where theDepartment determines that a change instatus from non-market to market iswarranted, subsidies bestowed by thatcountry after the change in status wouldbecome subject to the CVD law.

We received several commentsregarding the proposed definition ofbenefit. Two commenters expressed theopinion that the definition is toorestrictive. These parties identifiedexamples of benefits which theybelieved would not be captured underthe proposed definition. The first

example is where a domestic purchaseris the only customer for an inputprovided by a government entity orwhere non-domestic purchasers are notallowed to purchase an input. In thesesituations, the commenter maintainsthat there could be a benefit eventhough the price paid is not less thanany other domestic price. The secondexample is where a transaction isstructured so that the firm pays marketvalue for the input but receives otherperquisites, such as a higher-qualityinput or additional services or goods aspart of a package.

We disagree that our definition of abenefit is not comprehensive enough toinclude these types of scenarios. Thedefinition of a benefit (in the absence ofa specific rule for the measurement ofthe benefit) does not call forcomparisons only to other domesticprices. Rather, it calls for adetermination of whether the inputcosts were reduced relative to what theywould be in the absence of the financialcontribution. In the first example, abenefit exists to the extent that thedomestic purchaser would have paidmore for the input absent thegovernment provision or absent therestrictions placed on foreignpurchasers. Likewise, in the secondexample, if the firm would have had topay more in order to receive theadditional perquisites without thegovernment assistance, a benefit exists.Section 351.511, governing theprovision of goods and services,contains more detailed guidance on howsuch subsidies would be valued.

Another commenter supported theproposed definition, but urged theDepartment to leave itself enoughflexibility so that we could find abenefit when government action enablesa firm to sell a product that would nothave been created but for thegovernment assistance. For example, ifthe government assists in thedevelopment of a new product, thiscommenter asserted that the benefit isnot the reduced development cost of thenew product, but the continuingexistence of the product.

We believe that in situations such asthat described by the commenter, theexistence of a benefit is directlydependent upon the nature of thefinancial contribution. If a financialcontribution has been provided, eitherdirectly or indirectly, in a form whichis specifically identified in the statute orregulations (e.g., a loan, a grant, anequity infusion, etc.), we will identifyand measure the resulting benefit inaccordance with the rules contained inthe statute and regulations. If thefinancial contribution takes a form


which has not been specifically dealtwith in these regulations, we willidentify and measure the benefit inaccordance with the definition ofbenefit contained in paragraph (b).Moreover, as noted above, paragraph (b)provides sufficient flexibility toaccommodate circumstances in whichthe facts of a particular case indicatethat a financial contribution hasconferred a benefit, even if the benefitdoes not take the form of a reduction ininput costs or an enhancement ofrevenues.

Finally, one commenter objected tothe following statement which wasincluded in the preamble to the 1997Proposed Regulations: ‘‘By the sametoken, where a firm does not pay less foran input than it otherwise would pay (orits revenues are not increased) as aresult of a financial contribution, itwould be very difficult to contend thata benefit exists.’’ This commenterargued that we should not define thetypes of practices which do not conferbenefits as this would invite thecreation and exploitation of loopholes.

We agree that we need only providea definition of what constitutes abenefit. We believe we have givenourselves the flexibility to apply theconcept of benefit in such a way that wewill be able to find a benefit insituations in which the regulations donot contain specific rules for identifyingand measuring the benefit from aparticular government program orpractice.

We received several commentsregarding the extent to which theDepartment should consider the overall‘‘effect’’ a government program has on afirm’s behavior in determining whethera benefit exists. One group ofcommenters requested an affirmativestatement preserving the Department’sdiscretion to consider ‘‘effects’’ inappropriate circumstances. Anothergroup of commenters urged us torenounce any use of our discretion andto state that the effects of governmentactions are irrelevant to the existence ofa countervailable subsidy.

As we explained in the preamble tothe 1997 Proposed Regulations, thedetermination of whether a benefit isconferred is completely separate anddistinct from an examination of the‘‘effect’’ of a subsidy. In other words, adetermination of whether a firm’s costshave been reduced or revenues havebeen enhanced bears no relation to theeffect of those cost reductions orrevenue enhancements on the firm’ssubsequent performance, such as itsprices or output. In analyzing whethera benefit exists, we are concerned withwhat goes into a company, such as

enhanced revenues and reduced-costinputs in the broad sense that we haveused the term, not with what thecompany does with the subsidy. Ouremphasis on reduced-cost inputs andenhanced revenues is derived fromelements contained in the examples ofbenefits in section 771(5)(E) of the Actand in Article 14 of the SCMAgreement. In contrast, the effect ofgovernment actions on a firm’ssubsequent performance, such as itsprices or output, cannot be derived fromany elements common to the examplesin section 771(5)(E) of the Act or Article14 of the SCM Agreement.

For example, assume that agovernment puts in place newenvironmental restrictions that require afirm to purchase new equipment toadapt its facilities. Assume also that thegovernment provides the firm withsubsidies to purchase that newequipment, but the subsidies do notfully offset the total increase in thefirm’s costs—that is, the net effect of thenew environmental requirements andthe subsidies leaves the firm with coststhat are higher than they previouslywere.

In this situation, section 771(5B)(D) ofthe Act, which deals with one form ofnon-countervailable subsidy, makesclear that a subsidy exists. Section771(5B)(D) of the Act treats theimposition of new environmentalrequirements and the subsidization ofcompliance with those requirements astwo separate actions. A subsidy thatreduces a firm’s cost of complianceremains a subsidy (subject, of course, tothe statute’s remaining tests forcountervailability), even though theoverall effect of the two governmentactions, taken together, may leave thefirm with higher costs. As anotherexample, if a government promulgatedsafety regulations requiring auto makersto install seat belts in back seats, andthen gave the auto makers a subsidy toinstall the seat belts, we would draw thesame conclusion. In the two examples,the government action that constitutesthe benefit is the subsidy to install theequipment, because this actionrepresents an input cost reduction. Thegovernment action represented by therequirement to install the equipmentcannot be construed as an offset to thesubsidy provided to reduce the costs ofinstalling the equipment.

Thus, if there is a financialcontribution and a firm pays less for aninput than it otherwise would pay in theabsence of that financial contribution(or receives revenues beyond theamount it otherwise would earn), that isthe end of the inquiry insofar as thebenefit element is concerned. The

Department need not consider how afirm’s behavior is altered when itreceives a financial contribution thatlowers its input costs or increases itsrevenues.

If there were any doubt on this score,section 771(5)(C) of the Act eliminatesit by clarifying that the ‘‘benefit’’ andthe ‘‘effect’’ of a subsidy are twodifferent things. While, as stated above,there must be a benefit in order for asubsidy to exist, section 771(5)(C) of theAct expressly provides that theDepartment ‘‘is not required to considerthe effect of the subsidy in determiningwhether a subsidy exists.’’ This messageis reinforced by the SAA at 926, whichstates that ‘‘the new definition ofsubsidy does not require that Commerceconsider or analyze the effect (includingwhether there is any effect at all) of agovernment action on the price oroutput of the class or kind ofmerchandise under investigation orreview.’’

Paragraph (c) of the new regulationfurther reinforces this principle bystating affirmatively that, in determiningwhether a benefit is conferred, theDepartment is not required to considerthe effect of the government action onthe firm’s performance, including itsprices or output, or how the firm’sbehavior otherwise is altered.

When we examine indirect subsidies,we are inquiring into whether agovernment is entrusting or directing aprivate entity to provide a reduced-costinput or enhanced revenue to a firm thatproduces the subject merchandise. Forexample, we have investigated whetherbelow-market loans or reduced-costgoods have been provided by means ofindirect subsidies. This analysis in noway implies that we are examiningwhether the indirect subsidy has aneffect on the price or output of thesubject merchandise. It merely meansthat we are investigating, in fulfillmentof other statutory requirements, whetherloans were provided on non-commercialterms or whether goods were providedfor less than adequate remuneration.

In addition to those commentsrelating specifically to our proposeddefinition of a benefit, we receivedcomments on other topics which webelieve are appropriately addressed inthe context of a discussion on benefits.First, one commenter objected to theabsence of a regulation regarding so-called ‘‘tiered’’ programs. Tieredprograms are those programs whichprovide varying levels of governmentassistance based upon differingeligibility criteria. Our longstandingpractice regarding such programs hasbeen to countervail only the differencebetween the assistance provided at a


non-specific level (within the meaningof section 771(5A) of the Act) and theassistance provided to a specificenterprise or industry (or group thereof).This practice was reflected in§ 355.44(n) of the 1989 ProposedRegulations.

Our omission of a similar rule in thisround of regulations was an oversight.To correct for this, we have addedparagraph (d), which provides thatwhere varying levels of financialcontributions are provided, a benefitwill be conferred to the extent that aspecific enterprise or industry or groupthereof receives a greater level offinancial contribution than thatprovided at the non-specific level. Thevarying financial contribution levelsmust be set forth in a statute, decree,regulation, or other official act, and theymust be clearly delineated andidentifiable (e.g., the investment taxcredit program in Certain Fresh AtlanticGroundfish from Canada, 51 FR 10041(March 24, 1986)). We note, however,that this exception cannot apply wherethe statute specifies a commercial testfor determining the benefit, such as withrespect to loans and loan guarantees.

Another related topic involves thetreatment of taxes on subsidies.Typically, we have referred to this issueas the ‘‘secondary tax consequences’’ ofsubsidies. Section 351.527 of the 1997Proposed Regulations stated that wewould not take account of secondary taxconsequences. For example, if receipt ofa grant increases the amount of incometax paid by a firm, we do not reduce theamount of the benefit from the grant toreflect the higher taxes paid. In theseFinal Regulations, we have retained thisrule and have relocated it to§ 351.503(e).

We received two commentsexpressing support for the 1997Proposed Regulations. One of thesecommenters requested that we includein the regulation the following corollary,which flows from the same basicprinciple: where a subsidy is exemptfrom income tax, we will treat the taxexemption as a separate benefit inaddition to the benefit from the originalsubsidy. An additional commenterrequested that the regulation beexpanded to clarify that we will notconsider any secondary consequences oreffects of the granting of the subsidyoutside the exclusive list of subsidyoffsets designated by the statute. To thisend, this commenter advocatedincluding the list of allowable offsets inthe regulations and stating that we willnot consider secondary consequences ofthe benefit. We have not added therequested language because the statuteis clear regarding what is considered to

be an allowable offset. Nor have webroadened the regulation as requestedby either commenter. We believe thatthe impact of the benefit under onesubsidy program should not beconsidered in calculating the benefitunder a separate program. However, inour experience, this question has onlyarisen with respect to the impact of taxprograms on other programs. Therefore,a broader regulation is not necessary.

Section 351.504

Section 351.504 deals with the benefitattributable to the most basic type ofsubsidy, a grant. In the 1997 ProposedRegulations, paragraph (c) of thissection (which was then numbered§ 351.503) included our methodologyfor allocating over time the benefit froma grant, or the benefit from a subsidythat the Department treated as a grant.In these Final Regulations, we havebroken out the allocation issues fromthe grant section and created a separatesection (§ 351.524) which deals with theallocation of benefits to a particular timeperiod. Therefore, § 351.504 nowpertains only to grants.

As in our 1997 Proposed Regulations,paragraph (a) provides that in the caseof a grant, a benefit exists in the amountof the grant. Paragraph (b) sets forth therule for determining when a firm isconsidered to have received a subsidyprovided in the form of a grant. Thisparagraph provides that the Secretarywill normally consider the benefit ashaving been received on the date onwhich the firm received the grant. Inthese Final Regulations, we have addedthe word ‘‘normally’’ for reasonsexplained in the preamble discussion of§ 351.524. Finally, paragraph (c)provides that the benefit from a grantwill be allocated to a particular timeperiod pursuant to the methodology setforth in § 351.524.

All the comments that we receivedregarding grants dealt with theallocation of benefits. These commentsare, therefore, discussed in the preambleto § 351.524.

Section 351.505

Section 351.505 deals with loans andother forms of debt financing. Paragraph(a) deals with the identification andmeasurement of the benefit attributableto a loan. Paragraph (a)(1) tracks thegeneral standard set forth in section771(5)(E)(ii) of the Act, which directsthe Department to use a ‘‘comparablecommercial loan that the recipientcould actually obtain on the market’’ asthe benchmark in determining whethera government-provided loan confers abenefit.

Use of Effective Interest Rates:Paragraph (a)(1) restates theDepartment’s current practice ofnormally seeking to compare effectiveinterest rates rather than nominal ratesin making this comparison. ‘‘Effectiveinterest rates’’ are intended to takeaccount of the actual cost of the loan,including the amount of any fees,commissions, compensating balances,government charges (such as stamptaxes) or penalties paid in addition tothe ‘‘nominal’’ interest. However, whereeffective rates are not available, we willcompare nominal rates or, as a lastresort, nominal to effective rates, asunder current practice. If the ‘‘loan’’ isa bond (see definition of ‘‘loan’’ in§ 351.102), we normally will treat theyield on the bond as the effectiveinterest rate.

One commenter asked that theregulations clarify that only paymentslegitimately made on a loan will be usedwhen calculating the effective interestrate. The commenter urged theDepartment to exclude other, unrelatedpayments to the government which theborrower might make along with theloan payments.

We agree with this commenter thatpayments unrelated to the loan shouldnot be included when we calculate theeffective interest rate, but we do notbelieve that the regulation needs to bemodified to address this concern. Thepreamble clearly describes the types ofpayments that would be included incalculating an effective interest rate.However, we will examine whetherthere are requirements placed on eitherthe government loan or the benchmarkloan affecting the cost of borrowing thatshould be factored into the calculationof the benefit amount.

Selection of Benchmark Loans andInterest Rates

Paragraphs (a)(2) and (a)(3) elaborateon the criteria for selecting thebenchmark. The criteria contained inthese two paragraphs are much moregeneral (and, thus, much more flexible)than the detailed hierarchies containedin § 355.44(b) of the 1989 ProposedRegulations. The Department seldomused these hierarchies because, inpractice, the information required in the1989 Proposed Regulations was seldomavailable.

‘‘Comparable commercial loan’’defined: Paragraph (a)(2) sets forth thecriteria the Department normally willconsider in selecting a comparablecommercial loan. First, paragraph(a)(2)(i) defines the term ‘‘comparable.’’In the preamble to the 1997 ProposedRegulations, we stated that in order tobe used as a benchmark, a comparable


commercial loan should represent afinancial instrument that is similar tothe government-provided loan and thatwas taken out (or could have been takenout) at the same time. To identify a loanthat is comparable to the government-provided loan, the 1997 ProposedRegulations called for primary emphasisto be placed on the structure of theloans (e.g., fixed interest rate v. variableinterest rate), the maturities of the loans(e.g., short-term v. long-term), and thecurrencies in which the loans aredenominated.

Several commenters maintained thatit is not enough to look at the structure,maturity, and currency denomination toidentify a benchmark loan that iscomparable to the government-providedloan. These commenters argued that theDepartment should also consider thelevel of risk associated with the loans bycomparing the security or collateral thatthe borrower is required to provide foreach loan. One of the commentersobserved that this approach would beconsistent with the Department’spractice in Laminated Hardwood TrailerFlooring from Canada, 62 FR 5201(February 4, 1997). This commenter alsonoted that, while the risk element wasdiscussed in the preamble of the 1997Proposed Regulations, it did not appearin the regulation.

In opposition, another commenterargued that a commercial loan should beconsidered sufficiently comparable to agovernment loan when the structuresand maturities of the two loans areidentical or similar and the loans areprovided in the same currency. Thiscommenter argued that in the interest ofpredictability and uniformity, no furtheranalysis, particularly with regard to thelevel of security of a loan, should benecessary. This commenter assertedthat, where these three criteria are met,the loans would generally require thesame level of security. Comparing thevalue of different assets securingdifferent loans would create anunworkable test, according to thecommenter, who suggested that theDepartment at least make it a rebuttablepresumption that a commercial and agovernment-provided loan arecomparable if the three criteria listedabove match.

We have not adopted the proposalsput forward by either set of commenters.As in the 1997 Proposed Regulations,§ 351.505(a)(2)(i) states that we intend toplace primary emphasis on three basiccharacteristics in determining whetherparticular loans are comparable to agovernment-provided loan: Thestructure, maturity, and currencydenomination of the loans. This doesnot mean, however, that a loan in the

same currency with a similar structureand maturity will always be foundcomparable to the government-providedloan. Nor should our decision to placeprimary emphasis on these threecharacteristics be seen as a rebuttablepresumption.

Instead, we recognize that manycharacteristics could factor into adecision of whether a loan should beconsidered comparable to thegovernment-provided loan. Certainly, asthe first set of commenters has pointedout, the levels of security or collateralon the two loans could be relevant indetermining comparability. Similarly,the amounts of principal might differ sogreatly that the two loans should not becompared. However, rather thanidentifying numerous characteristics forfinding loans to be comparable, andthereby limiting our ability to findbenchmarks, we have continued toplace primary emphasis on what webelieve to be the three most importantcharacteristics. Regarding othercharacteristics that might renderparticular loans not comparable to thegovernment-provided loan, such ascollateral and size, we will considerarguments made by the parties based onthe facts presented in their cases.

Paragraph (a)(2)(ii) provides adefinition of the term ‘‘commercial.’’The 1997 Proposed Regulations statedthat we would normally treat a loan as‘‘commercial’’ if it were taken out froma commercial lending institution or if itwere a bond issued by the firm incommercial markets. We also stated thata loan provided under a governmentprogram, even if the program is notspecific to an enterprise or industry,would not be considered a‘‘commercial’’ loan for benchmarkpurposes. Finally, the 1997 ProposedRegulations stated that the Departmentwould treat a loan from a government-owned bank as a commercial loan,unless there was evidence that the loanwas provided at the direction of thegovernment or with government funds.

We received several comments on thisissue, all of which urged us not to useloans from government-owned banks forbenchmark purposes. One commenterasserted that a loan from a government-owned bank is the same as a loan fromthe government, regardless of whetherthe loan is provided under agovernment program, because theactions of a government-owned bank arepresumably consistent with the policiesof its owner, the government. A secondcommenter maintained that thedistinction between ‘‘a governmentprogram’’ and ‘‘government control’’ isblurred and pointed to the Department’sdetermination in Certain Steel Products

from Korea, 58 FR 37338 (July 9, 1993),where the Department found that acountervailable benefit was conferred bygovernment-directed, preferential accessto specific sources of credit offered atfavorable terms. Because of theavailability of ‘‘directed credit’’ such asthat found in the Korean case, thiscommenter argued that the Departmentshould not use rates from loansprovided by government-owned banksas benchmark rates. A third commenterargued that the Department should notuse loans from government-ownedbanks for benchmark purposes unlessthe respondent can demonstrate thecommercial nature of such loans. Thisand other commenters objected to theburden that the 1997 ProposedRegulations allegedly placed upon apetitioner to show that a loan from agovernment-owned bank is provided atthe direction of the government or withgovernment funds. Noting that the 1989Proposed Regulations directed theDepartment to use financing provided ordirected by the government as abenchmark only under certainexceptional circumstances, severalcommenters urged the Department tocontinue to apply this narrow standard.

We have traditionally recognized thatgovernment-owned banks may operateas commercial banks in some countries.It is not appropriate to maintain thatloans from government-owned banksper se are not commercial. Therefore,we continue to take the positions that:(1) We will not consider loans providedunder government programs to becommercial loans, and (2) we will notautomatically disqualify loans fromgovernment-owned commercial banksas benchmarks. However, we will notuse loans from government-ownedspecial purpose banks, such asdevelopment banks, as benchmarksbecause such loans are similar to loansprovided under a government programor at the direction of the government.Regarding loans from government-owned commercial banks, we will treatsuch loans as being commercial and usethem as benchmarks unless they aremade on non-commercial terms or areprovided at the direction of thegovernment. We do not believe that thisstandard imposes an unreasonableburden on petitioners because this is thetype of information they wouldroutinely provide when alleging thatgovernment-provided loans arecountervailable.

Further, regarding the definition of‘‘commercial,’’ where a firm receives afinancing package including loans fromboth commercial banks and from thegovernment, we intend to examine thepackage closely to determine whether


the commercial bank loans should infact be viewed as ‘‘commercial’’ forbenchmark purposes. In particular, wewill look to whether there are anyspecial features of the package thatwould lead the commercial lender tooffer lower, more favorable terms thanwould be offered absent thegovernment/commercial bank package.

Paragraphs (a)(2)(iii) and (iv) specifythe time period from which theDepartment will select comparablefinancing. Paragraph (a)(2)(iii) addresseslong-term loans and is unchanged fromthe 1997 Proposed Regulations. Thisregulation directs us to use a loan whoseterms were established during orimmediately before the year in whichthe terms of the government-providedloan were established. Paragraph(a)(2)(iv) addresses short-term loans. Inthe 1997 Proposed Regulations, westated that we would use as thebenchmark rate an annual average of theinterest rates on comparable commercialloans taken out during the period ofinvestigation or review. However, incases with significantly fluctuatinginterest rates, the 1997 ProposedRegulations allowed us to use ‘‘the mostappropriate’’ interest rate as thebenchmark rate.

We received two comments regardingthe benchmark interest rate for short-term loans. Both commenters arguedagainst using a simple average of theinterest rates on comparable commercialshort-term loans obtained by therespondent. Instead, they asked theDepartment to weight the rates by theassociated principal amount of eachloan in order to prevent small, one-timeloans from distorting the benchmarkcalculation. According to thecommenters, this change would alsoaddress the Department’s concern aboutsignificantly fluctuating interest rates.

We have adopted the commenters’proposal in part and have amendedparagraph (a)(2)(iv) to provide that wewill calculate a weighted rather than asimple average benchmark interest ratefor short-term loans. However, we donot share the commenters’ view that thischange addresses situations where theinterest rate fluctuates significantly overthe year, e.g., in economies with a highinflation rate. We are, therefore,retaining the provision that allows us touse benchmarks other than annualweighted averages in these situations.

We also wish to clarify that we intendto follow our practice of calculatingshort-term benchmarks on a calendaryear basis. In most instances, the periodof investigation or review is a calendaryear, so the short-term benchmark willbe calculated using commercial loansthat were obtained (or could have been

obtained) during the period ofinvestigation or review. In situationswhere the loans under investigationspan two calendar years, we willcalculate two annual benchmarkscorresponding to the two years.

Finally, we received one comment onthe selection of benchmark interest ratesto be used in administrative reviews ofsuspension agreements. In the preambleto the 1997 Proposed Regulations, westated that in administering a suspendedinvestigation, we would monitordevelopments in commercialbenchmarks outside of the normaladministrative review process and thatthis monitoring activity should serve toensure that the commercial benchmarksused were timely. The commenter,however, claimed that a specialregulation requiring the Department tomonitor commercial benchmark rates isneeded because otherwise there is noguarantee that the Department will doso. In the commenter’s experience, theDepartment has not always undertakenthis type of monitoring activity.Specifically, pointing to MiniatureCarnations and Roses and Other FreshCut Flowers from Colombia, 59 FR52514 (October 18, 1994), thecommenter alleged that the Departmentset new benchmarks at the conclusion ofeach administrative review, with theresult that the interest rates used forpurposes of the suspension agreementalways lagged behind thecontemporaneous commercial rates. Forshort-term loans, the commenter argued,the Department should monitorcommercial interest rates on at least aquarterly basis in order to keep thesuspension agreement current.

We do not agree with the commenter’sview that a regulation is needed on thisissue. In the case of suspensionagreements, we will revise thebenchmarks for long- and short-termloans whenever appropriate, regardlessof whether we are conducting anadministrative review of the suspensionagreement. To ensure that thebenchmarks are kept as current aspossible, we intend to review them oncea year or more frequently, if informationavailable to the Department indicatesthat a change is necessary.

‘‘Could actually obtain on themarket’’ defined: In accordance withsection 771(5)(E)(ii) of the Act,paragraph (a)(3) addresses therequirement that the comparable loan beone that the firm ‘‘could actually obtainon the market,’’ and reflects a change inour practice with respect to short-termloans. In the past, we have used nationalaverage interest rates to determine thebenefit from government-providedshort-term loans. This practice was

codified in § 355.44(b)(3) of the 1989Proposed Regulations. However, as earlyas 1989, we announced that we wouldconsider using company-specificbenchmarks for short-term loans. Basedupon our experience in the interim, andespecially because of the ability tocomputerize our loan calculations, wehave concluded that we have thecapability to use company-specificbenchmarks. Moreover, we believe thatcompany-specific benchmarks provide amore accurate measure of the benefit, ifany, to a recipient of a government-provided short-term loan. Therefore,paragraph (a)(3)(i) states a preference forusing company-specific benchmarks forboth short- and long-term loans. Underparagraph (a)(3)(ii), we normally woulduse national averages only in the eventthat the firm did not take out anycomparable commercial loans duringthe relevant period. Except for a minorclarification (adding ‘‘for both short-and long-term loans’’ to paragraph(a)(3)(i)), these paragraphs areunchanged from the 1997 ProposedRegulations.

Two commenters warned againstusing the interest rates on hypotheticalloan offers as benchmark rates. One ofthe commenters pointed to a perceivedloophole in the preamble to the 1997Proposed Regulations, which stated that‘‘a comparable commercial loan used asa benchmark should represent afinancial instrument * * * that wastaken out (or could have been taken out)at the same point in time.’’ Anothercommenter suggested that theacceptance of hypothetical loan offersfor benchmark purposes might temptrespondents to manipulate thebenchmark rate by soliciting offers ofloans that they do not intend to take.Both commenters asserted that theinterest rates on such hypothetical loanoffers would be very low and that theywould, thus, distort the benchmark rate.

We agree that respondents should notbe permitted to submit hypotheticalloans for use as benchmarks. Thelanguage in the preamble cited by thecommenter was meant to addressanother situation: Where the respondentdid not actually take out anycommercial loans during the relevantperiod and where we, therefore, woulduse an appropriate alternativebenchmark interest rate * * * such asa national average interest rate. Thenational average interest rate isrepresentative of a loan that ‘‘could havebeen taken out.’’

Benchmark for uncreditworthycompanies: Paragraph (a)(3)(iii), whichdeals with long-term loans provided tofirms considered to be uncreditworthy,describes our methodology for


calculating the benchmark that we willuse in identifying and measuring thebenefit attributable to a government-provided, long-term loan received by anuncreditworthy firm. One importantaspect of this methodology has changedfrom the 1997 Proposed Regulations.

Our methodology is based explicitlyon the notion that, when a lender makesa loan to a company that is consideredto be uncreditworthy (as opposed to asafer, creditworthy company), thelender faces a higher probability that theborrower will default on repayment ofthe loan. As a consequence of thishigher probability of default, the lenderwill charge a higher interest rate. Thecalculation described in paragraph(a)(3)(iii) addresses the increasedprobability of default for anuncreditworthy company by adjustingupward the interest rate for acreditworthy company in the country inquestion.

As stated in the 1997 ProposedRegulations, in making this adjustment,we are not proposing to calculate theprobability that a particularuncreditworthy firm will default on aparticular loan. Such a calculationwould require extensive data andanalysis, and any conclusion would behighly speculative. Instead, similar tothe method we have used since 1984,we will rely on information regardingthe U.S. debt market. In the 1997Proposed Regulations, we stated that wewould use the weighted average one-year default rate for speculative gradebonds, as reported by Moody’s InvestorService. This weighted average defaultrate would be reflected indirectly in ourformula for calculating the benchmarkinterest rate for uncreditworthycompanies, which is based on theprobability that these risky loans will berepaid.

We received numerous comments onour new methodology. One commenterexpressed support for the methodology,stating that it seemed to calculateaccurately the full benefit of a loansubsidy. Certain other commenterssupported the new methodology as longas it resulted in a ‘‘substantial spread’’between the observed commercialinterest rates in the country underinvestigation and the benchmarkinterest rate used for uncreditworthycompanies.

One commenter did not object to thenew methodology but argued that, incalculating the risk premium, theDepartment should use data pertainingto the country under investigation, notU.S. data, which should only be used asfacts available.

Another commenter criticized thereliance upon default rates in the U.S.

‘‘junk’’ bond market, arguing that U.S.data do not reflect the risk of lending touncreditworthy companies in foreigncountries, especially developingcountries where the default rate is likelyto be much higher. This commenter alsocriticized the use of a one-year defaultrate in the calculation of the riskpremium, arguing that this significantlyunderstates the overall default ratebecause default is more likely after thefirst year of the life of a loan. Should theDepartment decide to rely on U.S.market data, the commenter asked thatthe Department, at a minimum, examinethe default rate over 10 years.

Another commenter stated that theDepartment’s new methodology impliesa serious departure from the statutorymandate to determine an interest ratethat the borrower could actually obtainon the market. First, the commenterargued, a default-based premium doesnot take into account all the costsassociated with lending to anuncreditworthy company, e.g.,collection costs and lost opportunitycosts and, as a result, the premium isunderstated. Second, the commenterasserted, the new methodology treats alluncreditworthy borrowers as if theywere large corporate borrowers able toissue junk bonds of the kind reported byMoody’s. According to this commenter,many companies cannot obtain long-term loans even at junk bond rates andare forced to rely on borrowing from theventure capital market at substantiallyhigher interest rates. In reality, thecommenter argued, a private lenderwould assess a company’screditworthiness on a case-by-case basisusing the same financial indicators thatthe Department has relied upon in thepast (see § 355.44(b)(6)(i) of the 1989Proposed Regulations). The regulations,therefore, should reflect such privatelender behavior by directing theDepartment to determine the riskpremium on a case-by-case basis.

Finally, two commenters noted thatthe European Union (‘‘EU’’) takes atougher stance on government loans touncreditworthy borrowers by treatingthe entire loan as a grant when therecipient company’s financial positionis so weak that it could not haveobtained a commercial loan, andimplied that the Department shouldfollow the EU’s example.

As stated in the 1997 ProposedRegulations, we are changing ourmethodology because we believe thatthe new methodology moreappropriately reflects the risk involvedin lending to firms with little or noaccess to commercial bank loans fromconventional sources. By adjustingupward the interest rate that an average,

creditworthy company would pay toaccount for the greater likelihood ofdefault by an uncreditworthy company,we recognize the speculative nature ofloans to uncreditworthy borrowers andthe premium they would have to paythe lender to assume that risk.

We have continued to rely on defaultinformation pertaining to the UnitedStates in our formula because webelieve it would be difficult to locatedetailed and comprehensive defaultinformation for many of the countriesthat we investigate. However, if suchdata do exist and are brought to ourattention in the course of aninvestigation or review, and the dataindicate that the default experience inthe country in question differssignificantly from that in the UnitedStates, we would consider using thedefault rate from the country underinvestigation. Therefore, we haveamended the 1997 Proposed Regulationto say that the Secretary ‘‘normally’’ willcalculate the benchmark foruncreditworthy companies using U.S.data.

We have not adopted the suggestionthat we follow the EU’s practice oftreating loans to uncreditworthy firmsas grants. Under our definition,uncreditworthy firms are those thatcannot obtain long-term loans fromconventional commercial sources. Thisdoes not mean, however, that theycannot borrow funds from other sources.Hence, we would not equate loans tothese companies with grants. Instead,the purpose of our methodology is tocapture the increased risk of lending tothese companies.

Regarding the new calculationmethodology, we agree that using a one-year default rate would not accuratelyreflect the risk that an uncreditworthyborrower will default on a long-termloan. We have, therefore, changed thisaspect of our methodology and will usethe average cumulative default rate forthe number of years corresponding tothe length of the loan, as reported inMoody’s study of historical corporatebond default rates. In other words, wewould use a five-year default rate for afive-year loan, a 15-year default rate fora 15-year loan, and so forth. We believethat using a default rate that is directlylinked to the term of the loan is a betterreflection of the risk associated withlong-term lending to uncreditworthyborrowers.

Our formula for calculating thebenchmark interest rate for anuncreditworthy company is based uponthe assumption that a lender’s expectedreturn on all loans should be equal.Under this assumption, the interest ratedifferential on loans charged to


creditworthy and uncreditworthycompanies is such that the lender’sexpected (total) return on a loan to anuncreditworthy company equals theexpected (total) return on a loan to acreditworthy company, after accountingfor differences in the risk of default. Asecond assumption is that, in the eventof default, no portion of the principal orinterest is recovered by the lender. Thefollowing equation relates the loan rateto a creditworthy company and the loanrate to an uncreditworthy company:(1¥qn)(1+if)n = (1¥pn)(1 + ib)n,Where:n = the term of the loan;ib = the benchmark interest rate for

uncreditworthy companies;if = the long-term interest rate that

would be paid by a creditworthycompany;

pn = the probability of default by anuncreditworthy company within nyears; and

qn = the probability of default by acreditworthy company within nyears.

Default means any missed or delayedpayment of interest and/or principal,bankruptcy, receivership, or distressedexchange. For values of pn, we willnormally rely on the average cumulativedefault rates reported for the Caa to C-rated categories of companies inMoody’s study of historical default ratesof corporate bond issuers. For values ofqn, we will normally rely on the averagecumulative default rates reported for theAaa to Baa-rated categories ofcompanies in Moody’s study ofhistorical default rates of corporate bondissuers.

Solving for ib in the above equationyields a formula for the benchmarkinterest rate that should be paid by anuncreditworthy borrower:ib = [(1¥qn)(1+if)n/(1¥pn)]1/n¥1.

One commenter urged the Departmentto apply a risk premium also to short-term loans taken out by uncreditworthyborrowers. Another commentersupported this idea, arguing that eventhough long-term financing is riskier, abank’s decision on short-term loans isalso based on the overall financialhealth of the borrower.

The fact that we are using a company-specific benchmark means that the riskassociated with providing a short-termloan to a company will be reflectedwithout any special adjustment.However, even where a company-specific benchmark is not available, wedo not believe it would be appropriateto include a risk premium in the short-term benchmark calculation. Short-termlending is less risky than long-termlending and the inclusion of a risk

premium in the short-term benchmarkwould overcompensate for thecommercial default risk. The risk ofdefault in short-term lending is minimalbecause short-term lending is usuallyassociated with specific transactions,and these transactions provide securityfor the lender (albeit by means of a widevariety of legal modalities). Thus, wehave not adopted this suggestion.

We note that we have identified onesituation where it would be appropriateto include a risk premium in a short-term benchmark. This would arise if wewere forced to use a short-term interestrate as a benchmark for long-term loansto an uncreditworthy company or as adiscount rate for allocating benefitsreceived by an uncreditworthycompany.

Creditworthiness AnalysisParagraph (a)(4) sets forth the

standard for determining whether a firmis uncreditworthy. In the 1997 ProposedRegulations, we made certainmodifications to § 355.44(b)(6)(i) of the1989 Proposed Regulations to clarify theanalysis we intended to undertake indetermining whether a company iscreditworthy. Specifically, we adopted abroader definition of‘‘uncreditworthiness’’ where we wouldfind a company to be uncreditworthy ifinformation available at the time theterms of the government-provided loanwere agreed upon indicated that thefirm could not have obtained long-termfinancing from conventionalcommercial sources. In this context, theterm ‘‘conventional commercialsources’’ referred to bank loans and non-speculative grade bond issues. Hence,uncreditworthy companies were thosethat would be forced to resort to othersources, such as junk bonds, to raisefunds. We also listed factors we wouldconsider in making a creditworthinessdetermination. These factors focused onthe financial position of the firmreceiving the government financing,without any consideration of thepurpose of the financing or whetherdifferent levels of risk might beassociated with different types ofprojects undertaken by the firm.

We received several comments on ourdefinition of ‘‘uncreditworthiness.’’Certain commenters urged theDepartment to retain the definition ofuncreditworthiness from the 1989Proposed Regulations, arguing that thisstandard was objective, uncontroversial,and easy to administer. Thesecommenters maintained that thisstandard provided important guidancefor petitioners who may havedifficulties obtaining information on theloan options available to respondents.

The commenters also argued that thenew regulation would place a nearlyimpossible burden of proof onpetitioners to demonstrate that arespondent is uncreditworthy.

We have not adopted this suggestion.As we stated in the preamble to our1997 Proposed Regulations, we changedthe definition from the 1989 ProposedRegulations because we found that theold definition did not contain a generalprinciple to guide our determinations ofuncreditworthiness. Instead, the 1989Proposed Regulation relied on aformulaic approach to determiningcreditworthiness that was toorestrictive. We believe that the generalprinciple adopted in these regulations(i.e., an uncreditworthy firm is onewhich could not have obtained long-term financing from conventionalsources) will give us the flexibility toaddress situations that would not havemet the formulaic approach for findinga company uncreditworthy.

However, although we changed thedefinition of uncreditworthiness, we didnot intend to change the standard forinitiating an investigation of acompany’s creditworthiness. Therefore,petitioners may continue to provide thesame type of information we havetypically relied upon.

Another commenter argued that theDepartment should not limit itself toexamining the creditworthiness of firmsas a whole, but should also give itselfthe flexibility to examine thecreditworthiness of individual projects.This commenter argued that someforeign manufacturers, thoughcreditworthy per se, are able to carry outnew development projects only becausethey obtain government financing. Thecommenter argued that thesemanufacturers would not have been ableto secure financing from commercialsources for their huge developmentprojects because these projects are notcommercially viable and would beimpossible to finance withoutgovernment subsidies. The commenternoted that, under the Department’straditional approach, the Departmentwould analyze the creditworthiness ofthe company as a whole, not thecreditworthiness of the specific project.Hence, the Department would be likelyto find the foreign manufacturercreditworthy, regardless of thecommercial viability of the project. Thecommenter argued that, in this type ofsituation, the Department should focuson the creditworthiness of the project,not the firm.

We share this commenter’s concernand have amended the 1997 ProposedRegulations to allow for a project-specific analysis in determining


creditworthiness. For example, for loansthat are provided to fund a largeinvestment project into new products,processes, or capacity (e.g., a plantexpansion or new model or productline, where repayment of a loan iscontingent upon the success of theparticular project being funded), ourtraditional analysis focusing primarilyon the creditworthiness of the companyas a whole may be inappropriatebecause the risk associated with a newproject may be much higher or lowerthan the average risk of the company’sexisting operations. In these situations,we would expect commercial lenders toplace greater emphasis on the expectedreturn and risk of the project becausethe success or failure of the projectwould be the most important indicatorof the borrowing firm’s ability to repaythe loan. This is not to say that thefinancial position of the firm as a wholewould be irrelevant to the lender’sdecision, only that the primary focuswould be on the project itself.Therefore, paragraph (a)(4) now allowsfor the possibility of focusing thecreditworthiness analysis on the projectbeing financed rather than the companyas a whole.

Significance of long-term commercialloans: In the 1997 ProposedRegulations, paragraph (a)(4)(ii)provided that, if a privately-ownedcompany received long-termcommercial loans without a governmentloan guarantee, we would consider thepresence of such commercial loans asdispositive evidence that the companywas not uncreditworthy.

Two commenters criticized theDepartment’s proposed approach. Thesecommenters maintained that thepresence of a long-term, commercialloan does not prove that a company iscreditworthy. Instead they urged theDepartment to examine all the criterialisted in paragraphs (a)(4)(i) (A), (B), (C),and (D) without treating one of thesefactors as dispositive. One of thecommenters argued that giving onecriterion dispositive status wouldconstitute abuse of the Department’sdiscretion to implement the statute. Theother commenter argued that theDepartment’s proposed approach wouldpreclude an in-depth review of thecompany as envisioned by theregulations. Both commenters statedthat making the presence of acommercial loan a dispositiveindication of creditworthiness would beparticularly inappropriate if thecommercial loan had characteristicsdifferent from the government loan (e.g.,different requirements of security).

In general, we believe that ifcommercial banks are willing to provide

loans to the firm, we should notsubstitute our judgment and find thefirm to be uncreditworthy. This does notmean, however, that if the firm hastaken out a single commercial bank loanwe would find that loan to bedispositive evidence that the firm wascreditworthy. Instead, the intent of thisparagraph is to indicate that, where thefirm has recourse to commercial sourcesfor loans, as made evident by the receiptof such loans, and the commercial loansare comparable with the governmentloan, those loans will be dispositive ofthe firm’s creditworthiness. However, if,for example, the firm has obtained asingle commercial loan in the year inquestion for a relatively small amount,and the loan has a short repayment term(e.g., less than two years), or hasunusual aspects, receipt of that loan willnot be dispositive of the firm’screditworthiness, and we will go on toexamine the other factors listed inparagraph (a)(4)(i) B through D.

We have also made a change from the1997 Proposed Regulations regardingthe presence of guarantees and thefirm’s creditworthiness. We have added‘‘explicit or implicit’’ to modify‘‘government guarantee.’’ This serves toclarify our position that if either type ofguarantee is present, the commercialloans will not be viewed as dispositiveof the firm’s creditworthiness. We mayconsider a commercial loan to becovered by an implicit governmentguarantee where the loan contributes tothe financing of a project that is beingundertaken in conjunction withgovernment loan funds or other types ofgovernment participation such asdevelopment grants. In such a scenario,while no explicit government guaranteeis present, we believe that banks arelikely to assume that the governmentwill stand behind the project and ensurethat creditors are repaid.

Finally, we note our longstandingpractice that creditworthinessdeterminations are made on a year-by-year basis. For example, if we are tryingto determine whether a firm iscreditworthy in 1998, we will look towhether the firm has negotiatedcommercial loans in 1998.

One commenter suggested thatpurchases of equity in a company by acommercial institution should alsoconstitute dispositive evidence ofcreditworthiness. The commenterreasoned that a private entity willing toinvest in a company would presumablyalso be willing to lend money to thatcompany because investing is riskierthan lending.

We have not adopted this suggestion.By its very terms, equity differs fromloans and, hence, the presence of equity

investments (even if made by privateinvestors) is not necessarily indicativeof whether the firm could obtain loansfrom commercial sources. As an extremeexample, private owners may injectequity into their company because thedebt-to-equity ratio is so high that it hasbecome virtually impossible for thecompany to borrow funds. Clearly, inthis situation, the presence of equitypurchases by the owners would not beindicative of the firm’s access tocommercial loans.

We received two comments regardingthe significance of the receipt of acommercial loan where we areexamining the creditworthiness of agovernment-owned company. Onecommenter suggested that paragraph(a)(4)(ii) should apply also togovernment-owned firms. Anothercommenter took the opposite view,stating that it is not unusual to findcommercial lenders providing loans togovernment-owned companies whichare otherwise uncreditworthy.

We do not believe that the presenceof commercial loans is dispositive ofwhether a government-owned firmcould have obtained long-term financingfrom conventional commercial sources.This is because, in our view, in the caseof a government-owned firm, a bank islikely to consider that the governmentwill repay the loan in the event ofdefault. Accordingly, paragraph (a)(4)(ii)provides that the presence ofcomparable commercial loans will bedispositive of creditworthiness only forprivately owned companies. Forgovernment-owned firms, we will makeour creditworthiness determination byexamining this factor and the otherfactors listed in paragraph (a)(4)(i).

Significance of prior subsidies:Paragraph (a)(4)(iii) in the 1997Proposed Regulations stated that wewould ignore current and priorcountervailable subsidies indetermining whether a firm isuncreditworthy. In other words, wewould not attempt to adjust a firm’sfinancial data for current and priorsubsidies in making a creditworthinessdetermination.

We received three comments on thisissue, all of which urged the Departmentto change its approach and adjust forprior subsidies when examining a firm’screditworthiness. One of thesecommenters requested that theDepartment take prior subsidies intoaccount to the same extent that areasonable private lender would. Thiscommenter argued that, by ignoringprior subsidies, the Department is notadhering to the standards of areasonable private lender. Thecommenter maintained that, if a


company’s financial health is due togovernment assistance, a private lenderwould examine the company’sunderlying performance independent ofsubsidies. The private lender, whowould then discover that the company’sfinancial health was superficial, mightnot lend money to the company unlessthe lender was convinced that thegovernment would continue to providesubsidies in the future. A secondcommenter argued that failure toconsider prior subsidies when making acreditworthiness determinationunderestimates the benefit received.This commenter urged the Departmentto estimate the recipient company’sfinancial situation without subsidiesand base its creditworthinessdetermination on this estimate.

We have not adopted this suggestion.Our longstanding practice has been notto take current or prior subsidies intoaccount when determining a company’screditworthiness. We believe that tryingto adjust a company’s financial ratios forpreviously received subsidies would bean extremely difficult and highlyspeculative exercise.

We have made one small amendmentto paragraph (a)(4)(iv) addressing thediscount rate. We have changed ‘‘non-recurring grant’’ to ‘‘non-recurringbenefit’’ to conform with the newnomenclature used in § 351.524.

Calculation of Benefit From Long TermVariable Rate Loans

Paragraph (a)(5) deals with long-termvariable rate loans and codifies themethodology set forth in the GIA. Underparagraph (a)(5)(i), which is unchangedfrom the 1997 Proposed Regulations, theyear in which the terms of thegovernment-provided loan are setestablishes the reference point forcomparing the government-providedvariable-rate loan with the comparablecommercial variable-rate loan. If theinterest rate on the government-provided loan is lower than the interestrate on the comparable commercialloan, a benefit exists. If the interest rateon the government-provided loan is thesame or higher, no benefit exists. Therationale for basing the decision on thefirst-year interest rate differential is thatthe interest rate spread, if any, in thatyear generally will apply throughout thelife of the loan.

Paragraph (a)(5)(ii) recognizes thatthere may be situations where themethod described in paragraph (a)(5)(i)cannot be followed and provides theDepartment with the discretion tomodify that method. For example, theremay be no comparable commercialvariable-rate loan to use for comparisonpurposes, or the repayment structure of

the government-provided variable-rateloan may be such that the simpleinterest rate comparison described inparagraph (a)(5)(i) would not yield anaccurate measure of the benefit.

AllegationsParagraph (a)(6)(i) deals with the

standard for initiating an investigationof a respondent company’screditworthiness. It is unchanged fromthe 1997 Proposed Regulations. Inaccordance with our past practice, thisparagraph states that the Secretary willnormally require a specific allegationbefore the Department will consider thecreditworthiness of a firm.

One commenter argued that theDepartment should not employ aheightened initiation standard forinvestigating a company’screditworthiness. Specifically, thiscommenter suggested that therequirement that petitioners supplyinformation ‘‘establishing a reasonablebasis to believe or suspect’’ that acompany is uncreditworthy be replacedwith information ‘‘reasonably availableto petitioners.’’

We have not adopted this suggestion.The requirement that petitionersestablish ‘‘a reasonable basis to believeor suspect’’ uncreditworthiness ratherthan merely provide ‘‘informationreasonably available’’ to them datesback to the 1989 Proposed Regulations.Because of the additional workloadinvolved in investigating anddetermining whether a company isuncreditworthy, we continue to believethat it is appropriate to impose a higherstandard for uncreditworthinessallegations. This does not involve anychange in our past practice—the sametypes of allegations that we haveaccepted in the past will still suffice tostart a creditworthiness inquiry.

Paragraph (a)(6)(ii) establishes theevidentiary standard for investigatingloans extended by government-ownedbanks. In the 1997 ProposedRegulations, we made a distinctionbetween government-owned banks thatare operated to meet special financingneeds and government-ownedcommercial banks. For special purposebanks (such as national developmentbanks), we asked that petitionersprovide information reasonablyavailable to them indicating that loansprovided by such banks were specificand that the interest charged was not atcommercial rates. For government-owned commercial banks, we requestedthat petitioners also provide informationestablishing a reasonable basis tobelieve or suspect that the loans weresomething more than mere commercialloans. In particular, we requested

information suggesting that such loanswere provided at the direction of thegovernment or with funds provided bythe government.

Several commenters objected to thehigher initiation standard for loansprovided by government-ownedcommercial banks. They argued that theadditional information required by theDepartment for initiating aninvestigation of loans from this categoryof banks is not reasonably available topetitioners. They contended that itshould be sufficient for petitioners todemonstrate that a loan is specific andprovided on terms inconsistent withcommercial considerations. Theysuggested that the burden of proof beshifted to respondents to show that theloan involves no government funds orgovernment direction. Anothercommenter asserted that the division ofgovernment-owned banks into twocategories is a new approach and notpart of the Department’s past practice.The same commenter argued that theDepartment’s 1997 ProposedRegulations would create a loopholebecause the Department’s threshold forinitiating an investigation of loans fromgovernment-owned commercial bankswould be higher than for initiating aninvestigation of loans from privately-owned banks and government-ownedspecial purpose banks.

Based on our consideration of thesecomments, we have decided that thedistinction between government-ownedspecial purpose banks and government-owned commercial banks may not behelpful in this context and that it is,therefore, not meaningful to retaindifferent initiation standards forinvestigating loans from these twocategories of banks. Paragraph (a)(6)(ii)has, thus, been changed and nowprovides that, for loans provided by anygovernment-owned bank, the Secretarywill require petitioners to presentinformation reasonably available tothem indicating that the loans: (1) Arespecific in accordance with section771(5A) of the Act, and (2) are providedon terms more favorable than those therecipient would pay on a comparablecommercial loan that the recipientcould actually obtain on the market.This initiation standard is consistentwith the initiation standard for mostsubsidy allegations, i.e., petitioner mustallege (and provide reasonably availableinformation in support of the allegation)that the subsidy is specific and that itconfers a benefit. We believe that, forinitiation purposes, governmentownership is sufficient to indicate thatfunds have been provided at thedirection of the government.


One commenter argued that loansprovided by special purposegovernment-owned banks should bepresumed to be specific for purposes ofmaking a subsidy allegation becausesuch banks promote specific and narrowobjectives. This commenter stated thatmany petitioners cannot obtain theinformation needed to show that a loanis specific. In this commenter’s view,the Department should instead requirerespondents to show that the loans aregenerally available.

We have not adopted this suggestion.With any presumption, there must be afactual basis for making thepresumption, and none exists in thisinstance. The fact that special purposebanks may be set up to achieve certainobjectives does not necessarily meanthat they provide funds to a specificgroup of enterprises or industries. Aswith any other domestic program,petitioners must provide informationreasonably available to them indicatingthat the bank’s loans are specific andthat they confer a benefit.

Timing of Receipt of BenefitParagraph (b) sets forth a rule

regarding the point in time at which thebenefit from a loan arises. The 1997Proposed Regulations stated that wewould consider the benefit as havingbeen received on the date on which thefirm is due to make a payment on thegovernment-provided loan. In theseFinal Regulations, we have amended theregulation such that we will considerthe benefit to have been received in theyear in which the firm otherwise wouldhave had to make a payment on thecomparable commercial loan. Thesecond sentence of paragraph (b)addresses loans with specialcharacteristics, e.g., loans with non-commercial grace periods. With thesetypes of loans, we believe that thebenefit stream starts upon the receipt ofthe loan. It would not be appropriate towait until the end of the grace period tobegin assigning the benefit from suchloans because the firm would have hadto make loan payments during thisperiod if the loan were provided oncommercial terms.

Allocation Over TimeParagraph (c) deals with the allocation

of the benefits of a government-providedloan to a particular time period andreflects one minor change from the 1997Proposed Regulations.

Paragraph (c)(1) provides that thebenefit of a short-term loan will beallocated (expensed) to the year(s) inwhich the firm is due to make interestpayments on the loan. This approach,which essentially treats short-term loans

as recurring subsidies, is consistent withlongstanding Department practice. Wehave added to the paragraph the samecondition that applies to long-termloans, i.e., that the amount of thesubsidy conferred by a government-provided loan can never exceed theamount that would have been calculatedif the loan had been given as a grant.

Paragraph (c)(2) deals with situationsin which the benefit of a government-provided long-term loan stems solelyfrom the concessionary interest rate ofthe loan, not from any differences inrepayment terms. Where this is the case,there is no need to engage in thecomplicated calculations called for by§ 355.49(c) of the 1989 ProposedRegulations. Instead, as paragraph (c)(2)provides, the annual benefit can bedetermined by simply calculating, foreach year in which the loan isoutstanding, the difference in interestpayments between the government-provided loan and the comparison loan.The last sentence of paragraph (c)(2)restates our long-held principle that theamount of the subsidy conferred by agovernment-provided loan never canexceed the amount that would havebeen calculated if the loan had beengiven as a grant.

Paragraph (c)(3) deals with situationswhere both the government-providedloan and the comparison loan are long-term, fixed-interest rate loans, but wherethe two loans have dissimilar graceperiods or maturities, or where therepayment schedules have differentshapes (e.g., declining balance versusannuity style). Because a firm mayderive a benefit from special repaymentterms, in addition to any benefit derivedfrom a concessional interest rate, wewill calculate the benefit in a two-stepprocess. First, paragraph (c)(3)(i) directsus to calculate the present value, in theyear in which repayment would beginon the comparable commercial loan, ofthe difference between the amount thatthe firm is to pay on the government-provided loan and the amount that thefirm would have paid on the benchmarkloan (this difference is called ‘‘the grantequivalent’’). Second, paragraph(c)(3)(ii) provides that we allocate thisgrant equivalent over time by using theallocation formula in § 351.524(d)(1).We have decided to eliminate our oldloan allocation formula described in the1989 Proposed Regulations, as part ofour effort to streamline methodologies,where possible. In determining that thebenefit from these types of loans occursin the year in which the government-provided loan was received (see§ 351.505(b)), the old loan formula isunnecessary, because its primarypurpose was to begin assigning annual

benefit amounts in the year after thereceipt of the loan.

We received two comments on thisissue. Both commenters objected to ouruse of the number of years in the life ofthe government-provided loan whenallocating the benefit of loans withconcessionary grace or deferral periods.The commenters argued that, because ofthe concessionary grace/deferral period,the Department is diluting the annualbenefit by including this period in theallocation period. Instead, thecommenters urged the Department toallocate the benefit over the length ofthe benchmark loan. In addition, thecommenters asked the Department to‘‘add an additional amount to reflect thepresent value of the benefit fromreduced interest and principalpayments’’ due to a deferral of therepayment schedule.

We have not adopted thesesuggestions. With regard to the formercomment, matching the allocationperiod with the life of the government-provided loan is a more predictable,transparent, and logical methodology.This is because we will be allocatingsubsidy benefits as long as thegovernment-provided loan is on thefirm’s books. Using a different allocationperiod, such as the life of thebenchmark loan, could mean thatsubsidy benefits would end even thoughthe subsidized loan itself is stilloutstanding. Moreover, we do not sharethe commenters’ view that ourmethodology dilutes the annual benefit.Although the amounts countervailedeach year may be smaller under ourmethodology, the benefit stream willcorrespond to a period that matches thelife of the subsidized loan.

Paragraph (c)(4) sets forth the methodof calculating an annual benefit forgovernment-provided variable-rateloans. No comments were received onthis paragraph.

Contingent LiabilitiesParagraph (d) sets forth the method

for calculating the annual benefitattributable to a long-term interest-freeloan, for which the obligation forrepayment is contingent upon thecompany taking some future action orachieving some goal in fulfillment of theloan’s requirements, such as theachievement of a particular profit levelby the firm. We have made changes tothis paragraph so that our methodologyfor these loans conforms to themethodology for tax deferrals (see, e.g.,§ 351.509). In the case of tax deferrals,we recognized that if the event thattriggers repayment will not occur forseveral years, the deferral should betreated as a long-term loan and the


benefit measured using a long-termbenchmark. Contingent liability loansare analogous to tax deferrals.Consequently, our regulation now statesthat where the event triggeringrepayment will occur at a point in timeafter one year from receipt of thecontingent liability, we will treat thecontingent liability as a long-term loan.

Additionally, paragraph (d)(2) nowrecognizes that it may be appropriate incertain circumstances to treat contingentliabilities as grants. This would occur, ifat any point in time, we determine fromrecord evidence that the event uponwhich repayment depends is not aviable contingency. In this instance, wewill treat the outstanding balance of theloan as a grant received in the year inwhich this condition manifests itself.

One commenter asked that theregulations clarify that in the event offorgiveness of a contingent liability, anew subsidy arises whose benefit isequal to the unpaid principal of theloan.

We will continue our longstandingpractice and treat the entire unpaidprincipal of a forgiven loan and anyaccumulated interest, regardless ofwhether it is a contingent liability loanor a regular loan, as a grant bestowed atthe time of the forgiveness (see, e.g.,Certain Hot-Rolled Lead and BismuthCarbon Steel Products from Germany,58 FR 6223, 6234–35 (January 27,1993)).

Section 351.506Section 351.506 deals with loan

guarantees. Paragraph (a)(1) sets forththe general rule for identifying andmeasuring the benefit attributable to agovernment-provided loan guarantee,and conforms to the new standardcontained in section 771(5)(E)(iii) of theAct. According to this general rule, abenefit exists to the extent that the totalamount a firm pays for a loan with agovernment-provided loan guarantee isless than what the firm would have paidfor a comparable commercial loan thatthe firm could actually obtain on themarket absent the governmentguarantee. In this context, ‘‘totalamount’’ includes both the loanguarantee fee and the effective interestpaid on the loan. The terms‘‘comparable commercial loan’’ and‘‘could actually obtain on the market’’are defined in § 351.505(a)(2) and (3),respectively.

One commenter asked the Departmentto recognize that the very existence of agovernment loan guarantee constitutesprima facie evidence that acountervailable benefit exists because agovernment loan guarantee is onlynecessary when a company cannot

obtain a loan without a loan guaranteeand when such a guarantee is notavailable from private sources.

We have not adopted this suggestion.As with other forms of financialcontributions, the Department mustdetermine that a benefit is conferredbefore we can find a subsidy program tobe countervailable. However, weacknowledge that the presence of agovernment loan guarantee may affectother terms of the loan, such as theinterest rate. Therefore, when we aredealing with a government-guaranteedloan, we will carefully examine all ofthe terms of both the government loanand the benchmark loan to ensure thatwe capture all of the benefit.

One commenter asked the Departmentto clarify that the term ‘‘comparableloan’’ includes both comparable sizeand risk level. Another commenterurged the Department to recognize thatthe risk to the lender would be higherwithout a loan guarantee and that theborrower, therefore, would have to paya higher interest rate absent theguarantee.

We intend to interpret the term‘‘comparable commercial loan’’ as itaffects loan guarantees in the samemanner as when we are addressingloans. The role of relative risk levels isdiscussed in the preamble to § 351.505.We agree with the second commenterthat a lender faces greater risk if a loanis not guaranteed. We believe that thisadditional risk will be captured in thebenefit methodology described inparagraph (a). This is because theinterest rate on the guaranteed loan willbe compared with either (1) the interestrate on a comparable unguaranteed(and, hence, riskier) loan that wasobtained, or could have been obtained,by the firm; or (2) the interest rate on acomparable commercially guaranteedloan that was obtained, or could havebeen obtained, by the firm. In the lattercase, we would expect that the twoguaranteed loans would have similarrisk levels and that the interest rateswould be similar, assuming that theloans are comparable as defined above.Of course, we would also adjust fordifferences in guarantee fees asparagraph (a)(1) directs us to do.

Two commenters urged theDepartment to make sure that wecapture the full benefit conferred by agovernment loan guarantee bymeasuring the difference in loan termsresulting from the government guaranteeas well as the difference in the cost ofthe guarantees.

We believe that paragraph (a)(1)addresses the commenters’ concerns. Bymeasuring the difference between thetotal amount that a firm pays for a loan

guaranteed by the government and theamount that the firm would have paidon a comparable commercial loan(including any difference in guaranteefees), we are capturing both elementsbrought up by the commenters.

Paragraph (a)(2) of the 1997 ProposedRegulations specified that a governmentloan guarantee that was given by thegovernment in its capacity as owner(i.e., not under a government guaranteeprogram used by government-ownedand privately owned companies) wouldnot be considered countervailable ifprivate owners normally provideguarantees in the same circumstances.In the preamble of the 1997 ProposedRegulations, we said that if thegovernment directly guarantees the debtof a company it owns, it would fallupon the respondent to demonstratethat it is normal commercial practice forprivate shareholders in that country toguarantee the debt of the companies inwhich they own shares. The preamblefurther provided that in a situationwhere a government-owned holdingcompany guarantees the debt of itssubsidiaries, the respondent would needto show that it is normal commercialpractice for non-government-ownedcorporations to guarantee the debt oftheir subsidiaries. In addition, therespondent would need to demonstratethat the holding company has sufficientinternally-generated resources to serveas guarantor of the debt.

One commenter maintained that,because of their greater financialresources and also for social andpolitical reasons, governments have agreater ability and interest inguaranteeing certain loans than privateshareholders do. Therefore, thecommenter argued, in a situation wherea government provides a loan guaranteeto a company it owns, the Departmentshould presume that the guaranteeconstitutes a countervailable subsidyunless the respondent can show that theguarantee was provided on commercialterms. In addition, this commenteremphasized that the burden should beon the respondent, not on theDepartment, to show that it is normalcommercial practice in the countryunder investigation to provide loanguarantees.

We have not adopted a presumptionthat government-provided loanguarantees to government-owned firmsare countervailable subsidies. If therespondent cannot provide evidenceshowing that it is normal commercialpractice for private owners to givecomparable loan guarantees to firmsthey own, the Department willdetermine whether the government loanguarantee resulted in the borrower


receiving a loan on terms more favorablethan the firm would have received on acomparable commercial loan. We havemodified paragraph (a)(2) to reflect thisburden.

In the preamble to the 1997 ProposedRegulations, we also stated that wherethe government or a government-ownedholding company guarantees the debt ofan ‘‘uncredit worthy’’ company it owns(see § 351.505(a)(4) regardinguncreditworthy companies), therespondent must provide evidence thatprivate owners would also guarantee thedebt of uncreditworthy companies theyown.

Two commenters argued that in thecase of uncreditworthy companies, thecountervailable benefit is equal to theamount of the guaranteed loan becausean uncreditworthy company would nothave been able to obtain any loan at allwithout government loan guarantees.They urged the Department to treat theentire amount of a guaranteed loanprovided to an uncreditworthy companyas a grant. In addition, one of thecommenters implied that the EuropeanUnion follows this practice.

We have not adopted this suggestion.Subsidized loan guarantees areessentially treated as subsidized loans.Therefore, consistent with ourmethodology of constructing abenchmark for loans to uncreditworthycompanies (see § 351.505(a)(3)(iii)), wewould construct a benchmark whenuncreditworthy companies are givenloan guarantees.

Paragraph (b) sets forth a ruleregarding the point in time at which thebenefit from a loan guarantee arises. The1997 Proposed Regulations stated thatwe would consider the benefit as havingbeen received on the date on which thefirm is due to make a payment on thegovernment-guaranteed loan. In theseFinal Regulations, we have amended theregulation such that we will considerthe benefit to have been received in theyear in which the firm otherwise wouldhave had to make a payment on thecomparable commercial loan.

Paragraph (c) deals with the allocationof the benefit to a particular time period.It is unchanged from the 1997 ProposedRegulations.

Section 351.507

Section 351.507 pertains to equityinfusions. The methodology reflectedhere has changed from that laid out inthe 1997 Proposed Regulations. Thechanges stem from our consideration ofthe comments received and areevaluation of certain fundamentalassumptions regarding the nature of,and circumstances surrounding, a

government’s purchase of shares in acompany.

The 1997 Proposed Regulationsassigned all equity infusions to one oftwo main methodological tracksaccording to whether or not a marketshare price for the company receivingthe infusion was available. Where amarket share price was available, weintended to use that price as abenchmark against which to comparethe government purchase price of thestock. Any premium paid by thegovernment was to be considered abenefit. While we expressed apreference for the use of a market pricefor newly issued shares which wereidentical or similar to the sharespurchased by the government, we statedthat, where such a price was notavailable, we would resort to using amarket price for similar, pre-existingshares (i.e., a ‘‘secondary market price’’)as the benchmark. Where secondarymarket prices were to be used, weproposed using post-infusion prices toensure that our analysis captured any‘‘dilution’’ effects (i.e., any effects fromthe issue of new shares on the value ofexisting shares).

Where a market price for the sharespurchased by the government was notavailable, we explained that we wouldfirst conduct our conventionalequityworthiness test. If the companywas deemed equityworthy, i.e.,appeared capable of generating a‘‘reasonable rate of return within areasonable period of time,’’ and if therewere no special conditions orrestrictions attached to the government’sshares rendering their purchaseinconsistent with the usual investmentpractice of private investors, the equityinfusion would not confer a benefit. Afinding that the company wasunequityworthy would equate to afinding that the investment wasinconsistent with the usual investmentpractice of private investors. To measurethe benefit, the Department wouldattempt to construct a price that areasonable private investor wouldtheoretically have been willing to payfor the shares (‘‘constructed privateinvestor price’’ or ‘‘CPIP’’). Anydifference between the governmentpurchase price and the CPIP would beconsidered a subsidy. If the informationnecessary for calculating the CPIP wasnot available, the Department wouldallocate the entire infusion amount overtime, but deduct from the portionallocated to a particular year the amountof actual returns achieved by the firm inquestion in that year.

We received numerous commentsregarding many aspects of the proposedmethodology. Several comments

focused on the use of private prices:Some commenters suggestedabandoning any reference to marketprices in all cases; some suggestedabandoning only any reference tosecondary market prices; and somesupported use of private market prices,but requested that a pre-infusion ratherthan a post-infusion price be used.

Some commenters argued that the factthat a company’s previously issuedshares are traded in the secondarymarket is not conclusive evidence ofthat company’s ability to raise newcapital from private investors. Thesecommenters pointed to the case wherean otherwise financially soundcompany is contemplating a newexpansion project about which generalsentiment among private investors ispessimistic given the increased risk orlow value the expansion is expected toadd to the company as a whole. In thiscase, private investors would not likelypurchase new shares. Thesecommenters argued that, rather thanusing the secondary market shares as abenchmark to measure the benefit, theDepartment should move straight to itsequityworthiness analysis as it doeswhen there is no benchmark.

If the Department relies on secondarymarket prices as a standard by which toevaluate the reasonableness of thegovernment’s equity investment,however, several commenters arguedthat post-infusion prices should not beused. These commenters argued thatsuch prices are inappropriate because areasonable private investor could notknow at the time of the purchase of newshares what the subsequent market priceof that stock would be. Pre-infusion,rather than post-infusion, prices are,therefore, a better standard by which tojudge the reasonableness of agovernment equity infusion.

The vast majority of equity commentsaddressed the proposed methodologyfor measuring the benefit tounequityworthy companies. While a fewcommenters expressed support for theproposed methodology, many othersobjected, arguing that a change from thecurrent methodology (i.e., treating theentire infusion as a benefit) is notmandated by either the SCM Agreementor the URAA, and that such a changerepresents a troublesome weakening ofthe CVD law. According to thesecommenters, the Department’s statedlegal authorities for the proposedchange are not relevant to this particularissue: the GATT Panel ruling in theLead and Bismuth case was rejected bythe United States as inconsistent withU.S. law and the international subsidycode, and the CIT ruling in AIMCORdealt only with the case of an


equityworthy firm (see United States—Imposition of Countervailing Duties onCertain Hot-Rolled Lead and BismuthCarbon Steel Products Originating inFrance, Germany and the UnitedKingdom, SCM/185 (November15, 1994)and AIMCOR, Alabama Silicon, Inc. v.United States, 912 F. Supp. 549, 552–55(CIT 1995) (‘‘AIMCOR II’’)).

The central point of the commentersopposing our proposed methodologywas that, once a company has beendeemed unequityworthy, the fullamount of any equity infusion by thegovernment should be considered abenefit. In other words, because thecompany would not have received anynew capital absent governmentinvolvement, the benefit to the recipientis equal to the amount of the infusion.In contrast, the proposed methodologyof constructing a private investor price,and the alternative methodology ofadjusting for returns, use a cost-to-government standard which has beenexplicitly rejected as unlawful by theCIT. See British Steel Corp. v. UnitedStates, 605 F. Supp. 286, 295–296 (CIT1985). These commenters also providedfurther theoretical, practical and legalreasons why each of the proposedmethodologies is inappropriate.

First, several commenters maintainthat the proposed CPIP methodology isbased on the erroneous assumption thatprices of a new share issue in anunequityworthy firm could be pricedlow enough to yield an overall return(dividends plus capital appreciation) tothe new investor comparable to a marketreturn. If the investment in which thenew capital is used is not expected toyield a market return (which is why thefirm is unequityworthy), issuing newshares at a discounted price wouldlower the existing shareholders’expected returns by diluting their claimon the firm’s total equity. The existingshareholders, from the view of areasonable private investor, have noincentive to allow this to happen.Hence, there is no price—in theory or inpractice—at which, simultaneously,private investors would be willing tobuy, and current shareholders willing tosell, shares in an unequityworthycompany.

Another problem with the CPIPapproach, according to thesecommenters, is that it is subject tomanipulation in the case of an equityinfusion into a 100 percent government-owned firm. In such a case, the earningsper share could always be manipulated(by adjusting the number of sharespurchased) to reflect a fabricated pershare ‘‘market return’’ without anyadverse consequences for thegovernment, which, in any case, would

retain its claim on all of the company’sprofits.

Finally, as a practical matter, thesecommenters argue that the analysiscalled for under the CPIP approachplaces a significant burden on theDepartment. They argue that calculatingthe theoretical price a private investorwould have been willing to pay for astock would require a considerable levelof financial expertise, would prove aninordinate drain on the Department’sresources, and would involve too muchconjecture on the part of the Departmentin matters of financial forecasting.

Several commenters also objected tothe proposed alternative methodology oftreating the entire infusion as a benefit,but then adjusting that benefit by actualreturns. These commenters likened thismethodology to the rate-of-return-shortfall (‘‘RORS’’) approach rejected bythe Department in 1993. In theiropinion, the arguments proffered by theDepartment for rejecting the RORSapproach are equally valid in this case.

One such argument is that dividends(or actual returns) cannot be considereda ‘‘repayment’’ of the benefit conferredby the government equity infusionbecause dividends are, in fact, generatedfrom that benefit. Nor can the dividendsbe used to reduce the amount of thebenefit because the CIT has ruled thatdividends are not explicitly included inthe statutory list of allowable offsets.British Steel PLC. v. United States, 879F. Supp. 1254, 1309 (CIT 1995).

These commenters highlighted severaladditional arguments, originallyidentified by the Department withregard to the RORS methodology, thatexplain why it is inappropriate to adjustfor actual returns. First, the actualreturns method is a post-hoc valuationof an investment which measures eventssubsequent to the equity infusion.Second, the proposed approach fails toaccount for later subsidies which couldimprove the financial status of thecompany, improperly reducing thebenefit associated with earlier subsidies.Third, a company that was performingpoorly could have an anomalousprofitable year, allowing it to escapecountervailing duties for that year.Fourth, the proposed approach does notmeasure the rate of return on thegovernment’s original equity infusion,but rather the rate of return in theperiod of investigation or review on thefirm’s total equity. Finally, the approachengenders bias in the administration ofthe law in that investments inunequityworthy companies will escapecountervailing duties when results areunexpectedly good, but investments inequityworthy companies will not be

countervailed when the results areunexpectedly bad.

After considering all of the comments,we have decided to revise themethodology described in the 1997Proposed Regulations for analyzingequity infusions. In large measure, weare codifying our current practice witha number of important modifications.We believe that the approach detailedbelow better reflects the principles setforth in the statute, SAA and the SCMAgreement, and addresses manycommenters’ concerns whilemaintaining, to the extent possible,continuity with past Departmentpractice.

Consistent with section 771(5)(E)(i) ofthe Act, paragraph (a)(1) provides that abenefit is conferred by a government-provided equity infusion if theinvestment decision is inconsistent withthe usual investment practice of privateinvestors, including the practiceregarding the provision of risk capital,in the country in which the equityinfusion is made. As in the 1997Proposed Regulations, our methodologyfor identifying and measuring theresulting benefit is divided into twomethodological tracks, with the choiceof methodology dependent uponwhether or not actual private investorprices can serve as a benchmark for theshares purchased by the government.However, for reasons discussed ingreater detail below, we have changedour proposed methodology forcalculating the benefit where there areno private investor prices and we willnot construct the theoretical price aprivate investor would pay. Therefore,we have deleted the second sentencethat appeared in paragraph (a)(1) of the1997 Proposed Regulations.

Actual Private Investor Prices Available

Paragraph (a)(2) contains rules foranalyzing equity infusions when actualprivate investor prices (i.e., marketprices) are available—the firstmethodological track—and has retainedonly some portions of the language inthe 1997 Proposed Regulations. Under§ 351.507(a), the initial step in analyzingan equity infusion is to determinewhether, at the time of the infusion,there was a market price for newlyissued equity. If so, the Departmentwould consider the equity infusion tohave conferred a benefit if the price paidby the government for the newly issuedequity was more than the price paid byprivate investors for the same new issue.For example, if a government pays $10per share for newly issued shares in afirm, and private investors pay $8 pershare for shares in the same share issue,


a benefit exists in the amount of $2 pershare ($10¥$8=$2).

Paragraph (a)(2)(i) also provides forthe use of a ‘‘similar form’’ of new,contemporaneously issued shares as thebasis for the reasonable private investorbenchmark. As noted in the preamble tothe 1997 Proposed Regulations, in theCertain Steel determinations theDepartment determined that, inappropriate circumstances, shares withsimilar characteristics can be compared,as long as appropriate adjustments aremade. See GIA at 37252. The CITsubsequently upheld the principle ofrelying on a similar form of equitywhere the same form of equity does notexist. Geneva Steel v. United States, 914F. Supp. 563, 580 (CIT 1996).

Where similar new,contemporaneously issued shares areused as the benchmark, paragraph(a)(2)(iv) provides that the Departmentwill make a price adjustment fordifferences in the types of shares whenit is appropriate. See, e.g., Certain FreshAtlantic Groundfish from Canada, 51FR 10047 (March 24, 1986). Moreover,paragraph (a)(2)(iii) requires that, wherethe Department uses the private investorprices, the amount of shares purchasedby private investors must be significantso as to provide an appropriatebenchmark. See, e.g., Small DiameterCircular Seamless Carbon and AlloySteel Standard, Line and Pressure Pipefrom Italy, 60 FR 31992, 31994 (June 19,1995).

An important change to paragraph(a)(2) from the 1997 ProposedRegulations is that we have eliminatedany provision for the use of secondary-market share prices. As discussed ingreater detail below, in cases whereprivate investor prices for the newlyissued shares are not available, we willproceed directly to an equityworthinessdetermination without any reference tosecondary market prices. Althoughprevious Department practice has beento prefer market-determined shareprices (including secondary prices)when available and useable, we arepersuaded that a revision of thispractice is now warranted for thefollowing reasons.

In our view, secondary market pricesdo not necessarily reflect the marketvalue of new shares, regardless of thepoint in time the comparison is made.Use of secondary market prices before agovernment infusion does not accountfor the dilution of company ownershipand does not take into considerationprivate investors’ perceptions of therecipient company’s intended use of thenewly obtained equity capital. Use ofpost-infusion secondary market pricesmay also be problematic. For example,

the fact that the government has madean infusion may cause investors to bidup the secondary market price of thestock to a higher level than thatwarranted by the improved capitalposition of the company. TheDepartment cannot reasonably accountfor such secondary market phenomena.In sum, secondary market prices are nota reliable basis for measuring the marketvalue of newly issued equity.

Actual Private Investor PricesUnavailable

One of the most difficultmethodological problems confronted bythe Department in its administration ofthe CVD law involves the analysis ofgovernment-provided equity infusionsin situations where there is no marketbenchmark price. Since 1982, theDepartment has dealt with this problemby categorizing firms as either‘‘equityworthy’’ or ‘‘unequityworthy.’’As set forth in § 355.44(e)(2) of the 1989Proposed Regulations, an equityworthyfirm was one that showed ‘‘an ability togenerate a reasonable rate of returnwithin a reasonable period of time.’’ Anunequityworthy firm did not show suchan ability. If the Department found thata firm was equityworthy, theDepartment would declare agovernment-provided equity infusion inthe firm to not be countervailable. TheDepartment would not considerwhether, notwithstanding the generalfinancial health of a firm, an excessiveprice was paid for government-providedequity. Conversely, if the Departmentfound a firm to be unequityworthy, theDepartment would declare agovernment-provided equity infusion inthe firm to be countervailable withoutfurther analysis.

In these Final Regulations, we haveretained the equityworthy/unequityworthy distinction. Thus, inparagraph (a)(3), if actual privateinvestor prices are not available underparagraph (a)(2), the Secretary willdetermine whether the firm funded bythe government-provided equity wasequityworthy at the time of the equityinfusion. Paragraph (a)(4) sets forth thestandard the Secretary will apply indetermining equityworthiness, andbroadly follows § 355.44(e)(2) of the1989 Proposed Regulations.

Several commenters have argued that,under certain circumstances, theequityworthiness of the project beingfinanced, rather than the firm as awhole, should be the focus of theDepartment’s equityworthiness analysis.This is especially true, according tothese commenters, when the investmentcontemplated by a firm represents asignificant departure, in terms of its

riskiness or expected return, from thefirm’s existing operations. Thesecommenters maintain that the riskinessof a firm’s new investment cansignificantly impede the firm’s ability toraise new capital on equity markets oncommercially available terms.

We received a similar comment withrespect to our creditworthinessdeterminations. Consistent with theposition we have taken regarding loansand creditworthiness, in the case ofequityworthiness determinations, werecognize the possibility that it may beappropriate, in certain circumstances, tofocus on the risk and expected return ofthe project being financed rather thanthe firm as a whole. Therefore, we haveincluded a provision that allows theSecretary to do a project analysis whereappropriate, but we are maintaining thegeneral principle that the focus of anequityworthiness determination willnormally be on the firm as a whole. Wewill address issues relating to theappropriateness of a project-specificequityworthiness analysis in the contextof specific cases.

Paragraph (a)(4)(ii) discusses thesignificance of the analysis performedprior to a government equity purchase.For every government equity infusion,we will analyze whether thegovernment’s decision to invest wasconsistent with ‘‘the usual investmentpractice of private investors, includingthe practice regarding the provision ofrisk capital.’’ Section 771(5)(E)(i).Obviously, to answer this question, thebasis upon which the governmentinfusion was made must be clear. Inprior CVD proceedings, governmentshave often failed to provide theDepartment any commercial rationalefor their investment. This has been truefor even very large infusions. Incontrast, prior to making a significantequity infusion, it is the usualinvestment practice of a private investorto evaluate the potential risk versus theexpected return, using the mostobjective criteria and informationavailable to the investor. This includesan analysis of information sufficient todetermine the expected risk-adjustedreturn and how such a return comparesto that of alternative investmentopportunities of similar risk. Absentsuch an objective analysis—performedprior to the equity infusion—it isunlikely that we would find that theinfusion was in accordance with theusual investment practice of a privateinvestor, except where we are satisfiedthat the lack of such an analysis isconsistent with the actions of areasonable private investor in thecountry.


Certain commenters have specificallyrequested that independent studiescommissioned by foreign governmentsbe considered by the Department inmaking an equityworthinessdetermination.

We will closely examine such studies.In order to be considered in ourequityworthiness analysis, any studymust have been prepared prior to thegovernment’s approval of the infusionand must be sufficiently objective andcomprehensive. We intend to reviewsuch studies carefully to determinewhether the government acted like areasonable private investor, subjectingboth the assumptions and the analysisto scrutiny. This will enable us todecide whether the decision to investwas commercially sound given theinformation at the disposal of thegovernment.

Some independent studiescommissioned to analyze the merits ofa given investment may present anassessment of the company’s expectedreturns and risks that is predicated oncertain future actions by the company inquestion. For instance, a study mightconclude that the investment in acompany planning to close oneoutmoded plant and construct a newone in a different location iscommercially viable so long as thecompany also reduces its workforce byhalf. In this case, the Department wouldtake into consideration whether thedownsizing will actually occur. If thecompany has known for a long time thata reduction in its workforce was anecessary condition for improvedfinancial performance, but hasconsistently shown itself unwilling orincapable of making that reduction, thismay prove sufficient cause to believethat the projected return is unattainable.

Some commenters cautioned theDepartment about relying too heavily onindependent studies given theirinherently speculative and subjectivenature. We are well aware of thepotential difficulties in usingindependent analyses, not least ofwhich is the fact that independentexperts often fundamentally disagreeabout the prospects of a giveninvestment. In other instances, theobjectivity of some studies is called intoquestion. However, private investors arelikewise usually faced with a similarvariety of competing views and mustexercise their own judgement withrespect to the objectivity of informationbefore them. When considering thesuitability of a submitted study, we willseek to ensure the study is accurate andreliable, and exercise our ownjudgement with respect to a study’sobjectivity. Specifically, we will take

into consideration the extent to whichthe study’s premises and conclusionsdiffer from those of other independentstudies, accepted financial analysisprinciples, or market sentiment ingeneral (e.g., industry-specific businesspublications or general industry marketstudies).

Paragraph (a)(4)(iii) discusses thesignificance of prior subsidies in ourequityworthiness determination. As inthe 1997 Proposed Regulations, it statesthat in determining whether a firm orproject was equityworthy, we willignore current and prior subsidiesreceived by the firm. Severalcommenters objected to this rule,arguing that any reasonable investorwould take into consideration the rolethat past subsidies have played in acompany’s financial performance. Thesecommenters noted that, while acompany might appear to be successful,a reasonable investor may deem thecompany unequityworthy if he or shebelieves that, when forced to stand onits own (i.e., without subsidies), thecompany would not yield a marketreturn.

While we recognize the potential forprior subsidies to affect the presentfinancial performance of a company, weare continuing with our practice of notconsidering the impact of priorsubsidies when conducting anequityworthiness test. We continue tobelieve that it would be too difficult andspeculative a task to determine what thecompany’s performance would havebeen had it not previously benefittedfrom a subsidy.

Paragraph (a)(5) pertains to thoseinfusions in which the firm or project isdetermined to be equityworthy. In our1997 Proposed Regulations, we statedour intent to conduct a furtherexamination of equityworthy companiesto determine whether the particularinvestment was consistent with usualinvestment practice. We adopted thispolicy in light of the CIT decision inAIMCOR II, 912 F. Supp. at 552–55, inwhich the Court ruled that, because ofrestrictions imposed on the sharesbought by the government, thegovernment’s purchase of those shareswas inconsistent with commercialconsiderations, notwithstanding the factthat the firm in question wasequityworthy.

Certain commenters objected to thisproposal, arguing that if a firm has beendeemed to be equityworthy, anyinvestment in that firm is per seconsistent with usual privateinvestment practices and should not becountervailed. However, we note that,as the Court pointed out in a previousdetermination, ‘‘[w]here a company is

equityworthy, as here, it does notnecessarily follow that the purchase ofstock from that company will beconsistent with commercialconsiderations.’’ See AIMCOR v. UnitedStates, 871 F. Supp. 447, 454 (CIT 1994)(‘‘AIMCOR I’’). Therefore, as provided inparagraph (a)(5), we will conduct afurther analysis into whether the sharespurchased by the government havespecial conditions or restrictionsattached and, if so, whether thoseconditions render the investmentinconsistent with usual privateinvestment practices as stipulated inparagraph (a)(1). Any benefit found fromthese types of equity purchases will bedetermined on a case-by-case basis. Insituations where the shares purchasedby the government in an equityworthyfirm are common shares, we willnormally consider the infusion to havebeen consistent with usual privateinvestment practice.

In cases where a government equityinfusion has been made and the firm isunequityworthy, paragraph (a)(6) statesthat the amount of the benefit will beequal to the amount of the equityinfusion. This is a codification of ourcurrent practice which has been in placesince the 1993 steel determinations andhas been upheld by the CIT in BritishSteel plc v. United States, 879 F. Supp.1254, 1309 (CIT 1995), aff’d in part andrev’d in part, 127 F.3d 1471 (Fed. Cir.1997). See, also, Usinor Sacilor v.United States, 893 F. Supp. 1112, 1125–26 (CIT 1995).

We believe this approach is mostappropriate based mainly on theargument that, because a reasonableprivate investor could not expect areasonable return on the investedcapital, no such investor would providethe infusion. The CPIP approach, whichwe explored in the 1997 ProposedRegulations, attempted to measure thehypothetical price at which the investorwould provide the funds. In the case ofan unequityworthy firm or project, thishypothetical price would have to belower than the price of existing shares.However, as explained in the summaryof comments above, from theperspective of the existing shareholdersof the company that received theinfusion, such a lower price would beunacceptable. These shareholderswould generally not allow the newshares to be issued at a reduced pricebecause this would simultaneouslylower the expected return on theirexisting investment. There is, therefore,no mutually acceptable price at whichthe transaction would take placebetween two private investors, and theinvestment would not occur.


Thus, the benefit to the operations ofthe recipient firm is the entire amountof the government infusion. That is notto say that the shares received by thegovernment are worthless; they mayhave value. However, the comparisonhere is what the company actuallyreceived with what the company wouldhave received absent the governmentintervention. In the case of anunequityworthy firm, the amount thecompany would have received is zero.Thus, although the government equityinfusion is not per se a grant, it isappropriate to consider the full amountof the infusion as the benefit becausethe government provided a sum ofmoney that would not have beenprovided by a private investor. This isthe fundamental point overlooked bythe GATT panel report. (See UnitedStates—Imposition of CountervailingDuties on Certain Hot-Rolled Lead andBismuth Carbon Steel ProductsOriginating in France, Germany, and theUnited Kingdom, SCM/185 (November15, 1994) (unadopted).

Paragraph (a)(7) pertains to allegationsregarding equity infusions and is basedon § 355.44(e)(3) of the 1989 ProposedRegulations.

Paragraph (b) provides that theSecretary normally will consider thebenefit from an equity infusion to havebeen received on the date on which thefirm received the infusion. Paragraph (c)pertains to the allocation of the benefitto particular years and provides that thebenefit conferred by an equity infusionwill be allocated as if it were a non-recurring subsidy, using themethodology set forth in § 351.524(d).

Section 351.508Section 351.508 deals with

assumptions or forgiveness of debt.Paragraph (a), which deals with theidentification and measurement of thebenefit attributable to government-provided debt assumptions orforgiveness, is little changed from§ 355.44(k) of the 1989 ProposedRegulations and from § 351.507 of the1997 Proposed Regulations. Paragraph(b) describes when the benefit from debtassumption or forgiveness will bedeemed to have been received.Paragraph (c) provides that the Secretarywill normally treat the benefit from debtassumption or forgiveness as a non-recurring subsidy for allocationpurposes. However, paragraph (c)(2)provides that, where the government isassuming interest under certainnarrowly drawn circumstances, theinterest assumption will be treated as areduced-interest loan and allocatedaccording to the loan allocation rules.Although it has undergone some

refinement, this exception is consistentwith the policy articulated by theDepartment in the 1993 Certain Steeldeterminations.

Section 351.509Section 351.509 deals with subsidy

programs that provide a benefit in theform of relief from direct taxes. (‘‘Directtax’’ is defined in § 351.102.) Such reliefincludes exemptions, remissions, anddeferrals of direct taxes. The mostcommon form of a direct tax is anincome tax, and the subsidy programsmost frequently encountered are thosethat provide special income taxexemptions, deductions, or credits.With respect to the benefit provided bythese types of programs, paragraph (a)(1)of § 351.509 retains the standard setforth in § 355.44(i)(1) of the 1989Proposed Regulations, i.e., a benefitexists to the extent that the taxes paidby a firm as the result of a program areless than the taxes the firm would havepaid in the absence of the program. See1989 Proposed Regulations at 23372 andrelated cases cited.

Paragraph (a)(2) deals with anothertype of direct tax program: the deferralof direct taxes owed. Although§ 355.44(i)(1) of the 1989 ProposedRegulations included tax deferrals withexemptions and remissions of directtaxes, the Department has consistentlyused a different methodology foridentifying and measuring the benefitsof deferrals by treating deferrals asgovernment-provided loans. We havenormally treated deferrals of one year orless as short-term loans, while multi-year deferrals have been treated asshort-term loans rolled over on theanniversary date(s) of the deferral.

We received two comments on thedeferral of direct taxes. One commentermaintained that it would be moreappropriate to treat multi-year taxdeferrals as long-term loans rather thanas a series of rolled-over short-termloans. The commenter observed that theDepartment had not explained whymulti-year tax deferrals should betreated as a series of short-term loans,arguing that this approach enables therecipient company to receive long-termbenefits that are countervailed using ashort-term benchmark interest rate. Thecommenter stated that long-term interestrates are typically higher than short-term rates and that the Department,therefore, should use the long-term rateas the benchmark rate. The secondcommenter argued that multi-year taxdeferrals should be treated as long-termloans because such deferrals areauthorized only once for the entireperiod of deferral. However, the secondcommenter stated, even if a multi-year

deferral were authorized annually on aroutine basis, the benefit wouldresemble a long-term loan and,therefore, a long-term interest rateshould be used as the benchmark rate.

We agree that, in certaincircumstances, where it is reasonable toconclude from the record that a deferralwill extend over more than one year,multi-year deferrals should be viewed aslong-term loans. For example, if the firmknows at the time the taxes wouldnormally be due that the firm would notbecome liable for the taxes until fiveyears later, it would be appropriate toview the deferral as a five-year loan andto use the appropriate benchmark.Moreover, if it is known at the time ofthe deferral that the deferral will belonger than one year, but the term isindefinite, we will also use a long-termbenchmark to calculate the benefit ineach year. However, if the deferral hasan uncertain endpoint, we will examinewhether it is appropriate to view thedeferral as a short-term or long-termloan.

As in the past, tax deferrals of oneyear or less will be treated as short-termloans, using a short-term interest rate asthe benchmark rate in accordance with§ 351.505(a). Similarly, if it is notknown if a tax deferral will extend overmore than one year (e.g., if the firm’spayment of taxes is made contingentupon some future event) and we haveno reasonable basis to conclude that thedeferral will extend over more than oneyear, such tax deferral will be treated asa short-term loan.

In the 1997 Proposed Regulations, weidentified one aspect of direct taxsubsidy programs that might warrantmodification. We stated that, in the caseof special accelerated depreciationallowances, a firm typically experiencestax savings in the early years of anasset’s life and tax increases in the latteryears of the asset’s life. In the past, theDepartment has focused on the taxsavings but has not acknowledged thelater tax increases. In the 1997 ProposedRegulations, we discussed adopting amethodology that accounts for both theearly tax savings and the later taxincreases by calculating the net presentvalue of the expected tax savings at theoutset of the accelerated depreciationperiod. However, we stated that wewanted to obtain the views of the publicbefore changing our methodology.

We received several comments on thisissue, all of which contained objectionsto our proposed change of methodology.The comments focused on four areas.First, the commenters characterized ourproposed methodology as speculativebecause the Department cannot becertain that the benefits of an


accelerated depreciation program willbe offset by higher taxes in the future.The commenters pointed to factors suchas changes in tax provisions andgovernment tax policies, the provisionof additional future tax benefits, and thepossibility that the recipient companywould incur losses in the future, all ofwhich might prevent higher taxes frommaterializing in the future. Onecommenter pointed to the Department’sfindings in Extruded Rubber Threadfrom Malaysia, 57 FR 38472 (August 25,1992) (‘‘Malaysian Rubber Thread’’),where a hypothetical tax burden in lateryears did not prevent the Departmentfrom countervailing tax benefitsprovided during the period ofinvestigation. In sum, these commentersargued that the Department should notgive a company credit for a contingenttax liability that we could not be surethe company ever would incur.

Second, some of the commentersmaintained that the Department’sproposed change would be contrary tothe central purpose of the CVD law, i.e.,to discourage the provision of subsidies.According to these commenters, theproposed methodology wouldencourage foreign governments tomodify their tax programs so that futuretax payments would appear to offsetcurrent countervailable tax benefits.

Third, some commenters asserted thatit would be unlawful for the Departmentto offset countervailable benefits withhigher future tax payments. Thesecommenters pointed to the statutory listof permissible offsets, which does notinclude future tax payments. They alsoargued that our proposed methodologywould be akin to taking secondary taxeffects into account, which would becontrary to § 351.527 of the 1997Proposed Regulations (this section,which deals with the tax consequencesof benefits, is included in § 351.503(e) ofthese Final Regulations).

Fourth, a few commenters pointed tothe administrative burden that theDepartment would assume if it were toadopt the proposed methodology. Onecommenter stated that it would bedifficult to track companies’ future taxpayments. Another commenterportrayed it as unlikely that theDepartment would verify that highertaxes were actually paid in future years.Finally, one commenter recommendedthat the Department adopt a regulationsaying that benefits resulting fromaccelerated depreciation may not beoffset by a potentially higher tax burdenin the future.

Based on the comments we havereceived, we are not changing ourmethodology. We will, therefore,continue our current methodology for

calculating the tax benefits fromaccelerated depreciation schemes on ayear by year basis.

In the 1997 Proposed Regulations, wealso sought public comment on how weshould address tax subsidies when therecipient company is incurring losses,including loss carryforwards and lossesunder accelerated depreciation. Wereceived only a few comments on theseissues. All the commenters agreed thatlosses should be dealt with according tothe same underlying principle thatguides the rest of the Department’sdirect tax methodology, i.e., theDepartment should treat as acountervailable benefit the differencebetween the amount of taxes actuallypaid and the amount of taxes that wouldhave been paid in the absence of thecountervailable tax benefit. With respectto loss carryforwards, the commentersoutlined two scenarios under whichsuch carryforwards can conveycountervailable benefits: (1) When acompany is allowed to carry forward agreater value of losses from one year tothe next than other companies, and (2)when a company is allowed to carryforward losses for a longer period oftime than other companies. In bothcases, the commenters urged theDepartment to follow the underlyingprinciple described above, i.e., tocountervail the difference between theactual taxes paid and the taxes thatwould have been paid under normalcircumstances. Regarding lossesassociated with accelerateddepreciation, the commenters requestedthe Department to countervail theaccelerated depreciation allowance onlyto the extent that it results in areduction of taxes paid.

We agree with the commenters thatour guiding principle is to treat as acountervailable benefit the differencebetween the taxes a company actuallypays and the taxes it would have paidif it had not incurred a loss or adiminished profit as a result ofaccelerated depreciation or a losscarryforward (provided that these taxbenefits are specific). We intend tofollow the approach used in MalaysianRubber Thread. We do not see any needto change or to add to our regulationsin this respect.

Paragraph (b) of § 351.509 deals withthe question of when the benefit from adirect tax subsidy is considered to havebeen received by a firm. In our 1997Proposed Regulations, we proposed toconsider the benefit as having beenreceived on the date the firm knew theamount of its tax liability. However, asstated in the 1989 Proposed Regulations,the date the firm knows its tax liabilitynormally is the date on which it files its

tax return. In these Final Regulations,we have decided that, with respect to afull or partial tax exemption orremission, we will consider the benefitas having been received on the date onwhich the recipient firm wouldotherwise have had to pay the taxesassociated with the exemption orremission, which is usually the date itfiles its tax return. This conforms theregulations to our experience.

With respect to deferrals, underparagraph (b)(2), the Secretary normallywill treat the deferral of a direct tax asa loan, and will treat the benefit asreceived, as follows. The Secretarynormally will treat a tax deferral of oneyear or less as a short-term loan receivedon the date the tax originally was dueand repaid when the tax was actuallypaid. The Secretary normally willconsider the benefit from a multi-yeardeferral as having been received on theanniversary date(s) of the deferral.

Paragraph (c) deals with the allocationof the benefits of direct tax subsidies toparticular time periods. As under the1997 Proposed Regulations, theDepartment normally will allocate suchbenefits to the year in which thebenefits are considered to have beenreceived under paragraph (b).

Finally, the Department will apply§ 351.509 consistently with WTO rulesconcerning direct tax measures. Thus,for example, in the case of a foreign taxmeasure that exempts from taxation(either in whole or in part) incomeattributable to economic processes(including transactions involvingexported goods) located outside theterritorial limits of the exportingcountry, the Department would notconsider such a measure to be an exportsubsidy, provided that the measurecomplied with other relevant WTOrules.

Section 351.510Section 351.510 deals with programs

that provide full or partial exemptionsfrom, and deferrals of, indirect taxes orimport charges. (‘‘Indirect tax’’ and‘‘import charge’’ are defined in§ 351.102.) However, § 351.510 dealsonly with programs that potentiallywould be considered importsubstitution subsidies or domesticsubsidies under section 771(5A)(C) orsection 771(5A)(D) of the Act,respectively. Sections 351.517 through519 deal with programs that potentiallywould be considered export subsidiesunder section 771(5A)(B) of the Actbecause separate guidelines must beapplied when examining export subsidyprograms that involve exemptions orrebates of indirect taxes or importcharges.


Paragraph (a)(1) of § 351.510 is basedon § 355.44(i)(2) of the 1989 ProposedRegulations, and continues to providethat a benefit exists to the extent that thetaxes or import charges paid by a firmas the result of a program are less thanthe taxes the firm would have paid inthe absence of the program. As in thecase of direct taxes under § 351.509,deferrals of indirect taxes and importcharges will be treated under paragraph(a)(2) as government-provided loans.Normally, we will use a short-terminterest rate as the benchmark fordeferrals of one year or less and a long-term interest rate as the benchmark formulti-year deferrals. The treatment ofmulti-year deferrals represents a changefrom the 1997 Proposed Regulations andis discussed in detail in the preamble to§ 351.509.

Paragraph (b) of § 351.510 is based on§ 355.48(b)(6) of the 1989 ProposedRegulations, and continues to providethat the Secretary will consider thebenefit from a full or partial exemptionof indirect taxes or import charges tohave been received on the date whenthe recipient firm otherwise would havehad to pay the tax or charge. In the caseof deferrals of one year or less, theSecretary normally will consider thebenefit to have been received when thedeferred amount becomes due. Formulti-year deferrals, the benefit isreceived on the anniversary date(s) ofthe deferral.

Paragraph (c) deals with allocation toa particular time period, and providesthat the Secretary normally will expensethe benefits attributable to the types ofsubsidy programs covered by § 351.510in the year of receipt.


provision of goods and services. Prior tothe URAA, section 771(5)(A)(ii)(II) ofthe Act provided that the provision ofgoods or services constituted a subsidyif such provision was ‘‘at preferentialrates.’’ Now, under section 771(5)(E)(iv)of the Act, a subsidy exists if suchprovision is ‘‘for less than adequateremuneration.’’ Under section 771(5)(E)of the Act, the adequacy ofremuneration is to be determined:‘‘in relation to prevailing market conditionsfor the good or service being provided * * *in the country which is subject to theinvestigation or review. Prevailing marketconditions include price, quality,availability, marketability, transportation,and other conditions of purchase or sale.’’

In our 1997 Proposed Regulations, wedesignated paragraph (a) as‘‘(reserved),’’ stating that we wished toacquire some experience with the newstatutory provision before codifying our

methodology in the form of a regulation.We received several commentsexpressing disappointment in the lackof a regulation on this topic. While theseparties recognized that our relative lackof experience with the new statutoryprovision made it difficult topromulgate a regulation, they requestedguidance as to how we intend toidentify and measure adequateremuneration.

Several commenters stressed theimportance of basing the adequateremuneration benchmark on marketprices that have not been distorted bythe government’s involvement in themarket. According to these commenters,where government involvement hasdistorted prices, the Department shouldeither adjust the price to account for thedistortion or resort to the use of analternative price. These commentersalso argued that the benchmark usedshould include all delivery charges and,if necessary, import duties.

We also received several comments inresponse to our stated intention ofcontinuing to employ a preferentialitytype analysis where the government isthe sole provider of goods or servicessuch as electricity, water, or natural gas.One commenter supported such anapproach and encouraged us to codifyit. Other commenters argued that thepreferentiality approach does notsufficiently capture the benefitmandated by the adequate remunerationstandard. That is, it does not adequatelymeasure the differential between theprice paid for the input and the fullmarket value of the input.

Since issuing the 1997 ProposedRegulations, the Department has gainedsome experience in applying theadequate remuneration standard. See,e.g., Steel Wire Rod from Germany, 62FR 54990, 54994 (October 22, 1997),Steel Wire Rod from Trinidad andTobago, 62 FR 55003, 55006–07(October 22, 1997), and Steel Wire Rodfrom Venezuela, 62 FR 55014, 55021–22(October 22, 1997) (‘‘Venezuelan WireRod’’). Based on our experience in thesecases and on the comments received onthis issue, we are providing guidance onhow we intend to apply this newstandard. Accordingly, paragraph (a)outlines the conceptual approach wewill follow to measure the benefit fromgovernmental provision of goods orservices.

Paragraph (a)(1) states that a benefitexists to the extent that the good orservice is provided for less thanadequate remuneration. Paragraph(a)(2)(i) provides that our preference isto compare the government price tomarket-determined prices stemmingfrom actual transactions within the

country. Such market-determined pricesinclude actual sales involving privatesellers and actual imports. They mayalso include, in certain circumstances,actual sales from government-runcompetitive bidding. The circumstanceswhere such prices would be appropriateare where the government sells asignificant portion of the goods orservices through competitive bidprocedures that are open to everyone,that protect confidentiality, and that arebased solely on price. In choosing actualtransactions, the Secretary will considerproduct similarity, quantities sold orimported, and other factors affectingcomparability.

We normally do not intend to adjustsuch prices to account for governmentdistortion of the market. While werecognize that government involvementin a market may have some impact onthe price of the good or service in thatmarket, such distortion will normally beminimal unless the governmentprovider constitutes a majority or, incertain circumstances, a substantialportion of the market. Where it isreasonable to conclude that actualtransaction prices are significantlydistorted as a result of the government’sinvolvement in the market, we willresort to the next alternative in thehierarchy.

Paragraph (a)(2)(ii) provides that, ifthere are no useable market-determinedprices stemming from actualtransactions, we will turn to worldmarket prices that would be available tothe purchaser. We will considerwhether the market conditions in thecountry are such that it is reasonable toconclude that the purchaser couldobtain the good or service on the worldmarket. For example, a European pricefor electricity normally would not be anacceptable comparison price forelectricity provided by a Latin Americangovernment, because electricity fromEurope in all likelihood would not beavailable to consumers in LatinAmerica. However, as another example,the world market price for commodityproducts, such as certain metals andores, or for certain industrial andelectronic goods commonly tradedacross borders, could be an acceptablecomparison price for a government-provided good, provided that it isreasonable to conclude from recordevidence that the purchaser would haveaccess to such internationally tradedgoods.

Where there is more than onecommercially available world marketprice to be used as a benchmark, weintend to average these prices to theextent practicable, with due allowancefor factors affecting comparability. If the


most appropriate benchmarks are forproducts that are dumped or subsidizedin the country where the subjectmerchandise is produced, we will adjustthe benchmarks to reflect the dumpingor subsidization. However, we will onlymake an adjustment to reflect adetermination of dumping orsubsidization made by the importingcountry with respect to the inputproduct imported from the country fromwhich the world market price isderived.

Paragraph (a)(2)(iii) provides that, insituations where the government isclearly the only source available toconsumers in the country, we normallywill assess whether the governmentprice was established in accordancewith market principles. Where thegovernment is the sole provider of agood or service, and there are no worldmarket prices available or accessible tothe purchaser, we will assess whetherthe government price was set inaccordance with market principlesthrough an analysis of such factors asthe government’s price-settingphilosophy, costs (including rates ofreturn sufficient to ensure futureoperations), or possible pricediscrimination. We are not putting thesefactors in any hierarchy, and we mayrely on one or more of these factors inany particular case. In our experience,these types of analyses may benecessary for such goods or services aselectricity, land leases, or water, and thecircumstances of each case vary widely.See, e.g., Pure Magnesium and AlloyMagnesium from Canada, 57 FR 30946,30954 (July 13, 1992) and VenezuelanWire Rod.

We believe that this approachaddresses the concerns raised bycommenters about potentiallycontinuing the use of the preferentialitystandard by shifting the focus of ourinquiry toward whether the governmentemployed market principles in settingprices. Although we do not have enoughexperience with the adequateremuneration standard to state when aprice discrimination analysis may beappropriate, we believe there may beinstances where government prices arethe most reasonable surrogate formarket-determined prices. We wouldonly rely on a price discriminationanalysis if the government good orservice is provided to more than aspecific enterprise or industry, or groupthereof.

Paragraph (a)(2)(iv) provides that, indetermining the adequacy ofremuneration, the Department willadjust comparison prices to reflect theprice a company would pay if itimported the good or service. This

adjustment will account for deliverycharges and import duties. In addition,if the price of the imported goodincludes antidumping or countervailingduties imposed by the country inquestion, we would use the priceinclusive of those duties for comparisonpurposes. Absent the imposition ofantidumping or countervailing duties bythe country in question, however, wewould not adjust the import prices toreflect alleged dumping or subsidies.

Paragraph (b) is based on§ 355.48(b)(2) of the 1989 ProposedRegulations, and continues to providethat the benefit from a government-provided good or service is consideredreceived when the firm pays, or is dueto pay, for the good or service.Paragraph (c), which also is consistentwith existing practice, provides that theSecretary normally will expense thebenefit of a government-provided goodor service to the year of receipt.However, benefits conferred by theprovision of non-general infrastructurenormally will be allocated over time.

Paragraph (d) deals with the provisionof general infrastructure. Section355.43(b)(4) of the 1989 ProposedRegulations contained a special test fordetermining whether government-provided infrastructure was specificand, therefore, countervailable. In our1997 Proposed Regulations, weexplained that, unlike the pre-URAAstatute, section 771(5) of the Act, asamended by the URAA, expresslymentions certain types of government-provided infrastructure. However, itdoes so not in the context of specificity,but in the context of ‘‘financialcontribution,’’ one of the prerequisitesfor a subsidy. Section 771(5)(D)(iii) ofthe Act, which implements Article1.1(a)(1)(iii) of the SCM Agreement,provides that the term ‘‘financialcontribution’’ includes the provision of‘‘goods or services, other than generalinfrastructure.’’ In other words, theprovision of ‘‘general infrastructure’’does not constitute a ‘‘financialcontribution,’’ and, thus, does notconstitute a subsidy.

We noted in our 1997 ProposedRegulations that, in light of the changein the statute, the countervailability ofinfrastructure depends on the definitionof ‘‘general infrastructure.’’ However,because of our inexperience in applyingthis definition and our uncertaintyregarding the extent to which theprinciples reflected in the 1989Proposed Regulations remained usefulanalytical tools for distinguishingpotentially countervailableinfrastructure from non-countervailablegeneral infrastructure, we opted not toissue a regulation on infrastructure.

We received several commentsregarding the definition of generalinfrastructure. One commenter arguedthat the word ‘‘general’’ essentiallydescribes types of infrastructure—suchas roads, bridges, railroads, etc.—whichwould never be countervailable. Thiscommenter maintained that the word‘‘general’’ should not be interpreted asrelating to the question of specificityand argued that to do so would be toignore the plain language of the statute.Several other commenters argued thatthe language in the SCM Agreementregarding general infrastructure wasmeant to codify the U.S. practice ofcountervailing specific infrastructure.

We disagree with the proposition thatcertain types of infrastructureautomatically constitute generalinfrastructure and, thus, are notcountervailable. Roads, bridges, andrailroads do not necessarily constitute‘‘general infrastructure’’ and canprovide benefits to particular industries,as in the case where a road or bridge isbuilt in an industrial park or portfacility that is used only by oneindustry, or a group of industries. See,e.g., Certain Steel Products from Korea,58 FR 37338, (July 9, 1993) (‘‘KoreanSteel’’). Therefore, the type ofinfrastructure per se is not dispositive ofwhether the government provisionconstitutes ‘‘general infrastructure.’’Rather, the key issue is whether theinfrastructure is developed for thebenefit of society as a whole.

Paragraph (d) defines ‘‘generalinfrastructure’’ as infrastructure that iscreated for the broad societal welfare ofa country, region, state, or municipality.For example, interstate highways,schools, health care facilities, sewagesystems, or police protection wouldconstitute general infrastructure if wefound that they were provided for thegood of the public and were available toall citizens or to all members of thepublic. Because we have no experiencewith the new concept of generalinfrastructure, we are not establishingmore precise criteria at this time.However, we intend to follow thesebroad principles in future cases and wemay develop more detailed criteria aswe gain more experience.

Any infrastructure that satisfies thispublic welfare concept is generalinfrastructure and therefore, bydefinition, is not countervailable andnot subject to any specificity analysis.Any infrastructure that does not satisfythis public welfare concept is notgeneral infrastructure and is potentiallycountervailable. The provision ofindustrial parks and ports, specialpurpose roads, and railroad spur lines,to name some examples (some of which


we have encountered in our cases), thatdo not benefit society as a whole, doesnot constitute general infrastructure andwill be found countervailable if theinfrastructure is provided to a specificenterprise or industry and confers abenefit. See, e.g., Korean Steel.


purchase of goods. Section 771(5)(E)(iv)of the Act provides that the purchase ofgoods by a government can confer abenefit if the goods are purchased ‘‘formore than adequate remuneration.’’ Aswith the provision of goods andservices, our lack of experience inapplying the adequate remunerationstandard led us to designate this section‘‘[reserved]’’ in the 1997 ProposedRegulations. Unlike the case with theprovision of goods and services,however, we have not had theopportunity to gain sufficientexperience applying the new standardin the context of government purchases.In addition, while governmentprocurement potentially was acountervailable subsidy prior to theURAA, allegations of procurementsubsidies were extremely rare. Thus, westill do not have experience on suchmatters as the ‘‘timing’’ of procurementsubsidies or the allocation of suchsubsidies to a particular time period.Therefore, given our lack of experiencewith procurement subsidies we are notissuing regulations concerning thegovernment purchase of goods. Instead,we have continued to designate§ 351.512 as ‘‘[reserved].’’

One commenter, however, encouragedthe Department to provide furtherguidance regarding how it intended toapply the adequate remunerationstandard in the context of thegovernment purchase of goods. Inparticular, this commenter advocated adefinition of adequate remunerationwhich focuses on a comparison ofcomparable prices for the good orservice provided based on prevailingmarket conditions in the country subjectto investigation or review.

As noted above, we are hesitant topromulgate a regulation dealing withthe purchase of goods by a governmentbecause of our relative lack ofexperience in this area. However, ourintended approach toward themeasurement of the adequacy ofremuneration is outlined in detail in§ 351.511 (government provision ofgoods or services). While we have notcodified this approach with respect togovernment purchases, we expect thatany analysis of the adequacy ofremuneration will follow the same basicprinciple, i.e., will focus on what a

market-determined price for the good inquestion would be.

We also received one commentregarding the threshold for initiating aninvestigation into whether governmentpurchases have been made for morethan adequate remuneration. Inparticular, this commenter argued for a‘‘reasonable basis to believe or suspect’’standard. In other words, a petitionerwould be required to allege facts thatgive the Department a reasonable basisto believe or suspect that governmentpurchases have been made for morethan adequate remuneration.

We disagree that a heightenedinitiation threshold should be employedfor this type of subsidy. Because wehave virtually no experience with thistype of subsidy, it would beinappropriate to require petitioners tomeet a higher threshold for initiationthan that imposed by the statute.According to section 702(b)(1) of theAct, the petitioner need only allege theelements necessary for the imposition ofthe duty (i.e., the existence of acountervailable subsidy) and supportthe allegation with reasonably availableinformation.

One additional commenter stated thatthe government purchase of servicesshould be treated similarly to thegovernment purchase of goods. In thediscussion of this point in the preambleto the 1997 Proposed Regulations, wenoted that only government purchase ofgoods is identified as a financialcontribution under section 771(5)(D)(iv)of the Act and Article 1.1(a)(1)(iii) of theSCM Agreement. This commenterargued, however, that according to thestatute and the SCM Agreement, asubsidy can exist where there is eithera financial contribution or an income orprice support. A governmental purchaseof services, according to thiscommenter, can be considered anincome support and, therefore, canresult in a subsidy.

We have not adopted this suggestion.We believe that if governmentalpurchases of services were intended tobe treated similarly to the governmentpurchase of goods, the statute and theSCM Agreement would specificallymention services as they do with thegovernment provision of goods andservices.

Finally, we received one commentarguing that if we chose to promulgatea regulation regarding governmentpurchases, we should make clear thatpurchases by government monopoliesare included. While we are not issuinga regulation on this subject, we agreethat purchases by governmentmonopolies can constitute subsidies

provided there is a benefit and thebenefit is specific.

Section 351.513Section 351.513 deals with worker-

related subsidies. Under paragraph (a),the Department will identify andmeasure the benefit of government-provided assistance to workers based onthe extent such assistance relieves thefirm of an obligation it otherwisenormally would incur. The commentswe received dealt mainly with the formthe obligation must take in order forworker-related assistance to becountervailable.

All commenters agreed that theDepartment should continue its practiceof countervailing worker-relatedassistance when there is a pre-existingobligation for the company to providesuch assistance. However, thecommenters differed in how theydefined the term ‘‘obligation.’’ Somecommenters asked the Department toadopt a broad definition of the term‘‘obligation’’ and not limit it to onlycontractual or statutory obligations,whereas others argued that an obligationmust be contractual or statutory in orderfor the Department to find the assistanceto be countervailable.

As in our 1997 Proposed Regulations,we continue to take the position that‘‘obligation’’ should be interpretedbroadly. Even though an obligation isnot binding in a contractual or statutorysense, an exemption from it maynevertheless provide a benefit to a firm.As an example, social or politicalconditions in a country may be suchthat, although no legal or contractualobligation exists, it is normal practicethat companies make severancepayments to laid-off workers. If thegovernment decides to shoulder all orpart of such payments, then thegovernment relieves the company of apayment it otherwise would haveincurred. In this situation, we will findthat a countervailable subsidy exists, aslong as the government’s action isspecific.

A related issue arises in situationswhere a company’s obligations to itsworkers are negotiated by labor andmanagement with the knowledge thatthe government will make acontribution. We encountered thissituation in Certain Steel Products fromGermany, 58 FR 38318 (July 9, 1993)(‘‘Certain Steel from Germany’’), wherewe concluded that the parties’’knowledge of the government’swillingness to make a contribution hadan impact on the outcome of thenegotiations. In the absence of thegovernment’s payment, the companywould likely have agreed to pay the


workers more. Because the additionalamount would depend upon the relativenegotiating strengths of labor andmanagement, we found it reasonable toassume that workers and managementheld approximately equal negotiatingstrength. We, therefore, decided to splitthe difference and concluded that in theabsence of the government’scontribution, the company would havehad to pay the workers 50 percent of theamount paid by the government. As aresult, we decided that 50 percent of thegovernment’s contribution wascountervailable because it relieved thecompany of a payment it otherwisewould have had to make.

Some commenters asked theDepartment to continue to apply themethodology used in Certain Steel fromGermany whereas another commentermaintained that this approach is toogenerous to respondents and that theDepartment should countervail the fullamount of the government’scontribution. In opposition, othercommenters characterized themethodology as speculative and urgedthe Department not to countervailgovernmental social aid at all.

As in the 1997 Proposed Regulations,we have declined to codify the approachused in Certain Steel from Germany. Webelieve, and the CIT has found, thatwhere a company’s obligations to itsworkers are negotiated with theknowledge that the government willmake a contribution, it is reasonable toconclude that the government’scommitment, and the negotiatingparties’ awareness of the commitment,have an impact on the outcome of thenegotiations (see LTV Steel v. UnitedStates, 985 F. Supp. 95 (1997)).However, we believe it is necessary toexamine the facts in each case beforedetermining whether it is appropriate tocountervail 50 percent of thegovernment’s contribution or someother amount.

Paragraph (b) deals with the form andtiming of worker-related subsidies. Eventhough we did not receive anycomments on these issues, we aremaking the following clarifications:Although most worker-related subsidiesare provided in the form of cashpayments, we consider the term‘‘payment’’ in paragraph (b) to includenon-cash benefits. With respect totiming, the Secretary will consider thesubsidy to have been received by thefirm on the date on which the paymentis made that relieves the firm of anobligation that it normally would haveincurred.

Paragraph (c) deals with the allocationof worker-related subsidies to aparticular time period. As in the past,these subsidies will normally be

considered to provide recurring benefitsand they will be allocated to the year ofreceipt (expensed) in accordance with§ 351.524(a).

Section 351.514Section 351.514 contains the standard

for determining when a subsidy is anexport subsidy, as opposed to adomestic or import substitution subsidy.Consistent with section 771(5A)(B) ofthe Act, paragraph (a) of § 351.514codifies the expansion of the definitionof an export subsidy to include anysubsidy that is, in law or in fact,contingent upon export performance,alone or as one of two or moreconditions. Paragraph (b) has beenadded, incorporating the previouslyseparate regulation regarding generalexport promotion.

We received a number of commentsregarding the expanded definition ofexport subsidy in the 1997 ProposedRegulations. Several commenterssupported the expanded definition inthe 1997 Proposed Regulations butsuggested that language be added to theregulation making it clear that an exportrequirement need not be an explicitcondition of the program as long as thefacts indicated that the benefits werecontingent upon actual or anticipatedexportation. These commentershighlighted several factual scenariosunder which the Department shouldfind an export subsidy to exist. Theseinclude subsidies provided to ‘‘for-export’’ industries; subsidies providedin situations where the export market isthe only market for the subjectmerchandise; and subsidies providedwhere a substantial portion of asubsidized project will be devoted toexport production.

Several other commenters wereopposed to the expanded definition.These commenters argued that, ifnarrowly applied, the definition woulddisproportionately penalize exportingcountries which may have broad policystatements referring to exports. With thegrowing economic integration of theNorth American market under the NorthAmerican Free Trade Agreement(‘‘NAFTA’’), firms in these countriesmay base their investment decisions onservicing the NAFTA market rather thana domestic and export market, and, assuch, the assistance is not trulycontingent upon export performance.Further, these commenters argued thatmere consideration of possibleexportation as one of the factorsconsidered by the government ingranting the benefit does not mean thatthe benefit is ‘‘contingent’’ upon exportperformance. As support, they citedfootnote 4 to Article 3.1(a) of the SCMAgreement which states that ‘‘the mere

fact that a subsidy is granted toenterprises which export shall not forthat reason alone be considered to be anexport subsidy within the meaning ofthis provision.’’ One commenter arguedthat ‘‘contingent upon actual oranticipated exportation or exportearnings’’ should be limited tosituations where the subsidy isconferred only upon actual exportationor is lost if the recipient is unable todemonstrate that the goods wereexported.

Finally, one commenter suggestedthat the regulations should includeillustrative (but not all-inclusive)guidance regarding the factors that theDepartment will consider in its analysisof de facto export subsidies. In thiscommenter’s view, the regulationsshould also incorporate language thatclarifies the distinction between a dejure and a de facto analysis.

While we have made minor changesto more closely conform the language ofthe 1997 Proposed Regulations with thelanguage in the SCM Agreement and thestatute, we have made no changes inresponse to these comments. However,in applying the standard contained in§ 351.514, we will distinguish betweenbroad development goals or economicpolicy, and specific program objectivesand criteria. For purposes of ouranalysis, we have developed a list offactors that we may consider. This listis non-exhaustive and includes: (1) Thestated purpose or purposes of thesubsidy as put forth in the governinglaws or regulations; (2) the selectioncriteria and reasons for approval/disapproval; (3) application andapproval documents, including marketor economic viability studies; (4) theexistence and nature of any monitoringor enforcement mechanism; (5)governmental collection of dataregarding the program recipients’exports (other than the customarycollection of export and import data); (6)the exporting history of recipient firmsor industries; and (7) other evidencethat the Department deems relevant toconsider. We need not examine all ofthe factors to determine that theprogram is an export subsidy if ourexamination of one or more factorsprovides sufficient evidence todetermine that the program is a de factoexport subsidy.

In situations where the governmentevaluates multiple criteria under aprogram, § 351.514 would require ananalysis different from that described inExtruded Rubber Thread from Malaysia,57 FR 38472 (August 25, 1992). In thatcase, the Malaysian Governmentconsidered 12 criteria in evaluating


whether a particular company shouldreceive ‘‘Pioneer’’ status. Two of thesecriteria addressed the export potential ofa product or activity. In addition, incertain situations, companies wererequired to agree to exportcommitments. In analyzing the Pioneerprogram, the Department examined thecriteria being applied with respect to aparticular company. If one or more ofthe criteria applied by the Governmentincluded favorable prospects for export,but the export criteria did not carrypreponderant weight, we did notconsider the award of Pioneer status toconstitute an export subsidy. However,under the new standard contained in§ 351.514, if exportation or anticipatedexportation was either the solecondition or one of several conditionsfor granting Pioneer status to a firm, wewould consider any benefits providedunder the program to the firm to beexport subsidies unless the firm inquestion can clearly demonstrate that ithad been approved to receive thebenefits solely under non-export-relatedcriteria. In such situations, we wouldnot treat the subsidy to that firm as anexport subsidy.

We have not adopted the suggestionto limit the interpretation of the phrase‘‘contingent upon actual or anticipatedexport performance’’ to situations wherethe subsidy is conferred only uponactual exportation or is lost if therecipient is unable to demonstrate thatthe goods were exported. Such languagewould effectively negate the phrase‘‘tied to * * * anticipated exportation orexport earnings’’ and directly conflictswith the intent of Congress and thelanguage of the SCM Agreement. TheSCM Agreement states that a de factoexport subsidy exists ‘‘when the factsdemonstrate that the granting of asubsidy, without having been madelegally contingent upon exportperformance, is in fact tied to actual oranticipated exportation or exportearnings.’’ See Footnote 4 to Article 3.1of the SCM Agreement (emphasisadded).

One commenter protested that the1997 Proposed Regulations failed toprovide a mechanism for notifyingexport subsidies discovered during aninvestigation to the Office of the U.S.Trade Representative (‘‘USTR’’) forsubmission to the WTO. We do notbelieve a regulation is needed given theclear language of the statute whichrequires the Department to notify USTRof any subsidies which are ‘‘prohibited’’under Article 3 of the SCM Agreement.(See section 281(b)(1) of the Act (19U.S.C. 3571(b)(1) and (c)(1).)

General Export Promotion: Paragraph(b) contains an exception to the general

rule which codifies the Department’spractice with respect to certain types ofgovernment export promotion activities.In the 1997 Proposed Regulations, thisparagraph was a separate section (see,§ Section 351.520). However, we havedecided it fits more appropriately as anexception to our discussion of whatconstitutes an export subsidy. As wehave observed in the past, mostcountries maintain general exportpromotion programs. As long as theseprograms provide only generalinformation services, such asinformation concerning exportopportunities or government advocacyefforts on behalf of a country’sexporters, they do not confer a benefitfor purposes of the CVD law. However,if such activities promote particularproducts or provide financial assistanceto a firm, a benefit could exist.

For example, government guides onhow to export, overseas marketingreports, and marketing opportunitybulletins would be considered to begeneral promotion activities and, assuch, would not be countervailable.Similarly, certain advocacy efforts, suchas country image events or countryproduct displays, could also beconsidered to be general promotionactivities. However, image events orproduct displays that focus onindividual products or which providefinancial assistance to participantswould not meet the exception forgeneral export promotion. See, e.g., thediscussion regarding the treatment oftwo ProChile trade promotions, ‘‘EventBon Appetit’’ and ‘‘Summer Harvest’’ inFresh Atlantic Salmon from Chile, 63FR 31437, 31440 (June 9, 1998).

Two commenters argued that theregulation should be modified first toidentify what constitutescountervailable export promotionassistance and then to identify thecriteria for potentially non-countervailable export promotionassistance. Another commenter arguedthat the regulation should be revised tomake it clear that general exportpromotion programs never constituteexport subsidies because such programscan never be considered to becontingent upon export results.According to the commenter, suchtreatment would be consistent with the‘‘green box’’ treatment of generalmarketing and promotional programsunder the WTO Agricultural Agreement.This commenter further suggested thatthe focus of the regulation should be onprograms rather than activities. Thecommenter also argued that even wherean export promotion program confers abenefit, the program should beconsidered to be non-countervailable if

it is non-specific. Another commenterargued that even if an export promotionprogram is superficially generallyavailable but upon examination is defacto specific, then it is countervailable.

Having clarified the exception forgeneral export promotion byincorporating that proposed regulationinto the general export subsidiesregulation, we are not adopting thesuggested modification regarding theidentification of countervailable exportpromotion assistance. We also disagreethat the regulation should be revised tostate that general export promotionactivities can never be countervailablebecause they are never contingent uponexport results. As discussed in responseto a similar comment posed by thiscommenter with respect to the generaldefinition of an export subsidycontained in paragraph (a), the phrase‘‘contingent upon actual or anticipatedexport performance’’ is not limited toactual exportation. Assistance topromote exports, even of a generalnature, is designed to result in actualexport performance.

With respect to whether theregulation should refer to exportpromotion programs rather than exportpromotion activities, we do not see theneed to make this change. We oftenexamine and make determinations withrespect to certain aspects of, or activitiesunder, a program, and as a result mayfind one project or activity under aprogram to be countervailable whilefinding another project or activity underthe same program to be notcountervailable.

Finally, with respect to the commentsregarding the ‘‘specificity’’ of exportpromotion assistance, we do not need toreach this issue. All export promotionprograms, even those of a generalnature, are specific under section771(5A)(B) of the Act. However, asnoted above, as long as these programsprovide only information services, suchas information concerning exportopportunities, or government advocacyefforts on behalf of a country’sexporters, they do not confer a benefitfor purposes of the CVD law.

Section 351.515Section 351.515 corresponds to

paragraph (c) of the Illustrative List, anddeals with preferential internaltransport and freight charges on exportshipments. It is unchanged from the1997 Proposed Regulations. Paragraph(a)(1) restates the general principle thata benefit exists to the extent that a firmpays less for the transport of goodsdestined for export than it would for thetransport of goods destined for domesticconsumption. In addition, paragraph


(a)(2), which is based on § 355.44(g)(2)of the 1989 Proposed Regulations,provides that the Secretary will notconsider a benefit to exist if differencesin charges are the result of an arm’s-length transaction or are commerciallyjustified.

Paragraph (b) provides that theSecretary will consider the benefit tohave been received on the date onwhich the firm pays or, in the absenceof payment, was due to pay thetransport or freight charges. Paragraph(c) provides that the Secretary willnormally allocate (expense) the benefitto the year in which the benefit isreceived.


government provision of goods orservices on favorable terms orconditions to exporters. Like itspredecessor, § 355.44(h) of the 1989Proposed Regulations, § 351.516 isbased on paragraph (d) of the IllustrativeList, and reflects the changes toparagraph (d) made as part of theUruguay Round. Paragraph (a) containsthe standard for determining theexistence and amount of the benefitattributable to these types of subsidyprograms. As paragraph (a)(2) makesclear, in determining whether thedomestically sourced input is beingprovided on more favorable terms thanare commercially available on worldmarkets, the Department will add to theworld market price delivery charges tothe country in question. In our view,delivered prices offer the best measureof prices that are commercially availableto exporters in that country. Paragraphs(b) and (c) contain rules regarding thetiming of benefit receipt and theallocation of the benefit to a particulartime period, respectively. As discussedbelow, one change has been made toparagraph (a)(1) of the 1997 ProposedRegulations.

As noted in the 1997 ProposedRegulations, one commenter argued thatthe Department should provide that allexport subsidy payments are prohibitedper se under the SCM Agreement andU.S. law, and that nothing in paragraph(d) permits them. According to thiscommenter, in the past, foreigngovernments have claimed an exceptionto paragraph (d) for practices thatprotect domestic markets whilepromoting subsidized exports ofagricultural and manufactured goods.As an example, this commenter citedthe European Union program providing‘‘export restitution’’ payments or‘‘export refunds’’ on durum wheat, theprimary agricultural product used in theproduction of pasta. The commenter

stated that these refunds wereprohibited because paragraph (d)applies only to the ‘‘provision’’ of goodsand/or services, not export payments,and that the Department’s regulationsshould clearly prohibit export‘‘payments.’’

This argument is identical to one putforth by petitioners in the1985administrative review on Certain Iron-Metal Castings from India, 55 FR 50747,50748 (December 10, 1990). In that case,India’s International PriceReimbursement Scheme (‘‘IPRS’’)provided payments to castingsexporters, refunding the differencebetween the price of raw materialspurchased domestically and the priceexporters otherwise would have paid onthe world market. We refused toexamine whether the IPRS met thecriteria for non-countervailability underthe exception in item (d) andcountervailed the IPRS payments intheir entirety.

Exporters and importers challengedthe Department’s determination, and, inits decision in Creswell Trading Co. v.United States, 783 F. Supp. 1418 (1992),the CIT remanded the case to theDepartment with instructions to analyzethe consistency of the IPRS with item(d). The Federal Circuit discussed thisdecision with approval in connectionwith an appeal from a second CITdecision in this same case. See CreswellTrading Co. v. United States, 15 F. 3d1054 (1994) (‘‘Creswell’’). Therefore,based on the above judicial precedent,we disagree with the commenter thatparagraph (d) does not apply toprograms where a governmentreimburses an exporter for thedifference between a higher domesticprice for an input and a lower price thatthe exporter would have paid on theworld market, as opposed to providingthe input itself.

Also consistent with the FederalCircuit’s decision in Creswell, where aprogram exists that provides inputs forexported goods at a lower price than isavailable for inputs for use in theproduction of goods for domesticconsumption, the burden will be onrespondents to provide evidence thatthe lower price reflects the price that iscommercially available on worldmarkets.

In the preamble to the 1997 ProposedRegulations, we asked parties tocomment on whether dumped orsubsidized prices should be consideredto be commercially available worldmarket prices suitable for use as abenchmark to determine whether agovernment is providing pricepreferences for inputs used for exports.Several commenters opposed using

dumped or subsidized prices as abenchmark because it would understatethe subsidy, undermine the purpose ofthe SCM Agreement and would beinconsistent with our proposedupstream subsidy methodology. Othercommenters argued that subsidized ordumped prices should be considered asa possible benchmark because theyrepresent ‘‘commercially available’’prices.

Where there is more than onecommercially available world marketprice to be used as a benchmark, weintend to average these prices to theextent practicable, making dueallowance for factors affectingcomparability. If the most appropriatebenchmarks are for products that aredumped or subsidized in the countrywhere the subject merchandise isproduced, we will adjust thebenchmark. However, we will onlymake an adjustment to reflect adetermination of dumping orsubsidization made by the importingcountry with respect to the inputproduct imported from the country fromwhich the world market price isderived.

A number of parties commented onthe Department’s inclusion of deliverycharges in determining thecommercially available world marketprice benchmark. While somecommenters supported the inclusion ofdelivery charges in the benchmarkarguing that it more accurately reflectedthe price available to exporters in thatcountry, others disagreed arguing thatdelivery charges merely reflect thedistance the good is being transported.The difference in delivery costs betweena locally sourced product and animported product is not due to thegovernment subsidy; rather it reflectsthe comparative advantage the domesticproduct has over the imported productwith respect to geographic proximity.

Consistent with our past practice inevaluating such subsidies, we intend tocontinue to include delivery charges inthe commercially available worldmarket price benchmark used tomeasure price preferences for inputsused for exports. Item (d) of theIllustrative List specifically sets thebenchmark as the price ‘‘commerciallyavailable on world markets to theirexporters.’’ By its very terms, the pricethey would pay would include freight.

This practice was upheld by theFederal Circuit in Creswell v. the UnitedStates, 141 F.3d 1471 (Fed. Cir. 1998)(‘‘Creswell II’’), a case which involvesIPRS and exporters of iron-metalcastings in India. According to theCourt:


Item (d) thus recognizes that foreigngovernments may subsidize their domesticindustries to allow them to competeeffectively on the world market as long as theextent of the subsidization is not morefavorable to their exporters than if thoseexporters had to participate in the worldmarket without assistance. If the amount ofthe subsidization exceeds this point, it isexcessive and this excessive amount iscountervailable under Item (d). Accordingly,Item (d) mandates a comparison between theterms and conditions under which productwas supplied to exporters by theirgovernments and the terms and conditions towhich those exporters would have beensubject had they instead participated in theworld market.

The Court explained that:A castings manufacturer procuring pig iron

on the world market would have to pay theFOB price for the pig iron itself, plus the costof shipping that iron to India. Accordingly,the world market price must include the costof shipping. To the extent that the Indiangovernment’s world market price did notinclude oceanic shipping costs, its worldmarket price was artificially low and itsrebate artificially high by this amount. Theprice of pig iron that is not delivered to Indiacannot be fairly compared with the price ofpig iron that is delivered. Thus, because ofthe omission of oceanic shipping costs fromthe calculation of the world market price, theIPRS program has in effect provided pig ironto India’s castings manufacturers on termsmore favorable than had those manufacturersactually procured pig iron on the worldmarket.

One commenter stated that, consistentwith the SCM Agreement,§ 351.516(a)(1) should be amended toinclude government-provided services.We have adopted this suggestion andhave amended § 351.516(a)(1) to includeservices.

This same commenter also stated thatwhen a foreign government charges lessthan the commercially available priceon world markets, the Departmentshould countervail the full amount ofthe difference between the price thegovernment charges to domesticproducers and that charged to exporters,not just the difference between thegovernment price and the deliveredcommercially available world marketprice benchmark. Such an approachwould be consistent with the Court’sdecision in RSI (India) Pvt., Ltd. v.United States, 687 F. Supp. 605, 611(CIT 1988) (‘‘RSI’’).

We have not adopted this suggestion.Where there is a government-mandatedscheme in place, the benefit to therecipient from price preferences forinputs used in the production of goodsfor export is the difference betweenwhat the producer actually pays andwhat the producer would otherwise pay(i.e., the commercially available price

on the world market). We disagree thatthe suggested approach is consistentwith the Federal Circuit’s decision inRSI. In RSI, the Court was addressing asituation where the record wasdeficient, and it found that theDepartment was under no obligation tomake calculations that should have beenmade by respondents. However,consistent with RSI and the FederalCircuit’s decision in Creswell II, wecontinue to take the position that therespondents must provide evidenceestablishing that the lower price beingcharged by the government reflects theprice that is commercially available onworld markets.


exemption, remission or rebate uponexport of indirect taxes. (‘‘Indirect tax’’is defined in § 351.102.) Section 351.517is consistent with longstanding U.S.practice, (see Zenith Radio Corp. v.United States, 437 U.S. 443 (1978)), andis based on paragraph (g) of theIllustrative List. The regulation has beenchanged to reflect paragraph (g) of theIllustrative List by adding that it alsoapplies to the exemption of indirecttaxes, as well as to their remission.Paragraph (g) deals with indirect taxeson the production or distribution of theexported merchandise, such as valueadded taxes, and provides that theremission or rebate of such taxesconstitutes an export subsidy only if theamount of the remittance or rebate isexcessive; i.e., if it exceeds the amountof indirect taxes levied on like productssold for domestic consumption. Forexample, if a government imposes a $7tax on a widget sold for domesticconsumption and provides a $10 rebateif the same type of widget is exported,an export subsidy exists in the amountof $3. In accordance with paragraph (g),the non-excessive exemption orremission upon export of indirect taxesdoes not constitute a subsidy. See note1 of the SCM Agreement.

Paragraph (b) provides that the benefitfrom an excessive exemption or rebateof indirect taxes is deemed to bereceived on the date of exportation.Paragraph (c) provides that the Secretarywill normally expense these types ofsubsidies in the year of receipt.

Section 351.518While § 351.517 deals with the

exemption or remission of indirect taxesin general, § 351.518 deals with theexemption, remission, or deferral ofprior-stage cumulative indirect taxesand has been changed from the 1997Proposed Regulations, as describedbelow. (‘‘Prior-stage indirect tax’’ and

‘‘cumulative indirect tax’’ are defined in§ 351.102.) Section 351.518 is based onparagraph (h) of the Illustrative List, andreflects certain changes made toparagraph (h) as part of the UruguayRound negotiations. Section 351.518 isconsistent with paragraph (h) and theGuidelines on Consumption of Inputs inthe Production Process (Annex II to theSCM Agreement).

Section 351.518 is drafted to addressseparately exemptions, remissions anddeferrals of prior stage cumulativeindirect taxes. Paragraph (a) deals withwhether a benefit is received and howit is calculated. Paragraph (a)(1) dealswith exemptions and states that whereinputs are exempt from prior stagecumulative indirect taxes, a benefitexists to the extent that the exemptionextends to inputs not consumed in theproduction of the exported product, asdefined in accordance with the SAAand Annex II to the SCM Agreement,making normal allowance for waste, orwhere the exemption covers taxes otherthan indirect taxes. (‘‘Consumed in theproduction process’’ is defined in§ 351.102.) Where a benefit exists, it isequal to the amount of the taxes the firmwould otherwise pay on inputs notconsumed in the production of theexported product.

Paragraph (a)(2) addresses remissionsof indirect taxes and states that a benefitexists to the extent that the amountremitted exceeds the amount of priorstage cumulative indirect taxes paid oninputs that are consumed in theproduction of the exported product,making normal allowance for waste.Where a benefit exists, paragraph (a)(2)sets forth a general rule to the effect thatthe amount of the benefit normally willequal the difference between theamount remitted and the amount ofprior stage cumulative indirect taxes oninputs that are consumed in theproduction of the exported product.

Paragraph (a)(3) deals with theamount of the benefit attributable to adeferral of prior-stage cumulativeindirect taxes. We have modifiedparagraph (a)(3) in response tocomments that the regulation shouldidentify the practice consideredcountervailable before addressing theexception. Consistent with footnote 59to the SCM Agreement, the firstsentence of paragraph (a)(3) providesthat a deferral gives rise to a benefit ifthe deferral extends to inputs that arenot consumed in the production of theexported product, making normalallowance for waste, and thegovernment does not charge theappropriate interest on the taxesdeferred.


Another commenter urged theDepartment to treat multi-year deferralsas long-term loans, because using ashort-term interest rate as a benchmarkunderstates the benefit to the recipient.For the reasons discussed in § 351.509regarding deferrals of direct taxes, wehave adopted this position.Consequently, § 351.518(a)(3) permits usto use long-term benchmark rates fordetermining the benefit conferred bydeferrals of prior stage cumulativeindirect taxes, where appropriate.

We have also modified the exceptionoutlined in paragraph (a)(4) in responseto a comment that the 1997 ProposedRegulations erroneously appliesprocedures set out in Annex II to theSCM Agreement only to remissions ofindirect taxes and should apply as wellto exemptions and deferrals. We agreethat Annex II to the SCM Agreementapplies not only to remissions but alsoto exemptions and deferrals.Accordingly, paragraph (a)(4) has beenchanged and directs that, based onAnnex II to the SCM Agreement, theSecretary may consider the entireamount of an exemption, remission ordeferral of prior-stage cumulative taxesto be a benefit if the Secretarydetermines that the foreign governmenthas not examined the inputs in order toconfirm which inputs are consumed inthe production of exported products andin what amounts, and the taxes that areimposed on those inputs. Thisqualification is essentially a modifiedversion of the Department’s ‘‘linkagetest,’’ a test upheld in IndustrialFasteners Group, American ImportersAss’n v. United States, 710 F.2d 1576(Fed. Cir. 1983). The test has beenmodified to conform to the guidelines ofAnnex II. Under the modified test, wewill first examine whether the exportinggovernment has a system in place thatconfirms which inputs are consumed inthe production of the exported product,and in what amounts, and which taxesare imposed on the inputs consumed inproduction. Where we find that such asystem is in operation, we will examinethe system to determine whether it isreasonable, effective, and based ongenerally accepted commercial practicesin the exporting country. Where such asystem is not in operation, or where thesystem is not reasonable or effective, thegovernment of the exporting countrymay examine the actual inputs involvedto demonstrate that the exemption,remission or deferral of indirect taxesreflects only those inputs consumed inthe production of the exported product,the quantity of those inputs consumedin production, including a normalallowance for waste, and only those

indirect taxes imposed on the inputproduct.

Paragraph (b) deals with the time ofreceipt of the benefit. Paragraph (b)(1)provides that in the case of a taxexemption, the benefit is received onthe date of exportation. Paragraph (b)(2)provides that in the case of a taxremission, the benefit arises as of thedate of exportation. Paragraphs (b)(3)and (b)(4) address deferrals and statethat the benefit from deferrals of lessthan one year will be received on thedate the deferred tax becomes due. Formulti-year deferrals, the benefit isreceived on the anniversary date(s) ofthe deferral.

Paragraph (c) deals with the allocationof the benefit to a particular time period,and provides that the Secretarynormally will allocate (expense) thebenefit from an exemption, remission ordeferral of prior-stage cumulativeindirect taxes to the year in which thebenefit is considered to have beenreceived under paragraph (b).

Two commenters argued that§ 351.518(a)(2) should state that thesystem, procedure or methodology ofexamination used by foreigngovernments to confirm theconsumption of inputs in theproduction process is subject to thefurther examination by the Department,including verification. We have notadopted the suggested languageregarding verification. We see no needto add this language. As with anyinformation relied upon by theDepartment for its determinations, thisinformation is subject to verification.


remission or drawback of importcharges. The regulation has beenchanged to clarify that the term‘‘remission or drawback’’ includes fullor partial exemptions and deferrals ofimport charges. Section 351.519 isgenerally consistent with priorDepartment practice, but contains somerevisions to reflect changes made toparagraph (i) of the Illustrative Listduring the Uruguay Round negotiations.Section 351.519 is based on paragraph(i), the Guidelines on Consumption ofInputs in the Production Process, andthe Guidelines in the Determination ofSubstitution Drawback Systems asExport Subsidies (Annex III to the SCMAgreement).

Paragraph (a)(1) reflects thelongstanding principle that governmentsmay remit or drawback import chargespaid on imported inputs consumed inproduction when the finished product isexported. However, if the amountremitted or drawn back exceeds the

amount of import charges paid, a benefitexists. In addition, paragraph (a)(1) nowincorporates exemptions and deferralsof import charges on inputs consumedin the production of exported products.

Paragraph (a)(2) deals with so-called‘‘substitution drawback.’’ Under asubstitution drawback system, a firmmay substitute domestic inputs forimported inputs without losing itseligibility for drawback. However, abenefit exists if the amount drawn backexceeds the amount of import chargeslevied on imported inputs, or if theexport of the finished product does notoccur within a reasonable time (not toexceed two years) of the import of theinputs.

Paragraph (a)(3) deals with thecalculation of the amount of benefit.Paragraph (a)(3)(i) sets forth the rule forcalculating the benefit from an excessiveremission or drawback and states thatthe amount of the benefit equals thedifference between the amount remittedor drawn back and the amount of importcharges paid on the inputs consumed inproduction for which the remission ordrawback is claimed. For example,assume that a firm imports a widgetwhich is an input consumed in theproduction of a gizmo, and pays $2 inimport duties on the widget. If, whenthe firm exports the finished gizmo, thefirm receives $5 in drawback, thebenefit equals $3 ($5¥$2 = $3).Paragraphs (a)(3) (ii) and (iii) deal withcalculation of the benefit from anexemption or deferral of import chargesand parallel the language set forth in§ 351.518.

However, paragraph (a)(4) providesthat in certain circumstances, theSecretary may consider the amount ofthe benefit to equal the amount of theexemption, deferral, remission ordrawback. Paragraph (a)(4) provides fora ‘‘linkage’’ test, and is essentiallyidentical to § 351.518(a)(4). Seediscussion of § 351.518(a)(4), above.

One commenter suggested thatlanguage be added to § 351.519(a)(4) toclarify further the type of system orprocedure referred to by the regulation.This commenter and anothercommenter also argued that theDepartment should state that thesystem, procedure or methodology ofexamination used by foreigngovernments to confirm theconsumption of inputs in theproduction process is subject to furtherexamination by the Department,including verification.

We have not adopted this clarifyinglanguage in § 351.519(a)(4). We believethat clarification regarding the type ofsystem or procedure is unnecessarybecause any system, regardless of the


type, must meet the standards set forthin paragraph (a)(4) in order to be non-countervailable. We will examine allsuch systems carefully to ensure fullcompliance with these standards. Withrespect to the suggested languageregarding verification, we have notadopted this language. As with anyinformation relied upon by theDepartment for its determinations, thisinformation is subject to verification.

Paragraph (b) deals with the time ofreceipt of the benefit. Paragraph (b)(1)provides that, in the case of remissionor drawback, the Secretary normallywill consider the benefit to have beenreceived as of the date of exportation.Paragraphs (b)(2), (b)(3) and (b)(4) havebeen added to reflect the addition ofexemptions and deferrals of importcharges to this section. The timing ofreceipt of the benefit from an exemptionor deferral of import charges parallels§ 351.518. Paragraph (c) provides thatthe Secretary normally will allocate thisbenefit to the year in which the benefitsare considered to have been receivedunder paragraph (b).

Section 351.520Section 351.520 deals with export

insurance and is unchanged from the1997 Proposed Regulations. Paragraph(a), which deals with the benefitattributable to export insurance, is basedon paragraph (j) of the Illustrative List.Paragraph (a) differs from the section ofthe 1989 Proposed Regulations dealingwith export insurance, § 355.44(d). First,to reflect changes made to theIllustrative List during the UruguayRound, the word ‘‘manifestly’’ has beendeleted.

Second, § 355.44(d)(1) of the 1989Proposed Regulations required that anexport insurance program must haveexhibited losses for a five-year periodbefore the Secretary would consider theprogram a countervailable subsidy. Wehave not included the five-year lossrequirement in these regulations,because, depending on how an exportinsurance program is structured, it maybe evident within less than five yearsthat premiums will be inadequate tocover the long-term operating costs andlosses of the program. On the otherhand, where the program is structuredin such a way that expected premiumscan cover expected long-term operatingcosts and losses, we anticipate that wewill continue to apply the five-year rule.For example, we would continue toapply the five-year rule to programs likeIsrael’s Exchange Rate Risk InsuranceScheme. With respect to this program,we originally determined that it wasstructured so as to be self-balancing inthe sense that it could reasonably be

expected to break even over the longterm. See Potassium Chloride fromIsrael, 49 FR 36122, 36124 (September14, 1984). Therefore, we did not find acountervailable subsidy despite lossesin the early years of the program. Id.However, after observing losses for fiveyears, we concluded that the premiumscharged were inadequate, and wedetermined that the scheme conferred acountervailable benefit. See IndustrialPhosphoric Acid from Israel, 52 FR25447, 25449–50 (July 7, 1987).

Finally, § 355.44(d)(1) of the 1989Proposed Regulations stated that theDepartment would take into accountincome from other insurance programsoperated by the entity in question. Asdiscussed in the Preamble to the 1997Proposed Regulations, we havereconsidered this policy, and, althoughwe do not have much experience in thisregard, have concluded that thisrequirement may be overly restrictive.For example, there may be instanceswhere the insuring entity operates on acommercial basis, except for the exportinsurance function that may bespecifically underwritten by thegovernment. In such a situation, itwould be inappropriate to take intoaccount the insuring company’s incomefrom other insurance programs.

One commenter suggested that theDepartment’s regulations should clearlystate that the Department’s evaluation ofwhether export insurance programs arebeing subsidized will be limited to thoseprograms and not other insuranceprograms which may be offered by theinsurer.

Section 351.520(a)(1) states, ‘‘In thecase of export insurance, a benefit existsif the premium rates charged areinadequate to cover the long-termoperating costs and losses of theprogram.’’ (Emphasis added). We do notsee a need to clarify the regulation anyfurther.

Section 351.521

Section 771(5A)(C) of the Act definesan ‘‘import substitution subsidy’’ as ‘‘asubsidy that is contingent upon the useof domestic goods over imported goods,alone or as 1 of 2 or more conditions.’’As stated in the Senate Report, ‘‘thecategory of import substitutionsubsidies is a new one that is neitherpart of the 1979 Subsidies Code norincluded in current law.’’ S. Rep. No.103–412, at 93 (1994). Under the newlaw, import substitution subsidies areautomatically considered to be specific.

In the 1997 Proposed Regulations, westated that we were not issuing aregulation on import substitutionsubsidies due to our lack of experience

in dealing with this new category ofsubsidies.

One commenter supported theDepartment’s decision not to issue aregulation on this topic but asked thatwe explain in these Final Regulationsour reasons for not doing so. Thiscommenter also requested that wereiterate our view, as expressed in the1997 Proposed Regulations, that section771(5A)(C) of the Act does not limit thedefinition of import substitutionsubsidies to include only de juresubsidies. Another commenter urged usto issue a regulation to clarify that bothde jure and de facto import substitutionsubsidies are countervailable.

Because of our lack of experience indealing with import substitutionsubsidies, we have continued todesignate § 351.521 as ‘‘reserved.’’ Weintend to develop our practice regardingimport substitution subsidies on a case-by-case basis. As we stated in the 1997Proposed Regulations, the plainlanguage of section 771(5A)(C) of theAct does not limit the definition ofimport substitution subsidies to onlythose subsidies that are contingent ‘‘inlaw’’ upon the use of domestic goods.Moreover, the absence of a regulationmaking explicit the coverage of de factoimport substitution subsidies should notbe construed as an indication that theDepartment believes that section771(5A)(C) applies only to de jureimport substitution subsidies.

A third commenter contended thatinvestigations of import substitutionsubsidies would be very complex andtime-consuming and that they,therefore, would divert attention andresources from the main countervailingduty investigation. For this reason, thecommenter argued, the Departmentshould not initiate an investigation ofimport substitution subsidies absent aspecific allegation by petitioners thatgives the Department a reasonable basisto believe or suspect that such subsidieshave been bestowed.

We have not adopted this suggestion.Contrary to the commenter’s view, webelieve that investigation of importsubstitution subsidies may place less ofa burden on the Department andrespondents because import substitutionsubsidies are per se specific.Consequently, we would only need toinvestigate the existence and amount ofany benefit. Therefore, we see no basisfor employing a heightened initiationstandard.

A fourth commenter asked that theregulations clarify that the term‘‘domestic goods’’ should also apply topurchases within a customs union ofwhich the subsidizing country is amember. The commenter argued that


this definition of ‘‘domestic’’ would beconsistent with the definition of‘‘country’’ in section 771(3) of the Act.The commenter noted that theDepartment has countervailed subsidiesprovided by the European Union in thepast. According to the commenter, aregulation that includes purchases fromwithin a customs union in the term‘‘domestic goods’’ would, therefore, beconsistent with the Department’s pastpractice.

Import substitution subsidiesgenerally protect domestic inputproducers by imposing requirements orproviding incentives for companies touse these inputs. It seems unlikely thatone country would provide incentivesto use inputs from another country,even if the other country is in the samecustoms union. However, if the subsidyis provided by the customs union itself,we can reach that program directlythrough the definition of ‘‘country,’’ asdefined further in the preamble to§ 351.523 on upstream subsidies.Furthermore, we believe thecommenter’s analysis of the relationshipbetween ‘‘domestic goods’’ as used insection 771(5A)(C) and ‘‘country’’ asused in section 771(3) may have merit,and we will look carefully at thissuggestion if the situation is presentedin a specific case.

Section 351.522Section 351.522 of the 1997 Proposed

Regulations, entitled ‘‘Certainagricultural subsidies,’’ codifiedparticular aspects of how theDepartment intends to analyze ‘‘greenbox’’ subsidies. We did not promulgateproposed regulations governing the non-countervailable status of ‘‘green light’’subsidies because we considered thestatute and the SAA sufficiently clearwith respect to these exceptions in thecountervailing duty law. However,based on comments received, asdiscussed below, we have codifiedcertain standards concerning ouranalysis of green light research andenvironmental subsidies in§§ 351.522(b) and 351.522(c). To reflectthese changes from the 1997 ProposedRegulations, we have renamed § 351.522‘‘Green Light and Green Box Subsidies,’’and we have added paragraphs (b) and(c) in these Final Regulations.

Certain agricultural subsidies: Section771(5B)(F) of the Act implementsArticle 13(a)(i) of the WTO Agreementon Agriculture regarding the non-countervailable status of certain‘‘domestic support measures.’’ UnderArticle (6)(1) of the Agreement onAgriculture, domestic support measuresthat meet the policy-specific criteria andconditions of Annex 2 of the WTO

Agreement on Agriculture are exemptfrom member countries’ commitmentsto reduce subsidies. In addition, Article13(a)(i) of the Agreement on Agriculturedirects that these subsidies, commonlyreferred to as ‘‘green box’’ subsidies,will be non-countervailable during thenine-year implementation perioddescribed in Article 1(f) of theAgreement on Agriculture.

Consistent with Article 13(a)(i) of theAgreement, section 771(5B)(F) of theAct provides that the Secretary will treatas non-countervailable domesticsupport measures that (1) are providedwith respect to products listed in Annex1 to the Agreement on Agriculture, and(2) the Secretary ‘‘determines conformfully to the provisions of Annex 2’’ tothat Agreement. To implement section771(5B)(F) of the Act, § 351.522(a) setsout the criteria the Secretary willconsider in determining whether aparticular domestic support measureconforms fully to the provisions ofAnnex 2.

One commenter argued that theDepartment should clarify that, in orderto obtain green box status, a subsidymust truly be designed for agriculturebecause the Agreement on Agriculturemakes a distinction between supportprovided to raw products and supportprovided to processed products.Specifically, the Department shouldmake clear that a grant to upgrade afacility for processing agriculturalproducts, while technically covered bythe Agreement on Agriculture, wouldnot receive green box treatment.

We have not adopted this proposalbecause neither Annex 1 nor Annex 2 ofthe Agreement on Agriculture draws adistinction between raw and processedagricultural products for purposes ofgreen box treatment. Annex 1 coversproducts from HS Chapters 1–24 andvarious other HS Codes and Headings.These tariff categories includenumerous forms of both raw andprocessed agricultural products. Thepolicy-specific criteria and otherconditions set forth in Annex 2 are notproduct-specific. Hence, a domesticsupport measure provided with respectto the specific agricultural productsidentified only in Annex 1, whether rawor processed, may warrant green boxtreatment as long as the measure fullyconforms to the relevant criteria inAnnex 2.

One commenter argued that theregulations should require theDepartment to consider whether or notan alleged green box subsidy has trade-distorting effects. Further, thecommenter noted that the SAAenumerates certain U.S. programs thatmeet the green box criteria. According

to the commenter, the regulationsshould explicitly treat as non-countervailable a foreign program that issimilar to an enumerated U.S. program.This same commenter also argued thatthe list of eight types of direct paymentsto producers included in Annex 2 isillustrative, not exclusive. Thecommenter stated that the regulationsshould provide ‘‘precise, objective andeven-handed’’ criteria for determiningwhether a particular subsidy is a greenbox subsidy.

Another commenter disputed thesuggestion that the regulations shouldinclude a list of agricultural programsthat the Department automaticallywould consider as non-countervailable.According to this commenter, there isno basis in the statute for automaticallyexempting particular programs from theCVD law. Instead, this commenterargued, the Department should assesswhether particular programs meet thegreen box criteria on a case-by-casebasis.

We believe there is little to be gainedfrom enumerating in the regulationsspecific types of programs that wouldqualify automatically as green boxsubsidies. Annex 2 of the Agreementprovides explicit criteria that a programmust meet in order to receive green boxstatus, and § 351.522(a) incorporatesthese criteria. Consistent with section771(5B)(F) of the Act and the Agreementon Agriculture, paragraph (a) of§ 351.522 provides that we will treat asnon-countervailable a subsidy providedto an agricultural product listed inAnnex 1 of the Agreement if the subsidyfully conforms to both the basic criteriaof subparagraphs (a) and (b) ofparagraph 1 of Annex 2 of theAgreement on Agriculture and therelevant policy-specific criteria andconditions set out in paragraphs 2through 13 of that Annex.

We received two commentsconcerning the so-called ‘‘peace clause’’in the Agreement on Agriculture.Specifically, Articles 13(b) and (c) ofthat Agreement require WTO membercountries to exercise ‘‘due restraint’’ ininitiating CVD proceedings onagricultural subsidies provided by amember whose total non-green boxagricultural subsidies (both domesticand export) are within that member’sreduction commitments. See SAA at723–25. The obligation to exercise ‘‘duerestraint’’ exists only during the‘‘implementation period,’’ defined inArticle 1(f) of the Agreement onAgriculture.

One commenter argued that theDepartment’s regulations should ensurethat the Department exercise duerestraint by not self-initiating CVD


investigations on products that benefitfrom subsidies described in Articles13(b) and (c). A second commenterargued that the Department shouldinterpret the due restraint clausenarrowly.

We do not believe that a regulation isnecessary. The Department understandsthe due restraint requirement to entail acommitment to refrain from self-initiating CVD investigations withrespect to agricultural subsidiesdescribed in Articles 13(b) and (c)during the implementation period, andthe Department will administer thestatute accordingly. See SAA at 937.

Green light subsidies in general:Under section 771(5B) of the Act, whichimplements Article 8 of the SCMAgreement, certain domestic subsidiesand domestic subsidy programs thatmeet all the requirements may betreated as non-countervailable. Thereare three categories of these so-called‘‘green light’’ subsidies: (1) Researchsubsidies (see section 771(5B)(B) of theAct); (2) subsidies to disadvantagedregions (see section 771(5B)(C) of theAct); and (3) subsidies for adaptation ofexisting facilities to new environmentalrequirements (see section 771(5B)(D) ofthe Act).

The non-countervailable status ofthese green light subsidies can beestablished in two ways. First, a WTOMember country can notify a subsidyprogram to the WTO SCM Committee inaccordance with Article 8.3 of the SCMAgreement. Once notified, section771(5B)(E) of the Act provides that agreen light subsidy program ‘‘shall notbe subject to investigation or review’’ bythe Department. However, an exceptionto this rule exists in situations where aMember country has successfullychallenged in the WTO a claim for greenlight status. In the event of a successfulchallenge, section 751(g) and section775 of the Act establish mechanisms forpromptly including the subsidy orsubsidy program in an existing CVDproceeding should there be reason tobelieve that merchandise subject to theproceeding may be benefitting from thesubsidy or subsidy program.

We received one comment on subsidynotifications. The commenter requestedthat the Department ensure that publicsubsidy notifications under Article 8.3are made available and are circulatedpromptly upon receipt. We haveadopted this suggestion. The SubsidiesEnforcement Office within ImportAdministration intends to promptly addto the Subsidies Library all derestrictedsubsidy notifications, including thosereported under Article 8.3. TheSubsidies Library can be accessed via

the Internet at http://www.ita.doc.gov/importladmin/records/esel/.

The second method for obtaininggreen light status involves situationswhere a subsidy or subsidy program hasnot been notified to the SCMCommittee. In the case of a subsidygiven under a non-notified program, thesubsidy is non-countervailable if theSecretary determines in a CVDinvestigation or review that the subsidysatisfies the relevant green light criteriacontained in subparagraphs (B), (C) or(D) of section 771(5B) of the Act (or aWTO panel determines in a disputesettlement proceeding that the relevantcriteria of Article 8 of the SCMAgreement are met). The Secretary mustdetermine that the subsidy satisfies allof the relevant criteria before a givensubsidy will be treated as non-countervailable. See section 771(5B)(A)of the Act; SAA at 936. Moreover, asdiscussed in the SAA, in investigationsand reviews of non-notified subsidies,the burden will be on the party claiminggreen light status to present evidencedemonstrating that a particular subsidymeets all of the relevant criteria. SAA at936. In addition, under section771(5B)(A) of the Act, green light statusmay be claimed only in proceedingsinvolving merchandise imported from aWTO Member country.

In the 1997 Proposed Regulations, westated that, in accordance with theAdministration’s commitment in theSAA, we intend to construe strictly thevarious green light provisions to ‘‘limitthe scope of the provision[s] to onlythose situations which clearly warrantnon-countervailable treatment.’’ SAA at935. Thus, the Department ‘‘will notlimit its analysis * * * to a narrowreview of the technical criteria of Article8 of the SCM Agreement, but willanalyze all aspects of the subsidyprogram and its implementation toensure that the purposes and terms ofArticle 8 have been respected.’’ SAA at937.

Two commenters argued that thegreen light provisions should not beconstrued more restrictively than otherCVD law provisions. Therefore, thesecommenters stated that the Departmentshould either eliminate any referencesto a strict interpretation of theseprovisions or explain why this differenttreatment is necessary, appropriate, andjustified.

We reaffirm our commitment tointerpret these provisions strictly asrequired by the SAA. The legislativehistory recognizes that completeexemption from the CVD law ofgovernment programs that meet thedefinition of a countervailable subsidyand that cause injury is extraordinary.

Strict interpretation is needed both toprevent circumvention and to preservethe balance of commitments negotiatedin the SCM Agreement. For thesereasons, where there is a questionregarding the green light status of aparticular subsidy, we will ensure thatthe subsidy clearly qualifies beforeaccording it green light status.Moreover, a determination that aparticular subsidy received by a firm isa green light or green box subsidy wouldnot necessarily mean that we wouldfind that the entire program underwhich the subsidy is provided satisfiesall of the applicable green light criteriain all cases.

Certain commenters suggested thatthe Department ‘‘incorporate fully’’ inthe regulations the discussion of greenlight subsidies contained in the SAA orthe preamble to the 1997 ProposedRegulations. Another commentersuggested that the Department publish aregulation stating that green light is setto expire unless extended.

We have not adopted thesesuggestions. As with other areas of theseregulations, unless we have determinedthat a particular aspect of our CVDmethodology warrants clarification, wehave not repeated language from thestatute or the SAA. In response to thelatter comment, the statute, at section771(5B)(G), is explicit regarding theprovisional application of the greenlight provisions.

Investigation of notified subsidies:One commenter, noting the text ofsection 771(5B)(E) of the Act, suggestedthat the Department should refrain frominvestigating notified subsidy programs.According to the commenter, a failure to‘‘screen out’’ notified subsidies prior tothe initiation of an investigation wouldresult in a waste of Departmentalresources and unnecessary burdens onforeign governments.

In response, several commentersargued that if there is any ambiguityregarding whether a subsidy alleged bya petitioner does, in fact, qualify as anotified green light subsidy, theDepartment should include the subsidyin its CVD investigation or review todetermine whether it qualifies for agreen light exemption. One examplegiven by these commenters is a situationwhere a petitioner presents evidencethat a subsidy program has beenmodified subsequent to its notificationto the SCM Committee. Thesecommenters also suggested that it maysimply be unclear whether an allegedsubsidy is the same as the notifiedsubsidy, in which case the Departmentshould include the alleged subsidy inthe investigation to make thisdetermination.


We reaffirm our position in thepreamble to the 1997 ProposedRegulations that section 771(5B)(E) ofthe Act and the SAA make clear that, ifa subsidy program has been notifiedunder Article 8.3 of the SCMAgreement, any challenge regarding itseligibility for green light treatment,whether due to later modification orotherwise, must be made through thereview procedures under the WTOrather than in the context of a CVDproceeding. As described above, theDepartment may not initiate a CVDinvestigation or review of a notifiedsubsidy program (which appears tobenefit subject merchandise) unlessinformed by USTR that a violation hasbeen determined under the proceduresof Article 8.

However, as we explained further inthe preamble to the 1997 ProposedRegulations, the identity of a subsidy isa different matter. If there is a legitimatequestion as to whether a subsidy allegedin a petition is, in fact, a subsidyprovided under a program that has beennotified under Article 8.3, pre-initiationconsultations may be used to clarify thata subsidy or subsidy program containedin the petition was, in fact, notified. Ifconsultations do not resolve thequestion, the Department will includethe subsidy in a CVD investigation orreview until the party claiming greenlight status demonstrates that a subsidyhas been notified. If the party fails toestablish that the alleged subsidy orsubsidy program has been notified, thenwe will analyze the subsidy’s eligibilityfor green light status in the samemanner as for any other non-notifiedsubsidy. To clarify the Department’sprocedure for investigating allegedsubsidy programs notified under Article8.3, as set forth below, we have codified§ 351.301(d)(7) as an interim final rule.

Policy for investigating non-notifiedsubsidies: One commenter argued thatthe Department should adopt aregulation providing that, whenever apetition includes a potential green lightsubsidy that has not been notified underArticle 8.3, the Department will conducta full investigation to determinewhether the subsidy meets the relevantrequirements of section 771(5B) of theAct. This commenter and othersemphasized that the regulations alsoshould include the SAA’s expressrequirement that the party claiminggreen light status has the burden ofpresenting evidence demonstratingcompliance with all of the relevantcriteria for any particular subsidycategory. See SAA at 936.

While we agree with the policyespoused, we do not believe that thispolicy must be codified in the

regulations. As discussed above, theSAA is clear that in investigations andreviews of subsidies that have not beennotified under Article 8.3 of the SCMAgreement, the party claiming greenstatus must provide evidencedemonstrating that a particular subsidymeets all of the relevant criteria for non-countervailable status.

Another commenter argued that allnon-notified programs should bepresumed countervailable. We have notadopted this suggestion. The SCMAgreement and the URAA make clearthat there are two ways to achieve greenlight status—WTO notification andpursuant to a CVD investigation. We seeno basis for presuming that a programis countervailable simply because aforeign government elects not to use thenotification procedures establishedunder Article 8.

Alleged green light subsidies not usedduring the period of investigation orreview: As we stated in the preamble tothe 1997 Proposed Regulations, in aninvestigation or a review of a CVD orderor suspended investigation, we will notconsider claims for green light status ifthe subject merchandise did not benefitfrom the subsidy during the period ofinvestigation or review. Instead,consistent with the Department’sexisting practice, the green light statusof a subsidy will be considered only inan investigation or review of a timeperiod where the subject merchandisedid benefit from the subsidy.

One commenter supported thisposition and argued that it should becodified. However, we continue tobelieve that a regulation is not neededto clarify this issue.

Research subsidies: Prior to theenactment of the URAA, we treatedassistance provided by a government tofinance research and development(‘‘R&D’’) as non-countervailable if theR&D results were (or would be) madeavailable to the public, including theU.S. competitors of the recipient of theassistance. This policy, sometimesreferred to as the public availability test,was described by the Department in§ 355.44(l) of the 1989 ProposedRegulations.

In the 1997 Proposed Regulations, weelected not to retain the publicavailability test. We stated that theobjectives served by the publicavailability test were better met byapplying the criteria listed in section771(5B)(B) of the Act and Article 8.2(a)of the SCM Agreement. Twocommenters supported our decision notto codify the public availability test, andtwo commenters argued that theDepartment should reinstate the publicavailability test. One commenter

requested clarification of whether thepublic availability test would apply tothe aircraft sector in light of the fact thatthe R&D green light provisions of theSCM Agreement do not apply to aircraft.In this commenter’s view, the publicavailability test should be abandonedcompletely.

In these Final Regulations, weconfirm our decision not to retain thepublic availability test for any sector.We believe the public availability test isinconsistent with the concept of benefitwhich underlies the SCM Agreementand statute, and which we have codifiedin § 351.503. According to § 351.503, abenefit is conferred when a firm paysless for its ‘‘inputs’’ than it otherwisewould pay in the absence of thegovernment-provided input or earnsmore than it otherwise would earn. Aresearch and development subsidywould reduce the firm’s input costs,whether or not the results of theresearch were made publicly available.This same rationale applies to theaircraft industry. Consequently, eventhough the R&D green light provisionsof the SCM Agreement do not apply toaircraft, we do not intend to apply thepublic availability standard to theaircraft sector.

One commenter suggested that theDepartment should adopt anassumption that only grants will qualifyfor green light status under the R&Dprovisions; tax breaks and subsidizedloans usually will not qualify. We havenot adopted this proposal becauseneither the statute nor the SAA limitsR&D green light provisions to grants.

One commenter argued that, indetermining whether a given researchsubsidy falls within the 75 and 50percent maximums allowed undersection 771(5B)(B) of the Act, theDepartment should base its analysis onthe total costs incurred over theduration of the project in question.Under this reasoning, the Departmentwould not countervail a subsidy if the75 or 50 percent maximum wereexceeded in the particular year coveredby the investigation or review, providedthat the applicable threshold ‘‘is notexceeded over the life of the project.’’This commenter further argued that, ifthe Department determined that theapplicable threshold was exceeded overthe life of the project, only the amountof subsidy in excess of the relevant‘‘maximum’’ should be countervailed.

Several commenters challenged thesearguments. First, they argued that theDepartment should evaluate the 75 and50 percent maximums based on thecosts already incurred at the time of therelevant investigation or administrativereview, and not on the basis of expected


costs over the lifetime of the project.Second, these commenters argued that,if the Department determined that theapplicable threshold had beenexceeded, the entire benefit—not justthe excess over the relevant threshold—should be countervailed. According tothese commenters, the SAA statesclearly that all of the relevant criteriamust be met for a given program toreceive green light status, and that afailure to meet all relevant criteriawould result in the ‘‘entire subsidy’’being countervailable in full. See SAAat 936.

We agree in part with the firstcommenter, and in part with the lattercommenters. With respect to the properframe of reference for determiningwhether a given research subsidy hasexceeded the specified statutorythresholds, section 771(5B)(B)(iii)(II) ofthe Act instructs the Department to baseits analysis on ‘‘the total eligible costsincurred over the duration of aparticular project.’’ Thus, it would beimproper for the Department to limit itsanalysis to only those costs incurred asof the time period covered by aninvestigation or administrative review.We recognize that a finding of non-countervailability may be based onprojected or estimated costs. Given theAgreement’s ceilings on governmentsupport, we expect that such projectionswill have been required by theprogram’s administrators. On the basisof a reasonably-supported allegation ina subsequent review, we will revisit thisfinding to ensure that actual costsexpended did not differ from theestimates upon which an earlier findingof green light status was based. Changesor amendments to the original projectwill be carefully scrutinized to ensureconsistency with these provisions. Weagree that, if it becomes clear at anypoint during the life of the project thatthe subsidy will exceed the relevantstatutory threshold, the entire amount ofthe subsidy would be countervailable,not merely the excess.

Subsidies to disadvantaged regions:One commenter argued that theDepartment should clarify that the greenlight category regarding subsidies todisadvantaged regions is not limited tosubsidies provided by nationalgovernments, but also includessubsidies granted by subnational levelsof government, such as states orprovinces. This commenter furtherargued that, in determining whether asubsidy provided by a state or provinceto a disadvantaged region meets thecriteria of section 771(5B)(C) of the Act,the Department should assess thecriteria within the framework of thesubnational government’s jurisdiction.

In response, other commenters arguedthat the Department should assess thegreen light criteria in relation to theinvestigated country as a whole, not justin relation to the jurisdiction of thesubsidizing government if thatgovernment is at the subnational level.According to these commenters, thestatute and the SAA instruct theDepartment to evaluate the relevantgreen light criteria in relation to the‘‘average for the country subject toinvestigation or review.’’

We agree with the first commenterthat the green light categories includesubsidies granted by governments at thesubnational level and that, in the caseof the regional green light category, weshould assess the relevant criteria inrelation to the jurisdiction of thegranting authority. In discussing thelanguage in section 771(5B)(C)(ii) of theAct regarding the ‘‘average for thecountry subject to investigation orreview,’’ the SAA explains that, wherea CVD proceeding involves a member ofa customs union, the term ‘‘country’’shall be defined in accordance with thestructure of the regional assistanceprogram. SAA at 934–35. For example,if we were to investigate a product fromLuxembourg, the term ‘‘country’’ wouldrefer to the EU as a whole if the subsidybeing investigated were received underan EU regional assistance program.Thus, the SAA indicates that theDepartment should make itsdeterminations based on averages forthe jurisdiction granting the regionalassistance subsidy.

Other commenters argued that wherecertain regions receiving assistanceunder a program do not meet the criteriafor green light treatment, that should notprejudice the green light treatment ofassistance to regions that do meet thecriteria.

Because we have only limitedexperience in administering the regionalgreen light provisions, we are notprepared to adopt a formal policy at thistime. However, we find persuasive theargument that some regions that meetthe jurisdiction’s general framework ofeconomic development but do nototherwise meet the green light criteriacould potentially be given aid withoutautomatically disqualifying all regionsfrom green light treatment.

The language in section 771(5B)(C) ofthe Act states that a subsidy provided toa person in a disadvantaged region,‘‘pursuant to a general framework ofregional development,’’ shall be treatedas non-countervailable. This impliesthat some of the regions within thegeneral framework may not necessarilymeet the statutory criteria to beconsidered ‘‘disadvantaged.’’ However,

if the number of regions that do notqualify for green light treatment butcontinue to receive assistance issignificant, this may call into questionthe basic principles of the generalframework itself and, therefore, theeligibility for green light treatment ofany subsidies provided under it.

Subsidies for adaptation of existingfacilities to new environmentalrequirements: Certain commentersargued that, with respect to theDepartment’s criteria for green lightenvironmental subsidies described insection 771(5B)(D) of the Act, theDepartment should treat as non-countervailable those subsidies given toupgrade existing facilities toenvironmental standards that are higherthan the minimum standards imposedby law or regulation. According to thesecommenters, governments should beallowed to encourage higherenvironmental standards than theminimum required by law by sharingthe additional costs of achieving thehigher environmental standards.Moreover, according to thesecommenters, the language of the statutedoes not limit green light treatment tosubsidies that allow companies to meet,rather than exceed, standards. Thesecommenters believe that the Departmentshould retain the flexibility to find non-countervailable subsidies that assist inupgrading existing facilities to higherenvironmental standards than theminimum imposed by law or regulation.

Several commenters disputed thissuggestion, claiming that section771(5B)(D)(i) of the Act specificallylimits green light status forenvironmental subsidies to those thatare ‘‘provided to promote the adaptationof existing facilities to newenvironmental requirements * * *.’’According to these commenters, theDepartment has no authority to broadenthe scope of environmental subsidieseligible for green light treatment. Onecommenter further argued that wherethe environmental subsidy exceeds theamount necessary to meet the minimumregulatory requirements of the law, evenby a de minimis amount, theDepartment should confirm its intent tofind countervailable the entire subsidy.

Although we acknowledge thatgovernments have the flexibility toencourage higher environmentalstandards, we agree with the lattercommenters. As noted above, section771(5B)(D)(i) of the Act provides thatnon-countervailable environmentalsubsidies are those that are ‘‘provided topromote the adaptation of existingfacilities to new environmentalrequirements that are imposed bystatute or by regulation.’’ According to


the SAA, ‘‘strict application of theserequirements is essential in order tolimit the scope of the provision to onlythose situations which clearly warrantnon-countervailable treatment.’’ SAA at935. Given the clear language of thestatute and the SAA, we believe thatsubsidies given to upgrade existingfacilities to environmental standards inexcess of legal requirements arecountervailable. In response to the lastcomment on subsidies which exceed theamount necessary to meet the minimumstatutory or regulatory requirements, weagree that the full amount of the subsidywould be countervailable.

One commenter suggested that theregulations should specify thatenvironmental subsidies will receivegreen light treatment only if: (1)Required by law or regulations(administrative practice should not besufficient); (2) limited to investmentsabsolutely needed to meet newrequirements; (3) limited to theadaptation of equipment and plantfacilities; and (4) directly linked to thenew investment.

Because we have received no greenlight claims for environmental subsidiesand, therefore, have no experience inadministering these provisions, we arenot adopting the proposed criteria.Without experience, we cannot judgewhat impact the proposed criteriawould have. Therefore, we are not yetprepared to adopt criteria such as theseat this time. However, we do not ruleout the possibility that such criteria maybe adopted at a later time. With respectto the first proposed criterion (requiredby law or regulation, as opposed topractice), section 771(5B)(D)(i) of theAct and the SAA already include sucha limitation.

One commenter argued that when arespondent can show thatenvironmental assistance is notrelieving a company of an obligationand that the assistance does not benefitthe manufacture, production, orexportation of the subject merchandise,such assistance should not becountervailable. We disagree with thecommenter’s attempt to expand thecriteria, which are clearly stated in theSCM Agreement, statute, and the SAA,under which the Department would findenvironmental assistance non-countervailable.

Finally, we have concluded thatprocedural rules setting forth thedeadlines and obligations for filinggreen light and green box claims arenecessary to ensure efficient and orderlyadministration of these new provisionsin the CVD statute. As discussed in theExplanation of the Final Rules, we areissuing these procedural rules as interim

final rules effective on their date ofpublication in the Federal Register. Inkeeping with our decision toconsolidate antidumping andcountervailing duty procedures, theseinterim final rules amend § 351.301(d)of the Department’s regulations.

Section 351.301(d)(6) sets forth timelimits for filing green light and greenbox claims. These time limits parallelthe deadlines for filing newcountervailable subsidy allegations ininvestigations and reviews. Consistentwith the evidentiary burden to establishthe validity of such claims,§ 351.301(d)(6) also clarifies that allgreen light and green box claims mustbe made by the competent governmentwith the full participation of theadministering authority of the relevantprogram. We note that examinations ofgreen light and green box requestsrequire the full participation of theadministering governments. Section301(d)(7) clarifies procedures forinvestigating subsidies or subsidyprograms notified under Article 8.3 ofthe SCM Agreement.


identification and measurement ofupstream subsidies. Because the URAAdid not significantly amend thecorresponding statutory provision(section 771A of the Act), § 351.523 isbased largely on § 355.45 of the 1989Proposed Regulations, except for thedeletion of language that merely repeatsthe statute. We have, however, adoptednew terminology in § 351.523(a).Specifically, ‘‘affiliation’’ replaces‘‘control’’ as the standard for when wewill have a reasonable basis to believeor suspect that a competitive benefit isbestowed on the subject merchandise.This also represents a change from our1997 Proposed Regulations, where thestandard was ‘‘cross-ownership’’ (seediscussion of cross-ownership inpreamble to § 351.525 below) . Webelieve the new definition of ‘‘affiliatedpersons’’ contained in section 771(33) ofthe Act is sufficient to meet thethreshold for deciding whether acompetitive benefit is bestowed forpurposes of initiating an upstreamsubsidy investigation. In addition,because we have changed ourattribution rules regarding cross-ownedinput and downstream suppliers, it isno longer appropriate to use the ‘‘cross-ownership’’ standard.

With regard to the upstream subsidyprovision in general, one commenterrequested that the Department issue aregulation making clear its ability toapply an upstream subsidy analysiseven where the subsidized input

producer is located in a separatecountry from the producer of the subjectmerchandise. We agree that the statuteprovides the Department the flexibilityto perform such an analysis in twospecific circumstances. First, where twoor more foreign countries are organizedas a customs union, section 771A(a)clearly states that the Department maytreat the customs union as a singlecountry in conducting an upstreamsubsidy analysis if the countervailablesubsidy is provided by the customsunion. In addition, the definition of‘‘country’’ in section 771(3) of the Actdoes not limit this reading of ‘‘country’’to situations in which the subsidy isprovided by the customs union itself.Second, where an internationalconsortium is engaged in the productionof the subject merchandise, section701(d) of the Act allows the Departmentto cumulate the subsidies provided tomembers of the consortium by theirrespective home countries. We interpretthis provision to include the receipt bymembers of the consortium of upstreamsubsidies provided by the member’sown country or (where appropriate)customs union. Therefore, we see noneed to include a regulation on thisissue.

Another commenter suggested thatthe Final Regulations should expresslystate that the Department is not requiredto investigate upstream subsidies furtherthan one stage back in the chain ofproduction. This commenter cites tolegislative history which indicatesCongress’ intent to limit the scope of anupstream inquiry to the stage prior tofinal manufacture or production, unlessinformation demonstrates thesignificance of subsidies at earlierstages. H.R. Rep. No. 725, 98th Cong., 2dSess. 33–34 (1984).

We do not believe it is necessary toissue a regulation on this topic. Section351.523(a)(iii) already requires ademonstration of the significance ofprior-stage subsidies in order for theDepartment to initiate an upstreamsubsidy investigation. As one movesback in the chain of commerce, it is lessand less likely that the subsidies willhave a significant effect on the cost ofmanufacturing or producing the subjectmerchandise and, therefore, less likelythat we would initiate an upstreamsubsidy investigation. However, in thosecircumstances where a party is able todemonstrate the significance ofsubsidies at earlier stages, we willinvestigate accordingly.

As noted in the 1997 ProposedRegulations, one aspect of theseregulations which differs from the 1989Proposed Regulations involves thestandard for determining whether a


competitive benefit exists. In thisregard, section 771A(b)(1) of the Actprovides that a competitive benefit hasbeen bestowed when:

The price for the (subsidized) inputproduct * * * is lower than the price thatthe manufacturer or producer of merchandisewhich is the subject of a countervailing dutyproceeding would otherwise pay for theproduct in obtaining it from another seller inan arms-length transaction.

In addition, section 771A(b)(2) of theAct provides that when the Secretaryhas determined in a previousproceeding that a countervailablesubsidy is paid or bestowed on thecomparison input product, theDepartment ‘‘may (A) whereappropriate, adjust the price that themanufacturer or producer ofmerchandise which is the subject ofsuch proceeding would otherwise payfor the product to reflect the effects ofthe countervailable subsidy, or (B) selectin lieu of that price a price from anothersource.’’

In the past, as reflected in § 355.45(d)of the 1989 Proposed Regulations, wepreferred to base our comparisons uponthe price charged for unsubsidizedinputs produced by other producers inthe same country as the producer of thesubject merchandise. If we haddetermined in a prior CVD proceedingthat a countervailable subsidy had beenbestowed in the subject country on thecomparison input, our next preferredalternative was to adjust the price of theinput product to reflect the subsidy. Asa final alternative, we could select a‘‘world market price for the inputproduct.’’ We interpreted the phrase‘‘world market price’’ broadly to include(1) actual prices charged for the inputproduct by producers located in othercountries, and (2) average import prices.Additionally, because the statute didnot preclude, for comparison purposes,the use of prices of subsidized, importedinputs, we had determined that it wouldbe ‘‘inappropriate to exclude allsubsidized producers, even assumingthat we could identify them.’’ CircularWelded Non-Alloy Steel Pipe FromVenezuela, 57 FR 42964, 42967–68(September 17, 1992) (‘‘VenezuelanSteel Pipe’’).

We have revised our approachregarding ‘‘competitive benefit’’ in thefollowing manner. Under paragraph(c)(1)(i), we will rely first upon theactual price charged or offered for anunsubsidized input product, regardlessof whether the producer of that input islocated in the same country as theproducer of the subject merchandise.We will make due allowance forquantities, physical characteristics, andother factors that affect comparability.

Upon further reflection, we see nojustification for distinguishing betweeninput products based on the country ofproduction. Section 771A(b)(1) of theAct merely requires the Department tocompare the price paid for thesubsidized input product to the pricethat the producer ‘‘would otherwise payfor the product in obtaining it fromanother seller in an arms-lengthtransaction.’’ The price that theproducer ‘‘would otherwise pay’’ couldinclude the actual price paid by theproducer of subject merchandise to anunrelated supplier or a bid offered by anunrelated supplier, regardless of thelocation of that supplier. However, wewill examine quantities, physicalcharacteristics, and other factors thatmay affect the comparability of theprices.

While several commenters arguedagainst the use of offered prices,asserting that such prices do not reflectthe true cost of alternative purchases,we have left this provision unchanged.Our preference, of course, is to use aprice resulting from an actual sale;however, a bona fide price offer made ata time reasonably corresponding to thetime of the purchase of the input doesconstitute a commercial alternative tothe subsidized input product and, assuch, is an acceptable benchmark.

Other comments concerning the useof actual or offered prices focused onthe extent to which such prices are‘‘representative.’’ Essentially, thesecommenters defined a ‘‘representative’’price as a price that is not less than theworld market price. Therefore, theyargued that if the actual unsubsidizedprice is less than the world marketprice, the Department should presumethat the price is not representative anduse the world market price.

We have not adopted this suggestion.As noted above, an actual price chargedor offered represents the best example ofwhat a downstream producer would‘‘otherwise pay’’ for the subsidizedinput product. However, we are willingto entertain arguments during the courseof a proceeding pertaining to whether anactual price or offer is anomalous orotherwise not comparable, includingarguments that such price may bedumped or subsidized.

If actual prices or offers forunsubsidized inputs are not available,we will rely upon a world market price,i.e., generally an average of publiclyavailable prices for unsubsidized inputsfrom different countries or some othersurrogate price deemed appropriate bythe Department. See paragraph (c)(1)(ii).One commenter objected to the use ofan average price, arguing that it is morereasonable to assume that the

downstream producer would purchasethe input product at the lowest publiclyavailable price. Another commentersupported the use of an average worldmarket price, but urged the Departmentto make it a weighted-average price.

We have made no change in responseto these comments. Absent an actualprice or offer for an unsubsidizedproduct, we are in a position of havingto construct the price that a companywould ‘‘otherwise pay.’’ We cannotassume that the downstream producerwould always be able to purchase itsinputs at the lowest publicly availableprice. Such a price might be an anomalyresulting from unusual marketcircumstances which may not always beavailable to the producer in question.Therefore, it is more appropriate to usean average of the publicly availableprices. The use of weighted-averageprices, however, is impractical becausewe are unlikely to have the informationwith which to weight the publiclyavailable prices. Although we willgenerally use an average of availableworld market prices, we will considerarguments that certain world marketprices may be inappropriate.

Finally, if there are no prices forunsubsidized inputs available from anysource, we will resort to prices ofsubsidized input products, adjusted toreflect the countervailable subsidy. Insuch a case, under paragraph (c)(1)(iii),we first will rely upon the actual pricethat the producer of the subjectmerchandise otherwise would pay forthe input product adjusted to reflect thesubsidy, regardless of the country inwhich the input product is produced. Ifsuch a price is not available, underparagraph (c)(1)(iv), we would use anaverage price for the input product fromdifferent countries adjusted to reflectthe subsidy or some other adjustedsurrogate price. When no adjustableprice is available (e.g., the only availableprice is a published price reflecting anaverage of both subsidized and non-subsidized prices), we may include theprice of a subsidized input in ouranalysis or we may resort to any otherreasonable price. See paragraph(c)(1)(v).

We believe that this new approach formeasuring the competitive benefit betterreflects the overall purpose of theupstream subsidies provision, which isto account, when appropriate, forupstream subsidies provided on inputproducts used in the production ormanufacture of subject merchandise.The language of section 771A itself doesnot express a preference regarding theselection of a comparison input price,and grants the Department wide latitudein determining when to adjust the price


of the comparison product to reflectknown countervailable subsidies.However, parts of the legislative historyunderlying the Trade and Tariff Act of1984, which added section 771A to theAct, support a preference for using theprice of an unsubsidized input, andsupport making adjustments forsubsidies when there is no price forunsubsidized inputs. See, e.g., 130Cong. Rec. S13970 (daily ed. Oct. 9,1984) (statement of Sen. Dole).Although, as described above, we arerevising our practice regarding theidentification and measurement of acompetitive benefit, the preference forusing the price of unsubsidized inputsalso was reflected in our earlier practiceSee, e.g., Certain Agricultural TillageTools From Brazil, 50 FR 24270, 24273(June 10, 1985).

In determining whether a price issubsidized, we will rely primarily onCVD findings made by the United Statesor the investigating authorities of othercountries in the recent past (i.e., withinthe past five years).

As we noted in the 1997 ProposedRegulations, in determining whetherthere is a competitive benefit, we willadjust prices upward to account fordelivery charges (e.g., c.& f.). Wereceived a number of commentsconcerning this point. Severalcommenters expressed support of thispolicy. One commenter objected,however, arguing that the inclusion ofdelivery charges could result in theDepartment finding a competitivebenefit which results solely from thedifference in the cost of transporting thesubsidized versus unsubsidized goods,rather than from the subsidy to theinput product.

Although the statute does not specifythe precise basis for calculating abenchmark price for the input product,section 771A(b)(1) does require the useof the price that the manufacturer orproducer of the subject merchandise‘‘would otherwise pay.’’ In our view,this requires the use of a price thatrepresents a commercial alternative tothe producer of the subjectmerchandise, and f.o.b. prices do notprovide a measurement of thecommercial alternative to thedownstream producer. See, e.g.,Venezuelan Steel Pipe.

As the Federal Circuit recently statedin upholding the Department’sinclusion of freight charges indetermining the world price under Item(d) of the Illustrative List of ExportSubsidies, ‘‘A castings manufacturerprocuring pig iron on the world marketwould have to pay the f.o.b. price for thepig iron itself, plus the cost of shippingthat iron to India. Accordingly, the

world market price must include thecost of shipping.’’ Creswell Trading Co.v. United States, 141 F.3d 1471, 1478(Fed. Cir. 1998). For these reasons, wehave not changed the position taken inthe 1997 Proposed Regulations.

Section 351.524In the 1997 Proposed Regulations, the

Department’s method for allocatingbenefits from subsidies was included inthe grant section (see § 351.503(c) of the1997 Proposed Regulations). For theseFinal Regulations, however, we havedecided to issue a separate regulation onallocation because this issue concernsall types of subsidies, not only grants.Therefore, unless otherwise specified in§§ 351.504–523, the Secretary willallocate benefits to a particular timeperiod in accordance with this section.

Which Benefits Are Allocated OverTime

Section 351.524 retains thedistinction between ‘‘recurring’’ and‘‘non-recurring’’ benefits. Althoughmore precise terms might be ‘‘non-allocable’’ and ‘‘allocable,’’ we areretaining the terms ‘‘recurring’’ and‘‘non-recurring’’ because they arewidely understood in the internationaltrading community. Paragraph (a)provides that the Secretary will allocatea recurring benefit to the year in whichthe subsidy is considered to have beenreceived, a practice usually referred toas ‘‘expensing.’’ Paragraph (b) providesthat, with one exception (discussed as‘‘the 0.5 percent test’’ below), theSecretary will allocate non-recurringbenefits over time.

Paragraph (c) contains a test fordistinguishing between recurring andnon-recurring benefits. In the 1997Proposed Regulations, we proposed tocodify the test applied by theDepartment in the GIA. Under the GIAstandard, if a benefit is exceptional, i.e.,not received on a regular or predictablebasis, or if it requires expressgovernment authorization or approval,the Department will consider it as non-recurring. Otherwise, the Departmentwill treat it as a recurring benefit.However, as stated in the preamble tothe 1997 Proposed Regulations, we wereconsidering:

* * * whether there might be a betterstandard for distinguishing between thesetwo types of benefits. An important purposeof the recurring/non-recurring test is toreduce the burden on the Department andinterested parties by limiting the amount ofinformation requested on subsidies bestowedprior to the period of investigation or review.However, the Department is increasinglyfacing arguments regarding its application ofthe standard described in the GIA. At somepoint, the burden of applying the GIA

standard may well outweigh the benefits.Therefore, we particularly invite commentson this issue. We note that the Departmenthas considered other options in the pastincluding: (1) Developing a list of the typesof subsidies that would be allocated andthose that would be expensed; (2) allocatingany grant-like benefit that exceeds 0.5percent * * * ; and (3) allocating only thosegrant-like subsidies that are tied to thepurchase of fixed assets.

We received a number of commentson this issue. (Because this and theother allocation issues discussed belowwere included in the grant section ofour 1997 Proposed Regulations, thecomments consistently refer to ‘‘grants.’’Our responses, however, are moregenerally drafted and refer not only togrants, but also to the allocation of othertypes of subsidies.)

One commenter argued that theregulation should include a provisionthat there will be a rebuttablepresumption that certain grants will beexpensed and others allocated. Thiscommenter supported the option ofdeveloping an illustrative list showingwhich types of grants will be expensedand which will be allocated. Accordingto the commenter, this approach wouldmake the application of the law morepredictable and consistent, and wouldreduce the administrative burden on theDepartment. Another commenteropposed the inclusion of an illustrativelist as a rebuttable presumption, arguingthat this would unfairly benefitrespondents who control all informationrelating to the purpose and use of asubsidy.

Most commenters asked theDepartment to retain the GIA test fordetermining whether a grant is recurringor non-recurring. They argued that thismethodology is both predictable andflexible and that it has worked well inthe past. One commenter, however,asked the Department to take intoconsideration two factors which wereincluded in the preamble to theDepartment’s 1989 ProposedRegulations, but not in the GIA: (1)Whether the program is of alongstanding nature, and (2) whetherthere is reason to believe that theprogram will continue in the future.

Most of the commenters rejected ourthree suggested alternatives to the GIAtest. They argued that the first option(i.e., to develop a list of different typesof subsidies) would be rigid,unworkable, inconsistent withcommercial reality, and subject toabuse. In addition, they felt that itwould be very difficult for theDepartment to compile a binding list,which would not only have to identifyand categorize every type of subsidy we


have ever encountered, but whichwould also have to anticipate futuregrant programs. However, onecommenter suggested that, as analternative, the Department coulddevelop a non-binding informative list,based on previous practice, as acomplement to the GIA test.

These commenters agreed that thesecond option (to allocate all grants thatexceed 0.5 percent ad valorem) wouldcreate unnecessary work since theDepartment would have to obtainhistorical information for all grantprograms regardless of their nature andthe Department’s past treatment ofidentical or similar programs. Onecommenter argued that the courts arelikely to find such a methodologyarbitrary, adding that it was Congress’intent that only non-recurring subsidiesbe allocated over time.

The commenters agreed that the thirdoption (i.e., to allocate only grants thatcan be tied to the purchase of fixedassets) would be inconsistent withcommercial reality since it would bebased upon a flawed assumption,namely that only fixed assets continueto provide benefits after the year ofreceipt. In addition, this methodologywould require the Department toabandon its longstanding practice of notconsidering the effect of a subsidy, thecommenters stated.

We agree with the commenters thatnone of the three options listed in the1997 Proposed Regulations provides amore reliable basis for determiningwhether a subsidy benefit should betreated as recurring or non-recurringthan that in the GIA test. However, wedo not think that the GIA test, on itsown, should be the sole basis fordetermining whether a subsidy isrecurring or non-recurring. If we appliedonly the GIA test, we believe we wouldrun the risk of expensing some subsidiesin the year of receipt that are moreappropriately allocated over time, asexplained in further detail below. Inaddition, the GIA test alone may lead tounnecessary arguments over whichsubsidies are recurring or non-recurring.We also do not agree with thecommenter who asked us to modify theGIA test by resurrecting two standardsfrom our 1989 Proposed Regulations(i.e., to examine whether a program islongstanding and if there is reason tobelieve that it will continue in thefuture). As stated in the GIA, wechanged our approach for distinguishingbetween recurring and non-recurringbenefits in Certain Hot-Rolled Lead andBismuth Carbon Steel Products fromFrance, 58 FR 6221 (January 27, 1993).In that determination, we explained thatthe two standards from the 1989

Proposed Regulations had not provenhelpful in determining the nature of abenefit and that they had been difficultto interpret and apply in practice.Nothing in our subsequent experiencehas changed our view on this matter.

However, we find persuasive thecomment that suggested developing anon-binding illustrative list as acomplement to the GIA test. We believethat non-binding lists illustrating whichtypes of subsidies we will normally treatas providing recurring benefits, andwhich types of subsidies we willnormally treat as providing non-recurring benefits, would offer valuableguidance on how the Department viewsdifferent types of subsidies. Since theyare non-binding, the lists do not have tocover every single type of subsidy thatwe have encountered in the past, nor dothey have to anticipate all conceivablenew subsidies that we might comeacross in the future.

Therefore, for illustrative purposes wehave added to paragraph (c) non-binding lists of subsidies which we willnormally treat as providing recurringbenefits, and subsidies which we willnormally treat as providing non-recurring benefits. These lists have beendeveloped based upon our pastexperience and our findings describedin the GIA. Because these lists are non-binding, paragraph (c) also provides thatparties may argue that the benefit froma subsidy on the recurring list should beconsidered non-recurring, or that thebenefit from a subsidy on the non-recurring list should be consideredrecurring.

Our determination of whether arecurring subsidy should be treated asnon-recurring, or vice versa, will relyprincipally on the test set forth in theGIA. However, because we have decidedto codify these illustrative lists, we havereevaluated the GIA test to ensure thatit covers all of the factors that should beconsidered in determining whether asubsidy should be treated as recurringor non-recurring. Based on thisreevaluation, and the comments wereceived, we have determined that it isappropriate to expand the criteria thatwill be considered in applying the testof whether a subsidy traditionallyconsidered as recurring should betreated as non-recurring, or whether asubsidy traditionally considered as non-recurring should be treated as recurring.Therefore, in addition to examiningwhether the subsidy is exceptional, orwhether express governmentauthorization or approval is provided orrequired, we will also examine whetherthe subsidy was provided for, or tied to,the capital structure or capital assets ofthe company. In this context, capital

structure is considered to be thecombination of common equity(including retained earnings), preferredstock, and long-term debt that comprisesa firm’s financial framework. Capitalassets are the plant and equipmentwhich produce other goods, and includeindustrial buildings, machinery andequipment. Thus, it is appropriate toconsider the benefit from a subsidyprovided for, or tied to, the capitalstructure or capital assets of a firm to benon-recurring because these types ofsubsidies generally benefit the creation,expansion, and/or continued existenceof a firm.

The addition of this criterion to theGIA test in no way envisions or requiresan examination of the effects or uses ofthe subsidy. Rather, we will examinewhether, at the point of bestowal, thesubsidy was provided to, or tied to, thecompany’s capital structure or capitalassets. For example, debt forgivenessbenefits the capital structure of acompany by reducing long-termliabilities, and thus increasing networth. Similarly, a government’scoverage of a company’s losses benefitsits capital structure because thecompany need not cover the losses outof its retained earnings.

If the government provides a grantexpressly for the purchase of anindustrial building, the capital assets ofthe firm are benefitted and, as such, itis reasonable to conclude that thebenefit from the grant should beconsidered non-recurring. In the samevein, if the government provides importduty exemptions tied to major capitalequipment purchases, it may bereasonable to conclude that, becausethese duty exemptions are tied to capitalassets, the benefits from such dutyexemptions should be considered non-recurring, even though import dutyexemptions are on the list of recurringsubsidies.

While we agree with the commenterswho argued that one of the proposedoptions—allocating only those grant-likesubsidies tied to the purchase of fixedassets—is based on a flawed assumptionthat only fixed assets continue toprovide benefits after the year of receipt,we do not consider that our addition tothe GIA test in these Final Regulationsreflects the same flawed assumption. Byincluding not only capital assets, butalso capital structure, in ourexamination of whether a subsidy isrecurring or non-recurring, we will bebetter able to identify those subsidiesthat continue to benefit a company afterthe year of receipt.

Under paragraph (c), a party mayargue that a subsidy included on theillustrative list of recurring subsidies be


treated as non-recurring or that asubsidy on the non-recurring list betreated as recurring. If such argumentsare presented to us and supported bysufficient information, we will apply thestandards set forth in the regulation. Inother words, we will examine whetherthe program is exceptional, whether itrequires express governmentauthorization or approval, or whether, atthe point of bestowal, the subsidy wasprovided for, or was tied to, the capitalstructure or capital assets of thecompany. If a subsidy is not on eitherlist, the Secretary will apply thestandards set forth in the regulation todetermine if it should be treated asrecurring or non-recurring.

The 0.5 Percent Test and the Expensingof Small Subsidies

Although we normally will allocatenon-recurring benefits over time,paragraph (b)(2) retains the so-called 0.5percent test with a few minormodifications which are discussedbelow. See § 355.49(a)(3)(i) of the 1989Proposed Regulations and the GIA at37226. Under this test, we will expensenon-recurring benefits under aparticular subsidy program in the yearof receipt if the total amount of suchbenefits is less than 0.5 percent advalorem, as calculated under § 351.525.

We consider this test to be animportant part of our efforts to simplifycountervailing duty proceedings and toreduce the burdens on all partiesinvolved. By expensing small non-recurring benefits in the year of receipt,we avoid the need to: (1) Collect,analyze, and verify the data needed toallocate such benefits over time; and (2)keep track of the allocation calculationsfor minuscule subsidies from year toyear. If considered only in the contextof a single case, the burdens imposed bythis activity may not appear to beparticularly onerous. However, whenconsidered across all investigations andadministrative reviews, the cumulativeburden becomes considerable.

Since the 1993 Certain Steelinvestigations, we have performed the0.5 percent test using the so-called‘‘program-by-program’’ approach. Underthis approach, we add the ad valoremrates for all subsidies received by acompany under a single program in thatyear. If the resulting sum is below 0.5percent, we expense the benefits in theyear of receipt. An alternative approachwould be to add the ad valorem rates forall subsidies approved under allprograms for each company in a givenyear and examine whether this total rateis below 0.5 percent (the so-called‘‘company-by-company’’ approach). Inthe 1997 Proposed Regulations, we

stated that we intended to retain theprogram-by-program approach, but thatwe wanted to preserve ‘‘the flexibility totake a different approach in situationswhere petitioners are able to point toclear evidence that the foreigngovernment has deliberately structuredits subsidy programs so as to reduce theexposure of its exporters tocountervailing duties.’’

We received three comments on the0.5 percent test, all of which urged usto administer the test on a company-by-company basis. One commenter arguedthat the current program-by-programtest could lead to anomalous results. Forexample, a company that receivedseveral small non-recurring grants, allbelow 0.5 percent of the company’s totalsales, would face a countervailing dutyrate different from a company thatreceived the same total amount ofmoney in the form of one large non-recurring grant. Such anomalies wouldallow foreign governments to evade thecountervailing duty law by providingseveral small subsidies instead of onelarge subsidy, according to thecommenter. All three commentersagreed that the administrativeconvenience of expensing small non-recurring grants would be outweighedby the potential for abuse.

The same commenters also criticizedthe exception to the 0.5 percent rule asoutlined in the 1997 ProposedRegulations, i.e., that petitioners mustshow the intent of the foreigngovernment if the Department is todeviate from the rule. Thesecommenters argued that the standardimposes an improper burden onpetitioners, who cannot be expected todivine the intent of a foreigngovernment.

As explained above, theadministrative burden on theDepartment to collect the informationnecessary to allocate very small non-recurring benefits over time would beconsiderable. This burden cannot bejustified given that, after carefulconsideration, we believe that in mostcases there would be little demonstrableimpact in aggregating all programs on acompany-specific basis. However, weagree that some potential formanipulation exists with the program-by-program approach. We also agreethat petitioners may have difficultydemonstrating the intent of a foreigngovernment. To address these concerns,we have made several changes to the1997 Proposed Regulations.

Paragraph 351.524(b)(2) now statesthat the Secretary will normally expensenon-recurring benefits in the year ofreceipt if the total of the benefits fromsubsidies approved in each year under

a program is less than 0.5 percent advalorem of the relevant sales. Therelevant sales that we use to calculatethe ad valorem rate are either the firm’stotal sales or, if the subsidy is tied, thesales of the product(s) or the sales to themarket to which the subsidy is tied. Inthe case of an export subsidy program,we use the firm’s export sales. The newparagraph adds the word ‘‘normally’’and makes clear that we will apply the0.5 percent test to all benefits associatedwith a particular program, not eachindividual benefit, if there are morethan one. We have also changed theword ‘‘received’’ to ‘‘approved’’ withrespect to all benefits associated with aparticular program. This is intended tocover the situation where a governmentapproves a subsidy in one year butdisburses the funds in installments overa period of years. We will apply the 0.5percent test to the full amountapproved, not to each individualinstallment. In our experience,governments often make one-timeapprovals for large grants, but disbursethe funds over a period of years. This isoften the case in research anddevelopment programs. As such, basingour 0.5 percent test on disbursementscould result in certain large non-recurring subsidies being expensedrather than allocated. To avoid this, it ismore appropriate to base ourdetermination of whether the subsidyshould be allocated over time on the fullamount approved, rather than onperiodic installments. However, we willcontinue to countervail according to theamount received by the company ineach year. The only difference is thatonce the 0.5 percent test has beenapplied to the approved amount and thesubsidy exceeds 0.5 percent of sales, alldisbursements will be allocated overtime.

In addition, we have abandoned therequirement that petitioners show, inorder to convince the Department toabandon the program-by-programapproach, that a governmentdeliberately structured its subsidyprogram so as to reduce exposure tocountervailing duties. Instead, weintend to follow the program-by-program method, but we will consideraggregating all programs on a company-specific basis where the application ofthe 0.5 percent rule would have asignificant impact on the results of theinvestigation or review. Since we haveno experience in determining whatconstitutes a significant impact, we willexamine this on a case-by-case basis inresponse to comments or on our owninitiative.


The Time Period Over Which Non-Recurring Benefits Are Allocated

As described below, we have madechanges in the methods used todetermine certain variables included inour formula for allocating non-recurringbenefits over time. In a departure fromour current practice and from the 1997Proposed Regulations, we have adopteda rebuttable presumption that non-recurring benefits will be allocated overthe number of years corresponding tothe average useful life (‘‘AUL’’) of afirm’s renewable physical assets, as setforth for the industry concerned in theU.S. Internal Revenue Service’s 1977Class Life Asset Depreciation RangeSystem (Rev. Proc. 77–10, 1977–1, C.B.548 (RR–38)) (‘‘the IRS tables method’’),as updated by the Department ofTreasury, unless the parties establishthat the IRS tables do not reasonablyreflect the AUL of a firm’s assets. Partiesmay rebut the presumption to use theIRS tables by demonstrating either thatthe company-specific AUL or country-wide AUL for the industry in therespondent country differs by one yearor more from the AUL in the IRS tablesfor the industry under investigation.Before describing the criteria that wewill consider in determining whetherthe presumption has been rebutted, wewill first explain why we have decidedto change the 1997 ProposedRegulations, which stated that wewould use a company-specific AUL.

Selection of AUL Method

Before 1995, we allocated non-recurring benefits over the AUL listed inthe IRS tables in accordance with our1989 Proposed Regulations. Webelieved, and continue to believe, thatthe IRS tables method offers consistencyand predictability and that it is simpleto administer. However, for purposes ofthe 1997 Proposed Regulations, wedecided to change our practice due toseveral CIT decisions which ruledagainst our use of the IRS tables method(see, e.g., Ipsco v. United States, 687 F.Supp. 614, 626 (CIT 1988) (‘‘Ipsco’’)).One common theme of these decisionswas that because the IRS tables methodwas not a company-specific approach, itfailed to reflect adequately the benefit ofa subsidy to a particular firm. Anothercommon theme was that the IRS tablesmethod could not be affirmed in theabsence of a properly promulgatedregulation (see Ipsco). In the 1997Proposed Regulations, we also cited thefindings in an unadopted GATT panelreport (United States—Imposition ofCountervailing Duties on Certain Hot-Rolled Lead and Bismuth Carbon SteelProducts Originating in France,

Germany, and the United Kingdom,SCM/185, Nov. 15, 1994) (‘‘LeadedBar’’) which criticized the way in whichthe Department applied the IRS tablesmethod.

Although we did not necessarily agreewith the reasoning of these decisions,we decided to develop an alternativemethod. Among several options, wechose to allocate non-recurringsubsidies over the company-specificAUL of productive assets because webelieved that this methodology wouldbe more administrable and predictablethan the alternatives and, also, that itwould be easily calculable from a firm’saccounting records. Consequently, inthe 1997 Proposed Regulations, wecodified our recent practice of allocatingnon-recurring benefits over a periodcorresponding to the company-specificAUL of productive assets.

We received many comments on theAUL method. Several commenters,including respondents, urged theDepartment to return to the use of theIRS tables or, alternatively, to use theIRS tables as a rebuttable presumptionor a fallback methodology in situationswhere a company-specific AUL couldnot be calculated. These commentersargued that the main reason for theCIT’s rejection of the IRS tables was thatthe Department had failed to codify itsmethodology into a regulation pursuantto the Administrative Procedure Act.One commenter observed that the GATTpanel report referred to in the 1997Proposed Regulations did not find thatthe Department was barred from usingthe IRS tables. Rather, the paneldetermined that the use of thismethodology in Leaded Bar had notbeen supported by sufficient reasoningon the record.

The main arguments in favor ofcodifying the IRS tables methodologypresented by the commenters were thatthis approach offers consistency andpredictability and that the Department’suse of the IRS tables has not beencontroversial in the vast majority ofcases. In contrast, the commentersstated, the company-specific AULmethodology would produceinconsistent and unpredictable results,among other things, due to therespondents’ varying accountingpractices. In addition, it would increasethe workload for all parties. Also, itwould not be possible to use themethodology universally, e.g., whenrespondent companies do not collect theinformation needed to calculate theAUL, when they do not use straight-linedepreciation, or when they write downthe value of their assets. Furthermore,one of the commenters pointed toproblems allegedly associated with the

Department’s calculation of the grossbook value of a firm’s assets. The samecommenter was also troubled by the factthat all of a company’s assets areincluded in the asset base, as opposedto only those assets that are used toproduce the subject merchandise.

We also received comments on ourstatement in the 1997 ProposedRegulations that, in certain situations, itmight ‘‘be necessary to makenormalizing adjustments for factors thatmay distort the calculation of an AUL’’(e.g., adjustments for extraordinary assetwrite-downs or hyperinflation). Somecommenters expressed misgivings aboutsuch adjustments which, they said,might compromise the reliability of thedata. One commenter also argued thatrelying on a company-specific AULwould allow respondents to manipulatethe data and that the methodology,therefore, would lead to more litigation.

Other commenters suggested otherapproaches. One commenter argued thatthe Department should not limit itsdiscretion to use one method or theother. Rather, the commenter suggested,the Department should make a case-by-case determination of the appropriatemethodology after requiringrespondents to report the average usefullife of assets used in the production ofthe subject merchandise. In thiscommenter’s view, the burden shouldbe on respondents to show that theirreported data are superior to the IRStables.

Another commenter argued thatunless challenged by respondents, theDepartment should use the AUL of fixedassets alleged in the petition, whichgenerally would be the number of yearsset forth in the IRS tables. Thiscommenter cited the significant burdenthat would be put on all parties,particularly respondents, and on theDepartment if the company-specificmethodology were codified.

One group of commenters urged theDepartment not to return to the IRStables methodology. One of thesecommenters supported the company-specific AUL methodology, arguing thatthis approach is more accurate than theIRS tables methodology, thus renderingfairer and more equitable results. Theother commenters in this groupexpressed a preference for either of thetwo alternative methods for determiningthe allocation period which wereoutlined in our 1997 ProposedRegulations (i.e., the company-specificaverage maturity of long-term debt andthe company-specific weighted-averageuse of funds). These commenters’ chiefarguments against the IRS tablesmethodology were (1) that it had beenstruck down by the CIT and a GATT


panel, and (2) that it does not accuratelyreflect the benefit conferred upon theactual recipient of the subsidy.

Another commenter conveyed generalcriticism of what it claimed was the U.S.practice of assessing subsidy benefitsover an ‘‘inordinate’’ number of years.This commenter stated thatcountervailing duties are intended to beremedial, not punitive, and urged theDepartment to achieve a fairer, moretransparent, and more consistentregime. A second commenter arguedthat data from outside a certain countrycan never be used to evaluate subsidieswithin that country except in theabsence of data from the country inquestion, which seems to suggest that inthis commenter’s view, the IRS tablesshould only be used as ‘‘facts available.’’

We have gained some experience withthe company-specific AUL method overthe last few years. In some cases, thismethod has turned out to be moreburdensome than we had envisioned.We have also found that the methodmay not be appropriate for companiesthat have been sold and that it presentsproblems when a company revalues itsassets, for example as a result ofdeclaring bankruptcy (see, e.g., SteelWire Rod from Germany, 62 FR 54990(October 22, 1997)). The results we haveobtained using the company-specificAUL method have been mixed: in somecases, they have been close to the IRStables, whereas in other cases we havefound anomalies within the sameindustry.

Taking into account our experiencewith the use of the company-specificAUL method and our review of thenumerous comments and concernsraised by both petitioner andrespondent parties, we have decided tocodify the IRS tables method as arebuttable presumption. In our view, theIRS tables method offers consistency,predictability, and simplicity, andpresents a reasonable substitute for theAUL of assets in specific industriesaround the world. Furthermore, weagree with the comment that oneimportant reason behind the CIT’sdecisions regarding the IRS tablesmethod was that it had not beencodified into a final regulation. Withrespect to the GATT panel report, it istrue that the panel found fault with theway the Department applied the IRStables method. However, it is also true,as suggested by one commenter, that thepanel concluded that it was notnecessarily inconsistent with GATT’sGuidelines on Amortization andDepreciation (Committee on Subsidiesand Countervailing Measures, April1985) for a signatory to apply a standardperiod as the average useful life of assets

in a given industry, provided that suchstandard period was not established onan arbitrary basis and that it wasapplied with a degree of flexibility,taking into account the circumstances ofa given case.

Therefore, as set forth in paragraph(d)(2), we will use the AUL listed in theIRS tables for the industry underinvestigation, unless parties claim andestablish that these tables do notreasonably reflect the AUL of therenewable physical assets for the firm orindustry under investigation. Since it isquite likely that the IRS tables, whichare based on industry averages, willnever exactly match a firm’s AUL, wewill not allow parties to claim that theIRS tables do not reflect the firm’s AULunless they can demonstrate either: (1)That the AUL for the firm differs by oneyear or more from the AUL listed for theindustry in the IRS tables, or (2) that therelevant authorities in the respondentcountry have in place a system,equivalent to the IRS tables, fordetermining the actual AUL of assets inspecific industries, and the respondentcountry’s tables show that the AUL forthe industry under investigation differsby one year or more from the IRS tables.

By requiring any party objecting to theapplication of the IRS tables to showthat either the company-specific AUL,or the industry AUL in that country,differs by one year or more from the IRStables, we will reduce the burden on allparties, as well as the Department, inanalyzing, commenting on, andchallenging claims that, even ifultimately accepted, would haverelatively little impact on thecalculation.

Although most commenters focusedon some variation of the AUL method asthe appropriate period over which toallocate non-recurring subsidies, onecommenter urged the Department toadopt a special rule for determining theperiod over which to allocate subsidiesthat are tied to the development of anew product or which fund a specificproject. This commenter maintainedthat the proper allocation period incases where a subsidy is provided forthe development of a specific product isthe life of the product, and not the lifeof the renewable physical assets used tomanufacture the product. Thecommenter stated that subsidies for thedevelopment of a new product continueto benefit the recipient over the life ofthe product and have no relationship tothe recipient’s AUL.

The same commenter noted thatunder the Department’s methodology,regardless of whether it uses the IRStables or the company-specific AUL, theallocation period begins with the receipt

of the subsidy. The commenter arguedthat the allocation period should beginwith the sale of the first product that hasbeen developed with the aid of thesubsidy, which may be several yearsafter the initial provision of the subsidy.In the commenter’s view, theDepartment’s standard calculationmethodology severely understates theduration of the benefit.

In our experience, we have found thatfor most industries and most types ofsubsidies, the IRS tables have providedan accurate and fair approximation ofthe AUL of assets in the industry inquestion, and that the AUL of assetsrepresents a reasonable reflection of theduration of the benefit from a non-recurring subsidy. We recognize,however, that for certain types ofindustries or certain types of subsidies,the AUL of assets may not represent thebest reflection of the duration of thebenefit. In addition, with respect tocertain types of subsidies, even if wewere to use the AUL of assets, it is notclear when the benefit stream shouldcommence.

It is reasonable to assume that theAUL of assets closely approximates theduration of the benefit in mature ortraditional industries. For example, if agovernment provides a grant to a chairproducer to purchase electric saws andwood-carving equipment, it isreasonable to assume that the grant willcontinue to benefit the chair producer aslong as the equipment lasts. In thisinstance, the focus of the government’sattention is to provide the means for thecompany to produce already developedproducts, or modest innovations in themanufacturing process of developedproducts. Often, both the equipmentand the products made from theequipment have already beendeveloped. There is usually only arelatively short lead time betweenreceipt of the subsidy and production.In comparison with the totalinvestment, research and developmentand marketing expenses are likely to berelatively low. In addition, the level ofrisk associated with the investment maybe lower than that associated with thetype of investment described below.

However, when a governmentprovides a subsidy to fund thedevelopment of certain newtechnologies, or to fund anextraordinarily large project for thedevelopment of new products thatencompasses not only basic researchand development, but alsoimplementation and commercialization,the duration of the benefit may notnecessarily be related to the AUL ofassets in that industry. For one thing, bydefinition, estimates of the AUL of


assets are based on existing equipmentused to make existing products. Theassets needed to develop newtechnologies, or to produce a newproduct may not even have beendesigned yet, and certainly the productis not yet developed. Often there is asignificant lead time between receipt ofthe subsidy and development of theproduct and between the developmentof the product and the product’scommercialization (e.g., the firstcommercial sale); in some industries,these lead times can be several years. Inthese instances, even if we were to relyon the AUL of assets, there is a questionas to when the benefit stream shouldbegin: at the time the grant is receivedor at the time the product reachescommercial production.

For these reasons, we have added anexception to paragraph (d). Underparagraph (d)(2)(iv), we will considerarguments, with respect to subsidies todevelop certain new technologies, or tofund extraordinarily large developmentprojects that require extensive researchand development prior toimplementation of production, that weshould rely on allocation periods otherthan AUL, or that the benefit streamshould begin at some time other thanthe date the subsidy is received.

Calculation of a Company-Specific AULAs noted above, in order to rebut the

presumption that the IRS tablesreasonably reflect the AUL of assets ofthe respondent company, a party mustprovide information showing either thata company-specific AUL differs by oneyear or more from the AUL listed in theIRS tables for that industry, or that theAUL of the industry in the respondentcountry differs by one year or more fromthe AUL in the IRS tables. The criteriathat the Department will apply indeciding whether the presumption hasbeen rebutted are discussed below andare set forth in paragraphs (d)(2)(ii) and(iii).

Because firms usually do not calculatethe ‘‘actual’’ AUL of assets in the normalcourse of business, and requiring firmsto calculate this figure for purposes ofa countervailing duty proceeding couldpose an extremely onerous burden onfirms with thousands of individualassets, and on the Department to verifythe accuracy of those calculations, weintend to continue relying on the basicmethod for calculating company-specific AUL which has been used bythe Department since the remanddetermination in the 1993 Certain Steelinvestigations (see, British Steel v.United States, 929 F. Supp. 426, 432–34(CIT 1996)). Under this method, whichis set forth in general terms in paragraph

(d)(2)(iii), a firm calculates an AUL asfollows. First, the annual average grossbook value of the firm’s depreciableproductive fixed assets (which isusually based on acquisition cost) iscumulated, for a period consideredappropriate by the Department. In thepreamble to the 1997 ProposedRegulations, we indicated that we hadbeen requesting 10 years of data tocalculate a company-specific AUL;however, we are still evaluating whether10 years of data are necessary orappropriate. Second, the firm’s annualcharges to accumulated depreciation forthe same time period are summed.Third, the sum of the annual averagegross book values is divided by the sumof annual depreciation charges. Theresulting number is a company-specificAUL. As we gain more experience inaddressing the calculation of AULsunder these regulations, we may makerefinements to the approach describedabove.

The Secretary will attempt to excludefixed assets that are not depreciable(such as land or construction inprogress) and assets that have been fullydepreciated and that are no longer inservice. However, assets that are inservice would be included even if theyhave been fully depreciated. There maybe situations in which the company-specific AUL calculated in the mannerdescribed above is not representative ofthe company’s actual AUL. Forexample, if a firm’s depreciation is notbased on an estimate of the actual usefullife of its assets, the calculationdescribed above is not a reasonablemethod of calculating AUL. Similarly,AUL cannot be calculated in thismanner if the firm does not use straight-line depreciation unless additions to thefirm’s asset pool are regular and even.In addition, we will not use a company-specific AUL where we conclude thatthe company-specific AUL isaberrational, or in some other way notusable. As noted above, we have foundthat company-specific AULs may not beusable in the face of a recent change inownership or bankruptcy.

It may also be necessary to makenormalizing adjustments for factors thatdistort the calculation of an AUL. Weare not in a position at this time toprovide additional detail in theregulation itself on when we will makenormalizing adjustments and how suchadjustments will be made because thetypes of necessary adjustments willlikely vary based on the facts of aparticular case. However, certainobvious normalizing adjustments thatcome to mind are situations in which afirm may have charged an extraordinarywrite-down of fixed assets to

depreciation, or where the economy ofthe country in question has experiencedpersistently high inflation.

If a party can show that a company’sAUL meets all of the requirements setforth in paragraph (d)(2)(iii), and thatthe company-specific AUL differs fromthe IRS tables by one year or more, wewill consider that the presumption hasbeen rebutted and will use thecompany’s own AUL for purposes of itsanalysis. Because petitioners may nothave access to translated financialstatements (which is where much of therequired information on asset valuesand depreciation is reported),petitioners will be allowed to base theirarguments that the IRS tables are notrepresentative of a company’s AULeither on the financial statements theysubmit in the petition, or on informationsubmitted by respondents in their initialquestionnaire responses. We recognizethat, by waiting until the initialquestionnaire response to examineclaims to rebut the IRS tablespresumption, we may be faced with asituation where we will need to collectadditional years of information on thealleged subsidy programs. If thatsituation arises, we will determine on acase-by-case basis whether this providessufficient reason to declare aninvestigation extraordinarilycomplicated in accordance with section703(c) of the Act.

In addition to rebutting thepresumption to use the IRS tablesthrough the calculation of a company-specific AUL, we will also permit therespondent government to demonstratethat it has a system in place whichreasonably reflects the AUL forindustries. The government mustdemonstrate that the system was set upto determine the AUL of industries inthe country, that it has conductedreliable surveys and/or studies to gatherinformation from the companies ontheir AULs, and that it has ensured theaccuracy of any reported informationand of any calculations performed. If therespondent government’s system meetsthese standards, and the AUL for theindustry under investigation differs byone year or more from the IRS tables, wewill consider that the presumption hasbeen rebutted, and will use the AULfrom the respondent government’ssystem for the industry underinvestigation.

As is the case for any otherinformation included in a response to acountervailing duty questionnaire, afirm’s calculation of its AUL, or agovernment’s system for determiningthe AULs of its industries, would besubject to verification by theDepartment and comment by parties to


the proceeding. The regulation settingforth the use of the IRS tables as arebuttable presumption is in paragraph(d)(2)(i); the standards we will apply todetermine if the presumption has beenrebutted are set forth in paragraphs(d)(2)(ii) and (iii).

Several commenters who objected tothe use of a company-specific AUL alsosubmitted comments on the method forcalculating the company-specific AULshould the Department decide to retainthis methodology. Although we havedecided to use the IRS tables as arebuttable presumption to determine theallocation period, parties will be able touse the company-specific AUL methodto rebut the presumption. As such, weaddress these additional commentsbelow regarding the calculation andapplication of a company-specific AUL.

One commenter argued that, in asituation where the petition is basedupon the IRS tables and the company-specific AUL exceeds the AUL in theIRS tables, the Department mustinvestigate all subsidies providedduring the allocation period, and thepetitioners must have a reasonableamount of time after the Department hasmade its AUL determination to allegeadditional subsidies from earlier years.To this effect, the commenter suggestedthat the investigation be declaredextraordinarily complicated inaccordance with the Department’sregulations for postponing preliminaryand final countervailing dutydeterminations when the company-specific AUL exceeds the AUL in theIRS tables.

In cases where the petition is basedupon the AUL listed in the IRS tables,and where a party rebuts thatpresumption based on the factorsdiscussed above, it is our intention togive the parties a reasonable amount oftime to provide information concerningsubsidies received in the earlier period(see the rules regarding the time limitsfor submission of factual information in§ 351.301(b) of Antidumping Duties;Countervailing Duties; Final rule, 62 FR27296 (May 19, 1997)). We will decideon a case-by-case basis if rebutting theuse of the IRS tables provides sufficientreason to declare an investigationextraordinarily complicated inaccordance with section 703(c) of theAct.

The same commenter asked that theregulations clearly state that thecompany-specific AUL method will beused only if the respondent (1) bases itsdepreciation charges on an estimate ofthe actual useful life of its productiveassets, and (2) employs a straight-linedepreciation methodology. Anothercommenter argued that there are two

circumstances under which theDepartment should be precluded fromusing the company-specific AULmethod: (1) When additions to a firm’sasset pool are irregular and uneven, and(2) when the number of producers andexporters is so large that the Departmentuses aggregate data, as was the case in,e.g., Live Swine from Canada, 62 FR18087 (April 14, 1997).

As stated in the 1997 ProposedRegulations and reiterated previously,there are certain situations in which acompany cannot compute its AUL usingthe methodology described above. Forexample, if a firm’s depreciation is notbased on an estimate of the actual usefullife of its assets, the methodology cannotbe used. Similarly, an AUL cannot becalculated in this manner if the firmdoes not use straight-line depreciationand additions to the firm’s asset pool areirregular and uneven. With respect tothe last comment about aggregate cases,we have found that in some aggregatecases it is possible to calculate an AULbased on combined data from a largenumber of companies (see, e.g., FreshAtlantic Salmon from Chile, 63 FR31437 (June 9, 1998)). However, becausewe now intend to use the AUL in theIRS tables as a rebuttable presumptionin all investigations, parties in anaggregate case that wish to rebut thepresumption would have to provide thesame type of information outlinedabove.

One commenter criticized theDepartment’s practice of including fullydepreciated assets that are still inservice in the asset base used tocalculate the company-specific AUL.The commenter argued that theDepartment would have to assign anactual value to a fully depreciated assetto be used as a substitute for itsacquisition cost which would involvecomplicated calculations. Thecommenter asked that the Departmentinstead exclude fully depreciated assetsfrom the asset base for purposes of theAUL calculation.

We note that, in cases where assetsare fully depreciated, yet remain inservice, their useful life is simply longerthan the depreciation period used by therespondent for accounting purposes. Byincluding fully depreciated assets thatare still in service, our calculation moreaccurately reflects the assets’ useful life.With respect to the commenter’sconcern that we would have to assign avalue to a fully depreciated asset in lieuof its acquisition cost, this is simplyincorrect. As explained above, oneelement of our calculation of the AULof productive fixed assets is the grossbook value of these assets, which isbased on their acquisition cost. We will

still use the gross book value when theasset has been written off, just as wewill use the aggregated depreciation ofthe asset. Thus, there is no need toassign a fictional value to a fullydepreciated asset that is still in use forpurposes of calculating the company-specific AUL.

The 1997 Proposed Regulations statedthat, in administrative reviews, wewould recalculate the AUL for non-recurring subsidies received after theperiod of investigation based uponupdated information. One commenterlabeled this approach as misguided andargued that there is no need toundertake such recalculation. Moreover,the commenter argued, this approachwould lead to anomalous results, e.g., incases where a company that receivedtwo identical subsidies in two differentyears might face different countervailingduty rates based solely upon thecompany’s financial structure andaccounting practices.

We disagree that this approach wouldlead to anomalous results. Even if thesubsidy amounts are identical, if theyare provided in two different years, theywill have different discount rates and,consequently, different benefit streamsregardless of the allocation period.However, because we have limitedexperience in this area, we arecontinuing to evaluate whether weshould recalculate the allocation periodfor new subsidies, and we will addressthis issue in the context of individualcases.

Calculation of the Benefit StreamOnce we have determined that a

benefit is non-recurring and that itshould not be expensed under the 0.5percent rule under paragraph (b)(2), wewill calculate the amount of the benefitthat will be assigned to a particular yearaccording to the formula described inparagraph (d)(1).

We noted in the 1997 ProposedRegulations that we had recentlyreceived comments on our allocationformula and that we intended to addressthe comments we had received in theseFinal Regulations. Those comments andour position follow.

One commenter, who argued that theDepartment’s traditional calculationmethodology is biased in favor ofrespondents, outlined four alternativesfor determining when a grant isreceived: (1) In the beginning of the yearof receipt, (2) at the end of the year ofreceipt, (3) on the actual date of receipt,or (4) in the middle of the year ofreceipt. The commenter maintained thatbecause our traditional methodology isbased on the implicit assumption thatgrants are received in the beginning of


the year of receipt, it favors respondentsbecause it undervalues the benefit andartificially shortens the amortizationperiod. The commenter also found ourmethodology to be inconsistent withcommercial realities and with§ 351.503(b) of the 1997 ProposedRegulations.

Regarding the second alternative (i.e.,basing the benefit calculation on theassumption that grants are received atthe end of the year of receipt), thecommenter stated that this would alsobe inconsistent with commercialrealities and would unfairly favorpetitioners. The third alternative (i.e.,using the actual date of receipt) wasdescribed as a neutral methodology thatwould favor neither petitioners norrespondents. According to thecommenter, this approach is consistentwith commercial reality, with theDepartment’s past practice, and with§ 351.503(b) of the 1997 ProposedRegulations. However, the commenternoted that this methodology would beburdensome and urged the Departmentto adopt the fourth alternative, i.e., themid-year methodology. The commentermaintained that this option is neutral,consistent with commercial realities,and would require only minor changesin the calculation formula. On average,the mid-year option would produce thesame result as the actual date of receiptalternative and would thus be a fairmethodology, according to thecommenter. (A detailed explanation ofhow to calculate the annual benefit inaccordance with the mid-year approachwas also provided.)

A second commenter agreed with theprevious argument that theDepartment’s traditional calculationmethodology favors respondents byundervaluing the benefit and preventingthe Department from fully offsetting thebenefit received. However, thiscommenter argued that the Departmentshould change its calculationmethodology to reflect the assumptionthat the benefit is received at the end ofthe year. The commenter asked that thisunderlying assumption should controlunless respondents can establish theactual date of receipt.

We have not adopted any of theproposed alternatives to our currentformula. Our current formula forallocating non-recurring benefits overtime, which is shown in paragraph(d)(1), was developed as a result of theCIT’s examination of our previousallocation method in Michelin TireCorp. v. United States, 6 CIT 320 (1983).The formula first appeared in theSubsidies Appendix to Certain Cold-Rolled Carbon Steel Flat Products fromArgentina, 49 FR 18006 (April 26, 1984)

and has since been part of theDepartment’s longstanding practice.This methodology has beenuncontroversial and has worked well inpast cases. We, therefore, do not see anycompelling need to change it. Moreover,we disagree with the commenters’specific proposals, including theproposed calculation formula developedby the first commenter. We find thiscommenter’s methodology undulycomplicated because it involves threedifferent calculation formulas to be usedat different times during the allocationperiod. Furthermore, the commenter’sformula is not consistent with thedeclining balance methodology, whichhas been an important part of theDepartment’s past practice.

Selection of Discount RateParagraph (d)(3) deals with the

selection of a discount rate. Consistentwith the GIA at 37227, paragraph(d)(3)(ii) provides that, in the case of anuncreditworthy firm, the Secretary willuse as a discount rate an interest ratewith a ‘‘risk premium’’ included.


calculation of the ad valorem subsidyrate and the attribution of a subsidy toa particular product. While § 351.525 isbased roughly on § 355.47 of the 1989Proposed Regulations, it containschanges that reflect further refinementsin the Department’s practice since 1989.

Paragraph (a) deals with thecalculation of the ad valorem subsidyrate, and continues to provide that theSecretary will calculate the rate bydividing the amount of the subsidybenefit by the sales value of the productor products to which the subsidy isattributed. For example, if a firmreceives an untied domestic subsidy forwhich the benefit in the period ofinvestigation or review is $100 and thefirm’s total sales in that period amountto $1,000, the ad valorem subsidy ratewould be 10 percent ($100 ÷ $1,000 =10 percent).

The second and third sentences ofparagraph (a) deal with the basis onwhich the Secretary will determine thesales value of a product. TheDepartment’s longstanding practice hasbeen to determine the sales value forproducts that are exported on an f.o.b.(port) basis in order to correspond to thebasis on which the Customs Serviceassesses duties. However, in the GIA,we announced that we would beginusing sales values as recorded in afirm’s financial statements. We did sowith the belief that this approach wouldbe more accurate, would reduce theburden on the firms involved, and

would allow us to account for the factthat shipping expenses might besubsidized. However, in order to ensurethat the Customs Service collected thecorrect amount of duties based on anf.o.b. (port) basis, we found it necessaryto adjust the calculated ad valoremsubsidy rate based on a ratio of theinvoice value of exports to the UnitedStates to the f.o.b. value of exports to theUnited States. In the end, only one ofthe respondents in the 1993 steelinvestigations had the informationneeded to calculate this ratio. Therefore,for all other firms in those cases, theDepartment resorted to its traditionalf.o.b. (port) methodology.

Because our experiment with adifferent basis was not successful, in thesecond sentence of paragraph (a) wehave reverted to our standard practice ofdetermining sales value on an f.o.b.(port) basis in the case of products thatare exported. In the case of productsthat are sold for domestic consumption,we would determine sales value on anf.o.b. factory basis. While this methodimposes a bit more work on firms thandoes a method that relies on bookedvalues, we believe that the burden canbe mitigated by relying on aggregatefigures and reasonable allocations ofthose figures across markets (e.g.,subtracting total freight and insuranceexpenses—expenses that usually aremaintained in ledgers that are separatefrom sales information).

In addition, there is no compellingreason for allocating subsidy benefitsover sales values that include freightand other shipping costs. Althoughthere may be rare instances where themovement component of a transaction issubsidized, we can deal with thoseinstances on a case-by-case basis.Accordingly, the third sentence ofparagraph (a) provides that the Secretarymay make appropriate adjustments tothe ad valorem subsidy rate to accountfor movement subsidies.

Paragraph (b) deals with theattribution of a subsidy to a particularproduct. Paragraphs (b)(2) through (b)(7)set forth general rules of attribution thatthe Secretary will apply to a givenfactual situation. We have taken thisapproach because, depending on thefacts, several of the different rules maycome into play at the same time. If wetried to account for all the possiblepermutations in advance, the resultwould be an extremely lengthy set ofrules that might prove unduly rigid.

On the other hand, we appreciate thatthere needs to be a certain degree ofpredictability as to how the Departmentwill attribute subsidies. We believe thatthe rules set forth in paragraph (b) aresufficiently precise that parties can


predict with a reasonable degree ofcertainty how we will attributesubsidies to particular products in agiven factual scenario. In this regard,our intent is to apply these rules asharmoniously as possible, recognizingthat unique and unforeseen factualsituations may make complete harmonyamong these rules impossible.

With respect to the attribution rulesthemselves, they are consistent with theconcept of ‘‘benefit’’ described in§ 351.503, i.e., that a benefit generally isconferred when a firm pays less than itotherwise would pay in the absence ofthe government-provided input or whena firm receives more revenue than itotherwise would earn. In light of this,subsidies are by these rules attributed,to the extent possible, to the sales forwhich costs are reduced (or revenuesincreased). For example, an exportsubsidy reduces the costs of a firm’sexports and is, therefore, attributed onlyto export sales. Similarly, a subsidyprovided by a government for a specificproduct is attributed only to sales of thatproduct for which the subsidy wasprovided (and any downstreamproducts produced from that product),as it reduces the costs of a firm’s salesof those products. This attributionprinciple applies equally to the currentbenefit from non-recurring subsidiesallocated over time. For example, thecurrent benefit of an untied subsidy willbe attributed to the firm’s total sales,even if the products produced by thefirm differ significantly from the timethe subsidy was provided. We will not,therefore, examine whether productlines have been expanded or terminated,or whether and to what extent thecorporate structure of the firm haschanged over time.

The principle of attributing a subsidyto sales of a particular product orproducts is embodied in theDepartment’s longstanding practiceconcerning the ‘‘tying’’ of subsidies.See, e.g., § 355.47 of the 1989 ProposedRegulations. As discussed below, thereare various ways in which a subsidy canbe tied. However, regardless of themethod, we attribute a subsidy to salesof the product or products to which itis tied. In this regard, one can view an‘‘untied’’ subsidy as a subsidy that istied to sales of all products produced bya firm. For example, we consider certainsubsidies, such as payments for plantclosures, equity infusions, debtforgiveness, and debt-to-equityconversions, to be untied because theybenefit all production.

Paragraphs (b)(2) through (b)(7) setforth rules that we will apply todifferent types of tying situations. Forexample, paragraph (b)(2) contains an

attribution rule regarding exportsubsidies. Because an export subsidy is,by definition, limited to exports,paragraph (b)(2) provides that theSecretary will attribute an exportsubsidy only to the sales of productsexported by a firm.

As noted above, we intend to applyparagraphs (b)(2) through (b)(7)consistently with each other, to theextent practicable. As an example,assume that a government provides anexport subsidy on exports of widgets toCountry X. Here, three attribution rulescome into play. Under paragraph (b)(2),the subsidy would be attributed to theexport sales of a firm. Under paragraph(b)(4), the subsidy would be attributedto products sold by a firm to Country X.Under paragraph (b)(5), the subsidywould be attributed to widgets sold bya firm. Putting the three rules together,the subsidy in this example would beattributed to the firm’s export sales ofwidgets to Country X.

Certain commenters have identifiedpotential scenarios where theDepartment should allow itself theflexibility to deviate from these tyingrules (e.g., where subsidies allegedly‘‘tied’’ to non-subject merchandise ormarkets are actually meant to benefit theoverall operations of the company).

We recognize that there may be manyscenarios where these attribution rulesdo not fit precisely the facts of aparticular case. Furthermore, we areextremely sensitive to potentialcircumvention of the countervailingduty law. We intend to examine alltying claims closely to ensure that theattribution rules are not manipulated toreduce countervailing duties. If theSecretary determines as a factual matterthat a subsidy is tied to a particularproduct, then the Secretary willattribute that subsidy to sales of thatparticular product, in accordance withparagraph (b)(5). If subsidies allegedlytied to a particular product are in factprovided to the overall operations of acompany, the Secretary will attributethe subsidy to sales of all products bythe company. This example illustratesthat the rules as proposed, and asfinalized here, do serve their intendedpurpose, but that the facts of each casemust be carefully examined.

The rules set forth in paragraphs (b)(5)and (b)(6) warrant additionalexplanation because of the specialnomenclature that is being used. In allother sections of these regulations, theterm ‘‘firm’’ is used to describe therecipient of the subsidy. See § 351.102.However, for purposes of certainattribution rules, where we aredescribing how subsidies will beattributed within firms, ‘‘firm’’ is too

broad. Therefore, for purposes ofparagraphs (b)(5) and (b)(6), we areusing the term ‘‘corporation.’’ In sodoing, we are not intending to limit theapplication of these rules to firms thatare organized as corporations. However,based on our experience, most of thefirms we investigate are organized ascorporations. Therefore, our use of theterm ‘‘corporation’’ makes theseattribution rules as clear as possible. Ifa respondent is not organized as acorporation, we will address anyattribution issues covered by the rulesin paragraphs (b)(5) and (b)(6) based onthe facts of that case, while following asclosely as possible the rules andprinciples set forth in paragraphs (b)(5)and (b)(6).

Paragraph (b)(5) sets out our rulesregarding product tying. Paragraph(b)(5)(i) states our longstanding generalrule that where a subsidy is tied toproduction of a particular product, thesubsidy will be attributed to sales of thatproduct. One commenter argued that theregulations should make clear thatwhere a subsidy is provided to developa specific model of a product (or tomodernize a particular productionfacility), the subsidy should beattributed to sales of that model (or toproduction from that facility). Webelieve that this commenter’s concernsmay already be addressed by theproposed product-tying rule. Ifsubsidies are provided for a specificmodel, they can be tied to that model.If a countervailing duty case is broughtsolely against that model, the subsidywould be attributed to that model, anda model-specific rate will, in effect, becalculated. However, if the case isbrought against several models thatcomprise the subject merchandise, wewould normally blend the model-specific rates to arrive at a single rate toapply to all merchandise covered by thecountervailing duty order.

Our 1997 Proposed Regulationscontained an exception to the generalproduct tying rule which provided that,if an input product is produced withinthe same corporation, subsidies tied tothe input product would be attributed tosales of both the input and thedownstream products. Our statedintention was to limit this exception tosituations where production of the inputand downstream product occur withinthe same corporation. We took theposition that if the input product isproduced by a separately incorporatedcompany, regardless of the level ofaffiliation or ‘‘cross-ownership’’ (asdiscussed further below), subsidies tothe input product would only beconsidered in the context of anupstream subsidy investigation initiated


on the basis of a sufficient allegationfrom the petitioner.

We received numerous commentsobjecting to such an approach, arguingthat the rule elevates form oversubstance. These commenters suggestedthat the rule creates a loophole wherebyvertically integrated businesses couldavoid countervailing duty exposure forinput subsidies simply by separatelyincorporating the division that makesthe input. In their opinion, where thereis cross-ownership between the inputsupplier and the downstream product,subsidies to the input supplier shouldbe automatically attributed to thedownstream product. In situationswhere the cross-ownership standard isnot met, but the corporations arenonetheless affiliated, the Departmentshould determine whether to attributethe subsidies between the twocompanies according to the particularfacts of the case.

Paragraph (b)(5)(ii) of these FinalRegulations maintains the exception tothe product tying rule whereby we willattribute a subsidy tied to the inputproduct to the sales of both the inputand downstream products where theproduction of the input anddownstream products occurs within thesame corporation. However, uponconsideration of the comments receivedand a careful review of the upstreamsubsidy provision of the statute, wehave decided to modify our practiceregarding separately incorporated inputand downstream producers.

The main concern we have tried toaddress is the situation where a subsidyis provided to an input producer whoseproduction is dedicated almostexclusively to the production of a highervalue added product—the type of inputproduct that is merely a link in theoverall production chain. This was thecase with stumpage subsidies on timberthat was primarily dedicated to lumberproduction and subsidies to semolinaprimarily dedicated to pasta production.(See Certain Softwood Lumber Productsfrom Canada, 57 FR 22570, 22578 (May28, 1992) and Certain Pasta from Italy,61 FR 30287–309 (June 14, 1996).) Webelieve that in situations such as these,the purpose of a subsidy provided to theinput producer is to benefit theproduction of both the input anddownstream products. Accordingly,where the input and downstreamproduction takes place in separatelyincorporated companies with cross-ownership (see discussion belowdefining cross-ownership) and theproduction of the input product isprimarily dedicated to the production ofthe downstream product, paragraph(b)(6)(iv) requires the Department to

attribute the subsidies received by theinput producer to the combined sales ofthe input and downstream products(excluding the sales between the twocorporations).

Where we are dealing with inputproducts that are not primarilydedicated to the downstream products,however, it is not reasonable to assumethat the purpose of a subsidy to theinput product is to benefit thedownstream product. For example, itwould not be appropriate to attributesubsidies to a plastics company to theproduction of cross-owned corporationsproducing appliances and automobiles.Where we are investigating productssuch as appliances and automobiles, wewill rely on the upstream subsidyprovision of the statute to capture anyplastics benefits which are passed to thedownstream producer. Moreover, webelieve that the upstream subsidyprovision is still applicable whendealing with lower levels of affiliation.Therefore, if the relationship betweenthe input and downstream producersmeets the affiliation standard but fallsshort of cross-ownership, even if theinput product is primarily dedicated tothe downstream product, we will onlyconsider subsidies to the input producerin the context of an upstream subsidyinvestigation.

Paragraph (b)(6) deals with situationswhere cross-ownership exists betweencorporations. We have decided to codifythe definition of cross-ownershipoutlined in the preamble to the 1997Proposed Regulations. Accordingly,paragraph (b)(6)(vi) makes clear that therelationships captured by the cross-ownership definition include thosewhere the interests of two corporationshave merged to such a degree that onecorporation can use or direct theindividual assets (or subsidy benefits) ofthe other corporation in essentially thesame ways it can use its own assets (orsubsidy benefits). For example, cross-ownership exists where corporation Aowns corporation B (or vice versa), orwhere A and B are both owned bycorporation C. Cross-ownership doesnot require one corporation to own 100percent of the other corporation.Normally, cross-ownership will existwhere there is a majority votingownership interest between twocorporations or through commonownership of two (or more)corporations. In certain circumstances, alarge minority voting interest (forexample, 40 percent) or a ‘‘goldenshare’’ may also result in cross-ownership.

As we noted in the 1997 ProposedRegulations, the term ‘‘cross-ownership’’ as it is used here clearly

differs from ‘‘affiliation,’’ as that term isdefined in section 771(33) of the Act. Inresponse to this, one commenterprotested that reliance upon cross-ownership for attribution purposes willunlawfully limit the affiliated partystandard as outlined in section 771(33)of the Act. Another commenter askedthe Department to revise the definitionof cross-ownership such that cross-ownership will be found when one‘‘affiliated’’ company exercises controlover another.

We believe that the definition ofcross-ownership in these FinalRegulations is a more useful basis thanmere affiliation for identifying the typesof relationships where it is reasonable topresume that subsidies to onecorporation could benefit anothercorporation. The underlying rationalefor attributing subsidies between twoseparate corporations is that theinterests of those two corporations havemerged to such a degree that onecorporation can use or direct theindividual assets (or subsidy benefits) ofthe other corporation in essentially thesame ways it can use its own assets (orsubsidy benefits). The affiliationstandard does not sufficiently limit therelationships we would examine tothose where corporations have reachedsuch a commonality of interests.Therefore, reliance upon the affiliatedparty definition would result in theDepartment expending unnecessaryresources collecting information fromcorporations about subsidies which arenot benefitting the production of thesubject merchandise, or dilutingsubsidies more properly attributed toinput producers by allocating suchsubsidies over the production ofremotely related and affecteddownstream producers. In response tothe second comment, we note thatvarying degrees of control can exist inany relationship. Therefore, we believethe more precise definition of cross-ownership that we have adopted inthese Final Regulations is moreappropriate.

Contrary to the assertions of thecommenters, in limiting our attributionrules to situations where there is cross-ownership, we are not reading‘‘affiliated’’ out of the CVD law—wesimply do not find the affiliationstandard to be a helpful basis forattributing subsidies. Nowhere in thestatute or the SAA is there anyindication that the affiliated partydefinition was intended to be used forsubsidy attribution purposes. Rather, itidentifies the broadest category ofrelationships which might be relevant toeither an antidumping or acountervailing duty analysis. Therefore,


we intend to include in ourquestionnaires a request for respondentsto identify all affiliated parties. Also,persons affiliated with companies thatshipped during the period ofinvestigation will not be entitled torequest a new shipper review undersection 751(a)(2)(B) of the Act. However,we do not intend to investigatesubsidies to affiliated parties unlesscross-ownership exists or otherinformation, such as a transfer ofsubsidies, indicates that such subsidiesmay in fact benefit the subjectmerchandise produced by thecorporation under investigation.

Paragraph (b)(6) begins by stating ageneral rule, which is followed by fourexceptions to that rule deriving from therationale described above. Paragraph(b)(6)(i) states that the Secretary willnormally attribute a subsidy received bya corporation to the products producedby that corporation. Hence, for example,if corporation A receives a subsidy, thenthat subsidy will normally be attributedto the sales of products produced bycorporation A.

However, under paragraph (b)(6)(ii), iftwo (or more) corporations with cross-ownership produce the subjectmerchandise, then subsidies received byeither or both of those corporations willbe attributed to the combined sales ofthe two corporations. Thus, for example,if corporation A and corporation B areboth owned by corporation C and bothA and B produce widgets, benefits to Aand B will be combined to determinethe subsidy on widgets and the subsidywill be attributed to the combinedproduction of A and B.

Paragraph (b)(6)(iii) addresses asecond instance where subsidiesreceived by one corporation might beattributed to sales of anothercorporation with cross-ownership. Thisis where the subsidy is received by aholding company. The term ‘‘holdingcompany’’ is intended to mean anycompany that owns or controlssubsidiaries through the ownership ofvoting stock or other means. Inparagraph (b)(6)(iii) of these FinalRegulations, we have clarified that theterm ‘‘holding company’’ includesinvestment companies with no businessof their own (commonly referred to asholding companies) as well ascompanies with their own operations(commonly referred to as parentcompanies). Under paragraph (b)(6)(iii),subsidies to a holding company willnormally be attributed to theconsolidated sales of the holdingcompany (including the sales ofsubsidiaries). However, if theDepartment determines that the holdingcompany is merely serving as a conduit

for government-provided funds to one(or more) of its subsidiaries, then thesubsidy will be attributed to theproduction of that subsidiary.

Analogous to the situation of aholding or parent company is thesituation where a government providesa subsidy to a non-producing subsidiary(e.g., a financial subsidiary) and thereare no conditions on how the money isto be used. Consistent with ourtreatment of subsidies to holdingcompanies, we would attribute asubsidy to a non-producing subsidiaryto the consolidated sales of thecorporate group that includes the non-producing subsidiary. See, e.g., CertainSteel Products from Belgium, 58 FR37273, 37282 (July 9, 1993) (‘‘CertainSteel from Belgium’’).

Paragraph (b)(6)(iv) incorporates thechange in practice with regard toseparately incorporated input producersdiscussed previously. This rule allowsthe Department to attribute thesubsidies received by the inputproducer to the input and downstreamproducts produced by both corporationswhen the input is primarily dedicated tothe production of the downstreamproduct.

Finally, where the exceptionscontained in paragraphs (b)(6)(i)–(iv)have not been met, subsidies receivedby one corporation may still beattributed to sales of anothercorporation with cross-ownership if theSecretary determines under paragraph(b)(6)(v) that the corporation receivingthe subsidy transfers it to thecorporation producing the subjectmerchandise. Such a transferral couldbe shown by some form of extraordinarytransaction between the two companies,e.g., a transfer of assets, an assumptionof debt, or a significant loan. Where wefind such transfer mechanisms, we willattribute the subsidy to the combinedsales of the two corporations.

Although cross-ownership is broadlydefined, permitting us to includecorporations under commongovernment ownership, we expect thatcommon government ownership willnot normally be viewed as cross-ownership. Instead, we intend tocontinue our longstanding practice oftreating most government-ownedcorporations as the government itself,and not as corporations that transfersubsidies received from the governmentto other government-ownedcorporations through loans or otherfinancial transactions. For example,where a government-owned corporationproducing the product underinvestigation purchases electricity froma government-owned utility, a subsidyis conferred if the utility does not

receive adequate remuneration.However, given the complexity andvariety of the government-ownedcorporate structures that we haveencountered, the nature of the allegationmay determine the nature of theanalysis and the level at which theanalysis should be applied. Thesituations where we would normallyexpect to apply the cross-ownershiprules to common government ownershipare: (1) Government-owned corporationsproducing the same product (see§ 351.525(b)(6)(ii)) and (2) government-owned corporations producing differentproducts where the corporations areunder the control of the same ministryor within a corporate group containingproducers of similar products (see§ 351.525(b)(6)(v)).

Although the rules described inparagraphs (b)(2)—(b)(7) of § 351.525deal with tying, § 351.525 does notcontain a definition of ‘‘tied.’’ In thepast, the Department has described thisconcept in a variety of ways. Forexample, in Appendix 2 to Certain SteelProducts from Belgium, 47 FR 39304,39317 (September 7, 1982), we statedthat ‘‘a grant is ‘tied’ when the intendeduse is known to the subsidy giver andso acknowledged prior to or concurrentwith the bestowal of the subsidy.’’ In thepreamble to the 1989 ProposedRegulations at 23374, we stated that a‘‘tied’’ subsidy benefit is ‘‘e.g., a benefitbestowed specifically to promote theproduction of a particular product.’’

Given the wide variety of factualscenarios that we have encountered inthe past, and are likely to encounter inthe future, we are not promulgating anall-encompassing definition of ‘‘tied.’’Moreover, the absence of a definition of‘‘tied’’ has not proven to be a problemin practice, and Annex IV to the SCMAgreement, which refers to ‘‘tied’’subsidies in paragraph 3, also lacks adefinition of this term. While thepreamble to the 1997 ProposedRegulations requested commentsregarding what factors are relevant tothe Department’s determination ofwhether benefits are tied, we receivedno such comments. For these reasons, atthis time we intend to apply the term‘‘tied’’ on a case-by-case basis, using theguidelines in this section.

Virtually every comment submittedon attribution-related issues included areference to the fungibility of money.Certain commenters argued that becausemoney is fungible, the Departmentshould not allow subsidies to be tied toparticular products or to particularexport markets. In their view, the onlydistinction that should be made isbetween export and domestic subsidies.Other commenters invoked the


fungibility principle in support of theirposition that untied capital infusions tocompanies with multinationalproduction should be attributed toworldwide sales of the firm.

While we agree with thesecommenters that money is fungible,these comments are somewhatmisplaced. Fungibility has to do withthe issue of whether we could, orshould, trace the use of specific fundsto determine whether such funds wereused for their stated purpose, or thepurpose that we evince from recordevidence. We have generally stated thatwe will not trace the use of subsidiesthrough a firm’s books and records.Rather we analyze the purpose of thesubsidy based on information availableat the time of bestowal. Once the firmreceives the funds, it does not matterwhether the firm used the governmentfunds, or some of its own funds thatwere freed up as a result of the subsidy,for the stated purpose or the purposethat we evince. This is what we meanwhen we say that money is fungible.Fungibility does not mean that wecannot attribute subsidies to particularportions of a firm’s activities. Thisinterpretation of fungibility wouldundermine congressional intent toattribute subsidies to the products thatdirectly benefit from the subsidy. See,e.g., H.R. Rep. No. 96–317, at 74–75(1979) (‘‘[W]ith regard to subsidieswhich provide an enterprise withcapital equipment or a plant * * * thenet amount of the subsidy should be* * * assessed in relation to theproducts produced with suchequipment or plant * * *.’’).

For example, if we were to adoptsome of the suggestions made by thecommenters, there should be nodistinction between export anddomestic subsidies. Yet, this agency’sconsistent and, for the most part, non-controversial practice over the past 18years has been to attribute exportsubsidies to the sales value of exportedproducts and domestic subsidies to allproducts sold. As additional examples,over time, we also have adopted thepractices of attributing subsidies thatcan be tied to particular products tosales of those products and attributingsubsidies that can be tied to particularmarkets to products sold to thosemarkets.

Our tying rules recognize that agovernment subsidy may not benefit allproducts or corporate entities equally.At the same time, they recognize that asubsidy may provide benefits topersons, products, or entities, notspecifically named in a governmentprogram. Our tying rules are an attemptat a simple, rational set of guidelines for

reasonably attributing the benefit from asubsidy based on the stated purpose ofthe subsidy or the purpose we evincefrom record evidence at the time ofbestowal.

Section 351.525(b)(7) addresses theattribution of subsidies received bycompanies with multinationalproduction. As we stated in the 1997Proposed Regulations, it is ourcontinued position, based upon our pastadministrative experience, that:

The government of a country normallyprovides subsidies for the general purpose ofpromoting the economic and social health ofthat country and its people, and for thespecific purposes of supporting, assisting orencouraging domestic manufacturing orproduction and related activities (including,for example, social policy activities such asthe employment of its people).

GIA at 37231. Moreover, a governmentnormally will not provide subsidies tofirms that refuse to use them as thegovernment wants, and firms receivingsubsidies will not use them in a waythat would contravene the government’spurposes, as they otherwise risk losingfuture subsidies. Consistent with this,§ 351.525(b)(7) states that we normallywill attribute subsidies to sales ofmerchandise produced within thejurisdiction of the granting authority.However, where a respondent candemonstrate that the purpose of thesubsidy was to benefit more thandomestic production (i.e., the subsidywas tied to more than domesticproduction), the subsidy will beattributed to multinational sales.

One commenter argued that it isinappropriate to assume that untiedsubsidies received by a multinationalholding company benefit only thenational operations of the companybecause such subsidies release resourcesfor international as well as domesticoperations. This argument, however,rests on the principle that money isfungible and, as discussed above, we donot believe that fungibility should bethe guiding principle for attributingsubsidies. Moreover, the presumptionthat domestic subsidies benefit domesticproduction has been a well-establishedpractice since the Certain Steelinvestigations and has been upheld bythe CIT. See GIA at 37231; see alsoBritish Steel plc v. United States, 929 F.Supp. 426, 453–55 (CIT 1996), appealpending sub nom. Inland SteelIndustries, Inc. v. United States, Nos.98–1230, 1259 (Fed. Cir.).

The same commenter objected to thechange from the rebuttable presumptionadopted in 1993. We note that under the1993 practice, a respondent wasrequired to show that a subsidy was nottied to domestic production. If a

respondent successfully demonstratedthis, the subsidy would be attributed tomultinational production. Under theproposed paragraph (b)(7), however,respondents were required todemonstrate that the subsidies were tiedto foreign production. If we found thesubsidy to be tied to foreign production,it would not be countervailed. The finalrule, which is worded slightlydifferently, still requires affirmativeevidence that the purpose of the subsidywas to benefit more than domesticproduction. We continue to believe thatthe shift in emphasis will bring ourpractice with respect to multinationalcompanies more in line with the otherattribution rules that require evidence oftying, as opposed to evidence that asubsidy is not tied.

Another commenter, while notobjecting to the proposed change in theformulation of the presumption,objected to our statement that, if theDepartment found a subsidy tied toforeign production, it would not becountervailed. This commenter arguedthat if the Department maintains acountervailing duty order coveringexports from the country in which theforeign production occurred, it shouldcountervail those subsidies.

We have not adopted this suggestionbecause the statute permitscountervailing subsidies provided byone government for the benefit ofproduction in another country only inlimited circumstances. See § 351.527(transnational subsidies). However, thiscomment did prompt a closerexamination of the proposed rule.Recognizing that governments are notlikely to provide subsidies solely for thebenefit of foreign production, we believethat the purpose, even of subsidieswhich may be tied to foreignproduction, is in fact to benefitmultinational operations, includingthose in the subsidizing jurisdiction.Therefore, we have revised the rule sothat if a respondent demonstrates that asubsidy is tied to more than domesticproduction, the subsidy will beattributed to multinational salesincluding sales in the subsidizingjurisdiction. We will examine suchclaims closely to ensure that the subsidywas, in fact, tied to more than domesticproduction. Respondents must showthat, in the authorization and/orapproval documents, the governmentexplicitly stated that the subsidy wasbeing provided for more than domesticproduction. Simply approving a loan toa company with multinationalproduction, or providing an equityinfusion to the company, is notsufficient to demonstrate that thesubsidy was tied to more than domestic


production. The documentation mustshow that, at the point of bestowal, oneof the express purposes of the subsidywas to provide assistance to the firm’sforeign subsidiaries. Absent such ademonstration, all subsidies, whethertied or untied, will be attributed to theappropriate category of domestically-produced sales as mandated by the rulescontained in paragraphs (b)(1) through(b)(6).

We received one comment requestingthe Department to include language inits Final Regulations which would allowthe agency to tie regional subsidies toproduction in a particular region—essentially to calculate factory-specificsubsidy rates. This commenter points toLive Swine from Canada, 61 FR 26879(May 29, 1996) (‘‘Live Swine fromCanada’’) in support of this proposal. Inthat case, the Department allocatedregional benefits over regionalproduction and then calculated a singlecountry-wide rate based on eachregion’s exports to the United States.

We have not adopted this suggestion.The calculation methodology employedin Live Swine from Canada wasparticular to the facts of that case ‘‘ anaggregate case in which the majority ofsubsidy programs examined wereregionally provided. If such amethodology were to be universallyapplied, foreign companies could easilyescape payment of countervailing dutiesby selling the production of asubsidized region domestically, whileexporting from a facility in anunsubsidized region.

Another commenter argued that if itwere true that governments normallywill not provide subsidies to firms thatrefuse to use them as the governmentwants, then even ‘‘untied’’ subsidies areworth less than their face value byvirtue of the fact that the subsidy isinherently ‘‘restricted’’ in its use. Thiscommenter appears to be seeking tohave the Department reduce the value ofthe subsidy because of potentialconstraints placed on its receipt. Wenote that such a reduction is not anallowable offset under the statute.

Finally, we note that we have addeda paragraph to this section whichcodifies our longstanding practiceregarding the attribution of subsidies totrading companies. See, e.g., CertainStainless Steel Cooking Ware from theRepublic of Korea, 51 FR 42867(November 26, 1986) and Certain SteelWire Nails from Thailand, 52 FR 36987(October 2, 1987). Although we did notreceive any comments on this issue andour practice has been non-controversial,we believe it is important to codifythose practices that we intend tocontinue. Therefore, paragraph (c) has

been added which states that benefitsfrom subsidies provided to tradingcompanies (or any firm that only sellsand does not produce subjectmerchandise) will be cumulated withbenefits from subsidies provided to theproducer of subject merchandise,regardless of whether the tradingcompany and the producer areaffiliated.

Section 351.526Section 351.526 deals with program-

wide changes, and is almost identical to§ 355.50 of the 1989 ProposedRegulations.

One commenter suggested that theDepartment should add specificlanguage to the regulation stating thatthe cash deposit rate will not beadjusted for a terminated program,unless the respondent has presentedpositive evidence demonstrating that noresidual benefits will be bestowed andthat no transitional program has been, orwill be enacted. The commenter furthersuggested that the regulation also clearlyset forth that the Department will notadjust the cash deposit rate based onmere assertion or announcement of agovernment’s intent to terminate aprogram.

We agree with the commenter thatprogram-wide changes must bedocumented by the respondent, beyondmere assertion. However, we do not feelthat it is necessary to codify thisposition through an amendedregulation. Given the general nature ofthis policy and our current practice, towhich the commenter does not object,there is no reason to amend the currentregulation.

A second commenter argued that§ 351.526 should allow for thepossibility that evidence of a program-wide change received subsequent to theperiod of investigation or review, butbefore the preliminary determination orpreliminary results of an administrativereview, may change the finaldetermination or final results of thereview. For example, when a programhas been terminated and no residualbenefits exist, the Department’s finaldetermination or final results should benegative (assuming that there is onlyone program). The commenter assertedthat the 1997 Proposed Regulations,which would require the Department torender an affirmative determinationwith a zero cash deposit rate, isinconsistent with the overall purpose ofthe U.S. countervailing duty law. Thecommenter further argued that theDepartment should not have thediscretion to determine that a‘‘substitute program’’ continues toprovide benefits; a substitute program

must be considered only in a newinvestigation or upon an allegation in anadministrative review.

We have not adopted the suggestedchanges of this commenter. It has beenour longstanding practice to impose (ornot to impose) a CVD order basedexclusively on the subsidy rate in effectduring the period of investigation. InPipe and Tube from Malaysia, where theperiod of investigation rate was zero, werendered a negative determination, eventhough we knew other benefits existedafter the period of investigation. See,Standard Pipe, Line Pipe, Light-WalledRectangular Tubing and Heavy-WalledRectangular Tubing from Malaysia, 53FR 46904, 46906 (November 21, 1988).If a subsidy exists during the period ofinvestigation, we will issue a CVD order(where any required injurydetermination is affirmative) regardlessof whether the program and the subsidyare eliminated after the period ofinvestigation, but before our finaldetermination. In regard to substituteprograms, it is our practice to considerwhether such programs exist whenadjusting deposit rates. If we did nothave such discretion to determinewhether a substitute program offers thesame benefits as a terminated program,then governments could terminateinvestigated or reviewed programs andreplace them with other programs toobtain a lower deposit rate.

Section 351.527Section 351.527, which is based on

§ 355.44(o) of the 1989 ProposedRegulations, provides that so-called‘‘transnational subsidies’’ are notcountervailable. Subsidies of this typeinclude situations where the funding forthe subsidy is provided (a) by thegovernment of a country other than thecountry in which the recipient firm islocated, of (2) by an internationallending or development institution.Except for the addition of the phrase‘‘ * * * supplied in accordance with,and as part of, a program or projectfunded,’’ which we discuss below,§ 351.527 is the same as the provision inthe 1997 Proposed Regulations and§ 355.44(o) of the 1989 ProposedRegulations.

Paragraph (o)(2) of § 355.44(o) of the1989 Proposed Regulations essentiallyduplicated what is now section 701(d)of the Act, a provision that deals withsubsidies to international consortia. Inlight of our decision to avoid regulationsthat merely repeat the statute, § 351.527merely references, but does not repeat,section 701(d).

One commenter stated that paragraph(a) in the 1997 Proposed Regulationsshould be clarified to apply solely to


foreign aid; otherwise any subsidyprovided by the government of onecountry to a recipient located in anothercountry would be not countervailable.The commenter argued that, as written,the regulation would prevent theDepartment from conducting anupstream analysis in a case where asubsidy is provided by the governmentof one country to an input producer inthat country, that producer sells theinput to a firm in another country, andthis last firm ultimately sells subjectmerchandise to the United States.Another commenter stated that thestatutory basis for not countervailingsubsidies provided by one country to anentity producing or manufacturing thesubject merchandise in another countryno longer exists following the repeal ofsection 303 by the URAA and, prior tothe URAA, did not exist for SubsidiesCode members covered by section 701,notwithstanding previous assertions bythe Department to the contrary.Therefore this commenter suggestsstriking paragraph (a) in its entirety.Both commenters supported paragraph(b), which addresses subsidies fundedby international lending or developmentinstitutions.

Section 351.527 derives from priorsection 303(a)(l) of the Act (nowrepealed), which stated:

Whenever any country * * * shall pay orbestow, directly or indirectly, any bounty ofgrant upon the manufacture or production orexport of any article * * * manufactured orproduced in such country * * * there shallbe levied a duty equal to the net amount ofsuch bounty or grant * * * .19 U.S.C. section 1303(a)(1)(1994)(emphasisadded).

In our view, neither the successorshipof section 701 for Subsidies Codemembers, nor the repeal of section 303by the URAA, eliminated thetransnational subsidies rule, and there isno other indication that Congressintended to eliminate this rule. Inaddition, § 351.527 does not precludethe Department from conducting anupstream analysis in a case where asubsidy is provided by the governmentof one country to an input producer inthat country, that producer sells theinput to a firm in another country, andthis last firm ultimately sells subjectmerchandise to the United States. Asexplained in the preamble to § 351.523,section 701(d), the internationalconsortia provision of the statute, allowsthe Department to countervail suchsubsidies where both countries are‘‘members (or other participatingentities)’’ in an international consortiumand the subsidy on the input product‘‘assisted, permitted, or otherwiseenabled’’ the participation of that

producer in the consortium.Furthermore, section 771A, theupstream subsidies provision of thestatute, allows the Department to reachsubsidies provided by one country thatis a member in a customs union to aninput produced in that country forincorporation into subject merchandiseproduced in another country that is amember of the same customs union.

With respect to § 351.527(b), we agreewith the commenters that a subsidydoes not exist if the funding for thesubsidy is provided by an internationallending or development institution.Common examples of this type ofinternational funding include theconstruction of a dam, a hydroelectricplant, or some other large infrastructureproject. The exemption in § 351.527applies if sufficient evidence isprovided showing that the funding forthe subsidy is supplied in accordancewith, and as part of, a program orproject funded by another governmentor by an international lending ordevelopment institution. If, however,the recipient government decides on itsown, outside of such a program orproject, to provide a subsidy, thatsubsidy will be subject to thecountervailing duty law. At the sametime, the provision of transnationalfunds to a government does not in andof itself create a presumption ofsubsidization. We have amended§ 351.527 to reflect the limitedapplication of this exemption and toclarify that national government subsidyprograms, if they meet the statutorycriteria for a countervailable subsidy,will not escape countervailing duties.

Comments Relating to ProceduralRegulations

We received comments arguing thatremand determinations, like otherdeterminations, should be published inthe Federal Register. Although thisissue was addressed in AntidumpingDuties; Countervailing Duties; Finalrule, 62 FR 27295, 27330 (May 19, 1997)(‘‘Procedural Regulations’’), thesecommenters assert that the alternativesdescribed therein do not providesufficient access to remanddeterminations. The commenters arguethat the publication of remanddeterminations is crucial as they correctpreviously published determinationsfound to be unsupported by substantialevidence or not in accordance with thelaw. Moreover, remand decisions ofteninclude new analysis or expandeddiscussions of the Department’smethodology which is not included inpublished decisions.

While we understand the concerns ofthe commenters, given the high cost of

publishing notices in the FederalRegister, we do not agree that remanddeterminations should be published inthe Federal Register. At this time, wewill continue the current plan of postingfinal remand determinations on theImport Administration web site (http://www.ita.doc.gov/importladmin/).After this system has been in place fora reasonable period of time, we willevaluate whether this system providesadequate distribution of thedeterminations, or if another systemwould provide better public access.

We also received a commentencouraging the Department to codifyand follow all procedures relating to theissuance of deposit instructions toCustoms. Under § 351.211(b) of theDepartment’s Procedural Regulations,the Department is obligated to issuedeposit instructions within seven daysof a final affirmative ITC determination,and promptly after final review results.However, the commenter stated that theDepartment frequently misses thesedeadlines, and parties have no remedy.Also, the commenter noted that theregulations do not address changesresulting from remands. The commenterstated that in some cases, deposit ratesare not amended until all appeals areexhausted, and that this harmspetitioners. According to thecommenter, a fair rule would be to issueamended deposit rates immediatelyafter the remand results are approved bythe Court, if the amended rate is higherthan the rate calculated in the previoussegment. If that higher rate is eventuallydetermined to be incorrect, then thedifference can be refunded.

We agree that we should issue depositinstructions promptly. With regard tochanges in deposit rates after remandresults are affirmed, our policy has beento follow the decision in Timken v.United States, 893 F.2d 337 (Fed. Cir.1990). Pursuant to our interpretation ofthis case, we do not change depositinstructions following a remanddetermination until all appeals areexhausted. If, however, the remandchanges a negative determination to anaffirmative determination, we willinstruct Customs to suspend liquidationat a zero rate until all appeals areexhausted.

Subpart G—Effective DatesSubpart G currently consists of a

single § 351.701, which established thedates on which the new substantive ADand procedural AD and CVD regulationspublished on May 19, 1997, becameeffective. Section 701 also explains theextent to which the previous AD andprocedural regulations govern segmentsof proceedings to which the new


regulations do not apply and the limitedrole of the new regulations in suchproceedings.

We are now adding a new § 351.702to establish effective dates for the newCVD substantive regulations. Becausethe procedural regulations published onMay 19, 1997, apply to CVDproceedings, the effective dates in thesubstantive CVD regulations arestructured as an exception to theeffective dates in the proceduralregulations.

Section 351.702(a) provides that thenew substantive CVD regulations willapply to all investigations initiatedpursuant to petitions filed more than 30days after the date on which they arepublished. In addition, § 351.702(a)provides that the new regulations willapply to all administrative reviewsinitiated on the basis of requests filed inthe month following the month inwhich the date 30 days after publicationof this notice falls (in other words, themonth following the month in whichthe regulations otherwise becomeeffective). The slight difference ineffective dates for requestedadministrative reviews is to avoidconfusion over whether the newregulations apply to administrativereviews requested by different partieson different days during the month inwhich the new regulations becomeeffective. Finally § 351.702(a) applies toall investigations or reviews that theDepartment self-initiates more than 30days after the date on which the newregulations are published.

Section 351.702(b) provides thatinvestigations and reviews to which thesubstantive CVD regulations do notapply will continue to be governed bythe Department’s previous CVDmethodology, except to the extent thatthe previous methodology wasinvalidated by the URAA. Althoughthere are no previous CVD substantiveregulations, the Department’s previousmethodology generally is described inthe proposed substantive CVDregulations published May 31, 1989. Insituations where the previousmethodology was invalidated by theURAA, the new regulations will serve asa restatement of the Department’sinterpretation of the Act as amended bythe URAA. The 1997 ProposedRegulations have no role as precedentfor any CVD determinations.

Classification

E.O. 12866

This final rule has been determined tobe significant under E.O. 12866.


The Assistant General Counsel forLegislation and Regulation of theDepartment of Commerce certified tothe Chief Counsel for Advocacy of theSmall Business Administration that thisfinal rule will not have a significanteconomic impact on a substantialnumber of small entities. TheDepartment does not believe that therewill be any substantive effect on theoutcome of AD and CVD proceedings asa result of the streamlining andsimplification of their administration.With respect to the substantiveamendments implementing the URAA,the Department believes that theseregulations benefit both petitioners andrespondents without favoring either,and, therefore, would not have asignificant economic effect. As such, aninitial regulatory flexibility analysis wasnot prepared.


Notwithstanding any other provisionof law, no person is required to respondto nor shall a person be subject to apenalty for failure to comply with acollection of information subject to therequirements of the PaperworkReduction Act unless that collection ofinformation displays a currently validOMB Control Number. This final ruledoes not contain any new reporting orrecording requirements subject to thePaperwork Reduction Act.

There are three separate collections ofinformation contained in this rule. Eachis currently approved by the Office ofManagement and Budget. The PetitionFormat for Requesting Relief Under U.S.Antidumping Laws, OMB Control No.0625–0105, is estimated to impose anaverage public reporting burden of 40hours. The information submitted isused to assess the petitioner’sallegations of unfair trade practices andto determine whether an investigation iswarranted. The information requestedrelates to the existence of sales at lessthan fair value and injury to the affectedU.S. industry. Second, the Format forPetition Requesting Relief Under theCountervailing Duty Law is approvedunder OMB Control No. 0625–0148.This format is used to elicit theinformation required by the Tariff Act of1930, as amended, and its implementingregulations, for the initiation of a CVDinvestigation. Specifically, the Formatrequests information about the importedproduct, a description of the allegedsubsidies to the imported product, andthe extent to which the domesticindustry is being injured by theimported product. Finally, OMB ControlNo. 0625–0200, Antidumping and

Countervailing Duties, Procedures forInitiation of Downstream ProductMonitoring, provides for the filing of apetition requesting the review of a‘‘downstream’’ product. A downstreamproduct is one that has incorporated asa component part, a part that is coveredby a U.S. antidumping or countervailingduty finding. To be eligible to file apetition, the petitioner must produce aproduct like the component part or thedownstream product. It is estimated torequire 15 hours per petition.

These estimates include the time forreviewing instructions, searchingexisting data sources, gathering andmaintaining the data needed, andcompleting and reviewing thecollections of information. Sendcomments regarding these burdenestimates or any other aspect of thesecollections of information, includingsuggestions for reducing the burden, tothe Department of Commerce, 14thStreet and Constitution Avenue, NW,Washington, DC. 20230, or to OMB DeskOfficer, New Executive Office Building,Washington, DC. 20503.

E.O. 12612

This final rule does not containfederalism implications warranting thepreparation of a Federalism Assessment.

List of Subjects

19 CFR Part 351

Administrative practice andprocedure, Antidumping, Business andindustry, Cheese, Confidential businessinformation, Countervailing duties,Investigations, Reporting andrecordkeeping requirements.

19 CFR Part 353

Administrative practice andprocedure, Antidumping, Business andindustry, Confidential businessinformation, Investigations, Reportingand recordkeeping requirements.

19 CFR Part 355

Administrative practice andprocedure, Business and industry,Cheese, Confidential businessinformation, Countervailing duties,Freedom of Information, Investigations,Reporting and recordkeepingrequirements.


Robert S. LaRussa,Assistant Secretary for ImportAdministration.

For the reasons stated, 19 CFR part351 is amended as follows:


PART 351—ANTIDUMPING ANDCOUNTERVAILING DUTIES

The authority citation for part 351continues to read as follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 1202note; 19 U.S.C. 1303 note; 19 U.S.C. 1671 etseq. and 19 U.S.C. 3538.

2. Section 351.102 (Definitions) isamended by adding new definitions toread as follows:

§ 351.102 Definitions

* * * * *(b) * * *Consumed in the production process.

Inputs ‘‘consumed in the productionprocess’’ are inputs physicallyincorporated, energy, fuels and oil usedin the production process and catalystswhich are consumed in the course oftheir use to obtain the product.

Cumulative indirect tax. ‘‘Cumulativeindirect tax’’ means a multi-staged taxlevied where there is no mechanism forsubsequent crediting of the tax if thegoods or services subject to tax at onestage of production are used in asucceeding stage of production.* * * * *

Direct tax. ‘‘Direct tax’’ means a tax onwages, profits, interests, rents, royalties,and all other forms of income, a tax onthe ownership of real property, or asocial welfare charge.* * * * *

Export insurance. ‘‘Export insurance’’includes, but is not limited to, insuranceagainst increases in the cost of exportedproducts, nonpayment by the customer,inflation, or exchange rate risks.

Firm. For purposes of subpart E(Identification and Measurement ofCountervailable Subsidies), ‘‘firm’’ isused to refer to the recipient of analleged countervailable subsidy,including any individual, company,partnership, corporation, joint venture,association, organization, or otherentity.* * * * *

Government-provided. ‘‘Government-provided’’ is a shorthand expression foran act or practice that is alleged to bea countervailable subsidy. The use ofthe term ‘‘government-provided’’ is notintended to preclude the possibility thata government may provide acountervailable subsidy indirectly in amanner described in section771(5)(B)(iii) of the Act (indirectfinancial contribution).

Import charge. ‘‘Import charge’’means a tariff, duty, or other fiscalcharge that is levied on imports, otherthan an indirect tax.* * * * *

Indirect tax. ‘‘Indirect tax’’ means asales, excise, turnover, value added,franchise, stamp, transfer, inventory, orequipment tax, a border tax, or anyother tax other than a direct tax or animport charge.* * * * *

Loan. ‘‘Loan’’ means a loan or otherform of debt financing, such as a bond.

Long-term loan. ‘‘Long-term loan’’means a loan, the terms of repaymentfor which are greater than one year.

Prior-stage indirect tax. ‘‘Prior-stageindirect tax’’ means an indirect taxlevied on goods or services used directlyor indirectly in making a product.* * * * *

Short-term loan. ‘‘Short-term loan’’means a loan, the terms of repaymentfor which are one year or less.* * * * *

3. A new subpart E is added to 19 CFRpart 351, to read as follows:

Subpart E—Identification and Measurementof Countervailable Subsidies

Sec.351.501 Scope.351.502 Specificity of domestic subsidies.351.503 Benefit.351.504 Grants.351.505 Loans.351.506 Loan guarantees.351.507 Equity.351.508 Debt forgiveness.351.509 Direct taxes.351.510 Indirect taxes and import charges

(other than export programs).351.511 Provision of goods or services.351.512 Purchase of goods. [Reserved]351.513 Worker-related subsidies.351.514 Export subsidies.351.515 Internal transport and freight

charges for export shipments.351.516 Price preferences for inputs used in

the production of goods for export.351.517 Exemption or remission upon

export of indirect taxes.351.518 Exemption, remission, or deferral

upon export of prior-stage cumulativeindirect taxes.

351.519 Remission or drawback of importcharges upon export.

351.520 Export insurance.351.521 Import substitution subsidies.

[Reserved]351.522 Green light and green box

subsidies.351.523 Upstream subsidies.351.524 Allocation of benefit to a particular

time period.351.525 Calculation of ad valorem subsidy

rate and attribution of subsidy to aproduct.

351.526 Program-wide changes.351.527 Transnational subsidies.

Subpart E—Identification andMeasurement of CountervailableSubsidies

§ 351.501 Scope.The provisions of this subpart E set

forth rules regarding the identificationand measurement of countervailablesubsidies. Where this subpart E does notexpressly deal with a particular type ofalleged subsidy, the Secretary willidentify and measure the subsidy, ifany, in accordance with the underlyingprinciples of the Act and this subpart E.

§ 351.502 Specificity of domesticsubsidies.

(a) Sequential analysis. Indetermining whether a subsidy is defacto specific, the Secretary willexamine the factors contained in section771(5A)(D)(iii) of the Act sequentially inorder of their appearance. If a singlefactor warrants a finding of specificity,the Secretary will not undertake furtheranalysis.

(b) Characteristics of a ‘‘group.’’ Indetermining whether a subsidy is beingprovided to a ‘‘group’’ of enterprises orindustries within the meaning of section751(5A)(D) of the Act, the Secretary isnot required to determine whether thereare shared characteristics among theenterprises or industries that are eligiblefor, or actually receive, a subsidy.

(c) Integral linkage. Unless theSecretary determines that two or moreprograms are integrally linked, theSecretary will determine the specificityof a program under section 771(5A)(D)of the Act solely on the basis of theavailability and use of the particularprogram in question. The Secretary mayfind two or more programs to beintegrally linked if:

(1) The subsidy programs have thesame purpose;

(2) The subsidy programs bestow thesame type of benefit;

(3) The subsidy programs confersimilar levels of benefits on similarlysituated firms; and

(4) The subsidy programs were linkedat inception.

(d) Agricultural subsidies. TheSecretary will not regard a subsidy asbeing specific under section 771(5A)(D)of the Act solely because the subsidy islimited to the agricultural sector(domestic subsidy).

(e) Subsidies to small-and medium-sized businesses. The Secretary will notregard a subsidy as being specific undersection 771(5A)(D) of the Act solelybecause the subsidy is limited to smallfirms or small-and medium-sized firms.

(f) Disaster relief. The Secretary willnot regard disaster relief as beingspecific under section 771(5A)(D) of the


Act if such relief constitutes generalassistance available to anyone in thearea affected by the disaster.

§ 351.503 Benefit.(a) Specific rules. In the case of a

government program for which aspecific rule for the measurement of abenefit is contained in this subpart E,the Secretary will measure the extent towhich a financial contribution (orincome or price support) confers abenefit as provided in that rule. Forexample, § 351.504(a) prescribes thespecific rule for measurement of thebenefit of grants.

(b) Other subsidies.—(1) In general.For other government programs, theSecretary normally will consider abenefit to be conferred where a firmpays less for its inputs (e.g., money, agood, or a service) than it otherwisewould pay in the absence of thegovernment program, or receives morerevenues than it otherwise would earn.

(2) Exception. Paragraph (b)(1) of thissection is not intended to limit theability of the Secretary to imposecountervailing duties when the facts ofa particular case establish that afinancial contribution (or income orprice support) has conferred a benefit,even if that benefit does not take theform of a reduction in input costs or anenhancement of revenues. Whenparagraph (b)(1) of this section is notapplicable, the Secretary will determinewhether a benefit is conferred byexamining whether the alleged programor practice has common or similarelements to the four illustrativeexamples in sections 771(5)(E)(i)through (iv) of the Act.

(c) Distinction from effect of subsidy.In determining whether a benefit isconferred, the Secretary is not requiredto consider the effect of the governmentaction on the firm’s performance,including its prices or output, or howthe firm’s behavior otherwise is altered.

(d) Varying financial contributionlevels.—(1) In general. Where agovernment program provides varyinglevels of financial contributions basedon different eligibility criteria, and oneor more of such levels is not specificwithin the meaning of § 351.502, abenefit is conferred to the extent that afirm receives a greater financialcontribution than the financialcontributions provided at a non-specificlevel under the program. The precedingsentence shall apply only to the extentthe Secretary determines that thevarying levels of financial contributionsare set forth in a statute, decree,regulation, or other official act; that thelevels are clearly delineated andidentifiable; and that the firm would

have been eligible for the non-specificlevel of contributions.

(2) Exception. Paragraph (d)(1) of thissection shall not apply where the statutespecifies a commercial test fordetermining the benefit.

(e) Tax consequences. In calculatingthe amount of a benefit, the Secretarywill not consider the tax consequencesof the benefit.

§ 351.504 Grants.(a) Benefit. In the case of a grant, a

benefit exists in the amount of the grant.(b) Time of receipt of benefit. In the

case of a grant, the Secretary normallywill consider a benefit as having beenreceived on the date on which the firmreceived the grant.

(c) Allocation of a grant to aparticular time period. The Secretarywill allocate the benefit from a grant toa particular time period in accordancewith § 351.524.

§ 351.505 Loans.(a) Benefit.—(1) In general. In the case

of a loan, a benefit exists to the extentthat the amount a firm pays on thegovernment-provided loan is less thanthe amount the firm would pay on acomparable commercial loan(s) that thefirm could actually obtain on themarket. See section 771(5)(E)(ii) of theAct. In making the comparison calledfor in the preceding sentence, theSecretary normally will rely on effectiveinterest rates.

(2) ‘‘Comparable commercial loan’’defined.—(i) ‘‘Comparable’’ defined. Inselecting a loan that is ‘‘comparable’’ tothe government-provided loan, theSecretary normally will place primaryemphasis on similarities in the structureof the loans (e.g., fixed interest rate v.variable interest rate), the maturity ofthe loans (e.g., short-term v. long-term),and the currency in which the loans aredenominated.

(ii) ‘‘Commercial’’ defined. Inselecting a ‘‘commercial’’ loan, theSecretary normally will use a loan takenout by the firm from a commerciallending institution or a debt instrumentissued by the firm in a commercialmarket. Also, the Secretary will treat aloan from a government-owned bank asa commercial loan, unless there isevidence that the loan from agovernment-owned bank is provided onnon-commercial terms or at thedirection of the government. However,the Secretary will not consider a loanprovided under a government program,or a loan provided by a government-owned special purpose bank, to be acommercial loan for purposes ofselecting a loan to compare with agovernment-provided loan.

(iii) Long-term loans. In selecting acomparable loan, if the government-provided loan is a long-term loan, theSecretary normally will use a loan theterms of which were established during,or immediately before, the year inwhich the terms of the government-provided loan were established.

(iv) Short-term loans. In making thecomparison required under paragraph(a)(1) of this section, if the government-provided loan is a short-term loan, theSecretary normally will use an annualaverage of the interest rates oncomparable commercial loans duringthe year in which the government-provided loan was taken out, weightedby the principal amount of each loan.However, if the Secretary finds thatinterest rates fluctuated significantlyduring the period of investigation orreview, the Secretary will use the mostappropriate interest rate based on thecircumstances presented.

(3) ‘‘Could actually obtain on themarket’’ defined.—(i) In general. Inselecting a comparable commercial loanthat the recipient ‘‘could actually obtainon the market,’’ the Secretary normallywill rely on the actual experience of thefirm in question in obtainingcomparable commercial loans for bothshort-term and long-term loans.

(ii) Where the firm has no comparablecommercial loans. If the firm did nottake out any comparable commercialloans during the period referred to inparagraph (a)(2)(iii) or (a)(2)(iv) of thissection, the Secretary may use anational average interest rate forcomparable commercial loans.

(iii) Exception for uncreditworthycompanies. If the Secretary finds that afirm that received a government-provided long-term loan wasuncreditworthy, as defined in paragraph(a)(4) of this section, the Secretarynormally will calculate the interest rateto be used in making the comparisoncalled for by paragraph (a)(1) of thissection according to the followingformula:ib = [(1¥qn)(1+if)n/(1¥pn)]1/n¥1,where:n = the term of the loan;ib = the benchmark interest rate for

uncreditworthy companies;if = the long-term interest rate that

would be paid by a creditworthycompany;

pn = the probability of default by anuncreditworthy company within nyears; and

qn = the probability of default by acreditworthy company within nyears.

‘‘Default’’ means any missed or delayedpayment of interest and/or principal,


bankruptcy, receivership, or distressedexchange. For values of pn, the Secretarywill normally rely on the averagecumulative default rates reported for theCaa to C-rated category of companies inMoody’s study of historical default ratesof corporate bond issuers. For values ofqn, the Secretary will normally rely onthe average cumulative default ratesreported for the Aaa to Baa-ratedcategories of companies in Moody’sstudy of historical default rates ofcorporate bond issuers.

(4) Uncreditworthiness.—(i) Ingeneral. The Secretary will consider afirm to be uncreditworthy if theSecretary determines that, based oninformation available at the time of thegovernment-provided loan, the firmcould not have obtained long-term loansfrom conventional commercial sources.The Secretary will determineuncreditworthiness on a case-by-casebasis, and may, in appropriatecircumstances, focus itscreditworthiness analysis on the projectbeing financed rather than the companyas a whole. In making thecreditworthiness determination, theSecretary may examine, among otherfactors, the following:

(A) The receipt by the firm ofcomparable commercial long-termloans;

(B) The present and past financialhealth of the firm, as reflected in variousfinancial indicators calculated from thefirm’s financial statements andaccounts;

(C) The firm’s recent past and presentability to meet its costs and fixedfinancial obligations with its cash flow;and

(D) Evidence of the firm’s futurefinancial position, such as marketstudies, country and industry economicforecasts, and project and loanappraisals prepared prior to theagreement between the lender and thefirm on the terms of the loan.

(ii) Significance of long-termcommercial loans. In the case of firmsnot owned by the government, thereceipt by the firm of comparable long-term commercial loans, unaccompaniedby a government-provided guarantee,will normally constitute dispositiveevidence that the firm is notuncreditworthy.

(iii) Significance of prior subsidies. Indetermining whether a firm isuncreditworthy, the Secretary willignore current and prior subsidiesreceived by the firm.

(iv) Discount rate. When thecreditworthiness of a firm is consideredin connection with the allocation ofnon-recurring benefits, the Secretarywill rely on information available in the

year in which the government agreed toprovide the subsidy conferring a non-recurring benefit.

(5) Long-term variable rate loans.—(i)In general. In the case of a long-termvariable rate loan, the Secretarynormally will make the comparisoncalled for by paragraph (a)(1) of thissection by relying on a comparablecommercial loan with a variable interestrate. The Secretary then will comparethe variable interest rates on thecomparable commercial loan and thegovernment-provided loan for the yearin which the terms of the government-provided loan were established. If thecomparison shows that the interest rateon the government-provided loan wasequal to or higher than the interest rateon the comparable commercial loan, theSecretary will not consider thegovernment-provided loan as havingconferred a benefit. If the comparisonshows that the interest rate on thegovernment-provided loan was lower,the Secretary will consider thegovernment-provided loan as havingconferred a benefit, and, if the othercriteria for a countervailable subsidy aresatisfied, will calculate the amount ofthe benefit in accordance withparagraph (c)(4) of this section.

(ii) Exception. If the Secretary isunable to make the comparisondescribed in paragraph (a)(5)(i) of thissection or if the comparison describedin paragraph (a)(5)(i) of this sectionwould yield an inaccurate measure ofthe benefit, the Secretary may modifythe method described in paragraph(a)(5)(i) of this section.

(6) Allegations.— (i) Allegation ofuncreditworthiness required. Normally,the Secretary will not consider theuncreditworthiness of a firm absent aspecific allegation by the petitioner thatis supported by information establishinga reasonable basis to believe or suspectthat the firm is uncreditworthy.

(ii) Government-owned banks. TheSecretary will not investigate a loanprovided by a government-owned bankabsent a specific allegation that issupported by information reasonablyavailable to petitioners indicating that:

(A) The loan meets the specificitycriteria in accordance with section771(5A) of the Act; and

(B) A benefit exists within themeaning of paragraph (a)(1) of thissection.

(b) Time of receipt of benefit. In thecase of loans described in paragraphs(c)(1), (c)(2), and (c)(4) of this section,the Secretary normally will consider abenefit as having been received in theyear in which the firm otherwise wouldhave had to make a payment on thecomparable commercial loan. In the

case of a loan described in paragraph(c)(3) of this section, the Secretarynormally will consider the benefit ashaving been received in the year inwhich the firm receives the proceeds ofthe loan.

(c) Allocation of benefit to aparticular time period.—(1) Short-termloans. The Secretary will allocate(expense) the benefit from a short-termloan to the year(s) in which the firm isdue to make interest payments on theloan. In no event may the present value(in the year of receipt of the loan) of theamounts calculated under the precedingsentence exceed the principal of theloan.

(2) Long-term fixed-rate loans withconcessionary interest rates. Except asprovided in paragraph (c)(3) of thissection, the Secretary normally willcalculate the subsidy amount to beassigned to a particular year bycalculating the difference in interestpayments for that year, i.e., thedifference between the interest paid bythe firm in that year on the government-provided loan and the interest the firmwould have paid on the comparisonloan. However, in no event may thepresent value (in the year of receipt ofthe loan) of the amounts calculatedunder the preceding sentence exceedthe principal of the loan.

(3) Long-term fixed-rate loans withdifferent repayment schedules.—(i)Calculation of present value of benefit.Where the government-provided loanand the loan to which it is comparedunder paragraph (a) of this section areboth long-term, fixed-interest rate loans,but have different grace periods ormaturities, or where the shapes of therepayment schedules differ, theSecretary will determine the totalbenefit by calculating the present value,in the year that repayment would beginon the comparable commercial loan, ofthe difference between the amount thatthe firm is to pay on the government-provided loan and the amount that thefirm would have paid on thecomparison loan. In no event may thetotal benefit calculated under thepreceding sentence exceed the principalof the loan.

(ii) Calculation of annual benefit.With respect to the benefit calculatedunder paragraph (c)(3)(i) of this section,the Secretary will determine the portionof that benefit to be assigned to aparticular year by using the formula setforth in § 351.524(d)(1) and thefollowing parameters:Ak = the amount countervailed in year

k,y = the present value of the benefit (see

paragraph (c)(3)(i) of this section),


n = the number of years in the life ofthe loan,

d = the interest rate on the comparisonloan selected under paragraph (a) ofthis section, and

k = the year of allocation, where theyear that repayment would begin onthe comparable commercial loan =1.

(4) Long-term variable interest rateloans. In the case of a government-provided long-term variable-rate loan,the Secretary normally will determinethe amount of the benefit attributable toa particular year by calculating thedifference in payments for that year, i.e.,the difference between the amount paidby the firm in that year on thegovernment-provided loan and theamount the firm would have paid on thecomparison loan. However, in no eventmay the present value (in the year ofreceipt of the loan) of the amountscalculated under the preceding sentenceexceed the principal of the loan.

(d) Contingent liability interest-freeloans.—(1) Treatment as loans. In thecase of an interest-free loan, for whichthe repayment obligation is contingentupon the company taking some futureaction or achieving some goal infulfillment of the loan’s requirements,the Secretary normally will treat anybalance on the loan outstanding duringa year as an interest-free, short-termloan in accordance with paragraphs (a),(b), and (c)(1) of this section. However,if the event upon which repayment ofthe loan depends will occur at a pointin time more than one year after thereceipt of the contingent liability loan,the Secretary will use a long-terminterest rate as the benchmark inaccordance with paragraphs (a), (b), and(c)(2) of this section. In no event maythe present value (in the year of receiptof the contingent liability loan) of theamounts calculated under thisparagraph exceed the principal of theloan.

(2) Treatment as grants. If, at anypoint in time, the Secretary determinesthat the event upon which repaymentdepends is not a viable contingency, theSecretary will treat the outstandingbalance of the loan as a grant receivedin the year in which this conditionmanifests itself.

§ 351.506 Loan guarantees.(a) Benefit.—(1) In general. In the case

of a loan guarantee, a benefit exists tothe extent that the total amount a firmpays for the loan with the government-provided guarantee is less than the totalamount the firm would pay for acomparable commercial loan that thefirm could actually obtain on the marketabsent the government-provided

guarantee, including any difference inguarantee fees. See section 771(5)(E)(iii)of the Act. The Secretary will select acomparable commercial loan inaccordance with § 351.505(a).

(2) Government acting as owner. Insituations where a government, acting asthe owner of a firm, provides a loanguarantee to that firm, the guaranteedoes not confer a benefit if therespondent provides evidencedemonstrating that it is normalcommercial practice in the country inquestion for shareholders to provideguarantees to their firms under similarcircumstances and on comparableterms.

(b) Time of receipt of benefit. In thecase of a loan guarantee, the Secretarynormally will consider a benefit ashaving been received in the year inwhich the firm otherwise would havehad to make a payment on thecomparable commercial loan.

(c) Allocation of benefit to aparticular time period. In allocating thebenefit from a government-providedloan guarantee to a particular timeperiod, the Secretary will use themethods set forth in § 351.505(c)regarding loans.

§ 351.507 Equity.

(a) Benefit.—(1) In general. In the caseof a government-provided equityinfusion, a benefit exists to the extentthat the investment decision isinconsistent with the usual investmentpractice of private investors, includingthe practice regarding the provision ofrisk capital, in the country in which theequity infusion is made. See section771(5)(E)(i) of the Act.

(2) Private investor prices available.—(i) In general. Except as provided inparagraph (a)(2)(iii) of this section, theSecretary will consider an equityinfusion as being inconsistent withusual investment practice (seeparagraph (a)(1) of this section) if theprice paid by the government for newlyissued shares is greater than the pricepaid by private investors for the same(or similar form of) newly issued shares.

(ii) Timing of private investor prices.In selecting a private investor priceunder paragraph (a)(2)(i) of this section,the Secretary will rely on sales of newlyissued shares made reasonablyconcurrently with the newly issuedshares purchased by the government.

(iii) Significant private sectorparticipation required. The Secretarywill not use private investor pricesunder paragraph (a)(2)(i) of this sectionif the Secretary concludes that privateinvestor purchases of newly issuedshares are not significant.

(iv) Adjustments for ‘‘similar’’ form ofequity. Where the Secretary uses privateinvestor prices for a form of shares thatis similar to the newly issued sharespurchased by the government (seeparagraph (a)(2)(i) of this section), theSecretary, where appropriate, willadjust the prices to reflect thedifferences in the forms of shares.

(3) Actual private investor pricesunavailable.—(i) In general. If actualprivate investor prices are not availableunder paragraph (a)(2) of this section,the Secretary will determine whetherthe firm funded by the government-provided equity was equityworthy orunequityworthy at the time of the equityinfusion (see paragraph (a)(4) of thissection). If the Secretary determines thatthe firm was equityworthy, theSecretary will apply paragraph (a)(5) ofthis section to determine whether theequity infusion was inconsistent withthe usual investment practice of privateinvestors. A determination by theSecretary that the firm wasunequityworthy will constitute adetermination that the equity infusionwas inconsistent with usual investmentpractice of private investors, and theSecretary will apply paragraph (a)(6) ofthis section to measure the benefitattributable to the equity infusion.

(4) Equityworthiness.—(i) In general.The Secretary will consider a firm tohave been equityworthy if the Secretarydetermines that, from the perspective ofa reasonable private investor examiningthe firm at the time the government-provided equity infusion was made, thefirm showed an ability to generate areasonable rate of return within areasonable period of time. The Secretarymay, in appropriate circumstances,focus its equityworthiness analysis on aproject rather than the company as awhole. In making the equityworthinessdetermination, the Secretary mayexamine the following factors, amongothers:

(A) Objective analyses of the futurefinancial prospects of the recipient firmor the project as indicated by, inter alia,market studies, economic forecasts, andproject or loan appraisals prepared priorto the government-provided equityinfusion in question;

(B) Current and past indicators of therecipient firm’s financial healthcalculated from the firm’s statementsand accounts, adjusted, if appropriate,to conform to generally acceptedaccounting principles;

(C) Rates of return on equity in thethree years prior to the governmentequity infusion; and

(D) Equity investment in the firm byprivate investors.


(ii) Significance of a pre-infusionobjective analysis. For purposes ofmaking an equityworthinessdetermination, the Secretary willrequest and normally require from therespondents the information andanalysis completed prior to the infusion,upon which the government based itsdecision to provide the equity infusion(see, paragraph (a)(4)(i)(A) of thissection). Absent the existence orprovision of an objective analysis,containing information typicallyexamined by potential private investorsconsidering an equity investment, theSecretary will normally determine thatthe equity infusion received provides acountervailable benefit within themeaning of paragraph (a)(1) of thissection. The Secretary will notnecessarily make such a determinationif the absence of an objective analysis isconsistent with the actions of reasonableprivate investors in the country inquestion.

(iii) Significance of prior subsidies. Indetermining whether a firm wasequityworthy, the Secretary will ignorecurrent and prior subsidies received bythe firm.

(5) Benefit where firm is equityworthy.If the Secretary determines that the firmor project was equityworthy (seeparagraph (a)(4) of this section), theSecretary will examine the terms andthe nature of the equity purchased todetermine whether the investment wasotherwise inconsistent with the usualinvestment practice of private investors.If the Secretary determines that theinvestment was inconsistent with usualprivate investment practice, theSecretary will determine the amount ofthe benefit conferred on a case-by-casebasis.

(6) Benefit where firm isunequityworthy. If the Secretarydetermines that the firm or project wasunequityworthy (see paragraph (a)(4) ofthis section), a benefit to the firm existsin the amount of the equity infusion.

(7) Allegations. The Secretary will notinvestigate an equity infusion in a firmabsent a specific allegation by thepetitioner which is supported byinformation establishing a reasonablebasis to believe or suspect that the firmreceived an equity infusion thatprovides a countervailable benefitwithin the meaning of paragraph (a)(1)of this section.

(b) Time of receipt of benefit. In thecase of a government-provided equityinfusion, the Secretary normally willconsider the benefit to have beenreceived on the date on which the firmreceived the equity infusion.

(c) Allocation of benefit to aparticular time period. The benefit

conferred by an equity infusion shall beallocated over the same time period asa non-recurring subsidy. See§ 351.524(d).

§ 351.508 Debt forgiveness.

(a) Benefit. In the case of anassumption or forgiveness of a firm’sdebt obligation, a benefit exists equal tothe amount of the principal and/orinterest (including accrued, unpaidinterest) that the government hasassumed or forgiven. In situations wherethe entity assuming or forgiving the debtreceives shares in a firm in return foreliminating or reducing the firm’s debtobligation, the Secretary will determinethe existence of a benefit under§ 351.507 (equity infusions).

(b) Time of receipt of benefit. In thecase of a debt or interest assumption orforgiveness, the Secretary normally willconsider the benefit as having beenreceived as of the date on which thedebt or interest was assumed orforgiven.

(c) Allocation of benefit to aparticular time period.—(1) In general.The Secretary will treat the benefitdetermined under paragraph (a) of thissection as a non-recurring subsidy, andwill allocate the benefit to a particularyear in accordance with § 351.524(d).

(2) Exception. Where an interestassumption is tied to a particular loanand where a firm can reasonably expectto receive the interest assumption at thetime it applies for the loan, theSecretary will normally treat the interestassumption as a reduced-interest loanand allocate the benefit to a particularyear in accordance with § 351.505(c)(loans).

§ 351.509 Direct taxes.

(a) Benefit.—(1) Exemption orremission of taxes. In the case of aprogram that provides for a full orpartial exemption or remission of adirect tax (e.g., an income tax), or areduction in the base used to calculatea direct tax, a benefit exists to the extentthat the tax paid by a firm as a resultof the program is less than the tax thefirm would have paid in the absence ofthe program.

(2) Deferral of taxes. In the case of aprogram that provides for a deferral ofdirect taxes, a benefit exists to the extentthat appropriate interest charges are notcollected. Normally, a deferral of directtaxes will be treated as a government-provided loan in the amount of the taxdeferred, according to the methodologydescribed in § 351.505. The Secretarywill use a short-term interest rate as thebenchmark for tax deferrals of one yearor less. The Secretary will use a long-

term interest rate as the benchmark fortax deferrals of more than one year.

(b) Time of receipt of benefit.—(1)Exemption or remission of taxes. In thecase of a full or partial exemption orremission of a direct tax, the Secretarynormally will consider the benefit ashaving been received on the date onwhich the recipient firm wouldotherwise have had to pay the taxesassociated with the exemption orremission. Normally, this date will bethe date on which the firm filed its taxreturn.

(2) Deferral of taxes. In the case of atax deferral of one year or less, theSecretary normally will consider thebenefit as having been received on thedate on which the deferred tax becomesdue. In the case of a multi-year deferral,the Secretary normally will consider thebenefit as having been received on theanniversary date(s) of the deferral.

(c) Allocation of benefit to aparticular time period. The Secretarynormally will allocate (expense) thebenefit of a full or partial exemption,remission, or deferral of a direct tax tothe year in which the benefit isconsidered to have been received underparagraph (b) of this section.

§ 351.510 Indirect taxes and importcharges (other than export programs).

(a) Benefit.—(1) Exemption orremission of taxes. In the case of aprogram, other than an export program,that provides for the full or partialexemption or remission of an indirecttax or an import charge, a benefit existsto the extent that the taxes or importcharges paid by a firm as a result of theprogram are less than the taxes the firmwould have paid in the absence of theprogram.

(2) Deferral of taxes. In the case of aprogram, other than an export program,that provides for a deferral of indirecttaxes or import charges, a benefit existsto the extent that appropriate interestcharges are not collected. Normally, adeferral of indirect taxes or importcharges will be treated as a government-provided loan in the amount of the taxesdeferred, according to the methodologydescribed in § 351.505. The Secretarywill use a short-term interest rate as thebenchmark for tax deferrals of one yearor less. The Secretary will use a long-term interest rate as the benchmark fortax deferrals of more than one year.

(b) Time of receipt of benefit.—(1)Exemption or remission of taxes. In thecase of a full or partial exemption orremission of an indirect tax or importcharge, the Secretary normally willconsider the benefit as having beenreceived at the time the recipient firm


otherwise would be required to pay theindirect tax or import charge.

(2) Deferral of taxes. In the case of thedeferral of an indirect tax or importcharge of one year or less, the Secretarynormally will consider the benefit ashaving been received on the date onwhich the deferred tax becomes due. Inthe case of a multi-year deferral, theSecretary normally will consider thebenefit as having been received on theanniversary date(s) of the deferral.

(c) Allocation of benefit to aparticular time period. The Secretarynormally will allocate (expense) thebenefit of a full or partial exemption,remission, or deferral described inparagraph (a) of this section to the yearin which the benefit is considered tohave been received under paragraph (b)of this section.

§ 351.511 Provision of goods or services.(a) Benefit.—(1) In general. In the case

where goods or services are provided, abenefit exists to the extent that suchgoods or services are provided for lessthan adequate remuneration. See section771(5)(E)(iv) of the Act.

(2) ‘‘Adequate Remuneration’’defined.—(i) In general. The Secretarywill normally seek to measure theadequacy of remuneration by comparingthe government price to a market-determined price for the good or serviceresulting from actual transactions in thecountry in question. Such a price couldinclude prices stemming from actualtransactions between private parties,actual imports, or, in certaincircumstances, actual sales fromcompetitively run government auctions.In choosing such transactions or sales,the Secretary will consider productsimilarity; quantities sold, imported, orauctioned; and other factors affectingcomparability.

(ii) Actual market-determined priceunavailable. If there is no useablemarket-determined price with which tomake the comparison under paragraph(a)(2)(i) of this section, the Secretarywill seek to measure the adequacy ofremuneration by comparing thegovernment price to a world marketprice where it is reasonable to concludethat such price would be available topurchasers in the country in question.Where there is more than onecommercially available world marketprice, the Secretary will average suchprices to the extent practicable, makingdue allowance for factors affectingcomparability.

(iii) World market price unavailable.If there is no world market priceavailable to purchasers in the country inquestion, the Secretary will normallymeasure the adequacy of remuneration

by assessing whether the governmentprice is consistent with marketprinciples.

(iv) Use of delivered prices. Inmeasuring adequate remuneration underparagraph (a)(2)(i) or (a)(2)(ii) of thissection, the Secretary will adjust thecomparison price to reflect the pricethat a firm actually paid or would payif it imported the product. Thisadjustment will include deliverycharges and import duties.

(b) Time of receipt of benefit. In thecase of the provision of a good orservice, the Secretary normally willconsider a benefit as having beenreceived as of the date on which thefirm pays or, in the absence of payment,was due to pay for the government-provided good or service.

(c) Allocation of benefit to aparticular time period. In the case of theprovision of a good or service, theSecretary will normally allocate(expense) the benefit to the year inwhich the benefit is considered to havebeen received under paragraph (b) ofthis section. In the case of the provisionof infrastructure, the Secretary willnormally treat the benefit as non-recurring and will allocate the benefit toa particular year in accordance with§ 351.524(d).

(d) Exception for generalinfrastructure. A financial contributiondoes not exist in the case of thegovernment provision of generalinfrastructure. General infrastructure isdefined as infrastructure that is createdfor the broad societal welfare of acountry, region, state or municipality.

§ 351.512 Purchase of goods. [Reserved]

§ 351.513 Worker-related subsidies.

(a) Benefit. In the case of a programthat provides assistance to workers, abenefit exists to the extent that theassistance relieves a firm of anobligation that it normally would incur.

(b) Time of receipt of benefit. In thecase of assistance provided to workers,the Secretary normally will consider thebenefit as having been received by thefirm on the date on which the paymentis made that relieves the firm of therelevant obligation.

(c) Allocation of benefit to aparticular time period. Normally, theSecretary will allocate (expense) thebenefit from assistance provided toworkers to the year in which the benefitis considered to have been receivedunder paragraph (b) of this section.

§ 351.514 Export subsidies.

(a) In general. The Secretary willconsider a subsidy to be an exportsubsidy if the Secretary determines that

eligibility for, approval of, or theamount of, a subsidy is contingent uponexport performance. In applying thissection, the Secretary will consider asubsidy to be contingent upon exportperformance if the provision of thesubsidy is, in law or in fact, tied toactual or anticipated exportation orexport earnings, alone or as one of twoor more conditions.

(b) Exception. In the case of exportpromotion activities of a government, abenefit does not exist if the Secretarydetermines that the activities consist ofgeneral informational activities that donot promote particular products overothers.

§ 351.515 Internal transport and freightcharges for export shipments.

(a) Benefit.—(1) In general. In the caseof internal transport and freight chargeson export shipments, a benefit exists tothe extent that the charges paid by afirm for transport or freight with respectto goods destined for export are lessthan what the firm would have paid ifthe goods were destined for domesticconsumption. The Secretary willconsider the amount of the benefit toequal the difference in amounts paid.

(2) Exception. For purposes ofparagraph (a)(1) of this section, a benefitdoes not exist if the Secretarydetermines that:

(i) Any difference in charges is theresult of an arm’s-length transactionbetween the supplier and the user of thetransport or freight service; or

(ii) The difference in charges iscommercially justified.

(b) Time of receipt of benefit. In thecase of internal transport and freightcharges for export shipments, theSecretary normally will consider thebenefit as having been received by thefirm on the date on which the firm paid,or in the absence of payment was dueto pay, the charges.

(c) Allocation of benefit to aparticular time period. Normally, theSecretary will allocate (expense) thebenefit from internal transport andfreight charges for export shipments tothe year in which the benefit isconsidered to have been received underparagraph (b) of this section.

§ 351.516 Price preferences for inputsused in the production of goods for export.

(a) Benefit.—(1) In general. In the caseof a program involving the provision bygovernments or their agencies, eitherdirectly or indirectly throughgovernment-mandated schemes, ofimported or domestic products orservices for use in the production ofexported goods, a benefit exists to theextent that the Secretary determines that


the terms or conditions on which theproducts or services are provided aremore favorable than the terms orconditions applicable to the provision oflike or directly competitive products orservices for use in the production ofgoods for domestic consumption unless,in the case of products, such terms orconditions are not more favorable thanthose commercially available on worldmarkets to exporters.

(2) Amount of benefit. In the case ofproducts provided under such schemes,the Secretary will determine the amountof the benefit by comparing the price ofproducts used in the production ofexported goods to the commerciallyavailable world market price of suchproducts, inclusive of delivery charges.

(3) Commercially available. Forpurposes of paragraph (a)(2) of thissection, commercially available meansthat the choice between domestic andimported products is unrestricted anddepends only on commercialconsiderations.

(b) Time of receipt of benefit. In thecase of a benefit described in paragraph(a)(1) of this section, the Secretarynormally will consider the benefit tohave been received as of the date onwhich the firm paid, or in the absenceof payment was due to pay, for theproduct.

(c) Allocation of benefit to aparticular time period. Normally, theSecretary will allocate (expense)benefits described in paragraph (a)(1) ofthis section to the year in which thebenefit is considered to have beenreceived under paragraph (b) of thissection.

§ 351.517 Exemption or remission uponexport of indirect taxes.

(a) Benefit. In the case of theexemption or remission upon export ofindirect taxes, a benefit exists to theextent that the Secretary determines thatthe amount remitted or exemptedexceeds the amount levied with respectto the production and distribution oflike products when sold for domesticconsumption.

(b) Time of receipt of benefit. In thecase of the exemption or remission uponexport of an indirect tax, the Secretarynormally will consider the benefit ashaving been received as of the date ofexportation.

(c) Allocation of benefit to aparticular time period. Normally, theSecretary will allocate (expense) thebenefit from the exemption or remissionupon export of indirect taxes to the yearin which the benefit is considered tohave been received under paragraph (b)of this section.

§ 351.518 Exemption, remission, ordeferral upon export of prior-stagecumulative indirect taxes.

(a) Benefit.—(1) Exemption of prior-stage cumulative indirect taxes. In thecase of a program that provides for theexemption of prior-stage cumulativeindirect taxes on inputs used in theproduction of an exported product, abenefit exists to the extent that theexemption extends to inputs that are notconsumed in the production of theexported product, making normalallowance for waste, or if the exemptioncovers taxes other than indirect taxesthat are imposed on the input. If theSecretary determines that the exemptionof prior-stage cumulative indirect taxesconfers a benefit, the Secretary normallywill consider the amount of the benefitto be the prior-stage cumulative indirecttaxes that otherwise would have beenpaid on the inputs not consumed in theproduction of the exported product,making normal allowance for waste, andthe amount of charges other than importcharges covered by the exemption.

(2) Remission of prior-stagecumulative indirect taxes. In the case ofa program that provides for theremission of prior-stage cumulativeindirect taxes on inputs used in theproduction of an exported product, abenefit exists to the extent that theamount remitted exceeds the amount ofprior-stage cumulative indirect taxespaid on inputs that are consumed in theproduction of the exported product,making normal allowance for waste. Ifthe Secretary determines that theremission of prior-stage cumulativeindirect taxes confers a benefit, theSecretary normally will consider theamount of the benefit to be thedifference between the amount remittedand the amount of the prior-stagecumulative indirect taxes on inputs thatare consumed in the production of theexport product, making normalallowance for waste.

(3) Deferral of prior-stage cumulativeindirect taxes. In the case of a programthat provides for a deferral of prior-stagecumulative indirect taxes on anexported product, a benefit exists to theextent that the deferral extends to inputsthat are not consumed in the productionof the exported product, making normalallowance for waste, and thegovernment does not charge appropriateinterest on the taxes deferred. If theSecretary determines that a benefitexists, the Secretary will normally treatthe deferral as a government-providedloan in the amount of the tax deferred,according to the methodology describedin § 351.505. The Secretary will use ashort-term interest rate as thebenchmark for tax deferrals of one year

or less. The Secretary will use a long-term interest rate as the benchmark fortax deferrals of more than one year.

(4) Exception. Notwithstanding theprovisions in paragraphs (a)(1), (a)(2),and (a)(3) of this action, the Secretarywill consider the entire amount of theexemption, remission or deferral toconfer a benefit, unless the Secretarydetermines that:

(i) The government in question has inplace and applies a system or procedureto confirm which inputs are consumedin the production of the exportedproducts and in what amounts, and toconfirm which indirect taxes areimposed on these inputs, and thesystem or procedure is reasonable,effective for the purposes intended, andis based on generally acceptedcommercial practices in the country ofexport; or

(ii) If the government in question doesnot have a system or procedure in place,if the system or procedure is notreasonable, or if the system or procedureis instituted and considered reasonable,but is found not to be applied or not tobe applied effectively, the governmentin question has carried out anexamination of actual inputs involved toconfirm which inputs are consumed inthe production of the exported product,in what amounts, and which indirecttaxes are imposed on the inputs.

(b) Time of receipt of benefit. In thecase of the exemption, remission, ordeferral of priorstage cumulativeindirect taxes, the Secretary normallywill consider the benefit as having beenreceived:

(1) In the case of an exemption, as ofthe date of exportation;

(2) In the case of a remission, as of thedate of exportation;

(3) In the case of a deferral of one yearor less, on the date the deferred taxbecame due; and

(4) In the case of a multi-year deferral,on the anniversary date(s) of thedeferral.

(c) Allocation of benefit to aparticular time period. The Secretarynormally will allocate (expense) thebenefit of the exemption, remission ordeferral of prior-stage cumulativeindirect taxes to the year in which thebenefit is considered to have beenreceived under paragraph (b) of thissection.

§ 351.519 Remission or drawback ofimport charges upon export.

(a) Benefit.—(1) In general. The term‘‘remission or drawback’’ includes fullor partial exemptions and deferrals ofimport charges.

(i) Remission or drawback of importcharges. In the case of the remission or


drawback of import charges uponexport, a benefit exists to the extent thatthe Secretary determines that theamount of the remission or drawbackexceeds the amount of import chargeson imported inputs that are consumedin the production of the exportedproduct, making normal allowances forwaste.

(ii) Exemption of import charges. Inthe case of an exemption of importcharges upon export, a benefit exists tothe extent that the exemption extends toinputs that are not consumed in theproduction of the exported product,making normal allowances for waste, orif the exemption covers charges otherthan import charges that are imposed onthe input.

(iii) Deferral of import charges. In thecase of a deferral, a benefit exists to theextent that the deferral extends to inputsthat are not consumed in the productionof the exported product, making normalallowance for waste, and thegovernment does not charge appropriateinterest on the import charges deferred.

(2) Substitution drawback.‘‘Substitution drawback’’ involves asituation in which a firm uses a quantityof home market inputs equal to, andhaving the same quality andcharacteristics as, the imported inputsas a substitute for them. Substitutiondrawback does not necessarily result inthe conferral of a benefit. However, abenefit exists if the Secretary determinesthat:

(i) The import and the correspondingexport operations both did not occurwithin a reasonable time period, not toexceed two years; or

(ii) The amount drawn back exceedsthe amount of the import charges leviedinitially on the imported inputs forwhich drawback is claimed.

(3) Amount of the benefit.—(i)Remission or drawback of importcharges. If the Secretary determines thatthe remission or drawback, includingsubstitution drawback, of importcharges confers a benefit underparagraph (a)(1) or (a)(2) of this section,the Secretary normally will consider theamount of the benefit to be thedifference between the amount ofimport charges remitted or drawn backand the amount paid on importedinputs consumed in production forwhich remission or drawback wasclaimed.

(ii) Exemption of import charges. Ifthe Secretary determines that theexemption of import charges uponexport confers a benefit, the Secretarynormally will consider the amount ofthe benefit to be the import charges thatotherwise would have been paid on theinputs not consumed in the production

of the exported product, making normalallowance for waste, and the amount ofcharges other than import chargescovered by the exemption.

(iii) Deferral of import charges. If theSecretary determines that the deferral ofimport charges upon export confers abenefit, the Secretary will normally treata deferral as a government-providedloan in the amount of the importcharges deferred on the inputs notconsumed in the production of theexported product, making normalallowance for waste, according to themethodology described in § 351.505.The Secretary will use a short-terminterest rate as the benchmark fordeferrals of one year or less. TheSecretary will use a long-term interestrate as the benchmark for deferrals ofmore than one year.

(4) Exception. Notwithstandingparagraph (a)(3) of this section, theSecretary will consider the entireamount of an exemption, deferral,remission or drawback to confer abenefit, unless the Secretary determinesthat:

(i) The government in question has inplace and applies a system or procedureto confirm which inputs are consumedin the production of the exportedproducts and in what amounts, and thesystem or procedure is reasonable,effective for the purposes intended, andis based on generally acceptedcommercial practices in the country ofexport; or

(ii) If the government in question doesnot have a system or procedure in place,if the system or procedure is notreasonable, or if the system or procedureis instituted and considered reasonable,but is found not to be applied or not tobe applied effectively, the governmentin question has carried out anexamination of actual inputs involved toconfirm which inputs are consumed inthe production of the exported product,and in what amounts.

(b) Time of receipt of benefit. In thecase of the exemption, deferral,remission or drawback, includingsubstitution drawback, of importcharges, the Secretary normally willconsider the benefit as having beenreceived:

(1) In the case of remission ordrawback, as of the date of exportation;

(2) In the case of an exemption, as ofthe date of the exportation;

(3) In the case of a deferral of one yearor less, on the date the import chargesbecame due; and (4) In the case of amulti-year deferral, on the anniversarydate(s) of the deferral.

(c) Allocation of benefit to aparticular time period. The Secretarynormally will allocate (expense) the

benefit from the exemption, deferral,remission or drawback of importcharges to the year in which the benefitis considered to have been receivedunder paragraph (b) of this section.

§ 351.520 Export insurance.(a) Benefit.—(1) In general. In the case

of export insurance, a benefit exists ifthe premium rates charged areinadequate to cover the long-termoperating costs and losses of theprogram.

(2) Amount of the benefit. If theSecretary determines under paragraph(a)(1) of this section that premium ratesare inadequate, the Secretary normallywill calculate the amount of the benefitas the difference between the amount ofpremiums paid by the firm and theamount received by the firm under theinsurance program during the period ofinvestigation or review.

(b) Time of receipt of benefit. In thecase of export insurance, the Secretarynormally will consider the benefit ashaving been received in the year inwhich the difference described inparagraph (a)(2) of this section occurs.

(c) Allocation of benefit to aparticular time period. The Secretarynormally will allocate (expense) thebenefit from export insurance to theyear in which the benefit is consideredto have been received under paragraph(b) of this section.

§ 351.521 Import substitution subsidies.[Reserved]

§ 351.522 Green light and green boxsubsidies.

(a) Certain agricultural subsidies. TheSecretary will treat as non-countervailable domestic supportmeasures that are provided to certainagricultural products (i.e., productslisted in Annex 1 of the WTOAgreement on Agriculture) and that theSecretary determines conform to thecriteria of Annex 2 of the WTOAgreement on Agriculture. See section771(5B)(F) of the Act. The Secretary willdetermine that a particular domesticsupport measure conforms fully to theprovisions of Annex 2 if the Secretaryfinds that the measure:

(1) Is provided through a publicly-funded government program (includinggovernment revenue foregone) notinvolving transfers from consumers;

(2) Does not have the effect ofproviding a price support to producers;and (3) Meets the relevant policy-specific criteria and conditions set outin paragraphs 2 through 13 of Annex 2.

(b) Research subsidies. In accordancewith section 771(5B)(B)(iii)(II) of theAct, the Secretary will examine the totaleligible costs to be incurred over the


duration of a particular project todetermine whether a subsidy forresearch activities exceeds 75 percent ofthe costs of industrial research, 50percent of the costs of precompetitivedevelopment activity, or 62.5 percent ofthe costs for a project that includes bothindustrial research and precompetitiveactivity. If the Secretary determines that,at some point over the life of aparticular project, these relevantthresholds will be exceeded, theSecretary will treat the entire amount ofthe subsidy as countervailable.

(c) Subsidies for adaptation ofexisting facilities to new environmentalrequirements. If the Secretarydetermines that a subsidy is given toupgrade existing facilities toenvironmental standards in excess ofminimum statutory or regulatoryrequirements, the subsidy will notqualify for non-countervailabletreatment under section 771(5B)(D) ofthe Act and the Secretary will treat theentire amount of the subsidy ascountervailable.

§ 351.523 Upstream subsidies.(a) Investigation of upstream

subsidies.—(1) In general. Beforeinvestigating the existence of anupstream subsidy (see section 771A ofthe Act), the Secretary must have areasonable basis to believe or suspectthat all of the following elements exist:

(i) A countervailable subsidy, otherthan an export subsidy, is provided withrespect to an input product;

(ii) One of the following conditionsexists:

(A) The supplier of the input productand the producer of the subjectmerchandise are affiliated;

(B) The price for the subsidized inputproduct is lower than the price that theproducer of the subject merchandiseotherwise would pay another seller inan arm’s-length transaction for anunsubsidized input product; or

(C) The government sets the price ofthe input product so as to guarantee thatthe benefit provided with respect to theinput product is passed through toproducers of the subject merchandise;and

(iii) The ad valorem countervailablesubsidy rate on the input product,multiplied by the proportion of the totalproduction costs of the subjectmerchandise accounted for by the inputproduct, is equal to, or greater than, onepercent.

(b) Input product. For purposes of thissection, ‘‘input product’’ means anyproduct used in the production of thesubject merchandise.

(c) Competitive benefit.—(1) Ingeneral. In evaluating whether a

competitive benefit exists under section771A(b) of the Act, the Secretary willdetermine whether the price for thesubsidized input product is lower thanthe benchmark input price. Forpurposes of this section, the Secretarywill use as a benchmark input price thefollowing, in order of preference:

(i) The actual price paid by, or offeredto, the producer of the subjectmerchandise for an unsubsidized inputproduct, including an imported inputproduct;

(ii) An average price for anunsubsidized input product, includingan imported input product, based uponpublicly available data;

(iii) The actual price paid by, oroffered to, the producer of the subjectmerchandise for a subsidized inputproduct, including an imported inputproduct, that is adjusted to account forthe countervailable subsidy;

(iv) An average price for a subsidizedinput product, including an importedinput product, based upon publiclyavailable data, that is adjusted toaccount for the countervailable subsidy;or

(v) An unadjusted price for asubsidized input product or any othersurrogate price deemed appropriate bythe Secretary.

For purposes of this section, suchprices must be reflective of a timeperiod that reasonably corresponds tothe time of the purchase of the input.

(2) Use of delivered prices. TheSecretary will use a delivered pricewhenever the Secretary uses the price ofan input product under paragraph (c)(1)of this section.

(d) Significant effect.—(1)Presumptions. In evaluating whether anupstream subsidy has a significant effecton the cost of manufacturing orproducing the subject merchandise (seesection 771A(a)(3) of the Act), theSecretary will multiply the ad valoremcountervailable subsidy rate on theinput product by the proportion of thetotal production cost of the subjectmerchandise that is accounted for by theinput product. If the product of thatmultiplication exceeds five percent, theSecretary will presume the existence ofa significant effect. If the product is lessthan one percent, the Secretary willpresume the absence of a significanteffect. If the product is between one andfive percent, there will be nopresumption.

(2) Rebuttal of presumptions. A partyto the proceeding may presentinformation to rebut thesepresumptions. In evaluating suchinformation, the Secretary will considerthe extent to which factors other thanprice, such as quality differences, are

important determinants of demand forthe subject merchandise.

§ 351.524 Allocation of benefit to aparticular time period.

Unless otherwise specified in§§ 351.504–351.523, the Secretary willallocate benefits to a particular timeperiod in accordance with this section.

(a) Recurring benefits. The Secretarywill allocate (expense) a recurringbenefit to the year in which the benefitis received.

(b) Non-recurring benefits. (1) Ingeneral. The Secretary will normallyallocate a non-recurring benefit to a firmover the number of years correspondingto the average useful life (‘‘AUL’’) ofrenewable physical assets as defined inparagraph (d)(2) of this section.

(2) Exception. The Secretary willnormally allocate (expense) non-recurring benefits provided under aparticular subsidy program to the yearin which the benefits are received if thetotal amount approved under thesubsidy program is less than 0.5 percentof relevant sales (e.g., total sales, exportsales, the sales of a particular product,or the sales to a particular market) of thefirm in question during the year inwhich the subsidy was approved.

(c) ‘‘Recurring’’ versus ‘‘non-recurring’’ benefits.—(1) Non-bindingiIlustrative lists of recurring and non-recurring benefits. The Secretarynormally will treat the following typesof subsidies as providing recurringbenefits: Direct tax exemptions anddeductions; exemptions and excessiverebates of indirect taxes or importduties; provision of goods and servicesfor less than adequate remuneration;price support payments; discounts onelectricity, water, and other utilities;freight subsidies; export promotionassistance; early retirement payments;worker assistance; worker training; wagesubsidies; and upstream subsidies. TheSecretary normally will treat thefollowing types of subsidies asproviding non-recurring benefits: equityinfusions, grants, plant closureassistance, debt forgiveness, coveragefor operating losses, debt-to-equityconversions, provision of non-generalinfrastructure, and provision of plantand equipment.

(2) The test for determining whether abenefit is recurring or non-recurring. Ifa subsidy is not on the illustrative lists,or is not addressed elsewhere in theseregulations, or if a party claims that asubsidy on the recurring list should betreated as non-recurring or a subsidy onthe non-recurring list should be treatedas recurring, the Secretary will considerthe following criteria in determiningwhether the benefits from the subsidy


should be considered recurring or non-recurring:

(i) Whether the subsidy is exceptionalin the sense that the recipient cannotexpect to receive additional subsidiesunder the same program on an ongoingbasis from year to year;

(ii) Whether the subsidy required orreceived the government’s expressauthorization or approval (i.e., receipt ofbenefits is not automatic), or

(iii) Whether the subsidy wasprovided for, or tied to, the capitalstructure or capital assets of the firm.

(d) Process for allocating non-recurring benefits over time.—(1) Ingeneral. For purposes of allocating anon-recurring benefit over time anddetermining the annual benefit amountthat should be assigned to a particularyear, the Secretary will use thefollowing formula:

Ay n y y n k d

dk = + − −+

/ [ ( / )( )]1

1Where:Ak = the amount of the benefit allocated

to year k,y = the face value of the subsidy,n = the AUL (see paragraph (d)(2) of this

section),d = the discount rate (see paragraph

(d)(3) of this section), andk = the year of allocation, where the

year of receipt = 1 and 1 ≤ k ≤ n.(2) AUL.—(i) In general. The Secretary

will presume the allocation period fornon-recurring subsidies to be the AULof renewable physical assets for theindustry concerned as listed in theInternal Revenue Service’s (‘‘IRS’’) 1977Class Life Asset Depreciation RangeSystem (Rev. Proc. 77–10, 1977–1, C.B.548 (RR–38)), as updated by theDepartment of Treasury. Thepresumption will apply unless a partyclaims and establishes that the IRStables do not reasonably reflect thecompany-specific AUL or the country-wide AUL for the industry underinvestigation, subject to therequirement, in paragraph (d)(2)(ii) ofthis section, that the difference betweenthe company-specific AUL or country-wide AUL for the industry underinvestigation and the AUL in the IRStables is significant. If this is the case,the Secretary will use company-specificor country-wide AULs to allocate non-recurring benefits over time (seeparagraph (d)(2)(iii) of this section).

(ii) Definition of ‘‘significant.’’ Forpurposes of this paragraph (d),significant means that a party hasdemonstrated that the company-specificAUL or country-wide AUL for theindustry differs from AUL in the IRStables by one year or more.

(iii) Calculation of a company-specificor country-wide AUL. A calculation of acompany-specific AUL will not beaccepted by the Secretary unless itsatisfies the following requirements: thecompany must base its depreciation onan estimate of the actual useful lives ofassets and it must use straight-linedepreciation or demonstrate that itscalculation is not distorted throughirregular or uneven additions to the poolof fixed assets. A company-specific AULis calculated by dividing the aggregateof the annual average gross book valuesof the firm’s depreciable productivefixed assets by the firm’s aggregatedannual charge to accumulateddepreciation, for a period consideredappropriate by the Secretary, subject toappropriate normalizing adjustments. Acountry-wide AUL for the industryunder investigation will not be acceptedby the Secretary unless the respondentgovernment demonstrates that it has asystem in place to calculate AULs for itsindustries, and that this system providesa reliable representation of AUL.

(iv) Exception. Under certainextraordinary circumstances, theSecretary may consider whether anallocation period other than AUL isappropriate or whether the benefitstream begins at a date other than thedate the subsidy was bestowed.

(3) Selection of a discount rate. (i) Ingeneral. The Secretary will select adiscount rate based upon data for theyear in which the government agreed toprovide the subsidy. The Secretary willuse as a discount rate the following, inorder of preference:

(A) The cost of long-term, fixed-rateloans of the firm in question, excludingany loans that the Secretary hasdetermined to be countervailablesubsidies;

(B) The average cost of long-term,fixed-rate loans in the country inquestion; or

(C) A rate that the Secretary considersto be most appropriate.

(ii) Exception for uncreditworthyfirms. In the case of a firm consideredby the Secretary to be uncreditworthy(see § 351.505(a)(4)), the Secretary willuse as a discount rate the interest ratedescribed in § 351.505(a)(3)(iii).

§ 351.525 Calculation of ad valoremsubsidy rate and attribution of subsidy to aproduct.

(a) Calculation of ad valorem subsidyrate. The Secretary will calculate an advalorem subsidy rate by dividing theamount of the benefit allocated to theperiod of investigation or review by thesales value during the same period ofthe product or products to which theSecretary attributes the subsidy under

paragraph (b) of this section. Normally,the Secretary will determine the salesvalue of a product on an f.o.b. (port)basis (if the product is exported) or onan f.o.b. (factory) basis (if the product issold for domestic consumption).However, if the Secretary determinesthat countervailable subsidies areprovided with respect to the movementof a product from the port or factory tothe place of destination (e.g., freight orinsurance costs are subsidized), theSecretary may make appropriateadjustments to the sales value used inthe denominator.

(b) Attribution of subsidies. (1) Ingeneral. In attributing a subsidy to oneor more products, the Secretary willapply the rules set forth in paragraphs(b)(2) through (b)(7) of this section.

(2) Export subsidies. The Secretarywill attribute an export subsidy only toproducts exported by a firm.

(3) Domestic subsidies. The Secretarywill attribute a domestic subsidy to allproducts sold by a firm, includingproducts that are exported.

(4) Subsidies tied to a particularmarket. If a subsidy is tied to sales toa particular market, the Secretary willattribute the subsidy only to productssold by the firm to that market.

(5) Subsidies tied to a particularproduct. (i) In general. If a subsidy istied to the production or sale of aparticular product, the Secretary willattribute the subsidy only to thatproduct.

(ii) Exception. If a subsidy is tied toproduction of an input product, then theSecretary will attribute the subsidy toboth the input and downstreamproducts produced by a corporation.

(6) Corporations with cross-ownership. (i) In general. The Secretarynormally will attribute a subsidy to theproducts produced by the corporationthat received the subsidy.

(ii) Corporations producing the sameproduct. If two (or more) corporationswith cross-ownership produce thesubject merchandise, the Secretary willattribute the subsidies received by eitheror both corporations to the productsproduced by both corporations.

(iii) Holding or parent companies. Ifthe firm that received a subsidy is aholding company, including a parentcompany with its own operations, theSecretary will attribute the subsidy tothe consolidated sales of the holdingcompany and its subsidiaries. However,if the Secretary finds that the holdingcompany merely served as a conduit forthe transfer of the subsidy from thegovernment to a subsidiary of theholding company, the Secretary willattribute the subsidy to products sold bythe subsidiary.


(iv) Input suppliers. If there is cross-ownership between an input supplierand a downstream producer, andproduction of the input product isprimarily dedicated to production of thedownstream product, the Secretary willattribute subsidies received by the inputproducer to the combined sales of theinput and downstream productsproduced by both corporations(excluding the sales between the twocorporations).

(v) Transfer of subsidy betweencorporations with cross-ownershipproducing different products. Insituations where paragraphs (b)(6)(i)through (iv) of this section do not apply,if a corporation producing non-subjectmerchandise received a subsidy andtransferred the subsidy to a corporationwith cross-ownership, the Secretary willattribute the subsidy to products sold bythe recipient of the transferred subsidy.

(vi) Cross-ownership defined. Cross-ownership exists between two or morecorporations where one corporation canuse or direct the individual assets of theother corporation(s) in essentially thesame ways it can use its own assets.Normally, this standard will be metwhere there is a majority votingownership interest between twocorporations or through commonownership of two (or more)corporations.

(7) Multinational firms. If the firm thatreceived a subsidy has productionfacilities in two or more countries, theSecretary will attribute the subsidy toproducts produced by the firm withinthe country of the government thatgranted the subsidy. However, if it isdemonstrated that the subsidy was tiedto more than domestic production, theSecretary will attribute the subsidy tomultinational production.

(c) Trading companies. Benefits fromsubsidies provided to a tradingcompany which exports subjectmerchandise shall be cumulated withbenefits from subsidies provided to thefirm which is producing subjectmerchandise that is sold through thetrading company, regardless of whetherthe trading company and the producingfirm are affiliated.

§ 351.526 Program-wide changes.(a) In general. The Secretary may take

a program-wide change into account inestablishing the estimatedcountervailing duty cash deposit rate if:

(1) The Secretary determines thatsubsequent to the period ofinvestigation or review, but before apreliminary determination in aninvestigation (see § 351.205) or apreliminary result of an administrativereview or a new shipper review (see

§§ 351.213 and 351.214), a program-wide change has occurred; and

(2) The Secretary is able to measurethe change in the amount ofcountervailable subsidies providedunder the program in question.

(b) Definition of program-widechange. For purposes of this section,‘‘program-wide change’’ means a changethat:

(1) Is not limited to an individual firmor firms; and

(2) Is effectuated by an official act,such as the enactment of a statute,regulation, or decree, or contained inthe schedule of an existing statute,regulation, or decree.

(c) Effect limited to cash depositrate.—(1) In general. The application ofparagraph (a) of this section will notresult in changing, in an investigation,an affirmative determination to anegative determination or a negativedetermination to an affirmativedetermination.

(2) Example. In a countervailing dutyinvestigation, the Secretary determinesthat during the period of investigation acountervailable subsidy existed in theamount of 10 percent ad valorem.Subsequent to the period ofinvestigation, but before the preliminarydetermination, the foreign governmentin question enacts a change to theprogram that reduces the amount of thesubsidy to a de minimis level. In a finaldetermination, the Secretary wouldissue an affirmative determination, butwould establish a cash deposit rate ofzero.

(d) Terminated programs. TheSecretary will not adjust the cashdeposit rate under paragraph (a) of thissection if the program-wide changeconsists of the termination of a programand:

(1) The Secretary determines thatresidual benefits may continue to bebestowed under the terminatedprogram; or

(2) The Secretary determines that asubstitute program for the terminatedprogram has been introduced and theSecretary is not able to measure theamount of countervailable subsidiesprovided under the substitute program.

§ 351.527 Transnational subsidies.

Except as otherwise provided insection 701(d) of the Act (subsidiesprovided to international consortia) andsection 771A of the Act (upstreamsubsidies), a subsidy does not exist ifthe Secretary determines that thefunding for the subsidy is supplied inaccordance with, and as part of, aprogram or project funded:

(a) By a government of a country otherthan the country in which the recipientfirm is located; or

(b) By an international lending ordevelopment institution.

4. Section 351.301 of subpart C isamended by adding the followingparagraphs (d)(6) and (7) to read asfollows:

§ 351.301(d) Time limits for submission offactual information.

* * * * *(d) * * *(6) Green light and Green box claims.

(i) In general. A claim that a particularsubsidy or subsidy program should beaccorded non-countervailable statusunder section 771(5B),(C), or (D) of theAct (‘‘green light subsidies’’) or undersection 771(5B)(F) of the Act (‘‘greenbox subsidies’’ must be made by thecompetent government with the fullparticipation of the governmentauthority responsible for funding and/oradministering the program. Such claimsare due no later than:

(i) In a countervailing dutyinvestigation, 40 days before thescheduled date of the preliminarydetermination, or

(ii) In an administrative review, newshipper review, or changedcircumstance review, 20 days afer allresponses to the initial questionnairesare filed with the Department, unlessthe Secretary alters this time limit.

(7) Investigation of notified subsidies.If the Secretary determines that there isinsufficient evidence to demonstratethat an alleged subsidy or subsidyprogram has been notified under Article8.3 of the WTO Subsidies andCountervailing Measures Agreement,the alleged subsidy or subsidy programwill be included in the countervailingduty investigation or administrative,new shipper, or changed circumstancereview. If the government authorityclaiming green light status establishes tothe Secretary’s satisfaction that thealleged subsidy or subsidy program hasbeen notified, the Secretary willterminate the investigation of thenotified subsidy.

5. Subpart G (Applicability Dates) isamended by adding the following§ 351.702, to read as follows:

§ 351.702 Applicability dates forcountervailing duty regulations.

(a) Notwithstanding § 351.701, theregulations in subpart E of this partapply to:

(1) All CVD investigations initiated onthe basis of petitions filed afterDecember 28, 1998;

(2) All CVD administrative reviewsinitiated on the basis of requests filed on


or after the first day of January 1999;and

(3) To all segments of CVDproceedings self-initiated by theDepartment after December 28, 1998.

(b) Segments of CVD proceedings towhich subpart E of this part does not

apply will continue to be guided by theDepartment’s previous methodology (inparticular, as described in the 1989Proposed Regulations), except to theextent that the previous methodologywas invalidated by the URAA, in whichcase the Secretary will treat subpart E of

this part as a restatement of theDepartment’s interpretation of therequirements of the Act as amended bythe URAA.

[FR Doc. 98–30565 Filed 11–24–98; 8:45 am]

BILLING CODE 3510–DS–P

fede

ral r

egiste

r

65419


Part IV

Department ofDefenseOffice of the Secretary

32 CFR Part 286DoD Freedom of Information Act ProgramRegulation; Final Rule


1 Copy may be viewed via internet at http://web7.whs.osd.mil/corres.htm.



32 CFR Part 286

[DoD 5400.7–R]

RIN 0790–AG58

DoD Freedom of Information ActProgram Regulation

AGENCY: Office of the Secretary,Department of Defense (DoD).ACTION: Final rule.

SUMMARY: This final rule conforms tothe requirements of the ElectronicFreedom of Information ActAmendments of 1996. This revisionreflects substantial and administrativechanges since May 1997, as a result ofDoD reorganization. This revision alsoprovides guidance to DoD onimplementation of the amends law.EFFECTIVE DATE: September 4, 1998.FOR FURTHER INFORMATION CONTACT: Mr.C. Talbott, 703–697–1171.SUPPLEMENTARY INFORMATION:

Executive Order 12866, ‘‘RegulatoryPlanning and Review’’

It has been determined that 32 CFRpart 286 is not a significant regulatoryaction. The rule does not:

(1) Have an annual effect to theeconomy of $100 million or more oradversely affect in a material way theeconomy; a section of the economy;productivity; completion; jobs; theenvironment; public health or safety; orState, local, or tribal governments orcommunities;

(2) Create a serious inconsistency orotherwise interfere with an action takenor planned by another Agency;

(3) Materially alter the budgetaryimpact of entitlements, grants, user fees,or loan programs, or the rights andobligations of recipients thereof; or

(4) Raise novel legal or policy issuesarising out of legal mandates, thePresident’s priorities, or the principlesset forth in this Executive Order.

Public Law 96–354, ‘‘RegulatoryFlexibility Act’’ (5 U.S.C. 601)

It has been certified that this rule isnot subject to the Regulatory FlexibilityAct (5 U.S.C. 601) because it would not,if promulgated, have a significanteconomic impact on a substantialnumber of small entities. This ruleimplements the Freedom of InformationAct (5 U.S.C. 552), a statute concerningthe release of Federal Governmentrecords, and does no economicallyimpact Federal Government relationswith the private sector.

Public Law 96–511, ‘‘PaperworkReduction Act’’ (44 U.S.C. Chapter 35)

It has been certified that this rule doesnot impose any reporting orrecordkeeping requirements under thePaperwork Reduction Act of 1995.


Freedom of information.

Accordingly, 32 CFR part 286 isrevised to read as follows:

PART 286—DOD FREEDOM OFINFORMATION ACT PROGRAMREGULATION


Sec.286.1 Purpose and applicability.286.2 DoD public information.286.3 Definitions.286.4 Policy.

Subpart B—FOIA Reading Rooms

286.7 Requirements.286.8 Indexes.

Subpart C—Exemptions

286.11 General provisions.286.12 Exemptions.

Subpart D—For Official Use Only

286.15 General provisions.286.16 Markings.286.17 Dissemination and transmission.286.18 Termination, disposal and

unauthorized disclosure.

Subpart E—Release and ProcessingProcedures

286.22 General provisions.286.23 Initial determinations.286.24 Appeals.286.25 Judicial actions.

Subpart F—Fee Schedule

286.28 General provisions.286.29 Collection of fees and fee rates.286.30 Collection of fees and fee rates for

technical data.

Subpart G—Reports

286.33 Reports control.

Subpart H—Education and Training286.36 Responsibility and purpose.

Appendix A to Part 286—CombatantCommands—Processing Procedures forFOIA Appeals

Appendix B to Part 286—Addressing FOIARequests

Appendix C to Part 286—DD Form 2086,‘‘Record of Freedom of Information (FOI)Processing Cost’’

Appendix D to Part 286—DD Form 2086–1,‘‘Record of Freedom of Information (FOI)Processing Cost for Technical Data’’

Appendix E to Part 286—DD Form 2564,‘‘Annual Report Freedom of InformationAct’’

Appendix F to Part 286—DoD Freedom ofInformation Act Program Components



§ 286.1 Purpose and applicability.(a) Purpose. This part provides

policies and procedures for the DoDimplementation of the Freedom ofInformation Act, as amended (5 U.S.C.552), and DoD Directive 5400.7 1, andpromotes uniformity in the DoDFreedom of Information Act (FOIA)Program.

(b) Applicability. This part applies tothe Office of the Secretary of Defense(OSD), the Military Departments, theChairman of the Joint Chiefs of Staff, theCombatant Command, the InspectorGeneral of the Department of Defense(IG DoD), the Defense Agencies, and theDoD Field Activities (hereafter referredto collectively as ‘‘the DoDcomponents’’). This part takesprecedence over all DoD Componentpublications that supplement andimplement the DoD FOIA Program. Alist of DoD Components is at appendixF.

§ 286.2 DoD public information.(a) Public information. (1) The public

has a right to information concerningthe activities of its Government. DoDpolicy is to conduct its activities in anopen manner and provide the publicwith a maximum amount of accurateand timely information concerning itsactivities, consistent always with thelegitimate public and private interests ofthe American people. A recordrequested by a member of the publicwho follows rules established by properauthority in the Department of Defenseshall not be withheld in whole or in partunless the record is exempt frommandatory partial or total disclosureunder the FOIA. As a matter of policy,


2 Available from the Records AdministrationInformation Center, Agency Service Division (NIA),Washington, DC 20408.

DoD Components shall makediscretionary disclosures of exemptrecords or information wheneverdisclosure would not foreseeably harman interest protected by a FOIAexemption, but this policy does notcreate any right enforceable in court. Inorder that the public may have timelyinformation concerning DoD activities,records requested through publicinformation channels by news mediarepresentatives that would not bewithheld if requested under the FOIAshould be released upon request.Prompt responses to requests forinformation from news mediarepresentatives should be encouraged toeliminate the need for these requestersto invoke the provisions of the FOIAand thereby assist in providing timelyinformation to the public. Similarly,requests from other members of thepublic for information that would not bewithheld under the FOIA shouldcontinue to be honored throughappropriate means without requiring therequester to involve the FOIA.

(2) Within the OSD, the AssistantSecretary of Defense for Command,Control, Communications, andIntelligence, as Chief InformationOfficer, in conjunction with theAssistant Secretary of Defense for PublicAffairs, is responsible for ensuringpreparation of reference material or aguide for requesting records orinformation from the Department ofDefense, subject to the nine exemptionsof the FOIA. This publication shall alsoinclude an index of all majorinformation systems, and a descriptionof major information and record locatorsystems, as defined by the Office of theAssistant Secretary of Defense forCommand, Control, Communications,and Intelligence. DoD FOIAComponents shall coordinate with theappropriate office(s) to insure that thisis also accomplished within theirdepartment or organization.

(3) DoD Components shall alsoprepare, in addition to normal FOIAregulations, a handbook for the use ofthe public in obtaining information fromtheir organization. This handbookshould be a short, simple explanation tothe public of what the FOIA is designedto do, and how a member of the publiccan use it to access government records.Each DoD Component should explainthe types of records that can be obtainedthrough FOIA requests, why somerecords cannot, by law, be madeavailable, and how the DoD Componentdetermines whether the record can bereleased. The handbook should alsoexplain how to make a FOIA request,how long the requester can expect towait for a reply, and explain the right of

appeal. The handbook shouldsupplement other information locatorsystems, such as the GovernmentInformation Locator Service (GILS), andexplain how a requester can obtain moreinformation about those systems. Thehandbook should be available on paperand through electronic means andcontain the following additionalinformation, complete with electroniclinks to the below elements; the locationof reading room(s) within theComponent and the types and categoriesof information available, the location ofComponent’s World Wide Web page, areference to the component’s FOIAregulation and how to obtain a copy, areference to the Component’s FOIAannual report and how to obtain a copyand the location of the Component’sGILS page. Also, the DoD Components’Freedom of Information Act AnnualReports should refer to the handbookand how to obtain it.

(b) Control system. A request forrecords that invokes the FOIA shallenter a formal control system designedto ensure accountability and compliancewith the FOIA. Any request for DoDrecords that either explicitly orimplicitly cites the FOIA shall beprocessed under the provisions of thispart, unless otherwise required by§ 286.4(m).

§ 286.3 Definitions.As used in this part, the following

terms and meanings shall be applicable:Administrative appeal. A request by a

member of the general public, madeunder the FOIA, asking the appellateauthority of a DOD Component toreverse a decision: to withhold all orpart of a requested record; to deny a feecategory claim by a requester, to deny arequest for waiver or reduction of fees;to deny a request to review an initial feeestimate; to deny a request for expeditedprocessing due to demonstratedcompelling need under § 286.4(d)(3) ofthis part; to confirm that no recordswere located during the initial search.Requesters also may appeal the failureto receive a response determinationwithin the statutory time limits, and anydetermination that the requesterbelieves is adverse in nature.

Agency record. (1) The products ofdata compilation, such as all books,papers, maps, and photographs,machine readable materials, inclusive ofthose in electronic form or format, orother documentary materials, regardlessof physical form or characteristics, madeor received by an agency of the UnitedStates Government under Federal law inconnection with the transaction ofpublic business and in Department ofDefense possession and control at the

time the FOIA request is made. Careshould be taken not to exclude recordsfrom being considered agency records,unless they fall within one of thecategories in paragraph (2) of thisdefinition.

(2) The following age not includedwithin the definition of the word‘‘record’’.

(i) Objects or articles, such asstructures, furniture, vehicles andequipment, whatever their historicalvalue, or value as evidence.

(ii) Anything that is not a tangible ordocumentary record, such as anindividual’s memory or oralcommunication.

(iii) Personal records of an individualnot subject to agency creation orretention requirements, created andmaintained primarily for theconvenience of an agency employee,and not distributed to other agencyemployees for their official use.Personal papers fall into threecategories: those created before enteringGovernment service; private materialsbrought into, created, or received in theoffice that were not created or receivedin the course of transacting Governmentbusiness; and work-related personalpapers that are not used in thetransaction of Government business (see‘‘Personal Papers of Executive BranchOfficials: A Management Guide’’ 2).

(3) A record must exist and be in thepossession and control of theDepartment of Defense at the time of therequest to be considered subject to thispart and the FOIA. There is noobligation to create, compile, or obtaina record to satisfy a FOIA request. See§ 286.4(g)(2) on creating a record in theelectronic environment.

(4) Hard copy or electronic records,that are subject to FOIA requests under5 U.S.C. 552(a)(3), and that are availableto the public through an establisheddistribution system, or through theFederal Register, the National TechnicalInformation Service, or the Internet,normally need not be processed underthe provisions of the FOIA. If a requestis received for such information, DoDComponents shall provide that requesterwith guidance inclusive of any writtennotice to the public, on how to obtainthe information. However, if therequester insists that the request beprocessed under the FOIA, then therequest shall be processed under theFOIA. If there is any doubt as towhether the request must be processed,contact the Directorate for Freedom ofInformation and Security Review.


Appellate authority. The Head of theDoD Component or the Componenthead’s designee having jurisdiction forthis purpose over the record, or any ofthe other adverse determinationsoutlined in definitions ‘‘Initial denialauthority (IDA)’’ and ‘‘Administrativeappeal’’.

DoD Component. An element of theDepartment of Defense, as defined in§ 286.1(b), authorized to receive and actindependently on FOIA requests. (Seeappendix F of this part.) A DoDComponent has its own initial denialauthority (IDA), appellate authority, andlegal counsel.

Electronic record. Records (includinge-mail) that are created, stored, andretrievable by electronic means.

Federal agency. As defined by 5U.S.C. 552(f)(1), a Federal agency is anyexecutive department, militarydepartment, Government corporation,Government controlled corporation, orother establishment in the executivebranch of the Government (includingthe Executive Office of the President), orany independent regulatory agency.

FOIA request. A written request forDoD records that reasonably describesthe record(s) sought, made by anyperson, including a member of thepublic (U.S. or foreign citizen/entity), anorganization, or a business, but notincluding a Federal Agency or a fugitivefrom the law, that either explicitly orimplicitly invokes the FOIA, DoDDirective 5400.7, this part, or DoDComponent supplementing regulationsor instructions. Requesters should alsoindicate a willingess to pay feesassociated with the processing of theirrequest or, in the alternative, why awaiver of fees may be appropriate.Written requests may be received bypostal service or other commercialdelivery means, by fascimile, orelectronically. Requests received byfascimile or electronically must have apostal mailing address included since itmay be practical to provide asubstantive response electrically. Therequest is considered properly received,or perfected, when the above conditionshave been met and the request arrives atthe FOIA office of the Component inpossession of the records.

Initial denial authority (IDA). Anofficial who has been granted authorityby the head of DoD component towithhold records requested under theFOIA for one or more of the ninecategories of records exempt frommandatory disclosure. IDA’s may alsodeny a fee category claim by a requester;deny a request for expedited processingdue to demonstrated compelling needunder § 286.4(d)(3) of this part; deny arequest for a waiver or reduction of fees;

review a fee estimate; and confirm thatno records were located in response toa request.

Public interest. The interest inobtaining official information that shedslight on an agency’s performance of itsstatutory duties because the informationfalls within the statutory purpose of theFOIA to inform citizens about whattheir Government is doing. Thatstatutory purpose, however, is notfostered by disclosure of informationabout private citizens accumulated invarious governmental files that revealsnothing about an agency’s or officialsown conduct.

§ 286.4 Policy.(a) Compliance with the FOIA. DoD

personnel are expected to comply withthe FOIA, this part, and DoD FOIApolicy in both better and spirit. Thisstrict adherence is necessary to provideuniformity in the implementation of theDoD FOIA Program and to createconditions that will promote publictrust.

(b) Openiness with the public. TheDepartment of Defense shall conduct itsactivities in an open manner consistentwith the need for security and aherenceto other requirements of law andregulation. Records not exempt fromdisclosure under the Act shall, uponrequest, be made readily accessible tothe public in accordance with rulespromulgated by competent authority,whether or not the Act is invoked.

(c) Avoidance of procedural obstacles.DoD Components shall ensure thatprocedural matters do not unnecessarilyimpede a requester from obtaining DoDrecords promptly. Components shallprovide assistance to requesters to helpthem understand and comply withprocedures established by this part andany supplemental regulations publishedby the DoD Components.

(d) Prompt action on requests. (1)Generally, when a member of the publiccomplies with the proceduresestablished in this part and DoDComponent regulations or instructionsfor obtaining DoD records, and after therequest is received by the officialdesignated to respond, DoDComponents shall endeavor to provide afinal response determination within thestatutory 20 working days. If asignificant number of requests, or thecomplexity of the requests prevent afinal response determination within thestatutory time period, DoD Componentsshall advise the requester of this fact,and explain how the request will beresponded to within its multitrackprocessing system (see § 286.4(d)(2)). Afinal response determination isnotification to the requester that the

records are released, or will be releasedon a certain date, or the records aredenied under the appropriate FOIAexemption, or the records cannot beprovided for one or more of the otherreasons in § 286.23(b). Interim responsesacknowledging receipt of the request,negotiations with the requesterconcerning the scope of the request, theresponse timeframe, and fee agreementsare encouraged; however, such actionsdo not constitute a final responsedetermination pursuant to the FOIA. Ifa request fails to meet minimumrequirements as set forth in § 286.3,definition ‘‘FOIA request’’, Componentsshall inform the requester how toperfect or correct the request. Thestatutory 20 working day time limitapplies upon receipt of a perfected orcorrect FOIA request which complieswith the requirements outlined in§ 286.3, definition ‘‘FOIA request’’.

(2) Multitrack processing. When aComponent has a significant number ofpending requests that prevents aresponse determination being madewithin 20 working days, the requestsshall be processed in a multitrackprocessing system, based on the date ofreceipt, the amount of work and timeinvolved in processing the requests, andwhether the request qualifies forexpedited processing as described inparagraph (d)(3) of this section. DoDComponents may establish as manyprocessing queues as they wish;however, as a minimum, threeprocessing tracks shall be established,all based on a first-in, first-out concept,and rank ordered by the date of receiptof the request. One track shall be aprocessing queue for simple requests,one track for complex requests, and onetrack shall be a processing queue forexpedited processing as described inparagraph (d)(3) of this section.Determinations as to whether a requestis simple or complex shall be made byeach DoD Component. DoD Componentsshall provide a requester whose requestdoes not qualify for the fastest queue(except for expedited processing asdescribed in paragraph (d)(3) of thissection), an opportunity to limit inwriting hard copy, facsimile, orelectronically, the scope of the requestin order to qualify for the fastest queue.This multitrack processing system doesnot obviate components’ responsibilityto exercise due diligence in processingrequests in the most expeditious mannerpossible.

(3) Expedited processing. A separatequeue shall be established for requestsmeeting the test for expeditedprocessing. Expedited processing shallbe granted to a requester after therequester requests such and


demonstrates a compelling need for theinformation. Notice of the determinationas to whether to grant expeditedprocessing in response to a requester’scompelling need shall be provided tothe requester within 10 calendar daysafter receipt of the request in the DoDComponent’s office that will determinewhether to grant expedited processing.Once the DoD Component hasdetermined to grant expeditedprocessing, the request shall beprocessed as soon as practicable.Actions by DoD Components to initiallydeny or affirm the initial denial onappeal of a request for expeditedprocessing, and failure to respond in atimely manner shall be subject tojudicial review.

(i) Compelling need means that thefailure to obtain the records on anexpedited basis could reasonably beexpected to pose an imminent threat tothe life or physical safety of anindividual.

(ii) Compelling need also means thatthe information is urgently needed byan individual primarily engaged indisseminating information in order toinform the public concerning actual oralleged Federal Government activity. Anindividual primarily engaged indisseminating information means aperson whose primary activity involvespublishing or otherwise disseminatinginformation to the public.Representatives of the news media (see§ 286.28(e)) would normally qualify asindividuals primarily engaged indisseminating information. Otherpersons must demonstrate that theirprimary activity involves publishing orotherwise disseminating information tothe public.

(A) Urgently needed means that theinformation has a particular value thatwill be lost if not disseminated quickly.Ordinarily this means a breaking newsstory of general public interest.However, information of historicalinterest only, or information sought forlitigation or commercial activitieswould not qualify, nor would a newsmedia publication or broadcast deadlineunrelated to the news breaking nature ofthe information.

(b) [Reserved](iii) A demonstration of compelling

need by a requester shall be made by astatement certified by the requester to betrue and correct to the best of theirknowledge. This statement mustaccompany the request in order to beconsidered and responded to within the10 calendar days required for decisionson expedited access.

(iv) Other reasons for expeditedprocessing. Other reasons that meritexpedited processing by DoD

Components are an imminent loss ofsubstantial due process rights andhumanitarian need. A demonstration ofimminent loss of substantial dueprocess rights shall be made by astatement certified by the requester to betrue and correct to the best of his or herknowledge. Humanitarian need meansthat disclosing the information willpromote the welfare and interest ofmankind. A demonstration ofhumanitarian need shall be also madeby a statement certified by the requesterto be true and correct to the best of hisor her knowledge. Both statementsmentioned above must accompany therequest in order to be considered andresponded to within the 10 calendardays required for decisions onexpedited access. Once the decision hasbeen made to expedite the request foreither of these reasons, the request maybe processed in the expeditedprocessing queue behind those requestsqualifying for compelling need.

(v) These same procedures also applyto requests for expedited processing ofadministrative appeals.

(e) Use of exemptions. It is DoD policyto make records publicly available,unless the record qualifies forexemption under one or more of thenine exemptions. It is DoD policy thatDoD Components shall makediscretionary releases wheneverpossible; however, a discretionaryrelease is normally not appropriate forrecords clearly exempt underexemptions 1, 3, 4, 6, 7(C) and 7(F) (seesubpart C of this part). Exemptions 2, 5,and 7(A)(B)(D) and (E) (see subpart C ofthis part) are discretionary in nature,and DoD Components are encouraged toexercise discretionary releaseswhenever possible. Exemptions 4, 6 and7(C) cannot be claimed when therequester is the submitter of theinformation.

(f) Public domain. Nonexempt recordsreleased under the authority of this partare considered to be in the publicdomain. Such records may also be madeavailable in Components’ reading roomsin paper form, as well as electronically,to facilitate public access. Discretionaryreleases to FOIA requesters constitute awaiver of the FOIA exemption that mayotherwise apply. Disclosure to aproperly constituted advisorycommittee, to Congress, or to otherFederal Agencies does not waive theexemption. (See § 286.22(d).) Exemptrecords disclosed without authorizationby the appropriate DoD official do notlose their exempt status. Also, whileauthority may exist to disclose recordsto individuals in their official capacity,the provisions of this Part apply if the

same individual seeks the records in aprivate or personal capacity.

(g) Creating a record. (1) A recordmust exist and be in the possession andcontrol of the Department of Defense atthe time of the search to be consideredsubject to this part and the FOIA. Thereis no obligation to create, compile, orobtain a record to satisfy a FOIArequest. A DoD Component, however,may compile a new record when sodoing would result in a more usefulresponse to the requester, or be lessburdensome to the agency thanproviding existing records, and therequester does not object. Cost ofcreating or compiling such a record maynot be charged to the requester unlessthe fee for creating the record is equalto or less than the fee which would becharged for providing the existingrecord. Fee assessments shall be inaccordance with subpart F of this part.

(2) About electronic data, the issue ofwhether records are actually created ormerely extracted from an existingdatabase is not always readily apparent.Consequently, when responding toFOIA requests for electronic data wherecreation of a record, programming, orparticular format are questionable,Components should apply a standard ofreasonableness. In other words, if thecapability exists to respond to therequest, and the effort would be abusiness as usual approach, then therequest should be processed. However,the request need not be processed wherethe capability to respond does not existwithout a significant expenditure ofresources, thus not being a normalbusiness as usual approach. As used inthis sense, a significant expenditure ofresources in both time and manpower,that would cause a significantinterference with the operation of theComponent’s automated informationsystem would not be a business as usualapproach.

(h) Description of requested record.(1) Identification of the record desired isthe responsibility of the requester. Therequester must provide a description ofthe desired record, that enables theGovernment to locate the record with areasonable amount of effort. In order toassist DoD Components in conductingmore timely searches, requesters shouldendeavor to provide as much identifyinginformation as possible. When a DoDComponent receives a request that doesnot reasonably describe the requestedrecord, it shall notify the requester ofthe defect in writing. The requestershould be asked to provide the type ofinformation outlined in paragraph (h)(2)of this section. DoD Components are notobligated to act on the request until therequester responds to the specificity


letter. When practicable, DoDComponents shall offer assistance to therequester in identifying the recordssought and in reformulating the requestto reduce the burden on the agency incomplying with the Act.

(2) The following guidelines areprovided to deal with generalizedrequests and are based on the principleof reasonable effort (Descriptiveinformation about a record may bedivided into two broad categories.):

(i) Category I is file-related andincludes information such as type ofrecord (for example, memorandum),title, index citation, subject area, datethe record was created, and originator.

(ii) Category II is event-related andincludes the circumstances that resultedin the record being created or the dateand circumstances surrounding theevent the record covers.

(3) Generally, a record is notreasonably described unless thedescription contains sufficient CategoryI information to permit the conduct ofan organized, non-random search basedon the DoD Component’s filingarrangements and existing retrievalsystems, or unless the record containssufficient Category II information topermit inference of the Category Ielements needed to conduct such asearch.

(4) The following guidelines deal withrequests for personal records:Ordinarily, when personal identifiersare provided only in connection with arequest for records concerning therequester, only records in a Privacy ActSystem of records that can be retrievedby personal identifiers need besearched. However, if a DoD Componenthas reason to believe that records on therequester may exist in a record systemother than a Privacy Act system, theDoD Component shall search thatsystem under the provisions of theFOIA. In either case, DoD Componentsmay request a reasonable description ofthe records desired before searching forsuch records under the provisions of theFOIA and the Privacy Act. If the recordis required to be released under theFOIA, the Privacy Act does not bar itsdisclosure. See paragraph (m) of thissection for the relationship between theFOIA and the Privacy Act.

(5) The previous guidelinesnotwithstanding, the decision of theDoD Component concerningreasonableness of description must bebased on knowledge of its files. If thedescription enables DoD Componentpersonnel to locate the record withreasonable effort, the description isadequate. The fact that a FOIA requestis broad or burdensome in its magnitudedoes not, in and of itself, entitle a DoD

Component to deny the request on theground that it does not reasonablydescribe the records sought. The keyfactor is the ability of the DoDComponent’s staff to reasonablyascertain and locate which records arebeing requested.

(i) Referrals. (1) The DoD FOIAreferral policy is based upon theconcept of the originator of a recordmaking a release determination on itsinformation. If a DoD Componentreceives a request for records originatedby another DoD Component, it shouldcontact the DoD Component todetermine if it also received the request,and if not, obtain concurrence from theother DoD Component to refer therequest. In either situation, the requestershall be advised of the action taken,unless exempt information would berevealed. While referrals to originatorsof information result in obtaining thebest possible decision on release of theinformation, the policy does not relieveDoD Components from theresponsibility of making a releasedecision on a record should therequester object to referral of the requestand the record. Should this situationoccur, DoD Components shouldcoordinate with the originator of theinformation prior to making a releasedetermination. A request received by aDoD Component having no recordsresponsive to a request shall be referredroutinely to another DoD Component, ifthe other DoD Component has reason tobelieve it has the requested record. Priorto notifying a requester of a referral toanother DoD Component, the DoDComponent receiving the initial requestshall consult with the other DoDComponent to determine if that DoDComponent’s association with thematerial is exempt. If the association isexempt, the DoD Component receivingthe initial request will protect theassociation and any exempt informationwithout revealing the identity of theprotected DoD Component. Theprotected DoD Component shall beresponsible for submitting thejustifications required in any litigation.Any DoD Component receiving arequest that has been misaddressedshall refer the request to the properaddress and advise the requester. DoDComponents making referrals ofrequests or records shall include withthe referral, a point of contact by name,a telephone number, and an e-mailaddress.

(2) A DoD Component shall refer forresponse directly to the requester, aFOIA request for a record that it holdsto another DoD Component or agencyoutside the DoD, if the record originatedin the other DoD Component or outside

agency. Whenever a record or a portionof a record is referred to another DoDComponent or to a Government Agencyoutside of the DoD for a releasedetermination and direct response, therequester shall be informed of thereferral, unless it has been determinedthat notification would reveal exemptinformation. Referred records shall onlybe identified to the extent consistentwith security requirements.

(3) A DoD Component may refer arequest for a record that it originated toanother DoD Component or agencywhen the other DoD Component oragency has a valid interest in the record,or the record was created for the use ofthe other DoD Component or agency. Insuch situations, provide the record anda release recommendation on the recordwith the referral action. Ensure youinclude a point of contact with thetelephone number. An example of sucha situation is a request for audit reportsprepared by the Defense Contract AuditAgency. These advisory reports areprepared for the use of contractingofficers and their release to the auditedcontractor shall be at the discretion ofthe contracting officer. A FOIA requestshall be referred to the appropriate DoDComponent and the requester shall benotified of the referral, unless exemptinformation would be revealed. Anotherexample is a record originated by a DoDComponent or agency that involvesforeign relations, and could affect a DoDComponent or organization in a hostforeign country. Such a request and anyresponsive records may be referred tothe affected DoD Component ororganization for consultation prior to afinal release determination within theDepartment of Defense. See also§ 286.22(e) of this part.

(4) Within the Department of Defense,a DoD Component shall ordinarily refera FOIA request and a copy of therecords it holds, but that was originatedby other DoD Component or thatcontains substantial informationobtained from another DoD Component,to that Component for direct response,after direct coordination and obtainingconcurrence from the Component. Therequester then shall be notified by suchreferral. DoD Components shall not, inany case, release or deny such recordswithout prior consultation with theother DoD Component, except asprovided in § 286.22(e) of this part.

(5) DoD Components that receivereferred requests shall answer them inaccordance with the time limitsestablished by the FOIA, this part, andtheir multitrack processing queues,based upon the date of initial receipt ofthe request at the referring componentor agency.


3 See footnote 1 to § 286.1(a).

(6) Agencies outside the Departmentof Defense that are subject to the FOIA.

(i) A DoD Component may refer aFOIA request for any record thatoriginated in an agency outside theDepartment of Defense or that is basedon information obtained from an outsideagency to the agency for direct responseto the requester after coordination withthe outside agency, if that agency issubject to FOIA. Otherwise, the DoDComponent must respond to the request.

(ii) A DoD Component shall refer tothe agency that provided the record anyFOIA request for investigative,intelligence, or any other type of recordsthat are on loan to the Department ofDefense for a specific purpose, if therecords are restricted from furtherrelease and so marked, However, if forinvestigative or intelligence purposes,the outside agency desires anonymity, aDoD Component may only responddirectly to the requester aftercoordination with the outside agency.

(7) DoD Components that receiverequests for records of the NationalSecurity Council (NSC), the WhiteHouse, or the White House MilitaryOffice (WHMO) shall process therequests. DoD records in which the NSCor White House has a concurrentreviewing interest, and NSC, WhiteHouse, or WHMO records discovered inDoD Components’ files shall beforwarded to the Directorate forFreedom of Information and SecurityReview (DFOISR). The DFOISR shallcoordinate with the NSC, White House,or WHMO and return the records to theoriginating agency after coordination.

(8) To the extent referrals areconsistent with the policies expressedby this section, referrals between officesof the same DoD Component areauthorized.

(9) On occasion, the Department ofDefense receives FOIA requests forGeneral Accounting Office (GAO)records containing DoD information.Even though the GAO is outside theexecutive Branch, and not subject to theFOIA, all FOIA requests for GAOdocuments containing DoD informationreceived either from the public, or onreferral from the GAO, shall beprocessed under the provisions of theFOIA.

(j) Authentication. Records providedunder this part shall be authenticatedwith an appropriate seal, whenevernecessary, to fulfill an officialgovernment or other legal function. Thisservice, however, is in addition to thatrequired under the FOIA and is notincluded in the FOIA fee schedule. DoDComponents may charge for the serviceat a rate of $5.20 for eachauthentication.

(k) Combatant Commands. (1) TheCombatant Commands are placed underthe jurisdiction of the OSD, instead ofthe administering Military Departmentor the Chairman of the Joint Chiefs ofStaff, only for the purpose ofadministering the DoD FOIA Program.This policy represents an exception tothe policies directed in DoD Directive5100.3; 3 it authorizes and requires theCombatant Commands to process FOIArequests in accordance with DoDDirective 5400.7 and this part. TheCombatant Commands shall forwarddirectly to the Director, Freedom ofInformation and Security Review allcorrespondence associated with theappeal of an initial denial for recordsunder the provisions of the FOIA.Procedures to effect this administrativerequirement are outlined in appendix Aof this part.

(2) Combatant Commands shallmaintain an electronic reading room forFOIA-processed 5 U.S.C. 552(a)(2)(D)records in accordance with subpart B ofthis part. Records qualifying for thismeans of public access also shall bemaintained in hard copy for publicaccess at Combatant Commands’respective locations.

(l) Records management. FOIArecords shall be maintained anddisposed of in accordance with theNational Archives and RecordsAdministration General RecordsSchedule, and DoD Component recordsschedules.

(m) Relationship between the FOIAand the Privacy Act (PA). Not allrequesters are knowledgeable of theappropriate statutory authority to citewhen requesting records, nor are all ofthem aware of appeal procedures. Insome instances, they may cite neitherAct, but will imply one or both Acts.For these reasons, the followingguidelines are provided to ensure thatrequesters receive the greatest amount ofaccess rights under both Acts. See also§ 286.24 regarding appeal rights.

(1) If the record is required to bereleased under the FOIA, the PrivacyAct does not bar its disclosure. Unlikethe FOIA, the Privacy Act applies onlyto U.S. citizens and aliens admitted forpermanent residence.

(2) Requesters who seek records aboutthemselves contained in a Privacy Actsystem of records and who cite or implyonly the Privacy Act, will have theirrequests processed under the provisionsof both the Privacy Act and the FOIA.If the Privacy Act system of records isexempt from the provisions of 5 U.S.C.552a(d)(1) and if the records, or anyportion thereof, are exempt under the

FOIA, the requester shall be so advisedwith the appropriate Privacy Act andFOIA exemption. Appeals shall beprocessed under both Acts.

(3) Requesters who seek records aboutthemselves that are not contained in aPrivacy Act system of records and whocite or imply the Privacy Act will havetheir requests processed under theprovisions of the FOIA, since thePrivacy Act does not apply to theserecords. Appeals shall be processedunder the FOIA.

(4) Requesters who seek records aboutthemselves that are contained in aPrivacy Act system of records and whocite or imply the FOIA or both Acts willhave their requests processed under theprovisions of both the Privacy Act andthe FOIA. If the Privacy Act system ofrecords is exempt from the provisions of5 U.S.C. 552a(d)(1) and if the records orany portion thereof, are exempt underthe FOIA, the requester shall be soadvised with the appropriate PrivacyAct and FOIA exemption. Appeals shallbe processed under both Acts.

(5) Requesters who seek access toagency records that are not part of aPrivacy Act system of records, and whocite or imply the Privacy Act and FOIA,will have their requests processed underthe FOIA since the Privacy Act does notapply to these records. Appeals shall beprocessed under the FOIA.

(6) Requesters who seek access toagency records and who cite or implythe FOIA will have their requests anappeals processed under the FOIA.

(7) Requesters shall be advised in thefinal response letter which Act(s) was(were) used, inclusive of appeal rightsas outlined in paragraphs (m)(1) through(m)(6) of this section.

(n) Non-responsive information inresponsive records. DoD Componentsshall interpret FOIA requests liberallywhen determining which records areresponsive to the requests, and mayrelease non-responsive information.However, should DoD Componentsdesire to withhold non-responsiveinformation, the following steps shall beaccomplished:

(1) Consult with the requester, andask if the requester views theinformation as responsive, and if not,seek the requester’s concurrence todeletion of non-responsive informationwithout a FOIA exemption. Reflect thisconcurrence in the response letter.

(2) If the responsive record isunclassified, and the requester does notagree to deletion of non-responsiveinformation without a FOIA exemption,release all non-responsive andresponsive information which is notexempt. For non-responsive informationthat is exempt, notify the requester that


even if the information were determinedresponsive, it would likely be exemptunder (state appropriate exemption(s)).Advise the requester of the right torequest this information under aseparate FOIA request. The separaterequest shall be placed in the samelocation within the processing queue asthe original request.

(3) If the responsive record isclassified, and the requester does notagree to deletion of non-responsiveinformation without a FOIA exemption,release all unclassified responsive andnon-responsive information which isnot exempt. If the non-responsiveinformation is exempt, follow theprocedures in paragraph (n)(2) of thissection. The classified, non-responsiveinformation need not be reviewed fordeclassification at this point. Advise therequester that even if the classifiedinformation were determinedresponsive, it would likely be exemptunder 5 U.S.C. 552(b)(1), and otherexemptions if appropriate. Advise therequester of the right to request thisinformation under a separate FOIArequest. The separate request shall beplaced in the same location within theprocessing queue as the original request.

(o) Honoring form or format requests.DoD Components shall provide therecord in any form or format requestedby the requester if the record is readilyreproducible in that form or format. DoDComponents shall make reasonableefforts to maintain their records in formsor formats that are reproducible. Inresponding to requests for records, DoDComponents shall make reasonableefforts to search for records in electronicform or format, except when such effortswould significantly interfere with theoperation of the DoD Components’automated information system. Suchdeterminations shall be made on a caseby case basis. See also paragraph (g)(2)of this section.

Subpart B—FOIA Reading Rooms

§ 286.7 Requirements.(a) Reading room. Each DoD

Component shall provide an appropriatefacility or facilities where the publicmay inspect and copy or have copiedthe records described in paragraph (b) ofthis section and § 286.8(a). In additionto the records described in paragraph (b)of this section and § 286.8(a), DoDComponents may elect to place otherrecords in their reading room, and alsomake them electronically available tothe public. DoD Components may sharereading room facilities if the public isnot unduly inconvenienced, and alsomay establish decentralized readingrooms. When appropriate, the cost of

copying may be imposed on the personrequesting the material in accordancewith the provisions of subpart F of thispart.

(b) Record availability. The FOIArequires that records described in 5U.S.C. 552(a)(2) (A), (B), (C), and (D)created on or after November 1, 1996,shall be made available electronically byNovember 1, 1997, as well as in hardcopy in the FOIA reading room forinspection and copying, unless suchrecords are published and copies areoffered for sale. Personal privacyinformation, that if disclosed to a thirdparty requester, would result in aninvasion of the first party’s personalprivacy, and contractor submittedinformation, that if disclosed to acompeting contractor, would result incompetitive harm to the submittingcontractor shall be deleted from all 5U.S.C. 552(A)(2) records made availableto the general public. In every case,justification for the deletion must befully explained in writing, and theextent of such deletion shall beindicated on the record which is madepublicly available, unless suchindication would harm an interestprotected by an exemption under whichthe deletion was made. If technicallyfeasible, the extent of the deletion inelectronic records or any other form ofrecord shall be indicated at the place inthe record where the deletion was made.However, a DoD Component maypublish in the Federal Register adescription of the basis upon which itwill delete identifying details ofparticular types of records to avoidclearly unwarranted invasions ofprivacy, or competitive harm tobusiness submitters. In appropriatecases, the DoD Component may refer tothis description rather than write aseparate justification for each deletion.5 U.S.C. 552(a)(2) (A), (B), (C) and (D)records are:

(1) (a)(2)(A) records. Final opinions,including concurring and dissentingopinions, and orders made in theadjudication of cases, as defined in 5U.S.C. 551, that may be cited, used, orrelied upon as precedents in futureadjudications.

(2) (a)(2)(B) records. Statements ofpolicy and interpretations that havebeen adopted by the agency and are notpublished in the Federal Register.

(3) (a)(2)(C) records. Administrativestaff manuals and instructions, orportions therefo, that establish DoDpolicy or interpretations of policy thataffect a member of the public. Thisprovision does not apply to instructionsfor employees on tactics and techniquesto be used in performing their duties, orto instructions relating only to the

internal management of the DoDComponent. Examples of manuals andinstructions not normally madeavailable are:

(i) Those issued for audit,investigation, and inspection purposes,or those that prescribe operationaltactics, standards of performance, orcriterial for defense, prosecution, orsettlement of cases.

(ii) Operations and maintenancemanuals and technical informationconcerning munitions, equipment,systems, and intelligence activities.

(4) (a)(2)(D) records. Those 5 U.S.C.552(a)(3) records, which because of thenature of the subject matter, havebecome or are likely to become thesubject of subsequent requests forsubstantially the same records. Theserecords are referred to as FOIA-processed (a)(2) records.

(i) DoD Components shall decide ona case by case basis whether records fallinto this category, based on thefollowing factors:

(A) Previous experience of the DoDComponent with simular records.

(B) Particular circumstances of therecords involved, including their natureand the type of information contained inthem.

(C) The identify and number ofrequesters and whether there iswidespread press, historic, orcommercial interest in the records.

(ii) This provision is intended forsituations where public access in atimely manner is important, and it is notintended to apply where there may bea limited number of requests over ashort period of time from a fewrequesters. DoD Components mayremove the records from this accessmedium when the appropriate officialsdetermine that access is no longernecessary.

(iii) Should a requester submit a FOIArequest for FOIA-processed (a)(2)records, and insist that the request beprocessed, DoD Components shallprocess the FOIA request. However,DoD Components have no obligation toprocess a FOIA request for 5 U.S.C.552(a)(2) (A), (B), and (C) recordsbecause these records are required to bemade public and not FOIA-processedunder paragraph (a)(3) of the FOIA.

§ 286.8 Indexes.(a) ‘‘(a)(2)’’ materials. (1) Each DoD

Component shall maintain in eachfacility prescribed in § 286.7(a), anindex of materials described in§ 286.7(b) that are issued, adopted, orpromulgated, after July 4, 1967. No ‘‘(a)(2)’’ materials issued, promulgated, oradopted after July 4, 1967, that are notindexed and either made available or


4 See footnote 1 to § 286.1(a).5 See footnote 1 to § 286.1(a).

published may be relied upon, used orcited as precedent against anyindividual unless such individual hasactual and-timely notice of the contentsof such materials. Such materialsissued, promulgated, or adopted beforeJuly 4, 1967, need not be indexed, butmust be made available upon request ifnot exempted under this part.

(2) Each DoD Component shallpromptly publish quarterly or morefrequently, and distribute, by sale orotherwise, copies of each index of‘‘(a)(2)’’ materials or supplementsthereto unless it publishes in theFederal Register an order containing adetermination that publication isunnecessary and impracticable. A copyof each index or supplement notpublished shall be provided to arequester at a cost not to exceed thedirect cost of duplication as set forth insubpart F of this part.

(3) Each index of ‘‘(a)(2)’’ materials orsupplement thereto shall be arrangedtopical or by descriptive words ratherthan by case name or numbering systemso that members of the public canreadily locate material. Case name andnumbering arrangements, however, mayalso be included for DoD Componentconvenience.

(4) A general index of FOIA-processed(a)(2) records referred to in § 286.7(b)(4),shall be made available to the public,both in hard copy and electronically byDecember 31, 1999.

(b) Other materials. (1) Any availableindex of DoD Component materialpublished in the Federal Register, suchas material required to be published bySection 552(a)(1) of the FOIA, shall bemade available in DoD ComponentFOIA reading rooms, and electronicallyto the public.

(2) Although not required to be madeavailable in response to FOIA requestsor made available in FOIA ReadingRooms, ‘‘(a)(1)’’ materials shall, whenfeasible, be made available to the publicin FOIA reading rooms for inspectionand copying, and by electronic means.Examples of ‘‘(a)(1)’’ materials are:descriptions of any agency’s central andfield organization, and to the extent theyaffect the public, rules of procedures,descriptions of forms available,instruction as to the scope and contentsof papers, reports, or examinations, andany amendment, revision, or report ofthe aforementioned.

Subpart C—Exemptions

§ 286.11 General provisions.Records that meet the exemption

criteria of the FOIA may be withheldfrom public disclosure and need not bepublished in the Federal Register, made

available in a library reading room, orprovided in response to a FOIA request.

§ 286.12 Exemptions.

The following types of records may bewithheld in whole or in part frompublic disclosure under the FOIA,unless otherwise prescribed by law: Adiscretionary release of a record (seealso § 286.4(e)) to one requester shallprevent the withholding of the samerecord under a FOIA exemption if therecord is subsequently requested bysomeone else. However, a FOIAexemption may be invoked to withholdinformation that is similar or relatedthat has been the subject of adiscretionary release. In applyingexemptions, the identity of the requesterand the purpose for which the record issought are irrelevant with the exceptionthat an exemption may not be invokedwhere the particular interest to beprotected is the requester’s interest.However, if the subject of the record isthe requester for the record and therecord is contained in a Privacy Actsystem of records, it may only be deniedto the requester if withholding is bothauthorized by DoD 5400.11–R 4 and bya FOIA exemption.

(a) Number 1 (5 U.S.C. 552(b)(1)).Those properly and currently classifiedin the interest of national defense orforeign policy, as specifically authorizedunder the criteria established byExecutive Order and implemented byregulations, such as DoD 5200.1–R.5Although material is not classified at thetime of the FOIA request, aclassification review may be undertakento determine whether the informationshould be classified. The procedures inDoD 5200.1–R apply. If the informationqualifies as exemption 1 information,there is no discretion regarding itsrelease. In addition, this exemptionshall be invoked when the followingsituations are apparent:

(1) The fact of the existence ornonexistence of a record would itselfreveal classified information. In thissituation, Components shall neitherconfirm nor deny the existence ornonexistence of the record beingrequested. A ‘‘refusal to confirm ordeny’’ response must be usedconsistently, not only when a recordexists, but also when a record does notexist. Otherwise, the pattern of using a‘‘no record’’ response when a recorddoes not exist, and a ‘‘refusal to confirmor deny’’ when a record does exist willitself disclose national securityinformation.

(2) Compilations of items ofinformation that are individuallyunclassified may be classified if thecompiled information reveals additionalassociation or relationship that meetsthe standard for classification under anexisting executive order forclassification and DoD 5200.R–1, and isnot otherwise revealed in the individualitems of information.

(b) Number 2 (5 U.S.C. 552(b)(2)).Those related solely to the internalpersonnel rules and practices of theDepartment of Defense or any of itsComponents. This exemption is entirelydiscretionary. This exemption has twoprofiles, high (b)(2) and low (b)(2).Paragraph (b)(2) of this section containsa brief discussion on the low (b)(2)profile; however, that discussion is forinformation purposes only. When onlya minimum Government interest wouldbe affected (administrative burden),there is a great potential fordiscretionary disclosure of theinformation. Consequently, DoDComponents shall not invoke the low(b)(2) profile.

(1) Records qualifying under high(b)(2) are those containing orconstituting statues, rules, regulations,orders, manuals, directives,instructions, and security classificationguides, the release of which wouldallow circumvention of these recordsthereby substantially hindering theeffective performance of a significantfunction of the Department of Defense.Examples include:

(i) Those operating rules, guidelines,and manuals for DoD investigators,inspectors, auditors, and examiners thatmust remain privileged in order for theDoD Component to fulfill a legalrequirement.

(ii) Personnel and otheradministrative matters, such asexamination questions and answersused in training courses or in thedetermination of the qualifications ofcandidates for employment, entrance onduty, advancement, or promotion.

(iii Computer software, the release ofwhich would allow circumvention of astatute or DoD rules, regulations, orders,manuals, directives, or instructions. Inthis situation, the use of the softwaremust be closely examined to ensure acircumvention possibility exists.

(2) Records qualifying under the low(b)(2) profile are those that are trivialand housekeeping in nature for whichthere is no legitimate public interest orbenefit to be gained by release, and itwould constitute an administrativeburden to process the request in orderto disclose the records. Examplesinclude rules of personnel’s use ofparking facilities or regulation of lunch



hours, statements of policy as to sickleave, and administrative data such asfile numbers, mail routing stamps,initials, data processing notations, briefreferences to previous communications,and other like administrative markings.DoD Components shall not invoke thelow (b)(2) profile.

(c) Number 3 (5 U.S.C. 552(b)(3)).Those concerning matters that a statutespecifically exempts from disclosure byterms that permit no discretion on theissue, or in accordance with criteriaestablished by that statute forwithholding or referring to particulartypes of matters to be withheld. TheDirectorate for Freedom of Informationand Security Review maintains a list of(b)(3) statutes used within theDepartment of Defense, and providesupdated lists of these statutes to DoDComponents on a periodic basis. A fewexamples of such statutes are:

(1) Patent Secrecy, 35 U.S.C. 181–188.Any records containing informationrelating to inventions that are thesubject of patent applications on whichPatent Secrecy Orders have been issued.

(2) Restricted Data and FormerlyRestricted Data, 42 U.S.C. 2162.

(3) Communication Intelligence, 18U.S.C. 798.

(4) Authority to Withhold FromPublic Disclosure Certain TechnicalData, 10 U.S.C. 130 and DoD Directive5230.25.6

(5) Confidentiality of Medical QualityAssurance Records: Qualified Immunityfor Participants, 10 U.S.C. 1102f.

(6) Physical Protection of SpecialNuclear Material: Limitation onDissemination of UnclassifiedInformation, 10 U.S.C. 128.

(7) Protection of Intelligence Sourcesand Methods, 50 U.S.C. 403–3(c)(6).

(8) Protection of Contractor SubmittedProposals, 10 U.S.C. 2305(g).

(9) Procurement Integrity, 41 U.S.C.423.

(d) Number 4 (5 U.S.C. 552(b)(4)).Those containing trade secrets orcommercial or financial informationthat a DoD Component receives from aperson or organization outside theGovernment with the understandingthat the information or record will beretained on a privileged or confidentialbasis in accordance with the customaryhandling of such records. Recordswithin the exemption must containtrade secrets, or commercial or financialrecords, the disclosure of which is likelyto cause substantial harm to thecompetitive position of the sourceproviding the information; impair theGovernment’s ability to obtain necessaryinformation in the future; or impair

some other legitimate Governmentinterest. Commercial or financialinformation submitted on a voluntarybasis, absent any exercised authorityprescribing criteria for submission isprotected without any requirement toshow competitive harm (see paragraph(d)(8) of this section). If the informationqualifies as exemption 4 information,there is no discretion in its release.Examples include:

(1) Commercial or financialinformation received in confidence inconnection with loans, bids, contracts,or proposals set forth in or incorporatedby reference in a contract entered intobetween the DoD Component and theofferor that submitted the proposal, aswell as other information received inconfidence or privileged, such as tradesecrets, inventions, discoveries, or otherproprietary data. See also § 286.23(h)(2)of this part. Additionally, when theprovisions of 10 U.S.C. 2305(g), and 41U.S.C. 423 are met, certain proprietaryand source selection information may bewithheld under exemption 3.

(2) Statistical data and commercial orfinancial information concerningcontract performance, income, profits,losses, and expenditures, if offered andreceived in confidence from a contractoror potential contractor.

(3) Personal statements given in thecourse of inspections, investigations, oraudits, when such statements arereceived in confidence from theindividual and retained in confidencebecause they reveal trade secrets orcommercial or financial informationnormally considered confidential orprivileged.

(4) Financial data provided inconfidence by private employers inconnection with locality wage surveysthat are used to fix and adjust payschedules applicable to the prevailingwage rate of employees within theDepartment of Defense.

(5) Scientific and manufacturingprocesses or developments concerningtechnical or scientific data or otherinformation submitted with anapplication for a research grant, or witha report while research is in progress.

(6) Technical or scientific datadeveloped by a contractor orsubcontractor exclusively at privateexpense, and technical or scientific datadeveloped in part with Federal fundsand in part at private expense, whereinthe contractor or subcontractor hasretained legitimate proprietary interestsin such data in accordance with 10U.S.C. 2320–2321 and DoD FederalAcquisition Regulation Supplement(DFARS), Chapter 2 of 48 CFR, Subpart227.71–227.72. Technical datadeveloped exclusively with Federal

funds may be withheld underExemption Number 3 if it meets thecriteria of 10 U.S.C. 130 and DoDDirective 5230.25 (see paragraph (c)(4)of this section).

(7) Computer software which iscopyrighted under the Copyright Act of1976 (17 U.S.C. 106), the disclosure ofwhich would have an adverse impact onthe potential market value of acopyrighted work.

(8) Proprietary information submittedstrictly on a voluntary basis, absent anyexercised authority prescribing criteriafor submission. Examples of exercisedauthorities prescribing criteria forsubmission are statutes, ExecutiveOrders, regulations, invitations for bids,requests for proposals, and contracts.Submission of information under theseauthorities is not voluntary. (See also§286.23(h)(3).)

(e) Number 5 (5 U.S.C. 552(b)(5)).Those containing informationconsidered privileged in litigation,primarily under the deliberative processprivilege. Except as provided inparagraphs (e)(2) through (e)(5) of thissection, internal advice,recommendations, and subjectiveevaluations, as contrasted with factualmatters, that are reflected in deliberativerecords pertaining to the decision-making process of an agency, whetherwithin or among agencies (as defined in5 U.S.C. 552(e)), or within or amongDoD Components. In order to meet thetest of this exemption, the record mustbe both deliberative in nature, as well aspart of a decision-making process.Merely being an internal record isinsufficient basis for withholding underthis exemption. Also potentiallyexempted are records pertaining to theattorney-client privilege and theattorney work-product privilege. Thisexemption is entirely discretionary.

(1) Examples of the deliberativeprocess include:

(i) The non factual portions of staffpapers, to include after-action reports,lessons learned, and situation reportscontaining staff evaluations, advice,opinions, or suggestions.

(ii) Advice, suggestions, orevaluations prepared on behalf of theDepartment of Defense by individualconsultants or by boards, committees,councils, groups, panels, conferences,commissions, task forces, or othersimilar groups that are formed for thepurpose of obtaining advice andrecommendations.

(iii) Those non factual portions ofevaluations by DoD Componentpersonnel of contractors and theirproducts.

(iv) Information of a speculative,tentative, or evaluative nature or such



matters as proposed plans to procure,lease or otherwise acquire and disposeof materials, real estate, facilities orfunctions, when such informationwould provide undue or unfaircompetitive advantage to privatepersonal interests or would impedelegitimate government functions.

(v) Trade secret or other confidentialresearch development, or commercialinformation owned by the Government,where premature release is likely toaffect the Government’s negotiatingposition or other commercial interest.

(vi) Those portions of official reportsof inspection, reports of the InspectorGeneral, audits, investigations, orsurveys pertaining to safety, security, orthe internal management,administration, or operation of one ormore DoD Components, when theserecords have traditionally been treatedby the courts as privileged againstdisclosure in litigation.

(vii) Planning, programming, andbudgetary information that is involvedin the defense planning and resourceallocation process.

(2) If any such intra- or inter-agencyrecord or reasonably segregable portionof such record hypothetically would bemade available routinely through thediscovery process in the course oflitigation with the Agency, then itshould not be withheld under the FOIA.If, however, the informationhypothetically would not be released atall, or would only be released in aparticular case during civil discoverywhere a party’s particularized showingof need might override a privilege, thenthe record may be withheld. Discoveryis the formal process by which litigantsobtain information from each other foruse in the litigation. Consult with legalcounsel to determine whetherexemption 5 material would beroutinely made available through thediscovery process.

(3) Intra- or inter-agency memorandaor letters that are factual, or thosereasonably segregable portions that arefactual, are routinely made availablethrough discovery, and shall be madeavailable to a requester, unless thefactual material is otherwise exemptfrom release, inextricably intertwinedwith the exempt information, sofragmented as to be uninformative, or soredundant of information alreadyavailable to the requester as to provideno new substantive information.

(4) A direction or order from asuperior to a subordinate, thoughcontained in an internalcommunication, generally cannot bewithheld from a requester if itconstitutes policy guidance or adecision, as distinguished from a

discussion of preliminary matters or arequest for information or advice thatwould compromise the decision-makingprocess.

(5) An internal communicationconcerning a decision that subsequentlyhas been made a matter of public recordmust be made available to a requesterwhen the rationale for the decision isexpressly adopted or incorporately byreference in the record containing thedecision.

(f) Number 6 (5 U.S.C. 552(b)(6)).Information in personnel and medicalfiles, as well as similar personalinformation in other files, that, ifdisclosed to a requester, other than theperson about whom the information isabout, would result in a clearlyunwarranted invasion of personalprivacy. Release of information about anindividual contained in a Privacy ActSystem of records that would constitutea clearly unwarranted invasion ofprivacy is prohibited, and could subjectthe releaser to civil and criminalpenalties. If the information qualifies asexemption 6 information, there is nodiscretion in its release.

(1) Examples of other files containingpersonal information similar to thatcontained in personnel and medicalfiles include:

(i) Those compiled to evaluate oradjudicate the suitability of candidatesfor civilian employment or membershipin the Armed Forces, and the eligibilityof individuals (civilian, military, orcontractor employees) for securityclearances, or for access to particularlysensitive classified information.

(ii) Files containing reports, records,and other material pertaining topersonnel matters in whichadministrative action, includingdisciplinary action, may be taken.

(2) Home addresses, including privatee-mail addresses, are normally notreleasable without the consent of theindividuals concerned. This includeslists of home addresses and militaryquarters’ addresses without theoccupant’s name. Additionally, thenames and duty addresses (postal and/or e-mail) of DoD military and civilianpersonnel who are assigned to units thatare sensitive, routinely deployable, orstationed in foreign territories canconstitute a clearly unwarrantedinvasion of personal privacy.

(i) Privacy interest. A privacy interestmay exist in personal information eventhough the information has beendisclosed at some place and time. Ifpersonal information is not freelyavailable from sources other than theFederal Government, a privacy interestexists in its nondisclosure. The fact thatthe Federal Government expended

funds to prepare, index and maintainrecords on personal information, andthe fact that a requester invokes FOIA toobtain these records indicates theinformation is not freely available.

(ii) Names and duty addresses (postaland/or e-mail) published in telephonedirectories, organizational charts, rostersand similar materials for personnelassigned to units that are sensitive,routinely deployable, or stationed inforeign territories are withholdableunder this exemption.

(3) This exemption shall not be usedin an attempt to protect the privacy ofa deceased person, but it may be usedto protect the privacy of the deceasedperson’s family if disclosure wouldrekindle grief, anguish, pain,embarrassment, or even disruption ofpeace of mind of surviving familymembers. In such situations, balance thesurviving family members’ privacyagainst the public’s right to know todetermine if disclosure is in the publicinterest. Additionally, the deceased’ssocial security number should bewithheld since it is used by the next ofkin to receive benefits. Disclosures maybe made to the immediate next of kin asdefined in DoD Directive 5154.24.7

(4) A clearly unwarranted invasion ofthe privacy of third parties identified ina personnel, medical or similar recordconstitutes a basis for deleting thosereasonably segregable portions of thatrecord. When withholding third partypersonal information from the subject ofthe record and the record is containedin a Privacy Act system of records,consult with legal counsel.

(5) This exemption also applies whenthe fact of the existence or nonexistenceof a responsive record would itselfreveal personally private information,and the public interest in disclosure isnot sufficient to outweigh the privacyinterest. In this situation, DoDComponents shall neither confirm nordeny the existence or nonexistence ofthe record being requested. This is aGlomar response, and exemption 6 mustbe cited in the response. Additionally,in order to insure personal privacy isnot violated during referrals, DoDComponents shall coordinate with otherDoD Components or Federal Agenciesbefore referring a record that is exemptunder the Glomar concept.

(i) A ‘‘refusal to confirm or deny’’response must be used consistently, notonly when a record exists, but alsowhen a record does not exist.Otherwise, the pattern of using a ‘‘norecords’’ response when a record doesnot exist and a ‘‘refusal to confirm ordeny’’ when a record does exist will


itself disclose personally privateinformation.

(ii) Refusal to confirm or deny shouldnot be used when:

(A) The person whose personalprivacy is in jeopardy has provided therequester a waiver of his or her privacyrights.

(B) The person initiated or directlyparticipated in an investigation that leadto the creation of any agency recordseeks access to that record.

(C) The person whose personalprivacy is in jeopardy is deceased, theAgency is aware of that fact, anddisclosure would not invade the privacyof the deceased’s family. See paragraph(f)(3) of this section.

(g) Number 7 (5 U.S.C. 552(b)(7)).Records or information complied forlaw enforcement purposes; i.e., civil,criminal, or military law, including theimplementation of Executive orders orregulations issued pursuant to law. Thisexemption may be invoked to preventdisclosure of documents not originallycreated for, but later gathered for lawenforcement purposes. With theexception of parts (C) and (F) (seeparagraph (g)(1)(iii) of this section) ofthis exemption, this exemption isdiscretionary. If information qualifies asexemption (7)(C) or (7)(F) (see paragraph(g)(1)(iii) of this section) information,there is no discretion in its release.

(1) This exemption applies, however,only to the extent that production ofsuch law enforcement records orinformation could result in thefollowing:

(i) Could reasonably be expected tointerfere with enforcement proceedings(5 U.S.C. 552(b)(7)(A)).

(ii) Would deprive a person of theright to a fair trial or to an impartialadjudication (5 U.S.C. 552(b)(7)(B)).

(iii) Could reasonably be expected toconstitute an unwarranted invasion ofpersonal privacy of a living person,including surviving family members ofan individual identified in such a record(5 U.S.C. 552(b)(7)(C)).

(A) this exemption also applies whenthe fact of the existence or nonexistenceof a responsive record would itselfreveal personally private information,and the public interest in disclosure isnot sufficient to outweigh the privacyinterest. In this situation, Componentsshall neither confirm nor deny theexistence or nonexistence of the recordbeing requested. This a Glomarresponse, and exemption (7)(C) must becited in the response. Additionally, inorder to insure personal privacy is notviolated during referrals, DoDComponents shall coordinate with otherDoD Components or Federal Agencies

before referring a record that is exemptunder the Glomar concept.

(B) A ‘‘refusal to confirm or deny’’response must be used consistently, notonly when a record exists, but alsowhen a record does not exist.Otherwise, the pattern of using a ‘‘norecords’’ response when a record doesnot exist and a ‘‘refusal to confirm ordeny’’ when a record does exist willitself disclose personally privateinformation.

(C) Refusal to confirm or deny shouldnot be used when:

(1) The person whose personalprivacy is in jeopardy has provided therequester with a waiver of his or herprivacy rights.

(2) The person whose personalprivacy is in jeopardy is deceased, andthe Agency is aware of that fact.

(D) Could reasonably be expected todisclose the identity of a confidentialsource, including a source within theDepartment of Defense; a State, local, orforeign agency or authority; or anyprivate institution that furnishes theinformation on a confidential basis; andcould disclose information furnishedfrom a confidential source and obtainedby a criminal law enforcement authorityin a criminal investigation or by anagency conducting a lawful nationalsecurity intelligence investigation (5U.S.C. 552(b)(7)(D)).

(E) Would disclose techniques andprocedures for law enforcementinvestigations or prosecutions, or woulddisclose guidelines for law enforcementinvestigations or prosecutions if suchdisclosure could reasonably be expectedto risk circumvention of the law (5U.S.C. 552(b)(7)(E)).

(F) Could reasonably be expected toendanger the life or physical safety ofany individual (5 U.S.C. 552(b)(7)(F)).

(2) Some examples of exemption 7are:

(i) Statements of witnesses and othermaterial developed during the course ofthe investigation and all materialsprepared in connection with relatedGovernment litigation or adjudicativeproceedings.

(ii) The identify of firms orindividuals being investigated foralleged irregularities involvingcontracting with the Department ofDefense when no indictment has beenobtained nor any civil action filedagainst them by the United States.

(iii) Information obtained inconfidence, expressed or implied, in thecourse of a criminal investigation by acriminal law enforcement agency oroffice within a DoD Component, or alawful national security intelligenceinvestigation conducted by anauthorized agency or office with a DoD

Component. National securityintelligence investigations includebackground security investigations andthose investigations conducted for thepurpose of obtaining affirmative orcounterintelligence information.

(3) The right of individual litigants toinvestigative records currently availableby law (such as, the Jencks Act, 18U.S.C. 3500)) is not diminished.

(4) Exclusions. Excluded fromexemption 7 are the following twosituations applicable to the Departmentof Defense. (Components consideringinvoking an exclusion should firstconsult with the Department of Justice,Office of Information and Privacy.):

(i) Whenever a request is made thatinvolves access to records orinformation compiled for lawenforcement purposes, and theinvestigation or proceeding involves apossible violation of criminal law wherethere is reason to believe that the subjectof the investigation or proceeding isunaware of its pendency, and thedisclosure of the existence of therecords could reasonably be expected tointerfere with enforcement proceedings,Components may, during only suchtimes as that circumstances continues,treat the records of information as notsubject to the FOIA. In such situation,the response to the requester will statethat no records were found.

(ii) Whenever informant recordsmaintained by a criminal lawenforcement organization within a DoDComponent under the informant’s nameor personal identifier are requested by athird party using the informant’s nameor personal identifier, the Componentmay treat the records as not subject tothe FOIA, unless the informant’s statusas an informant has been officiallyconfirmed. If it is determined that therecords are not subject to 5 U.S.C.552(b)(7), the response to the requestwill state that no records were found.

(h) Number 8 (U.S.C. 552 (b)(8)).Those contained in or related toexamination, operation or conditionreports prepared by, on behalf of, or forthe use of any agency responsible for theregulation or supervision of financialinstitutions.

(i) Number 9 (5 U.S.C. 552(b)(9)).Those containing geological andgeophysical information and data(including maps) concerning wells.

Subpart D—For Official Use Only

§ 286.15 General provisions.(a) General. Information that has not

been given a security classificationpursuant to the criteria of an ExecutiveOrder, but which may be withheld fromthe public because disclosure would



9 See footnote 1 to § 286.1(a).10 See footnote 1 to § 286.1(a).

cause a foreseeable harm to an interestprotected by one or more FOIAexemptions 2 through 9 (see subpart Cof this part) shall be considered as beingfor official use only (FOUO). No othermaterial shall be considered FOUO, andFOUO is not authorized as an anemicform of classification to protect nationalsecurity interests. Additionalinformation on FOUO and othercontrolled, unclassified informationmay be found in DoD 5200. 1–R or bycontacting the Directorate for Security,Office of the Assistant Secretary ofDefense (Command, Control,Communications, and Intelligence).

(b) Prior FOUO application. The priorapplication of FOUO markings is not aconclusive basis for withholding arecord that is requested under the FOIA.When such a record is requested, theinformation in it shall be evaluated todetermine whether disclosure wouldresult in a foreseeable harm to aninterest protected by one or more FOIAexemptions 2 through 9. Even if anyexemptions apply, the record shall bereleased as a discretionary matter whenit is determined that there is noforeseeable harm to an interest protectedby the exemptions.

(c) Historical papers. Records such asnotes, working papers, and draftsretained as historical evidence of DoDComponent actions enjoy no specialapart from the exemptions under theFOIA.

(d) Time to mark records. Themarking of records at the time of theircreation provides notice of FOUOcontent and facilitates review when arecord is requested under the FOIA.Records requested under the FOIA thatdo not bear such markings shall not beassumed to be releasable withoutexamination for the presence ofinformation that requires continuedprotection and qualifies as exempt frompublic release.

(e) Distribution statement.Information in a technical documentthat requires a distribution statementpursuant to DoD Directive 5230.24 8

shall bear that statement and may bemarked FOUO, as appropriate.

§ 286.16 Markings.(a) Location of markings. (1) An

unclassified document containingFOUO information shall be marked ‘‘ForOfficial Use Only’’ at the bottom on theoutside of the front cover (if any), oneach page containing FOUOinformation, and on the outside of theback cover (if any). Each paragraphcontaining FOUO information shall bemarked as such.

(2) Within a classified document, anindividual page that contains bothFOUO and classified information shallbe marked at the top and bottom withthe highest security classification ofinformation appearing on the page.Individual paragraphs shall be markedat the appropriate classification level, aswell as unclassified or FOUO, asappropriate.

(3) Within a classified document, anindividual page that contains FOUOinformation but no classifiedinformation shall be marked ‘‘ForOfficial Use Only’’ at the top and bottomof the page, as well as each paragraphthat contains FOUO information.

(4) Other records, such asphotographs, films, tapes, or slides,shall be marked ‘‘For Official Use Only’’or ‘‘FOUO’’ in a manner that ensuresthat a recipient or viewer is aware of thestatus of the information therein.

(5) FOUO material transmittedoutside the Department of Defenserequires application of an expandedmarking to explain the significance ofthe FOUO marking. This may beaccomplished by typing or stamping thefollowing statement on the record priorto transfer:This document contains informationEXEMPT FROM MANDATORY

DISCLOSUREunder the FOIA. Exemption(s) lll

applies/apply.

(b) [Reserved]

§ 286.17 Dissemination and transmission.

(a) Release and transmissionprocedures. Until FOUO status isterminated, the release and transmissioninstructions that follow apply:

(1) FOUO information may bedisseminated within DoD Componentsand between officials of DoDComponents and DoD contractors,consultants, and grantees to conductofficial business for the Department ofDefense. Recipients shall be made awareof the status of such information, andtransmission shall be by means thatpreclude unauthorized publicdisclosure. Transmittal documents shallcall attention to the presence of FOUOattachments.

(2) DoD holders of FOUO informationare authorized to convey suchinformation to officials in otherDepartments and Agencies of theExecutive and Judicial Branches tofulfill a government function, except tothe extent prohibited by the Privacy Act.Records thus transmitted shall bemarked ‘‘For Official Use Only,’’ and therecipient shall be advised that theinformation may qualify for exemptionfrom public disclosure, pursuant to the

FOIA, and that special handlinginstructions do or do not apply.

(3) Release of FOUO information toMembers of Congress is governed byDoD Directive 5400.4. 9 Release to theGAO is governed by DoD Directive7650.1. 10 Records released to theCongress or GAO should be reviewed todetermine whether the informationwarrants FOUO status. If not, priorFOUO markings shall be removed oreffaced. If withholding criteria are met,the records shall be marked FOUO andthe recipient provided an explanationfor such exemption and marking.Alternatively, the recipient may berequested, without marking the record,to protect against its public disclosurefor reasons that are explained.

(b) Transporting FOUO information.Records containing FOUO informationshall be transported in a manner thatprevents disclosure of the contents.When not commingled with classifiedinformation, FOUO information may besent via first-class mail or parcel post.Bulky shipments, such as distributionsof FOUO Directives or testing materials,that otherwise qualify under postalregulations, may be sent by fourth-classmail.

(c) Electronically and facsimiletransmitted messages. Each part ofelectronically and facsimile transmittedmessages containing FOUO informationshall be marked appropriately.Unclassified messages containing FOUOinformation shall contain theabbreviation ‘‘FOUO’’ before thebeginning of the text. Such messagesand facsimiles shall be transmitted inaccordance with communicationssecurity procedures wheneverpracticable.

§ 286.18 Safeguarding FOUO information.(a) During duty hours. During normal

working hours, records determined to beFOUO shall be placed in an out-of-sightlocation if the work area is accessible tonongovernment personnel.

(b) During nonduty hours. At the closeof business, FOUO records shall bestored so as to prevent unauthorizedaccess. Filing such material with otherunclassified records in unlocked files ordesks, etc., is adequate when normalU.S. Government or Government-contractor internal building security isprovided during nonduty hours. Whensuch internal security control is notexercised, locked buildings or roomsnormally provide adequate after-hoursprotection. If such protection is notconsidered adequate, FOUO materialshall be stored in locked receptacles


such as file cabinets, desks, orbookcases. FOUO records that aresubject to the provisions of the NationalSecurity Act of 1959 shall meet thesafeguards outlined for that group ofrecords.

§ 286.19 Termination, disposal andunauthorized disclosure.

(a) Termination. The originator orother competent authority; e.g., initialdenial and appellate authorities, shallterminate ‘‘For Official Use Only’’markings or status when circumstancesindicate that the information no longerrequires protection from publicdisclosure. When FOUO status isterminated, all known holders shall benotified, to the extent practical. Uponnotification, holders shall efface orremove the ‘‘For Official Use Only’’markings, but records in file or storageneed not be retrieved solely for thatpurpose.

(b) Disposal. (1) Nonrecord copies ofFOUO materials may be destroyed bytearing each copy into pieces to preventreconstructing, and placing them inregular trash containers. When localcircumstances or experience indicatesthat this destruction method is notsufficiently protective of FOUOinformation, local authorities may directother methods but must give dueconsideration to the additional expensebalanced against the degree ofsensitivity of the type of FOUOinformation contained in the records.

(2) Record copies of FOUO documentsshall be disposed of in accordance withthe disposal standards establishedunder 44 U.S.C. 3301–3314, asimplemented by DoD Componentinstructions concerning recordsdisposal.

(c) Unauthorized disclosure. Theunauthorized disclosure of FOUOrecords does not constitute anunauthorized disclosure of DoDinformation classified for securitypurposes. Appropriate administrativeaction shall be taken, however, to fixresponsibility for unauthorizeddisclosure whenever feasible, andappropriate disciplinary action shall betaken against those responsible.Unauthorized disclosure of FOUOinformation that is protected by thePrivacy Act may also result in civil andcriminal sanctions against responsiblepersons. The DoD Component thatoriginated the FOUO information shallbe informed of its unauthorizeddisclosure.

Subpart E—Release and ProcessingProcedures

§ 282.22 General provisions.(a) Public information. (1) Since the

policy of the Department of Defense isto make the maximum amount ofinformation available to the publicconsistent with its otherresponsibilities, written requests for aDoD record made under the provisionsof 5 U.S.C. 552(a)(3) of the FOIA may bedenied only when:

(i) Disclosure would result in aforeseeable harm to an interest protectedby a FOIA exemption, and the record issubject to one or more of the exemptionsof FOIA.

(ii) The record has not been describedwell enough to enable the DoDComponent to locate it with areasonable amount of effort by anemployee familiar with the files.

(iii) The requester has failed tocomply with the proceduralrequirements, including the writtenagreement to pay or payment of anyrequired fee imposed by the instructionsof the DoD Component concerned.When personally identifiableinformation in a record is requested bythe subject of the record or the subject’sattorney, notarization of the request, ora statement certifying under the penaltyof perjury that their identity is true andcorrect may be required. Additionally,written consent of the subject of therecord is required for disclosure from aPrivacy Act System of records, even tothe subject’s attorney.

(2) Individuals seeking DoDinformation should address their FOIArequests to one of the addresses listed inappendix B of this part.

(b) Requests from private parties. Theprovisions of the FOIA are reserved forpersons with private interest as opposedto U.S. Federal Agencies seeking officialinformation. Requests from privatepersons will be made in writing, andshould clearly show all other addresseeswithin the Federal Government towhich the request was also sent. Thisprocedure will reduce processing timerequirements, and ensure better inter-and intra-agency coordination.However, if the requester does not showall other addressees to which therequest was also sent, DoD Componentsshall still process the request. DoDComponents should encouragerequesters to send requests by mail,facsimile, or by electronic means.Disclosure of records to individualsunder the FOIA is considered publicrelease of information, except asprovided for in § 286.4(f) and § 286.12.

(c) Requests from governmentofficials. Requests from officials of State

or local Governments for DoDComponent records shall be consideredthe same as any other requester.Requests from members of Congress notseeking records on behalf of aCongressional Committee,Subcommittee, either House sitting as awhole, or made on behalf of theirconstituents shall be considered thesame as any other requester (see also§ 286.4(f) and paragraph (d) of thissection). Requests from officials offoreign governments shall be consideredthe same as any other requester.Requests from officials of foreigngovernments that do not invoke theFOIA shall be referred to appropriateforeign disclosure channels and therequester so notified.

(d) Privileged release outside of theFOIA to U.S. Government officials. (1)Records exempt from release to thepublic under the FOIA may be disclosedin accordance with DoD Componentregulations to agencies of the FederalGovernment, whether legislative,executive, or administrative, as follows:

(i) In response to a request of aCommittee or Subcommittee ofCongress, or to either House sitting as awhole in accordance with DoD Directive5400.4.

(ii) To other Federal Agencies, bothexecutive and administrative, asdetermined by the head of a DoDComponent or designee.

(iii) In response to an order of aFederal court, DoD Components shallrelease information along with adescription of the restrictions on itsrelease to the public.

(2) DoD Components shall informofficials receiving records under theprovisions of this paragraph that thoserecords are exempt from public releaseunder the FOIA. DoD Components alsoshall advise officials of any specialhandling instructions. Classifiedinformation is subject to the provisionsof DoD 5200.1–R, and informationcontained in Privacy Act systems ofrecords is subject to DoD 5400.11–R.

(e) Consultation with affected DoDcomponent. (1) When a DoD Componentreceives a FOIA request for a record inwhich an affected DoD organization(including a Combatant Command) hasa clear and substantial interest in thesubject matter, consultation with thataffected DoD organization is required.As an example, where a DoDComponent receives a request forrecords related to DoD operations in aforeign country, the cognizantCombatant Command for the areainvolved in the request shall beconsulted before a release is made.Consultations may be telephonic,electronic, or in hard copy.


(2) The affected DoD Component shallreview the circumstances of the requestfor host-nation relations, and provide,where appropriate, FOIA processingassistance to the responding DoDComponent regarding release ofinformation. Responding DoDComponents shall provide copies ofresponsive records to the affected DoDComponent when requested by theaffected DoD Component. The affectedDoD Component shall receive a courtesycopy of all releases in suchcircumstances.

(3) Nothing in paragraphs (e)(1) and(e)(2) of this section shall impede theprocessing of the FOIA request initiallyreceived by a DoD Component.

§ 286.23 Initial determinations.(a) Initial denial authority. (1)

Components shall limit the number ofIDAs appointed. In designating its IDAs,a DoD Component shall balance thegoals of centralization of authority topromote uniform decisions anddecentralization to facilitate respondingthe each request within the timelimitations of the FOIA.

(2) The initial determination whetherto make a record available upon requestmay be made by any suitable officialdesignated by the DoD Component inpublished regulations. The presence ofthe marking ‘‘For Official Use Only’’does not relieve the designated officialof the responsibility to review therequested record for the purpose ofdetermining whether an exemptionunder the FOIA is applicable.

(3) The officials designated by DoDComponents to make initialdeterminations should consult withpublic affairs officers (PAOs) to becomefamiliar with subject matter that isconsidered to be newsworthy, andadvise PAOs of all requests from newsmedia representatives. In addition, theofficials should inform PAOs in advancewhen they intend to withhold orpartially withhold a record, if it appearsthat the withholding action may bechallenged in the media.

(b) Reasons for not releasing a record.The following are reasons for notcomplying with a request for a recordunder 5 U.S.C. 552(a)(3):

(1) No records. A reasonable search offiles failed to identify responsiverecords.

(2) Referrals. The request istransferred to another DoD Component,or to another Federal Agency.

(3) Request withdrawn. The request iswithdrawn by the requester.

(4) Fee-related reason. The requesteris unwilling to pay fees associated witha request; the requester is past due inthe payment of fees from a previous

FOIA request; or the requester disagreeswith the fee estimate.

(5) Records not reasonably described.A record has not been described withsufficient particularity to enable theDoD Component to locate it byconducting a reasonable search.

(6) Not a proper FOIA request forsome other reason. The requester hasfailed unreasonably to comply withprocedural requirements, other than fee-related, imposed by this part or DoDComponent supplementing regulations.

(7) Not an agency record. Theinformation requested is not a recordwithin the meaning of the FOIA and thispart.

(8) Duplicate request. The request is aduplicate request (e.g., a requester asksfor the same information more thanonce). This includes identical requestsreceived via different means (e.g.,electronic mail, facsimile, mail, courier)at the same or different times.

(9) Other (specify). Any other reasona requester does not comply withpublished rules other than thoseoutlined paragraphs (b)(1) through (b)(8)of this section.

(10) Partial or total denial. The recordis denied in whole or in part inaccordance with procedures set forth inthe FOIA.

(c) Denial tests. To deny a requestedrecord that is in the possession andcontrol of a DoD Component, it must bedetermined that disclosure of the recordwould result in a foreseeable harm to aninterest protected by a FOIA exemption,and the record is exempt under one ormore of the exemptions of the FOIA. Anoutline of the FOIA’s exemptions iscontained in subpart C of this part.

(d) Reasonably segregable portions.Although portions of some records maybe denied, the remaining reasonablysegregable portions must be released tothe requester when it reasonably can beassumed that a skillful andknowledgeable person could notreconstruct the excised information.Unless indicating the extent of thedeletion would harm an interestprotected by an exemption, the amountof deleted information shall beindicated on the released portion ofpaper records by use of brackets ordarkened areas indicating removal ofinformation. In no case shall the deletedareas be left ‘‘white’’ without the use ofbrackets to show the bounds of deletedinformation. In the case of electronicdeletion, or deletion in audiovisual ormicrofiche records, if technicallyfeasible, the amount of redactedinformation shall be indicated at theplace in the record such deletion wasmade, unless including the indicationwould harm an interest protected by the

exemption under which the deletion ismade. This may be done by use ofbrackets, shaded areas, or some otheridentifiable technique that will clearlyshow the limits of the deletedinformation. When a record is denied inwhole, the responsive advising therequester of that determination willspecifically state that it is not reasonableto segregate portions of the record forrelease.

(e) Response to requester. (1)Whenever possible, initialdeterminations to release or deny arecord normally shall be made and thedecision reported to the requesterwithin 20 working days after receipt ofthe request by the official designated torespond. When a DoD Component has asignificant number of pending requestswhich prevent a response determinationwithin the 20 working day period, therequester shall be so notified in aninterim response, and advised whethertheir request qualifies for the fast trackor slow track within the DoDComponents’ multitrack processingsystem. Requesters who do not meet thecriteria for fast track processing shall begiven the opportunity to limit the scopeof their request in order to qualify forfast track processing. See also§ 286.4(d)(2), for greater detail onmultitrack processing and compellingneed meriting expedited processing.

(2) When a decision is made to releasea record, a copy should be madeavailable promptly to the requester oncehe has complied with preliminaryprocedural requirements.

(3) When a request for a record isdenied in whole or in part, the officialdesignated to respond shall inform therequester in writing of the name andtitle or position of the official who madethe determination, and shall explain tothe requester the basis for thedetermination in sufficient detail topermit the requester to make a decisionconcerning appeal. The requesterspecifically shall be informed of theexemptions on which the denial isbased, inclusive of a brief statementdescribing what the exemption(s) cover.When the initial denial is based inwhole or in part on a securityclassification, the explanation shouldinclude a summary of the applicableExecutive Order criteria forclassification, as well as an explanation,to the extent reasonably feasible, of howthose criteria apply to the particularrecord in question. The requester shallalso be advised of the opportunity andprocedures for appealing an unfavorabledetermination to a higher final authoritywithin the DoD Component.

(4) The final response to the requestershould contain information concerning


the fee status of the request, consistentwith the provisions of subpart F of thispart. When a requester is assessed feesfor processing a request, the requester’sfee category shall be specified in theresponse letter. Components also shallprovide the requester with a completecost breakdown (e.g., 15 pages of officereproduction at $0.15 per page; 5minutes of computer search time at$43.50 per minute, 2 hours ofprofessional level search at $25 perhour, etc.) in the response letter.

(5) The explanation of the substantivebasis for a denial shall include specificcitation of the statutory exemptionapplied under provisions of this part;e.g., 5 U.S.C. 552(b)(1). Merely referringto a classification; to a ‘‘For Official UseOnly’’ marking on the requested record;or to this part or a DoD Component’sregulation does not constitute a propercitation or explanation of the basis forinvoking an exemption.

(6) When the time for responsebecomes an issue, the officialresponsible for replying shallacknowledge to the requester the date ofthe receipt of the request.

(7) When denying a request forrecords, in whole or in a part, a DoDComponent shall make a reasonableeffort to estimate the volume of therecords denied and provide thisestimate to the requester, unlessproviding such an estimate would harman interest protected by an exemption ofthe FOIA. This estimate should be innumber of pages or in some otherreasonable form of estimation, unlessthe volume is otherwise indicatedthrough deletions on records disclosedin part.

(8) When denying a request forrecords in accordance with a statutequalifying as a FOIA exemption 3statute, DoD Components shall, inaddition to sitting the particular statuterelied upon to deny the information,also state whether a court has upheldthe decision to withhold theinformation under the particular statute,and a concise description of the scopeof the information being withheld.

(f) Extension of time. (1) In unusualcircumstances, when additional time isneeded to respond to the initial request,the DoD Component shall acknowledgethe request in writing the 20 day period,describe the circumstances requiring thedelay, and indicate the anticipated datefor a substantive response that may notexceed 10 additional working days,except as follows:

(2) With respect to a request for whicha written notice has extended the timelimits by 10 additional working days,and the Component determines that itcannot make a response determination

within that additional 10 working dayperiod, the requester shall be notifiedand provided an opportunity to limitthe scope of the request so that it maybe processed within the extended timelimit, or an opportunity to arrange analternative time frame for processing therequest or a modified request. Refusalby the requester to reasonably modifythe request or arrange for an alternativetime frame shall be considered a factorin determining whether exceptionalcircumstances exist with respect to DoDComponents’ request backlogs.Exceptional circumstances do notinclude a delay that results frompredictable component backlogs, unlessthe DoD Component demonstratesreasonable progress in reducing itsbacklog.

(3) Unusual circumstances that mayjustify delay are:

(i) The need to search for and collectthe requested records from otherfacilities that are separate from theoffice determined responsible for arelease or denial decision on therequested information.

(ii) The need to search for, collect,and appropriately examine avoluminous amount of separate anddistinct records which are requested ina single request.

(iii) The need for consultation, whichshall be conducted with all practicablespeed, with other agencies having asubstantial interest in the determinationof the request, or among two or moreDoD Components having a substantialsubject-matter interest in the request.

(4) DoD Components may aggregatecertain requests by the same requester,or by a group of requesters acting inconcert, if the DoD Componentreasonably believes that such requestsactually constitute a single request,which would otherwise satisfy theunusual circumstances set forth inparagraph (f)(3) of this section, and therequests involve clearly related matters.Multiple requests involving unrelatedmatters shall not be aggregated. If therequests are aggregated under theseconditions, the requester or requestersshall be so notified.

(5) In cases where the statutory timelimits cannot be met and no informalextension of time has been agreed to, theinability to process any part of therequest within the specified time shouldbe explained to the requester with arequest that he agree to await asubstantive response by an anticipateddate. If should be made clear that anysuch agreement does not prejudice theright of the requester to appeal theinitial decision after it is made. DoDComponents are reminded that therequester still retains the right to treat

this delay as a de facto denial with fulladministrative remedies.

(6) As an alternative to the taking offormal extensions of time as describedin § 286.23(f), the negotiation by thecognizant FOIA coordinating office ofinformal extensions in time withrequesters is encouraged whereappropriate.

(g) Misdirected requests. Misdirectedrequests shall be forwarded promptly tothe DoD Component or other FederalAgency with the responsibility for therecords requested. The period allowedfor responding to the requestmisdirected by the requester shall notbegin until the request is received by theDoD Component that manages therecords requested.

(h) Records of non-U.S. governmentsource. (1) When a request is receivedfor a record that falls under exemption4 (see § 286.12(d)), that was obtainedfrom a non-U.S. Government source, orfor a record containing informationclearly identified as having beenprovided by a non-U.S. Governmentsource, the source of the record orinformation (also known as ‘‘thesubmitter’’ for matters pertaining toproprietary data under 5 U.S.C. 552,Exemption (b)(4)) (§ 286.12(d), this partand E.O. 12600 (3 CFR, 1987 Comp., p.235)) shall be notified promptly of thatrequest and afforded reasonable time(e.g., 30 calendar days) to present anyobjections concerning the release,unless it is clear that there can be novalid basis for objection. This practice isrequired for those FOIA requests fordata not deemed clearly exempt fromdisclosure under exemption (b)(4) of 5U.S.C. 552. If, for example, the record orinformation was provided with actual orpresumptive knowledge of the non-U.S.Government source and established thatit would be made available to the publicupon request, there is no obligation tonotify the source. Any objections shallbe evaluated. The final decision todisclose information claimed to beexempt under exemption (b)(4) shall bemade by an official equivalent in rankto the official who would make thedecision to withhold that informationunder the FOIA. When a substantialissue has been raised, the DoDComponent may seek additionalinformation from the source of theinformation and afford the source andrequester reasonable opportunities topresent their arguments on the legal andsubstantive issues involved prior tomaking an agency determination. Whenthe source advises it will seek arestraining order or take court action toprevent release of the record orinformation, the requester shall benotified, and action on the request


normally shall not be taken until afterthe outcome of that court action isknown. When the requester brings courtaction to compel disclosure, thesubmitter shall be promptly notified ofthis action.

(2) If the submitted information is aproposal in response to a solicitation fora competitive proposal, and theproposal is in the possession andcontrol of DoD, and meets therequirements of 10 U.S.C. 2305(g), theproposal shall not be disclosed, and nosubmitter notification and subsequentanalysis is required. The proposal shallbe withheld from public disclosurepursuant to 10 U.S.C. 2305(g) andexemption (b)(3) of 5 U.S.C. 552. Thisstatute does not apply to bids,unsolicited proposals, or any proposalthat is set forth or incorporated byreference in a contract between a DoDComponent and the offeror thatsubmitted the proposal. In suchsituations, normal submitter notice shallbe conducted in accordance withparagraph (h)(1) of this section, exceptfor sealed bids that are opened and readto the public. The term proposal meansinformation contained in or originatingfrom any proposal, including atechnical, management, or cost proposalsubmitted by an offeror in response tosolicitation for a competitive proposal,but does not include an offeror’s nameor total price or unit prices when setforth in a record other than the proposalitself. Submitter notice, and analysis asappropriate, are required for exemption(b)(4) matters that are not specificallyincorporated in 10 U.S.C. 2305(g).

(3) If the record or information wassubmitted on a strictly voluntary basis,absent any exercised authority thatprescribes criteria for submission, andafter consultation with the submitter, itis absolutely clear that the record orinformation would customarily not bereleased to the public, the submitterneed not be notified. Examples ofexercised authorities prescribing criteriafor submission are statutes, ExecutiveOrders, regulations, invitations for bids,requests for proposals, and contracts.Records or information submitted underthese authorities are not voluntary innature. When it is not clear whether theinformation was submitted on avoluntary basis, absent any exercisedauthority, and whether it wouldcustomarily be released to the public bythe submitter, notify the submitter andask that it describe its treatment of theinformation, and render an objectiveevaluation. If the decision is made torelease the information over theobjection of the submitter, notify thesubmitter and afford the necessary timeto allow the submitter to seek a

restraining order, or take court action toprevent release of the record orinformation.

(4) The coordination provisions ofthis paragraph also apply to any non-U.S. Government record in thepossession and control of the DoD frommulti-national organizations, such asthe North Atlantic Treaty Organization(NATO), United Nations Commands, theNorth American Aerospace DefenseCommand (NORAD), the Inter-AmericanDefense Board, or foreign governments.Coordination with foreign governmentsunder the provisions of this paragraphmay be made through Department ofState, or the specific foreign embassy.

(i) File of initial denials. Copies of allinitial denials shall be maintained byeach DoD Component in a form suitablefor rapid retrieval, periodic statisticalcompilation, and managementevaluation. Records denied for any ofthe reasons contained in paragraph (b)of this section shall be maintained for aperiod of six years to meet the statuteof limitations requirement.

(j) Special mail services. Componentsare authorized to use registered mail,certified mail, certificates of mailing andreturn receipts. However, their useshould be limited to instances where itappears advisable to establish proof ofdispatch or receipt of FOIAcorrespondence. The requester shall benotified that they are responsible for thefull costs of special services.

(k) Receipt accounts. The Treasurer ofthe United States has established twoaccounts for FOIA receipts, and allmoney orders or checks remitting FOIAfees should be made payable to the U.S.Treasurer. These accounts, which aredescribed in paragraphs (k)(1) and (k)(2)of this section shall be used fordepositing all FOIA receipts, exceptreceipts for Working Capital and nonappropriated funded activities.Components are reminded that thebelow account numbers must bepreceded by the appropriate disbursingoffice two digit prefix. Working Capitaland non appropriated funded activityFOIA receipts shall be deposited to theapplicable fund.

(1) Receipt account 3210 sale ofpublications and reproductions,Freedom of Information Act. Thisaccount shall be used when depositingfunds received from providing existingpublications and forms that meet theReceipt Account Series descriptionfound in Federal Account Symbols andTitles.

(2) Receipt account 3210 fees andother charges for services, Freedom ofInformation Act. This account is used todeposit search fees, fees for duplicatingand reviewing (in the case of

commercial requesters) records tosatisfy requests that could not be filledwith existing publications or forms.

§ 286.24 Appeals.(a) General. If the official designated

DoD Component to make initialdeterminations on requests for recordsdeclines to provide a record because theofficial considers it exempt under one ormore of the exemptions of the FOIA,that decision may be appealed by therequester, in writing, to a designatedappellate authority. The appeal shouldbe accompanied by a copy of the letterdenying the initial request. Suchappeals should contain the basis fordisagreement with the initial refusal.Appeal procedures also apply to thedisapproval of a fee category claim by arequester, disapproval of a request forwaiver or reduction of fees, disputesregarding fee estimates, review on anexpedited basis a determination not togrant expedited access to agencyrecords, for no record determinationswhen the requester considers suchresponses adverse in nature, notproviding a response determination to aFOIA request within the statutory timelimits, or any determination found to beadverse in nature by the requester.When denials have been made underthe provisions of the Privacy Act andthe FOIA, and the denied information iscontained in a Privacy Act system ofrecords, appeals shall be processedunder both the Privacy Act and theFOIA. If the denied information is notmaintained in a Privacy Act system ofrecords, the appeal shall be processedunder the FOIA. Appeals of Office of theSecretary of Defense and Chairman ofthe Joint Chiefs of Staff determinationsmay be sent to the address in appendixB of this part. If a request is merelymisaddressed, and the receiving DoDComponent simply advises the requesterof such and refers the request to theappropriate DoD Component, this shallnot be considered a no recorddetermination.

(b) Time of receipt. A FOIA appealhas been received by a DoD Componentwhen it reaches the office of anappellate authority having jurisdiction.Misdirected appeals should be referredexpeditiously to the proper appellateauthority.

(c) Time limits. (1) The requester shallbe advised to file an appeal so that it ispostmarked no later than 60 calendardays after the date of the initial denialletter. If no appeal is received, or if theappeal is postmarked after theconclusion of this 60-day period, theappeal may be considered closed.However, exceptions to the above maybe considered on a case by case basis.


In cases where the requester is providedseveral incremental determinations for asingle request, the time for the appealshall not begin until the date of the finalresponse. Records that are denied shallbe retained for a period of six years tomeet the statute of limitationsrequirement.

(2) Final determinations on appealsnormally shall be made within 20working days after receipt. When a DoDComponent has a significant number ofappeals preventing a responsedetermination within 20 working days,the appeals shall be processed in amultitrack processing system, based at aminimum, on the three processingtracks established for initial requests.See § 286.4(d) of this part. All of theprovisions of § 286.4(d) apply also toappeals of initial determinations, toinclude establishing additionalprocessing queues as needed.

(d) Delay in responding to an appeal.(1) If additional time is needed due tothe unusual circumstances described in§ 286.23(f), the final decision may bedelayed for the number of working days(not to exceed 10), that were not usedas additional time for responding to theinitial request.

(2) If a determination cannot be madeand the requester notified within 20working days, the appellate authorityshall acknowledge to the requester, inwriting, the date of receipt of the appeal,the circumstances surrounding thedelay, and the anticipated date forsubstantive response. Requesters shallbe advised that, if the delay exceeds thestatutory extension provision or is forreasons other than the unusualcircumstances identified in § 286.23(f),they may consider their administrativeremedies exhausted. They may,however, without prejudicing their rightof judicial remedy, await asubstantiative response. The DoDcomponent shall continue to process thecase expeditiously.

(e) Response to the requester. (1)When an appellate authority makes afinal determination to release all or aportion of records withheld by an IDA,a written response and a copy of therecords so released should be forwardedpromptly to the requester aftercompliance with any preliminaryprocedural requirements, such aspayment of fees.

(2) Final refusal of an appeal must bemade in writing by the appellateauthority or by a designatedrepresentative. The response, at aminimum, shall include the following:

(i) The basis for the refusal shall beexplained to the requester in writing,both with regard to the applicablestatutory exemption or exemptions

invoked under provisions of the FOIA,and with respect to other appeal mattersas set forth in paragraph (a) of thissection.

(ii) When the final refusal is based inwhole or in part on a securityclassification, the explanation shallinclude a determination that the recordmeets the cited criteria and rationale ofthe governing Executive Order, and thatthis determination is based on adeclassification review, with theexplanation of how that reviewconfirmed the continuing validity of thesecurity classification.

(iii) The final denial shall include thename and title or position of the officialresponsible for the denial.

(iv) In the case of appeals for totaldenial of records, the response shalladvise the requester that the informationbeing denied does not containmeaningful portions that are reasonablysegregable.

(v) When the denial is based upon anexemption 3 statute (subpart C of thispart), the response, in addition to citingthe statute relied upon to deny theinformation, shall state whether a courthas upheld the decision to withhold theinformation under the statute, and shallcontain a concise description of thescope of the information withheld.

(vi) The response shall advise therequester of the right to judicial review.

(f) Consultation. (1) Final refusalinvolving issues not previously resolvedor that the DoD Component knows to beinconsistent with rulings of other DoDComponents ordinarily should not bemade before consultation with the DoDOffice of the General Counsel.

Tentative decisions to deny recordsthat raise new or significant legal issuesof potential significance to otherAgencies of the Government shall beprovided to the DoD Office of theGeneral Counsel.

§ 286.25 Judicial actions.(a) General. (1) This section states

current legal and procedural rules forthe convenience of the reader. Thestatemetns of rules do not create rightsor remedies not otherwise available, nordo they bind the Department of Defenseto particular judicial interpretations orprocedures.

(2) A requester may seek an orderfrom a U.S. District Court to compelrelease of a record after administrativeremedies have been exhausted; i.e.,when refused a record by the head of aComponent or an appellate designee orwhen the DoD Component has failed torespond with the time limits prescribedby the FOIA and in this part.

(b) Jurisdiction. The requester maybring suit in the U.S. District Court in

the district in which the requesterresides or is the requesters place ofbusiness, in the district in which therecord is located, or in the District ofColumbia.

(c) Burden of proof. The burden ofproof is on the DoD Component tojustify its refusal to provide a record.The court shall evaluate the case denovo (anew) and may elect to examineany requester record in camera (inprivate) to determine whether the denialwas justified.

(d) Actions by the court. (1) When aDoD Component has failed to make adetermination within the statutory timelimits but can demonstrate duediligence in exceptional circumstances,to include negotiating with the requesterto modify the scope of their request, thecourt may retain jurisdiction and allowthe Component additional time tocomplete its review of the records.

(2) If the court determines that therequester’s complaint is substantiallycorrect, it may require the United Statesto pay reasonable attorney fees andother litigation costs.

(3) When the court orders the releaseof denied records, it may also issue awritten finding that the circumstancessurrounding the witholding raisequestions whether DoD Componentpersonnel acted arbitrarily andcapriciously. In these cases, the specialcounsel of the Merit System ProtectionBoard shall conduct an investigation todetermine whether or not disciplinaryaction is warranted. The DoDComponent is obligated to take theaction recommended by the specialcounsel.

(4) The court may punish theresponsible official for contempt when aDoD Component fails to comply withthe court order to produce records thatit determines have been withheldimproperly.

(e) Non-United States governmentsource information. A requester maybring suit in a U.S. District Court tocompel the release of records obtainedfrom a non-government source orrecords based on information obtainedfrom a non-government source. Suchsource shall be notified promptly of thecourt action. When the source advisesthat it is seeking court action to preventrelease, the DoD Component shall deferanswering or otherwise pleading to thecomplainant as long as permitted by theCourt or until a decision is rendered inthe court action of the source,whichever is sooner.

(f) FOIA litigation. Personnelresponsible for processing FOIArequests at the DoD Component levelshall be aware of litigation under theFOIA. Such information will provide



management insights into the use of thenine exemptions by Componentpersonnel. Whenever a complaint underthe FOIA is filed in a U.S. District Court,the DoD Component named in thecomplaint shall forward a copy of thecomplaint by any means to the Director,Freedom of Information and SecurityReview with an information copy to theDoD Office of the General counsel,ATTN: Office of Legal Counsel.

Subpart F—Fee Schedule

§ 286.28 General provisions.(a) Authorities. The Freedom of

Information Act, as amended; thePaperwork Reduction Act (44 U.S.C.Chapter 35), as amended; the PrivacyAct of 1974, as amended; the Budgetand Accounting Act of 1921 and theBudget and Accounting Procedures Act,as amended (see 31 U.S.C.); and 10U.S.C. 2328.

(b) Application. (1) The fees describedin this subpart apply to FOIA requests,and conform to the Office ofManagement and Budget UniformFreedom of Information Act FeeSchedule and Guidelines. They reflectdirect costs for search, review (in thecase of commercial requesters); andduplication of documents, collection ofwhich is permitted by the FOIA. Theyare neither intended to imply that feesmust be charged in connection withproviding information to the public inthe routine course of business, nor arethey meant as a substitute for any otherschedule of fees, such as DoD 7000.14–R,11 which does not supersede thecollection of fees under the FOIA.Nothing in this subpart shall supersedefees chargeable under a statutespecifically providing for setting thelevel of fees for particular types ofrecords. A ‘‘statute specificallyproviding for setting the level of fees forparticular types of records’’ (5 U.S.C.552(a)(4)(a)(vi)) means any statute thatenables a Government Agency such asthe Government Printing Office (GPO)or the National Technical InformationService (NTIS), to set and collect fees.Components should ensure that whendocuments that would be responsive toa request are maintained for distributionby agencies operating statutory-basedfee schedule programs such as the GPOor NTIS, they inform requesters of thesteps necessary to obtain records fromthose sources.

(2) The term ‘‘direct costs’’ meansthose expenditures a Componentactually makes in searching for,reviewing (in the case of commercialrequesters), and duplicating documents

to respond to a FOIA request. Directcosts include, for example, the salary ofthe employee performing the work (thebasic rate of pay for the employee plus16 percent of that rate to cover benefits),and the costs of operating duplicatingmachinery. These factors have beenincluded in the fee rates prescribed at§ 286.29 of this subpart. Not included indirect costs are overhead expenses suchas costs of space, heating or lighting thefacility in which the records are stored.

(3) The term ‘‘search’’ includes alltime spent looking, both manually andelectronically, for material that isresponsive to a request. Search alsoincludes a page-by-page or line-by-lineidentification (if necessary) of materialin the record to determine if it, orportions thereof are responsive to therequest. Components should ensure thatsearches are done in the most efficientand least expensive manner so as tominimize costs for both the Componentand the requester. For example,Components should not engage in line-by-line searches when duplicating anentire document known to containresponsive information would prove tobe the less expensive and quickermethod of complying with the request.Time spent reviewing documents inorder to determine whether to apply oneor more of the statutory exemptions isnot search time, but review time. Seeparagraph (b)(5) of this section, for thedefinition of review, and paragraph(c)(5) of this section and § 286.29(b)(2),for information pertaining to computersearches.

(4) The term ‘‘duplication’’ refers tothe process of making a copy of adocument in response to a FOIArequest. Such copies can take the formof paper copy, microfiche, audiovisual,or machine readable documentation(e.g., magnetic tape or disc), amongothers. Every effort will be made toensure that the copy provided is in aform that is reasonably usable, therequester shall be notified that the copyprovided is the best available and thatthe Agency’s master copy shall be madeavailable for review upon appointment.For duplication of computer tapes andaudiovisual, the actual cost, includingthe operator’s time, shall be charged. Inpractice, if a Component estimates thatassessable duplication charges are likelyto exceed $25.00, it shall notify therequester of the estimate, unless therequester has indicated in advance hisor her willingness to pay fees as high asthose anticipated. Such a notice shalloffer a requester the opportunity toconfer with Component personnel withthe object of reformulating the request tomeet his or her needs at a lower cost.

(5) The term ‘‘review’’ refers to theprocess of examining documents locatedin response to a FOIA request todetermine whether one or more of thestatutory exemptions permitwithholding. It also includes processingthe documents for disclosure, such asexcising them for release. Review doesnot include the time spent resolvinggeneral legal or policy issues regardingthe application of exemptions. It shouldbe noted that charges for commercialrequesters may be assessed only for theinitial review. Components may notcharge for reviews required at theadministrative appeal level of anexemption already applied. However,records or portions of records withheldin full under an exemption that issubsequently determined not to applymay be reviewed again to determine theapplicability of other exemptions notpreviously considered. The costs forsuch a subsequent review would beproperly assessable.

(c) Fee restrictions. (1) No fees may becharged by any DoD Component if thecosts of routine collection andprocessing of the fee are likely to equalor exceed the amount of the fee. Withthe exception of requesters seekingdocuments for a commercial use,Components shall provide the first twohours of search time, and the first onehundred pages of duplication withoutcharge. For example, for a request (otherthan one from a commercial requester)that involved two hours and tenminutes of search time, and resulted inone hundred and five pages ofdocuments, a Component woulddetermine the cost of only ten minutesof search time, and only five pages ofreproduction. If this processing cost wasequal to, or less than, the cost to theComponent for billing the requester andprocessing the fee collected, no chargeswould result.

(2) Requesters receiving the first twohours of search and the first onehundred pages of duplication withoutcharge are entitled to such only once perrequest. Consequently, if a Component,after completing its portion of a request,finds it necessary to refer the request toa subordinate office, another DoDComponent, or another Federal Agencyto action their portion of the request, thereferring Component shall inform therecipient of the referral of the expendedamount of search time and duplicationcost to date.

(3) The elements to be considered indetermining the ‘‘cost of collecting afee’’ are the administrative costs to theComponent of receiving and recording aremittance, and processing the fee fordeposit in the Department of Treasury’sspecial account. The cost to the


Department of Treasury to handle suchremittance is negligible and shall not beconsidered in Components’determinations.

(4) For the purposes of theserestrictions, the word ‘‘pages’’ refers topaper copies of a standard size, whichwill normally be 81⁄2′′ x 11′′ or 11′′ x14′′. Thus, requesters would not beentitled to 100 microfiche or 100computer disks, for example. Amicrofiche containing the equivalent of100 pages or 100 pages of computerprintout however, might meet the termsof the restriction.

(5) In the case of computer searches,the first two free hours will bedetermined against the salary scale ofthe individual operating the computerfor the purposes of the search. As anexample, when the direct costs of thecomputer central processing unit, input-output devices, and memory capacityequal $24.00 (two hours of equivalentsearch at the clerical level), amounts ofcomputer costs in excess of that amountare chargeable as computer search time.In the event the direct operating cost ofthe hardware configuration cannot bedetermined, computer search shall bebased on the salary scale of the operatorexecuting the computer search. See§ 286.29, this subpart, for further detailsregarding fees for computer searches.

(d) Fee waivers. (1) Documents shallbe furnished without charge, or at acharge reduced below fees assessed tothe categories of requesters in paragraph(e) of this section when the Componentdetermines that waiver or reduction ofthe fees is in the public interest becausefurnishing the information is likely tocontribute significantly to publicunderstanding of the operations oractivities of the Department of Defenseand is not primarily in the commercialinterest of the requester.

(2) When assessable costs for a FOIArequest total $15.00 or less, fees shall bewaived automatically for all requesters,regardless of category.

(3) Decisions to waive or reduce feesthat exceed the automatic waiverthreshold shall be made on a case-by-case basis, consistent with the followingfactors:

(i) Disclosure of the information ‘‘is inthe public interest because it is likely tocontribute significantly to publicunderstanding of the operations oractivities of the Government.’’

(A) The subject of the request.Components should analyze whetherthe subject matter of the requestinvolves issues that will significantlycontribute to the public understandingof the operations or activities of theDepartment of Defense. Requests forrecords in the possession of the

Department of Defense which wereoriginated by non-governmentorganizations and are sought for theirintrinsic content, rather thaninformative value, will likely notcontribute to public understanding ofthe operations or activities of theDepartment of Defense. An example ofsuch records might be press clippings,magazine articles, or records forwardinga particular opinion or concern from amember of the public regarding a DoDactivity. Similarly, disclosures ofrecords of considerable age may or maynot bear directly on the currentactivities of the Department of Defense;however, the age of a particular recordshall not be the sole criteria for denyingrelative significance under this factor. Itis possible to envisage an informativeissue concerning the current activities ofthe Department of Defense, based uponhistorical documentation. Requests ofthis nature must be closely reviewedconsistent with the requester’s statedpurpose for desiring the records and thepotential for public understanding ofthe operations and activities of theDepartment of Defense.

(B) The informative value of theinformation to be disclosed. This factorrequires a close analysis of thesubstantive contents of a record, orportion of the record, to determinatewhether disclosure is meaningful, andshall inform the public on theoperations or activities of theDepartment of Defense. While thesubject of a request may containinformation that concerns operations oractivities of the Department of Defense,it may not always hold great potentialfor contributing to a meaningfulunderstanding of these operations oractivities. An example of such would bea previously released record that hasbeen heavily redacted, the balance ofwhich may contain only random words,fragmented sentences, or paragraphheadings. A determination as to whethera record in this situation will contributeto the public understanding of theoperations or activities of theDepartment of Defense must beapproached with caution, and carefullyweighed against the arguments offeredby the requester. Another example isinformation already known to be in thepublic domain. Disclosure ofduplicative, or nearly identicalinformation already existing in thepublic domain may add no meaningfulnew information concerning theoperations and activities of theDepartment of Defense.

(C) The contribution to anunderstanding of the subject by thegeneral public likely to result fromdisclosure. The key element in

determining the applicability of thisfactor is whether disclosure will inform,or have the potential to inform thepublic, rather than simply theindividual requester or small segment ofinterested persons. The identity of therequester is essential in this situation inorder to determine whether suchrequester has the capability andintention to disseminate the informationto the public. Mere assertions of plansto author a book, researching aparticular subject, doing doctoraldissertation work, or indigence areinsufficient without demonstrating thecapacity to further disclose theinformation in a manner that will beinformative to the general public.Requesters should be asked to describetheir qualifications, the nature of theirresearch, the purpose of the requestedinformation, and their intended meansof dissemination to the public.

(D) The significance of thecontribution to public understanding. Inapplying this factor, Components mustdifferentiate the relative significance orimpact of the disclosure against thecurrent level of public knowledge, orunderstanding which exists before thedisclosure. In other words, willdisclosure on a current subject of widepublic interest be unique in contributingunknown facts, thereby enhancingpublic knowledge, or will it basicallyduplicate what is already known by thegeneral public? A decision regardingsignificance requires objectivejudgment, rather than subjectivedetermination, and must be appliedcarefully to determine whetherdisclosure will likely lead to asignificant understanding of the issue.Components shall not make valuejudgments as to whether the informationis important enough to be made public.

(ii) Disclosure of the information ‘‘isnot primarily in the commercial interestof the requester.’’

(A) The existence and magnitude of acommercial interest. If the request isdetermined to be of a commercialinterest, Components should addressthe magnitude of that interest todetermine if the requester’s commercialinterest is primary, as opposed to anysecondary personal or non-commercialinterest. In addition to profitmakingorganizations, individual persons orother organizations may have acommercial interest in obtaining certainrecords. Where it is difficult todetermine whether the requester is of acommercial nature, Components maydraw inference from the requester’sidentity and circumstances of therequest. In such situations, theprovisions of paragraph (e) of thissection apply. Components are


reminded that in order to apply thecommercial standards of the FOIA, therequester’s commercial benefit mustclearly override any personal or non-profit interest.

(B) The primary interest in disclosure.Once a requester’s commercial interesthas been determined, Componentsshould then determine if the disclosurewould be primarily in that interest. Thisrequires a balancing test between thecommercial interest of the requestagainst any public benefit to be derivedas a result of that disclosure. Where thepublic interest is served above andbeyond that of the requester’scommercial interest, a waiver orreduction of fees would be appropriate.Conversely, even if a significant publicinterest exists, and the relativecommercial interest of the requester isdetermined to be greater than the publicinterest, then a waiver or reduction offees would be inappropriate. Asexamples, news media organizationshave a commercial interest as businessorganizations; however, their inherentrole of disseminating news to thegeneral public can ordinarily bepresumed to be of a primary interest.Therefore, any commercial interestbecomes secondary to the primaryinterest in serving the public. Similarly,scholars writing books or engaged inother forms of academic research, mayrecognize a commercial benefit, eitherdirectly, or indirectly (through theinstitution they represent); however,normally such pursuits are primarilyundertaken for educational purposes,and the application of a fee chargewould be inappropriate. Conversely,data brokers or others who merelycompile government information formarketing can normally be presumed tohave an interest primarily of acommercial nature.

(4) Components are reminded that thefactors and examples used in thissubsection are not all inclusive. Each feedecision must be considered on a case-by-case basis and upon the merits of theinformation provided in each request.When the element of doubt as towhether to charge or waive the feecannot be clearly resolved, Componentsshould rule in favor of the requester.

(5) In addition, the followingcircumstances describe situations wherewaiver or reduction of fees are mostlikely to be warranted:

(i) A record is voluntarily created toprevent an otherwise burdensome effortto provide voluminous amounts ofavailable records, including additionalinformation not requested.

(ii) A previous denial of records isreversed in total, or in part, and the

assessable costs are not substantial (e.g.$15.00–$30.00).

(e) Fee assessment. (1) Fees may notbe used to discourage requesters, and tothis end, FOIA fees are limited tostandard charges for direct documentsearch, review (in the case ofcommercial requesters) and duplication.

(2) In order to be as responsive aspossible to FOIA requests whileminimizing unwarranted costs to thetaxpayer, Components shall adhere tothe following procedures:

(i) Analyze each request to determinethe category of the requester. If theComponent determination regarding thecategory of the requester is differentthan that claimed by the requester, theComponent shall:

(A) Notify the requester to provideadditional justification to warrant thecategory claimed, and that a search forresponsive records will not be initiateduntil agreement has been attainedrelative to the category of the requester.Absent further category justificationfrom the requester, and within areasonable period of time (i.e., 30calendar days), the Component shallrender a final category determination,and notify the requester of suchdetermination, to include normaladministrative appeal rights of thedetermination.

(B) Advise the requester that,notwithstanding any appeal, a search forresponsive records will not be initiateduntil the requester indicates awillingness to pay assessable costsappropriate for the category determinedby the Component.

(ii) Requesters should submit a feedeclaration appropriate for thefollowing categories.

(A) Commercial. Requesters shouldindicate a willingness to pay all search,review and duplication costs.

(B) Educational or noncommercialscientific institution or news media.Requesters should indicate awillingness to pay duplication chargesin excess of 100 pages if more than 100pages of records are desired.

(C) All others. Requesters shouldindicate a willingness to pay assessablesearch and duplication costs if morethan two hours of search effort or 100pages of records are desired.

(iii) If the above conditions are notmet, then the request need not beprocessed and the requester shall be soinformed.

(iv) In the situations described byparagraphs (e)(2)(i) and (e)(2)(ii) of thissection, Components must be preparedto provide an estimate of assessable feesif desired by the requester. While it isrecognized that search situations willvary among Components, and that an

estimate is often difficult to obtain priorto an actual search, requesters whodesire estimates are entitled to suchbefore committing to a willingness topay. Should Components’ actual costsexceed the amount of the estimate or theamount agreed to by the requester, theamount in excess of the estimate or therequester’s agreed amount shall not becharged without the requester’sagreement.

(v) No DoD Component may requireadvance payment of any fee; i.e.,payment before work is commenced orcontinued on a request, unless therequester has previously failed to payfees in a timely fashion, or the agencyhas determined that the fee will exceed$250.00. As used in this sense, a timelyfashion is 30 calendar days from thedate of billing (the fees have beenassessed in writing) by the Component.

(vi) Where a Component estimates ordetermines that allowable charges that arequester may be required to pay arelikely to exceed $250.00, theComponent shall notify the requester ofthe likely cost and obtain satisfactoryassurance of full payment where therequester has a history of promptpayments, or require an advancepayment of an amount up to the fullestimated charges in the case ofrequesters with no history of payment.

(vii) Where a requester has previouslyfailed to pay a fee charged in a timelyfashion (i.e., within 30 calendar daysfrom the date of the billing), theComponent may require the requester topay the full amount owed, plus anyapplicable interest, or demonstrate thathe or she has paid the fee, and to makean advance payment of the full amountof the estimated fee before theComponent begins to process a new orpending request from the requester.Interest will be at the rate prescribed in31 U.S.C. 3717, and confirmed withrespective Finance and AccountingOffices.

(viii) After all work is completed ona request, and the documents are readyfor release, Components may requestpayment before forwarding thedocuments, particularly for thoserequesters who have no paymenthistory, or for those requesters who havefailed previously to pay a fee in a timelyfashion (i.e., within 30 calendar daysfrom the date of the billing). In the caseof the latter, the previsions of paragraph(e)(2)(vii) of this section, apply.

(ix) When Components act underparagraphs (e)(2)(i) through (e)(2)(vii) ofthis section, the administrative timelimits of the FOIA will begin only afterthe Component has received awillingness to pay fees and satisfaction


as to category determination, or feepayments (if appropriate).

(x) Components may charge for timespent searching for records, even if thatsearch fails to locate records responsiveto the request. Components may alsocharge search and review (in the case ofcommercial requesters) time in recordslocated are determined to be exemptfrom disclosure. In practice, if theComponents estimates that searchcharges are likely to exceed $25.00, itshall notify the requester of theestimated amount of fees, unless therequester has indicated in advance hisor her willingness to pay fees as high asthose anticipated. Such a notice shalloffer the requester the opportunity toconfer with Component personnel withthe object or reformulating the requestto meet his or her needs at a lower cost.

(3) Commercial requesters. Fees shallbe limited to reasonable standardcharges for document search, reviewand duplication when records arerequested for commerical use.Requesters must reasonably describe therecords sought. (See § 286.4(h)).

(i) The term ‘‘commercial use’’ requestrefers to a request from, or on behalf ofone who seeks information for a use orpurpose that furthers the commercial,trade, or profit interest of the requesteror the person on whose behalf therequest is made. In determining whethera requester properly belongs in thiscategory. Components must determinethe use to which a requester will put thedocuments requested. Moreover, wherea Component has reasonable cause todoubt the use to which a requester willput the records sought, or where thatuse is not clear from the request itself,Components should seek additionalclarification before assigning the requestto a specific category.

(ii) When Components receive arequest for documents for commercialuse, they should assess charges whichrecover the full direct costs of searchingfor, reviewing for release, andduplicating the records sought.Commerical requesters (unlike otherrequesters) are not entitled to two hoursof free search time, nor 100 free pagesof reproduction of documents.Moreover, commerical requesters arenot normally entitled to a waiver orreduction of fees based upon anassertion that disclosure would be in thepublic interest. However, because use isthe exclusive determining criteria, it ispossible to envision a commericalenterprise making a request that is notfor commercial use. It is also possiblethat a non-profit organization couldmake a request that is for commericaluse. Such situations must be addressedon a case-by-case basis.

(4) Educational institution requesters.Fees shall be limited to only reasonablestandard charges for documentduplication (excluding charges for thefirst 100 pages) when the request ismade by an educational institutionwhose purpose is scholarly research.Requesters must reasonably describe therecords sought (see § 286.4(h).). Theterm ‘‘educational institution’’ refers toa pre-school, a public or privateelementary or secondary school, aninstitution of graduate high education,an institution of undergraduate highereducation, an institution of professionaleducation, and an institution ofvocational education, which operates aprogram or programs of scholarlyresearch. Fees shall be waived orreduced in the public interest if thecriteria of paragraph (d) of this section,have been met.

(5) Non-commercial scientificinstitution requesters. Fees shall belimited to only reasonable standardcharges for document duplication(excluding charges for the first 100pages) when the request is made by anon-commerical scientific institutionwhose purpose is scientific research.Requesters must reasonbly describe therecords sought (see § 286.4(h)). The term‘‘non-commercial scientific institution’’refers to an institution that is notoperated on a ‘‘commercial’’ basis asdefined in paragraph (e)(3) of thissection, and that is operated solely forthe purpose of conducting scientificresearch, the results of which are notintended to promote any particularproduct or industry. Fees shall bewaived or reduced in the public interestif the criteria of paragraph (d) of thissection, have beem met.

(6) Components shall providedocuments to requesters in paragraphs(e)(4) and (e)(5) of this section for thecost of duplication alone, excludingcharges for the first 100 pages. To beeligible for inclusion in these categories,requesters must show that the request isbeing made under the auspices of aqualifying institution and that therecords are not sought for commercialuse, but in furtherance of scholarly(from an educational institution) orscientific (from a non-commercialscientific institution) research.

(7) Representatives of the news media.Fees shall be limited to only reasonablestandard charges for documentduplication (excluding charges for thefirst 100 pages) when the request ismade by a representative of the newsmedia. Requesters must reasonablydescribe the records sought (see§ 286.4(h)). Fees shall be waived orreduced if the criteria of paragraph (d)of this section, have been met.

(i) The term ‘‘representative of thenews media’’ refers to any personactively gathering news for an entitythat is organized and operated topublish or broadcast news to the public.The term ‘‘news’’ means informationthat is about current events or thatwould be of current interest to thepublic. Examples of news media entitiesinclude television or radio stationsbroadcasting to the public at large, andpublishers of periodicals (but only inthose instances when they can qualifyas disseminators of ‘‘news’’) who maketheir products available for purchase orsubscription by the general public.These examples are not meant to be all-inclusive. Moreover, as traditionalmethods of news delivery evolve (e.g.,electronic dissemination of newspapersthrough telecommunications services),such alternative media would beincluded in this category. In the case of‘‘freelance’’ journalists they may beregarded as working for a newsorganization if they can demonstrate asolid basis for expecting publicationthrough that organization, even thoughnot actually employed by it. Apublication contract would be theclearest proof, but Components may alsolook to the past publication record of arequester in making this determination.

(ii) To be eligible for inclusion in thiscategory, a requester must meet thecriteria in paragraph (e)(7)(i) of thissection, and his or her request must notbe made for commercial use. A requestfor records supporting the newsdissemination function of the requestershall not be considered to be a requestthat is for a commercial use. Forexample, a document request by anewspaper for records relating to theinvestigation of a defendant in a currentcriminal trial of public interest could bepresumed to be a request from an entityeligible for inclusion in this category,and entitled to records at the cost ofreproduction alone (excluding chargesfor the first 100 pages).

(iii) ‘‘Representative of the newsmedia’’ does not include privatelibraries, private repositories ofGovernment records, informationvendors, data brokers or similarmarketers of information whether toindustries and businesses, or otherentities.

(8) All other requesters. Componentsshall charge requesters who do not fitinto any of the categories described inparagraphs (e)(3), (e)(4), (e)(5), or (e)(7)of this section, fees which recover thefull direct cost of searching for andduplicating records, except that the firsttwo hours of search time and the first100 pages of duplication shall befurnished without charge. Requesters


must reasonably describe the recordssought (see § 286.4(h)). Requests fromsubjects about themselves will continueto be treated under the fee provisions ofthe Privacy Act of 1974, which permitfees only for duplication. Componentsare reminded that this category ofrequester may also be eligible for awaiver or reduction of fees if disclosureof the information is in the publicinterest as defined under paragraph(d)(1) of this section. (See alsoparagraph (e)(3)(ii) of this section.)

(f) Aggregating requests. Except forrequests that are for a commercial use,a Component may not charge for thefirst two hours of search time or for thefirst 100 pages of reproduction.However, a requester may not filemultiple requests at the same time, eachseeking portions of a document ofdocuments, solely in order to avoidpayment of fees. When a Componentreasonably believes that a requester or,on rare occasions, a group of requestersacting on concert, is attempting to breaka request down into a series of requestsfor the purpose of avoiding theassessment of fees, the Agency mayaggregate any such requests and chargeaccordingly. One element to beconsidered in determining whether abelief would be reasonable is the timeperiod in which the requests haveoccurred. For example, it would bereasonable to presume that multiplerequests of this type made within a 30day period had been made to avoid fees.For requests made over a longer periodhowever, such a presumption becomesharder to sustain and Componentsshould have a solid basis fordetermining that aggregation iswarranted in such cases. Componentsare cautioned that before aggregatingrequests from more than one requester,they must have a concrete basis onwhich to conclude that the requestersare acting in concert and are actingspecifically to avoid payment of fees. Inno case may Components aggregatemultiple requests on unrelated subjectsfrom one requester.

(g) Effect of the Debt Collection Act of1982 (5 U.S.C. 5515 note). The DebtCollection Act of 1982 (5 U.S.C. 5515note) provides for a minimum annualrate of interest to be charged on overduedebts owed the Federal Government.Components may levy this interestpenalty for any fees that remainoutstanding 30 calendar days from thedate of billing (the first demand notice)to the requester of the amount owed.The interest rate shall be as prescribedin 31 U.S.C. 3717. Components shouldverify the current interest rate withrespective Finance and AccountingOffices. After one demand letter has

been sent, and 30 calendar days havelapsed with no payment, Componentsmay submit the debt to respectiveFinance and Accounting Offices forcollection pursuant to 5 U.S.C. 5515note.

(h) Computation of fees. The feeschedule in this subpart shall be used tocompute the search, review (in the caseof commercial requesters) andduplication costs associated withprocessing a given FOIA request. Costsshall be computed on time actuallyspent. Neither time-based nor dollar-based minimum charges for search,review and duplication are authorized.The appropriate fee category of therequester shall be applied beforecomputing fees.

(i) Refunds. In the event that aComponent discovers that it hasovercharged a requester or a requesterhas overpaid, the Component shallpromptly refund the charge to therequester by reimbursement methodsthat are agreeable to the requester andthe Component.

§ 286.29 Collection of fees and fee rates.(a) Collection of fees. Collection of

fees will be made at the time ofproviding the documents to therequester or recipient when therequester specifically states that thecosts involved shall be acceptable oracceptable up to a specified limit thatcovers the anticipated costs. Collectionof fees may not be made in advanceunless the requester has failed to paypreviously assessed fees within 30calendar days from the date of thebilling by the DoD Component, or theComponent has determined that the feewill be in excess of $250 (see§ 286.28(e)).

(b) Search time—(1) Manual search.

Type Grade Hourlyrate

Clerical ..... E9/GS8 and below ... $12Profes-

sional.O1–O6/GS9–GS15 ... 25

Executive O7/GS16/ES1 andabove.

45

(2) Computer search. Fee assessmentsfor computer search consists of twoparts; individual time (hereafter referredto as human time), and machine time.

(i) Human time. Human time is all thetime spent by humans performing thenecessary tasks to prepare the job for amachine to execute the run command.If execution of a run requires monitoringby a human, that human time may bealso assessed as computer search. Theterms ‘‘programmer/operator’’ shall notbe limited to the traditionalprogrammers or operators. Rather, the

terms shall be interpreted in theirbroadest sense to incorporate anyhuman involved in performing thecomputer job (e.g. technician,administrative support, operator,programmer, database administrator, oraction officer).

(ii) Machine time. Machine timeinvolves only direct costs of the CentralProcessing Unit (CPU), input/outputdevices, and memory capacity used inthe actual computer configuration. Onlythis CPU rate shall be charged. No othermachine related costs shall be charged.In situations where the capability doesnot exist to calculate CPU time, nomachine costs can be passed on to therequester. When CPU calculations arenot available, only human time costsshall be assessed to requesters. ShouldDoD Components lease computers, theservices charged by the lessor shall notbe passed to the requester under theFOIA.

(c) Duplication.

Type Cost per Page (cents)

Pre-Printed ma-terial.

02

Office copy ...... 15Microfiche ........ 25Computer cop-

ies (tapes,discs or print-outs).

Actual cost of duplicatingthe tape, disc or printout(includes operator’s timeand cost of the medium)

(d) Review time (in the case ofcommercial requesters).


Clerical ..... E9/GS8 and below ... $12Profes-

sional.O1–O6/GS9–GS15 ... 25

Executive O7/GS16/ES1 andabove.

45

(e) Audiovisual documentarymaterials. Search costs are computed asfor any other record. Duplication cost isthe actual direct cost of reproducing thematerial, including the wage of theperson doing the work. Audiovisualmaterials provided to a requester neednot be in reproducible format or quality.

(f) Other records. Direct search andduplication cost for any record notdescribed in this section shall becomputed in the manner described foraudiovisual documentary material.

(g) Costs for special services.Complying with requests for specialservices is at the discretion of theComponents. Neither the FOIA, nor itsfee structure cover these kinds ofservices. Therefore, Components mayrecover the costs of special servicesrequested by the requester afteragreement has been obtained in writing



from the requester to pay for one ormore of the following services:

(1) Certifying that records are truecopies.

(2) Sending records by specialmethods such as express mail, etc.

§ 286.30 Collection of fees and fee ratesfor technical data.

(a) Fees for technical data. Technicaldata, other than technical data thatdiscloses critical technology withmilitary or space application, if requiredto be released under the FOIA, shall bereleased after the person requestingsuch technical data pays all reasonablecosts attributed to search, duplicationand review of the records to be released.Technical data, as used in this section,means recorded information, regardlessof the form or method of the recordingof a scientific or technical nature(including computer softwaredocumentation). This term does notinclude computer software, or dataincidental to contract administration,such as financial and/or managementinformation. DoD Components shallretain the amounts received by such arelease, and it shall be merged with andavailable for the same purpose and thesame time period as the appropriationfrom which the costs were incurred incomplying with request. All reasonablecosts as used in this sense are the fullcosts to the Federal Government ofrendering the service, or fair marketvalue of the service, whichever ishigher. Fair market value shall bedetermined in accordance withcommercial rates in the localgeographical area. In the absence of aknown market value, charges shall bebased on recovery of full costs to theFederal Government. The full costs shallinclude all direct and indirect costs toconduct the search and to duplicate therecords responsive to the request. Thiscost is to be differentiated from thedirect costs allowable under § 286.29 ofthis subpart for other types ofinformation released under the FOIA.

(b) Waiver. Components shall waivethe payment of costs required inparagraph (a) of this section, which aregreater than the costs that would berequired for release of this sameinformation under § 286.29 of thissubpart if:

(1) The request is made by a citizenof the United States or a United Statescorporation, and such citizen orcorporation certifies that the technicaldata requested is required to enable it tosubmit an offer, or determine whether itis capable of submitting an offer toprovide the product to which thetechnical data relates to the UnitedStates or a contractor with the United

States. However, Components mayrequire the citizen or corporation to paya deposit in an amount equal to notmore than the cost of complying withthe request, which will be refundedupon submission of an offer by thecitizen or corporation;

(2) The release of technical data isrequested in order to comply with theterms of an international agreement; or

(3) The Component determines inaccordance with § 286.28(d)(1), thatsuch a waiver is in the interest of theUnited States.

(c) Fee rates—(1) Search time—(i)Manual search: clerical.


Clerical ..... E9/GS8 and below ... $13.25(Minimum

Charge).................................... 8.30

(ii) Manual search: professional andexecutive (To be established at actualhourly rate prior to search. A minimumcharge will be established at 1⁄2 hourlyrates).

(2) Computer search is based on thetotal cost of the central processing unit,input-output devices, and memorycapacity of the actual computerconfiguration. The wage (based uponthe scale in paragraph (c)(1)(i) of thissection) for the computer operator and/or programmer determining how toconduct, and subsequently executingthe search will be recorded as part of thecomputer search. See § 286.29(b)(2) forfurther details regarding computersearch.

(3) Duplication.

Type Cost

Aerial photograph, maps, specifica-tions, permits, charts, blueprints,and other technical engineeringdocuments ..................................... $2.50

Engineering data (microfilm):(i) Aperture cards.(A) Silver duplicate negative,

per card .................................. .75When key punched and verified,

per card .................................. .85(B) Diazo duplicate negative,

per card .................................. .65When key punched and verified,

per card .................................. .75(ii) 35mm roll film, per frame ..... .50(iii) 16mm roll film, per frame .... .45(iv) Paper prints (engineering

drawings), each ...................... 1.50(v) Paper reprints of microfilm

indices, each .......................... .10

(4) Review time—(i) Clerical.

Type Grade Hourlyrate ($)

Clerical ..... E9/GS8 and below ... 13.25(Minimum

Charge).................................... 8.30

(ii) Professional and executive (To beestablished at actual hourly rate prior toreview. A minimum charge will beestablished at 1⁄2 hourly rates).

(d) Other technical data records.Charges for any additional services notspecifically provided in paragraph (c) ofthis section, consistent with Volume11A of DoD 7000.14–R, shall be madeby Components at the following rates:(1) Minimum charge for office copy (up to

six images) ................................................. $3.50(2) Each additional image ............................ .10(3) Each typewritten page ............................ 3.50(4) Certification and validation with seal,

each ............................................................ 5.20(5) Hand-drawn plots and sketches, each

hour or fraction thereof ............................ 12.00

Subpart G—Reports

§ 286.33 Reports control.(a) General. (1) The Annual Freedom

of Information Act Report is mandatedby the statute and reported on a fiscalyear basis. Due to the magnitude of therequested statistics and the need toensure accuracy of reporting, DoDComponents shall track this data asrequests are processed. This will alsofacilitate a quick and accuratecompilation of statistics. DoDComponents shall forward their reportto the Directorate for Freedom ofInformation and Security Review nolater than November 30 following thefiscal year’s close. It may be submittedelectronically and via hard copyaccompanied by a computer diskette. Inturn, DoD will produce a consolidatedreport for submission to the AttorneyGeneral, and ensure that a copy of theDoD consolidated report is placed onthe Internet for public access.

(2) Existing DoD standards andregistered data elements are to beutilized to the greatest extent possible inaccordance with the provisions of DoDManual 8320.1–M,12 ‘‘DataAdministration Procedures.’’

(3) The reporting requirementoutlined in this subpart is assignedReport Control Symbol DD–DA&M(A)1365, Freedom of InformationAct Report to Congress.

(b) Annual Report. The currentedition of DD Form 2564 shall be usedto submit component input. DD Form2564 is available on the Internet at http://www.defenselink.mil/pubs/ underRegulations and Forms. Instructions forcompletion follow:


(1) Item 1: Initial requestdeterminations. Please note that initialPrivacy Act requests which are alsoprocessed as initial FOIA requests arereported here. They will also bereported as ‘‘Privacy Act requests’’ onthe Annual Privacy Act Report. See§ 286.4(m), Relationship between theFOIA and the Privacy Act (PA).

(i) Total requests processed. Enter thetotal number of initial FOIA requestsresponded to (completed) during thefiscal year. Since more than one actionfrequently is taken on a completed case,total actions (see (b)(1)(vi) of thissection) the sum of Items (b)(1)(ii)through (b)(1)(v) of this section, mayexceed total requests processed (Seeappendix E of this part for form layout.)

(ii) Granted in full. Enter the totalnumber of initial FOIA requestsresponded to that were granted in fullduring the fiscal year. (This may includerequests granted by your office, yet stillrequiring action by another office.)

(iii) Denied in part. Enter the totalnumber of initial FOIA requestsresponded to and denied in part basedon one or more of the FOIA exemptions.(Do not report ‘‘other reason responses’’as a partial denial here, unless a FOIAexemption is used also.)

(iv) Denied in full. Enter the totalnumber of initial FOIA requestsresponded to and denied in full basedon one or more of the FOIA exemptions.(Do not report ‘‘other reason responses’’as denials here, unless a FOIAexemption is used also.)

(v) ‘‘Other reason’’ responses. Enterthe total number of initial FOIA requestsin which you were unable to provide allor part of the requested informationbased on an ‘‘other reason’’ response.Paragraph (b)(2)(ii) of this sectionexplains the nine possible ‘‘otherreasons.’’

(vi) Total actions. Enter the totalnumber of FOIA actions taken duringthe fiscal year. This number will be thesum of (b)(1)(ii) through (b)(1)(v) of thissection. Total actions must be equal toor greater than the number of totalrequests processed (paragraph (b)(1)(i)of this section).

(2) Item 2: Initial request exemptionsand other reasons—(i) Exemptionsinvoked on initial requestdeterminations. Enter the number oftimes an exemption was claimed foreach request that was denied in full orin part. Since more than one exemptionmay be claimed when responding to asingle request, this number will be equalto or greater than the sum of (b)(1)(iii)and (b)(1)(iv) of this section. The (b)(7)exemption is reported by subcategoriesidentified in paragraphs (b)(2)(i)(A)through (b)(2)(i)(F) of this section:

(A) Interfere with enforcement;(B) Fair trial right;(C) Invasion of privacy;(D) Protect confidential source;(E) Disclose techniques; and(F) Endanger life or safety.(ii) ‘‘Other reasons’’ cited on initial

determinations. Identify the ‘‘otherreason’’ response cited whenresponding to a FOIA request and enterthe number of times each was claimed.

(A) No records. Enter the number oftimes a reasonable search of files failedto identify records responsive to subjectrequest.

(B) Referrals. Enter the number oftimes a request was referred to anotherDoD Component or Federal Agency foraction.

(C) Request withdrawn. Enter thenumber of times a request and/or appealwas withdrawn by a requester. (Forappeals, report number in Item 4b onthe report form. (See appendix E of thispart.))

(D) Fee-related reason. Requester isunwilling to pay the fees associatedwith a request; the requester is past duein the payment of fees from a previousFOIA request; or the requester disagreeswith a fee estimate.

(E) Records not reasonably described.Enter the number of times a FOIArequest could not be acted upon sincethe record had not been described withsufficient particularity to enable theDoD Component to locate it byconducting a reasonable search.

(F) Not a proper FOIA request forsome other reason. Enter the number oftimes the requester has failedunreasonably to comply withprocedural requirements, other than fee-related (described in paragraph(b)(2)(ii)(D) of this section), imposed bythis part or a DoD Component’ssupplementing regulation.

(G) Not an agency record. Enter thenumber of times a requester wasprovided a response indicating therequested information was not a recordwithin the meaning of the FOIA and thispart.

(H) Duplicate request. Record numberof duplicate requests closed for thatreason (e.g., request for the sameinformation by the same requester). Thisincludes identical requests received viadifferent means (e.g., electronic mail,facsimile, mail, courier) at the same ordifferent times.

(I) Other (specify). Any other reason arequester does not comply withpublished rules, other than thosereasons outlined in paragraphs(b)(2)(ii)(A) through (b)(2)(ii)(H) of thissection.

(J) Total. Enter the sum of paragraphs(b)(2)(ii)(A) through (b)(2)(ii)(I) of this

section in the block provided on theform. This number will be equal to orgreater than the number in paragraph(b)(1)(v) of this section since more thanone reason may be claimed for each‘‘other reason’’ response.

(iii) (b)(3) statutes invoked on initialdeterminations. Identify the number oftimes you have used a specific statute tosupport each (b)(3) exemption. List thestatutes used to support each (b)(3)exemption; the number of instances inwhich the statute was cited; notewhether or not the statute has beenupheld in a court hearing; and providea concise description of the materialwithheld in each individual case by thestatute’s use. Ensure you cite thespecific sections of the acts invoked.The total number of instances reportedwill be equal to or greater than the totalnumber of (b)(3) exemptions listed inItem 2a on the report form.

(3) Item 3: Appeal determinations.Please note that Privacy Act appealswhich are also processed as FOIAappeals are reported here. They willalso be reported as ‘‘Privacy Actappeals’’ on the Annual Privacy ActReport. See § 286.4(m), RelationshipBetween the FOIA and the Privacy Act(PA).

(i) Total appeal responses. Enter thetotal number of FOIA appealsresponded to (completed) during thefiscal year.

(ii) Granted in full. Enter the totalnumber of FOIA appeals responded toand granted in full during the year.

(iii) Denied in part. Enter the totalnumber of FOIA appeals responded toand denied in part based on one or moreof the FOIA exemptions. (Do not report‘‘other reason responses’’ as a partialdenial here, unless a FOIA exemption isused also.)

(iv) Denied in Full. Enter the totalnumber of FOIA appeals responded toand denied in full based on one or moreof the FOIA exemptions. (Do not report‘‘other reason responses’’ as denialshere, unless a FOIA exemption is usedalso.)

(v) ‘‘Other reason’’ responses. Enterthe total number of FOIA appeals inwhich you were unable to provide therequested information based on an‘‘other reason’’ response (as outlined in‘‘other reasons’’ in paragraph (b)(2)(ii) ofthis section).

(vi) Total actions. Enter the totalnumber of FOIA appeal actions takenduring the fiscal year. This number willbe the sum of paragraphs (b)(3)(ii)through (b)(3)(v) of this section, andshould be equal to or greater than thenumber of total appeal responses,paragraph (b)(3)(i) of this section.


(4) Item 4: Appeal exemptions andother reasons—(i) Exemptions invokedon appeal determinations. Enter thenumber of times an exemption wasclaimed for each appeal that was deniedin full or in part. Since more than oneexemption may be claimed whenresponding to a single request, thisnumber will be equal to or greater thanthe sum of paragraphs (b)(3)(iii) and(b)(3)(iv) of this section. Note that the(b)(7) exemption is reported bysubcategories identified in paragraphs(b)(4)(i)(A) through (b)(4)(i)(F) of thissection:

(A) Interfere with enforcement;(B) Fair trial right;(C) Invasion of privacy;(D) Protect confidential source;(E) Disclose techniques; and(F) Endanger life or safety.(ii) ‘‘Other reasons’’ cited on appeal

determinations. Identify the ‘‘otherreason’’ response cited whenresponding to a FOIA appeal and enterthe number of times each was claimed.See paragraph (b)(2)(ii) of this sectionfor description of ‘‘other reasons.’’ Thisnumber may be equal to or possiblygreater than the number in paragraph(b)(3)(v) of this section since more thanone reason may be claimed for each‘‘other reason’’ response.

(iii) (b)(3) statutes invoked on appealdeterminations. Identify the number oftimes a specific statute has been used tosupport each (b)(3) exemption identifiedin item 4a on the report form (AppendixE of this part). List the statutes used tosupport each (b)(3) exemption; thenumber of instances in which thestatute was cited; note whether or notthe statute has been upheld in a courthearing; and provide a concisedescription of the material withheld ineach individual case by the statute’suse. Ensure citation to the specificsections of the statute invoked. The totalnumber of instances reported will beequal to or greater than the total numberof (b)(3) exemptions listed in Item 4a onthe report form.

(5) Item 5: Number and median age ofinitial cases pending: (i) Total initialcases pending:

(ii) Beginning and ending reportperiod: Midnight, 2400 hours,September 30 of the Preceding Year—OR—0001 hours, October 1 is thebeginning of the report period.Midnight, 2400 hours, is the close of thereporting period.

(iii) Median age of initial requestspending: Report the median age in days(including holidays and weekends) ofinitial requests pending.

(iv) Examples of median calculation.(A) If given five cases aged 10, 25, 35,65, and 100 days from date of receipt asof the previous September 30th, thetotal requests pending is five (5). Themedian age (days) of open requests isthe middle, not average value, in this setof numbers (10, 25, 35, 65, and 100), 35(the middle value in the set).

(B) If given six pending cases, aged10, 20, 30, 50, 120, and 200 days fromdate of receipt, as of the previousSeptember 30th, the total requestspending is six (6). The median age(days) of open requests 40 days (themean [average] of the two middlenumbers in the set, in this case theaverage of middle values 30 and 50).

(v) Accuracy of calculations.Components must ensure the accuracyof calculations. As backup, the raw dataused to perform calculations should berecorded and preserved. This willenable recalculation of median (andmean values) as necessary. Componentsmay require subordinate elements toforward raw data, as deemed necessaryand appropriate.

(vi) Average. If a Component believesthat ‘‘average’’ (mean) processing time isa better measure of performance, thenreport ‘‘averages’’ (means) as well asmedian values (e.g., with data reflectedand plainly labeled on plain bond as anattachment to the report). However,‘‘average’’ (mean) values will not beincluded in the consolidated DoD reportunless all Components report it.

(6) Item 6: Number of initial requestsreceived during the fiscal year. Enter thetotal number of initial FOIA requestsreceived during the reporting period(fiscal year being reported).

(7) Item 7: Types of requestsprocessed and median age. Informationis reported for three types of initialrequests completed during the reportingperiod: Simple; Complex; andExpedited Processing. The followingitems of information are reported forthese requests:

(i) Total number of initial requests.Enter the total number of initial requestsprocessed [completed] during thereporting period (fiscal year) by type(Simple, Complex and ExpeditedProcessing) in the appropriate row onthe form.

(ii) Median age (days). Enter themedian number of days [calendar daysincluding holidays and weekends]required to process each type of case(Simple, Complex and ExpeditedProcessing) during the period in theappropriate row on the form.

(iii) Example. Given seven initialrequests, multitrack—simple completedduring the fiscal year, aged 10, 25, 35,65, 79, 90 and 400 days whencompleted. The total number of requestscompleted was seven (7). The medianage (days) of completed requests is 65,the middle value in the set.

(8) Item 8: Fees collected from thepublic. Enter the total amount of feescollected from the public during thefiscal year. This includes search, reviewand reproduction costs only.

(9) Item 9: FOIA program costs—(i)Number of full time staff. Enter thenumber of personnel your agency haddedicated to working FOIA full timeduring the fiscal year. This will beexpressed in work-years (manyears). Forexample: ‘‘5.1, 3.2, 1.0, 6.5, et al.’’ Asample calculation follows:

EmployeeNumber(monthsworked)

Work-years Note

SMITH, Jane ............................................................................. 6 0.5 Hired full time at middle of fiscal year.PUBLIC, John Q ........................................................................ 4 .34 Dedicated to full time FOIA processing last quar-

ter of fiscal year.BROWN, Tom ........................................................................... 12 1.0 Worked FOIA full time all fiscal year.

Total ................................................................................... 22 1.84

(ii) Number of part time staff: Enterthe number of personnel your agencyhad dedicated to working FOIA part

time during the fiscal year. This will beexpressed in work-years (manyears). For

example: ‘‘5.1, 3.2, 1.0, 6.5, et al.’’ Asample calculation follows:


1 Copy may be viewed via internet at http://web7.whs.osd.mil/corres.htm.

2 See footnote 1 to paragraph AP1.1.1. of thisappendix.


EmployeeNumber(hours

worked)Work-years Note

PUBLIC, John Q ........................................................................ 200 .1 Amount of time devoted to part time FOIA proc-essing before becoming full time FOIA proc-essor in previous example.

WHITE, Sally ............................................................................. 400 .2 Processed FOIA’s part time while working asparalegal in General Counsel’s Office.

PETERS, Ron ........................................................................... 1,000 .5 Part time employee dedicated to FOIA process-ing.

Total: 1 1,600/2,000 ............................................................ .................... ......................

1 Hours (hours worked in a year) equals 0.8 work-years.

(iii) Estimated litigation cost: Reportyour best estimate of litigation costs forthe FY. Include all direct and indirectexpenses associated with FOIAlitigation in U.S. District Courts, U.S.Circuit Courts of Appeals, and the U.S.Supreme Court.

(iv) Total program cost: Report thetotal cost of FOIA program operationwithin your agency. Include yourlitigation costs in this total. While youdo not have to report detailed costinformation as in the past, you shouldbe able to explain the technique bywhich you derived your agency’s totalcost figures if the need arises.

(A) Before the close of each fiscalyear, the Directorate for Freedom ofInformation and Security Review(DFOISR) will dispatch the latest OSDComposite Rate Chart for militarypersonnel to DoD Components. Thisinformation may be used in computingmilitary personnel costs.

(B) DoD Components should computetheir civilian personnel costs using ratesfrom local Office of PersonnelManagement (OPM) Salary Tables andshall add 16% for benefits.

(C) Data captured on DD Form 2086,Record of Freedom of Information (FOI)Processing Cost and DD Form 2086–1,Record of Freedom of Information (FOI)Processing Cost for Technical Data, shallbe summarized and used in computingtotal costs.

(D) An overhead rate of 25% shall beadded to all calculated costs forsupervision, space, and administrativesupport.

(10) Item 10: Authentication. Theofficial that approves the agency’s reportsubmission to DoD will sign and date;enter typed name and duty title; andprovide both the agency’s name andphone number for questions about thereport.

(c) Electronic publication. Theconsolidated DoD Annual FOIAProgram Report will be made availableto the public in either paper orelectronic format.

Subpart H—Education and Training

§ 286.36 Responsibility and purpose.

(a) Responsibility. The Head of eachDoD Component is responsible for theestablishment of educational andtraining programs on the provisions andrequirements of this part. Theeducational programs should be targetedtoward all members of the DoDComponent, developing a generalunderstanding and appreciation of theDoD FOIA Program; whereas, thetraining programs should be focusedtoward those personnel who areinvolved in the day-to-day processing ofFOIA requests, and should provide athorough understanding of theprocedures outlined in this part.

(b) Purpose. The purpose of theeducational and training programs is topromote a positive attitude among DoDpersonnel and raise the level ofunderstanding and appreciation of theDoD FOIA Program, thereby improvingthe interaction with members of thepublic and improving the public trust inthe DoD.

(c) Scope and principles. EachComponent shall design its FOIAeducational and training programs to fitthe particular requirements of personneldependent upon their degree ofinvolvement in the implementation ofthis part. The program should bedesigned to accomplish the followingobjectives:

(1) Familiarize personnel with therequirements of the FOIA and itsimplementation by this part.

(2) Instruct personnel, who act inFOIA matters, concerning the provisionsof this part, advising them of the legalhazards involved and the strictprohibition against arbitrary andcapricious withholding of information.

(3) Provide for the procedural andlegal guidance and instruction, as maybe required, in the discharge of theresponsibilities of initial denial andappellate authorities.

(4) Advise personnel of the penaltiesfor noncompliance with the FOIA.

(d) Implementation. To ensureuniformity of interpretation, all majoreducational and training programsconcerning the implementation of thispart should be coordinated with theDirector, Freedom of Information andSecurity Review.

(e) Uniformity of legal interpretation.In accordance with DoD Directive5400.7, the DoD Office of the GeneralCounsel shall ensure uniformity in thelegal position and interpretation of theDoD FOIA Program.

Appendix A to Part 286—CombatantCommands—Processing Procedures forFOIA Appeals

AP1.1. General

AP1.1.1. In accordance with DoD Directive5400.7 1 and this part, the CombatantCommands are placed under the jurisdictionof the Office of the Secretary of Defense,instead of the administering MilitaryDepartment, only for the purpose ofadministering the Freedom of InformationAct (FOIA ) Program. This policy representsan exception to the policies in DoD Directive5100.3.2

AP1.1.2. The policy change in AP1.1.1. ofthis appendix authorizes and requires theCombatant Commands to process FOIArequests in accordance with DoD Directive5400.7 and DoD Instruction 5400.10 3 and toforward directly to the Director, Freedom ofInformation and Security Review, allcorrespondence associated with the appeal ofan initial denial for information under theprovisions of the FOIA.

AP1.2. Responsibilities of Commands

Combatant Commanders in Chief shall:AP1.2.1. Designate the officials authorized

to deny initial FOIA requests for records.AP1.2.2. Designate an office as the point-

of-contact for FOIA matters.AP1.2.3. Refer FOIA cases to the Director,

Freedom of Information and Security Review,for review and evaluation when the issuesraised are of unusual significance, precedentsetting, or otherwise require special attentionor guidance.



AP1.2.4. Consult with other OSD and DoDComponents that may have a significantinterest in the requested record prior to afinal determination. Coordination withAgencies outside of the Department ofDefense, if required, is authorized.

AP1.2.5. Coordinate proposed denials ofrecords with the appropriate CombatantCommand’s Office of the Staff JudgeAdvocate.

AP1.2.6. Answer any request for a recordwithin 20 working days of receipt. Therequesters shall be notified that his requesthas been granted or denied. In unusualcircumstances, such notification may statethat additional time, not to exceed 10working days, is required to make adetermination.

AP1.2.7. Provide to the Director, Freedomof Information and Security Review when therequest for a record is denied in whole or inpart, a copy of the response to the requesteror the requester’s representative, and anyinternal memoranda that provide backgroundinformation or rationale for the denial.

AP1.2.8. State in the response that thedecision to deny the release of the requestedinformation, in whole or in part, may beappealed to the Director, Administration andManagement and Washington HeadquartersServices, Directorate for Freedom ofInformation and Security Review, Room2C757, 1155 Defense Pentagon, Washington,DC 20301–1155.

AP1.2.9. Upon request, submit to Director,Administration and Management andWashington Headquarters Services a copy ofthe records that were denied. The Director,Administration and Management andWashington Headquarters Services shallmake such requests when adjudicatingappeals.

AP1.3. Fees for FOIA Requests

The fees charged for requested recordsshall be in accordance with subpart F of thispart.

AP1.4. Communications

Excellent communication capabilitiescurrently exist between the Director,Freedom of Information and Security Reviewand the Freedom of Information Act Officesof the Combatant Commands. Thiscommunication capability shall be used forFOIA cases that are time sensitive.

AP1.5. Information Requirements

AP1.5.1. The Combatant Commands shallsubmit to the Director, Freedom ofInformation and Security Review, an annualreport. The instructions for the report areoutlined in subpart G of this part.

AP1.5.2. The annual reporting requirementcontained in this part shall be submitted induplicate to the Director, Freedom ofInformation and Security Review not laterthan each November 30. This reportingrequirement has been assigned ReportControl Symbol DD–DA&M(A) 1365 inaccordance with DoD 8910.1–M.4

Appendix B to Part 286—AddressingFOIA Requests

AP2.1. General

AP2.1.1. The Department of Defenseincludes the Office of the Secretary ofDefense, the Chairman of the Joint Chiefs ofStaff, the Military Departments, theCombatant Commands, the InspectorGeneral, the Defense Agencies, and the DoDField Activities.

AP2.1.2. The Department of Defense doesnot have a central repository for DoD records.FOIA requests, therefore, should beaddressed to the DoD Component that hascustody of the record desired. In answeringinquiries regarding FOIA requests, DoDpersonnel shall assist requesters indetermining the correct DoD Component toaddress their requests. If there is uncertaintyas to the ownership of the record desired, therequester shall be referred to the DoDComponent that is most likely to have therecord.

AP2.2. Listing of DoD Component Addressesfor FOIA Requests

AP2.2.1. Office of the Secretary of Defenseand the Chairman of the Joint Chiefs of Staff.Send all requests for records from the belowlisted offices to: Directorate for Freedom ofInformation and Security Review, Room2C757, 1155 Defense Pentagon, Washington,DC 20301–1155.Executive SecretariatUnder Secretary of Defense (Policy)

Assistant Secretary of Defense(International Security Affairs)

Assistant Secretary of Defense (SpecialOperations & Low Intensity Conflict)

Assistant Secretary of Defense (Strategy &Threat Reduction)

Deputy to the Under Secretary of Defense(Policy Support)

Director of Net AssessmentDefense Security Assistance AgencyDefense Technology Security

AdministrationUnder Secretary of Defense (Acquisition &

Technology)Deputy Under Secretary of Defense

(Logistics)Deputy Under Secretary of Defense

(Advanced Technology)Deputy Under Secretary of Defense

(Acquisition Reform)Deputy Under Secretary of Defense

(Environmental Security)Deputy Under Secretary of Defense

(International & Commercial Programs)Deputy Under Secretary of Defense

(Industrial Affairs & Installations)Assistant to the Secretary of Defense

(Nuclear, Chemical & Biological DefensePrograms)

Director, Defense Research & EngineeringDirector, Small & Disadvantaged Business

UtilizationDirector, Defense ProcurementDirector, Test Systems Engineering &

EvaluationDirector, Strategic & Tactical SystemsDoD Radiation Experiments Command

CenterOn-Site Inspection Agency

Under Secretary of Defense (Comptroller)

Director, Program Analysis and EvaluationUnder Secretary of Defense (Personnel &

Readiness)Assistant Secretary of Defense (Health

Affairs)Assistant Secretary of Defense (Legislative

Affairs)Assistant Secretary of Defense (Public

Affairs)Assistant Secretary of Defense (Command,

Control, Communications & Intelligence)Assistant Secretary of Defense (Reserve

Affairs)General Counsel, Department of DefenseDirector, Operational Test and EvaluationAssistant to the Secretary of Defense

(Intelligence Oversight)Director, Administration and ManagementSpecial Assistant for Gulf War IllnessDefense Advanced Research Projects AgencyBallistic Missile Defense OrganizationDefense Systems Management CollegeNational Defense UniversityArmed Forces Staff CollegeDepartment of Defense Dependents SchoolsUniformed Services University of the Health

SciencesArmed Forces Radiology Research InstituteWashington Headquarters Services

AP2.2.2. Department of the Army. Armyrecords may be requested from those Armyofficials who are listed in 32 CFR 518. Sendrequests to the Department of the Army,Freedom of Information and Privacy ActsOffice, TAPC–PDR–PF, 7798 Cissna Road,Suite 205, Springfield, VA 22150–3166, forrecords of the Headquarters, U.S. Army, or ifthere is uncertainty as to which Armyactivity may have the records.

AP2.2.3. Department of the Navy. Navyand Marine Corps records may be requestedfrom any Navy or Marine Corps activity byaddressing a letter to the CommandingOfficer and clearly indicating that it is aFOIA request. Send requests to Chief ofNaval Operations, N09B30, 2000 NavyPentagon, Washington, DC 20350–2000, forrecords of the Headquarters, Department ofthe Navy, and to Commandant of the MarineCorps, (ARAD), Headquarters U.S. MarineCorps, 2 Navy Annex, Washington, DC20380–1775 for records of the U.S. MarineCorps, or it there is uncertainty as to whichNavy or Marine activities may have therecords.

AP2.2.4. Department of the Air Force. AirForce records may be requested from thecommander of any Air Force installation,major command, or field operating agency(ATTN: FOIA Office). For Air Force recordsof Headquarters, United States Air Force, orit there is uncertainty as to which Air Forceactivity may have the records, send requeststo Department of the Air Force, 11CS/SCSR(FOIA), 1000 Air Force Pentagon,Washington, DC 20330–1000.

AP2.2.5. Defense Contract Audit Agency(DCAA). DCAA records may be requestedfrom any of its regional offices or from itsHeadquarters. Requesters should send FOIArequests to the Defense Contract AuditAgency, ATTN: CMR, 8725 John J. KingmanRoad, Suite 2135, Fort Belvoir, VA 22060–6219, for records of its headquarters or ifthere is uncertainty as to which DCAA regionmay have the records sought.


AP2.2.6. Defense Information SystemsAgency (DISA). DISA records may berequested from any DISA field activity orfrom its Headquarters. Requesters shouldsend FOIA requests to Defense InformationSystems Agency, Regulatory/GeneralCounsel, 701 South Courthouse Road,Arlington, VA 22204–2199.

AP2.2.7. Defense Intelligence Agency(DIA). FOIA requests for DIA records may beaddressed to Defense Intelligence Agency,ATTN: SVI–1, Washington, DC 20340–5100.

AP2.2.8. Defense Security Service (DSS).All FOIA requests for DSS records should besent to the Defense Security Service, Officeof FOIA and Privacy V0020, 1340 BraddockPlace, Alexandria, VA 22314–1651.

AP2.2.9. Defense Logistics Agency (DLA).DLA records may be requested from itsheadquarters or from any of its fieldactivities. Requesters should send FOIArequests to Defense Logistics Agency, ATTN:CAAR, 8725 John J. Kingman Road, Suite2533, Ft. Belvoir, VA 22060–6221.

AP2.2.10. National Imagery and MappingAgency (NIMA). FOIA requests for NIMArecords may be sent to the National Imageryand Mapping Agency, General CounselsOffice, GCM, mail Stop D–10, 4600Sangamore Road, Bethesda, MD 20816–5003.

AP2.2.11. Defense Special WeaponsAgency (DSWA). FOIA requests for DSWArecords may be sent to the Defense SpecialWeapons Agency, Public Affairs Office,Room 113, 6801 Telegraph Road, Alexandria,VA 22310–3398.

AP2.2.12. National Security Agency (NSA).FOIA requests for NSA records may be sentto the National Security Agency/CentralSecurity Service, FOIA/PA Services, N5P5,9800 Savage Road, Suite 6248, Fort George G.Meade, MD 20755–6248.

AP2.2.13. Inspector General of theDepartment of Defense (IG, DoD). FOIArequests for IG, DoD records may be sent tothe Inspector General of the Department of

Defense, Chief FOIA/PA Office, 400 ArmyNavy Drive, Room 405, Arlington, VA 22202–2884.

AP2.2.14. Defense Finance and AccountingService (DFAS). DFAS records may berequested from any of its regional offices orfrom its Headquarters. Requesters shouldsend FOIA requests to Defense Finance andAccounting Service, Directorate for ExternalServices, Crystal Mall 3, Room 416,Arlington, VA 22240–5291, for records of itsHeadquarters, or if there is uncertainty as towhich DFAS region may have the recordssought.

AP2.2.15. National Reconnaissance Office(NRO). FOIA requests for NRO records maybe sent to the National ReconnaissanceOffice, Information Access and ReleaseCenter, Attn: FOIA Officer, 14675 Lee Road,Chantilly, VA 20151–1715.

AP2.3. Other Addresses. Although thebelow organizations are OSD and Chairmanof the Joint Chiefs of Staff Components forthe purposes of the FOIA, requests may besent directly to the addresses indicated.

AP2.3.1. DoD TRICARE ManagementActivity. Director, TRICARE ManagementActivity, 16401 East Centretech Parkway,Aurora, CO 80011–9043.

AP2.3.2. Chairman, Armed Services Boardof Contract Appeals (ASBCA). Chairman,Armed Services Board of Contract Appeals,Skyline Six Rm 703, 5109 Leesburg Pike,Falls Church, VA 22041–3208.

AP2.3.3. U.S. Central Command.Commander-in-Chief, U.S. CentralCommand, CCJ1 AGR, MacDill Air ForceBase, FL 33608–7001.

AP2.3.4. U.S. European Command.Commander-in-Chief, Headquarters, U.S.European Command/ECJ1–AA(FOIA) Unit30400 Box 1000, APO AE 09128–4209.

AP2.3.5. U.S. Southern Command.Commander-in-Chief, U.S. SouthernCommand, SCJ1–A, 3511 NW 91st Avenue,Miami, FL 33172–1217.

AP2.3.6. U.S. Pacific Command.Commander-in-Chief, U.S. Pacific Command,USPACOM FOIA Coordinator (J042),Administrative Support Division, JointSecretariat, Box 28, Camp H. M. Smith, HI96861–5025.

AP2.3.7. U.S. Special OperationsCommand. Commander-in-Chief, U.S.Special Operations Command, Chief,Command Information Management Branch,ATTN: SOJ6–SI, 7701 Tampa Point Blvd.,MacDill Air Force Base, FL 33621–5323.

AP2.3.8. U.S. Atlantic Command.Commander-in-Chief, U.S. AtlanticCommand, Code J02P, Norfolk, VA 23511–5100.

AP2.3.9. U.S. Space Command.Commander-in-Chief, U.S. Space Command,Command Records Manager/FOIA/PAOfficer, 150 Vandenberg Street, Suite 1105,Peterson Air Force Base, CO 80914–5400.

AP2.3.10. U.S. Transportation Command.Commander-in-Chief, U.S. TransportationCommand, ATTN: TCJ1–1F, 508 Scott Drive,Scott Air Force Base, IL 62225–5357.

AP2.3.11. U.S. Strategic Command.Commander-in-Chief, U.S. StrategicCommand, Attn: J0734, 901 SAC Blvd., Suite1E5, Offutt Air Force Base, NE 68113–6073.

AP2.4. National Guard Bureau

FOIA requests for National Guard Bureaurecords may be sent to the Chief, NationalGuard Bureau, ATTN: NGB–ADM, Room2C363, 2500 Army Pentagon, Washington,DC 20310–2500.

AP2.5. Miscellaneous

If there is uncertainty as to which DoDComponent may have the DoD record sought,the requester may address a Freedom ofInformation request to the Directorate forFreedom of Information and Security Review,Room 2C757, 1155 Defense Pentagon,Washington, DC 20301–1155.



Appendix C to Part 286—DD Form 2086, ‘‘Record of Freedom of Information (FOI) Processing Cost’’


Appendix D to Part 286—DD Form 2086–1, ‘‘Record of Freedom of Information (FOI) Processing Cost for TechnicalData’’


Appendix E to Part 286—DD Form 2564, ‘‘Annual Report Freedom of Information Act’’


BILLING CODE 5000–04–C


Appendix F to Part 286—DoD Freedomof Information Act ProgramComponents

Office of the Secretary of Defense/Chairmanof the Joint Chiefs of Staff/CombatantCommands, Defense Agencies, and theDoD Field Activities

Department of the ArmyDepartment of the NavyDepartment of the Air Force

Defense Information Systems AgencyDefense Contract Audit AgencyDefense Intelligence AgencyDefense Security ServiceDefense Logistics AgencyNational Imagery and Mapping AgencyDefense Special Weapons AgencyNational Security AgencyOffice of the Inspector General, Department

of Defense

Defense Finance and Accounting ServiceNational Reconnaissance Office


Patricia L. Toppings,Alternate OSD Federal Register LiaisonOfficer, Department of Defense.[FR Doc. 98–31103 Filed 11–24–98; 8:45 am]


fede

ral r

egiste

r

65455


Part V

Department ofHousing and UrbanDevelopmentFunding Availability (NOFA) for CDBGSmall Cities Development Grants forFiscal Year 1999; Notice


DEPARTMENT OF HOUSING ANDURBAN DEVELOPMENT

[Docket No. FR–4422–N–01]

Notice of Funding Availability for: theHUD-Administered Small CitiesCommunity Development Block Grant(CDBG) Program, Development Grants-Fiscal Year 1999; and the Section 108Loan Guarantee Program for SmallCommunities in New York State

AGENCY: Office of the AssistantSecretary for Community Planning andDevelopment, HUD.ACTION: Notice of funding availability(NOFA) for CDBG Small CitiesDevelopment Grants for Fiscal Year (FY)1999.

SUMMARY: This Notice of FundingAvailability (NOFA) announces theavailability of CDBG Small Citieseconomic development grants andguaranteed loans to fund eligibleeconomic development activities relatedto the New York canal system. ThisNOFA is part of the Canal CorridorInitiative, a multiyear effort designed torevitalize the economic base ofcommunities in upstate New Yorkthrough economic development projectsand job creation along the canal systemand connecting waterways. HUDannounced the first Canal CorridorInitiative grants in FY 1997 andawarded 51 Canal Corridor CDBG grantsto communities for canal-relatedprojects. This NOFA is the secondround in that overall initiative.

Eligible economic developmentactivities are expected to be fundedthrough a combination of resources,including Community DevelopmentBlock Grant (CDBG) funds madeavailable through this NOFA under theHUD-administered Small Cities CDBGprogram and the Section 108 LoanGuarantee program. HUD expects toprovide funds for the selected economicdevelopment projects through acombination of CDBG and Section 108in an aggregate amount ofapproximately $3 million.

HUD expects that the typical projectproposal would be a Section 108-eligible economic development projectthat builds on the unique locationalopportunities afforded by the New Yorkcanal system and connecting waterwaysto foster commercial revitalization,business growth and expansion, and jobcreation that will result in the economicand physical revitalization of the projectarea. Such projects would utilize fundsmade available by the Section 108 LoanGuarantee program to provide the ‘‘up-front’’ financing, along with otherpublic or private resources to the extent

financially feasible. The loan guaranteedby section 108 would be expected to berepaid with a combination of the CDBGfunds requested as part of thisapplication, future CDBGappropriations, and the ‘‘cash flows’’, ifany, generated by the assisted project.This NOFA makes available $1 millionin FY 1999 funding through the HUD-administered Small Cities CDBGprogram for the first year of multiyearplans requested through applications.Multiyear plans approved will notpropose an amount of grant fundstotaling more than $4.63 million for allyears.

HUD encourages applications fromjoint applicants in accordance with 24CFR 570.422. The nature of riverfrontrevitalization is such that waterfrontprojects undertaken in tandem atdifferent points along the waterfrontcreates a ‘‘regional synergy’’ thatenhances the success of all projects inthe region.

Combining Section 108 Loans withMultiyear Plans for CDBG Funding toCreate a Financial Package. Under theSection 108 program and pursuant to 24CFR 570.705(a)(2)(iii), a New York Statenonentitled community/public entityeligible to receive HUD-administeredCDBG Small Cities funds may borrow anaggregate amount of funds guaranteedunder the Section 108 Loan Guaranteeprogram that is five times the greater of:

(A) The most recent CDBG SmallCities grant approved for the applicant,

(B) The average of the most recentthree CDBG Small Cities grantsapproved for the applicant (excludingany CDBG grant in the same fiscal yearas the Section 108 Loan Guaranteecommitment), or

(C) The average amount of CDBGSmall Cities grants made to units ofgeneral local government in New YorkState in the previous fiscal year.

Note that the amount of Section 108guaranteed funds that is available to acommunity for new projects may bedetermined by subtracting therecipient’s total unpaid balance of debtobligations currently guaranteed underthe Section 108 Loan Guaranteeprogram from the amount authorized forthe community as determined in (A)through (C) above.

In FY 1998, the average New YorkState CDBG Small Cities grant amountawarded was $421,699. This means thatunder the Section 108 program, atypical New York State nonentitledcommunity or county may borrow,under (C) above, approximately $2.1million (assuming that the communitydoes not have any outstanding unpaidSection 108 Loan Guarantee balance).Given current Section 108 Loan

Guarantee rates and a 20-year financingterm, the average annual straight lineprincipal and interest payment of a $2.1million guaranteed Section 108 loanwould be approximately $191,000 peryear.

In addition to any other securityarrangement that may be permitted orrequired pursuant to 24 CFR 570.705(b),and in order to reduce the risk to HUDand individual borrowers beginning infiscal year 2000, HUD will establish adebt service reserve with CDBG SmallCities funds that will be used to makethe first year’s Section 108 debtobligation payments when they comedue (ending in August of any year underthe current system) for Canal Corridorprojects approved under this NOFA.Early in the next fiscal year, HUD willreplenish the debt service reserve forpurposes of the next year’s paymentswith another Small Cities grant underthe noncompetitive authority of 24 CFR570.432. HUD intends to, subject to theconditions stated in Sec. 570.432including the availability ofappropriations, continue to replenishthe debt service reserve account eachyear for each grant made under thisNOFA as long as any related Section108 loan remains outstanding.

This NOFA sets out programguidelines that will govern theapplication, application review, andaward process for the CDBG New YorkState Small Cities grants made availableas part of the financial package for CanalCorridor Initiative projects.DATES: Applications are due on or priorto February 3, 1999. Applications, ifmailed, must be postmarked by theUnited States Postal Service no laterthan midnight on February 3, 1999.Overnight delivery items receivedwithin ten (10) days after February 3,1999, will be deemed to have beenreceived by that date, upon submissionof documentary evidence that they wereplaced in transit with the overnightdelivery service by no later thanFebruary 3, 1999. If an application ishand-delivered to the New York or theBuffalo Office, the application must bedelivered to the appropriate office by nolater than 4:00 p.m. on the deadlinedate.

The above-stated application deadlineis firm as to date and hour. In theinterest of fairness to all competingapplicants, HUD will treat as ineligiblefor consideration any application that isnot received by 4:00 p.m. on, orpostmarked by February 3, 1999.Applicants should take this policy intoaccount and make early submission oftheir materials to avoid any risk of lossof eligibility brought about by


unanticipated delays or other delivery-related problems.ADDRESSES: Completed applications willbe accepted at the following addresses:

1. For the nonentitled CDBGjurisdictions in and county of Ulster andnonparticipating jurisdictions in theurban county of Dutchess: Departmentof Housing and Urban Development,Office of Community Planning andDevelopment, Attention: Small CitiesCoordinator, 26 Federal Plaza, NewYork, NY 10278–0068. Telephone (212)264–0771; and

2. For the nonentitled CDBGjurisdictions in and counties of Albany,Cayuga, Clinton, Columbia, Erie, Essex,Fulton, Greene, Herkimer, Jefferson,Madison, Monroe, Montgomery,Niagara, Oneida, Onondaga, Ontario,Orleans, Oswego, Rensselaer, St.Lawrence, Saratoga, Schenectady,Schuyler, Seneca, Tompkins, Warren,Washington, Wayne and Yates:Department of Housing and UrbanDevelopment, Community Planning andDevelopment Division, Attention: SmallCities Coordinator, 465 Main Street,Lafayette Court, Buffalo, NY 14203–1780. Telephone (716) 551–5742.FOR FURTHER INFORMATION CONTACT:Robert Duncan, Deputy Director, Officeof Block Grant Assistance, Departmentof Housing and Urban Development,Room 7286, 451 Seventh Street, SW,Washington, DC 20410, Telephone (202)708–3587; or Mr. Michael Merrill,Director, Community Planning andDevelopment Division, Department ofHousing and Urban Development, 415Main Street, Buffalo, NY 14203–1780,Telephone (716) 551–5755. (This is nota toll-free number)

Persons with hearing or speechimpairments may access these numbersvia TTY by calling the toll-free FederalInformation Relay Service at (800) 877–8339.SUPPLEMENTARY INFORMATION:

I. Purpose and Substantive Description

A. Authorities and Background

1. Authority

Title I, Housing and CommunityDevelopment Act of 1974 (the HCD Act)(42 U.S.C. 5301–5320); 24 CFR part 570,subpart F.

2. Background

Title I of the Housing and CommunityDevelopment Act of 1974 authorizes theCommunity Development Block Grant(CDBG) program. Section 106 of Title Ipermits the States to elect to assume theadministrative responsibility for theCDBG program for nonentitled areaswithin their jurisdiction. Section 106

provides that HUD will administer theCDBG program for nonentitled areaswithin any State that does not elect toassume the administrative responsibilityfor the program. Subpart F of 24 CFRpart 570 sets out the requirements forHUD’s administration of the CDBGprogram in nonentitled areas (SmallCities program). The State of New Yorkhas not elected to implement the CDBGSmall Cities program.

With respect to this NOFA, subpart F,at 24 CFR 570.421(a)(5), ‘‘Economicdevelopment grants,’’ provides that inthe event that a nonentitlement NewYork State Small Cities applicant needsa CDBG Small Cities grant, in additionto a Section 108 Loan Guarantee, tomake its economic development projectviable, HUD may fund suchapplications, as they are determined tobe fundable in a specific amount up tothe sum set aside for economicdevelopment projects in this Notice ofFunding Availability. This NOFAproposes to maximize the utilization ofSection 108 guaranteed loans inconjunction with multiyear plans foruse of CDBG funds to undertake eligibledevelopment projects. As a result of thisapproach, the funds announced in thisNOFA provide eligible smallcommunities and counties in New YorkState with a unique opportunity topropose programs that focus on canal-related economic development projectsto expand economic and jobopportunities and act as a catalyst tospur community and neighborhoodeconomic revitalization. HUDencourages eligible communities topropose programs that are creative andinnovative in addressing their economicdevelopment needs. Although the focusof 24 CFR 570.421(a)(5) is broadlydescribed as economic development, asa technical matter any activity eligiblefor Section 108 Loan Guaranteeassistance under 24 CFR 570.703 iseligible under this NOFA (except asstated in section I.C.3.a. of this NOFA,below) to carry out the applicant’seconomic development project. Asemphasized in the selection factors (seesection II.C. of this NOFA), however, theoverall purpose of the eligible activity,or group of eligible activities, proposedfor funding in response to this NOFA isjob creation and the economicdevelopment of the area served by theproposed project.

Because of the integral relationship ofCDBG grant funds and the Section 108Loan Guarantees, the scale of economicdevelopment projects solicited, and theexpectation of a long-term stream ofCDBG funds (subject to futureappropriations) to make such projectseconomically feasible, this NOFA

solicits applications for multiyear plans.If an applicant’s multiyear plan isselected on a competitive basis, the firstyear will be funded, and HUD may fundfuture years for purposes of paying theSection 108 Loan Guarantee debtobligation due that year on anoncompetitive basis subject toacceptable performance, submission ofan acceptable application andcertifications, and the provision ofadequate appropriations for the CDBGNew York nonentitlement Small Citiesprogram. Note that a community whoseCanal Corridor grant and multiyear planis approved will be required and mustagree to submit an application for CDBGSmall Cities funds to HUD each year ofthe multiyear plan in order to pay anyamount of the Section 108 debt serviceobligation that would not otherwise bepaid from the cash flow of the assistedproject. This is necessary in order toensure the timely payment of theSection 108 debt obligation and avoid adefault of the 108 guaranteed loan.

3. Other Program Requirementsa. Abbreviated Consolidated Plan.

Each jurisdiction that applies for fundsunder this NOFA must have submitteda consolidated plan, as provided at 24CFR part 91. A jurisdiction that does notexpect to be a participating jurisdictionin the HOME program under 24 CFRpart 92, may submit (or may havesubmitted) an abbreviated consolidatedplan that is appropriate to the types andamounts of assistance sought from HUD.(See 24 CFR 91.235.) If an applicant hasan abbreviated consolidated planpreviously approved by HUD, theapplicant may update it, if necessary, ifthe CDBG development activitiesproposed in the application contain anynew non-housing communitydevelopment activity. Note thatapplicants that are also submittingapplications for the New York CDBGSmall Cities competition (see the NOFAfor that program published elsewhere inthis issue of the Federal Register) maymeet the consolidated plan submissionfor both competitions with oneconsolidated plan submission as long asthe consolidated plan submission coversthe activities proposed in bothapplications.

Applicants are not authorized toundertake a housing activity with fundsunder this NOFA. An applicant seekingfunds under this NOFA to address non-housing community development needsshould prepare an abbreviatedconsolidated plan that describes thejurisdiction’s priority non-housingcommunity development needs eligiblefor assistance under the CDBG programby eligibility category, reflecting the


needs of families for each type ofactivity, as appropriate, in terms ofdollar amounts estimated to meet thepriority need for the type of activity (see24 CFR 91.235(c)(2)). The abbreviatedconsolidated plan is subject to the samecitizen participation requirements as isthe jurisdiction’s Small Cities CDBGapplication. Both must meet the citizenparticipation requirements before theymay be submitted to HUD. (See 24 CFR570.431) A Section 108 Loan Guaranteeapplication would also have to meetthese requirements if the jurisdictionsubmits one to HUD for consideration.

If possible, applicants shouldendeavor to submit the abbreviatedconsolidated plan in advance of theSmall Cities Canal Corridor applicationdue date. The latest time at which theabbreviated consolidated plan will beaccepted by HUD for the HUD-administered Small Cities program inNew York will be the application duedate for the Small Cities Canal Corridorapplication. Failure to submit theabbreviated consolidated plan by thedue date is not a curable technicaldeficiency. Questions regarding theabbreviated consolidated plan should bedirected to the appropriate HUD fieldoffice.

Any application that is fundable, butdoes not have an approved consolidatedplan, will receive a conditional approvalsubject to HUD’s approval of theabbreviated consolidated plan. If HUD isunable to approve the abbreviatedconsolidated plan within a reasonableperiod of time, but not less than 60 daysfrom the date that the conditionalapproval is announced, HUD reservesthe right to rescind the award. In suchevent the funding will be awarded to thehighest rated fundable applicant thatdid not receive funding under thiscompetition.

b. Section 3. Assistance providedunder this NOFA is subject to therequirements of section 3 of the Housingand Urban Development Act of 1968,and the implementing regulations in 24CFR part 135. One of the purposes ofthis NOFA, which is consistent withsection 3, is to give, to the greatestextent feasible and consistent withFederal, State, and local laws andregulations, job training, employmentand other contracting opportunitiesgenerated from certain HUD financialassistance to low- and very low-incomepersons. Public entities awarded fundsunder this NOFA that intend to use thefunds for housing rehabilitation,housing construction, or other publicconstruction must comply with theapplicable requirements set forth in theregulations.

c. CDBG Program Requirements. Theprovisions of 24 CFR part 570, subpartF, as applicable, shall apply to CDBGgrants made under this NOFA.

4. Accountability in the Provision ofHUD Assistance: Documentation andPublic Access Requirements; Applicant/Recipient Disclosures

HUD has promulgated a final rule toimplement section 102 of theDepartment of Housing and UrbanDevelopment Reform Act of 1989 (HUDReform Act) (Pub. L. 101–235; approvedDecember 15, 1989). The final rule iscodified at 24 CFR part 4. Section 102contains a number of provisions that aredesigned to ensure greateraccountability and integrity in theprovision of certain types of assistanceadministered by HUD. On January 16,1992 (57 FR 1942), HUD published afinal rule implementing section 102.Although the rule has been amendedand now appears in part 4, the January16, 1992 notice provided the public(including applicants for, and recipientsof, HUD assistance) with furtherinformation on the implementation ofsection 102. The documentation, publicaccess, and applicant and recipientdisclosure requirements of section 102apply to assistance awarded under thisNOFA as follows:

a. HUD Responsibilities. (1)Documentation and Public Access. HUDwill ensure that documentation andother information regarding eachapplication submitted pursuant to thisNOFA are sufficient to indicate the basisupon which assistance was provided ordenied. This material, including anyletters of support, will be madeavailable for public inspection for a five-year period beginning not less than 30days after the award of the assistance.Material will be made available inaccordance with the Freedom ofInformation Act (5 U.S.C. 552) andHUD’s implementing regulations at 24CFR part 15. In addition, HUD willinclude the recipients of assistancepursuant to this NOFA in its FederalRegister notice of all recipients of HUDassistance awarded on a competitivebasis.

(2) Disclosures. HUD will makeavailable to the public for five years allapplicant disclosure reports (HUD Form2880) submitted in connection with thisNOFA. Update reports (also Form 2880)will be made available along with theapplicant disclosure reports, but in nocase for a period of less than three years.All reports—both applicant disclosuresand updates—will be made available inaccordance with the Freedom ofInformation Act (5 U.S.C. 552) and

HUD’s implementing regulations at 24CFR part 15.

b. Units of General Local GovernmentResponsibilities. Units of general localgovernment awarded assistance underthis NOFA are subject to the provisionsof either paragraph b.(1), or paragraphb.(2) and b.(3), below. For units of localgovernment awarded assistance underthis NOFA which in turn make theassistance available on aNONCOMPETITIVE BASIS for aspecific project or activity to asubrecipient, or a ‘‘Community BasedDevelopment Organization’’ (CBDO) asdefined in 24 CFR 570.204, paragraph b.(1) applies. For units of localgovernment awarded assistance underthis NOFA, which in turn make theassistance available on a COMPETITIVEBASIS for a specific project or activityto a subrecipient, or a CBDO, paragraphsb. (2) and (3) apply.

(1) Disclosures. The units of generallocal government receiving assistanceunder this NOFA must make allapplicant disclosure reports available tothe public for three years. Requiredupdate reports must be made availablealong with the applicant disclosurereports, but in no case for a period lessthan three years. Each unit of generallocal government may use HUD Form2880 to collect the disclosures, or maydevelop its own form.

(2) Documentation and Public Access.The recipient unit of general localgovernment must ensure thatdocumentation and other informationregarding each application submitted tothe recipient by a subrecipient or CBDOapplicant are adequate to indicate thebasis upon which assistance wasprovided or denied. The unit of generallocal government must make thismaterial, including any letters ofsupport, available for public inspectionfor a five-year period beginning not lessthan 30 days after the award of theassistance. Unit of general localgovernment recipients must also notifythe public of the subrecipients orCBDO’s that receive the assistance. Eachrecipient will develop documentation,public access, and notificationprocedures for its programs.

(3) Disclosures. Units of general localgovernment receiving assistance underthis NOFA must make all applicantdisclosure reports available to thepublic for five years. Required updatereports must be made available alongwith the applicant disclosure reports,but in no case for a period less thanthree years. Each unit of general localgovernment may use HUD Form 2880 tocollect the disclosures, or may developits own form.


B. Allocation of Grant Amounts andSection 108 Loan GuaranteeCommitments

1. Total Available FundingThe nonentitlement CDBG funds for

New York State for FY 1999 totalapproximately $54,558,000. Of thatamount, this NOFA sets aside $1million for eligible economicdevelopment grants for projects thatcreate jobs, principally for low andmoderate income persons, and increaseeconomic opportunities related to theNew York State Canal System orconnecting waterways (see section I.C.1.of this NOFA, below, regarding eligibleapplicants).

2. Maximum Grant AmountsThe maximum CDBG grant amount

that will be awarded from FY 1999funds for an eligible economicdevelopment project pursuant to thisNOFA is $300,000, though the averagegrants may be less. For a multiyear plan,HUD expects that no more than $1million will be made available in fundsunder this NOFA and approximately$191,000 per year in future years’ CDBGfunds (subject to appropriations) to paythe Section 108-guaranteed debtobligation per grantee over the life of theplan. Thus in the aggregate for all plans,HUD expects that no more than $38million will be required (subject toappropriations) for Section 108 loanpayments over a projected 20 year lifeof all multiyear plans approved, limitingthe set-asides of CDBG funds formultiyear plans to an average of $1.91million per year over a 20-year period.

Note that the maximum grantamounts discussed in this paragraph aresolely for grants made under this NOFA.The maximum grant amountsauthorized under the regular New YorkCDBG nonentitlement competition are$400,000 for cities, towns and villagesand $600,000 for counties. Acommunity may apply for a grant underboth competitions and may be awardedgrants up to the maximum amountsauthorized under both competitions.

3. Availability of Section 108 LoanGuarantees

HUD could make up to $21 million inSection 108 Loan Guaranteecommitments, or higher, if allapplicants proposed projects thatutilized the maximum amount ofSection 108 loan guarantee authorityavailable to them.

4. Multiyear Requests and Repayment ofSection 108 Loans With CDBG Funds

a. General. Pursuant to 24 CFR570.432, HUD expects to approve

multiyear plans of up to twenty (20)years, for use of CDBG funds for the solepurpose of paying any amounts due ondebt obligations issued by such unit ofgeneral local government (or itsdesignated public agency) andguaranteed by the Secretary pursuant tosection 108 of the Housing andCommunity Development Act of 1974,as amended.

b. Submission of multiyear requestand plan. Each application for a CDBGeconomic development grant under thisNOFA should include a multiyear planfor CDBG funds, the use of which willbe limited to paying projected amountsdue on Section 108-guaranteed debtobligations over the projected term ofthe loan.

The multiyear plans will be ratedcompetitively against each other basedon the selection criteria in section II.C.of this NOFA. Each applicant’smultiyear plan must discuss:

• the total amount of the Section 108Loan Guarantee commitment that willbe requested,

• the term of the Section 108guaranteed loan and

• a repayment schedule for theSection 108 guaranteed loan that clearlyidentifies the amount and source of theprojected funds, including the CDBGfunds proposed to be used to repay theSection 108 guaranteed loan over thecourse of the multiyear plan.

The multiyear period may not exceed20 years.

HUD intends to fund succeeding yearsof the plan on a noncompetitive basis,subject to acceptable performance,submission of an acceptable applicationand certifications, and the provision ofadequate appropriations for the HUD-administered Small Cities program.HUD reserves the right to lower theamount of funds for succeeding years ifrespective recipients are not incompliance with performancerequirements and applicableregulations. The application must listfor each year of the multiyear period theprojected amount of CDBG fundsrequested for each year. The amount ofCDBG funds requested for each yearneed not be the same amount; however,the amount requested for each yearshould relate to the anticipated amountsappropriate to meet the CDBG portion ofthe debt obligation, principal andinterest, on the Section 108 guaranteedloan, consistent with section I.B.2. ofthis NOFA, above. For subsequent yearsof the multiyear period and pursuant to24 CFR 570.432, HUD will adjust theactual CDBG grant amount awarded tosuch amounts required for the solepurpose of paying any principal andinterest amounts due on the loan

guaranteed by Section 108 as providedunder the Section 108 note contract, orin the event of a default any amountsdue under the guarantee.

C. Eligibility

1. Eligible Applicants

Eligible applicants are units of generallocal government in New York State(excluding metropolitan cities, urbancounties, units of government that areparticipating in urban counties ormetropolitan cities even if only part ofthe participating unit of government islocated in the urban county ormetropolitan city, and Indian tribeseligible for assistance under section 106of the HCD Act) that are proposingdevelopment activities related to theNew York State Canal System orconnecting waterways, including, butnot limited to the Hudson River, CayugaLake, Seneca Lake, Lake Champlain,Lake George, Lake Erie, and LakeOntario. Eligible applicants are furtherlimited to the nonentitled CDBGjurisdictions in and counties of Albany,Cayuga, Clinton, Columbia, Erie, Essex,Fulton, Greene, Herkimer, Jefferson,Madison, Montgomery, Niagara, Oneida,Onondaga, Ontario, Orleans, Oswego,Rensselaer, Saint Lawrence, Saratoga,Schenectady, Schuyler, Seneca,Tompkins, Ulster, Warren, Washington,Wayne, and Yates, and thenonparticipating jurisdictions in theurban counties of Dutchess and Monroe.

2. Joint Applicants

There may be several instances inwhich several communities havecommon economic developmentopportunities that are more feasible if aneligible development project werecarried out jointly rather than on anindividual basis. In such cases, HUDencourages these communities todevelop regional solutions to regionalproblems and propose a jointapplication from all affectedcommunities. This NOFA authorizeseligible units of general localgovernment under section I.C.1. of thisNOFA, above, to submit a jointapplication to carry out an eligibleeconomic development project thataddresses common problems faced byall of the jurisdictions. A jointapplication must be pursuant to awritten cooperation agreementsubmitted with the application. Thecooperation agreement must authorizeone of the participating units ofgovernment to act as the lead applicantthat will submit the application to HUD,and must delineate the responsibilitiesof each participating unit of governmentwith respect to the Small Cities


program. (See 24 CFR 570.422 forrequirements regarding jointapplications.) Except as otherwisenoted, a joint application must meet allof the requirements of this NOFA as anapplication from a single unit of generallocal government. Applications underthis NOFA may be submittedindividually or jointly, subject to 24CFR 570.422. However, Section 108Loan Guarantee applications must besubmitted individually and inaccordance with 24 CFR 570.704 byeach unit of general local governmentthat will receive a guarantee and issueguaranteed obligations.

3. Activities Eligible for CDBG SmallCities Grants Under This NOFA

Eligible activities are economicdevelopment activities related to theNew York State Canal System orconnecting waterways, including, butnot limited to the Hudson River, CayugaLake, Seneca Lake, Lake Champlain,Lake George, Lake Erie and LakeOntario. Economic developmentactivities must also meet the criteriabelow:

a. Eligible economic developmentprojects and activities to be financedwith FY 1999 CDBG funds include thefollowing:

(1) The activities listed under theSection 108 Loan Guarantee program at24 CFR 570.703, except subparagraphs(j) Construction of housing by non-profitorganizations, and (m) regardingactivities by ‘‘colonias;’’ and

(2) Capitalization of a Section 108debt service reserve/loan loss reserve aspart of the financing of activities that areotherwise eligible under this NOFA. Adebt service reserve created from SmallCities grant funds should not, however,exceed one year’s Section 108 projecteddebt obligation needs.

b. Eligible activities to be fundedduring FY 2000 and later years withCDBG Small Cities funds undermultiyear plans proposed pursuant tothis NOFA are limited to the repaymentof any amounts due on debt obligationsissued by a units of general localgovernment and guaranteed by theSecretary pursuant to section 108 of theHCD Act. This includes plannedrepayments from CDBG funds, as wellas amounts due in the event of default,as applicable.

4. National Objectives and PrimaryObjective

Each activity to be funded with CDBGfunds or funds guaranteed by theSection 108 Loan Guarantee programunder this Canal Corridor Initiativecompetition only must meet thenational objective of principally

benefitting low and moderate incomepersons through the creation of jobs,51% of which will be made available toor held by low and moderate incomepersons. See 24 CFR 570.208(a)(4).Pursuant to 24 CFR 570.420(e)(2), notless than 70 percent of the total of grantfunds from a grant made under thisNOFA and Section 108 Loan Guaranteefunds received within a fiscal year mustbe expended for activities that benefitlow- and moderate-income personsunder the criteria of Sec. 570.208(a) orSec. 570.208(d) (5) or (6).

5. Anti-Pirating ProhibitionSection 588 of the Quality Housing

and Work Responsibility Act of 1998,P.L. 105–276, amended section 105(h) ofthe Housing and CommunityDevelopment Act of 1974 as follows:

‘‘(h) PROHIBITION ON USE OFASSISTANCE FOR EMPLOYMENTRELOCATION ACTIVITIES. Notwithstandingany other provision of law, no amount froma grant under section 106 made in fiscal year1999 or any succeeding fiscal year may beused to assist directly in the relocation of anyindustrial or commercial plant, facility, oroperation, then the application shall includefrom 1 area to another area, if the relocationis likely to result in a significant loss ofemployment in the labor market area fromwhich the relocation occurs.’’

Accordingly, HUD will not award anygrant for any project that would violatethis prohibition.

6. Limitations on the Ratio of CDBGGrant Funds to Section 108 LoanGuarantee Funds

HUD reserves the right, within themaximum grant limit of $300,000provided in section I.B.2. of this NOFA,above, to determine a minimum or amaximum amount of any CDBG grantaward under this NOFA with thedifference from the amount requested, ifany, to be made up (to the maximumextent feasible to fund the eligibleeconomic development project) withloan funds guaranteed by Section 108.HUD also reserves the right to determinethe amount and number of years of themultiyear plan, or Section 108 LoanGuarantee award per applicant,application, or project and to modifyrequests accordingly.

In the case of an applicant that hasreceived a prior CDBG grant award foran activity proposed in this application,HUD reserves the right to consider theamount of the previous CDBG awardand the grant amount requested inresponse to this NOFA, and to adjust theamount of a CDBG award under thisNOFA, including, if appropriate, notmaking an award.

In the event the applicant is awardeda CDBG grant that has been reduced

below the original request, the applicantwill be required to modify its projectplans and application to conform to theterms of HUD approval before executionof a grant agreement and/or a Section108 Loan Guarantee commitment. HUDreserves the right to reduce or de-obligate the CDBG grant award if anapprovable Section 108 Loan Guaranteeapplication is not submitted by thegrantee in the required amounts on atimely basis (see section II.B.1.b. Afterapproval of the CDBG grant, anyprogram amendments must meet theprovisions of 24 CFR 570.427.

7. Environmental Review Requirement

The HUD environmental reviewprocedures contained in 24 CFR part 58apply to this program, according to 24CFR 570.604. Under part 58, granteesassume all of the responsibilities forenvironmental review, decision making,and action pursuant to the NationalEnvironmental Policy Act of 1969 andthe other provisions of law specified bythe Secretary in 24 CFR part 58 thatwould apply to the Secretary were he toundertake such projects as Federalprojects.

II. The Application ProcessEligible applicants seeking CDBG

assistance must apply in accordancewith this NOFA. The CDBG applicationshall be accompanied by a request forSection 108 Loan Guaranteecommitments, as further described insection II.B. of this NOFA, below.Application requirements for theSection 108 program are found in Sec.570.704.

A. Timing of submission

Applications for CDBG assistancemust be submitted for receipt in themanner described under ‘‘Dates’’ and‘‘Addresses,’’ above.

B. Submission Requirements

1. The CDBG application (an originalplus two copies) shall be accompaniedby a request for loan guaranteeassistance under Section 108. If morethan one jurisdiction applies jointly,each entity that will receive a guaranteeand issue guaranteed obligations mustsubmit a separate request. Each requestfor Section 108 Loan Guarantee can beeither one or more of the following:

a. A formal application for Section108 Loan Guarantee(s), including thedocuments listed at 24 CFR 570.704(b);

b. A brief description of a Section 108Loan Guarantee application(s) to besubmitted within 60 days (with HUDreserving the right to extend such periodfor good cause on a case-by-case basis)of a notice of CDBG selection (CDBG


awards will be conditioned on approvalof actual Section 108 loancommitments). This description must besufficient to support the basic eligibilityof the proposed project or activities forSection 108 assistance;

c. A request for a Section 108 LoanGuarantee amendment (analogous tosubparagraph a. or b. above) thatproposes to increase the amount of apreviously approved application.

d. Applicants should note that anapplication for a Section 108 LoanGuarantee commitment requires that theapplicant certify that it has made effortsto obtain financing without the use ofthe Section 108 Loan Guarantee and thatit cannot complete such financingconsistent with the timely execution ofthe program plans without the Section108 Loan Guarantee.

2. In addition, an application forCDBG grant funds shall include thefollowing:

a. A completed Standard Form 424,Application for Federal Assistance.

b. A signed copy of certificationsrequired under the CDBG program,including, but not limited to the Drug-Free Workplace Certification, and theCertification Regarding Lobbyingpursuant to section 319 of theDepartment of Interior AppropriationsAct for Fiscal Year 1990 (31 U.S.C.1352), generally prohibiting use ofappropriated funds, and, if applicable,Disclosure of Lobbying Activities (SF–LLL). The applicant may use thelobbying certification published withthis NOFA.

c. Form HUD–2880, Applicant/Recipient Disclosure/Update Report, asrequired under 24 CFR 4.9 through 4.13.The applicant may use the formpublished with this NOFA.

d. Abbreviated consolidated plan, ifapplicable;

e. A narrative statement, inaccordance with section I.A.3.a. of thisNOFA, consisting of the following:

(1) A description of the eligibleactivities that will be carried out withthe CDBG grant funds and Section 108Loan Guarantee funds and how theseactivities will meet the nationalobjective of principally benefitting lowand moderate income persons bycreating jobs, 51% of which will bemade available to or held by low andmoderate income persons. The narrativestatement should explain how the use ofCDBG grant funds together with Section108 Loan Guarantee funds will meet theselection criteria in section II.C. of thisNOFA, below;

(2) A description of the multiyearplan for CDBG funds, the use of whichwill be limited to paying projectedamounts due on Section 108 guaranteed

loan debt obligations (principal andinterest) over the projected term of theloan that is guaranteed by the Section108 Loan Guarantee. Each applicant’smultiyear plan must discuss the totalamount of the Section 108 LoanGuarantee commitments that will berequested, the term of the Section 108guaranteed loans, a repayment schedulefor the Section 108 guaranteed loansthat clearly identifies the amount andsource of the projected funds, includingthe CDBG funds proposed to be used torepay the Section 108 guaranteed loansover the course of the multiyear plan.The multiyear period may not exceed 20years. The description must list, foreach year of the multiyear period, theprojected amount of CDBG funds thatwill be needed each year to meet theSection 108 debt obligation. The amountof CDBG funds requested for each yearneed not be the same amount; however,the amount requested for each yearshould relate to the anticipated amountsappropriate to meet the CDBG portion ofthe payment on the Section 108guaranteed loans, consistent with themaximum grant amounts specified insection I.B.2. of this NOFA; and

(3) The description of the activities tobe carried out with the CDBG grant andSection 108 Loan Guarantee fundsshould also describe how they willcreate visible change and are part of alarger comprehensive revitalizationeffort, and how they meet the selectioncriteria, including performancemeasures and benchmarks for theseactivities; identify and describe theproject service area; and, as an aid toreviewing the multiyear plan, include adraft business plan with financialprojections for not less than a 5-yearperiod.

In addition to the above, HUDencourages applicants to submit mapsand related information generated bythe community’s consolidated plancomputer software with theirapplications, and depictions ofproposed projects.

d. The narrative statement and theresponse to all of the selection criteriain section II.D. of this NOFA, below,should preferably not exceed thirty (30)8.5′′ by 11′′ typewritten pages.

C. Selection Criteria

All applications will be consideredfor selection based on the followingcriteria. As described in section II.B.2.d.of this NOFA, above, each applicant’sresponse to the narrative statement andall of the selection criteria shouldpreferably not exceed thirty (30) 8.5′′ by11′′ typewritten pages. Each applicationwill receive only one score.

A maximum of 184 points is possibleunder this NOFA, with the maximumpoints for each factor being:Need-absolute number of persons in

poverty ............................................ 22Need-percent of persons in poverty 22Program Impact .................................. 125Outstanding performance-FHEO ....... 15

Total ............................................ 184

Each of the four factors is outlinedbelow. All points for each factor arerounded to the nearest whole number.

1. Need-Absolute Number of Persons inPoverty (Up to 22 Points)

HUD uses 1990 census data todetermine the absolute number ofpersons in poverty residing within theapplicant unit of general localgovernment. Applicants which arecounty governments are rated separatelyfrom all other applicants. Applicants ineach group are compared in terms of thenumber of persons whose incomes arebelow the poverty level. Individualscores are obtained by dividing eachapplicant’s absolute number of personsin poverty by the greatest number ofpersons in poverty of any applicant, andmultiplying by 22.

2. Need-Percent of Persons in Poverty(Up to 22 Points)

HUD uses 1990 census data todetermine the percent of persons inpoverty residing within the applicantunit of general local government.Applicants in each group are comparedin terms of the percentage of theirpopulation below the poverty level.Individual scores are obtained bydividing each applicant’s percentage ofpersons in poverty by the highestpercentage of persons in poverty of anyapplicant, and multiplying by 22.

3. Program Impact (Up to 125 Points)

Within this selection factor, pointswill be awarded as follows:

a. Quality of the Plan (up to 65points).

In reviewing the applicant’s responseto this criterion, HUD will consider thefollowing:

(1) Economic and commercialrevitalization. The extent to which theproposed canal-related economicdevelopment project will contribute tothe physical and economicrevitalization of a waterfront district,and the impact of the project instrengthening the economic health ofthe entire community.

(2) Regional impact. The extent towhich the proposed canal-relatedeconomic development project relates toother waterfront development projectsin the region to create a regional synergywhich contributes to regional economic


growth, including job creation,increased business activity and tourism.

(3) Job creation. The extent to whichthe proposed canal-related economicdevelopment project assisted by therequested CDBG grant, Section 108 LoanGuarantees, and the multiyear CDBGprogram will create jobs, principally forlow- and moderate-income persons.

(4) Innovation and creativity. Theextent to which the applicantincorporated innovation and/orcreativity in the design and proposedimplementation of the activities to becarried out with Section 108/CDBGfunds.

(5) Feasibility of the economicdevelopment proposal. HUD willconsider the feasibility and quality ofthe applicant’s canal-related economicdevelopment proposal for the use ofCDBG funds and Section 108 guaranteedloans to address the applicant’seconomic and community developmentneeds, and the extent to which thecanal-related economic developmentproposal is logically, feasibly, andsubstantially likely to achieve its statedpurpose. In evaluating feasibility, HUDwill also consider the extent to whichthe proposal includes public/privatepartnerships, i.e. the involvement ofgroups such as nonprofit organizations,developers, financial institutions, andothers integral to the implementation ofthe project.

(6) Impact of the project in utilizingthe canal or related waterways toeconomically and physically revitalizethe area.

b. Extent of Need for CDBG Assistanceto Financially Support the Section 108Loans and the Project (up to 20 points).

HUD will use the followinginformation to evaluate this criterion. Inutilizing this information, HUD willconsider the extent to which theapplicant’s response demonstrates thefinancial need for the CDBG grant tosupport financially the loans guaranteedby the Section 108 Loan Guaranteecommitments. Note that if the applicantproposes a generic loan fund to assist acertain category of project or business,the applicant should demonstrate theimpact of the use of the CDBG funds toassist the project and the relationship ofthose funds to the use of Section 108loans. Relevant information mayinclude:

(1) Project costs and financialrequirements;

(2) The amount of any debt service oroperating reserve accounts to beestablished in connection with theeconomic development project;

(3) The reasonableness of the costs ofany credit enhancement paid withCDBG grant funds;

(4) The amount of program income (ifany) to be received each year during therepayment period for the guaranteedloans;

(5) Interest rates on those loans tothird parties (other than subrecipients)(either as an absolute rate or as a plus/minus spread to the Section 108 rate);

(6) Underwriting guidelines used (orexpected to be used) in determiningproject feasibility;

(7) The amount of anticipated ‘‘cashflow’’ the project is projected to generatethat will be available to make debtservice payments on the Section 108guaranteed loans; and

(8) Other relevant information.c. The Extent to Which the Proposal,

Compared to Other Canal-RelatedEconomic Development ProposalsSubmitted Pursuant to this NOFA,Leverages Other Non-Federal Public andPrivate Resources, in Addition to LoanFunds Guaranteed Under the Section108 Loan Guarantee Program (up to 20points).

Leveraged funds include State andlocal public funding and privatefinancing.

d. The Capacity or Potential Capacityof the CDBG applicant and the Section108 Public Entities to Carry Out the PlanSuccessfully (up to 20 points).

This may include factors such as theapplicant’s performance in theadministration of its CDBG, HOME, orother programs; its previous experience,if any, in administering a Section 108Loan Guarantee or CDBG grant; itsperformance and capacity in carryingout economic development projects; itsability to conduct prudent underwriting;its capacity to manage and service loansmade with the guaranteed loan funds orCDBG grant funds; and its capacity tocarry out its projects and programs in atimely manner. The applicant shouldalso describe any recent experience ithas had in carrying out programs similarto the one proposed in the application.

The capacity of subrecipients,nonprofit organizations, and otherentities that have a role in implementingthe proposed program will be includedin this review. HUD may rely oninformation from performance reports,financial status information, monitoringreports, audit reports and otherinformation available to HUD in makingits determination under this criterion.

4. Fair Housing and Equal OpportunityEvaluation (Up to 15 Points)

Documentation for the 15 points forthese items is the responsibility of theapplicant. Claims of outstandingperformance must be based upon actualaccomplishments. Clear, precisedocumentation will be required. Maps

must have a census tract (CT) or blocknumbering area (BNA), and they mustbe in accordance with the 1990 Censusdata. Additionally, maps must identifythe locations of areas with minorities bycensus tract or BNA. If there are nominority areas, applicants must state soon the map. Only population data fromthe 1990 Census will be acceptable forpurposes of this section.

Please note that a ‘‘minority’’ is aperson belonging to, or culturallyidentified as, a member of any one ofthe following racial/ethnic categories:Black, Hispanic, Asian or PacificIslander, and American Indian orAlaskan Native. For the purposes of thissection, the term ‘‘minority’’ does notinclude women as a separate category.

Counties claiming points under thiscriterion must use county-wide statistics(excluding entitlement communities). Inthe case of joint applications, pointswill be awarded based on theperformance of the lead entity only.

The following will be used to judgeoutstanding performance in these areas.Please note that points for outstandingperformance may be claimed under eachcriterion:

a. Housing Achievements (up to 12points total).

(1) Provision of Assisted Housing (upto 6 points).

Providing assisted housing for low-and moderate-income families, locatedin a manner which provides housingchoice in areas outside of minority orlow- and moderate-incomeconcentrations.

Points will be awarded if both of thefollowing criteria are met:

(a) More than one-third of the housingassistance provided by the applicant inthe last five (5) years (excluding Section8 existing and housing assistanceprovided in place) has been in censustracts (CT) or block numbering areas(BNA) having a percentage of minoritypopulation which is less than theminority population in the communityas a whole; and

(b) With regard to the Section 8Existing Housing program, a communitymust show the location (CT or BNA) ofits currently occupied family units byrace/ethnicity. Points will be awarded ifmore than one-half of the minorityassisted families occupy units in areaswhich have a lower percentage ofminority population than that of thecommunity as a whole.

A community with no minoritiesmust show the extent to which itsassisted housing is located outside areasof concentrations of low- and moderate-income persons. In order to receivepoints under this criteria, applicantsshould follow the process outlined in (a)


and (b) above, substituting low- andmoderate-income persons and familiesfor minority persons or families.Applicants addressing the first criterionmust use a map indicating the locationof all assisted housing and a narrativeindicating the number of units and thetype of assisted housing. The map alsomust show the general location of low-and moderate-income households andminority households, giving thenumbers and percentages for both.

To qualify as housing assistanceprovided, the units being claimed mustbe part of a project located outsideminority or lower income concentratedareas which has, at a minimum,received a firm commitment from thefunding agency.

(c) Points also may be awarded forefforts which enable low- and moderate-income persons to remain in theirneighborhood when suchneighborhoods are experiencingrevitalization and substantialdisplacement as a result of privatereinvestment. Applicants requestingpoints under this criterion would notneed to meet the requirements of (a) and(b) in order to receive points. Points willbe awarded if more than one-half of thefamilies displaced were able to remainin their original neighborhood throughthe assistance of the applicant.Applicants must show that:—The neighborhood experienced

revitalization;—The amount of displacement was

substantial;—Displacement was caused by private

reinvestment;—Low- and moderate-income persons

were permitted to remain in theneighborhood as a result of actiontaken by the applicant.If the community is inhabited

predominantly by persons who aremembers of minority and/or low-incomegroups, points will be awarded if thereis a balanced distribution of assistedhousing throughout the community.

(2) Implementation of a Fair HousingAction Plan (up to 6 points).

The applicant must describe how ithas implemented a Fair Housing ActionPlan of its own or participated in aregional or countywide Fair HousingAction Plan. For the purposes of thisNOFA, a Fair Housing Action Plan is adocument that delineates specificactions to address fair housing problemsin the area covered by the applicant.The plan should list Fair Housingactions, set priorities and time periodfor completion and include measuresagainst which performance shall beevaluated, identify resources from local,State, and private agencies and

organizations that have agreed tofinance or support fair housing actions,and define the responsibilities of eachgroup or organization. If the applicant isimplementing a Fair Housing Plan, theapplication must include the plan beingimplemented, the actions taken toimplement the plan, and the actionstaken to address the fair housingproblems. The applicant should providewritten documentation of commitmentsfrom all involved parties.

b. Equal Opportunity Employment (upto 3 points).

Under this factor, the applicant mustdocument that its percentage ofminority permanent full-time employeesis greater than the percentage ofminorities within the county or thecommunity, whichever is higher.Applicants with no full-time employeesmay claim points based on part-timeemployment provided that theydocument that the only permanentemployment is on a part-time basis.

c. Entrepreneurial Efforts and LocalEqual Employment. HUD encouragesthe use of minority contracting,although it will not be used as anevaluation factor in this NOFA.

D. Selection ProcessAll applications will be ranked in

order of points assigned, with theapplications receiving more pointsranking above those receiving fewerpoints. Applications will be funded inrank order.

As discussed in section I.C.5. of thisNOFA, above, HUD reserves the right todetermine a minimum and a maximumamount of any CDBG award or Section108 commitment per applicant,application, or project, the amount ornumber of years for which multiyearCDBG funding is proposed, and tomodify requests accordingly. Inaddition, if HUD determines that anapplication rated, ranked, and fundablecould be funded at a lesser CDBG grantamount than requested, consistent withfeasibility of the funded project oractivities and the purposes of the Act,HUD reserves the right to reduce theamount of the CDBG award and/orincrease or decrease the Section 108Loan Guarantee commitments, ifnecessary, in accordance with suchdetermination.

HUD may decide not to award the fullamount of CDBG grant funds availableunder this NOFA, and may make anyremaining amounts available under afuture NOFA.

To review and rate applications, HUDwill establish a panel consistingpredominantly of HUD employeesassigned to the New York Field Offices.HUD may also include other HUD staff

and persons not currently employed byHUD to obtain certain expertise andoutside points of view, including viewsfrom other Federal agencies.

E. Timing of Grant AwardsTo the extent full Section 108

applications are submitted concurrentlywith the CDBG grant application, HUD’sapproval of the related Section 108 LoanGuarantee commitments will in mostcases be granted contemporaneouslywith CDBG grant approval. However,the CDBG grant may be awarded priorto HUD approval of the Section 108commitments if HUD determines thatsuch award will further the purposes ofthe Act. CDBG funds shall not bedisbursed to the public entity before theissuance of the related Section 108guaranteed obligations.

F. Program AdministrationIn order to be consistent with the

local nature of the program, fundsawarded under this NOFA will beadministered by the New York StateCPD Office.

G. Funding Award ProcessIn accordance with section 102 of the

HUD Reform Act and HUD’s regulationat 24 CFR part 4, HUD will notify thepublic, by notice published in theFederal Register, of all award decisionsmade by HUD under this competition.In accordance with the requirements ofsection 102 of the Reform Act andHUD’s regulations at 24 CFR part 4,HUD also will ensure thatdocumentation and other informationregarding each application submittedunder this Notice of FundingAvailability is sufficient to indicate thebasis upon which assistance wasprovided or denied. Additionally, inaccordance with the Reform Act and theregulations, HUD will make thismaterial available for public inspectionfor a period of five years, beginning notless than 30 calendar days after the dateon which assistance is provided.

III. Technical AssistancePrior to the application deadline, the

New York Offices will provide technicalassistance on request to individualapplicants, including explaining andresponding to questions regardingprogram regulations and the NOFA. Inaddition, HUD will conductinformational meetings around the Stateto discuss the Small Cities program, andwill conduct application workshops inconjunction with these meetings. HUDemployees are prohibited in thesesessions, however, from advisingapplicants how to make substantiveimprovements to their applicants and


from disclosing other covered selectioninformation described at 24 CFR 4.26.Please contact the Buffalo or New YorkOffices for further information regardingthese meetings. In order to ensure thatthe application deadline is met, it isstrongly suggested that applicants beginpreparing their applicationsimmediately and not wait for theinformational meetings.

IV. Corrections to DeficientApplications

Under no circumstances will HUDaccept from the applicant unsolicitedinformation regarding the applicationafter the application deadline haspassed.

HUD may advise applicants oftechnical deficiencies in applicationsand permit them to be corrected. Atechnical deficiency would be an erroror oversight which, if corrected, wouldnot alter, in either a positive or negativefashion, the review and rating of theapplication. Examples of curabletechnical deficiencies would be a failureto submit the proper certifications orfailure to submit an applicationcontaining an original signature by anauthorized official. Situations notconsidered curable would be, forexample, a failure to submit programimpact descriptions.

HUD will notify applicants in writingof any curable technical deficiencies inapplications. Applicants will have 14calendar days from the date of HUD’scorrespondence to reply and correct thedeficiency. If the deficiency is notcorrected within this time period, HUDwill reject the application asincomplete.

Applicants should note that if anabbreviated consolidated plan is notsubmitted, the failure to submit it in atimely manner is not considered acurable deficiency.

V. Findings and Certifications

Paperwork Reduction Act Statement

The information collectionrequirements related to this CDBGprogram have been approved by theOffice of Management and Budget(OMB) in accordance with thePaperwork Reduction Act of 1995 (44U.S.C. 3501–3520), and have beenassigned OMB approval number 2506–0020. An agency may not conduct orsponsor, and a person is not required torespond to a collection of informationunless the collection displays a validcontrol number.

Environmental Impact

In accordance with 24 CFR 50.19(c)(5)of HUD’s regulations (as issued in a

final rule on September 27, 1996 (61 FR50914), this NOFA provides fundingunder, and does not alter environmentalrequirements of, a regulation previouslypublished in the Federal Register.Therefore, this NOFA is categoricallyexcluded from the requirements of theNational Environmental Policy Act. Theenvironmental review provisions of thisregulation are in 24 CFR 570.604.

FederalismThe General Counsel, as the

Designated Official under section 6(a) ofExecutive Order 12612, Federalism, hasdetermined that this NOFA will nothave substantial, direct effects on States,on their political subdivisions, or ontheir relationship with the FederalGovernment, or on the distribution ofpower and responsibilities betweenthem and other levels of government.While the NOFA will provide financialassistance through the Small Citiesprogram to New York State, none of itsprovisions will have an effect on therelationship between the FederalGovernment and New York State, or theState’s political subdivisions.

FamilyThe General Counsel, as the

Designated Official for Executive Order12606, The Family, has determined thatthe policies announced in this NOFAwould not have the potential forsignificant impact on family formation,maintenance, and general well-beingwithin the meaning of the Order. Nosignificant change in existing HUDpolicies and programs will result fromissuance of this NOFA, as those policiesand programs relate to family concerns.

Section 102 of the HUD Reform ActSection 102 of the Department of

Housing and Urban DevelopmentReform Act of 1989 (HUD Reform Act)and the final rule codified at 24 CFRpart 4, subpart A, published on April 1,1996 (61 FR 1448), contain a number ofprovisions that are designed to ensuregreater accountability and integrity inthe provision of certain types ofassistance administered by HUD. OnJanuary 14, 1992, HUD published, at 57FR 1942, a notice that also providesinformation on the implementation ofsection 102. The documentation, publicaccess, and disclosure requirements ofsection 102 are applicable to assistanceawarded under this NOFA as follows:

Documentation and public accessrequirements. HUD will ensure thatdocumentation and other informationregarding each application submittedpursuant to this NOFA are sufficient toindicate the basis upon whichassistance was provided or denied. This

material, including any letters ofsupport, will be made available forpublic inspection for a five-year periodbeginning not less than 30 days after theaward of the assistance. Material will bemade available in accordance with theFreedom of Information Act (5 U.S.C.552) and HUD’s implementingregulations at 24 CFR part 15. Inaddition, HUD will include therecipients of assistance pursuant to thisNOFA in its Federal Register notice ofall recipients of HUD assistanceawarded on a competitive basis.

Disclosures. HUD will make availableto the public for five years all applicantdisclosure reports (HUD Form 2880)submitted in connection with thisNOFA. Update reports (also Form 2880)will be made available along with theapplicant disclosure reports, but in nocase for a period less than three years.All reports—both applicant disclosuresand updates—will be made available inaccordance with the Freedom ofInformation Act (5 U.S.C. 552) andHUD’s implementing regulations at 24CFR part 15.

Section 103 of the HUD Reform ActSection 103 of the Department of

Housing and Urban DevelopmentReform Act of 1989, and HUD’simplementing regulation codified atsubpart B of 24 CFR part 4, applies tothe funding competition announcedtoday. These requirements continue toapply until the announcement of theselection of successful applicants. HUDemployees, including those conductingtechnical assistance sessions orworkshops and those involved in thereview of applications and in themaking of funding decisions, are limitedby section 103 from providing advanceinformation to any person (other than anauthorized employee of HUD)concerning funding decisions, or fromotherwise giving any applicant an unfaircompetitive advantage. Persons whoapply for assistance in this competitionshould confine their inquiries to thesubject areas permitted under section103 and subpart B of 24 CFR part 4.

Applicants who have ethics relatedquestions should contact the HUDEthics Law Division at (202) 708–3815.(This is not a toll-free number.)

Prohibition Against Lobbying ActivitiesThe use of funds awarded under this

NOFA is subject to the disclosurerequirements and prohibitions ofsection 319 of the Department of Interiorand Related Agencies AppropriationsAct for Fiscal Year 1990 (31 U.S.C.1352) and the implementing regulationsat 24 CFR part 87. These authoritiesprohibit recipients of Federal contracts,


grants, or loans from using appropriatedfunds for lobbying the Executive orLegislative Branches of the FederalGovernment in connection with aspecific contract, grant, or loan. Theprohibition also covers the awarding ofcontracts, grants, cooperativeagreements, or loans unless therecipient has made an acceptablecertification regarding lobbying. Under24 CFR part 87, applicants, recipients,and subrecipients of assistanceexceeding $100,000 must certify that noFederal funds have been or will be spenton lobbying activities in connectionwith the assistance.

Dated: November 20, 1998.Joseph A. D’Agosta,Acting General Deputy, Assistant Secretaryfor Community Planning and Development.

Certification Required By Title I of theHousing and Community DevelopmentAct of 1974, as Amended, With Respectto the Community Development BlockGrant Program

In accordance with the Housing andCommunity Development Act of 1974,as amended, the Applicant certifies that:

(a) It possesses legal authority to makea grant submission and to execute acommunity development and housingprogram;

(b) Its governing body has dulyadopted or passed as an official act aresolution, motion or similar actionauthorizing the person identified as theofficial representative of the applicant tosubmit the subject application and allunderstandings and assurancescontained therein, and directing andauthorizing the person identified as theofficial representative of the applicant toact in connection with the submissionof the application and to provide suchadditional information as may berequired;

(c) Prior to submission of itsapplication to HUD, the applicant hasmet the citizen participationrequirements of 24 CFR 570.431;

(d) It is following a detailed citizenparticipation plan which:

(1) Provides for and encouragescitizen participation, with particularemphasis on participation by persons oflow and moderate income who areresidents of slum and blighted areas inwhich funds are proposed to be used,and provides for participation ofresidents in low and moderate incomeneighborhoods as defined by the localjurisdiction;

(2) Provides citizens with reasonableand timely access to local meetings,information, and records relating to theapplicant’s proposed use of funds, asrequired by the regulations of the

Secretary, and relating to the actual useof funds under the Act;

(3) Provides for technical assistance togroups representative of persons of lowand moderate income that request suchassistance in developing proposals withthe level and type of assistance to bedetermined by the applicant;

(4) Provides for public hearings toobtain citizen views and to respond toproposals and questions at all stages ofthe community development program,including at least the development ofneeds, the review of proposed activities,and review of program performance,which hearings shall be held afteradequate notice, at times and locationsconvenient to potential or actualbeneficiaries, and with accommodationfor the handicapped;

(5) Provides for a timely writtenanswer to written complaints andgrievances, within 15 working dayswhere practicable; and

(6) Identifies how the needs of non-English speaking residents will be metin the case of public hearings where asignificant number of non-Englishspeaking residents can be reasonablyexpected to participate;

(e) The grant will be conducted andadministered in compliance with:

(1) Title VI of the Civil Rights Act of1964 (Public Law 88–352, 42 U.S.C.2000d et seq.); and

(2) The Fair Housing Act (42 U.S.C.3601–20);

(f) It will affirmatively further fairhousing;

(g) It has developed its application soas to give maximum feasible priority toactivities which benefit low andmoderate income families or aid in theprevention or elimination of slums orblight; the application may also includeactivities which the applicant certifiesare designed to meet other communitydevelopment needs having a particularurgency because existing conditionspose a serious and immediate threat tothe health or welfare of the community,and where other financial resources arenot available to meet such needs; exceptthat the grant shall principally benefitpersons of low and moderate income ina manner that ensures that not less than70 percent of such funds are used foractivities that benefit such persons;

(h) It has developed a communitydevelopment plan for the grant periodwhich identifies communitydevelopment and housing needs andspecifies both short and long termcommunity development objectives thathave been developed in accordancewith the primary objective andrequirements of the Act;

(i) Any proposed housing activitiesare consistent with its abbreviated

consolidated plan submitted or beingsubmitted to HUD for approval pursuantto 24 CFR 570.420(d) and 24 CFR91.235.

(j) It will not attempt to recover anycapital costs of public improvementsassisted in whole or in part with fundsprovided under section 106 of the Actor with amounts resulting from aguarantee under section 108 of the Actby assessing any amount againstproperties owned and occupied bypersons of low and moderate income,including any fee charged or assessmentmade as a condition of obtaining accessto such public improvements, unless:

(1) Funds received under section 106of the Act are used to pay the proportionof such fee or assessment that relates tothe capital costs of such publicimprovements that are financed fromrevenue sources other than under TitleI of the Act; or

(2) For purposes of assessing anyamount against properties owned andoccupied by persons of moderateincome, the applicant certifies to theSecretary that it lacks sufficient fundsreceived under section 106 of the Act tocomply with the requirements ofsubparagraph (1) above;

(k) Its notification, inspection, testingand abatement procedures concerninglead-based paint will comply with 24CFR 570.608;

(l) It will comply with the acquisitionand relocation requirements of theUniform Relocation Assistance and RealProperty Acquisition Policies Act of1970, as amended, as required under 24CFR 570.606(b) and Federalimplementing regulations; and therequirements in 24 CFR 570.606(c)governing the residential anti-displacement and relocation assistanceplan under section 104(d) of the Act(including a certification that theapplicant is following such a plan); andthe relocation requirements of 24 CFR570.606(d) governing optionalrelocation assistance under section105(a)(11) of the Act;

(m) It has adopted and is enforcing:(1) A policy prohibiting the use of

excessive force by law enforcementagencies within its jurisdiction againstany individuals engaged in nonviolentcivil rights demonstrations; and

2. A policy of enforcing applicableState and local laws against physicallybarring entrance to or exit from a facilityor location which is the subject of suchnonviolent civil rights demonstrationswithin its jurisdiction;

(n) To the best of its knowledge andbelief:

(1) No Federal appropriated fundshave been paid or will be paid, by or onbehalf of it, to any person for


influencing or attempting to influencean officer or employee of any agency, aMember of Congress, an officer oremployee of Congress, or an employeeof a Member of Congress in connectionwith the awarding of any Federalcontract, the making of any Federalgrant, the making of any Federal loan,the entering into of any cooperativeagreement, and the extension,continuation, renewal, amendment, ormodification of any Federal contract,grant, loan, or cooperative agreement;

(2) If any funds other than Federalappropriated funds have been paid orwill be paid to any person forinfluencing or attempting to influencean officer or employee of any agency, aMember of Congress, an officer oremployee of Congress, or an employeeof a Member of Congress in connectionwith this Federal contract, grant, loan,or cooperative agreement, it willcomplete and submit Standard Form-LLL, ‘‘Disclosure Form to ReportLobbying,’’ in accordance with itsinstructions; and

(3) It will require that the language ofparagraph (n) of this certification beincluded in the award documents for allsubawards at all tiers (includingsubcontracts, subgrants, and contractsunder grants, loans, and cooperativeagreements) and that all subrecipientsshall certify and disclose accordingly;

(o) It will or will continue to providea drug-free workplace by:

(1) Publishing a statement notifyingemployees that the unlawfulmanufacture, distribution, dispensing,possession, or use of a controlledsubstance is prohibited in theapplicant’s workplace and specifyingthe actions that will be taken againstemployees for violation of suchprohibition;

(2) Establishing an ongoing drug-freeawareness program to inform employeesabout—

(a) The dangers of drug abuse in theworkplace;

(b) The applicant’s policy ofmaintaining a drug-free workplace;

(c) Any available drug counseling,rehabilitation, and employee assistanceprograms; and

(d) The penalties that may be imposedupon employees for drug abuseviolations occurring in the workplace;

(3) Making it a requirement that eachemployee to be engaged in theperformance of the grant be given a copyof the statement required by paragraph(1);

(4) Notifying the employee in thestatement required by paragraph (1)that, as a condition of employmentunder the grant, the employee will—

(a) Abide by the terms of thestatement; and

(b) Notify the employer in writing ofhis or her conviction for a violation ofa criminal drug statute occurring in theworkplace no later than five calendardays after such conviction;

(5) Notifying the agency in writing,within ten calendar days after receivingnotice under subparagraph (4)(b) froman employee or otherwise receivingactual notice of such conviction.Employers of convicted employees mustprovide notice, including position title,to every grant officer or other designeeon whose grant activity the convictedemployee was working, unless theFederal agency has designated a centralpoint for the receipt of such notices.Notice shall include the identificationnumber(s) of each affected grant;

(6) Taking one of the followingactions, within 30 calendar days ofreceiving notice under subparagraph(4)(b), with respect to any employeewho is so convicted—

(a) Taking appropriate personnelaction against such an employee, up toand including termination, consistentwith the requirements of theRehabilitation Act of 1973, as amended;or

(b) Requiring such employee toparticipate satisfactorily in a drug abuseassistance or rehabilitation programapproved for such purposes by aFederal, State, or local health, lawenforcement, or other appropriateagency;

(7) Making a good faith effort tocontinue to maintain a drug-freeworkplace through implementation ofparagraphs (1), (2), (3), (4), (5) and (6).

(8) The applicant may insert in thespace provided below the site(s) for theperformance of work done inconnection with the specific grant:

Place of Performance (Street address,city, county, state, zip code)lllllllllllllllllllll

lllllllllllllllllllll



Check XX if there are workplaces onfile that are not identified here; and

(p) It will comply with the otherprovisions of the Act and with otherapplicable laws.lllllllllllllllllllll

Signature


Title


Date

Appendix to CDBG Certifications

Instructions Concerning Lobbying and Drug-Free Workplace RequirementsA. Lobbying Certification

This certification is a materialrepresentation of fact upon which reliancewas placed when this transaction was madeor entered into. Submission of thiscertification is a prerequisite for making orentering into this transaction imposed bysection 1352, title 31, U.S. Code. Any personwho fails to file the required certificationshall be subject to a civil penalty of not lessthan $10,000 and not more than $100,000 foreach such failure.

B. Drug-Free Workplace Certification

1. By signing and/or submitting thisapplication or grant agreement, the applicantis providing the certification set out inparagraph (o).

2. The certification set out in paragraph (o)is a material representation of fact uponwhich reliance is placed when the agencyawards the grant. If it is later determined thatthe applicant knowingly rendered a falsecertification, or otherwise violates therequirements of the Drug-Free WorkplaceAct, HUD, in addition to any other remediesavailable to the Federal Government, maytake action authorized under the Drug-FreeWorkplace Act.

3. For applicants other than individuals,Alternate I applies. (This is the informationto which applicants certify).

4. For applicants who are individuals,Alternate II applies. (Not applicable to CDBGapplicants.)

5. Workplaces under grants, for applicantsother than individuals, need not be identifiedon the certification. If known, they may beidentified in the grant application. If theapplicant does not identify the workplaces atthe time of application, or upon award, ifthere is no application, the applicant mustkeep the identity of the workplace(s) on filein its office and make the informationavailable for Federal inspection. Failure toidentify all known workplaces constitutes aviolation of the applicant’s drug-freeworkplace requirements.

6. Workplace identifications must includethe actual address of buildings (or parts ofbuildings) or other sites where work underthe grant takes place. Categorical descriptionsmay be used (e.g., all vehicles of a masstransit authority or State highway departmentwhile in operation, State employees in eachlocal unemployment office, performers inconcert halls or radio stations).

7. If the workplace identified to the agencychanges during the performance of the grant,the applicant shall inform the agency of thechange(s), if it previously identified theworkplaces in question (see paragraph five).

8. Definitions of terms in theNonprocurement Suspension and Debarmentcommon rule and Drug-Free Workplacecommon rule apply to this certification.Applicants’ attention is called, in particular,to the following definitions from these rules:

‘‘Controlled substance’’ means a controlledsubstance in Schedules I through V of theControlled Substances Act (21 U.S.C. 812)and as further defined by regulation (21 CFR1308.11 through 1308.15);


‘‘Conviction’’ means a finding of guilt(including a plea of nolo contendere) orimposition of sentence, or both, by anyjudicial body charged with the responsibilityto determine violations of the Federal orState criminal drug statutes;

‘‘Criminal drug statute’’ means a Federal ornon-Federal criminal statute involving themanufacture, distribution, dispensing, use, orpossession of any controlled substance;

‘‘Employee’’ means the employee of aapplicant directly engaged in theperformance of work under a grant,including: (i) All ‘‘direct charge’’ employees;(ii) all ‘‘indirect charge’’ employees unlesstheir impact or involvement is insignificantto the performance of the grant; and (iii)temporary personnel and consultants whoare directly engaged in the performance ofwork under the grant and who are not on the

applicant’s payroll. This definition does notinclude workers not on the payroll of theapplicant (e.g., volunteers, even if used tomeet a matching requirement; consultants orindependent contractors not on theapplicant’s payroll; or employees ofsubrecipients or subcontractors in coveredworkplaces).



[FR Doc. 98–31515 Filed 11–20–98; 1:30 pm]BILLING CODE 4210–29–C

fede

ral r

egiste

r

65485


Part VI

Department ofHousing and UrbanDevelopmentFunding Availability for the HUD-Administered Small Cities CommunityDevelopment Block Grant Program andthe Section 108 Loan Guarantee Programfor Small Communities in New YorkState; Notice

65486 Federal Register / Vol. 63, No. 227 / Wednesday, 25, 1998 / Notices

DEPARTMENT OF HOUSING ANDURBAN DEVELOPMENT

[Docket No. FR–4424–N–01]

Notice of Funding Availability for: theHUD-Administered Small CitiesCommunity Development Block Grant(CDBG) Program—Fiscal Year 1999;and the Section 108 Loan GuaranteeProgram for Small Communities inNew York State

AGENCY: Office of the AssistantSecretary for Community Planning andDevelopment, HUD.ACTION: Notice of Funding Availabilityfor Fiscal Year 1999.

SUMMARY: This Notice of FundingAvailability (NOFA) announces: (1) theavailability of approximately$54,558,000 in Fiscal Year (FY) 1999funding for the HUD-administeredSmall Cities Program in New York Stateunder the Community DevelopmentBlock Grant (CDBG) Program($1,000,000 of this amount has been setaside for the Canal Corridor Initiativewhich is being announced elsewhere inthis Federal Register); and (2) theavailability of a maximum ofapproximately $200,000,000—$250,000,000 in FY 1999 funding underthe Section 108 Loan Guaranteeprogram for small cities in New YorkState. Amounts available under theSection 108 Loan Guarantee program arenot awarded competitively and are notrated under the criteria of this NOFA.Grants awarded under this NOFA foractivities and projects for which Section108 assistance will also be needed,however, will be conditioned uponapproval of the requisite Section 108application within a stated time.

The exact amount of funds that willbe available from the approximately$53,558,000 of FY 1999 funds thatcommunities will be able to compete forunder this NOFA is not known at thistime. In FY 1997 HUD carried out theCanal Corridor Initiative (see the NOFAfor this initiative in the Federal Registeron December 3, 1996 (61 FR 64196) andthe amendment published in theFederal Register on December 12, 1996(61 FR 66692)). Pursuant to that NOFA,HUD approved Canal Corridorapplications for approximately $6.5million in Fiscal Year 1997 New YorkSmall Cities funds. HUD must also beprepared, pursuant to 24 CFR 570.432,to use CDBG funds each year, asnecessary, for the sole purpose of payingany amounts due on debt obligations,for up to 20 years, issued by units ofgeneral local government (or theirdesignated public agencies) andguaranteed by the Secretary pursuant to

section 108 of the Housing andCommunity Development Act of 1974,as amended, for projects approvedunder the Canal Corridor InitiativeNOFA. At this time, the exact amountof CDBG funds that will be needed tomeet required debt obligation paymentsduring Fiscal Year 1999 is not known.However, in the December 3, 1996NOFA, HUD estimated that the averageamount of CDBG funds required to meetthe debt obligation payments would notexceed an average of $3 million per yearover a 20-year period.

The funds announced in this NOFAprovide small communities andcounties in New York State with anopportunity to propose programs thatfocus on creating or expanding jobopportunities, addressing housingneeds, or meeting local public facilitiesneeds. HUD encourages communities topropose programs that are creative andinnovative in addressing the needs oftheir community. A community maypropose a program that is ‘‘singlepurpose’’ in nature addressing a specificarea of need. The maximum amount fora Single Purpose grant is $400,000($600,000 for counties).DATES: Applications are due byFebruary 8, 1999. Application kits maybe obtained from and must be submittedto either HUD’s New York or BuffaloOffice. (The addresses for these officesare provided in Section II. of thisNOFA.) In addition, application kits andadditional information are available onHUD’s website located at: www.hud.govor by contacting CommunityConnections at (800) 998–9999.

Applications, if mailed, must bepostmarked no later than midnight onFebruary 8, 1999 and received within 10calendar days of the deadline. If anapplication is hand-delivered to theNew York or the Buffalo Office, theapplication must be delivered to theappropriate office by no later than 4:00p.m. (local time) on February 8, 1999.

Application kits will be madeavailable by a date that affordsapplicants no fewer than 45 days torespond to this NOFA. For furtherinformation on obtaining andsubmitting applications, please seeSection II. of this NOFA.

The above-stated application deadlineis firm as to date and hour. In theinterest of fairness to all competingapplicants, HUD will treat as ineligiblefor consideration any application that isnot received by 4:00 p.m. on, orpostmarked by, February 8, 1999.Applicants should take this procedureinto account and make early submissionof their materials to avoid any risk ofloss of eligibility brought about by

unanticipated delays or other delivery-related problems.FOR FURTHER INFORMATION CONTACT:Yvette Aidara, State and Small CitiesDivision, Office of Community Planningand Development, Department ofHousing and Urban Development, Room7184, 451 Seventh Street SW,Washington, DC 20410; telephone (202)708–1322 (this is not a toll-freenumber). Hearing or speech-impairedindividuals may access this number viaTTY by calling the toll-free FederalInformation Relay Service at 1–800–877–8339.SUPPLEMENTARY INFORMATION:

ContentsI. Purpose and Substantive Description

A. Authority and Background1. Authority2. Background3. Other Program Requirementsa. Abbreviated Consolidated Planb. Section 34. Accountability in the Provision of HUD

Assistancea. HUD Responsibilities(1) Documentation and Public Access(2) Disclosuresb. Units of Local Government

ResponsibilitiesB. Allocation Amounts1. Total Available Funding2. Imminent ThreatsC. Eligibility1. Eligible Applicants2. Previous Grantees3. Eligible Activities and National

Objectives4. Anti-pirating provision5. Environmental Review RequirementsD. Grants1. General2. Grant Limits and Funding Requirements3. Applications with Multiple ProjectsE. Selection Criteria/Ranking Factors and

Final Selection1. General2. Performance Evaluationa. Community Development Activitiesb. Compliance with Applicable Laws and

Regulationsc. Performance Assessment Reports3. Five Factor Ratinga. Need—Absolute Number of Persons in

Povertyb. Need—Percent of Persons in Povertyc. Program Impact(1) Program Impact—Housing(a) Housing Rehabilitation(b) Creation of New Housing(c) Direct Homeownership Assistance(2) Program Impact—Public Facilities

Affecting Public Health and Safety(3) Program Impact—Economic

Development(a) Scoring(b) The Appropriate Determination(c) CDBG Assistance Must Minimize

Business and Job Displacement(d) Section 105(a)(17) Requirements(e) National Objectives(f) Application Requirements

65487Federal Register / Vol. 63, No. 227 / Wednesday, 25, 1998 / Notices

d. Fair Housing and Equal OpportunityEvaluation

(1) Housing Achievements(a) Provision of Fair Housing Choice(b) Implementation of a Fair Housing

Strategy that Affirmatively Furthers FairHousing

(2) Entrepreneurial Efforts and Local EqualOpportunity Performance

(3) Equal Opportunity Employmente. Welfare to Work Initiative4. Final Selection

II. Application and Funding Award ProcessA. Obtaining ApplicationsB. Submitting ApplicationsC. The Application1. Application Requirements2. Streamlined Application Requirements

for Certain ApplicantsD. Funding Award Process

III. Technical AssistanceIV. Checklist of Application Submission

RequirementsV. Corrections to Deficient ApplicationsVI. Findings and Certifications

I. Purpose and Substantive Description

A. Authority and Background

1. Authority

Title I, Housing and CommunityDevelopment Act of 1974 (42 U.S.C.5301–5320) (1974 HCD Act); 24 CFRpart 570, subpart F, for the New YorkState Small Cities program, and subpartM for the Section 108 Loan Guaranteeprogram.

2. Background

Title I of the 1974 HCD Act authorizesthe Community Development BlockGrant (CDBG) Program. Section 106(d)of Title I permits States, in such mannerand at such time as the Secretary shallprescribe, to elect to assume theadministrative responsibility for theCDBG Program for nonentitled areaswithin their jurisdiction. Section 106provides that HUD will administer theCDBG Program for nonentitled areaswithin any State that does not elect toassume the administrative responsibilityfor the program. HUD’s regulations at 24CFR part 570, subpart F describe therequirements for HUD’s administrationof the CDBG Program in nonentitledareas (Small Cities Program). ThisNOFA supplements subpart F of 24 CFRpart 570.

In accordance with 24 CFR570.421(b), and with the requirementsof section 102 of the Housing and UrbanDevelopment Reform Act of 1989 (HUDReform Act), HUD is issuing this NOFAfor New York State’s Small CitiesProgram for FY 1999. This NOFAannounces the allocation of funds for aSingle Purpose grant competition, andestablishes the deadline for filing grantapplications. The NOFA explains howHUD will apply the regulatory threshold

requirements for funding eligibility, andthe selection criteria for rating andscoring applications for Single Purposegrants.

Other information about the SmallCities Program will be provided in theapplication kit, which will be madeavailable to applicants by HUD’s NewYork Office and Buffalo Office (seeSection II. of this NOFA). In addition,application kits and additionalinformation are available on HUD’swebsite located at: www.hud.gov or bycontacting Community Connections at(800) 998–9999.

3. Other Program Requirementsa. Abbreviated Consolidated Plan.

Each jurisdiction that applies for fundsunder this NOFA must have submitteda consolidated plan, as provided in 24CFR part 91. An applicant for more thanone grant under this NOFA or for theCanal Corridor Initiative NOFApublished else where in this FederalRegister need submit only oneconsolidated plan or abbreviatedconsolidated plan, as applicable,covering the activities proposed in allapplications. A jurisdiction that doesnot expect to be a participatingjurisdiction in the HOME programunder 24 CFR part 92 may submit anabbreviated consolidated plan that isappropriate to the types and amounts ofassistance sought from HUD (see 24 CFR91.235). Any applicant that plans toundertake a housing activity with fundsunder this NOFA needs to prepare andsubmit, at a minimum, an abbreviatedconsolidated plan that is appropriate tothe types and amounts of housingassistance sought under this NOFA.

Even if the community’s Small Citiesapplication is approved, HUD must alsoapprove an abbreviated consolidatedplan that covers activities proposed insuch application(s) before thecommunity may receive Small Citiesfunding. Further, that applicant mustalso include a certification that thehousing activities in its CDBG SmallCities application are consistent withthe consolidated plan. The applicant’sconsolidated plan must describe thejurisdiction’s priority nonhousingcommunity development needs eligiblefor assistance under the CDBG programby eligibility category, reflecting theneeds of families for each type ofactivity, as appropriate, in terms ofdollar amounts estimated to meet thepriority need for the type of activity (see24 CFR 91.235(c)(2)).

The abbreviated consolidated plan issubject to the same citizen participationrequirements as is the jurisdiction’sSmall Cities CDBG application. Bothmust meet the citizen participation

requirements before they may besubmitted to HUD (see 24 CFR 570.431).A Section 108 Loan Guaranteeapplication would also have to meetcitizen participation requirements, asdescribed in 24 CFR 570.704, if thejurisdiction submits one to HUD forconsideration.

If possible, an applicant shouldsubmit the abbreviated consolidatedplan in advance of the Small Citiesapplication due date. The latest time atwhich the abbreviated consolidatedplan will be accepted by HUD for theHUD-administered Small Cities Programin New York will be February 8, 1999(the application due date for the SmallCities application). Failure to submit theabbreviated consolidated plan by thedue date is not a curable technicaldeficiency. Questions regarding theabbreviated consolidated plan should bedirected to the appropriate HUD fieldoffice.

Any application that is fundable butdoes not have an approved consolidatedplan will receive a conditional approvalsubject to HUD’s approval of theabbreviated consolidated plan. If HUD isunable to approve the abbreviatedconsolidated plan within a reasonableperiod of time (but not more than 60days from the date that the conditionalapproval is announced), HUD willrescind the award. In such event thefunding will be awarded to the highestrated fundable applicant that did notreceive funding under this competition.

b. Section 3. Assistance providedunder this NOFA is subject to therequirements of section 3 of the Housingand Urban Development Act of 1968 (12U.S.C. 1701u), and HUD’s implementingregulations in 24 CFR part 135. One ofthe purposes of this NOFA, which isconsistent with section 3, is to give, tothe greatest extent feasible andconsistent with Federal, State, and locallaws and regulations, job training,employment and other contractingopportunities generated from certainHUD financial assistance to low- andvery low-income persons. Publicentities awarded funds under thisNOFA that intend to use the funds forhousing rehabilitation, housingconstruction, or other publicconstruction must comply with theapplicable requirements set forth in 24CFR part 135.

4. Accountability in the Provision ofHUD Assistance: Documentation andPublic Access Requirements; Applicant/Recipient Disclosures

Section 102 of the Department ofHousing and Urban DevelopmentReform Act of 1989 (42 U.S.C. 3545)(HUD Reform Act) and the regulations


codified in 24 CFR part 4, subpart A,contain a number of provisions that aredesigned to ensure greateraccountability and integrity in theprovision of certain types of assistanceadministered by HUD. On January 14,1992 (57 FR 1942), HUD published anotice that also provides information onthe implementation of section 102. Thedocumentation, public access, anddisclosure requirements of section 102are applicable to assistance awardedunder this NOFA as follows:

a. HUD Responsibilities.(1) Documentation and Public Access.

HUD will ensure that documentationand other information regarding eachapplication submitted pursuant to thisNOFA are sufficient to indicate the basisupon which assistance was provided ordenied. This material, including anyletters of support, will be madeavailable for public inspection for a 5-year period beginning not less than 30days after the award of the assistance.Material will be made available inaccordance with the Freedom ofInformation Act (5 U.S.C. 552) andHUD’s implementing regulations at 24CFR part 15. In addition, HUD willinclude the recipients of assistancepursuant to this NOFA in its FederalRegister notice of all recipients of HUDassistance awarded on a competitivebasis.

(2) Disclosures. HUD will makeavailable to the public for 5 years allapplicant disclosure reports (HUD Form2880) submitted in connection with thisNOFA. Update reports (also Form 2880)will be made available along with theapplicant disclosure reports, but in nocase for a period less than 3 years. Allreports—both applicant disclosures andupdates—will be made available inaccordance with the Freedom ofInformation Act (5 U.S.C. 552) andHUD’s implementing regulations at 24CFR part 15.

b. Units of General Local GovernmentResponsibilities.

Units of general local governmentawarded assistance under this NOFAmust ensure that documentation andother information regarding eachapplication submitted to the recipientby a subsequent recipient applicant areadequate to indicate the basis uponwhich assistance was provided ordenied. The unit of general localgovernment must make this material,including any letters of support,available for public inspection for a 5-year period beginning not less than 30days after the award of the assistance.Unit of general local governmentrecipients must also notify the public ofthe subsequent recipients of theassistance. Each recipient will develop

documentation, public access, andnotification procedures for its programs.

B. Allocation Amounts

1. Total Available Funding

The nonentitlement CDBG funds forNew York State for FY 1999 totalapproximately $54,558,000. The exactamount of funds available for this SmallCities CDBG funding competition is notknown at this time. In FY 1997 HUDcarried out the Canal Corridor Initiative(see the NOFA for this initiative in theFederal Register on December 3, 1996(61 FR 64196) and as amended onDecember 18, 1996 (61 FR 66692)). HUDmust be prepared, pursuant to 24 CFR570.432, to use CDBG funds each year,as necessary, for the sole purpose ofpaying any amounts due on debtobligations, for up to 20 years, issued byunits of general local government (ortheir designated public agencies) andguaranteed by the Secretary pursuant tosection 108 of the Housing andCommunity Development Act of 1974,as amended, for projects approvedunder the Canal Corridor InitiativeNOFA. HUD approved approximately$6.55 million in FY 1997 Small Citiesfunds for Canal Corridor grants.However, at this time, the exact amountof CDBG funds that will be needed tomeet required debt obligation paymentsduring Fiscal Year 1999 is not known.Of the approximately $53,558,000available under this NOFA,approximately $47,024,000 is allocatedfor distribution to eligible units ofgeneral local government within thejurisdiction of HUD’s New York BuffaloField Office. Approximately $6,534,000is allocated for distribution to eligibleunits of general local government withinthe jurisdiction of HUD’s New YorkOffice. Once HUD has determined thefinal amount of funds available forcompetitive distribution under thisNOFA, HUD will allocate such funds inthe same ratio as above to HUD’s Buffaloand New York Offices. However, HUDhas the option to revise these finalallocations between offices by up to$400,000 in order to assure fulldistribution of funds. Finally, HUDreserves the right, in its sole discretion,not to award all of the funds availableunder this NOFA and to make any suchfunds available in a future NOFA, if aninsufficient number of applications aredetermined fundable under this NOFA.

2. Imminent Threats

All imminent threat projects mustmeet the national objective ofbenefitting low- and moderate-incomepersons. HUD may elect to set aside upto 15 percent of the FY 1999 allocations

for imminent threat projects. Thesefunds will be available until the ratingand ranking process for fundsdistributed under this NOFA iscompleted.

C. Eligibility

1. Eligible Applicants

Eligible applicants are units of generallocal government in New York State,excluding: (1) metropolitan cities; (2)urban counties; (3) units of governmentwhich are participating in urbancounties or metropolitan cities even ifonly part of the participating unit ofgovernment is located in the urbancounty or metropolitan city; and (4)Indian tribes (as defined in section102(a)(17) of the 1974 HCD Act).Applications may be submittedindividually, or jointly, as described in24 CFR 570.422.

2. Previous Grantees

Eligible applicants that previouslyhave been awarded Small CitiesProgram CDBG grants are also subject toan evaluation of capacity andperformance (see generally, sectionI.E.2. of this NOFA). Numericalthresholds for drawdown of funds havebeen established to assist HUD inevaluating a grantee’s progress inimplementing its program activities.(These standards apply to all CDBGProgram grants received by thecommunity.) In FY 1996 an additionalthreshold was established which relatesto the submission of annualPerformance Assessment Reports(PARs). A PAR was due on October 31,1998, for each grant which a localgovernment received prior to April 1,1997. Failure to submit a PAR is not acurable technical deficiency.

Applicants generally will bedetermined to have performedadequately in the area(s) where thethresholds are met. Where a thresholdhas not been met, HUD will evaluate thedocumentation of any mitigating factors,particularly with respect to actionstaken by the applicant to accelerate theimplementation of its programactivities.

3. Eligible Activities and NationalObjectives

Eligible activities under the SmallCities CDBG Program are thoseidentified in subpart C of 24 CFR part570. With respect to the Section 108Loan Guarantee program, eligibleactivities are identified in § 570.703.Note that § 570.703 does not include allCDBG-eligible activities. Each activityunder both programs must meet one ofthe national objectives (i.e., benefit to


low- and moderate-income persons,elimination of slums or blightingconditions, or meeting imminent threatsto the health and safety of thecommunity; see § 570.208), and eachgrant and use of Section 108 LoanGuarantee proceeds must meet therequirements for compliance with theprimary objective of principallybenefitting low- and moderate-incomepersons, as required under § 570.420(e).The CDBG program requires that notless than 70 percent of the total of grantfunds from a grant made under thisNOFA and Section 108 Loan Guaranteefunds received within a fiscal year mustbe expended for activities that benefitlow- and moderate-income personsunder the criteria of 24 CFR§ 570.208(a). The method of calculatingthe use of these funds for compliancewith the 70 percent overall benefitrequirement is set forth in § 570.420(e).In general, all applications mustdescribe the projects and activitiesproposed in sufficient detail thatcompliance with these and otherapplicable statutory, regulatory, andNOFA provisions can be determined.

4. Anti-pirating Prohibition

Section 588 of the Quality Housingand Work Responsibility Act of 1998,P.L. 105–276, amended section 105(h) ofthe Housing and CommunityDevelopment Act of 1974 as follows:

‘‘(h) PROHIBITION ON USE OFASSISTANCE FOR EMPLOYMENTRELOCATION ACTIVITIES. Notwithstandingany other provision of law, no amount froma grant under section 106 made in fiscal year1999 or any succeeding fiscal year may beused to assist directly in the relocation of anyindustrial or commercial plant, facility, oroperation, from 1 area to another area, if therelocation is likely to result in a significantloss of employment in the labor market areafrom which the relocation occurs.’’

Accordingly, HUD will not award anygrant for any project that would violatethis prohibition.

5. Environmental Review Requirement

The HUD environmental reviewprocedures contained in 24 CFR part 58apply to this program. Under part 58,grantees assume all of theresponsibilities for environmentalreview, decisionmaking and actionpursuant to the National EnvironmentalPolicy Act of 1969 (42 U.S.C. 4321 etseq.) and the other provisions of lawspecified by the Secretary in 24 CFRpart 58 that would apply to theSecretary were he to undertake suchprojects as Federal projects.

D. Grants

1. Single Purpose Grants1. General. HUD will fund only Single

Purpose grants which are designed toaddress and resolve a specificcommunity development need. A SinglePurpose grant may consist of more thanone project. A project may consist ofone activity or a set of activities. Eachproject must address communitydevelopment needs in one of thefollowing problem areas:

• Housing• Public Facilities• Economic Development.Each project will be rated against all

other projects addressing the sameproblem area, according to the criteriaoutlined below. It should be noted thateach project within an application willbe given a separate impact rating, if eachone is clearly designated by theapplicant as a separate and distinctproject (i.e., separate Needs Description,Community Development Activities,Impact Description and ProgramSchedule forms have been filled out,indicating project names). In somecases, it may be to the applicant’sadvantage to designate separate projectsfor activities that can ‘‘stand on theirown’’ in terms of meeting the describedneed, especially where a particularproject would tend to weaken theimpact rating of the other activities, ifthey were rated as a whole, as has beenthe case with some economicdevelopment and housing projects. If,however, the projects tend to meetimpact criteria to the same extent, or theweaker element is only a small portionof the overall project, there is nodiscernable benefit in designatingseparate projects.

2. Grant Limits and FundingRequirements

The maximum annual grant for aSingle Purpose grant is $400,000, exceptthat counties may apply for up to$600,000 in Single Purpose funds, if theproject will be carried out in more thanone community. If other sources offunds are to be used with respect to aproject, the source of those funds mustbe identified and the level ofcommitment indicated. With respect togrant limits for joint applicants, themaximum amount that may be awardedpursuant to a joint application is themaximum single grant limit establishedabove for communities and countiesmultiplied by the number ofparticipants in the cooperationagreement, provided that for purposes ofdetermining such a multiple grant limit,and in order to receive that amount, aparticipating joint applicant must

receive a substantial direct benefit fromthe activities proposed in theapplication and must not be actingsolely on behalf of or in conjunctionwith another jurisdiction for the solepurpose of raising the maximum grantamount that may be awarded. Inaddition, the statistics of eachparticipant counted for maximum grantlimits purposes shall also be used forpurposes of the selection factors undersection I.E.3. of this NOFA.

3. Applications with Multiple Projects

If an application contains more thanone project, each project will be ratedseparately for program impact.Applicants should note that regardlessof the number of projects, the total grantamount cannot exceed the limitsidentified in section I.D.2. of this NOFA.

E. Selection Criteria/Ranking Factorsand Final Selection

1. General

Complete applications received fromeligible applicants by February 8, 1999will be rated and scored by HUD.Applications are rated and scoredagainst five factors. These five factorsare discussed in more detail in sectionI.E.3. of this NOFA. Note that when anapplicant proposes to use Section 108Loan Guarantee assistance as a partialfunding resource for a proposed projectunder this NOFA, HUD, when applyingthe rating factors to such projects, willconsider the applicant’s description ofthe Section 108 assisted project inarriving at the score for a particularfactor. An applicant may have anapproved 108 Loan Guaranteeapplication, submit a full Section 108Loan Guarantee application or provide adescription of the Section 108 LoanGuarantee application. (The descriptionmust be specific as to the amount of theSection 108 Loan Guaranteecommitment that the applicant willrequest and the purpose for which the108 Loan Guarantee proceeds will beused. See section II.C.1. of this NOFAfor more information on this subject.)However, any such CDBG applicationunder this NOFA that is fundable andrelies upon Section 108 Loan Guaranteeassistance to partially carry out theactivities and does not have anapproved Section 108 Loan Guaranteecommitment will receive a conditionalapproval. If the applicant does notsubmit and HUD does not approve therequired Section 108 Loan Guaranteeapplication within a reasonable periodof time (see section II.C.1.(f)(2) of thisNOFA), HUD may rescind the award. Insuch event the funding will be awardedto the highest rated fundable applicant


that did not receive funding under thiscompetition.

2. Performance Evaluation

As noted in section I.C. of this NOFA,previous recipients of Small CitiesProgram CDBG grants are subject to anevaluation of performance andcontinuing capacity to undertake theproposed program. For purposes ofmaking performance evaluations, HUDwill use any information that becomesavailable before grant awards areannounced. Performance also will beevaluated using information which maybe available already to HUD, includingpreviously submitted performancereports, site visit reports, audits,monitoring reports and annualcommunity assessments. The HUDOffice may request and consideradditional information in cases where itis essential to make the requiredperformance judgments (see 24 CFR570.423(d), Thresholds). No grants willbe made to an applicant that does nothave the capacity to undertake theproposed program. A performancedetermination will be made by anevaluation of the following areas:

a. Community Development Activities.The following thresholds forperformance in expending CDBG fundshave been established for FY 1999 andpertain to all Single Purpose Grants,including grants pursuant to approvedmultiyear plans:FY 1993 and earlier—Grants must be

closed outFY 1994—Grant funds 100 percent

expendedFY 1995—Grant funds 75 percent

expendedFY 1996—Grant funds 30 percent

expendedFY 1997 and FY 1998—Recipients must

be on target with respect to the latestSmall Cities Program Schedulereceived by HUD.

Note: These standards will be used asbenchmarks in judging programperformance, but will not be the solebasis for determining whether theapplicant is ineligible for a grant due toa lack of capacity to carry out theproposed project or program. Anyapplicant that fails to meet thepercentages specified above may wish toprovide updated data to HUD, either inconjunction with the applicationsubmission or under separate cover, butin no case will data received by HUDafter February 8, 1999 be accepted,unless specifically requested by HUD.

b. Compliance with Applicable Lawsand Regulations. An applicant will beconsidered to have performedinadequately if the applicant:

(1) Has not substantially compliedwith the laws, regulations, andExecutive Orders applicable to theCDBG Program, including applicablecivil rights laws as may be evidencedby: (1) an outstanding finding of civilrights noncompliance, unless theapplicant demonstrates that it isoperating in compliance with a HUD-approved compliance agreementdesigned to correct the area(s) ofnoncompliance; (2) an adjudication of acivil rights violation in a civil actionbrought against it by a privateindividual, unless the applicantdemonstrates that it is operating incompliance with a court order designedto correct the area(s) of noncompliance;(3) a deferral of Federal funding basedupon civil rights violations; (4) apending civil rights suit brought againstit by the Department of Justice; or (5) anunresolved charge of discriminationissued against it by the Secretary undersection 810(g) of the Fair Housing Act,as implemented by 24 CFR 103.400;

(2) Has not resolved or attempted toresolve findings made as a result ofHUD monitoring; or

(3) Has not resolved or attempted toresolve audit findings.

An applicant will be ineligible for agrant where the inadequate performancein compliance with applicable laws andregulations evidences a lack of capacityto carry out the proposed project orprogram. For example, an applicationwill not be accepted from a unit ofgeneral local government which has anoutstanding audit finding or monetaryobligation for any HUD program.Additionally, applications will not beaccepted from any entity whichproposes an activity in a unit of generallocal government that has anoutstanding audit finding or monetaryobligation for any HUD program. TheDirector of the Community Planningand Development Division of the HUDfield office may provide an exception tothis prohibition if the unit of generallocal government has made a good faitheffort to clear the audit finding. Noexception will be provided if funds aredue HUD, unless a satisfactoryarrangement for repayment of the debthas been made.

c. Performance Assessment Reports.Under 24 CFR 570.507, Small CitiesCDBG grantees are required to submitPerformance Assessment Reports (PARs)on October 31st, for the period endedSeptember 30th, for all open grantsawarded before April 1st of the sameyear. For an application for FY 1999funds to be considered for funding, theapplicant must be current in itssubmission of PARs. Failure to submita PAR is not a curable technical

deficiency under section V. of thisNOFA.

3. Five Factor Rating.As noted in section I.E.1. of this

NOFA, all applications are rated andscored against five factors. These fivefactors are:

• Need based on absolute number ofpersons in poverty;

• Need based on the percent ofpersons in poverty;

• Program Impact;• Outstanding performance in fair

housing and equal opportunity; and• Welfare to Work InitiativeA maximum of 605 points is possible

under this system with the maximumpoints for each factor being:Need—absolute number of

persons in poverty.75 points.

Need—percent of persons inpoverty.

75 points.

Program Impact .................... 400 points.Outstanding performance—

FHEO:a. Provision of fair hous-

ing choice.20 points.

b. New Horizons FairHousing AssistanceProject.

20 points.

c. Equal opportunity em-ployment.

10 points.

Welfare to Work Initiative 5 points.

Total .............................. 605 points

Each of the five factors is outlinedbelow. All awarded points for eachfactor will be rounded to the nearestwhole number.

a. Need—Absolute number of personsin poverty. HUD uses 1990 census datato determine the absolute number ofpersons in poverty residing within theapplicant unit of general localgovernment. Applicants which arecounty governments are rated separatelyfrom all other applicants. Forapplications from joint applicants, datafrom each participating unit of generallocal government (as described in 24CFR 570.422) will be aggregated.Applicants in each group are comparedin terms of the number of personswhose incomes are below the povertylevel. Individual scores are obtained bydividing each applicant’s absolutenumber of persons in poverty by thegreatest number of persons in poverty ofany applicant and multiplying by 75.

b. Need—Percent of persons inpoverty. HUD uses 1990 census data todetermine the percent of persons inpoverty residing within the applicantunit of general local government.Applicants in each group are comparedin terms of the percentage of theirpopulation below the poverty level. Forapplications from joint applicants, datafrom each participating unit of generallocal government will be aggregated.Individual scores are obtained bydividing each applicant’s percentage of


persons in poverty by the highestpercentage of persons in poverty of anyapplicant and multiplying by 75.

c. Program Impact. In evaluatingprogram impact, HUD will considervarious factors. Within each activitytype described below is a set of factorsand scoring weights that will be used.Each proposal will be rated using thefactors and scoring weights described inthe selection criteria below.

Assessments are done on acomparative basis and, as a result, it isimportant that each applicant presentinformation in a detailed and uniformmanner.

For projects consisting of more thanone activity, the activity that directlyaddresses the need must represent atleast the majority of funds requested.Other activities must be incidental toand in support of the principal activity.For example, public improvementsincluded in a rehabilitation project thataddresses housing need must: (1) be arelatively small amount in terms offunds requested; (2) clearly be insupport of the housing objective; and (3)demonstrate a positive and direct link tothe national objective. For incidentalactivities claiming benefit to low -andmoderate-income persons on an areabasis, the application must documentthat at least 51 percent of the residentsof the service area meet the low -andmoderate-income requirement. Fundsshould not be requested for activitiesthat are not incidental to and in supportof the principal activity.

In addressing Program Impact criteria,applicants should adhere to thefollowing general guidelines forquantification. Where appropriate,absolute and percentage figures shouldbe used to describe the extent ofcommunity development needs and theimpact of the proposed program. Thisincludes, but is not limited to,appropriate units of measure (e.g.,number of housing units or structures,linear feet of pipe, pounds per squareinch, etc.), and costs per unit ofmeasure. These quantificationguidelines apply to the description ofneed, the nature of proposed activitiesand the extent to which the proposedprogram will address the identifiedneed.

Appropriate documentation should beprovided to support the degree of needdescribed in the application. Basically,the sources for all statements andconclusions relating to communityneeds should be included in theapplication or incorporated byreference. Examples of appropriatedocumentation include planningstudies, letters from public agencies,

newspaper articles, photographs andsurvey data.

Generally, the most effectivedocumentation is that whichspecifically addresses the subject matterand has a high degree of credibility.Applicants which intend to conductsurveys to obtain data are advised tocontact the appropriate HUD office priorto conducting the survey for adetermination as to whether the surveymethodology is statistically acceptable.

There are a number of program designfactors related to feasibility which canalter significantly the award of impactpoints. Accordingly, it is imperative thatapplicants provide adequatedocumentation in addressing thesefactors. Common feasibility issuesinclude site control, availability of otherfunding sources, validity of costestimates, and status of financialcommitments as well as evidence of thestatus of regulatory agency review andapproval.

Past productivity and administrativeperformance of prior grantees will betaken into consideration whenreviewing the overall feasibility of theprogram. Overall program design,administration and guidelines are otherfeasibility issues that should bearticulated and presented in theapplication, since they are critical inassessing the effectiveness and impactof the proposed program.

Each project will be rated againstother projects addressing the sameproblem area, so that, for example,housing projects only will be comparedwith other housing projects, accordingto the criteria outlined below. It shouldbe noted that each project within anapplication will be given a separateimpact rating, if each one is clearlydesignated by the applicant as aseparate and distinct project (i.e.,separate Needs Descriptions,Community Development Activities,and Impact Description and ProgramSchedule forms have been filled out,indicating separate project names).

In some cases, it may be to theapplicant’s advantage to designateseparate projects for activities that can‘‘stand on their own’’ in terms ofmeeting the described need, especiallywhere a particular project would tend toweaken the impact rating of the otheractivities, if they were all related as awhole, as has been the case with someeconomic development projects. If,however, the projects tend to meet theimpact criteria to the same extent, or theweaker element is only a small portionof the overall program, there is nodiscernable benefit in designatingseparate projects.

Applicants should bear in mind thatthe impact of the proposed project willbe judged by persons who may not befamiliar with the particular community.Accordingly, individual projects will berated according to how well theapplication demonstrates in specific,measurable terms, the extent to whichthe impact criteria are met. Generalstatements of need and impact alonewill not be sufficient to obtain afavorable rating. HUD will not make aSmall Cities grant when it determinesthat the grant will only have a minimalor insignificant impact on the grantee.For the purposes of this NOFA, anyapplication not scoring above 100 pointsof the possible 400 points for theProgram Impact factor will be deemed tohave a minimal or insignificant impacton the grantee and will not be fundedregardless of the number of points theapplicant may otherwise receive or theranking it attains as a result of its scoredue to points received on other ratingfactors.

(1) Program Impact—Housing. Thereare three distinct types of Housingprojects: Housing Rehabilitation,Creation of New Housing and DirectHomeownership Assistance. Separaterating criteria are provided for each typeof project.

(a) Housing Rehabilitation. Thefollowing factors and weights will beused to evaluate proposed housingrehabilitation projects:

(i) Severity of Need (proportion ofunits that are substandard and extent ofdisrepair) (up to 160 points of the totalProgram Impact score). Each applicationshould provide information on the totalnumber of units in the project area, thenumber that are substandard, and thenumber of substandard units occupiedby low- and moderate-incomehouseholds. The purpose of thisinformation is to establish the relativeseverity of housing conditions withinthe designated project area compared toother housing rehabilitationapplications. The application alsoshould describe the date andmethodology of any surveys used toobtain the information, including anyexplicit and detailed definition of‘‘substandard.’’

Surveys of Housing Conditions.Surveys of housing conditions serveseveral purposes in evaluatingapplications for housing rehabilitationactivities. These include establishingthe seriousness of need for suchassistance in the project area, providinga basis for estimating overall budgetaryneeds, and providing an indication ofthe marketability of the project.

(ii) Extent to which proposed programwill resolve the identified problem (up


to 50 points of the total Program Impactscore). Note that programs that proposeminimal rehabilitation may notnecessarily be addressing the identifiedproblem.

(iii) Feasibility (marketability, projectdesign affecting timely completion ofthe project) (up to 50 points of the totalProgram Impact score). The applicationshould describe the project in sufficientdetail to allow the reviewer to assess itsfeasibility and its probable impact onthe conditions described. It also shoulddescribe project requirements in such away that regulatory and policy concernswill be addressed.

HUD encourages communities tosupport the Healthy Homes Secretarialinitiative. Applicants applying for SmallCities CDBG funds to rehabilitatehousing and/or construct new housingunits may support these initiatives byincluding Healthy Homes features intheir program design, such as windowlocks, deadbolt locks on doors, locks orsafety latches on medicine cabinets,smoke detectors, carbon monoxidedetectors, energy efficient windows,elimination of lead-based paint, and anyother activities that contribute toHealthy Homes, especially regardingchildren.

(iv) Leveraging of other resources (upto 60 points of the total Program Impactscore). HUD encourages communities todesign projects supplementing SmallCities rehabilitation funds with privatefunds wherever feasible andappropriate, especially in the case ofrental units and housing not occupiedby lower-income persons. In such cases,the Small Cities grant subsidy should beas low as possible, while retainingsufficient incentive to attract localparticipants. On the other hand, projectsdesigned for low-income homeownersshould not require private contributionsat a level that puts the project out ofreach of potential participants.

(v) Cost per unit (up to 80 points ofthe Program Impact score). HUD willreview the applicant’s documentation todetermine whether the applicant’s cost-per-unit is lower than other applicants’costs-per-unit. All applications shouldprovide documentation to justify thecost-per-unit estimates, particularlygrantees where past performance doesnot support the estimates in theapplications. In reviewing applicationsfrom grantees with prior housingrehabilitation projects, reasonablenessof cost-per-unit, stated in theapplication, will be compared againstthe grantee’s actual past performance.

(b) Creation of New Housing. CDBGfunds may be used to support theconstruction of new housing units, thecreation of new units proposed through

conversion of existing structures(currently vacant structures orconversion of nonresidential structuresfor residential use) and, in certaincircumstances, to finance the actual costof constructing new units. Newconstruction may be carried out by aneligible nonprofit entity pursuant to 24CFR 570.204, or as last resort housing.Note that for purposes of specific usesof Section 108 Loan Guaranteeproceeds, eligibility is limited toassistance for community economicdevelopment projects under§ 570.204(a)(2). See also 24 CFR570.703(i)(2). Support of newconstruction could includenonconstruction assistance such as theacquisition and/or clearance of land, theprovision of infrastructure, or thepayment of certain planning costs.

The following factors and weightswill be used to evaluate proposedprojects for the creation of new housing:

(i) Severity of need for new housingaffordable to low- and moderate-incomepersons shown in the project area (up to160 points of the total Program Impactscore). Where the creation of new unitsis proposed, the application shoulddocument the need for additional unitsbased on vacancy rates, waiting lists,and other pertinent information.

(ii) Extent to which the proposedprogram will create new housing unitsaffordable to low- and moderate-incomepersons (up to 50 points of the totalProgram Impact score). The proposedproject clearly must support, or resultin, additional units for low- andmoderate-income persons. The unitsmay result from new constructionprojects for which the proposed projectwill provide nonconstruction assistance.

(iii) Feasibility (marketability, projectdesign affecting timely completion ofthe project) (up to 50 points of the totalProgram Impact score). Applicantsshould address issues of site control andmarketability, in addition to addressingfeasibility from the standpoint of marketfinancing.

(iv) Leveraging of other resources (upto 60 points of the total Program Impactscore). Where the proposed projectinvolves the use of Federally assistedhousing, the applicant must identifyand document the current commitmentstatus of the Federal assistance. Lack ofa firm financial commitment forassistance may adversely affect projectimpact.

(v) Cost per unit (up to 60 points ofthe total Program Impact score). HUDwill review the applicant’sdocumentation to determine whetherthe applicant’s cost-per-unit is lowerthan other applicants’ costs-per-unit. Allapplications should provide

documentation to justify the cost-per-unit estimates, particularly granteeswhere past performance does notsupport the estimates in theapplications. In reviewing applicationsfrom grantees with prior housingprojects, reasonableness of cost-per-unit,stated in the application, will becompared against the grantee’s actualpast performance.

(vi) Extent to which the project wouldaffirmatively further fair housing (eitherthrough spatial deconcentration ofminorities throughout the community orthrough spatial deconcentration of low-and moderate-income households ifthere are no areas of minorityconcentration) (up to 20 points of thetotal Program Impact score).

(c) Direct Homeownership Assistance.Homeownership activities are definedas activities which would promotehomeownership within the applicantjurisdiction, focusing particularly onaiding low- and moderate-incomepersons in becoming homeowners. Thismay include activities authorized under24 CFR 570.201(n) for purposes of useof Small Cities grant funding. However,activities eligible solely under 24 CFR570.201(n) are not permitted uses ofSection 108 loan guarantee proceeds.While declining to identify anyparticular type of proposed project assuperior, HUD is identifying severalcriteria which must be addressed withinthe project design, in order for theapplication to receive the maximumproject impact.

Applications must include a welldeveloped description ofhomeownership needs in the applicantjurisdiction, focusing particularly on theneeds of low- and moderate-incomepersons. The description also shouldinclude, if applicable, any alternativeapproaches which have been consideredin meeting homeownership needs.Project feasibility must be addressed aspart of the application.

The application must demonstratethat the proposed project would makeeffective use of all available funds. Thiswould include any local, State or otherFederal funds which would be utilizedby the proposed project. If other suchfunds are included as part of theproposed project, the applicant mustdemonstrate that such funds arecommitted and truly available for theproject. Any efforts which wouldaffirmatively further fair housing, bypromoting homeownership amongminorities as well as homeownershipthroughout the community, must beoutlined in the application.

The application must explain how theproject would benefit low- andmoderate-income homebuyers,


particularly focusing on first-time andminority homebuyers. The applicationalso should address anyhomeownership counseling services,including counseling pertaining toFederal, State, and local fair housinglaws and requirements, which would beprovided to persons selected toparticipate in the proposed project.Finally, the application should describehow the project would utilize public/private partnerships to promotehomeownership, particularly in thesense that private sector financingwould be accessible, as necessary, toproject participants to complementavailable public sector funds, includingCDBG money.

The following factors and weightswill be used to evaluate proposed directhomeownership assistance projects:

(i) The extent to which theapplication demonstrates severity ofhomeownership needs in thecommunity (up to 160 points of the totalProgram Impact score).

(ii) The extent to which: the projectdesign is appropriate to meetdemonstrated homeownership needs;the project would make effective us ofavailable funds; alternative approachesto meeting the homeownership needshave been considered; and the proposedproject would target first-timehomebuyers (up to 60 points of the totalProgram Impact score).

(iii) The extent to which the project isfeasible and likely to be implemented inaccordance with a project schedule (upto 50 points of the total Program Impactscore).

(iv) The extent to which the proposedproject would: complement otherFederal, State or local programs thatpromote homeownership; and utilizepublic/private partnerships inattempting to promote homeownership,particularly in regard to participation bylocal financial institutions consideringthe cost per unit (up to 80 points of thetotal Program Impact score).

(v) The extent to which the proposedproject would provide homeownershipcounseling to project participants (up to30 points of the total Program Impactscore).

(vi) The extent to which the projectwould affirmatively further fair housingthrough proposed initiatives to reachout to potential minority homeownersand/or to promote homeownershipopportunities throughout thecommunity (up to 20 points of the totalProgram Impact score).

(2) Program Impact—Public FacilitiesAffecting Public Health and Safety. Inthe case of public facility projects,documentation of the problem byoutside, third-party sources is of

primary importance. In the case of waterand sewer projects, documentation frompublic agencies is particularly helpful,especially where such agencies havepinpointed the exact cause of theproblem and have recommendedcourses of action which wouldeliminate the problem. Such supportingdocumentation should be as up-to-dateas possible; the older the supportingmaterial, the more doubt arises that theneed is current and immediate.Applicants also should be sure toindicate how the project would addresspublic health and safety needs andconditions. Quantification also isessential in describing needs.Documentation from those affectedshould be included.

The following factors and weightswill be used to evaluate proposed publicfacilities projects affecting the publichealth and safety:

(a) Severity of Need (up to 160 pointsof the total Program Impact score). Theapplicant should describe, includingappropriate documentation, as best aspossible, the degree to which the needis serious, current and requires promptattention.

(b) Extent to which the proposedprogram will resolve the identifiedproblem and public health and safetyconcerns (up to 50 points of the totalProgram Impact score). The applicantshould demonstrate that the project willcompletely solve the problem and, ifapplicable, the applicant should addresswhether the proposal would besatisfactory to other State/local agencieswhich have jurisdiction over theproblem.

(c) Feasibility (up to 50 points of thetotal Program Impact score). Theapplicant should address whether theproposal is the most cost effective andefficient among the possible alternativesconsidered, and the funding requestedwill be sufficient to resolve the problem.Total project costs should bedocumented by qualified third-partyestimates, and be as recent as possible.

(d) Extent of benefit to affectedpersons and the cost per household (upto 80 points of the total Program Impactscore).

(e) Leveraging other resources tominimize project costs (up to 40 pointsof the total Program Impact score). Tothe extent that Small Cities grant fundswill not cover all costs, the source ofother funds should be identified andcommitted. If local funds are to be used,the applicant should show both thewillingness and the ability to providethe funds.

(f) Extent to which the projectaddresses deficiencies in accessibilityfor disabled persons and/or provides a

significant increase in the number ofpublic facilities accessible to disabledpersons (up to 20 points of the totalProgram Impact score).

(3) Program Impact—EconomicDevelopment Projects. As discussedearlier in this section of the NOFA, eachindividual Single Purpose project willreceive a separate impact rating.Applicants whose proposed economicdevelopment program will includemultiple proposals should determinethe most appropriate form ofsubmission. This determination willrequire a choice as to either theincorporation of all proposals into asingle project or the submission ofseparate projects for each proposal (eachtransaction will be considered aseparate project). The single projectformat presents an ‘‘all or nothing’’situation. In determining theappropriate submission format,applicants should consider the ability ofa transaction to rate well on its own,based on the magnitude of employmentimpact, size of the financial transactionand the other factors discussed in thissection.

The submission of proposals asseparate projects must be clearlydesignated by the applicant withindividual Needs Descriptions,Community Development Activities,Impact Descriptions and ProgramSchedule forms, including anappropriate name for each project onHUD Form 4124.1.

Section 807(c)(3) of the Housing andCommunity Development Act of 1992(42 U.S.C. 5305 note) provides that it isthe sense of Congress that each granteeshould devote one percent of its grantfor the purpose of providing assistanceunder section 105(a)(23) of the 1974HCD Act to facilitate economicdevelopment through commercialmicroenterprises. A ‘‘microenterprise’’is defined as a commercial enterprisewith five or fewer employees, one ormore of whom owns the enterprise.While not a requirement, this intentshould be considered in developing aneconomic development application.

It is noted that in accordance withsection 105 of the 1974 HCD Act, HUDpublished on January 5, 1995 (60 FR1922), a final rule relating to evaluationand selection of Economic Developmentactivities by grantees, includingevaluation of public benefit (generallycodified at 24 CFR 570.209). EconomicDevelopment applications must bespecific enough to permit adetermination that such thresholdpublic benefit standards are met.

(a) Scoring. The following factors andweights will be used to evaluate


proposed economic developmentprojects:

(i) The extent to which the projectwill have a direct and positive impacton employment opportunities forpersons from low-and moderate-incomehouseholds (up to 160 points of the totalProgram Impact score). Applicants arereminded that for an activity to beconsistent with the statutory objective oflow-and moderate-income benefit, as aresult of the creation or retention ofjobs, at least 51 percent of created orretained employment opportunitiesmust be held by, or made available to,persons from low-and moderate-incomefamilies. Applicants must fullydocument and describe employmentbenefits. In addition, applicants shouldaddress the following issues:

a. All employment data must beexpressed in terms of full-timeequivalents (FTEs). Only permanentjobs may be counted, and applicantsmust take into account such factors asseasonal and part-time employment. Aseasonal job may be consideredpermanent if the season is long enoughto be considered the person’s principaloccupation; permanent part-time jobsmust be converted to the full-timeequivalent.

b. The amount of CDBG assistancerequired to produce each full-timeequivalent job will affect the impactassessment by HUD. Lower CDBG costsper job are preferable to higher CDBGcosts per job. Such assessments ofimpact will be done on a comparativebasis among all projects submitted,rather than by comparison to a givenstandard.

c. The use of CDBG funds to assist abusiness with transferring to a differentcommunity will generally be consideredas having no employment impact.Exceptions to this rule may include anexpansion to the business as a result of,or concurrent with, the transfer; or if thebusiness can demonstrate that it isinfeasible to continue operations at thecurrent site. An applicant that fails todocument a basis for such an exceptioncould receive a substantially lower scoreunder this ranking factor. Applicants areencouraged to use CDBG funds forprojects that provide as many jobs aspossible for individuals that arecurrently receiving public assistance.Providing employment to recipients ofpublic assistance will help break thecycle of dependency and empower low-income citizens to take control of theirlives.

(ii) The extent to which marketanalysis and other risk data providesassurance that the proposed project willbe successful (up to 50 points of thetotal Program Impact score).

(iii) The extent to which the proposedproject addresses all appropriatefeasibility issues (including extent offirm private financing commitments)and the extent to which there isreasonable assurance that the projectwill be completed in a timely manner(up to 50 points of the total ProgramImpact score). Projects that are likely toencounter feasibility issues whichwould hinder the timely completion ofthe project will receive a lower scoreunder this criterion. Such issuesinclude, but are not limited to: sitecontrol, zoning, public approvals andpermits, infrastructure, environment,and relocation. Applicants shouldaddress these and any other applicableissues and provide documentationwhere appropriate.

Applicants also must demonstrate thereasonable likelihood of the project’ssuccess, from both a financial andemployment standpoint. An analysis ormarket data, which indicates aninordinate risk in the undertaking of theproject, will affect the overall rating ofprogram impact. In order to receive ahigher rating, the costs must bereasonable (i.e., not inflated).

(iv) Extent to which the projectprovides Public Benefits relative toother proposals’ cost per job (up to 80points of the total Program Impactscore).

(v) The extent to which Small Citiesgrant funds will leverage the investmentof private and other dollars and theextent to which Small Cities grant fundsare NOT used to substitute for privatefinancing (up to 60 points of the totalProgram Impact score). Leverage isdefined as the amount of private debtand equity to be invested as a directresult of the CDBG-funded activity.Projects which provide the maximumfeasible level of private investment willbe considered as having appropriateleverage. The extent of firmcommitments for private financing willbe reviewed as well as the amount ofequity investment. The project will bereviewed to determine whether CDBGfunds are replacing private sources offunds. In order to receive maximumimpact CDBG funds may not replaceprivate financing, CDBG assistance mustbe limited to the amount necessary tofund the project without replacingCDBG funds for private funds, andequity funds should bear the greatestrisk in the project.

In addition to the standardsubmission requirements, HUD willevaluate the following as part of itsEligibility Review prior to consideringan application for funding in the FY1997/1998 competition.

(b) The Appropriate Determination.HUD has developed guidelines forreview of economic developmentactivities undertaken with CDBG funds.These guidelines are composed of twocomponents: guidelines for evaluatingproject costs and financial requirements;and standards for evaluating publicbenefit. The standards for evaluatingpublic benefit are mandatory, but theguidelines for evaluating project costsand financial requirements are not. Theguidelines for evaluating project costsare to ensure:

(i) Reasonableness of Proposed Costs.The applicant must review each projectcost element and determine that the costis reasonable and consistent with third-party, fair-market prices for that costelement. The general principle is thatthe level of CDBG assistance cannot beadequately determined if the projectcosts are understated or inflated.

(ii) Commitment of Other Sources ofFunds. The applicant shall review allprojected sources of funds necessary tocomplete the project and shall verifythat all sources (in particular privatedebt and equity financing) have beenfirmly committed to the extentpracticable, and are available to beinvested in the project. Verificationmeans ascertaining that: the source offunds is committed; that the terms andconditions of the committed funds areknown; and the source has the capacityto deliver.

(iii) No Substitution of CDBG Funds(including Section 108 Loan Guaranteeproceeds) for Private Sources of Funds.The applicant shall financiallyunderwrite the project and ensure to theextent possible that CDBG funds are notbeing substituted for available privatedebt financing or equity capital. Theanalysis must be tailored to the type ofproject being assisted (e.g., real estate,user project, capital equipment, workingcapital, etc.). Real estate projects requiredifferent financial analysis than workingcapital or machinery and equipmentprojects. Applicants should ensure thatboth a significant equity commitment bythe for-profit business exists and thatthe level of certainty of the end use ofthe property or project is sufficient toensure the achievement of nationalobjectives within a reasonable period oftime.

(iv) Establishment of Small CitiesGrant Financing Terms. The amount ofSmall Cities grant assistance provided toa for-profit business ideally should belimited to the amount, with appropriaterepayment terms, sufficient to goforward without substituting SmallCities grant funds for available privatedebt or cash equity. The applicantshould structure its repayment terms so


that the business is allowed a reasonablerate of return on invested equity,considering the level of risk of theproject. Equity funds generally shouldbear the greatest risk of all fundsinvested in a project.

(v) Public Benefit Determination. Theapplicant’s activities must meet thepublic benefit standards found in 24CFR 570.209(b). Activities covered bythese guidelines (subject to certainexceptions) must, in the aggregate,either:

• Create or retain at least one full-time equivalent, permanent job per$35,000 of CDBG funds used; or

• Provide goods or services toresidents of an area, such that thenumber of low- and moderate-incomepersons residing in the areas served bythe assisted businesses amounts to atleast one low- and moderate-incomeperson per $350 of CDBG funds used.

(c) CDBG Assistance Must MinimizeBusiness and Job Displacement. Eachapplicant will evaluate the potential ofeach economic development project forcausing displacement of existingbusinesses and lost jobs in theneighborhood where the project isproposed to be located. When thegrantee concludes that the potentialexists to cause displacement, given thesize, scope or nature of the business,then the grantee must, to the extentpracticable, take steps to minimize suchdisplacement. The project file mustdocument the grantee’s reviewconclusions and, if applicable, the stepsthe grantee will take to minimizedisplacement.

(d) Section 105(a)(17) Requirements.Section 105(a)(17) of the 1974 HCD Actrequires that an activity assisted underthat section achieve one of the followingcriteria:

(i) Creates or retains jobs for low- andmoderate-income persons (note that aproject which meets the nationalobjective of principally benefitting low-and moderate-income persons bycreating or retaining jobs, 51 percent ofwhich are for low- and moderate-income persons, will be deemed to havemet this criterion without anyadditional documentation);

(ii) Prevents or eliminates slums orblight (note that a project which meetsthe national objective of aiding in theprevention or elimination of slums orblight on an area basis will be deemedto have met this criterion without anyadditional documentation);

(iii) Meets an urgent need (note thata project which meets the nationalobjective of meeting communitydevelopment needs having a particularurgency will be deemed to have met this

criterion without any additionaldocumentation);

(iv) Creates or retains businessesowned by community residents;

(v) Assists businesses that providegoods or services needed by andaffordable to low- and moderate-incomeresidents;

(vi) Provides technical assistance topromote any of the activities under (i)through (v) of this subsection.

(e) National Objectives. As previouslystated in this NOFA, all CDBG-assistedactivities must address one of the threebroad national objectives. Sinceeconomic development projects usuallyresult in new employment or theretention of existing jobs, theseactivities most likely would becategorized as principally benefittinglow- and moderate-income persons inthis manner. Such projects will beconsidered to benefit low- andmoderate-income persons where thecriteria of 24 CFR 570.208(a)(4) are met.HUD will consider an activity to qualifyunder this provision where the activityinvolves jobs at least 51 percent ofwhich are taken by or made available tosuch persons, or retained by suchpersons. The extent to which theproposed project will directly addressemployment opportunities for low- andmoderate-income persons in theapplicant jurisdiction will be a primaryfactor in HUD’s assessment of theproposed program.

The application must containadequate documentation to explainfully, and to support, the process thatwill be used to ensure that project(s)comply with the low- and moderate-income employment requirements. Thedocumentation must be sufficient toshow that the process has beendeveloped and that programparticipants have agreed to adhere tothat process. In determining whether theperson is a low- and moderate-incomeperson for these activities, it is theperson’s family income at the time theCDBG assistance is provided that isdeterminative. When making judgmentsconcerning whether an individualqualifies as a low- and moderate-incomeperson, both family size and the incomeof the entire family must be considered.This consideration is necessary becausea ‘‘low- and moderate-income person’’ isdefined as a member of a low- andmoderate-income family.

HUD will accept a writtencertification by a person of his or herfamily income and size to establish low-and moderate-income status. Thecertification may simply state that theperson’s family income is below thatrequired to be low- and moderate-income in that area. The form for such

certification must include a statementthat the information is subject toverification.

In addition to person-by-personincome certifications discussed above,under section 105(c)(4) of the 1974 HCDAct, an employee may be presumed tobe a low- and moderate-income personif the employee resides in a census tractwhere not less than 70 percent of theresidents are low- and moderate-incomepersons, and a presumption of low- andmoderate-income may also be made ifthe business is located in and/or theemployee resides in a census tract (orblock numbering group) where 20percent of the residents are in poverty.The key consideration in thispresumption is the location of thebusiness or employee. Thedocumentation to support thepresumption must contain the location.(See 24 CFR 570.209(b)(2)(v) for moreinformation on this subject.)

In cases where an activity (e.g., ashopping center or a super market)provides goods and services to residentsof an area, the low- and moderate-income objective may be met by the areabenefit requirements at 24 CFR570.208(a)(1). To document low andmoderate income, 51 percent of theresidents of the area or block numberinggroup must be low- and moderate-income persons.

(f) Application Requirements. To theextent feasible, the material listed belowshould be submitted for economicdevelopment projects. The materialshould be submitted for each proposedactivity, whether the proposed activityis presented as a separate project or aspart of a project involving multipleactivities. Since economic developmentprojects are rated against each other, themore completely these submissionrequirements are met, the greater thepotential exists for enhancing theimpact score of the project.

(i) A letter from each appropriatedevelopmental entity which includes atleast the following information:

a. A detailed physical description ofthe project with a schedule of eventsand maps or drawings as appropriate.

b. The estimated costs for the project,including any working capitalrequirements.

c. A discussion of all financingsources, including the need for CDBG,the terms of the CDBG assistance, andthe proposed lien structure. Theamount, source, and nature of anyequity investment(s) must also beprovided as well as a commitment toinvest the equity.

d. A discussion of employmentimpact which includes a schedule ofnewly created positions. The schedule


should identify the number, salary andskill level of each permanent position tobe created. If jobs are made available tolow- and moderate-income persons, theapplicant must also demonstrate anddocument how persons from low- andmoderate-income households will beaccorded first consideration foremployment opportunities.

e. A discussion of all appropriatefeasibility issues including, but notlimited to: site control, zoning, publicapprovals and permits, impact fees,corporate authorizations, infrastructure,environment and relocation.

f. An analysis and summary of marketand other data which supports theanticipated success of the project.

g. A statement as to whether or notthe project will result in the relocationof any industrial or commercial plant,facility, or operation from one area toanother. If the CDBG funded project willresult in the relocation of a plant,facility, or operation, then theapplication shall include a statement asto the total number of jobs that arecurrently filled at the existing/currentplant, facility, or operation and thenumber of jobs that are projected toexist at that former plant, facility, oroperation after the proposed CDBGfunded project is complete and fullyoperational.

(ii) A development budget showing allcosts for the project, includingprofessional fees and working capital.

(iii) Documentation to support projectcosts. Documentation generally shouldbe from a third-party source and beconsistent with the followingguidelines:

a. Acquisition costs should besupported by an appraisal.

b. Construction/renovation costsshould be certified by an architect,engineer or contractor. Use of FederalPrevailing Wage Rates should be citedwhere applicable.

c. Machinery and equipment costsshould be supported by vendor quotes.

d. Soft costs (e.g., legal, accounting,title insurance) need be substantiatedonly where such costs are anticipated tobe abnormally high.

(iv) Letters from all financing sourcesdiscussing (at a minimum) the amountand terms of the proposed financing,and the current status of the applicationfor funding.

(v) Historical financial data of thedevelopment entity, preferably for thelast 3 years. This information may besubmitted under separate cover withconfidentiality requested. It isrecognized that historical financial datamay be unavailable or inappropriate forsome projects (e.g., start-up companiesand real estate transactions).

(vi) A 2- to 5-year cash flow pro formawith accompanying notes citing basicassumptions.

(vii) The applicant’s assessment of theproject’s consistency with the CDBGprogram eligibility requirements andstandards for evaluating project cost,financial requirements and publicbenefit.

d. Fair Housing and EqualOpportunity Evaluation. Documentationfor the 50 points for these items is theresponsibility of the applicant. Claimsof outstanding performance must bebased upon actual accomplishments.Clear, precise documentation will berequired. Maps must have a census tractor block numbering area (BNA), andthey must be in accordance with the1990 Census data. Additionally, mapsmust identify the locations of areas withminorities by census tract or BNA. Ifthere are no minority areas, state so onthe map. Only population data from the1990 Census will be acceptable forpurposes of this section.

Please note that a ‘‘minority’’ is aperson belonging to, or culturallyidentified as, a member of any one ofthe following racial/ethnic categories:Black, Hispanic, Asian or PacificIslander, and American Indian orAlaskan Native. For the purposes of thissection, the separate category of‘‘women’’ is not considered a minority.

Counties claiming points under thiscriterion must use county-wide statistics(excluding entitlement communities). Inthe case of joint applications, pointswill be awarded based on theperformance of the lead entity only.

The following factors will be used tojudge outstanding performance in theseareas. Please note that points foroutstanding performance may beclaimed under each criterion:

(1) Housing Achievements (40 pointstotal).

(a) Provision of Fair Housing Choice(20 points)

(i) HUD will consider the extent towhich the applicant demonstrates that ithas provided housing assistance forlow- and moderate-income families thatresults in housing choice in areasoutside of minority or low- andmoderate-income concentration. Suchactions may include the construction orrehabilitation of housing in areasoutside of minority or low- andmoderate-income concentration; theprovision of Section 8 ExistingCertificate or Voucher assistance inways that lessen concentration of suchassisted units within minority and low-and moderate-income concentratedareas; or the provision of directhomeownership assistance such ashomeownership counseling,

downpayment assistance, or first-timehomebuyer assistance. If applicable, theapplicant may use a map to show thegeneral location(s) of individual projectsand/or housing occupied by Section 8Existing Program participants.

(ii) Points also may be awarded forefforts which enable low- and moderate-income persons to remain in theirneighborhood when suchneighborhoods are experiencingrevitalization and substantialdisplacement as a result of privatereinvestment. Applicants requestingpoints under this criterion would notneed to meet the requirements ofparagraphs (a) and (b) in order to receivepoints. Points will be awarded wheremore than one-half of the familiesdisplaced were able to remain in theiroriginal neighborhood through theassistance of the applicant. Applicantsmust show that:

• The neighborhood experiencedrevitalization;

• The amount of displacement wassubstantial;

• Displacement was caused by privatereinvestment;

• Low- and moderate-income personswere permitted to remain in theneighborhood as a result of action takenby the applicant.

If the community is inhabitedpredominantly by persons who aremembers of minority and/or low-incomegroups, points will be awarded wherethere is a balanced distribution ofassisted housing throughout thecommunity.

(b) Implementation of a Fair HousingStrategy that Affirmatively Furthers FairHousing (20 points). The applicant mustdemonstrate that it is implementing orplans to implement a Fair HousingStrategy on its own or demonstrate thatit does or plans to participate in acounty/State or regional analysis ofimpediments to fair housing choice. Afair housing strategy must include thefollowing elements:

• Local compliance activities;• Educational programs to enhance

the clarity and understanding of thecommunity’s fair housing policy. Forcommunities with few or no minorities,this should include publication in thesurrounding communities of theapplicant’s policy of fair housing forminorities and persons with disabilities;

• Assistance to minority families; and• Special programs (e.g., utilization of

Community Housing Resource Board(CHRB) Programs, efforts to encouragelocal realtors to enter into voluntaryagreements to encourage equal access tofinancial institutions, etc.).

• Assistance to minority familiesthrough mobility counseling programs


and other activities that encourage suchfamilies to pursue such housingopportunities outside of minorityconcentrated areas;

• Special programs targeted atlenders, builders, realtors, and otherhousing industry groups;

• Affirmative marketing strategiestargeted at those groups in the eligiblepopulation considered least likely toapply without special outreach.

The fair housing strategy mustinclude goals for each of the aboveelements. The date of adoption ordevelopment of the strategy should beindicated, as well as the date proposedactivities will be or have beenimplemented.

(2) Entrepreneurial Efforts and LocalEqual Opportunity Performance. HUDencourages the use of minoritycontracting, although it will not be usedas an evaluation factor in this NOFA.

(3) Equal Opportunity Employment.(10 points) Under this factor, theapplicant must document that itspercentage of minority, permanent full-time employees is greater than thepercentage of minorities within thecounty or the community, whichever ishigher. Applicants with no full-timeemployees may claim points based onpart-time employment provided thatthey document that the only permanentemployment is on a part-time basis.

e. Welfare to Work Initiative. (5points) Five bonus points will be addedto proposals which support the Welfareto Work Initiative. These points will beadded to those proposals that includeactivities which will provide assistanceto persons moving from welfare to work.Examples of such activities are: jobs,day care slots, training or transportationassistance.

4. Final SelectionThe total points received by a project

for all of the selection factors are added,and the project is ranked against allother projects from all applications,regardless of the program areas in whichthe projects were rated. The highestranked projects will be funded to theextent funds are available. If anapplicant submits two applicationsunder this NOFA, it may receive up totwo single grants in the amounts of theproject or projects applied for in thoseapplications which were ranked highenough to be funded. In the case of tiesat the funding line, HUD will use thefollowing criteria in order to break ties:

• The project receiving the highestprogram impact rating will be funded;

• If tied projects have the sameprogram impact rating, the projecthaving the highest combined score onthe needs factors will be funded;

• If tied projects have the sameprogram impact ratings and equal needsfactor scores, the project having thehighest score on the percent of personsin poverty needs factor will be funded;and

• If tied projects have the sameprogram impact ratings, equal needsfactor scores, and an equal percent ofpersons in poverty needs factor score,the application having the mostoutstanding performance in fair housingand equal opportunity will be funded.

As soon as possible after the ratingand ranking process has beencompleted, HUD will notify allapplicants regarding their rating scoresand funding status. Thereafter,applicants may contact HUD to discussscores or any aspects of the selectionprocess.

II. Application and Funding AwardProcess

A. Obtaining ApplicationsAll nonentitled communities in New

York State may obtain application kitsthrough HUD’s New York or BuffaloOffices. The addresses for HUD’sBuffalo and New York offices are:Department of Housing and Urban

Development, Office of CommunityPlanning and Development, Attention:Small Cities Coordinator, 26 FederalPlaza, New York, NY 10278–0068,Telephone (212) 264–2885 x3401.

Department of Housing and UrbanDevelopment, Community Planning andDevelopment Division, Attention: SmallCities Coordinator, 465 Main Street,Lafayette Court, Buffalo, NY 14203,Telephone (716) 551–5755 x5800.

In addition, application kits andadditional information are available onthe HUD website located at:www.hud.gov or by contactingCommunity Connections at (800) 998–9999.

B. Submitting ApplicationsA final application must be submitted

to HUD no later than February 8, 1999.A final application includes an originaland two photocopies. Final applicationsmay be mailed, and if they are receivedafter the deadline, must be postmarkedno later than midnight, February 8,1999. If an application is hand-deliveredto the New York or Buffalo Offices, theapplication must be delivered by 4:00p.m. on the application deadline date.Applicants in the counties of Sullivan,Ulster, Putnam, and in nonparticipatingjurisdictions in the urban counties ofDutchess, Orange, Rockland,Westchester, Nassau, and Suffolkshould submit applications to the NewYork Office. All other nonentitledcommunities in New York State should

submit their applications to the BuffaloOffice. Applications must be submittedto the HUD office at the addresses listedabove in section II.A.

The above-stated application deadlineis firm as to date and hour. In theinterest of fairness to all competingapplicants, HUD will treat as ineligiblefor consideration any application that isnot received on, or postmarked byFebruary 8, 1999. Applicants shouldtake this practice into account and makeearly submission of their materials toavoid any risk of loss of eligibilitybrought about by unanticipated delaysor other delivery-related problems.

C. The Application

1. Application Requirements

An application for the Small CitiesProgram CDBG Grants is made by thesubmission of:

(a) A completed HUD Form 4124,including HUD Forms 4124.1 through4124.6 and all appropriate supportingmaterial;

(b) A completed Standard Form 424;(c) A signed copy of certifications

required under the CDBG Program,including, but not limited to the Drug-Free Workplace Certification, and theCertification Regarding Lobbyingpursuant to section 319 of theDepartment of Interior AppropriationsAct for Fiscal Year 1990 (31 U.S.C.1352), generally prohibiting use ofappropriated funds, and, if applicable,Disclosure of Lobbying Activities (SF–LLL);

(d) Form HUD–2880, Applicant/Recipient Disclosure/Update Report, asrequired under subpart A of 24 CFR part4 (Accountability in the Provision ofHUD Assistance); and, if applicable,

(e) Abbreviated Consolidated Plan.(f) A Section 108 Loan Guarantee

application or request, if applicable,consisting of one of the following:

(1) A formal application for Section108 Loan Guarantee(s), including thedocuments listed at § 570.704(b);

(2) A brief description of a Section108 Loan Guarantee application(s) to besubmitted within 60 days (with HUDreserving the right to extend such periodfor good cause on a case-by-case basis)of a notice of CDBG Small Cities grantaward. (The CDBG grant award will beconditioned on approval of actualSection 108 Loan Guaranteecommitments within a stated period oftime.) This description must besufficient to support the basic eligibilityof the proposed project or activities forSection 108 assistance; or

(3) If applicable, a copy of a Section108 Loan Guarantee approval documentwith grant number and date of approval.


2. Streamlined ApplicationRequirements for Certain Applicants

Single Purpose applicationssubmitted under the FY 1997/98 NOFAbut not selected for funding will bereactivated for consideration under thisNOFA, if the applicant notifies HUD inwriting by February 8, 1999 that theapplicant wishes the prior applicationto be considered in this competition.Applications which are reactivated maybe updated, amended or supplementedby the applicant provided that suchamendment or supplementation isreceived no later than the due date forapplications under this NOFA. If thereis no significant change in theapplication involving new activities oralteration of proposed activities thatwill significantly change the scope,location or objectives of the proposedactivities or beneficiaries, there will beno further citizen participationrequirement to keep the applicationactive for a succeeding round orcompetition.

D. Funding Award Process

In accordance with section 102 of theHUD Reform Act and HUD’s regulationin 24 CFR part 4, HUD will notify thepublic by notice published in theFederal Register of all award decisionsmade by HUD under this competition.In accordance with the requirements ofsection 102 of the Reform Act andHUD’s regulations at 24 CFR part 4,HUD also will ensure thatdocumentation and other informationregarding each application submittedunder this NOFA is sufficient toindicate the basis upon whichassistance was provided or denied.Additionally, in accordance with§ 4.5(b) of these regulations, HUD willmake this material available for publicinspection for a period of 5 years,beginning not less than 30 calendar daysafter the date on which assistance isprovided.

III. Technical Assistance

Prior to the application deadline, theBuffalo and New York offices willprovide technical assistance on requestto individual applicants, includingexplaining and responding to questionsregarding program regulations, anddefining terms in the applicationpackage. In addition, HUD will conductinformational meetings around the Stateto discuss the Small Cities Program, andwill conduct application workshops inconjunction with these meetings. Pleasecontact the New York or Buffalo Officefor further information regarding thesemeetings. Application kits will beavailable at these meetings, as well as

from the New York or Buffalo Offices.In order to ensure that the applicationdeadline is met, it is strongly suggestedthat applicants begin preparing theirapplications immediately and not waitfor the informational meetings.

IV. Checklist of Application SubmissionRequirements

The following checklist is intended toaid applicants in determining whethertheir application is complete:

Application Completeness Checklist

Applicant: lllllAmount Requested $llll1. Is amount of funds requested within

established maximum?2. Part I—Needs Description (HUD Form

4124.1)a. Program AreallHousingllTarget AreallNontarget AreallPublic FacilitiesllEconomic Development (If an

‘‘appropriate’’ analysis is requiredbut is not included, the applicationcannot be rated.)

b. Is description of communitydevelopment needs included inapplication?

3. Part II—Community DevelopmentActivities (HUD Form 4124.2)

a. Has national objective beenidentified for each activity?

b. Will 70 percent of grant fundsprimarily benefit low- andmoderate-income persons? (If not,the application cannot be rated.)

4. Part III—Impact Description (HUDForm 4124.3)

5. Part IV—Outstanding Performance(HUD Form 4124.4)

6. Part V—Program Schedule (HUDForm 4124.5)

7. Part VI—Mapsa. Location of proposed activities.

(Applicants must show theboundaries of the defined area orareas.)

b. Location of areas with minorities bycensus tract. (If there are nominority areas, state so on the map.)

c. Housing conditions if projectinvolves housing rehabilitation.(Number and location of eachstandard and substandard unitshould be clearly identified.)

8. a. Is Standard Form 424 complete?Yes No

b. Is original signature on at least onecopy? Yes No

9. Is Certification signed with originalsignature? Yes No

10. Has the abbreviated consolidatedplan been prepared and submittedto HUD (or included with thisapplication)?

11. Form HUD–2880, Application/Recipient Disclosure/UpdateReport.

12. Do proposed economic developmentactivities meet the public benefitstandards as defined in 24 CFR570.209?

V. Corrections to Deficient Applications

Under no circumstances will HUDaccept from the applicant unsolicitedinformation regarding the applicationafter the application deadline haspassed.

HUD may advise applicants oftechnical deficiencies in applicationsand permit them to be corrected. Atechnical deficiency would be an erroror oversight which, if corrected, wouldnot alter, in either a positive or negativefashion, the review and rating of theapplication. Examples of curabletechnical deficiencies would be a failureto submit the proper certifications orfailure to submit an applicationcontaining an original signature by anauthorized official. Situations notconsidered curable would be, forexample, a failure to submit programimpact descriptions.

HUD will notify applicants in writingof any curable technical deficiencies inapplications. Applicants will have 14calendar days from the date of HUD’scorrespondence to reply and correct thedeficiency. If the deficiency is notcorrected within this time period, HUDwill reject the application asincomplete.

Applicants should note that if anabbreviated consolidated plan is notsubmitted, the failure to submit it in atimely manner is not considered acurable deficiency.

VI. Findings and Certifications

Paperwork Reduction Act Statement

The information collectionrequirements related to this CDBGprogram have been approved by theOffice of Management and Budget(OMB) in accordance with thePaperwork Reduction Act of 1995 (44U.S.C. 3501–3520), and have beenassigned OMB approval number 2506–0020. An agency may not conduct orsponsor, and a person is not required torespond to, a collection of informationunless the collection displays a validcontrol number.

Environmental Impact

This NOFA provides funding under,and does not alter environmentalrequirements of, a regulation previouslypublished in the Federal Register.Accordingly, under 24 CFR 50.19(c)(5),this NOFA is categorically excluded


from environmental review under theNational Environmental Policy Act. Theenvironmental review provisions of thisregulation are in 24 CFR 570.604.

Federalism

The General Counsel, as theDesignated Official under section 6(a) ofExecutive Order 12612, Federalism, hasdetermined that this NOFA will nothave substantial, direct effects on States,on their political subdivisions, or ontheir relationship with the FederalGovernment, or on the distribution ofpower and responsibilities betweenthem and other levels of government.While the NOFA will provide financialassistance to the Small Cities Program ofNew York State, none of its provisionswill have an effect on the relationshipbetween the Federal Government andNew York State, or the State’s politicalsubdivisions.

Accountability in the Provision of HUDAssistance

See Section I.A.4. of this NOFA.

Prohibition Against Lobbying Activities

Applicants for funding under thisNOFA are subject to the provisions ofsection 319 of the Department of Interiorand Related Agencies Appropriation Actfor Fiscal Year 1991 (31 U.S.C. 1352)(the Byrd Amendment) and to theprovisions of the Lobbying DisclosureAct of 1995 (Pub. L. 104–65; December19, 1995).

The Byrd Amendment, which isimplemented in regulations at 24 CFRpart 87, prohibits applicants for Federalcontracts and grants from usingappropriated funds to attempt toinfluence Federal executive orlegislative officers or employees inconnection with obtaining suchassistance, or with its extension,continuation, renewal, amendment ormodification. The Byrd Amendmentapplies to the funds that are the subjectof this NOFA. Therefore, applicantsmust file a certification stating that theyhave not made and will not make anyprohibited payments and, if anypayments or agreement to makepayments of nonappropriated funds forthese purposes have been made, a formSF–LLL disclosing such payments mustbe submitted. The certification and theSF–LLL are included in the applicationpackage.

The Lobbying Disclosure Act of 1995,which repealed section 112 of the HUDReform Act and resulted in theelimination of the regulations at 24 CFRpart 86, requires all persons and entitieswho lobby covered executive orlegislative branch officials to registerwith the Secretary of the Senate and theClerk of the House of Representativesand file reports concerning theirlobbying activities.

Prohibition Against AdvanceInformation on Funding Decisions

Section 103 of the Department ofHousing and Urban Development

Reform Act of 1989, and HUD’simplementing regulation codified atsubpart B of 24 CFR part 4, applies tothe funding competition announcedtoday. These requirements continue toapply until the announcement of theselection of successful applicants. HUDemployees, including those conductingtechnical assistance sessions orworkshops and those involved in thereview of applications and in themaking of funding decisions, are limitedby section 103 from providing advanceinformation to any person (other than anauthorized employee of HUD)concerning funding decisions, or fromotherwise giving any applicant an unfaircompetitive advantage. Persons whoapply for assistance in this competitionshould confine their inquiries to thesubject areas permitted under section103 and subpart B of 24 CFR part 4.

Applicants who have ethics relatedquestions should contact the HUDOffice of Ethics, (202) 708–3815. (Thisis not a toll-free number.)

Catalog of Federal Domestic Assistance. TheCatalog of Federal Domestic AssistanceNumber for this program is 14.219.


Joseph A. D’Agosta,Acting General Deputy Assistant Secretaryfor Community Planning and Development.[FR Doc. 98–31516 Filed 11–20–98; 1:30 pm]


fede

ral r

egiste

r

65501


Part VII

Department ofJusticeBureau of Prisons

28 CFR Part 551Smoking/No Smoking Areas; ProposedRule



Bureau of Prisons

28 CFR Part 551

[BOP–1084–P]

RIN 1120–AA79

Smoking/No Smoking Areas

AGENCY: Bureau of Prisons, Justice.ACTION: Proposed rule.

SUMMARY: In this document the Bureauof Prisons is proposing to revise itsregulations on smoking in order to limitsmoking in Bureau of Prisons facilitiesto visibly designated outdoor locations,unless an indoor area has beendesignated as a smoking area to be usedexclusively for authorized religiousactivities. Previously, smoking areas atmedical referral centers and minimumsecurity institutions were ordinarilylocated outside of all buildings, andWardens at other institutions could, butwere not required to, identify certainindoor areas as designated smokingareas where the needs of effectiveoperations so required (for example, forthose who may be employed in, orrestricted to, a nonsmoking area for anextended period of time). Thisamendment is intended to promote aclean air environment and to protect thehealth and safety of staff and inmates.DATES: Comments due by January 25,1999.ADDRESSES: Rules Unit, Office ofGeneral Counsel, Bureau of Prisons,HOLC Room 754, 320 First Street, NW.,Washington, DC 20534.FOR FURTHER INFORMATION CONTACT: RoyNanovic, Office of General Counsel,Bureau of Prisons, phone (202) 514–6655.SUPPLEMENTARY INFORMATION: TheBureau of Prisons is proposing to amendits regulations on Smoking/No SmokingAreas (28 CFR part 551, subpart N). Afinal rule on this subject was publishedin the Federal Register on July 6, 1994(59 FR 34742).

The hazards of tobacco smoke(including the health risks associatedwith passive inhalation of second-handsmoke by nonsmokers) are wellestablished by medical and publichealth authorities. The national healthpromotion disease prevention objectivesof the Public Health Service studyHealthy People 2000 have identifiedhealth status, risk reduction, andservices and protection objectives inrelation to tobacco. One of the objectivescalls for stricter policies in theworkplace that prohibit or severelyrestrict smoking. Cigarette smoking is

responsible for an estimated 21 percentof all coronary heart disease deaths, 30percent of all cancer deaths, and 87percent of lung cancer deaths. Theknown health risks associated withsmoking and the increasing societalconcern about passive tobacco smoke,provide ample evidence and support forthe Bureau to enact stricter smoking/nosmoking rules to protect the health andsafety of both staff and inmates.

In the previous revision of itsregulations on smoking/no smokingareas (59 FR 34742), the Bureau limitedsmoking at medical referral centers andminimum security institutionsordinarily to outside locations. Underthe revised regulations, Wardens at low,medium, high, and administrativeinstitutions could identify certainindoor areas as designated smokingareas for those who may be employedin, or restricted to, a nonsmoking areafor an extended period of time. Theregulations, however, did not requirethe Wardens at these institutions todesignate indoor smoking areas.

The Bureau has an obligation to itsemployees and to the inmates in itscustody to provide the safest andhealthiest environment possible.Therefore, the Bureau is now proposingthat the restriction on designated indoorsmoking areas be extended to all Bureauof Prisons institutions. Smoking willonly be permitted outdoors in visiblydesignated locations with the exceptionthat an indoor smoking area may bedesignated to be used exclusively forauthorized religious activities.Individuals who do not observe thesmoking restrictions are subject toappropriate disciplinary action.

Programs to assist those personswishing assistance in quitting smokingare available through normal health careprograms offered to inmates.

This rule falls within a category ofactions that the Office of Managementand Budget (OMB) has determined notto constitute ‘‘significant regulatoryactions’’ under section 3(f) of ExecutiveOrder 12866 and, accordingly, it wasnot reviewed by OMB. After review ofthe law and regulations, the Director,Bureau of Prisons certifies that this rule,for the purpose of the RegulatoryFlexibility Act (5 U.S.C. 601 et seq.),does not have a significant economicimpact on a substantial number of smallentities, within the meaning of the Act.Because this rule pertains to thecorrectional management of offenderscommitted to the custody of theAttorney General or the Director of theBureau of Prisons, its economic impactis limited to the Bureau’s appropriatedfunds.

Interested persons may participate inthis proposed rulemaking by submittingdata, views, or arguments in writing tothe Rules Unit, Office of GeneralCounsel, Bureau of Prisons, 320 FirstStreet, NW., HOLC Room 754,Washington, DC 20534. Commentsreceived during the comment periodwill be considered before final action istaken. Comments received after theexpiration of the comment period willbe considered to the extent practicable.All comments received remain on filefor public inspection at the aboveaddress. The proposed rule may bechanged in light of the commentsreceived. No oral hearings arecontemplated.

List of Subjects in 28 CFR Part 551Prisoners.

Kathleen Hawk Sawyer,Director, Bureau of Prisons.

Accordingly, pursuant to therulemaking authority vested in theAttorney General in 5 U.S.C. 552(a) anddelegated to the Director, Bureau ofPrisons in 28 CFR 0.96(p), part 551 insubchapter C of 28 CFR, chapter V isproposed to be amended as set forthbelow.

Subchapter C—InstitutionalManagement

PART 551—MISCELLANEOUS

1. The authority citation for 28 CFRpart 551 is revised to read as follows:

Authority: 5 U.S.C. 301; 18 U.S.C. 1512,3621, 3622, 3624, 4001, 4005, 4042, 4081,4082 (Repealed in part as to offensescommitted on or after November 1, 1987),4161–4166 (Repealed as to offensescommitted on or after November 1, 1987),5006–5024 (Repealed October 12, 1984 as tooffenses committed after that date), 5039; 28U.S.C. 509, 510; Pub. L. 99–500 (sec. 209); 28CFR 0.95–0.99; Attorney General’s May 1,1995 Guidelines for Victim and WitnessAssistance.

2. Subpart N is revised to read asfollows:

Subpart N—Smoking/No Smoking AreasSec.551.160 Purpose and scope.551.161 Definitions.551.162 Designated smoking areas.551.163 Disciplinary action.

Subpart N—Smoking/No SmokingAreas

§ 551.160 Purpose and scope.To promote a clean air environment

and to protect the health and safety ofstaff and inmates, the Bureau of Prisonsrestricts areas and circumstances wheresmoking is permitted within itsinstitutions and offices.


§ 551.161 Definitions.For purpose of this subpart, smoking

is defined as carrying or inhaling alighted cigar, cigarette, pipe, or otherlighted tobacco products.

§ 551.162 Designated smoking areas.The Warden is responsible for

designating smoking areas. Smoking is

permitted only in these visiblydesignated areas. Designated areas are tobe outdoors, with the exception that anindoor area may be designated if theindoor designated smoking area is to beused exclusively for authorizedreligious activities.

§ 551.163 Disciplinary action.

Appropriate disciplinary action maybe taken for failure to observe smokingrestrictions.[FR Doc. 98–31556 Filed 11–24–98; 8:45 am]BILLING CODE 4410–05–P

fede

ral r

egiste

r

65505


Part VIII

Department of LaborPension and Welfare Administration

Notice on Annual Reporting EnforcementPolicy

65506 Federal Register / Vol. 63, No. 227, Wednesday, November 25, 1998 / Notices

1 See ERISA sections 101(b)(1) and 103, and 29CFR 2520.103–1.

2 ERISA sections 104(a)(5) and 502(c)(2), and 29CFR 2560.502c–2. See 29 CFR 2570.502c–2 which,in accordance with the requirements of the FederalCivil Penalties Inflation Adjustment Act of 1990, asamended, increased the civil penalty from $1,000a day to $1,100 a day for violations occurring afterJuly 29, 1997.

3 See letter to Cary Hammond from AssistantSecretary Olena Berg (July 11, 1997).

DEPARTMENT OF LABOR


RIN 1210 AA57

Notice on Annual ReportingEnforcement Policy

AGENCY: Pension and Welfare BenefitsAdministration, Department of Labor.ACTION: Notice.

SUMMARY: The purpose of this notice isto announce the Department of Labor’sdecision not to adopt the proposedannual reporting enforcement policydescribed in a notice published in theFederal Register on March 13, 1997 (62FR 11929). Under the proposal, theDepartment would not have rejected theannual report (Form 5500) of amultiemployer welfare benefit plansolely because the accountant’s opinionaccompanying the report was‘‘qualified’’ or ‘‘adverse’’ due to a failureto account and report for post-retirement benefit obligations inaccordance with American Institute ofCertified Public Accountants (AICPA)Statement of Position (SOP) 92–6, orotherwise was affected by or reflectednoncompliance with the financialstatement disclosure requirements ofSOP 92–6. The proposed enforcementrelief also was made available on aninterim basis for the 1996, 1997, and1998 plan years to provide time forconsideration of public comments onthe proposal. Although the Departmenthas decided not to adopt the proposedenforcement policy, to providemultiemployer welfare benefit planswith adequate time to comply with SOP92–6’s requirements, the Department, bythis notice, is extending the interimreporting relief to cover 1999 plan yearannual reports filed by multiemployerwelfare benefit plans. Annual reports ofmultiemployer welfare benefit plansfiled for plan years commencing on orafter January 1, 2000, however, will besubject to rejection if there is anymaterial qualification in theaccountant’s opinion accompanying theannual report due to a failure to complywith the requirement of SOP 92–6.FOR FURTHER INFORMATION CONTACT: EricA. Raps, Office of Regulations andInterpretations, Pension and WelfareBenefits Administration (PWBA), U.S.Department of Labor, Washington, DC20210, (202) 219–8515 (not a toll freenumber).SUPPLEMENTARY INFORMATION:

A. BackgroundIn general, the administrator of an

employee benefit plan with 100 or more

participants at the beginning of a planyear is required under Title I of theEmployee Retirement Income SecurityAct of 1974, as amended (ERISA), andthe Department’s regulations issuedthereunder, to file an annual report andto include as part of that report theopinion of an independent qualifiedpublic accountant.1 These annualreporting requirements are satisfied byfiling the Form 5500 Annual Return/Report in accordance with itsinstructions and related regulations. Therequirements governing the content ofthe opinion and report of theindependent qualified publicaccountant are set forth in ERISAsection 103(a)(3)(A) and 29 CFR2520.103–1(b)(5). ERISA section104(a)(4) permits the Department toreject an annual report if it determinesthat there is a material qualification byan accountant contained in the opinionrequired to be submitted pursuant tosection 103(a)(3)(A). If the Departmentrejects a filing under section 104(a)(4),and the administrator fails to submit asatisfactory filing within 45 days, theDepartment may, among other things,assess a civil penalty of up to a $1,000a day against the administrator forfailing or refusing to file an annualreport.2

On March 13, 1997, the Departmentpublished a notice in the FederalRegister (62 FR 11929) inviting publiccomment on a proposed annualreporting policy for multiemployerwelfare benefit plans. Under thisproposed policy, the Department wouldnot reject the annual report of amultiemployer welfare benefit plansolely because the accountant’s opinionaccompanying the report is ‘‘qualified’’or ‘‘adverse’’ due to a failure to accountand report for post-retirement benefitobligations in accordance with thefinancial statement disclosurerequirements of SOP 92–6. To allowsufficient time for considering publiccomments on the proposal, theDepartment announced in the FederalRegister notice that the Departmentwould not reject 1996 and 1997 planyear multiemployer welfare benefit planannual reports due to such qualified oradverse accountant’s opinions. Inresponse to questions, the Departmentsubsequently clarified the scope of therelief indicating that it would not reject

the subject annual reports because theaccountant’s opinion reflects or isotherwise affected by noncompliancewith any aspect of SOP 92–6.3 Thisinterim report relief was later extendedto the 1998 annual reports filed bymultiemployer welfare benefit plans.

B. Non-Adoption of ProposedEnforcement Policy

The Department received publiccomments supporting and opposingadoption of the proposed policy. Aftercarefully evaluating all of the commentsreceived, the Department has decidednot to adopt the proposed enforcementpolicy.

Section 103(a)(3)(A) of ERISAprovides, in relevant part, that theadministrator of an employee benefitplan must engage an independentqualified public accountant to conductan examination of any financialstatements, books and records of theplan necessary to enable the accountantto form an opinion as to whether thefinancial statements and schedules,required to be included in the annualreport, are presented fairly and inconformity with Generally AcceptedAccounting Principles or ‘‘GAAP,’’Because the accounting professionestablishes the requirements pertainingto GAAP, it has been the Department’slongstanding position that it generallywill not rule as to the acceptability ofmethods of accounting or auditing forpurposes of the accountant’s opinionrequired to be attached to the annualreport. See, e.g., Advisory Opinion 84–45A (November 16, 1984).

Although the Department believesthat the questions raised relating to theusefulness of the post-retirement benefitobligation disclosure required underSOP 92–6 for multiemployer and otherwelfare benefit plans have merit, theDepartment, following consideration ofthe comments, has concluded that theaccounting profession, rather than theDepartment through reportingenforcement policies, should beresponsible for addressing problemsattendant to the application ofaccounting principles. For this reason,the Department has determined not toadopt the proposed enforcement policy.The Department, however, continues toencourage the AICPA, as well as theFinancial Accounting Standards Board,as they review SOP 92–6 to continue towork with the multiemployer plancommunity and other interested partiesand develop accounting methodologiesfor assessing post-retirement benefitobligations that will serve to produce

65507Federal Register / Vol. 63, No. 227, Wednesday, November 25, 1998 / Notices

meaningful financial information thatwill be useful to plan fiduciaries, planparticipants and beneficiaries and theDepartment of Labor.

C. Interim Relief and Applicability Date

This notice does not affect theDepartment’s previous announcedinterim reporting relief for annualreports filed by multiemployer welfarebenefit plans for 1996, 1997 and 1998plan years. In addition, to ensure thatmultiemployer welfare benefit planshave an adequate opportunity to preparetheir financial recordkeeping and otherrelated systems so that financialstatements can be prepared to comply

with SOP 92–6, the Department herebyannounces that this same interimreporting relief will apply for the 1999plan year annual reports filed bymultiemployer welfare benefit plans. Inparticular, the Department understandsthat multiemployer welfare benefitplans may need this additional time tobe able to present plan year 1999 andplan year 2000 comparative financialstatements for Form 5500 filings madefor the 2000 plan year. Multiemployerwelfare benefit plan administrators whorely on the interim reporting relief mustcomply with the AICPA’s pre-SOP 92–6 requirements in their financialstatement treatment of the matters now

covered by SOP 92–6. Annual reports ofmultiemployer welfare benefit plansfiled for plan years commencing on orafter January 1, 2000, however, will besubject to rejection if there is anymaterial qualification in theaccountant’s opinion accompanying theannual report due to a failure to complywith the requirements of SOP 92–6.

Signed at Washington DC, this 18th day ofNovember 1998.Meredith Miller,Deputy Assistant Secretary for Policy, Pensionand Welfare Benefits Administration,Department of Labor.[FR Doc. 98–31524 Filed 11–24–98; 8:45 am]BILLING CODE 4510–29–M

fede

ral r

egiste

r

65509


Part IX

The PresidentProclamation 7150—World Fisheries Day,1998

Proclamation 7151—National FamilyCaregivers Week, 1998

Proclamation 7152—National FamilyWeek, 1998

Presidential Documents

65511

Federal Register

Vol. 63, No. 227


Title 3—

The President

Proclamation 7150 of November 20, 1998

World Fisheries Day, 1998

By the President of the United States of America

A Proclamation

As a coastal Nation, America has a proud fishing heritage, and we havelong benefited from the bounty of the oceans. Generations of our peoplehave made their living from the sea, fishing for cod off the rocky coastof New England, shrimp in the Gulf of Mexico, or Pacific salmon alongthe West Coast and Alaska. In this Year of the Ocean, it is fitting thatwe set aside a special day to celebrate one of our Nation’s oldest industriesand the source of so much of our sustenance.

World Fisheries Day is not only an occasion for celebration, it is alsoa time to raise awareness of the plight of so many of the world’s fishresources. A recent United Nations study reported that more than two-thirds of the world’s fisheries have been overfished or are fully harvestedand more than one third are in a state of decline because of factors likethe loss of essential fish habitats, pollution, and global warming.

My Administration is committed to restoring our marine resources and pre-serving their diversity through careful stewardship. At the National OceansConference in June of this year, I announced our goal of creating sustainablefisheries and rebuilding fish stocks by working with industry to improvefishing practices and technologies that catch only targeted species, devotingadditional resources to fisheries research, and protecting essential fish habi-tats. We have also launched the Clean Water Action Plan that, among otherthings, reduces the runoff from farms and city streets that flow into ourstreams, rivers, and oceans.

While these efforts are important, the United States acting alone cannotpreserve the health of the world’s oceans and their marine life. It willtake concerted international action—both at the government level and fromfish harvesters, workers, and consumers themselves—and a commitmentto scientifically based fishing limits to rebuild the world’s fisheries andensure that future generations will benefit from their abundance.

NOW, THEREFORE, I, WILLIAM J. CLINTON, President of the United Statesof America, by virtue of the Constitution and laws of the United States,do hereby proclaim Saturday, November 21, 1998, as World Fisheries Day.I call upon Government officials, fishing industry professionals, scientists,environmental experts, and the people of the United States to observe thisday and to recognize the importance of conserving the world’s fisheries,sustaining the health of the oceans, and protecting their precious and abun-dant variety of marine life.

65512 Federal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / Presidential Documents

IN WITNESS WHEREOF, I have hereunto set my hand this twentieth dayof November, in the year of our Lord nineteen hundred and ninety-eight,and of the Independence of the United States of America the two hundredand twenty-third.

œ–[FR Doc. 98–31750

Filed 11–24–98; 8:45 am]

Billing code 3195–01–P


65513Federal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / Presidential Documents


National Family Caregivers Week, 1998


A Proclamation

As American families enjoy Thanksgiving this year, millions of aging parentsand grandparents or relatives with disabilities will be able to join thesecelebrations because of the loving support of family caregivers. Each daythese generous women and men devote their time and energies to carefor family members who can no longer live independently or who needassistance to remain in the familiar surroundings of their own homes.

The need for such caregivers in our Nation is growing. We are blessedto live in a time when medicine and technology have helped us live longer;as a result, people 85 years of age and older constitute America’s fastest-growing age group. For these older Americans, however, the blessing oflongevity also brings with it an increased likelihood of disability and chronicdisease, reduced physical and mental agility, and higher risk of injury orillness—all of which create a greater need for care.

Families across our country have quickly responded to this need, but oftenat great financial, physical, and emotional sacrifice. Family members, workingwithout pay, are the major providers of long-term care in the United States,and half of all caregivers today are over the age of 65 and are often themselvesin declining health. Women, who tend to be the primary family caregiversin our society, often must juggle full-time work and family schedules withtheir caregiving responsibilities.

The contributions that family caregivers make to our society are best gaugedby the impact they have in improving the quality of life of the familymembers for whom they care. Thanks to family caregivers, those they serveretain a measure of independence, remain with friends and relatives, andcontinue making contributions to our Nation.

This week, as we celebrate Thanksgiving and reflect with gratitude on ourmany blessings, let us remember to give thanks for the family caregiversamong us whose love and care make life brighter for so many and whosededication and generosity contribute so much to the strength and well-being of our Nation.

NOW, THEREFORE, I, WILLIAM J. CLINTON, President of the United Statesof America, by virtue of the authority vested in me by the Constitutionand laws of the United States, do hereby proclaim November 22 throughNovember 28, 1998, as National Family Caregivers Week. I call upon Govern-ment officials, businesses, communities, educators, volunteers, and the peo-ple of the United States to pay tribute to and acknowledge the heroicefforts of caregivers this special week and throughout the year.



œ–[FR Doc. 98–31751

Filed 11–24–98; 8:45 am]



65515Federal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / Presidential Documents


National Family Week, 1998


A Proclamation

Of all the blessings that Americans enjoy, our families are perhaps themost precious. It is within the family that we first gain an understandingof who we are and learn to respect the individuality of others. It is toour families that we turn for the unconditional love, acceptance, comfort,and support we need. And it is our families who teach us how to givethat love and support to others, helping us to grow into strong, caringadults who can contribute to the well-being of our communities and ourworld.

In the broad and diverse America of today, families take many differentforms, but they all share a need for security and stability. If we are tomaintain strong families as the cornerstone of our society and our hopefor the future, it is our responsibility as individuals to strengthen andprotect our own families—and it is our responsibility as Americans to reachout with compassion to help other families in need.

My Administration has worked hard to help provide America’s familieswith the tools they need to thrive. Our economic policies have broughtdignity, security, and opportunity to millions of families by creating newjobs and reducing unemployment.

The most important work, however, is always done in the hearts and homesof individuals. During this week, I encourage all Americans to reflect uponthe many blessings of family life and to join in our national effort topromote strong, loving families across our country. By strengthening andsupporting the American family, we are ensuring that the future will bebright for our children, our Nation, and the world.

NOW, THEREFORE, I, WILLIAM J. CLINTON, President of the United Statesof America, by virtue of the authority vested in me by the Constitutionand the laws of the United States, do hereby proclaim November 22 throughNovember 28, 1998, as National Family Week. I call upon Federal, State,and local officials to honor American families with appropriate programsand activities. I encourage educators, community organizations, and religiousleaders to celebrate the strength and values we draw from family relation-ships, and I urge all the people of the United States to reaffirm theirown family ties and to reach out to other families in friendship and goodwill.



œ–[FR Doc. 98–31752

Filed 11–24–98; 8:45 am]


i

Reader Aids Federal Register

Vol. 63, No. 227


CUSTOMER SERVICE AND INFORMATION

Federal Register/Code of Federal RegulationsGeneral Information, indexes and other finding

aids202–523–5227

Laws 523–5227

Presidential DocumentsExecutive orders and proclamations 523–5227The United States Government Manual 523–5227

Other ServicesElectronic and on-line services (voice) 523–4534Privacy Act Compilation 523–3187Public Laws Update Service (numbers, dates, etc.) 523–6641TTY for the deaf-and-hard-of-hearing 523–5229

ELECTRONIC RESEARCH

World Wide Web

Full text of the daily Federal Register, CFR and otherpublications:

http://www.access.gpo.gov/nara

Federal Register information and research tools, including PublicInspection List, indexes, and links to GPO Access:

http://www.nara.gov/fedreg

E-mail

PENS (Public Law Electronic Notification Service) is an E-mailservice that delivers information about recently enacted PublicLaws. To subscribe, send E-mail to

[email protected]

with the text message:

subscribe publaws-l <firstname> <lastname>

Use [email protected] only to subscribe or unsubscribe toPENS. We cannot respond to specific inquiries at that address.

Reference questions. Send questions and comments about theFederal Register system to:

[email protected]

The Federal Register staff cannot interpret specific documents orregulations.

FEDERAL REGISTER PAGES AND DATES, NOVEMBER

58619–59202......................... 259203–59456......................... 359457–59690......................... 459691–59874......................... 559875–60202......................... 660203–60448......................... 962919–63120.........................1063121–63384.........................1263385–63590.........................1363591–63780.........................1663781–63968.........................1763969–64168.........................1864169–64408.........................1964409–64588.........................2064589–64838.........................2364839–65042.........................2465043–65516.........................25

CFR PARTS AFFECTED DURING NOVEMBER

At the end of each month, the Office of the Federal Registerpublishes separately a List of CFR Sections Affected (LSA), whichlists parts and sections affected by documents published sincethe revision date of each title.

3 CFR

Proclamations:6636 (Terminated by

Department of StatePublic notice No.2932) ............................64139

7144.................................591997145.................................592037146.................................631217147.................................644057148.................................644077149.................................648397150.................................655117151.................................655137152.................................65515Executive Orders:11246 (See

Department of theInterior notice) ..............60381

12170 (See Notice ofNov. 9, 1998) ...............63125

12938 (See Notice ofNov. 12, 1998) .............63589

13105...............................60201Administrative Orders:Memorandum of Oct.

27, 1998 .......................63123Notices:Nov. 9, 1998 ....................63125Nov. 12, 1998 ..................63589Presidential Determinations:No. 99–1 of October

21, 1998 .......................59201No. 99–3 of Nov. 6,

1998 .............................64169

5 CFR

316...................................63781317...................................59875335...................................59875351...................................63591410...................................64589532...................................63591550...................................64589551...................................64589591.......................63385, 64589630...................................64589870...................................64589890.......................59457, 645892634.................................58619Proposed Rules:316...................................64008530...................................64880531...................................64880532...................................58659536...................................64880550...................................64880551...................................64880575...................................64880591...................................64880610...................................64880

7 CFR

17.....................................5969146.....................................64171246...................................63969301 ..........62919, 63385, 64409723...................................59205737...................................60203905...................................62919911...................................60204915...................................60204916...................................60209917...................................60209920...................................62923944...................................629191499.................................59876Proposed Rules:15.....................................6296215d...................................62962246...................................64211729...................................65133868...................................65134916...................................64653917...................................64653930.......................63803, 64008956...................................64215984.......................59246, 59891985...................................638041214.................................629641216.....................59893, 599071755.................................59248

8 CFR

103.......................63593, 64895208...................................64895240...................................64895244...................................63593274a.....................63593, 64895299.......................63593, 64895

9 CFR

1.......................................629252.......................................6292511.....................................6292577.....................................6459592.....................................6292793.........................62927, 6417394.........................62927, 6417395.....................................6292796.....................................6292798.....................................62927130...................................64173

10 CFR

50.....................................6312770.....................................63127835...................................59662Proposed Rules:Ch. 1 ................................6482820.....................................6482932.....................................6482935.....................................6482970.....................................64434

ii Federal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / Reader Aids

430...................................64344432...................................63360

11 CFR

9003.................................633889033.................................63388

12 CFR

4.......................................62927204...................................64841208...................................58620211...................................58620215...................................58620225.......................58620, 65281262...................................58620263...................................58620265.......................58620, 65043611...................................64846Proposed Rules:Ch. VI...............................64013611...................................60219614...................................60219618...................................60219701...................................59742

14 CFR

23.....................................6293025.....................................5969239 ...........58622, 58624, 58625,

59206, 59460, 59695, 59696,59697, 59699, 60222, 60224,62931, 62935, 63130, 63132,63134, 63137, 63388, 63390,63391, 63393, 63396, 63397,63398, 63400, 63402, 63597,63598, 63784, 63967, 63975,64175, 64597, 64598, 64600,64602, 64603, 64605, 64606,64698, 64609, 64612, 64844,64846, 64848, 64849, 64854,64856, 64857, 65045, 65047,65048, 65050, 65052, 65054,

65056, 6505771 ...........58627, 58628, 58629,

58811, 59701, 59702, 59703,59704, 59705, 59842, 59878,62936, 63139, 63140, 63600,63601, 63967, 63977, 64179,64180, 64181, 64411, 64615,64860, 64861, 64862, 64863,64864, 64865, 64866, 64867

91.....................................6378897 ............59878, 59879, 59881107.......................60448, 64867108.......................60448, 64867121...................................63788125...................................63788Proposed Rules:23.....................................5866036.....................................6414639 ...........59252, 59743, 60222,

60224, 62970, 62973, 63423,63620, 64654, 64656, 64657,64659, 64661, 64664, 64913,64915, 64918, 65136, 65147

71 ...........59255, 59256, 59257,62975, 63622, 63623, 63624,63625, 63626, 63627, 64016,

6402191.........................59494, 62976119...................................62976121 ..........59192, 59494, 62976125...................................62976129...................................64764135 ..........59192, 59494, 62976145...................................59192

15 CFR

295...................................64411740...................................63141742.......................63141, 64322744...................................64322902...................................64182

16 CFR

436...................................646161700.................................63602Proposed Rules:305.......................58671, 64921

17 CFR

10.....................................58811200.......................59862, 63143201...................................63404240 .........58630, 59208, 59362,

63143249.......................59862, 63143274...................................62936Proposed Rules:240.......................59911, 63222

18 CFR

Proposed Rules:4.......................................59916153...................................59916157...................................59916161...................................63425250...................................63425284...................................63425375...................................59916

19 CFR

191...................................65060351...................................65348

20 CFR

10.....................................6528425.....................................65284

21 CFR

10.....................................6397816.....................................6455626.....................................6012299.....................................64556101...................................63982175...................................59706176.......................59707, 63406178.......................59213, 59709211...................................59463314...................................59710510...................................59215520 ..........59712, 59713, 63982522 ..........59215, 59714, 63788524...................................59715556...................................59715558...................................59216806...................................63983812...................................64617814...................................59217862...................................59222864...................................59222866...................................59222872...................................59715876...................................59222880.......................59222, 59717882...................................59222886...................................59222890...................................59222892...................................59222Proposed Rules:1.......................................64930101...................................62977

310...................................59746314.......................59746, 64222320...................................64222600...................................59746862...................................63122864...................................63122866...................................63122868...................................63122870...................................63122872...................................63122874...................................63122876...................................63122878...................................63122880.......................59917, 63122882...................................63122884...................................63122886...................................63122888...................................63122890...................................63122892...................................63122900...................................597501308.................................597511310.................................632531312.................................59751

22 CFR

40.....................................64626

23 CFR

Proposed Rules:658...................................64434

24 CFR

246...................................64802891...................................64802Proposed Rules:5.......................................58675

26 CFR

1 ..............58811, 64187, 64868Proposed Rules:1...........................58811, 63016

27 CFR

Proposed Rules:4.......................................5992119.....................................5992124.....................................59921194...................................59921250...................................59921251...................................59921

28 CFR

0.......................................6293716.....................................6506027.....................................6293736.....................................64836Proposed Rules:551...................................65502

29 CFR

2704.................................631784011.................................631784022.................................631784044.....................63179, 63408Proposed Rules:2510.................................64667

30 CFR

904...................................65062943...................................65068944...................................63608Proposed Rules:46.....................................59258913.......................63628, 63630

915...................................59627936...................................65149938...................................59259

31 CFR

317...................................64544351...................................64544353...................................64544370...................................64544560...................................62940575...................................62942585...................................59883

32 CFR

199...................................59231286...................................65420311...................................59718318...................................60214

33 CFR

100.......................59232, 63611117 .........60212, 63180, 64187,

64628, 64868165.......................58635, 59719Proposed Rules:Ch. I .................................64937100...................................63426117 ..........58676, 60226, 64022181...................................63638

36 CFR

200...................................600491191.................................64836

37 CFR

201.......................59233, 59235

38 CFR

3.......................................62943Proposed Rules:14.....................................5949517.........................58677, 6022721.....................................6325351.....................................602271001.................................640231002.................................640231003.................................640231004.................................640231005.................................640231006.................................64023

39 CFR

Proposed Rules:20.....................................65153

40 CFR

59.....................................6476152 ...........58637, 59471, 59720,

59884, 60214, 62943, 62947,63181, 63410, 63983, 63986,

6418860.....................................6486962 ...........59887, 63191, 63414,

63988, 6462863.........................63990, 6463264.....................................6486965.....................................6486966.....................................6486967.....................................6486968.....................................6486969.....................................6486970.....................................6486971.....................................6486979.....................................6378980.....................................63793

iiiFederal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / Reader Aids

81 ............58637, 59722, 6441586.....................................63967180 .........65071, 65073, 65078,

65085261...................................64372281...................................63793406...................................64417721.......................62955, 64874Proposed Rules:52 ...........58678, 59754, 59923,

59924, 60257, 63428, 6422862 ...........59928, 63429, 64023,

6466763.........................64023, 6466879.....................................6380780.....................................6380781.........................58678, 6443782.....................................64437300.......................64668, 65161745.......................59754, 64670

41 CFR

60–250.............................5963060–741.............................59657301-3................................63417301-10..............................63417

42 CFR

405...................................58814410...................................58814412...................................64191413...................................58814414...................................58814415...................................58814424...................................58814440...................................64195441...................................64195485...................................58814Proposed Rules:5.......................................5867951c ...................................58679409...................................63429410...................................63429411...................................63429412...................................63429413...................................63429416...................................63430419...................................63429

488...................................63430489...................................63429498...................................634291003.................................63429

43 CFR

Proposed Rules:428...................................64158

44 CFR

64.........................59236, 6379665.........................64418, 6441967.....................................64420206...................................64423Proposed Rules:62 (2 documents) ...........63431,

6343267.....................................64441

45 CFR

1201.................................641991606.................................646361623.................................646461625.................................64636

46 CFR

2.......................................59472199...................................63798510...................................64876514...................................64876582...................................64876Proposed Rules:45.....................................58679

47 CFR

1...........................63612, 650872...........................58645, 637985.......................................6419921.....................................6508724.....................................6361236.........................63993, 6464952.....................................6361354.....................................6399369.....................................6399373 ...........59238, 59239, 62956,

62957, 63617, 63618, 64876,64877

74.....................................6508790.........................58645, 64199Proposed Rules:Ch. 1 ................................5975525.....................................6325854.....................................5868564.....................................6363973 ...........59262, 59263, 59928,

63016, 6494190.....................................58685

48 CFR

209...................................64426213...................................64426215.......................63799, 64427217...................................64427219.......................64426, 64427225...................................64426226...................................64427231...................................64426235...................................64426236.......................64426, 64427252.......................64426, 64427253 .........60216, 60217, 63799,

644261827.................................632091852.................................63209Proposed Rules:Ch. 7 ................................5950111.....................................6377852.....................................63778712...................................59501727...................................59501742.......................59501, 64539752...................................59501801...................................60257806...................................60257812...................................60257837...................................60257852...................................60257873...................................60257909...................................60269970.......................60269, 640241842.................................636541852.................................63654

49 CFR

1.......................................59474

37.....................................6483640.....................................65128195.......................59475, 63210385...................................62957571 ..........59482, 59732, 63800Proposed Rules:171...................................59505177...................................59505178...................................59505180...................................59505243...................................59928571.......................60271, 632581420.....................59263, 65163

50 CFR

17 ............59239, 63421, 6477220.....................................6358023.....................................63210217...................................62959227...................................62959230...................................65129300...................................64005600.......................64209, 64182622...................................64430644...................................63421648.......................64006, 64436660...................................64209679 .........58658, 59244, 63221,

63801, 64652, 64878, 65129Proposed Rules:17 ...........58692, 63657, 63659,

63661, 64449, 65164, 6516518.....................................6381220.....................................6027821.....................................60278216...................................64228222...................................58701227...................................58701300...................................64031622 ..........60287, 63276, 64031648 .........59492, 63434, 63436,

63819, 64032, 64539649...................................63436660.......................59758, 64032679 ..........60288, 63442, 64034

iv Federal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / Reader Aids

REMINDERSThe items in this list wereeditorially compiled as an aidto Federal Register users.Inclusion or exclusion fromthis list has no legalsignificance.

RULES GOING INTOEFFECT NOVEMBER 25,1998

ENVIRONMENTALPROTECTION AGENCYPesticides; tolerances in food,

animal feeds, and rawagricultural commodities:Azoxystrobin; published 11-

25-98Carfentrazone-ethyl;

published 11-25-98Hydramethylnon; published

11-25-98Tebufenozide; published 11-

25-98FEDERAL RESERVESYSTEMOrganization, functions, and

authority delegations:Consumer and Community

Affairs Division, Director;published 11-25-98

HEALTH AND HUMANSERVICES DEPARTMENTFood and DrugAdministrationMedical devices:

General and plastic surgerydevices—Tweezer-type epilator;

reclassification;published 10-26-98

INTERIOR DEPARTMENTSurface Mining Reclamationand Enforcement OfficePermanent program and

abandoned mine landreclamation plansubmissions:Arkansas; published 11-25-

98Texas; published 11-25-98

JUSTICE DEPARTMENTPrivacy Act:

System of records;published 11-25-98

SECURITIES ANDEXCHANGE COMMISSIONPractice and procedure:

Improper professionalconduct standards;published 10-26-98

SOCIAL SECURITYADMINISTRATIONOrganization and procedures:

Telephone conversations;listening-in to orrecording; published 10-26-98

TRANSPORTATIONDEPARTMENTFederal AviationAdministrationAirworthiness directives:

New Piper Aircraft, Inc.;correction; published 10-22-98

COMMENTS DUE NEXTWEEK

AGRICULTUREDEPARTMENTAgricultural MarketingServiceCherries (tart) grown in—

Michigan; comments due by12-1-98; published 11-17-98

Michigan et al.; commentsdue by 12-3-98; published11-18-98

AGRICULTUREDEPARTMENTAnimal and Plant HealthInspection ServicePlant-related quarantine,

foreign:Orchids in growing media;

importation; commentsdue by 12-2-98; published10-29-98

AGRICULTUREDEPARTMENTGrain Inspection, Packersand StockyardsAdministrationFees:

Official inspection andweighing services;comments due by 12-1-98; published 10-2-98

AGRICULTUREDEPARTMENTRural Utilities ServiceElectric loans:

Year 2000 compliant electricsystems; comments dueby 11-30-98; published 9-29-98

COMMERCE DEPARTMENTNational Oceanic andAtmospheric AdministrationFishery conservation and

management:West Coast States and

Western Pacificfisheries—Northern anchovy;

comments due by 11-30-98; published 10-30-98

COMMERCE DEPARTMENTPatent and Trademark OfficePatent cases:

Patent business goals;implementation; comments

due by 12-4-98; published10-5-98

DEFENSE DEPARTMENTFreedom of Information;

implementationNational Security Agency/

Central Security Service;comments due by 11-30-98; published 9-30-98

EDUCATION DEPARTMENTSpecial education and

rehabilitative services:State vocational

rehabilitation servicesprogram; comments dueby 11-30-98; published10-14-98

ENERGY DEPARTMENTEnergy Efficiency andRenewable Energy OfficeConsumer products; energy

conservation program:Fluorescent lamp ballasts;

energy conservationstandards; comments dueby 11-30-98; published10-30-98

ENERGY DEPARTMENTFederal Energy RegulatoryCommissionNatural gas companies

(Natural Gas Act):Facilities construction and

operation, etc.; filing ofapplications; commentsdue by 12-1-98; published10-16-98

ENVIRONMENTALPROTECTION AGENCYAir quality implementation

plans; √A√approval andpromulgation; variousStates; air quality planningpurposes; designation ofareas:Connecticut; comments due

by 12-2-98; published 11-2-98

Clean Air Act:Interstate ozone transport

reduction—Section 126 petitions,

findings of significantcontribution andrulemaking; commentsdue by 11-30-98;published 10-21-98

Interstate ozone transportreduction; Section 126petitions and Federalimplementation plans;comments due by 11-30-98; published 9-30-98

Regional transport of ozone,Eastern States; Federalimplementation plans;comments due by 11-30-98; published 10-21-98

Hazardous waste programauthorizations:Michigan; comments due by

11-30-98; published 10-29-98

Pesticides; tolerances in food,animal feeds, and rawagricultural commodities:Pyridaben; comments due

by 12-4-98; published 10-5-98

Superfund program:National oil and hazardous

substances contingencyplan—National priorities list

update; comments dueby 11-30-98; published9-29-98

Toxic substances:Lead-based paint;

identification of dangerouslevels of lead; commentsdue by 11-30-98;published 10-1-98

Water pollution control:Underground injection

control program—Class V wells;

requirements for motorvehicle waste andindustrial waste disposalwells and cesspools inground water-basedsource protection areas;comments due by 11-30-98; published 9-29-98

FEDERALCOMMUNICATIONSCOMMISSIONCommon carrier services:

Interstate services of localexchange carriers;authorized unitary rate ofreturn; comments due by12-3-98; published 10-20-98

Radio services, special:Amateur services—

Novice class andtechnician plus operatorlicenses phaseout, etc.;comments due by 12-1-98; published 9-14-98

Radio stations; table ofassignments:Nevada; comments due by

11-30-98; published 10-19-98

Texas; comments due by11-30-98; published 10-19-98

HEALTH AND HUMANSERVICES DEPARTMENTFood and DrugAdministrationFood additives:

Adjuvants, production aids,and sanitizers—2,9-dichloro-5,12-

dihydroquinone[2,3-b]acridine-7,14-dione(C.I. Pigment Red 202);comments due by 12-3-98; published 11-3-98

vFederal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / Reader Aids

HEALTH AND HUMANSERVICES DEPARTMENTHealth Care FinancingAdministrationMedicaid:

Managed care programs;comments due by 11-30-98; published 9-29-98

HEALTH AND HUMANSERVICES DEPARTMENTHealth care programs; fraud

and abuse:Health Insurance Portability

and Accountability Act—Data collection program;

final adverse actionsreporting; commentsdue by 11-30-98;published 10-30-98

HEALTH AND HUMANSERVICES DEPARTMENTInspector General Office,Health and Human ServicesDepartmentHealth care programs; fraud

and abuse:Health Insurance Portability

and Accountability Act—Data collection program;

final adverse actionsreporting; commentsdue by 11-30-98;published 10-30-98

JUSTICE DEPARTMENTImmigration andNaturalization ServiceImmigration:

Aliens—Deportation suspension,

removal cancellation,and status adjustmentcases; comments dueby 11-30-98; published9-30-98

JUSTICE DEPARTMENTParole CommissionFederal prisoners; paroling

and releasing, etc.:District of Columbia Code;

incorporation into ParoleCommission regulations;comments due by 12-1-98; published 7-21-98

District of Columbia Code;prisoners servingsentences; comments dueby 12-1-98; published 10-26-98

LABOR DEPARTMENTEmployment and TrainingAdministrationAliens:

Nonimmigrant agriculturalworkers; temporaryemployment; laborcertification process;administrative measuresto improve programperformance; commentsdue by 12-1-98; published10-2-98

NATIONAL CREDIT UNIONADMINISTRATIONCredit unions:

Member business loans andappraisals; comments dueby 11-30-98; published 9-29-98

NUCLEAR REGULATORYCOMMISSIONIndependent storage of spent

nuclear fuel and high-levelradioactive waste; licensingrequirements:30-day hold in loading spent

fuel after preoperationaltesting of independentspent fuel or monitoredretrievable storageinstallations; reportingrequirement eliminated; comments

due by 11-30-98;published 9-14-98

Rulemaking petitions:American National

Standards Institute;comments due by 11-30-98; published 9-15-98

PANAMA CANALCOMMISSIONShipping and navigation:

Marine accidents;investigations, control,responsibility; commentsdue by 11-30-98;published 10-22-98

TRANSPORTATIONDEPARTMENTFederal AviationAdministrationAir carrier certification and

operations:Major repair data

development (SFAR No.36); comments due by12-2-98; published 11-2-98

Airworthiness directives:Boeing; comments due by

11-30-98; published 9-30-98

Mooney Aircraft Corp.;comments due by 12-4-98; published 10-9-98

Pratt & Whitney; commentsdue by 11-30-98;published 8-31-98

Twin Commander AircraftCorp.; comments due by12-2-98; published 10-9-98

Airworthiness standards:Special conditions—

Raytheon model 390airplane; comments dueby 12-2-98; published11-2-98

Class E airspace; commentsdue by 11-30-98; published10-16-98

TRANSPORTATIONDEPARTMENTFederal HighwayAdministrationTransportation Equity Act for

21st Century;implementation:Open container laws;


TRANSPORTATIONDEPARTMENTNational Highway TrafficSafety AdministrationAnthropomorphic test devices:

Occupant crash protection—Hybrid III test dummies;

fifth percentile femaleadult dummy designand performancespecifications;comments due by 12-2-98; published 9-3-98

Motor vehicle safetystandards:Occupant crash protection—

Occupant protectionincentive grants criteria;comments due by 11-30-98; published 10-1-98

Transportation Equity Act for21st Century;implementation:Open container laws;


TRANSPORTATIONDEPARTMENTResearch and SpecialPrograms AdministrationHazardous materials:

Infectious substances andgenetically modified micro-organisms standards;

requirements andexceptions clarificationand public meeting;comments due by 12-1-98; published 9-2-98

TRANSPORTATIONDEPARTMENT

Transportation StatisticsBureau

ICC Termination Act;implementation:

Motor carriers of property;reporting requirements;comments due by 12-3-98; published 11-3-98

TREASURY DEPARTMENT

Customs Service

Drawback:

False drawback claims;penalties; comments dueby 11-30-98; published 9-29-98

TREASURY DEPARTMENT


Income taxes:

Taxpayer Relief Act—

Qualified retirement planbenefits; section411(d)(6) protectedbenefits; comments dueby 12-3-98; published9-4-98

Roth IRAs; comments dueby 12-2-98; published9-3-98

Procedure and administration:

Tax refund offset program;revisions; comments dueby 11-30-98; published 8-31-98

LIST OF PUBLIC LAWS

Note: The list of Public Lawsfor the second session of the105th Congress has beencompleted and will resumewhen bills are enacted intolaw during the first session ofthe 106th Congress, whichconvenes on January 6, 1999.

A cumulative list of PublicLaws for the second sessionof the 105th Congress will bepublished in the FederalRegister on November 30,1998.

Last List November 19, 1998.

FR-1998-11-25.pdf - Govinfo.gov

Documents

Transcript of FR-1998-11-25.pdf - Govinfo.gov