Federal Register Vol. 83, No.149,
Federal Register Volume 83, Issue 149 (August 2, 2018)
Federal Register Volume 83, Issue 149 (August 2, 2018)
| Page Range | 37735-38010 | |
| FR Document |
Document Created: 2017-12-29 23:38:31
Document Modified: 2017-12-29 23:38:31
| Page and Subject | |
|---|---|
| 83 FR 37993 - To Take Certain Actions Under the African Growth and Opportunity Act and for Other Purposes | |
| 83 FR 37812 - Sunshine Act Meeting | |
| 83 FR 37825 - Notice of Crude Helium Auction and Sale for Fiscal Year 2019 Delivery | |
| 83 FR 37808 - Sunshine Act Meeting; Farm Credit Administration Board | |
| 83 FR 37880 - Railroad Revenue Adequacy-2017 Determination; Railroad Cost of Capital-2017; Uniform Railroad Costing System-2017 Calculations | |
| 83 FR 37822 - Notice of Establishment of the Bureau of Indian Education Standards, Assessments, and Accountability System Negotiated Rulemaking Committee; Notice of Meetings | |
| 83 FR 37824 - Proclaiming Certain Lands as Reservation for the Rincon Band of Luiseno Mission Indians of the Rincon Reservation, California | |
| 83 FR 37824 - Proclaiming Certain Lands as Reservation for the Bois Forte Band of the Minnesota Chippewa Tribe of Minnesota | |
| 83 FR 37802 - Annual Updates to the Income Contingent Repayment (ICR) Plan Formula for 2018-William D. Ford Federal Direct Loan Program | |
| 83 FR 37795 - Atlantic Highly Migratory Species; Meeting of the Atlantic Highly Migratory Species Advisory Panel | |
| 83 FR 37807 - Application to Export Electric Energy; ADG Group Inc. | |
| 83 FR 37807 - Notice of Request for Information (RFI) on [email protected] (Hydrogen at Scale): Determining Opportunities To Facilitate Wide-Scale Hydrogen Adoption for Energy Security and Economic Growth | |
| 83 FR 37806 - Notice of Request for Information (RFI) on Understanding Catalyst Production and Development Needs at National Laboratories | |
| 83 FR 37827 - Advisory Council on Employee Welfare and Pension Benefit Plans; Nominations for Vacancies | |
| 83 FR 37882 - Notice of Final Federal Agency Actions on Proposed Highway in California | |
| 83 FR 37790 - Certain Cold-Rolled Steel Flat Products From the Republic of Korea: Initiation of Anti-Circumvention Inquiries on the Antidumping Duty and Countervailing Duty Orders | |
| 83 FR 37785 - Certain Corrosion-Resistant Steel Products From the Republic of Korea and Taiwan: Initiation of Anti-Circumvention Inquiries on the Antidumping Duty and Countervailing Duty Orders | |
| 83 FR 37784 - Certain Frozen Warmwater Shrimp From India: Initiation and Preliminary Results of Antidumping Duty Changed Circumstances Review | |
| 83 FR 37881 - WTO Dispute Settlement Proceeding Regarding United States-Anti-Dumping Measures on Fish Fillets From Vietnam | |
| 83 FR 37813 - Announce the Intent To Award an Administrative Supplement | |
| 83 FR 37783 - Notice of New Fee Sites | |
| 83 FR 37878 - Data Collection Available for Public Comments | |
| 83 FR 37812 - Availability of Set 29 Draft Toxicological Profiles | |
| 83 FR 37882 - Petition for Exemption; Summary of Petition Received; Honeywell Aerospace | |
| 83 FR 37827 - Advisory Committee for Mathematical and Physical Sciences; Notice of Meeting | |
| 83 FR 37780 - Regulated Navigation Area; Straits of Mackinac, Mackinaw City, MI | |
| 83 FR 37747 - Medicare, Medicaid, and Children's Health Insurance Programs: Announcement of the Extension of Temporary Moratoria on Enrollment of Part B Non-Emergency Ground Ambulance Suppliers and Home Health Agencies in Designated Geographic Locations | |
| 83 FR 37828 - Notice of Hearing (Notice of Evidentiary Hearing and Opportunity To Provide Oral, Written, and Audio-Recorded Limited Appearance Statements); In the Matter of Crow Butte Resources, Inc. (Marsland Expansion Area) | |
| 83 FR 37828 - Notice (Regarding Weapons at Atomic Safety and Licensing Board Proceeding); In the Matter of Crow Butte Resources, Inc. (Marsland Expansion Area) | |
| 83 FR 37879 - Administrative Declaration of a Disaster for the Commonwealth of Pennsylvania | |
| 83 FR 37880 - Administrative Declaration of a Disaster for the Commonwealth of Pennsylvania | |
| 83 FR 37880 - Administrative Declaration of a Disaster for the State of Maryland | |
| 83 FR 37879 - Administrative Declaration of a Disaster for the State of California | |
| 83 FR 37797 - Applications for New Awards; Grants to States for School Emergency Management Program | |
| 83 FR 37817 - Agency Information Collection Activities; Proposed Collection; Comment Request; Food and Drug Administration's Research and Evaluation Survey for the Public Education Campaign on Tobacco Among the Lesbian Gay Bisexual Transgender Community | |
| 83 FR 37813 - Revocation of Authorization of Emergency Use of an In Vitro Diagnostic Device for Detection of Ebola Virus | |
| 83 FR 37831 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Amendment No. 1 and Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change as Modified by Amendment No. 1 Thereto Regarding the Continued Listing and Trading of Shares of the Natixis Loomis Sayles Short Duration Income ETF | |
| 83 FR 37839 - Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Amendments No. 1 and 2 to Proposed Rule Change Concerning Enhanced and New Tools for Recovery Scenarios | |
| 83 FR 37870 - Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Codify the Definitions of the Protocols That Members Can Use To Enter Quotes and Orders | |
| 83 FR 37864 - Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Partial Amendments No. 1 and 2 to Proposed Rule Change Concerning Updates to and Formalization of OCC's Recovery and Orderly Wind-Down Plan | |
| 83 FR 37875 - Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Definition of Flexibly Structured Options | |
| 83 FR 37853 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule on the BOX Market LLC (“BOX”) Options Facility To Establish BOX Connectivity Fees for Participants and Non-Participants Who Connect to the BOX Network | |
| 83 FR 37867 - Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Codify the Protocol Definitions That Members Use To Enter Quotes and Orders | |
| 83 FR 37855 - Self-Regulatory Organizations; The Options Clearing Corporation; Order Approving Proposed Rule Change, as Modified by Amendments No. 1 and 2, Related to The Options Clearing Corporation's Stress Testing and Clearing Fund Methodology | |
| 83 FR 37849 - Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 518, Complex Orders | |
| 83 FR 37855 - Notice of Applications for Deregistration Under Section 8(f) of the Investment Company Act of 1940 | |
| 83 FR 37873 - Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Codify the Definitions of the Protocols That Members Can Use To Enter Quotes and Orders | |
| 83 FR 37830 - Product Change-Priority Mail and First-Class Package Service Negotiated Service Agreement | |
| 83 FR 37816 - Advancing the Development of Pediatric Therapeutics 5: Advancing Pediatric Pharmacovigilance; Public Workshop | |
| 83 FR 37830 - Product Change-Priority Mail Negotiated Service Agreement | |
| 83 FR 37831 - Product Change-Priority Mail Express, Priority Mail, & First-Class Package Service Negotiated Service Agreement | |
| 83 FR 37831 - Product Change-Priority Mail Negotiated Service Agreement | |
| 83 FR 37831 - Product Change-Parcel Select Negotiated Service Agreement | |
| 83 FR 37821 - Accreditation and Approval of Laboratory Service, Inc., as a Commercial Gauger and Laboratory | |
| 83 FR 37809 - Information Collection Being Reviewed by the Federal Communications Commission Under Delegated Authority | |
| 83 FR 37810 - Information Collection Being Reviewed by the Federal Communications Commission | |
| 83 FR 37760 - Cellular Service, Including Changes in Licensing of Unserved Area | |
| 83 FR 37808 - Information Collection Being Submitted for Review and Approval to the Office of Management and Budget | |
| 83 FR 37797 - Submission for OMB Review; Comment Request; “Post Registration (Trademark Processing)” | |
| 83 FR 37783 - Agenda and Notice of Public Meeting of the Massachusetts Advisory Committee | |
| 83 FR 37820 - Center for Scientific Review; Notice of Closed Meeting | |
| 83 FR 37820 - Office of the Secretary; Notice of Meeting | |
| 83 FR 37778 - Proposed Modification of Class E Airspace for the Following Alaska Towns; Toksook Bay, AK; Unalakleet, AK; Wainwright, AK; and Yakutat, AK | |
| 83 FR 37796 - Proposed Information Collection; Comment Request; Alaska Quota Cost Recovery Programs | |
| 83 FR 37795 - Submission for OMB Review; Comment Request | |
| 83 FR 37764 - Airworthiness Directives; Bell Helicopter Textron Inc. Helicopters | |
| 83 FR 37820 - National Cancer Institute; Notice of Meeting | |
| 83 FR 37771 - Airworthiness Directives; Gulfstream Aerospace Corporation Airplanes | |
| 83 FR 37768 - Airworthiness Directives; Viking Air Limited (Type Certificate Previously Held by Bombardier, Inc.; Canadair Limited) Airplanes | |
| 83 FR 37773 - Proposed Modification of Class E Airspace for the Following Alaska Towns; St. Michael, AK; Shaktoolik, AK; and Tatitlek, AK | |
| 83 FR 37766 - Airworthiness Directives; Airbus SAS Airplanes | |
| 83 FR 37774 - Proposed Modification of Class E Airspace for the Following Alaska Towns; Barrow, AK; Chevak, AK; Clarks Point, AK; Elim, AK; and Golovin, AK | |
| 83 FR 37776 - Proposed Modification of Class E Airspace for the Following Alaska Towns; Nuiqsut, AK; Perryville, AK; Pilot Point, AK; and Point Lay, AK | |
| 83 FR 37821 - First Responders Community of Practice | |
| 83 FR 37886 - Modernized Drawback | |
| 83 FR 37735 - Renewable Fuel Standard Program: Grain Sorghum Oil Pathway | |
| 83 FR 37750 - Emergency Alert System |
Issue
Forest Service
International Trade Administration
National Oceanic and Atmospheric Administration
Patent and Trademark Office
Agency for Toxic Substances and Disease Registry
Centers for Medicare & Medicaid Services
Community Living Administration
Food and Drug Administration
National Institutes of Health
Coast Guard
U.S. Customs and Border Protection
Indian Affairs Bureau
Land Management Bureau
Employee Benefits Security Administration
Federal Aviation Administration
Federal Highway Administration
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Environmental Protection Agency (EPA).
Final rule.
In this action, the Environmental Protection Agency (EPA) determines that biodiesel and heating oil produced from distillers sorghum oil via a transesterification process, and renewable diesel, jet fuel, heating oil, naphtha, and liquefied petroleum gas (LPG) produced from distillers sorghum oil via a hydrotreating process, meet the lifecycle GHG emissions reduction threshold of 50 percent required for advanced biofuels and biomass-based diesel under the Renewable Fuel Standard (RFS) program. Based on these analyses, EPA is adding these pathways to the list of approved renewable fuel production pathways in the RFS regulations. EPA is also amending the RFS regulations by adding a new definition of “distillers sorghum oil,” and replacing existing references to “non-food grade corn oil” with the newly defined term “distillers corn oil.”
The final rule is effective October 1, 2018.
The EPA has established a docket for this action under Docket ID No. EPA-HQ-OAR-2017-0655. All the documents in the docket are listed on the
Diana Galperin, Office of Air and Radiation, Office of Transportation and Air Quality, Mail Code: 6401A, U.S. Environmental Protection Agency, 1200 Pennsylvania Avenue NW, Washington, DC 20460; telephone number: 202-564-5687; email address:
Entities potentially affected by this action are those involved with the production, distribution, and sale of transportation fuels, including gasoline and diesel fuel or renewable fuels such as ethanol, biodiesel, heating oil, renewable diesel, naphtha and liquefied petroleum gas. Potentially regulated categories include:
This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be regulated by this action. This table lists the types of entities that the EPA is now aware could potentially be affected by
EPA is amending the RFS regulations to add a new definition of “distillers sorghum oil” and to replace existing references to “non-food grade corn oil” with the newly defined term “distillers corn oil.” This rule also adds the following pathways to rows F and H of Table 1 to 80.1426: (1) Biodiesel and heating oil produced from distillers sorghum oil and commingled distillers sorghum and corn oil via a transesterification process; and (2) renewable diesel, jet fuel, and heating oil produced from distillers sorghum oil and commingled distillers sorghum and corn oil via a hydrotreating process. Pathways for naphtha and LPG produced from distillers sorghum oil via a hydrotreating process are also added to row I of Table 1 to 40 CFR 80.1426. These pathways are approved for biomass-based diesel (D-code 4) or advanced biofuel (D-code 5) renewable identification numbers (RINs), depending on the fuel type and whether the production process involves co-processing renewable biomass and petroleum.
Statutory authority for this action comes from Clean Air Act sections 114, 208, 211, and 301.
There are no incremental costs from this action. This action allows for additional flexibility and feedstock production options for participating in the Renewable Fuel Standard (RFS) program.
Section 211(o) of the Clean Air Act (CAA) establishes the RFS program, under which EPA sets annual percentage standards specifying the amount of renewable fuel, as well as three subcategories of renewable fuel, that must be used to reduce or replace fossil fuel present in transportation fuel, heating oil, or jet fuel. Non-exempt renewable fuels must achieve at least a 20 percent reduction in lifecycle greenhouse gas (GHG) emissions as compared to a 2005 petroleum baseline.
In addition to the lifecycle GHG reduction requirements, there are other definitional criteria for renewable fuel (
Since the formation of the RFS program, EPA has periodically promulgated rules to add new pathways to the regulations.
EPA's lifecycle analyses are used to assess the overall GHG emissions of a fuel throughout each stage of its production and use. The results of these analyses, considering uncertainty and the weight of available evidence, are used to determine whether a fuel meets the necessary GHG reductions required under the CAA. Lifecycle analysis includes an assessment of emissions related to the full fuel lifecycle, including feedstock production, feedstock transportation, fuel production, fuel transportation and distribution, and tailpipe emissions. Per the CAA definition of lifecycle GHG emissions, EPA's lifecycle analyses also include an assessment of significant indirect emissions, such as those from land use changes and agricultural sector impacts.
EPA received a petition from the National Sorghum Producers (NSP), submitted under partial claims of confidential business information (CBI), requesting that EPA evaluate the GHG emissions associated with biofuels produced using as a feedstock grain sorghum oil derived from dry mill ethanol production, and that EPA provide a determination of the renewable fuel categories, if any, for which such biofuels may be eligible. EPA issued a proposed rule in December 2017
This preamble describes EPA's analysis of the GHG emissions associated with distillers sorghum oil when used to produce specified biofuels via particular processes. The analysis considers a scenario where distillers sorghum oil is recovered from distillers grains with solubles (DGS) at dry mill plants that produce biofuel from grain sorghum and where the remaining reduced-oil DGS co-product is used as animal feed. The distillers sorghum oil is then used as a feedstock for conversion into certain biofuels. As described in section III.B.8 of this preamble, we find that, under these circumstances, biodiesel and heating oil produced from distillers sorghum oil via a transesterification process meets the 50 percent GHG reduction threshold required for advanced biofuel and biomass-based diesel. We also find that, under these circumstances, renewable diesel, jet fuel, naphtha, and LPG produced from distillers sorghum oil via a hydrotreating process meets the 50
As discussed in section IV of this preamble, EPA is also amending the RFS regulations to add a new definition for “distillers corn oil” that is consistent with the new definition of distillers sorghum oil. The definitional change for distillers corn oil was proposed in the November 2016 Renewable Enhancement and Growth Support proposed rule (the “November 2016 REGS proposed rule”).
With no known exceptions, ethanol plants that recover grain sorghum oil also, and in most cases simultaneously, recover corn oil by the same methods. Thus, for practical implementation purposes, it is important to finalize the distillers corn oil definitional changes in this rulemaking, to provide consistency between these regulatory definitions. Finally, we also include in this rulemaking pathways for biodiesel and heating oil produced from commingled distillers sorghum oil and distillers corn oil via a transesterification process, and renewable diesel, jet fuel, and, heating oil produced from commingled distillers sorghum and corn oil via hydrotreating processes.
Sorghum is native to Africa, but was introduced to the U.S. in the early 17th century. Grain sorghum belongs to the species
Dry mill ethanol and butanol
The recovered distillers corn and sorghum oils contain a high concentration of free-fatty acids, greater than ten percent by weight,
In previous actions, EPA has approved pathways for the production of ethanol from grain sorghum made through a dry mill process as qualifying for renewable fuel (D-code 6) RINs, and in some cases advanced biofuel (D-code 5) RINs, depending on process energy sources used during production.
Currently about 30 percent of grain sorghum grown, or 120 million bushels a year, goes towards ethanol production.
To the extent that distillers sorghum oil is used as a biofuel feedstock, it will often be produced together with distillers corn oil at ethanol plants using a combination of grain sorghum and corn as feedstocks for ethanol production. The commingled distiller sorghum and corn oils will then be shipped as a mixture to a different biofuel production facility for use as a feedstock.
At this time, EPA is not adding “commingled distillers corn and sorghum oil” as a feedstock to row I of Table 1 to 40 CFR 80.1426 for the production of naphtha and LPG via a hydrotreating process. Non-food grade corn oil is not currently listed in that row, nor has EPA proposed to add it (or distillers corn oil). Thus, it would be premature for EPA to add either distillers corn oil or commingled distillers corn and sorghum oil as feedstocks in row I. Through the fuel pathway petition process, EPA previously approved two petitions allowing the generation of advanced biofuel (D-code 5) RINs for naphtha and LPG produced from non-food grade corn oil via a hydrotreating process.
EPA sought comment in the December 2017 sorghum oil proposed rule on a proposed definition for distillers sorghum oil. We summarize comments received below, with a more detailed summary and analysis included in the docket for this rulemaking. EPA received one comment on the proposed definition, asking that EPA clarify the phrase “rendered unfit for food uses” to specify that this means human food uses and not animal food uses. In this comment EPA was also asked to finalize revisions to the definition of corn oil extraction that was proposed in the November 2016 REGS proposed rule. The requested clarification is consistent with EPA's intended meaning, and we are finalizing a definition that says, “the oil is unfit for human food use without further refining.” We are also removing the word “rendered” from this part of the definition, as it is unnecessary and seemed to raise questions for commenters without any clear benefit.
EPA received a number of comments on the November 2016 REGS proposed rule related to the proposed changes to the definition of corn oil extraction contained in that proposed rule. Based on these comments, we have made a number of changes to the proposed definition of distillers sorghum oil to ensure that it aligns with the definition of distillers corn oil. These comments and associated changes are discussed in section IV, and in more detail in a response to comment document in the docket for this rulemaking.
As part of this rule, we are adding a definition of distillers sorghum oil in 40 CFR 80.1401. So long as the criteria in the definition are met, a variety of recovery methods could be
EPA evaluated the GHG emissions associated with using distillers sorghum oil as a biofuel feedstock based on information provided by the petitioner, input from the U.S. Department of Agriculture (USDA), public comments, and other available data sources. GHG emissions include emissions from production and transport of grain sorghum, the production and transport of distillers sorghum oil; the processing of the oil into biofuel; transport of the biofuel from the production facility to the fuel-blender; and, ultimately the use of the biofuel by the end consumer.
EPA's lifecycle analyses include significant direct and indirect GHG emissions (including such emissions from land use changes) associated with producing a feedstock and transporting it to the processing facility. All of the emissions associated with growing, harvesting, and transporting grain sorghum as a biofuel feedstock were calculated and taken into account in EPA's evaluation of the lifecycle GHG emissions associated with grain sorghum ethanol and butanol.
In the proposed rule we described our preliminary finding that biofuels produced from distillers sorghum oil reduce lifecycle GHG emissions by approximately 80 percent compared to the petroleum baseline. These results assumed zero indirect GHG emissions related to compensating for oil removal from DGS, based on the premise that certain types of livestock benefit from lower-fat DGS and therefore removing the sorghum oil would not result in significant indirect impacts. EPA received two comments arguing that extracting distillers sorghum oil from DGS reduces the mass, calorific, and fat content of the DGS, and that there would be significant indirect GHG emissions associated with replacing these losses with other sources of livestock feed. As discussed below, we have adjusted our analysis based on these comments and conducted further analysis to estimate the potential indirect GHG emissions associated with replacing the extracted distillers sorghum oil. After accounting for these emissions, based on available information and reasonable assumptions to account for uncertainties, our revised analysis continues to show that biofuels produced from distillers sorghum oil satisfy the 50 percent lifecycle GHG reduction threshold required to qualify as advanced biofuel or biomass-based diesel. Finally, some commenters on the proposed distillers sorghum oil rule suggested that EPA has an obligation to engage in consultation with the United States Fish and Wildlife Service and/or that National Marine Fisheries Service under Section 7 of the Endangered Species Act prior to finalizing the rule. Such consultation is required for actions in which the Agency has discretion to tailor its actions for the benefit of threatened or endangered species, or their critical habitat, and where the action in question “may effect” listed species. However, as described in the Response to Comments Document accompanying this rule, EPA does not have discretion under the statute to take into consideration possible impacts to threatened or endangered species or their critical habitat in determining which biofuels qualify under the renewable fuel standard program as advanced biofuel or biomass-based diesel and, even if it did have such discretion, today's rule will have no effect on threatened or endangered species. As a result, Section 7 consultation is not required.
During a typical dry mill fermentation process, DGS are produced. These DGS are then used as animal feed, thereby displacing feed crops and the GHG emissions associated with growing and transporting those feed crops. After distillers sorghum oil is removed, DGS continue to be produced and sold as livestock feed, but with reduced oil content.
We do not expect sorghum oil removal to have significant impact on the types and quantities of feed used in the livestock market. EPA's modeling for the December 2012 grain sorghum ethanol final rule assumed average dried DGS yield of 17 pounds per bushel of grain sorghum feedstock.
Chemically, full-oil and reduced-oil sorghum DGS share similar compositions; they are primarily made up of crude protein, fat, and natural and acid detergent fibers.
Table III.1 shows the key constituents that make up dried full-oil and reduced-oil DGS.
EPA received two comments
The key issue associated with the first potential impact is whether the reduced calories would impact the amount of feed displaced through the use of sorghum DGS. Should fat content not be at sufficient levels, livestock producers might need to add nutrients or other types of feed to meet appropriate nutritional targets. This is reflected in the “displacement rate” of a DGS, which indicates how much weight a pound of distillers grain can replace of another feed. A lower feed displacement rate for a reduced-oil distillers grain as compared to a full-oil distillers grain could result in additional GHG emissions as it suggests that additional feed is required to replace the missing oil. Displacement rates are calculated by taking into account nutrient and energy requirements of livestock and their respective recommended DGS inclusion rates to maintain animal performance.
Research suggests that for several livestock types there are performance improvements, per pound of DGS, when oil content of fed-DGS is removed. For instance, for poultry and swine, “increased concentrations of free fatty acids have a negative impact on lipid digestion and energy content.”
For dairy, there are also benefits from feeding reduced-oil DGS as compared to full-oil DGS. Research on dairy cows shows that reduced-oil DGS produce a lessened likelihood of the onset of milk fat depression.
An impact on displacement rates may occur when reduced-oil instead of full-oil DGS are used for beef cattle, which require additional fat. Table III.2 shows the displacement ratios for the livestock sectors where dried DGS (DDGS) are used. In this table, for instance, 1 pound of reduced-oil DDGS fed to beef cattle displaces 1.173 pounds of corn, as opposed to 1.196 pounds of corn for full-oil DDGS. A pound of full-oil and reduced-oil DDGS also displaces equal amounts (0.056 pounds) of urea. Urea is a non-protein nitrogen compound that is typically fed to cattle for aiding the production of protein by rumen microbes.
The
When oil is removed from the sorghum DGS, the distillers grains decrease in mass. Although feed rations are complex, for the purposes of conducting this analysis, in USDA's judgement it is a reasonable assumption to use corn to substitute for the mass loss due to sorghum oil recovery. Corn is a relatively low cost primary product that is readily available in the locations where sorghum oil is produced.
To calculate the impact of the mass loss and the greenhouse gas emission impacts from the substitution of corn for sorghum DGS, EPA used data obtained from a study conducted by Argonne National Laboratory and estimates from NSP for the displacement of feed by DGS by livestock type (see Table III.2). Using these data, we calculated a substitution rate for how much corn would be needed for every pound of grain sorghum oil diverted to biofuel production, by livestock type (see Table III.3 below).
Using the national average shares for DDGS use by livestock type,
Distillers sorghum oil is removed from DGS at dry mill biofuel plants using the same equipment and technologies used for distillers corn oil recovery. Oil recovery requires thermal energy to heat the DGS and electricity to power centrifuges, pumps and other oil recovery equipment. Our analysis for the March 2010 RFS final rule,
In our analysis, distillers sorghum oil is transported 50 miles by heavy duty truck from the dry mill ethanol plant to the biodiesel or hydrotreating facility where it is converted to transportation fuel. GHG emissions associated with feedstock transport are relatively small, and modest changes in transport distance would not affect the threshold determinations based on our analysis.
For emissions from feedstock pretreatment and fuel production, we perform two analyses. In the first analysis, we calculate the emissions from biodiesel and heating oil produced using transesterification. In the second analysis, we calculate the emissions from renewable diesel, jet fuel, LPG, and naphtha, produced using hydrotreating.
Before distillers sorghum oil is converted to biodiesel via transesterification, it is processed to remove free-fatty acids. This process requires thermal energy. Our evaluation of yellow grease for the March 2010 RFS final rule included 14,532 Btu of natural gas per gallon of biodiesel produced for pretreatment, and we have applied the same assumption for this analysis. According to the NSP petition, distillers sorghum oil has free fatty acid content near or below 15 percent, which is in the range of yellow grease free fatty acid contents (<15 percent).
Pretreatment to remove free-fatty acids is not required when distillers sorghum oil is used to produce renewable diesel, jet fuel, LPG and naphtha through a hydrotreating process.
For biodiesel production, we used the transesterification analysis for the March 2010 RFS rule for yellow grease biodiesel.
For production of renewable diesel, jet fuel, naphtha and LPG via a hydrotreating process, we used the same data and approach as used in the March 2013 Pathways I rule,
Our previous analyses of hydrotreating processes have applied an energy allocation approach for RIN-generating co-products that qualify as renewable fuel.
In the allocation approach, all the emissions from the hydrotreating process are allocated across all co-products. There are a number of ways to do the allocation, for example on the basis of energy, mass, or economic value. Consistent with the approach taken in the hydrotreating analysis for the March 2013 RFS rule, for this analysis of fuels produced from distillers sorghum oil feedstock through a hydrotreating process, we allocated emissions to the renewable diesel, naphtha and LPG based on the energy content (using lower-heating values) of the products produced. Emissions from the process were allocated equally to all of the Btus of fuel produced. Therefore, on a per Btu basis, all of the primary products coming from the hydrotreating facility have the same emissions from the fuel production stage of the
We used the fuel distribution results from the biodiesel analysis for the March 2010 RFS rule. Fuel distribution emissions are relatively small compared to baseline lifecycle GHG emissions (see Table III.4: Lifecycle GHG Emissions Associated With Biofuels Produced From Distillers Sorghum Oil (kgCO
For this analysis we applied fuel use emissions factors developed for the March 2010 RFS final rule. We used the biodiesel emissions factor for biodiesel and biodiesel used as heating oil. For renewable diesel and jet fuel we used the emissions factors for non-CO
Table III.4 shows the lifecycle GHG emissions associated with biofuels produced from distillers sorghum oil that result from our assessment. The table also shows the percent reduction relative to the petroleum baseline. All of the fuels are compared to the diesel baseline, except for naphtha which is compared to the gasoline baseline. Based on the lifecycle GHG emissions results presented above, all of the pathways evaluated meet the 50 percent GHG reduction threshold required for advanced biofuel and biomass-based diesel.
In the March 2010 RFS final rule, EPA established two pathways (pathways F and H in Table 1 to 40 CFR 80.1426) for biomass-based diesel (D-code 4) or advanced biofuel (D-code 5) made from “non-food grade corn oil.” The lifecycle GHG analyses for these pathways were based on the EPA's modeling of corn oil recovered from DGS produced by a dry-mill corn ethanol plant through corn oil extraction. In the November 2016 REGS proposed rule, EPA proposed to revise pathways F and H in Table 1 to 40 CFR 80.1426 to specify that the feedstock is “oil from corn oil extraction,” rather than “non-food grade corn oil,” and to include a revised and somewhat broadened definition of “corn oil extraction” relative to the 2010 definition.
The proposed definitional change was motivated by the evolution of corn oil extraction technology within the ethanol industry, which allows ethanol producers to recover corn oil at different locations in the ethanol production process, with potential energy efficiency and ethanol yield benefits.
In the November 2016 REGS proposed rule, EPA reasoned that the precise timing and method of corn oil extraction are not relevant for meeting the 50 percent GHG reduction threshold associated with pathways F and H, provided that a number of conditions are satisfied. Specifically, EPA proposed the following definition for corn oil extraction: “Corn oil extraction means the recovery of corn oil at any point downstream of when a dry mill corn ethanol plant grinds the corn, provided that the corn is converted to ethanol, the oil is rendered unfit for food uses without further refining, and the oil extraction results in distillers grains marketable as animal feed.” This definitional change was intended to both address the developments in corn oil extraction and to define the conditions under which corn oil qualifies as a feedstock for the purposes of Table 1.
As explained below, rather than the approach proposed in the 2016 REGS proposed rule, which would have revised the term “corn oil extraction” and replaced “non-food grade corn oil” with “oil from corn oil extraction” in rows F and H, EPA is instead leaving the definition of “corn oil extraction” as-is and is finalizing a definition for the term “distillers corn oil” that will be used in Table 1. The substance of the definition of “distillers corn oil” finalized here is consistent with the proposed definition for “corn oil
The approach taken in this rule preserves the existing meaning of corn oil extraction for the purpose of the second row of Table 2 to 40 CFR 80.1426 (the “corn oil extraction advanced technology”); our intent was to broaden the non-food grade corn oil pathways listed in Table 1 to 40 CFR 80.1426, not to modify the corn oil extraction advanced technology specified in Table 2, which is relevant for corn starch ethanol pathways. The corn oil extraction advanced technology was included in the regulations based on analysis completed in the March 2010 RFS rule for pathways in rows A and B of Table 1 that can include extracting oil from whole stillage and/or derivatives of whole stillage, thus reducing energy use at dry mill ethanol plants.
Four commenters on the November 2016 REGS proposed rule supported EPA's proposed revision to the definition of corn oil extraction.
While no commenters objected to EPA's overall proposal to revise and expand the types of extracted corn oil that qualify as approved feedstocks in rows F and H of Table 1 to 40 CFR 80.1426, a number of commenters requested clarifications or modifications to EPA's proposed definition. Four commenters suggested that EPA should expand the definition of corn oil extraction even further to include corn oil recovered at butanol plants, because the dry mill process for butanol is very similar to those for dry mill ethanol with respect to conversion of corn to liquefied mash and recovery of distillers grains and thin stillage.
Based on these comments, EPA is finalizing a definition that has been modified in several ways compared to the one proposed in the November 2016 REGS proposed rule. First, EPA has decided to use the term “distillers corn oil” because we agree with the commenter that the term is better understood in the industry and thus enhances the clarity of the regulations. Second, the definition has been revised to include corn oil recovered at dry mill butanol plants, given their similarities in terms of the oil recovery technologies used, the characteristics of the oil recovered and the resulting DGS co-products. Third, we have clarified that distillers corn oil is limited to oil that is unfit for
Other modifications recommended by commenters have not been incorporated into the definition finalized by this rulemaking. Corn oil from wet milling remains excluded from the definition. Corn oil produced at wet mills is
Based on our GHG lifecycle evaluation described above, we find that biodiesel and heating oil produced from distillers sorghum oil via a transesterification process, and renewable diesel, jet fuel and heating oil produced from distillers sorghum oil via a hydrotreating process meet the 50 percent GHG reduction threshold requirement for advanced biofuel and biomass-based diesel. Based on this finding, and providing that all regulatory requirements are satisfied, these fuels are eligible for biomass-based diesel (D-code 4) RINs if they are produced through a process that does not co-process renewable biomass and petroleum, and for advanced biofuel (D-code 5) RINs if they are produced through a process that does co-process renewable biomass and petroleum. The RFS regulations are also amended to add new and consistent definitions for “distillers sorghum oil” and “distillers corn oil.” As discussed above, we are allowing commingled distillers sorghum and corn oil to be reported as one volume under the existing registration, reporting and recordkeeping requirements, and therefore are not amending these sections.
This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review.
This action is not expected to be an Executive Order 13771 regulatory action because this action is not significant under Executive Order 12866.
This action does not impose any new information collection burden under the provisions of the
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities. An agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, has no net burden or otherwise has a positive economic effect on the small entities subject to the rule. This rule enables distillers sorghum oil producers and producers of biofuels from distillers sorghum oil to participate in the RFS program, see CAA section 211(o), if they choose to do so in order to obtain economic benefits.
This action does not contain an unfunded mandate of $100 million or more as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. The action imposes no enforceable duty on any state, local or tribal governments or the private sector.
This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.
This action does not have tribal implications as specified in Executive Order 13175. This final rule would affect only producers of distillers sorghum oil and producers of biofuels made from distillers sorghum oil. Thus, Executive Order 13175 does not apply to this action.
The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it because it does not concern an environmental health risk or safety risk.
This action is not subject to Executive Order 13211 because it is not a significant regulatory action under Executive Order 12866.
This rulemaking does not involve technical standards.
The EPA believes that this action does not have disproportionately high and adverse human health or environmental effects on minority populations, low-income populations and/or indigenous peoples, as specified in Executive Order 12898 (59 FR 7629, February 16, 1994). This final rule does not affect the level of protection provided to human health or the environment by applicable air quality standards. This action does not relax the control measures on sources regulated by the fuel programs and RFS regulations and therefore will not cause emissions increases from these sources.
This action is subject to the CRA, and the EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).
Environmental protection, Administrative practice and procedure, Air pollution control, Diesel Fuel, Fuel additives, Gasoline, Imports, Oil imports, Petroleum, Renewable fuel.
For the reasons set forth in the preamble, EPA amends 40 CFR part 80 as follows:
42 U.S.C. 7414, 7521, 7542, 7545, and 7601(a).
(f) * * *
(1) * * *
Centers for Medicare & Medicaid Services (CMS), HHS.
Extension of temporary moratoria.
This document announces the extension of statewide temporary moratoria on the enrollment of new Medicare Part B non-emergency ground ambulance providers and suppliers and Medicare home health agencies and branch locations in Florida, Illinois, Michigan, Texas, Pennsylvania, and New Jersey, as applicable, to prevent and combat fraud, waste, and abuse. This extension also applies to the enrollment of new non-emergency ground ambulance suppliers and home health agencies and branch locations in Medicaid and the Children's Health Insurance Program in those states.
Applicable July 29, 2018.
Jung Kim, (410) 786-9370.
News media representatives must contact CMS' Public Affairs Office at (202) 690-6145 or email them at
The Social Security Act (the Act) provides the Secretary with tools and resources to combat fraud, waste, and abuse in Medicare, Medicaid, and the Children's Health Insurance Program (CHIP). In particular, section 1866(j)(7) of the Act provides the Secretary with authority to impose a temporary moratorium on the enrollment of new Medicare, Medicaid, or CHIP providers and suppliers, including categories of providers and suppliers, if the Secretary determines a moratorium is necessary to prevent or combat fraud, waste, or abuse under these programs. Regarding Medicaid, section 1902(kk)(4) of the Act requires States to comply with any moratorium imposed by the Secretary unless the State determines that the imposition of such moratorium would adversely impact Medicaid beneficiaries' access to care. In addition, section 2107(e)(1)(F) of the Act provides that the Medicaid provisions in section 1902(kk) are also applicable to CHIP.
In the February 2, 2011
In accordance with section 1866(j)(7)(B) of the Act, there is no judicial review under sections 1869 and 1878 of the Act, or otherwise, of the decision to impose a temporary enrollment moratorium. A provider or supplier may use the existing appeal procedures at 42 CFR part 498 to administratively appeal a denial of billing privileges based on the imposition of a temporary moratorium; however, the scope of any such appeal is limited solely to assessing whether the temporary moratorium applies to the provider or supplier appealing the denial. Under § 424.570(c), CMS denies the enrollment application of a provider or supplier if the provider or supplier is subject to a moratorium. If the provider or supplier was required to pay an application fee, the application fee will be refunded if the application was denied as a result of the imposition of a temporary moratorium (see § 424.514(d)(2)(v)(C)).
Based on this authority and our regulations at § 424.570, we initially imposed moratoria to prevent enrollment of new home health agencies, subunits, and branch locations
Then, we further extended these moratoria in documents issued on August 1, 2014 (79 FR 44702), February 2, 2015 (80 FR 5551), July 28, 2015 (80 FR 44967), and February 2, 2016 (81 FR 5444). On August 3, 2016 (81 FR 51120), we extended the current moratoria for an additional 6 months and expanded them to statewide for the enrollment of new HHAs in Florida, Illinois, Michigan, and Texas, and Part B non-emergency ambulance suppliers in New Jersey, Pennsylvania, and Texas. Our August 3, 2016 publication also announced the lifting of temporary moratoria for all Part B emergency ambulance suppliers.
On September 1, 2017, CMS lifted the statewide temporary moratorium on the enrollment of new Medicare Part B non-emergency ground ambulance suppliers in Texas under the authority of § 424.570(d). This lifting of the moratorium also applied to Medicaid and CHIP in Texas. This decision was a result of the Presidential Disaster Declaration signed on August 25, 2017 for several counties in the State of Texas due to Hurricane Harvey. Upon declaration of the disaster, CMS carefully reviewed the potential impact of continued moratoria in Texas, and decided to lift the temporary enrollment moratorium on non-emergency ground ambulance suppliers in Texas in order to aid in the disaster response. CMS published a formal announcement of this decision on November 3, 2017 (82 FR 51274).
Most recently, on January 30, 2018 (83 FR 4147), CMS announced the extension of the temporary moratoria for an additional six months.
In imposing these enrollment moratoria, CMS considered both qualitative and quantitative factors suggesting a high risk of fraud, waste, or abuse. CMS relied on law enforcement's longstanding experience with ongoing and emerging fraud trends and activities through civil, criminal, and administrative investigations and prosecutions. CMS' determination of a high risk of fraud, waste, or abuse in these provider and supplier types within these geographic locations was then confirmed by CMS' data analysis, which relied on factors the agency identified as strong indicators of risk. (For a more detailed explanation of this determination process and of these authorities, see the July 31, 2013 notice (78 FR 46339) or February 4, 2014 moratoria document (79 FR 6475)).
Because fraud schemes are highly migratory and transitory in nature, many of CMS' program integrity authorities and anti-fraud activities are designed to allow the agency to adapt to emerging fraud in different locations. The laws and regulations governing CMS' moratoria authority give us flexibility to use any and all relevant criteria for future moratoria, and CMS may rely on additional or different criteria as the basis for future moratoria.
The February 2, 2011, final rule also implemented section 1902(kk)(4) of the Act, establishing new Medicaid regulations at § 455.470. Under § 455.470(a)(1) through (3), the Secretary may impose a temporary moratorium, in accordance with § 424.570, on the enrollment of new providers or provider types after consulting with any affected State Medicaid agencies. The State Medicaid agency must impose a temporary moratorium on the enrollment of new providers or provider types identified by the Secretary as posing an increased risk to the Medicaid program unless the State determines that the imposition of such moratorium would adversely affect Medicaid beneficiaries' access to medical assistance and so notifies the Secretary. The final rule also implemented section 2107(e)(1)(D) of the Act by providing, at § 457.990 of the regulations, that all of the provisions that apply to Medicaid under sections 1902(a)(77) and 1902(kk) of the Act, as well as the implementing regulations, also apply to CHIP.
Section 1866(j)(7) of the Act authorizes imposition of a temporary enrollment moratorium for Medicare, Medicaid, and/or CHIP, “if the Secretary determines such moratorium is necessary to prevent or combat fraud, waste, or abuse under either such program.” While there may be exceptions, CMS believes that generally, a category of providers or suppliers that poses a risk to the Medicare program also poses a similar risk to Medicaid and CHIP. Many of the anti-fraud provisions in the Act reflect this concept of “reciprocal risk” in which a provider that poses a risk to one program poses a risk to the other programs. For example, section 1902(a)(39) of the Act requires State Medicaid agencies to terminate the participation of an individual or entity if such individual or entity is terminated under Medicare or any other State Medicaid plan. Additional provisions in the Act also support the determination that categories of providers and suppliers pose the same risk to Medicaid as to Medicare. Section 1866(j) of the Act requires us to establish levels of screening for categories of providers and suppliers based on the risk of fraud, waste, and abuse determined by the Secretary. Section 1902(kk) of the Act requires State Medicaid agencies to screen providers and suppliers based on the same levels established for the Medicare program. This reciprocal concept is also reflected in the Medicare moratoria regulations at § 424.570(a)(2)(ii) and (iii), which permit CMS to impose a Medicare moratorium based solely on a State imposing a Medicaid moratorium. Accordingly, CMS has determined that there is a reasonable basis for concluding that a category of providers or suppliers that poses a risk to Medicare also poses a similar risk to Medicaid and CHIP, and that a moratorium in all of these programs is necessary to effectively combat this risk.
In consultation with the HHS Office of Inspector General (OIG) and the Department of Justice (DOJ), CMS previously identified two provider and supplier types in nine geographic locations that warrant a temporary enrollment moratorium. For a more detailed discussion of this consultation process, see the July 31, 2013 notice (78 FR 46339) or February 4, 2014 moratoria document (79 FR 6475).
In addition to consulting with law enforcement, CMS also analyzed its own data to identify specific provider and supplier types within geographic locations with significant potential for fraud, waste or abuse, therefore warranting the imposition of enrollment moratoria.
Beneficiary access to care in Medicare, Medicaid, and CHIP is of critical importance to CMS and its State partners, and CMS carefully evaluated access for the target moratorium locations with every imposition and extension of the moratoria. Prior to imposing and extending these moratoria, CMS reviewed Medicare data for these areas and found no concerns with beneficiary access to HHAs or ground ambulance suppliers. CMS also consulted with the appropriate State Medicaid Agencies and with the appropriate State Departments of Emergency Medical Services to determine if the moratoria would create access to care concerns for Medicaid and CHIP beneficiaries. All of CMS' State partners were supportive of CMS' analysis and proposals, and together with CMS, determined that continuation of these moratoria would not create access to care issues for Medicaid or CHIP beneficiaries.
Under § 424.570(a)(1)(iii), a temporary moratorium does not apply to any of the following: (1) Changes in practice
In accordance with § 424.570(b), a temporary enrollment moratorium imposed by CMS will remain in effect for 6 months. If CMS deems it necessary, the moratorium may be extended in 6-month increments. CMS will evaluate whether to extend or lift the moratorium before the end of the initial 6-month period and, if applicable, any subsequent moratorium periods. If one or more of the moratoria announced in this document are extended, CMS will publish a document regarding such extensions in the
As provided in § 424.570(d), CMS may lift a moratorium at any time if the President declares an area a disaster under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, if circumstances warranting the imposition of a moratorium have abated, if the Secretary has declared a public health emergency, or if, in the judgment of the Secretary, the moratorium is no longer needed.
Once a moratorium is lifted, the provider or supplier types that were unable to enroll because of the moratorium will be designated to the “high” screening level in accordance with §§ 424.518(c)(3)(iii) and 455.450(e)(2) if such provider or supplier applies at any time within 6 months from the date the moratorium was lifted.
CMS currently has in place statewide moratoria on newly enrolling HHAs in Florida, Illinois, Michigan, and Texas and Part B non-emergency ambulance suppliers in New Jersey and Pennsylvania.
As provided in § 424.570(b), CMS may deem it necessary to extend previously-imposed moratoria in 6-month increments. Under this authority, CMS is extending the temporary moratoria on the Medicare enrollment of HHAs and Part B non-emergency ground ambulance providers and suppliers in the geographic locations discussed herein. Under the regulations at § 455.470 and § 457.990, these moratoria also apply to the enrollment of HHAs and non-emergency ground ambulance providers and suppliers in Medicaid and CHIP in those locations. Under § 424.570(b), CMS is required to publish a document in the
CMS consulted with the HHS-OIG regarding the extension of the moratoria on new HHAs and Part B non-emergency ground ambulance providers and suppliers in all of the moratoria states, and HHS-OIG agrees that a significant potential for fraud, waste, and abuse continues to exist regarding those provider and supplier types in these geographic areas. The circumstances warranting the imposition of the moratoria have not yet abated, and CMS has determined that the moratoria are still needed as we monitor the indicators and continue with administrative actions to combat fraud and abuse, such as payment suspensions and revocations of provider/supplier numbers. (For more information regarding the monitored indicators, see the February 4, 2014 moratoria document (79 FR 6475)).
Based upon CMS' consultation with the relevant State Medicaid agencies, CMS has concluded that extending these moratoria will not create an access to care issue for Medicaid or CHIP beneficiaries in the affected states at this time. CMS also reviewed Medicare data for these states and found there are no current problems with access to HHAs or ground ambulance providers or suppliers. Nevertheless, the agency will continue to monitor these locations to make sure that no access to care issues arise in the future.
Based upon our consultation with law enforcement and consideration of the factors and activities described previously, CMS has determined that the current temporary enrollment moratoria should be extended for an additional 6 months.
CMS is executing its authority under sections 1866(j)(7), 1902(kk)(4), and 2107(e)(1)(D) of the Act to extend and implement temporary enrollment moratoria on HHAs for all counties in Florida, Illinois, Michigan, and Texas, as well as Part B non-emergency ground ambulance providers and suppliers for all counties in New Jersey and Pennsylvania.
Section 1866(j)(7)(B) of the Act states that there shall be no judicial review under section 1869, section 1878, or otherwise, of a temporary moratorium imposed on the enrollment of new providers of services and suppliers if the Secretary determines that the moratorium is necessary to prevent or combat fraud, waste, or abuse. Accordingly, our regulations at 42 CFR 498.5(l)(4) state that for appeals of denials based on a temporary moratorium, the scope of review will be limited to whether the temporary moratorium applies to the provider or supplier appealing the denial. The agency's basis for imposing a temporary moratorium is not subject to review. Our regulations do not limit the right to seek judicial review of a final agency decision that the temporary moratorium applies to a particular provider or supplier. In the preamble to the February 2, 2011 (76 FR 5918) final rule with comment period establishing this regulation, we explained that “a provider or supplier may administratively appeal an adverse determination based on the imposition of a temporary moratorium up to and including the Department Appeal Board (DAB) level of review.” We are clarifying that providers and suppliers that have received unfavorable decisions in accordance with the limited scope of review described in § 498.5(l)(4) may seek judicial review of those decisions after they exhaust their administrative appeals. However, we reiterate that section 1866(j)(7)(B) of the Act precludes judicial review of the agency's basis for imposing a temporary moratorium.
This document does not impose information collection requirements, that is, reporting, recordkeeping or third-party disclosure requirements. Consequently, there is no need for review by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
CMS has examined the impact of this document as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory
The RFA requires agencies to analyze options for regulatory relief of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of less than $7.5 million to $38.5 million in any one year. Individuals and states are not included in the definition of a small entity. CMS is not preparing an analysis for the RFA because it has determined, and the Secretary certifies, that this document will not have a significant economic impact on a substantial number of small entities.
In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if an action may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, CMS defines a small rural hospital as a hospital that is located outside of a metropolitan statistical area (MSA) for Medicare payment purposes and has fewer than 100 beds. CMS is not preparing an analysis for section 1102(b) of the Act because it has determined, and the Secretary certifies, that this document will not have a significant impact on the operations of a substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any regulatory action whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2018, that threshold is approximately $150 million. This document will have no consequential effect on state, local, or tribal governments or on the private sector.
Executive Order 13771, titled “Reducing Regulation and Controlling Regulatory Costs,” was issued on January 30, 2017 (82 FR 9339, February 3, 2017). It has been determined that this notice is a transfer notice that does not impose more than de minimis costs and thus is not a regulatory action for the purposes of E.O. 13771.
Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed regulatory action (and subsequent final action) that imposes substantial direct requirement costs on state and local governments, preempts state law, or otherwise has Federalism implications. Because this document does not impose any costs on state or local governments, the requirements of Executive Order 13132 are not applicable.
In accordance with the provisions of Executive Order 12866, this document was reviewed by the Office of Management and Budget.
Federal Communications Commission.
Final rule.
In this document, the Commission amends its rules governing the Emergency Alert System (EAS) by establishing the Alert Reporting System (ARS), a comprehensive online filing system for EAS that combines the existing EAS Test Reporting System (ETRS) with a new, streamlined electronic system for the filing of State EAS Plans. By replacing paper-based State EAS Plans with an online filing system, the ARS will minimize the burdens on State Emergency Communications Committees (SECCs), and allow the FCC, the Federal Emergency Management Agency (FEMA), and other authorized entities to better access and use up-to-date information about the EAS, thus increasing its value as a tool to protect life and property for all Americans.
Effective September 4, 2018. Mandatory compliance dates: FCC will publish a document in the
Austin Randazzo, Attorney Advisor, Policy and Licensing Division, Public Safety and Homeland Security Bureau, at 202-418-1462, or by email at
This is a summary of the Commission's Report and Order (
1. This
2. The EAS is a national public warning system used by EAS Participants to deliver emergency alerts to the public. The primary purpose of the EAS is to allow the President of the United States (President) to provide information to the general public during periods of national emergency. State and local authorities also use the common distribution architecture of the EAS to distribute voluntary weather-related and other emergency alerts to the public.
3. There are two distribution methods for EAS alerts. The traditional method distributes alerts through a hierarchical, broadcast-based distribution system, in which an alert originator formats an alert using the EAS Protocol and initiates its transmission at a designated entry point. This “daisy chain” process relays the alert from one designated station to another until it is fully distributed. EAS alerts also are distributed over the internet through the Integrated Public Alert and Warning System (IPAWS), a national alerting system administered by FEMA. Under the IPAWS, EAS Participants monitor a FEMA-administered website for EAS messages that are written in the Common Alerting Protocol (CAP).
4. While IPAWS relies upon the centralized distribution of alerts using an alert aggregator and an internet-based interface, the EAS's “daisy chain” leverages the broadcast-based EAS distribution architectures in each of the states. The Commission's rules require each state to file a State EAS Plan with the Commission documenting its EAS distribution architecture. State Emergency Communications Committees (SECCs), along with associated Local Emergency Communications Committees (LECCs), draft and file these plans on behalf of the states. The SECCs and LECCs are volunteer organizations composed of state broadcast associations, EAS Participants, emergency management personnel, and other stakeholders. SECCs grew out of a 1963 Executive Order that directed the Commission to cooperate with other governmental entities to develop emergency communications plans related to the Emergency Broadcast System (EBS). At that time, the Commission provided SECCs with templates for State EAS Plans that described the kinds of information that their plans should provide.
5.
6.
7.
8. Following the first nationwide EAS test in 2011, PSHSB recommended converting the State EAS Plan filing process into an online system in light of inconsistencies identified in a post-test analysis of the structure of State EAS Plans. Subsequently, the Communications Security, Reliability and Interoperability Council (CSRIC) IV recommended that State EAS Plans also be filed online and recommended that the Commission revise its rules to adopt an online platform, State EAS Plan template design, and identification mechanisms for facilities and geographic areas contained within State EAS Plans. In the document, the Commission noted the CSRIC's recommendations and proposed converting the paper-based filing process for State EAS Plans into a secure online process that would interface with the ETRS.
9.
10. The Commission agrees with the many commenters that note the benefits of the online filing system. For example, broadcast engineer Sean Donelan (Donelan) states that a well-implemented electronic filing system for EAS data will reduce the burden on state and local EAS committee volunteers. Use of an online filing system will also benefit EAS Participants, SECCs, and other EAS stakeholders by facilitating the Commission's swift and efficient review of State EAS Plans. As the Washington State SECC notes, a standardized filing system “is long overdue” and will aid the Commission's effort to review State EAS Plans. The Commission believes, as does Wisconsin SECC Broadcast Chair Gary Timm, commenting in his individual capacity (Timm), that the time required for SECCs to fill out a monitoring matrix would be minimal, and that other FCC databases could help keep the information updated. The online filing system will be an efficient tool for reviewing alerting architecture, as it will provide an end-to-end picture of the EAS distribution architecture for each state. Further, cross-referencing data from electronically filed State EAS Plans with data collected from the ETRS will make it easier to identify problems such as single points of failure. Finally, moving to an online system will reduce burdens on SECCs by pre-populating data fields in State EAS Plans with information from other FCC databases, enabling SECCs to readily update and revise their plans.
11. The Commission believes that the efficient and effective administration of the EAS,
12.
13. The Commission traditionally has provided SECCs with templates describing the kinds of information to be included in State EAS Plans, and the template the Commission adopts today is consistent with that practice. To be both effective and minimally burdensome, the State EAS Plan template must address all state plan elements. The Commission thus disagrees with suggestions that the online database and template apply only to the monitoring assignment matrix, or to what some commenters characterize as the “federal” aspects of State EAS Plans. State EAS Plans are not limited to monitoring assignment data, but rather include other elements which, taken together, form the EAS activation guidelines that EAS stakeholders follow. Similarly, the use and testing of the EAS at the state and local level provide insight into its functionality and effectiveness at the federal level.
14. Finally, the Commission disagrees with commenters who suggest that a State EAS Plan template is unworkable because there is no “one size fits all” framework for State EAS Plans. The template will afford SECCs flexibility to provide information they deem relevant to design and maintain their states' EAS distribution architectures and relay networks. It will be configured in a manner that accommodates variations in state alerting architectures, including areas where alerts are transmitted across state borders.
15.
16. Several commenters provide useful suggestions about access to State EAS Plan data that the Commission adopts as elements of ARS access. The Commission agrees with Nevada SECC Chairwoman Adrienne Abbott, commenting in her individual capacity (Abbott), that only individuals with significant roles in SECCs should have access to this data, and, further, that such access should be limited to data about an SECC's individual state. The Commission disagrees with Monroe Electronics, however, that EAS equipment manufacturers and planning consultants should have access to State EAS Plan data to confirm proper configuration of system hardware and software. As noted above, the ARS will contain sensitive data and, for this reason, the Commission believes it serves the public interest to limit access to the ARS. EAS equipment manufacturers and other third-party vendors may request a particular client's data from that client.
17.
18.
19. The Commission amends section 11.18 to define all its current EAS designations. Although SECCs' use of EAS designations may vary, commenters support retaining the current designations to support the SECCs' abilities to assign roles and responsibilities. Accordingly, the Commission keeps these designations as tools to help SECCs describe their states' EAS alert distribution hierarchies in their State EAS Plans “using common language.” These universal designations also will allow the Commission to create an EAS Mapbook as contemplated by the EAS rules. The Mapbook will provide an accurate and dynamic nationwide propagation map for the Presidential Alert, as well as state, county, and local propagation maps. The Commission agrees with Abbott that it would be difficult to implement standardized terminology if its definitions did not provide sufficient flexibility to accommodate states' varying approaches to establishing EAS monitoring assignments. However, the EAS designation definitions the Commission adopts today are designed to provide a level of uniformity that will allow SECCs to establish EAS monitoring assignments that accommodate their unique situations. Accordingly, the Commission will define the EAS designations as follows.
20.
21.
22. PEP and NP are the only designations that are solely relevant to the transmission of the Presidential Alert.
23.
24. SPs may, for example, be designated by SECCs to initially transmit AMBER alerts or alerts related to incidents of severe weather to the public and to other EAS Participants that voluntarily monitor for and retransmit such alerts.
25.
26.
27.
28. Commenters assert that SR properly describes the relay function and is used extensively in some State EAS Plans. While the Commission anticipates that the EAS alert distribution hierarchy described above will be sufficient to define the roles and responsibilities for all EAS Participants in many states, in some states, SRs may be necessary to ensure that EAS alerts are available to everyone in the state. In these instances, especially when SRs are used as alternative monitoring assignments, the Commission recognizes that it may be appropriate to use special designations for entities responsible for relaying alerts from a PEP, NP, or SP to an LP or PN.
29.
30. The Commission understands that in some states, such as Washington, the SRN serves as an alternative, redundant system for ensuring the successful delivery of EAS alerts. The Commission also understands that some State EAS Plans, such as Nevada's, do not rely on SRNs because “[s]mall and rural broadcasters cannot afford the monthly cost of these services.” To the extent that SRNs enhance system reliability and resiliency, the Commission finds them to be desirable, and encourage SECCs to specify in their state plans the extent to which they rely on SRNs as a secondary alert distribution mechanism. The Commission does not require any state to utilize a SRN, because it recognizes the maintenance burdens that SRNs may pose for small entities.
31. The Commission agrees with commenters that additional EAS designations are unnecessary and therefore declinesto adopt the additional designations or sub-designations proposed in the document based on the entities responsible for particular types of alerts (
32.
33. In the EAS Nationwide Test Report, PSHSB observed a lack of clarity in State EAS Plans that precluded end-to-end analysis and review of the EAS system. First, it noted that the Commission's rules do not require EAS Participants to provide monitoring assignment data below the LP level. Second, it observed that many State EAS Plans did not identify the alternative monitoring sources that EAS Participants relied upon to receive the EAN during the first nationwide EAS test. Additionally, PSHSB observed that many EAS Participants used the satellite-based National Public Radio (NPR) News Advisory Channel (Squawk Channel) to receive the EAN, as opposed to their “daisy chain” monitoring assignments. Based on these findings, PSHSB recommended review of the State EAS Plan rules. CSRIC IV recommended that “SECCs must be free to design and maintain their respective state's own robust and redundant EAS relay networks in the best and most practical ways possible.”
34. To address these concerns, in the document, the Commission proposed that each State EAS Plan include: (1) A list of header codes and messages to be transmitted by key EAS sources; (2) a description of all of the state's procedures for transmitting emergency information to the public, including by EAS, WEA, social media, highway signs, and other alerting procedures; (3) the extent to which the state's dissemination strategy for state and local alerts differs from its strategy for disseminating the Presidential Alert; (4) a list of all entities authorized to activate EAS for state and local emergencies; (5) monitoring assignments for key alerting sources; (6) EAS testing procedures; (7) the extent to which alert originators coordinate alerts with “many-to-one” feedback mechanisms, such as 911; (8) procedures for authenticating state EAS messages formatted in CAP and signed with digital signatures; and (9) a description of the SECC governance structure used by the state, including the duties, membership selection process, and administrative structure of the SECC.
35. The Commission amends the Commission's rules to specify and standardize the organizational and operational aspects of State EAS Plans to provide State EAS Plans with the level of order and consistency necessary for efficient and reliable distribution of emergency information to the public.
36.
37.
38.
39.
40. The EAS's primary purpose is transmitting a message from the President to the public during a national emergency. To do so, EAS information must be properly coordinated and understood by relevant stakeholders. Accordingly, the Commission requires State EAS Plans to include transmission
41.
42.
43. Some commenters recommend that the Commission remain technologically neutral in light of the availability of alternative dissemination technologies for EAS alerts. The Commission's satellite-based sources requirement does not mandate any particular technology, but rather requires that State EAS Plans reflect the monitoring sources used. Thus, its rules maintain technological neutrality while ensuring that State EAS Plans accurately identify each state's entire EAS distribution system. As Abbott suggests, states will determine independently whether they will use satellite-based resources. The Commission notes that many state plans include satellite monitoring information. Requiring its inclusion in all State EAS Plans benefits the industry by bringing consistency to the process. To the extent that some State EAS Plans will supply it for the first time, the Commission expects the incremental cost to be minimal.
44.
45. The Commission also removes the current restriction that State EAS Plans include monitoring assignments for Presidential Alerts formatted only in the EAS Protocol. Several commenters support removing this restriction. The Commission finds that doing so will permit states to provide additional information in their plans. Technologies are evolving, and a Presidential Alert may not necessarily be issued using the EAS Protocol; for example, a new generation of Presidential Alert may be introduced using the CAP standard only. The Commission believes that removing this restriction will ensure that state plans remain flexible and responsive to both changes in technology and changes FEMA may make in the future to the format of Presidential Alerts. The Commission disagrees with Timm, who asserts that the Commission should not remove the restriction yet because doing so could “lead to imperiling” the EAS Protocol distribution system and diminish the redundancy of having EAS Participants monitor multiple sources of the Presidential Alert. The Commission continues to require State EAS Plans to contain the EAS Header Code and other EAS Protocol distribution information required under the part 11 rules. The Commission also concludes that it also should allow State EAS Plans to include additional non-EAS Protocol (
46.
47. The Commission finds that this change is supported by CSRIC IV's recommendation that the Commission amend section 11.21 to provide that “[s]tates that want to use the EAS shall submit a State EAS Plan.” The Commission also agrees with several commenters who suggest that it would be helpful to specify in section 11.21 that SECCs develop and maintain state plans, and the Commission adds this language to the rule. Finally, the Commission agrees with Timm that the language in section 11.21(c) should refer to the state monitoring assignment matrix rather than the state “data table” and revise section 11.21(c) accordingly.
48.
49.
50.
51. Based on the record, the Commission believes it would serve the public interest to provide SECCs with further guidance on their roles and responsibilities. The record demonstrates support for reinstating the NAC, and commenters generally support the Commission adopting rules or providing guidance or best practices on SECC governance. The Commission notes, however, that under the IPAWS Modernization Act of 2015, FEMA recently established the IPAWS Subcommittee to its National Advisory Council, which will consider changes to improve the IPAWS and develop technologies that may be beneficial to the public alert and warning system. NSBA observes that “it would not be unreasonable” for the IPAWS Subcommittee to address issues raised in the document. Thus, rather than establishing a separate advisory committee, the Commission concludes that the IPAWS Subcommittee is best positioned to efficiently and effectively address issues related to SECC governance and best practices. Accordingly, the Commission will coordinate with FEMA to ensure that SECC administration and governance are addressed within the scope of the IPAWS Subcommittee, which transmits its recommendations to FEMA's National Advisory Council for review. The Commission believes that working through these existing mechanisms will be the most efficient way to generate recommendations that the Commission may evaluate in formulating its own guidance to improve communication among the Commission, SECCs, FEMA, NWS, and other EAS stakeholders.
52. Although a few commenters suggest amending part 11 to regulate SECCs, the Commission declines to adopt any rules regulating SECCs. Rather, by way of guidance, the Commission provides the SECCs with an online filing template for State EAS Plans and specify the required contents of those plans.
53.
54.
55.
56.
57. In the document, the Commission sought comment on its sources of legal authority over the EAS, including those provisions that the Commission highlights above, and noted that its proposals are “primarily intended to prepare the nation's alerting infrastructure for successful transmission of a Presidential Alert.” To enable the President to reliably execute this authority in the public interest, the Commission has long considered it necessary to ensure that the national alerting architecture is ready to transmit a Presidential Alert in an appropriate situation. The rules the Commission adopts here provide more consistent and reliable access to state plans so that the Commission and EAS participants will be better prepared to ensure the successful transmission of a Presidential Alert. No commenters opposed the Commission's authority to adopt any of the proposals contained in the document.
58. The Commission notes that the overall goal of the EAS system is to serve as an effective integral part of a “comprehensive system to alert and warn the American people.” Today's actions contribute to that goal by “adopt[ing] rules to ensure that communications systems have the capacity to transmit alerts and warnings to the public as part of the public alert and warning system.”
59.
60.
61. The Commission concludes that producing State EAS Plans consistent with its rules will result in approximately $235,000 as a one-time recordkeeping cost. In the document, the Commission estimated that implementing these changes would result in a one-time cost of approximately $25,000 and that it would take each SECC approximately 20 hours to comply with the new State EAS Plan requirements. Commenters observe that this cost assessment, as well as the Commission's assessment of the total hourly burden required to update State EAS Plans, was too low. In response to these concerns, the Commission is not requiring SECCs to include certain proposed elements in State EAS Plans, which the Commission concludes will reduce the amount of time required to revise their plans. Notwithstanding this revision, the Commission uses a quantification of commenters' assessment of the time that it would take SECCs to write their plans from scratch (100 hours) as a reasonable ceiling for the time needed to update those plans consistent with its rules. Based on submissions of State EAS Plans to date, the Commission expects that 54 entities will file such plans. The record shows that the individuals most likely to update those plans are broadcast engineers. Crowdsourced employee compensation data indicates that the median hourly compensation for a broadcast engineer is approximately $29. According to the Bureau of Labor Statistics, employee overhead benefits (including paid leave, supplementary pay, insurance, retirement and savings, and legally required benefits) add 50 percent to an employer's cost of labor. Thus, the Commission quantifies the value of an hour spent updating a State EAS Plan as approximately $43.50. The Commission concludes that the reasonable estimated cost of updating a single State EAS Plan consistent with this
62. Additionally, the Commission anticipates that SECC representatives also will incur a one-time estimated $1,000 reporting cost to file their revised State EAS Plans in the ARS. The Commission concludes that the time burden of filing State EAS Plans in the ARS will be one hour, the same burden that OMB approved for filing data in ETRS. Both filing systems present filers with the same user interface, and while State EAS Plans may include more data points than ETRS filings, entering state plan data in the ARS will be simpler because SECCs already have the relevant information on-hand from the process of creating a State EAS Plan. The Commission values the cost of an SECC representative's time spent on this task as approximately $19, the median hourly salary of a clerical employee plus benefits. Thus, filing state plan data in the ARS will cost approximately $1,000.
63. Therefore, based on the foregoing analysis, the Commission finds it reasonable to conclude that the benefits of the rules the Commission adopts today will exceed the costs of their implementation. The Commission's rule changes will improve alerting organization, support greater testing and awareness of the EAS, and promote the security of the EAS. The Commission believes these benefits easily outweigh the one-time $236,000 total compliance cost. The Commission also find that these rules likely will continue to accrue value to the public while reducing recurring costs.
64.
65. However, there remain weaknesses in conveying this critical information to the public via the EAS. Recent nationwide testing of the EAS has shown “shortfalls in some state EAS plans,” including confusion and difficulties in understanding and implementing monitoring assignments. The current paper-based State EAS Plan filing system, EAS designations, and State EAS Plan contents collectively make it difficult for the Commission and other EAS stakeholders to detect problems or map the propagation of EAS alerts. This inability to detect and resolve problems, in turn, makes it more likely that some members of the public may not receive emergency alerts. The Commission's new requirements address this difficulty by creating a uniform online filing system that will utilize specific State EAS Plan contents and uniform EAS designations. These improvements will allow the Commission, FEMA, and localities to more easily review and identify gaps in the EAS architectures, detect problems, and take measures to address these shortcomings. In doing so, and by helping to facilitate measures to improve the reach of EAS messages, the Commission improves the likelihood that a greater segment of the public will receive emergency alerts on a timely basis and take emergency preparedness measures, thereby providing benefits that include potentially reducing the incidence of injuries and preserving property.
66. The improvements to the EAS that the Commission adopts today will contribute to its ability to prevent injuries. The Commission notes that in 2016, there were 1,276 injuries resulting from weather events in the United States. If the improvements to the EAS the Commission adopts today prevent just 15 injuries, they will produce a public value of at least $400,000. This analysis illustrates that injury prevention alone, which will continue in years to come, is likely to produce benefits that outweigh those one-time costs.
67. Additionally, the Commission anticipates that, after the initial one-time cost of compliance with its rules, EAS Participants, SECCs, and state emergency alerting authorities will realize long-term cost savings. In the Second Report and Order, the Commission required “state and local entities to annually confirm their plans.” Prior to the current
68. Regulatory Flexibility Analysis. As required by the Regulatory Flexibility Act of 1980, the Commission has prepared a Final Regulatory Flexibility Analysis (FRFA) of the significant economic impact on small entities of the policies and rules adopted in this document. The FRFA is set forth in Appendix B of the
69.
70.
71. Accordingly,
72.
73.
74.
This part contains rules and regulations providing for an Emergency Alert System (EAS). The EAS provides the President with the capability to provide immediate communications and information to the general public at the National, State and Local Area levels during periods of national emergency. The rules in this part describe the required technical standards and operational procedures of the EAS for analog AM, FM, and TV broadcast stations, digital broadcast stations, analog cable systems, digital cable systems, wireline video systems, wireless cable systems, Direct Broadcast Satellite (DBS) services, Satellite Digital Audio Radio Service (SDARS), and other participating entities. The EAS may be used to provide the heads of State and local government, or their designated representatives, with a means of emergency communication with the public in their State or Local Area. [72 FR 62132, Nov. 2, 2007]
Radio, Television.
For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 11 as follows:
. 47 U.S.C. 151, 154(i) and (o), 303(r), 544(g) and 606.
(a) A Primary Entry Point (PEP) is a private or commercial radio broadcast station that cooperatively participates with FEMA to provide EAS alerts to the public. PEPs are the primary source of initial broadcast for a Presidential Alert. A PEP is equipped with back-up communications equipment and power generators designed to enable it to continue broadcasting information to the public during and after disasters of national significance. The Primary Entry Point System is a nationwide network of such broadcast stations used to distribute EAS alerts formatted in the EAS Protocol. FEMA is responsible for designating broadcast stations as PEPs.
(b) A National Primary (NP) is an entity tasked with the primary responsibility of receiving the Presidential Alert from a PEP and delivering it to an individual state or portion of a state. In states without a PEP, the NP is responsible for receiving the Presidential Alert from an out-of-state PEP and transmitting it to the public and other EAS Participants in the state. Multiple entities may be charged with primary responsibility for delivering the Presidential Alert.
(c) A State Primary (SP) is an entity tasked with initiating the delivery of EAS alerts other than the Presidential Alert.
(d) A State Relay (SR) is an entity not otherwise designated that is charged with retransmitting EAS alerts for the purpose of being monitored by a Local Primary or Participating National.
(e) State Relay Network (SRN) is a network composed of State Relay (SR) sources, leased common carrier communications facilities or any other available communication facilities. The network distributes State EAS messages originated by the Governor or designated official. In addition to EAS monitoring, satellites, microwave, FM subcarrier or any other communications technology may be used to distribute State emergency messages.
(f) A Local Primary (LP) is an entity that serves as a monitoring assignment for other EAS Participants within the state. LP sources may be assigned numbers (
(g) A Participating National (PN) is an EAS Participant that transmits national, state, or Local Area EAS messages, and is not otherwise designated within the State EAS Plan.
(a) State EAS Plans contain guidelines that must be followed by EAS Participants' personnel, emergency officials, and National Weather Service (NWS) personnel to activate the EAS. The Plans include information on actions taken by EAS Participants, in coordination with state and local governments, to ensure timely access to EAS alert content by non-English speaking populations. State EAS Plans must be updated on an annual basis. The plans must be reviewed and approved by the Chief, Public Safety and Homeland Security Bureau, prior to implementation to ensure that they are consistent with national plans, FCC regulations, and EAS operation. State EAS Plans must include the following elements:
(1) A list of the EAS header codes and messages that will be transmitted by key EAS sources (NP, LP, SP, and SR);
(2) Procedures for state emergency management officials, the National Weather Service, and EAS Participant personnel to transmit emergency information to the public during an emergency via the EAS, including the extent to which the state's dissemination strategy for state and local emergency alerts differs from its Presidential Alerting strategy;
(3) Procedures for state and local activations of the EAS, including a list of all authorized entities participating in the State or Local Area EAS;
(4) A monitoring assignment matrix, in computer readable form, clearly showing monitoring assignments and the specific primary and backup path for emergency action notification (EAN)/Presidential Alert messages from the PEP to all key EAS sources (using the uniform designations specified in § 11.18) and to each station in the plan, organized by operational areas within the state. If a state's emergency alert system is capable of initiating EAS messages formatted in the Common Alerting Protocol (CAP), its EAS State Plan must include specific and detailed information describing how such messages will be aggregated and distributed to EAS Participants within the state, including the monitoring requirements associated with distributing such messages;
(5) State procedures for conducting special EAS tests and Required Monthly Tests (RMTs);
(6) A list of satellite-based communications resources that are used as alternate monitoring assignments and present a reliable source of EAS messages; and
(7) The SECC governance structure utilized by the state in order to organize state and local resources to ensure the efficient and effective delivery of a Presidential Alert, including the duties of the SECC, the membership selection process utilized by the SECC, and the administrative structure of the SECC.
(c) The FCC Mapbook is based on the consolidation of the monitoring assignment matrices required in each State EAS Plan with the identifying data contained in the ETRS. The Mapbook organizes all EAS Participants according to their State, EAS Local Area, and EAS designation. EAS Participant monitoring assignments and EAS operations must be implemented in a manner consistent with guidelines established in a State EAS Plan submitted to the Commission in order for the Mapbook to accurately reflect actual alert distribution.
(b) EAS operations must be conducted as specified in State and Local Area EAS Plans.
(c) Immediately upon receipt of a State or Local Area EAS message that has been formatted in the EAS Protocol or the Common Alerting Protocol, EAS Participants participating in the State or Local Area EAS must do the following:
(1) State Relays (SR) monitor or deliver EAS alerts as required by the State EAS Plan.
(2) Local Primary (LP) entities monitor SPs, SRs, or other sources as set forth in the State EAS Plan.
(3) Participating National (PN) sources monitor LPs or other sources as set forth in the State EAS Plan.
Federal Communications Commission.
Final rule.
In this document, the Federal Communications Commission (Commission) adopts revised rules governing the 800 MHz Cellular Radiotelephone (Cellular) Service and other commercial mobile radio services (CMRS) governed by Part 22 of the Commission's rules. These steps to remove unnecessary regulatory burdens for Cellular Service and other Part 22 licensees will free up more resources for investment in new technologies and greater spectrum efficiency to meet increasing consumer demand for advanced wireless services. Specifically, the Commission modernizes its rules by eliminating several Part 22 recordkeeping and reporting obligations that were adopted more than two decades ago—obligations for which there is no longer a benefit to outweigh the compliance costs and burdens imposed on licensees. It also eliminates certain Cellular Service-specific rules that are no longer necessary. These reforms will provide Cellular Service and other Part 22 licensees with enhanced flexibility and advance the goal of ensuring more consistency in licensing across commercial wireless services, while taking into account unique features of each service. With this document, the Commission terminates the Cellular Reform proceeding in WT Docket No. 12-40, including RM Nos. 11510 and 11660.
Effective September 4, 2018, except for the amendment to 47 CFR 22.303, which contains modified information collection requirements that have not yet been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act. The Commission will publish a document in the
Nina Shafran, (202) 418-2781, in the Mobility Division, Wireless Telecommunications Bureau. She may also be contacted at (202) 418-7233 (TTY).
This is a summary of the Commission's
1. In a
2. To build on the adopted reforms and to respond to certain submissions by commenters in the Commission's 2016 Biennial Review of Telecommunications Regulations proceeding (WT Biennial Review proceeding), the Commission also released a companion
3. In response to the
4. Commission Rules 22.301 and 22.303 collectively require that hard copies of license authorizations and other records be maintained by all Part 22 licensees for each station and that such records and the station itself be made available for inspection upon request. The Commission finds that both rules have outlived the usefulness they may have had in the past and now impose administrative burdens without any corresponding public benefit.
5. Commission Rule 22.325 requires that “[e]ach station in the Public Mobile Services [ ] have at least one control point and a person on duty who is responsible for station operation.” The Commission finds that this rule no longer serves the public interest; it is technologically obsolete, as licensees today routinely monitor their network operations by automatic and remote mechanisms. As with Rules 22.301 and 22.303, discussed above, there is no similar provision governing competing CMRS in the Commission's Part 24 or Part 27 rules. Part 22 licensees should have the same flexibility as Part 24 and Part 27 commercial wireless licensees to determine how to manage their networks to ensure compliance with the Commission's rules, including how best to avoid interference. Accordingly, the Commission deletes 47 CFR 22.325.
6. Commission Rule 22.321 sets forth licensee obligations for equal employment opportunity (EEO) programs and policies to assure nondiscriminatory practices in recruitment, placement, promotion, and other areas of employment practices. Paragraph (c) of the rule requires all Part 22 licensees (
7. Under 47 CFR 22.927, Cellular licensees are “responsible for exercising effective operational control over mobile stations receiving service through their Cellular systems,” including mobile stations operated by subscribers to a different Cellular licensee. Pursuant to 47 CFR 1.903(c), the “[a]uthority for subscribers to operate mobile or fixed stations in the Wireless Radio Services [WRS],” which includes the Cellular Service, “is included in the authorization held by the licensee providing service to them.” Thus, when a WRS licensee, as the host carrier, provides service to a subscriber of another carrier (
8. The Commission concludes that a related legacy rule that applies to all Part 22 licensees, 47 CFR 22.3, is also no longer necessary. This rule specifies that PMS stations must be used and operated only in accordance with applicable Commission rules and only with a valid authorization granted by the Commission. It further specifies that authority for subscribers to operate mobile or fixed PMS stations is included in the authorization of the licensee providing service to them. The same provisions are included in the later-adopted 47 CFR 1.903, which applies more broadly to numerous wireless services in addition to the PMS. Accordingly, the Commission deletes 47 CFR 22.3 as duplicative.
9. The Commission sought comment in the
10. Only two commenters addressed the issue, and one of them opposes the idea, highlighting the fact that disparate types of operations found in certain rule parts would make it challenging to consolidate Part 22 Cellular, Part 24 PCS, and other wireless mobile service rules into a single set of regulations. Such an exercise would entail painstaking review of numerous rules to determine those that can be consolidated and those that must be retained for individual services. In the absence of strong support on the record for this endeavor, which would require a significant investment of staff resources to complete, the Commission declines to pursue the issue at this time.
11. In response to the Commission's query in the
12.
13.
14.
15.
16.
17.
18.
19. Accordingly,
20.
21.
22.
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24.
25.
Communications common carriers, Reporting and recordkeeping requirements.
For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 22 as follows:
47 U.S.C. 154, 222, 303, 309 and 332.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to supersede airworthiness directive (AD) 2015-04-04 for Bell Helicopter Textron Inc. (Bell) Model 412 and 412EP helicopters. AD 2015-04-04 requires revising the Rotorcraft Flight Manual (RFM) and installing a placard to limit flights to visual flight rules (VFR) and prohibiting night operations because of failing inverters. This proposed AD would require replacing the inverters with a new inverter. The actions in this proposed AD are intended to correct an unsafe condition on these products.
We must receive comments on this proposed AD by October 1, 2018.
You may send comments by any of the following methods:
•
•
•
•
You may examine the AD docket on the internet at
For service information identified in this proposed rule, contact Bell Helicopter Textron, Inc., P.O. Box 482, Fort Worth, TX 76101; telephone (817) 280-3391; fax (817) 280-6466; or at
Tim Beauregard, Aviation Safety Engineer, DSCO Branch, AIR-7J0, FAA, 10101 Hillwood Pkwy, Fort Worth, TX 76177; telephone (817) 222-4357; email
We invite you to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.
We will file in the docket all comments that we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. We may change this proposal in light of the comments we receive.
We issued AD 2015-04-04, Amendment 39-18106 (80 FR 9594, February 24, 2015), for Bell Model 412 and 412EP helicopters with an inverter part number (P/N) 412-375-079-101 or 412-375-079-103 with a serial number 29145 or higher. AD 2015-04-04 was prompted by numerous failures of inverters. The failure of one inverter can result in smoke in the cockpit, making landing at night and during instrument meteorological conditions difficult. If two inverters fail, then the pilot will lose primary flight and navigation displays, autopilot, and alternate current powered engine and transmission indicators.
To address this condition, Bell issued Alert Service Bulletin (ASB) 412-13-156, dated April 25, 2013, which specifies inspecting inverter part number (P/N) 412-375-079-101 and either repairing it or replacing it with inverter P/N 412-375-079-103 to prevent failure. Because the specific cause of the inverter failures had not been verified, and since inverter failures continued after Bell issued the ASB, we determined the actions specified in the ASB did not correct the unsafe condition. Therefore, AD 2015-04-04 requires revising the RFM and installing a placard in full view of the pilot to limit flights to VFR only and prohibit night operations.
Since we issued AD 2015-04-04, Bell determined the root causes of the failures were an external connector that caused a short circuit inside inverter P/N 412-375-079-101 and components chafing because of variations in the assembly process and packaging tolerances for inverter P/N 412-375-079-103. Bell introduced an improved inverter, P/N 412-375-079-105, and retrofit kits to replace inverter P/N 412-375-079-101 or 412-375-079-103 on helicopters with serial numbers 33001 or higher. These replacements and repairs correct the unsafe condition by providing 250 voltage amperes (VA) of total power instead of 500 VA, thereby reducing the input power to the inverter.
We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of these same type designs.
We reviewed Bell Alert Service Bulletin (ASB) 412-15-164, dated March 13, 2015 (ASB 412-15-164), which specifies an alternate means of compliance (AMOC) approved by the FAA for AD 2015-04-04 (80 FR 9594, February 24, 2015). Instead of the flight limitations mandated by AD 2015-04-04, ASB 412-15-164 limits allow operation under instrument flight rules (IFR) and night operations with two pilots.
We also reviewed Bell ASB 412-16-171, dated March 22, 2016 (ASB 412-16-171), which specifies replacing certain serial-numbered inverters P/N 412-375-079-101 and 412-375-079-103 with inverter P/N 412-375-079-105 as a direct replacement or with a retrofit kit. Bell specifies that completing the actions specified by the ASB constitute terminating action for Bell ASB 412-15-164.
Lastly, we reviewed Bell Service Instruction for Inverter Retrofit Kit BHT-412-SI-93, dated February 15, 2016, which provides instructions for installing retrofit kit P/N 412-704-058-103.
The proposed AD would require, within 25 hours time-in-service (TIS), replacing the inverter with inverter P/N 412-375-079-105 and, for some helicopters, installing retrofit kit P/N 412-704-058-103.
After accomplishing the previous actions, the proposed AD would allow removing the placard and Rotorcraft Flight Manual limitations that prohibit night operations and restrict flights to visual flight rules.
After the effective date of this AD, this proposed AD would prohibit installing an inverter P/N 412-375-079-101 or 412-375-079-103 on any helicopter.
Bell ASB 412-16-171 requires compliance no later than January 1, 2017, while this proposed AD would require compliance within 25 hours TIS. Bell ASB 412-16-171 makes an electrical load analysis a determining factor for corrective actions. This proposed AD would make no such requirement. Bell ASB 412-16-171 provides instructions for helicopters with serial numbers 36649, 36658, 36659, 36673, 36681 through 36684, 36686, 36688, 36690, 36692, 36694, and 36696 through 36704, and this proposed AD would not. Bell has notified us of errors in the S/Ns listed for Part B of ASB 412-16-171. Accordingly, this proposed AD would only be applicable to those serial-numbered helicopters subject to the unsafe condition.
We estimate that this proposed AD would affect 73 helicopters of U.S. Registry and that labor costs average $85 per work-hour. Based on these estimates, we expect that installing a new inverter or retrofit kit would require about 3 work-hours and a parts cost of $15,749, for a total cost of $16,004 per helicopter and $1,168,292 for the U.S. fleet.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed, I certify this proposed regulation:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
3. Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; and
4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
We prepared an economic evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD applies to Model 412 and 412EP helicopters with a serial number (S/N) 33001 through 33213, 34001 through 34036, 36001 through 36648, 36650 through 36657, 36660 through 36672, 36674 through 36680, 36685, 36687, 36689, 36691, 36693, 36695, and 37002 through 37012, certificated in any category, with a static inverter (inverter) part number (P/N) 412-375-079-101 or 412-375-079-103 installed.
This AD defines the unsafe condition as the failure of an inverter under instrument meteorological conditions or night flight. This condition could result in smoke in the cockpit, increased pilot workload due to the loss of primary flight and navigation displays, alternating current powered engine and transmission indicators, and autopilot, and subsequent loss of control of the helicopter.
This AD replaces AD 2015-04-04, Amendment 39-18106 (80 FR 9594, February 24, 2015).
We must receive comments by October 1, 2018.
You are responsible for performing each action required by this AD within the
(1) Within 25 hours time-in-service:
(i) For helicopters with a S/N 33001 through 33213, 34001 through 34036, and 36001 through 36086, replace the inverter with inverter P/N 412-375-079-105.
(ii) For helicopters with a S/N 36087 through 36648, 36650 through 36657, 36660 through 36672, 36674 through 36680, 36685, 36687, 36689, 36691, 36693, 36695, and 37002 through 37012, install retrofit kit P/N 412-704-058-103 and replace the inverter with inverter P/N 412-375-079-105.
(2) After accomplishing the actions required by paragraph (f)(1) of this AD, you may remove the placard and Rotorcraft Flight Manual limitations, required by AD 2015-04-04, prohibiting night operations and restricting flights to visual flight rules.
(3) After the effective date of this AD, do not install an inverter P/N 412-375-079-101 or 412-375-079-103 on any helicopter.
(1) The Manager, DSCO, FAA, may approve AMOCs for this AD. Send your proposal to: Tim Beauregard, Aviation Safety Engineer, DSCO Branch, AIR-7J0, FAA, 10101 Hillwood Pkwy, Fort Worth, TX 76177; telephone 817-222-5190; email
(2) For operations conducted under a 14 CFR part 119 operating certificate or under 14 CFR part 91, subpart K, we suggest that you notify your principal inspector, or lacking a principal inspector, the manager of the local flight standards district office or certificate holding district office before operating any aircraft complying with this AD through an AMOC.
Bell Alert Service Bulletin 412-15-164, dated March 13, 2015, and Bell Alert Service Bulletin 412-16-171, dated March 22, 2016, which are not incorporated by reference, contain additional information about the subject of this AD. For service information identified in this AD, contact Bell Helicopter Textron, Inc., P.O. Box 482, Fort Worth, TX 76101; telephone (817) 280-3391; fax (817) 280-6466; or at
Joint Aircraft Service Component (JASC) Code: 2422, AC Inverter.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for certain Airbus SAS Model A350-941 airplanes. This proposed AD was prompted by leakage of shrouded pipe T-boxes in the potable water system. This proposed AD would require replacement of the affected potable water T-boxes and clamps with new parts. We are proposing this AD to address the unsafe condition on these products.
We must receive comments on this proposed AD by September 17, 2018.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
For service information identified in this NPRM, contact Airbus SAS, Airworthiness Office—EAL, Rond-Point Emile Dewoitine No: 2, 31700 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 45 80; email
You may examine the AD docket on the internet at
Kathleen Arrigotti, Aerospace Engineer, International Section, Transport Standards Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-3218.
We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
We will post all comments we receive, without change, to
The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2018-0111R1, dated May 30, 2018 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Airbus SAS Model A350-941 airplanes. The MCAI states:
During a pressure test on the A350 Final Assembly Line (FAL), leakage was observed on the potable water system shrouded pipes, due to a crack failure on the T-Boxes. Leakage of a primary pipe may cause water ingress into the avionics bay. Additionally, during another pressure proof test on the A350 FAL, loss of torque was detected on the clamps used to attach the shrouded pipes on the T-Boxes.
This condition, if not corrected, could lead to loss of systems/equipment located inside the avionics bay, possibly resulting in an unsafe condition.
Prompted by these findings, Airbus developed improved potable water T-Boxes
For the reasons described above, this [EASA] AD requires replacement of the affected potable water shrouded pipe T-Boxes and clamps with new parts.
This [EASA] AD was revised to exclude post-mod 111440 aeroplanes from the Applicability.
This condition, if not corrected, could lead to the loss of systems/equipment located inside the avionics bay and possible loss of control of the airplane. You may examine the MCAI in the AD docket on the internet at
Airbus SAS has issued Service Bulletin A350-38-P004, dated April 11, 2018. This service information describes procedures for replacing the affected potable water T-boxes and clamps with new parts. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop on other products of the same type design.
This proposed AD would require accomplishing the actions specified in the service information described previously.
We have revised the applicability of this AD to identify model designations as published in the most recent type certificate data sheet for the affected model.
We estimate that this proposed AD affects 7 airplanes of U.S. registry. We estimate the following costs to comply with this proposed AD:
According to the manufacturer, some or all of the costs of this proposed AD may be covered under warranty, thereby reducing the cost impact on affected individuals. We do not control warranty coverage for affected individuals. As a result, we have included all known costs in our cost estimate.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
This proposed AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes to the Director of the System Oversight Division.
We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
3. Will not affect intrastate aviation in Alaska; and
4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by September 17, 2018.
None.
This AD applies to Airbus SAS Model A350-941 airplanes, certificated in any category, except those on which Airbus SAS modification (mod) 111435 or mod 111440 has been embodied in production.
Air Transport Association (ATA) of America Code 38, Water/waste.
This AD was prompted by leakage of shrouded pipe T-boxes in the potable water system. We are issuing this AD to address the possible leakage of water into the avionics bay. This condition, if not corrected, could lead to the loss of systems/equipment located inside the avionics bay and possible loss of control of the airplane.
Comply with this AD within the compliance times specified, unless already done.
Within 36 months after the effective date of this AD: Replace the affected potable water T-boxes and clamps with new parts in accordance with the Accomplishment Instructions of Airbus Service Bulletin A350-38-P004, dated April 11, 2018.
The following provisions also apply to this AD:
(1)
(2)
(3)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA Airworthiness Directive 2018-0111R1, dated May 30, 2018, for related information. This MCAI may be found in the AD docket on the internet at
(2) For more information about this AD, contact Kathleen Arrigotti, Aerospace Engineer, International Section, Transport Standards Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-3218.
(3) For service information identified in this AD, contact Airbus SAS, Airworthiness Office—EAL, Rond-Point Emile Dewoitine No: 2, 31700 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 45 80; email
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to supersede Airworthiness Directive (AD) 2013-11-03, which applies to certain Viking Air Limited Model CL-215-1A10 and CL-215-6B11 (CL-215T Variant) airplanes. AD 2013-11-03 requires repetitive detailed inspections for cracking of the left-hand (LH) and right-hand (RH) wing lower skin, and repair if necessary. AD 2013-11-03 was prompted by reports of a fractured wing lower rear spar cap and reinforcing strap. Since we issued AD 2013-11-03, further analysis has indicated the need for repetitive eddy current and borescope inspections. This proposed AD would require repetitive borescope inspections of the LH and RH wing lower skin and repetitive eddy current inspections of the LH and RH wing front and rear lower spar caps. We are proposing this AD to address the unsafe condition on these products.
We must receive comments on this proposed AD by September 17, 2018.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
For service information identified in this NPRM, contact Viking Air Limited, 1959 de Havilland Way, Sidney, British Columbia V8L 5V5, Canada; telephone +1-250-656-7227; fax +1-250-656-0673; email
You may examine the AD docket on the internet at
Andrea Jimenez, Aerospace Engineer, Airframe and Mechanical Systems Section, FAA, New York ACO Branch, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7330; fax 516-794-5531.
We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
We will post all comments we receive, without change, to
We issued AD 2013-11-03, Amendment 39-17463 (78 FR 32353, May 30, 2013) (“AD 2013-11-03”), for certain Viking Air Limited Model CL-215-1A10 and CL-215-6B11 (CL-215T Variant) airplanes. AD 2013-11-03 requires repetitive detailed inspections for cracking of the LH and RH wing lower skin, and repair if necessary. AD 2013-11-03 resulted from reports of a fractured wing lower rear spar cap and reinforcing strap. We issued AD 2013-11-03 to detect and correct cracked wing structure, which could result in failure of the wing.
Since we issued AD 2013-11-03, an operator reported damage to the wing lower skin and rear spar of an airplane. This damage was noticed 95 flight hours after an ultrasonic inspection. Further analysis by the airplane manufacturer and the FAA has determined that the ultrasonic inspection might not have been adequate to detect a crack in the spar cap, and there is a need for repetitive eddy current and borescope inspections.
Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian Airworthiness Directive, CF-2013-11R1, dated October 30, 2017 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Viking Air Limited Model CL-215-1A10 and CL-215-6B11 (CL-215T Variant) airplanes. The MCAI states:
While performing modifications on a CL-215-1A10 aeroplane, an operator discovered that the wing lower rear spar cap and reinforcing strap were fractured at Wing Stations (WS) 49.5 and 50 respectively and the rear spar web and wing lower skin were also cracked. It is suspected that a crack initiated at the wing lower spar cap, leading to its failure, the subsequent failure of the reinforcing strap and cracking of the spar web and wing lower skin. The damage was outside of the area addressed by the repetitive ultrasonic inspections required by [Canadian] AD CF-1992-26R2 [which corresponds to FAA AD 2012-11-04, Amendment 39-17067 (77 FR 32892, June 4, 2012)] and was found 95 hours air time after the last ultrasonic inspection.
Failure and cracking of the above-noted wing structure, if not detected, could result in failure of the wing.
In order to mitigate the unsafe condition, [Canadian] AD CF-2013-11 [which corresponds to FAA AD 2013-11-03] was released. However, further analysis has indicated the need for repetitive eddy current and borescope inspections. Therefore, Revision 1 of this [Canadian] AD mandates a repetitive detailed inspection of the wing lower skin using a borescope, changes the one-time eddy current inspection of the lower front and rear spar caps to a repetitive inspection and eliminates the one-time detailed inspection with fuel bladders removed.
The requirements of [Canadian] AD CF-1992-26R2 remain applicable.
You may examine the MCAI in the AD docket on the internet at
Bombardier has issued Alert Service Bulletin 215-A558, Revision 3, dated June 3, 2016. This service information describes procedures for detecting cracks using repetitive borescope inspections of the LH and RH wing lower skin and repetitive eddy current inspections of the LH and RH wing front and rear lower spar caps. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of these same type designs.
We estimate that this proposed AD affects 4 airplanes of U.S. registry. We estimate the following costs to comply with this proposed AD:
We have received no definitive data that would enable us to provide cost estimates for the on-condition actions specified in this proposed AD.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
This proposed AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by
We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
1. Is not a “significant regulatory action” under Executive Order 12866,
2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
3. Will not affect intrastate aviation in Alaska, and
4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by September 17, 2018.
This AD replaces AD 2013-11-03, Amendment 39-17463 (78 FR 32353, May 30, 2013) (“AD 2013-11-03”).
This AD applies to the Viking Air Limited (Type Certificate previously held by Bombardier, Inc.; Canadair Limited) airplanes identified in paragraphs (c)(1) and (c)(2) of this AD, certificated in any category.
(1) Model CL-215-1A10 airplanes, serial numbers (S/Ns) 1001 through 1125 inclusive.
(2) Model CL-215-6B11 (CL-215T Variant) airplanes, S/Ns 1056 through 1125 inclusive.
Air Transport Association (ATA) of America Code 57, Wings.
This AD was prompted by reports of cracking of the wing lower skin and rear spar. We are issuing this AD to address cracked wing structure, which could result in failure of the wing.
Comply with this AD within the compliance times specified, unless already done.
Within 50 flight hours after the effective date of this AD: Using a borescope, do a detailed inspection for cracking of the left-hand (LH) and right-hand (RH) wing lower skin between wing station (WS) 45.00 and 51.00, in accordance with Part A of Bombardier Alert Service Bulletin 215-A558, Revision 3, dated June 3, 2016. Repeat the inspection thereafter at intervals not to exceed 50 flight hours until the initial eddy current inspection required by paragraph (h) of this AD has been accomplished. After accomplishment of the initial eddy current inspection required by paragraph (h) of this AD, the borescope inspection interval required by this paragraph may be extended to 300 flight hours.
Within 300 flight hours after the effective date of this AD: Do an eddy current inspection for cracking of the LH and RH wing front and rear lower spar caps, in accordance with Parts C-1 and C-2 of Bombardier Alert Service Bulletin 215-A558, Revision 3, dated June 3, 2016. Repeat the inspection thereafter at intervals not to exceed 300 flight hours.
If any crack, as defined in Bombardier Alert Service Bulletin 215-A558, Revision 3, dated June 3, 2016, is found during any inspection required by paragraph (g) or paragraph (h) of this AD: Before further flight, repair using a method approved by the FAA; or Transport Canada Civil Aviation (TCCA); or Viking Air Limited's TCCA Design Approval Organization (DAO). If approved by the DAO, the approval must include the DAO-authorized signature.
This paragraph provides credit for the initial inspections required by paragraphs (g) and (h) of this AD if those actions were performed before the effective date of this AD using Bombardier Alert Service Bulletin 215-A558, Revision 1, dated January 10, 2014; or Bombardier Alert Service Bulletin 215-A558, Revision 2, dated January 17, 2014.
Although Bombardier Alert Service Bulletin 215-A558, Revision 3, dated June 3, 2016, specifies to submit certain information to the manufacturer, this AD does not include that requirement.
(1)
(2)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) Canadian Airworthiness Directive CF-2013-11R1, dated October 30, 2017, for related information. This MCAI may be found in the AD docket on the internet at
(2) For more information about this AD, contact Andrea Jimenez, Aerospace Engineer, Airframe and Mechanical Systems Section, FAA, New York ACO Branch, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7330; fax 516-794-5531.
(3) For service information identified in this AD, contact Viking Air Limited, 1959 de Havilland Way, Sidney, British Columbia V8L 5V5, Canada; telephone +1-250-656-7227; fax +1-250-656-0673; email
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for certain Gulfstream Aerospace Corporation Models G-IV and GIV-X airplanes. This proposed AD was prompted by a revision to the airworthiness limitations section (ALS) of the aircraft maintenance manual (AMM) based on fatigue and damage tolerance testing and updated analysis. This proposed AD would require revising the maintenance or inspection program to incorporate updated inspection requirements and life limits that address fatigue cracking of principal structural elements (PSEs). We are proposing this AD to address the unsafe condition on these products.
We must receive comments on this proposed AD by September 17, 2018.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
For service information identified in this NPRM, contact Gulfstream Aerospace Corporation, Technical Publications Dept., 500 Gulfstream Road, Savannah, GA 31402-2206; telephone: 800-810-4853; fax: 912-965-3520; email:
You may examine the AD docket on the internet at
Ronald “Ron” Wissing, Airframe Engineer, Atlanta ACO Branch, FAA, 1701 Columbia Avenue, College Park, Georgia 30337; phone: 404-474-5552; fax: 404-474-5606; email:
We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
We will post all comments we receive, without change, to
We received a revision to the ALS of the maintenance manual for Gulfstream Aerospace Corporation Models G-IV and GIV-X airplanes based on fatigue and damage tolerance testing and updated analysis that indicates current inspection programs may not be identifying cracks before reaching critical size. The revised ALS updates inspection requirements and life limits that address fatigue cracking of PSEs. We determined that these actions are necessary to address the identified unsafe condition. This condition, if not corrected, could result in fatigue cracking of PSEs, which could result in reduced structural integrity of the PSEs and critical components with consequent loss of control of the airplane.
We reviewed Gulfstream Document No. GIV-GER-0008, Summary of Changes to the GIV Series and GIV-X Series Airworthiness Limitations, Revision B, dated March 12, 2018. The service information describes more restrictive inspection intervals or altered NDT inspection requirements and updated life limits that address fatigue cracking of the PSEs. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would require revising the AMM, Chapter 5 “Life Limits” and “Airworthiness Limitations” sections, to incorporate new inspections and life limits based on fatigue and damage tolerance (FTD) testing and updated analysis.
We estimate that this proposed AD affects 711 airplanes of U.S. registry.
We estimate the following costs to comply with this proposed AD:
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
This proposed AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to small airplanes, gliders, balloons, airships, domestic business jet transport airplanes, and associated appliances to the Director of the Policy and Innovation Division.
We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
(3) Will not affect intrastate aviation in Alaska, and
(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by September 17, 2018.
None.
This AD applies to Gulfstream Aerospace Corporation Model G-IV airplanes, certificated in any category, serial numbers 1000 through 1535; and Model GIV-X airplanes, certificated in any category, serial numbers 4001 through 4363.
Note 1 to paragraph (c) of this AD: Model G-IV airplanes are also referred to by the marketing designations G300 and G400. Model GIV-X airplanes are also referred to by the marketing designations G350 and G450.
Joint Aircraft System Component (JASC)/Air Transport Association (ATA) of America Code 27, Flight Controls; 32, Landing Gear; 52, Doors; 53, Fuselage; 55, Stabilizers; 57, Wings; 71, Power Plant-General; and 78, Engine Exhaust.
This AD was prompted by a revision to the airworthiness limitations section (ALS) of the Model G-IV and Model GIV-X maintenance manuals based on fatigue and damage tolerance testing and updated analysis. We are issuing this AD to detect and correct fatigue cracking of principal structural elements (PSEs). This unsafe condition, if unaddressed, could result in reduced structural integrity of a PSE or critical component and lead to loss of control of the airplane.
Comply with this AD within the compliance times specified, unless already done.
Within 12 months after the effective date of this AD, revise the ALS of your maintenance or inspection program (
After the maintenance or inspection program (
(1) The Manager, Atlanta ACO Branch, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the certification office, send it to the attention of the person identified in paragraph (j)(1) of this AD.
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
(1) For more information about this AD, contact Ronald “Ron” Wissing, Airframe Engineer, Atlanta ACO Branch, FAA, 1701 Columbia Avenue, College Park, Georgia
(2) For service information identified in this AD, contact Gulfstream Aerospace Corporation, P.O. Box 2206, Savannah, Georgia 31402-2206; telephone: (800) 810-4853; fax 912-965-3520; email:
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to modify Class E airspace extending upward from 1,200 feet above the surface at St. Michael Airport, AK; Shaktoolik Airport, AK; and Tatitlek Airport, AK. This proposal would add exclusionary language to the legal descriptions of these airports to exclude Class E airspace extending beyond 12 miles from the shoreline, and would ensure the safety and management of aircraft within the National Airspace System.
Comments must be received on or before September 17, 2018.
Send comments on this proposal to the U.S. Department of Transportation, Docket Operations, 1200 New Jersey Avenue SE, West Building Ground Floor, Room W12-140, Washington, DC 20590; telephone: 1-800-647-5527, or (202) 366-9826. You must identify FAA Docket No. FAA-2017-0349; Airspace Docket No. 17-AAL-5, at the beginning of your comments. You may also submit comments through the internet at
FAA Order 7400.11B, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
Richard Roberts, Federal Aviation Administration, Operations Support Group, Western Service Center, 2200 S. 216th St., Des Moines, WA, 98198-6547; telephone (206) 231-2245.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would amend Class E airspace extending upward from 1,200 feet above the surface at St. Michael Airport, AK; Shaktoolik Airport, AK; and Tatitlek Airport, AK to support IFR operations in standard instrument approach and departure procedures at these airports.
Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Persons wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2017-0349/Airspace Docket No. 17-AAL-5”. The postcard will be date/time stamped and returned to the commenter.
All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.
An electronic copy of this document may be downloaded through the internet at
You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the
This document proposes to amend FAA Order 7400.11B, Airspace Designations and Reporting Points, dated August 3, 2017, and effective September 15, 2017. FAA Order 7400.11B is publicly available as listed in the
The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 by modifying Class E airspace extending upward from 1,200 feet above the surface at St. Michael Airport, AK; Shaktoolik Airport, AK; and Tatitlek Airport, AK. This action would add language to the legal descriptions of these airports that reads “excluding that airspace that extends beyond 12 miles from the shoreline”.
Class E airspace designations are published in paragraph 6005 of FAA Order 7400.11B, dated August 3, 2017, and effective September 15, 2017, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current, and is non-controversial and unlikely to result in adverse or negative comments. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal would be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (air).
Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
That airspace extending upward from 700 feet above the surface within a 6.4-mile radius of Shaktoolik Airport; and that airspace extending upward from 1,200 feet above the surface within a 73-mile radius of Shaktoolik Airport, AK, excluding that airspace that extends beyond 12 miles of the shoreline.
That airspace extending upward from 700 feet above the surface within an 8.4-mile radius of St. Michael Airport; and that airspace extending upward from 1,200 feet above the surface within a 73-mile radius of the St. Michael Airport, excluding that airspace that extends beyond 12 miles of the shoreline.
That airspace extending upward from 700 feet above the surface within a 6.4-mile radius of Tatitlek Airport, and within 2 miles southwest and 3.4 miles northeast of the 149° radial from Tatitlek Airport extending from the 6.4-mile radius to 11.8 miles southeast of the airport; and that airspace extending upward from 1,200 feet above the surface within a 60-mile radius of the Tatitlek Airport, excluding that airspace that extends beyond 12 miles of the shoreline.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to modify Class E airspace extending upward from 1,200 feet above the surface in Alaska at Wiley Post/Will Rogers Memorial Airport, Barrow; Chevak Airport; Clarks Point Airport; Elim Airport; and Golovin Airport. This proposal would add exclusionary language to the legal descriptions of these airports to exclude Class E airspace extending beyond 12 miles from the shoreline, and would ensure the safety and management of aircraft within the National Airspace System. Also, an editorial change would be made in the associated airspace designation for Chevak Airport.
Comments must be received on or before September 17, 2018.
Send comments on this proposal to the U.S. Department of Transportation, Docket Operations, 1200 New Jersey Avenue SE, West Building Ground Floor, Room W12-140, Washington, DC 20590; telephone: (800) 647-5527, or (202) 366-9826. You must identify FAA Docket No. FAA-2017-0345; Airspace Docket No. 17-AAL-1, at the beginning of your comments. You may also submit comments through the internet at
FAA Order 7400.11B, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
Richard Roberts, Federal Aviation Administration, Operations Support Group, Western Service Center, 2200 S 216th St., Des Moines, WA 98198-6547; telephone (206) 231-2245.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority, as it would amend Class E airspace extending upward from 1,200 feet above the surface at Wiley Post/Will Rogers Memorial Airport, Barrow; Chevak Airport, Clarks Point Airport, Elim Airport, and Golovin Airport, AK, to support IFR operations in standard instrument approach and departure procedures at these airports.
Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Persons wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2017-0345; Airspace Docket No. 17-AAL-1.” The postcard will be date/time stamped and returned to the commenter.
All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.
An electronic copy of this document may be downloaded through the internet at
You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the
This document proposes to amend FAA Order 7400.11B, Airspace Designations and Reporting Points, dated August 3, 2017, and effective September 15, 2017. FAA Order 7400.11B is publicly available as listed in the
The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 by modifying Class E airspace extending upward from 1,200 feet above the surface at Wiley Post/Will Rogers Memorial Airport, Barrow, AK; Chevak Airport, Clarks Point Airport, Elim Airport, and Golovin Airport, AK. This action would add language to the legal descriptions of these airports that reads “excluding that airspace that extends beyond 12 miles from the shoreline”.
An editorial change also would be made to the Chevak airspace designation removing the city from the airport name to comply with a change to FAA Order 7400.2L, Procedures for Handling Airspace Matters.
Class E airspace designations are published in paragraph 6005 of FAA Order 7400.11B, dated August 3, 2017, and effective September 15, 2017, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current, and is non-controversial and unlikely to result in adverse or negative comments. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal would be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (air).
Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
That airspace extending upward from 700 feet above the surface within a 6.6-mile radius of the Wiley Post/Will Rogers Memorial Airport; and that airspace extending upward from 1,200 feet above the surface within a 73-mile radius of the Wiley Post/Will Rogers Memorial Airport, excluding that airspace extending beyond 12 miles of the shoreline.
That airspace extending upward from 700 feet above the surface within a 7.0-mile radius of Chevak Airport; and that airspace extending upward from 1,200 feet above the surface within a 73-mile radius of Chevak Airport, excluding that airspace extending beyond 12 miles of the shoreline.
That airspace extending upward from 700 feet above the surface within a 6.3-mile radius of Clarks Point Airport; and that airspace extending upward from 1,200 feet above the surface within a 73-mile radius of the Clarks Point Airport, excluding that airspace extending beyond 12 miles of the shoreline.
That airspace extending upward from 700 feet above the surface within a 6.8-mile radius of Elim Airport, and within 3.7 miles either side of the 015° bearing from the Elim Airport, extending from the 6.8-mile radius, to 12.6 miles north of Elim Airport; and that airspace extending upward from 1,200 feet above the surface within a 74-mile radius of the Elim Airport, excluding that airspace extending beyond 12 miles of the shoreline.
That airspace extending upward from 700 feet above the surface within a 7.4-mile radius of Golovin Airport, and that airspace extending upward from 1,200 feet above the surface within a 30-mile radius of lat. 64°43′47″ N, long. 163°15′17″ W and a 30-mile radius of lat. 64°17′57″ N, long. 163°01′41″ W, excluding that airspace extending beyond 12 miles of the shoreline.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to modify Class E airspace extending upward from 1,200 feet above the surface in Alaska at Nuiqsut Airport; Oooguruk Island Heliport Nuiqsut; Pioneer Heliport, Nuiqsut; Perryville Airport; Pilot Point Airport; and Point Lay Airport. This proposal would add exclusionary language to the legal descriptions of these airports to exclude Class E airspace extending beyond 12 miles from the shoreline, and would ensure the safety and management of aircraft within the National Airspace System. Also, this action would remove the heliport name from the airspace designation of Oooguruk Island Heliport and Pioneer Heliport.
Comments must be received on or before September 17, 2018.
Send comments on this proposal to the U.S. Department of Transportation, Docket Operations, 1200 New Jersey Avenue SE, West Building Ground Floor, Room W12-140, Washington, DC 20590; telephone: (800) 647-5527, or (202) 366-9826. You must identify FAA Docket No. FAA-2017-0348; Airspace Docket No. 17-AAL-4, at the beginning of your comments. You may also submit comments through the internet at
FAA Order 7400.11B, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
Richard Roberts, Federal Aviation Administration, Operations Support Group, Western Service Center, 2200 S. 216th St., Des Moines, WA, 98198-6547; telephone (206) 231-2245.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would amend Class E airspace extending upward from 1,200 feet above the surface at Nuiqsut Airport, Oooguruk Island Heliport, Pioneer Heliport, Perryville Airport, Pilot Point Airport, Point Hope Airport, Point Lay Airport, and Port Heiden Airport, AK, to support IFR operations in standard instrument approach and departure procedures at these airports.
Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Persons wishing the FAA to
All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.
An electronic copy of this document may be downloaded through the internet at
You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the
This document proposes to amend FAA Order 7400.11B, Airspace Designations and Reporting Points, dated August 3, 2017, and effective September 15, 2017. FAA Order 7400.11B is publicly available as listed in the
The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 by modifying Class E airspace extending upward from 1,200 feet above the surface at Nuiqsut Airport, Nuiqsut, AK; Oooguruk Island Heliport, Nuiqsut, AK; Pioneer Heliport, Nuiqsut, AK; Perryville Airport, Perryville, AK; Pilot Point Airport, Pilot Point, AK; and Point Lay Airport, Point Lay, AK. This action would add language to the legal descriptions of these airports that reads “excluding that airspace that extends beyond 12 miles from the shoreline.”
Also, this action would remove the airport name from the airspace designation for Oooguruk Island Heliport and Pioneer Heliport, to conform with recent change to FAA Order 7400.2L, Procedures for Handling Airspace Matters.
Class E airspace designations are published in paragraph 6005 of FAA Order 7400.11B, dated August 3, 2017, and effective September 15, 2017, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current, and is non-controversial and unlikely to result in adverse or negative comments. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal would be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (air).
Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
That airspace extending upward from 700 feet above the surface within a 6.4-mile radius of the Nuiqsut Airport, and that airspace extending upward from 1,200 feet above the surface within a 73-mile radius of Nuiqsut Airport, excluding that airspace which overlies Control 1485L, and excluding that airspace that extends beyond 12 miles of the shoreline.
That airspace extending upward from 700 feet above the surface within a 6-mile radius of Oooguruk Island Heliport; and that airspace extending upward from 1,200 feet above the surface within a 73-mile radius of Oooguruk Island Heliport, excluding that airspace that extends beyond 12 miles of the shoreline.
That airspace extending upward from 700 feet above the surface within a 6-mile radius of Pioneer Heliport; and that airspace extending upward from 1,200 feet above the surface within a 73-mile radius of Pioneer Heliport, excluding that airspace that extends beyond 12 miles of the shoreline.
That airspace extending upward from 700 feet above the surface within a 14.7-mile radius of Perryville Airport; and that airspace east of long. 160°00′00″ W extending upward from 1,200 feet above the surface within an 81.2-mile radius of Perryville Airport, excluding that airspace that extends beyond 12 miles of the shoreline.
That airspace extending upward from 700 feet above the surface within a 6.3-mile radius of Pilot Point Airport; and that airspace extending upward from 1,200 feet above the surface within an area bounded by lat. 57°51′00″ N, long. 158°03′00″ W, to lat. 57°51′00″ N, long. 157°05′00″ W, to lat. 57°24′45″ N, long. 157°05′00″ W, to lat. 57°24′45″ N, long. 158°03′00″ W, to the point of beginning, excluding that airspace that extends beyond 12 miles of the shoreline.
That airspace extending upward from 700 feet above the surface within an 8-mile radius of Point Lay Airport; and that airspace extending upward from 1,200 feet above the surface within a 46-mile radius of the Point Lay Airport, excluding that airspace that extends beyond 12 miles from the shoreline.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to modify Class E airspace extending upward from 1,200 feet above the surface at Toksook Bay Airport, Toksook Bay, AK; Unalakleet Airport, Unalakleet, AK; Wainwright Airport, Wainwright, AK; and Yakutat Airport, Yakutat, AK. This proposal would add exclusionary language to the legal descriptions of these airports for Class E airspace extending beyond 12 miles from the shoreline, and would ensure the safety and management of aircraft within the National Airspace System.
Comments must be received on or before September 17, 2018.
Send comments on this proposal to the U.S. Department of Transportation, Docket Operations, 1200 New Jersey Avenue SE, West Building Ground Floor, Room W12-140, Washington, DC 20590; telephone: 1-800-647-5527, or (202) 366-9826. You must identify FAA Docket No. FAA-2017-0350; Airspace Docket No. 17-AAL-6, at the beginning of your comments. You may also submit comments through the internet at
FAA Order 7400.11B, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
Richard Roberts, Federal Aviation Administration, Operations Support Group, Western Service Center, 2200 S 216th St., Des Moines, WA 98198-6547; telephone (206) 231-2245.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would amend Class E airspace extending upward from 1,200 feet above the surface at Toksook Bay Airport, AK; Unalakleet Airport, AK; Wainwright Airport, AK; and Yakutat Airport, AK, to support IFR operations in standard instrument approach and departure procedures at these airports and to limit Class E airspace to within 12 miles of the shoreline.
Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Persons wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2017-0350, Airspace Docket No. 17-AAL-6”. The postcard will be date/time stamped and returned to the commenter.
All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.
An electronic copy of this document may be downloaded through the internet at
You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the
This document proposes to amend FAA Order 7400.11B, Airspace Designations and Reporting Points, dated August 3, 2017, and effective September 15, 2017. FAA Order 7400.11B is publicly available as listed in the
The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 by modifying Class E airspace extending upward from 1,200 feet above the surface at Toksook Bay Airport, Toksook, AK; Unalakleet Airport, Unalakleet, AK; Wainwright Airport, Wainwright, AK; and Yakutat Airport, Yakutat, AK. This action would add language to the legal descriptions of these airports that reads “ excluding that airspace extending beyond 12 miles of the shoreline”, and would support IFR operations in standard instrument approach and departure procedures at these airports.
Class E airspace designations are published in paragraph 6005 of FAA Order 7400.11B, dated August 3, 2017, and effective September 15, 2017, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current, and is non-controversial and unlikely to result in adverse or negative comments. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal would be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (air).
Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
That airspace extending upward from 700 feet above the surface within a 6.3-mile radius of Toksook Bay Airport; and that airspace extending upward from 1,200 feet above the surface within a 73-mile radius of the Toksook Bay Airport, excluding that airspace that extends beyond 12 miles of the shoreline.
That airspace extending upward from 700 feet above the surface within a 7-mile radius of Unalakleet Airport beginning at the 360° bearing of the airport clockwise to the 260° bearing of the airport, and within a 13.5-mile radius of the airport beginning at the 260° bearing of the airport clockwise to the 360° bearing of the airport, and within 6 miles each side of the Unalakleet Airport 185° bearing of the airport extending from the 7-mile radius to 10 miles south of the airport; and that airspace extending upward from 1,200 feet above the surface within a 74-mile radius of Unalakleet Airport, excluding that airspace that extends beyond 12 miles of the shoreline.
That airspace extending upward from 700 feet above the surface within an 8.5-mile radius of Wainwright Airport; and that airspace extending upward from 1,200 feet above the surface within a 73-mile radius of the Wainwright Airport, AK, excluding that portion extending outside the Anchorage Arctic CTA/FIR (PAZA) boundary, and excluding that airspace that extends beyond 12 miles of the shoreline.
That airspace extending upward from 700 feet above the surface within a 6.35-mile radius of Wales Airport; and that airspace extending upward from 1,200 feet above the surface within an area bounded by lat. 65°24′00″ N, long.168°30′00″ W, to lat. 65°53′00″ N, long. 168°30′00″ W, to lat. 66°00′00″ N, long. 167°50′00″ W, to lat. 65°24′00″ N, 167°50′00″ W, to point of beginning, excluding that airspace within the Tin City Class E airspace area, and excluding that airspace that extends beyond 12 miles of the shoreline.
That airspace extending upward from 700 feet above the surface within the area bounded by lat. 59°47′42″ N, 139°58′48″ W, to lat. 59°37′33″ N, long. 139°40′54″ W, then along the 7 mile radius of the Yakutat VOR/DME clockwise to lat. 59°28′54″ N, long. 139°25′36″ W, to lat. 59°20′16″ N, long. 139°10′20″ W, to lat. 59°02′49″ N, long. 139°47′45″ W, to lat. 59°30′15″ N, long. 140°36′43″ W, to the point of beginning, excluding that area beyond 12 miles from the shoreline within Gulf of Alaska Low Control Area; and that airspace extending upward from 1,200 feet above the surface within a 75-mile radius of the Yakutat VOR/DME, excluding that area extending over Canada, and that airspace that extends beyond 12 miles of the shoreline within Control 1487L.
Coast Guard, DHS.
Notice of proposed rulemaking.
The Coast Guard is proposing to establish a Regulated Navigation Area (RNA) for certain waters of the Straits of Mackinac. This action is necessary to provide for the safety of life and protection of property on these navigable waters near Mackinaw City, MI. This proposed rulemaking would prohibit persons and vessels from anchoring or loitering within the RNA unless authorized by the Captain of the Port of Sault Sainte Marie, Michigan or a designated representative. We invite your comments on this proposed rulemaking.
Comments and related material must be received by the Coast Guard on or before September 4, 2018.
You may submit comments identified by docket number USCG-2018-0563 using the Federal eRulemaking Portal at
If you have questions about this proposed rulemaking, call or email Lieutenant Jason Radcliffe, Ninth District Waterways Management, U.S. Coast Guard; telephone 216-902-6060, email
The northwest part of Lake Huron forms the approach to, and the east part of the, Straits of Mackinac. At the extreme northwest end, the lake narrows abruptly to a width of 4 miles. Spanning this divide is the Mackinac Bridge. Two main shipping lanes lead north and south of Bois Blanc Island and pass under the bridge. Numerous shoals and several islands obstruct the Straits Area. Located approximately a mile west of the Mackinac Bridge are submerged electrical cables and the Enbridge Line 5 Pipeline. Posted on NOAAs navigation charts are cautionary notes advising mariners of the cable and pipeline area. There is no prohibition nor is there an enforcement mechanism to discourage anchoring in this area. The Captain of the Port (COTP) of Sault Sainte Marie has determined that the high volume of vessel transits and the potential for damage to submerged infrastructure warrants the creation of a regulatory measure to specifically outline an area of regulated navigation that prohibits certain vessels from anchoring or loitering.
The purpose of this rulemaking is to better enhance the safety of vessels and protection of sub-surface cables and pipelines within the navigable waters of the Straits of Mackinac. The Coast Guard proposes this rulemaking under authority in 33 U.S.C. 1231; 50 U.S.C. 191; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 0170.1.
On the behalf of COTP Sector Sault Sainte Marie, the Ninth Coast Guard District proposes the creation of a Regulated Navigation Area that mandates transiting vessels to make a direct passage with no anchoring or loitering, unless expressly granted permission from the COTP or designated representative. Vessels that would be required to comply with this RNA include vessels of 40 meters or more in length, towing vessels of 20 meters or more in length while engaged in towing another vessel, vessels certificated to carry 50 or more passengers for hire, when engaged in trade, or any dredge or floating plant.
Within the RNA, the District Commander or COTP may establish temporary traffic rules that include but are not limited to channel obstructions, winter navigation, unusual weather conditions, or unusual water levels. This proposed rule will ensure transiting mariners are fully aware of existing and emergent hazards to navigation on or below the navigable waterways and provide the Coast Guard with greater situational awareness and oversight. The regulatory text we are proposing appears at the end of this document.
We developed this proposed rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This NPRM has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, the NPRM has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.
This regulatory action determination is based on the fact that no part of this proposed rulemaking and its stipulations will require any additional equipment purchases or create an undue burden to marine operations. This proposed rule will increase communication and situational awareness of the specified area.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the Regulated Navigation Area may be small entities, for the reasons stated in section IV.A above, this proposed rule would not have a significant economic impact on any vessel owner or operator. The majority of this proposed rule applies to vessels typically larger than those operated by small entities. The size and operational applicability of this proposed rule is found at the end of this document.
If you think that your business, organization, or governmental
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
This proposed rule would not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this proposed rule under Department of Homeland Security Directive 023-01 and Commandant Instruction M16475.1D, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves creating a permanent Regulated Navigation Area detailing how mariners shall transit through the Straits of Mackinac. Normally such actions are categorically excluded from further review under paragraph L61 of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A preliminary Record of Environmental Consideration supporting this determination is available in the docket where indicated under
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. All comments received will be posted without change to
Documents mentioned in this NPRM as being available in the docket, and all public comments, will be in our online docket at
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 165 as follows:
33 U.S.C. 1231; 50 U.S.C. 191; 33 CFR 1.05-1, 6.04-1, 6.04-6 and 160.5; Department of Homeland Security Delegation No. 0170.1.
(a)
(b)
(1) Vessels of 40 meters (approx. 131 feet) or more in length, while navigating;
(2) Towing vessels of 20 meters (approx. 65 feet) or more in length, while engaged in towing another vessel astern, alongside or by pushing ahead; or
(3) Vessels certificated to carry 50 or more passengers for hire, when engaged in trade; or
(4) Each dredge or floating plant.
(c)
(1) Nothing in this regulation relieves any vessel, owner, operator, charterer, master, or person directing the movement of a vessel, from the consequences of any neglect to comply with this part or any other applicable law or regulation. (
(2) Vessels transiting in the RNA must comply with all directions given to them by the COTP, or a designated representative. The “designated representative” of the COTP is any Coast Guard commissioned, warrant or petty officer who designated by the COTP to act on their behalf. The designated representative may be on a Coast Guard vessel; or other designated craft; or on shore and communicating via VHF-16 or telephone 906-635-3319.
(3) Vessels transiting through the RNA must make a direct passage. No vessel may anchor or loiter within the RNA at any time without the expressed permission of the COTP or a designated representative.
(4) Vessels desiring to anchor within the confines of the RNA must contact the COTP or a designated representative one (1) hour in advance of anchoring via VHF-16 or telephone 906-635-3319. The person directing the movement of the vessel desiring to anchor will provide the time and purpose for anchoring, plus the anchoring location. Vessels getting underway from anchor will notify the COTP or a designated representative no less than 15 minutes prior to sailing via VHF-16 or telephone 906-635-3319.
(5) The owner, operator, charterer, master or person directing the movement of a vessel desiring to loiter within the prescribed RNA for the purposes of work, dredging, or survey must receive permission from the COTP or a designated representative a minimum of 72 hours in advance of the desired activity.
(6) In the RNA, the District Commander or COTP may establish temporary traffic rules for reasons that include but are not limited to channel obstructions, winter navigation, unusual weather conditions, or unusual water levels.
(7) There may be times that the Ninth District Commander or the COTP finds it necessary to close the RNA to vessel traffic. During times of limited closure, persons and vessels may request permission to enter the RNA by contacting the COTP or a designated representative via VHF-16 or telephone 906-635-3319.
(d)
(1)
(2)
(e)
(f)
Helena—Lewis & Clark National Forest, USDA Forest Service.
Notice of new fee sites.
The Helena—Lewis & Clark National Forest is proposing to implement new fees at the following sites: Three rental cabins, one campground, and one group campground. The Forest is proposing to charge at the following sites:
• Indian Meadows Cabin; Lincoln Ranger District: Proposed fee of $65 per night.
• Mergenthaler Cabin; Helena Ranger District: Proposed fee of $60 per night.
• Nevada Creek Cabin; Lincoln Ranger District: Proposed fee of $45 per night.
• Quigley Group Campground; Helena Ranger District: Proposed fee of $50 per night.
• Hay Canyon Campground; Musselshell Ranger District: Proposed Fee of $10 per night
These fees are only proposed and will be determined upon further analysis and public comment.
Send any comments about these fee proposals by September 4, 2018 so comments can be compiled, analyzed, and shared with the Western Montana (or North-Central for Hay Canyon Campground) Bureau of Land Management (BLM) Recreation Resource Advisory Committees. The proposed effective date of implementation of proposed new fees will be no earlier than six months after publication of this notice.
William Avey, Forest Supervisor, Helena—Lewis & Clark National Forest, 2880 Skyway Drive, Helena, MT 59602 or Email to
Rory Glueckert, Forest Recreation Program Manager, Helena—Lewis & Clark National Forest at 406-495-3761 or
The Federal Recreation Lands Enhancement Act (Title VII, P.L. 108-447) directed the Secretary of Agriculture to publish a six month advance notice in the
Once public involvement is complete, these new fees will be reviewed by the BLM Western or North Central Montana Recreation Resource Advisory Committees (depending on site location) prior to a final decision and implementation.
Reasonable fees, paid by users of these sites and services, will help ensure that the Forest can continue maintaining and improving the sites for future generations. A market analysis of surrounding recreation sites with similar amenities indicates that the proposed fees are comparable and reasonable.
Advance reservations for the Indian Meadows, Mergenthaler, and Nevada Creek Cabins and the Quigley Group Campground will be available through
This document was received for publication by the Office of the Federal Register on July 30, 2018.
Commission on Civil Rights.
Announcement of monthly planning meetings.
Notice is hereby given, pursuant to the provisions of the rules and regulations of the U.S. Commission on Civil Rights (Commission), and the Federal Advisory Committee Act (FACA), that a planning meeting of the Massachusetts Advisory Committee to the Commission will convene on Thursday, August 15, 2017 at 1:00 p.m. (EDT) at McCarter & English, LLP, 265 Franklin Street, Boston, MA 02110. The purpose of the meeting is to hear testimony on human trafficking to consider it as a civil rights topic of study.
Thursday, August 15, 2018 (EDT) at 1:00 p.m. (EDT).
McCarter & English, LLP, 265 Franklin Street, Boston, MA 02110.
Evelyn Bohor, at
If other persons who plan to attend the meeting require other accommodations, please contact Evelyn Bohor at
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) is initiating a changed circumstances review and preliminarily determining that Coastal Aqua Private Limited (CAPL) is the successor-in-interest to Coastal Aqua in the context of the antidumping duty order on certain frozen warmwater shrimp (shrimp) from India.
Applicable August 2, 2018.
Brittany Bauer, AD/CVD Operations, Office II, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: 202-482-3860.
On February 1, 2005, Commerce published in the
The merchandise subject to the order is certain frozen warmwater shrimp.
Pursuant to section 751(b)(1) of the Act, Commerce will conduct a changed circumstances review upon receipt of information concerning, or a request from, an interested party for a review of an antidumping duty order which shows changed circumstances sufficient to warrant a review of the order. As indicated in the “Background” section, we received information indicating that Coastal Aqua transferred its shrimp business to CAPL. This constitutes changed circumstances warranting a review of the order.
Section 351.221(c)(3)(ii) of Commerce's regulations permits Commerce to combine the notice of initiation of a changed circumstances review and the notice of preliminary results if Commerce concludes that expedited action is warranted.
In this changed circumstances review, pursuant to section 751(b) of the Act, Commerce conducted a successor-in-interest analysis. In making a successor-in-interest determination, Commerce examines several factors, including, but not limited to, changes in the following: (1) Management; (2) production facilities; (3) supplier relationships; and (4) customer base.
In accordance with 19 CFR 351.216, we preliminarily determine that CAPL is the successor-in-interest to Coastal Aqua. Record evidence, as submitted by CAPL, indicates that CAPL operates as essentially the same business entity as Coastal Aqua with respect to the subject merchandise.
Pursuant to 19 CFR 351.310(c), any interested party may request a hearing within 30 days of publication of this notice. In accordance with 19 CFR 351.309(c)(1)(ii), interested parties may submit case briefs not later than 30 days after the date of publication of this notice. Rebuttal briefs, limited to issues raised in the case briefs, may be filed no later than five days after the case briefs, in accordance with 19 CFR 351.309(d). Parties who submit case or rebuttal briefs are encouraged to submit with each argument: (1) A statement of the issue; (2) a brief summary of the argument; and (3) a table of authorities.
Consistent with 19 CFR 351.216(e), we will issue the final results of this changed circumstances review no later than 270 days after the date on which this review was initiated, or within 45 days if all parties agree to our preliminary finding. This notice is published in accordance with sections 751(b)(1) and 777(i) of the Act and 19 CFR 351.216(b), 351.221(b) and 351.221(c)(3).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
In response to requests from ArcelorMittal USA LLC, Nucor Corporation, United States Steel Corporation, Steel Dynamics, Inc. and California Steel Industries (collectively, the domestic producers), the Department of Commerce (Commerce) is initiating a country-wide anti-circumvention inquiries to determine whether imports of certain corrosion-resistant steel products (CORE), which are completed in the Socialist Republic of Vietnam (Vietnam) from hot-rolled steel (HRS) and/or cold-rolled steel (CRS) products (
Applicable August 2, 2018.
Chien-Min Yang (Korea) and Shanah Lee (Taiwan), AD/CVD Operations, Office VII and III, respectively, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-5484 and (202) 482-6386, respectively.
On June 3, 2015, the domestic producers filed petitions seeking the imposition of antidumping and countervailing duties on imports of CORE from Korea and Taiwan.
On June 12, 2018, pursuant to section 781(b) of the Tariff Act of 1930, as amended (the Act) and 19 CFR 351.225(h), the domestic producers submitted a request for Commerce to initiate anti-circumvention inquiries to determine whether entities in Vietnam are circumventing the
The products covered by these orders are certain flat-rolled steel products, either clad, plated, or coated with
(1) Where the nominal and actual measurements vary, a product is within the scope if application of either the nominal or actual measurement would place it within the scope based on the definitions set forth above, and
(2) where the width and thickness vary for a specific product (
Steel products included in the scope of these orders are products in which: (1) Iron predominates, by weight, over each of the other contained elements; (2) the carbon content is 2 percent or less, by weight; and (3) none of the elements listed below exceeds the quantity, by weight, respectively indicated:
• 2.50 percent of manganese, or
• 3.30 percent of silicon, or
• 1.50 percent of copper, or
• 1.50 percent of aluminum, or
• 1.25 percent of chromium, or
• 0.30 percent of cobalt, or
• 0.40 percent of lead, or
• 2.00 percent of nickel, or
• 0.30 percent of tungsten (also called wolfram), or
• 0.80 percent of molybdenum, or
• 0.10 percent of niobium (also called columbium), or
• 0.30 percent of vanadium, or
• 0.30 percent of zirconium
Unless specifically excluded, products are included in this scope regardless of levels of boron and titanium.
For example, specifically included in this scope are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels and high strength low alloy (HSLA) steels. IF steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium and/or niobium added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, titanium, vanadium, and molybdenum.
Furthermore, this scope also includes Advanced High Strength Steels (AHSS) and Ultra High Strength Steels (UHSS), both of which are considered high tensile strength and high elongation steels.
Subject merchandise also includes corrosion-resistant steel that has been further processed in a third country, including but not limited to annealing, tempering, painting, varnishing, trimming, cutting, punching and/or slitting or any other processing that would not otherwise remove the merchandise from the scope of the orders if performed in the country of manufacture of the in-scope corrosion resistant steel.
All products that meet the written physical description, and in which the chemistry quantities do not exceed any one of the noted element levels listed above, are within the scope of these orders unless specifically excluded. The following products are outside of and/or specifically excluded from the scope of these orders:
• Flat-rolled steel products either plated or coated with tin, lead, chromium, chromium oxides, both tin and lead (“terne plate”), or both chromium and chromium oxides (“tin free steel”), whether or not painted, varnished or coated with plastics or other non-metallic substances in addition to the metallic coating;
• Clad products in straight lengths of 4.7625 mm or more in composite thickness and of a width which exceeds 150 mm and measures at least twice the thickness; and
• Certain clad stainless flat-rolled products, which are three-layered corrosion-resistant flat-rolled steel products less than 4.75 mm in composite thickness that consist of a flat-rolled steel product clad on both sides with stainless steel in a 20%-60%-20% ratio.
The products subject to these orders are currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under item numbers: 7210.30.0030, 7210.30.0060, 7210.41.0000, 7210.49.0030, 7210.49.0091, 7210.49.0095, 7210.61.0000, 7210.69.0000, 7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.6000, 7210.90.9000, 7212.20.0000, 7212.30.1030, 7212.30.1090, 7212.30.3000, 7212.30.5000, 7212.40.1000, 7212.40.5000, 7212.50.0000, and 7212.60.0000.
The products subject to these orders may also enter under the following HTSUS item numbers: 7210.90.1000, 7215.90.1000, 7215.90.3000, 7215.90.5000, 7217.20.1500, 7217.30.1530, 7217.30.1560, 7217.90.1000, 7217.90.5030, 7217.90.5060, 7217.90.5090, 7225.91.0000, 7225.92.0000, 7225.99.0090, 7226.99.0110, 7226.99.0130, 7226.99.0180, 7228.60.6000, 7228.60.8000, and 7229.90.1000.
The HTSUS subheadings above are provided for convenience and customs purposes only. The written description of the scope of these orders is dispositive.
These anti-circumvention inquiries cover imports of CORE exported from Vietnam manufactured from HRS and/or CRS inputs produced in Korea and Taiwan.
The domestic producers request that Commerce treat CORE imports from Vietnam as subject merchandise under the scope of the
Section 781(b)(1) of the Act provides that Commerce may find circumvention of an AD or CVD order when merchandise of the same class or kind subject to the order is completed or assembled in a foreign country other than the country to which the order applies. In conducting an anti-circumvention inquiry, under section 781(b)(1) of the Act, Commerce relies on the following criteria: (A) Merchandise imported into the United States is of the same class or kind as any merchandise produced in a foreign country that is the
The domestic producers claim that CORE exported to the United States is the same class or kind as that covered by the
The domestic producers presented evidence demonstrating how CORE in Vietnam is produced from HRS or CRS produced and imported from Taiwan and Korea.
Regarding Taiwan, the domestic producers note that China Sumikin Vietnam (CSVC), one of Vietnam's principle manufacturers and exporters of CORE, stated in a response to Commerce in the previously completed anti-circumvention inquiry with regard to Chinese substrate finished in Vietnam that it “produces its CORE only with hot-rolled steel from Japan and Taiwan.”
As discussed above, the domestic producers assert that because Vietnam has little capacity to produce HRS domestically, Vietnamese CORE producers rely heavily on HRS imports. In support of this assertion, the domestic producers presented evidence showing increasing and substantial imports of Korean and Taiwanese HRS into Vietnam between 2015 and 2017.
As to the imports of HRS and CRS to Vietnam from Korea, the domestic producers provided information showing those shipments increased from 879,537 tons in 2014 to nearly 1.1 million tons in 2015, continued to grow in 2016, and remained substantial in 2017.
The domestic producers maintain that the process for completing CORE from HRS and CRS is minor or insignificant. Under section 781(b)(2) of the Act, Commerce considers five factors to determine whether the process of assembly or completion in the foreign country is minor or insignificant: (A) The level of investment in the foreign country in which the merchandise is completed or assembled; (B) the level of research and development in the foreign country in which the merchandise is completed or assembled; (C) the nature of the production process in the foreign country in which the merchandise is completed or assembled; (D) the extent of production facilities in the foreign country in which the merchandise is completed or assembled, and (E) whether the value of the processing performed in the foreign country in which the merchandise is completed or assembled represents a small proportion of the value of the merchandise imported into the United States.
The domestic producers contend that the level of investment necessary to complete CORE in Vietnam is less than the level of investment required to construct a factory that can produce HRS and CRS in Korea and Taiwan.
Finally, the domestic producers provide evidence that the cost of building a coated steel sheet factory in Vietnam was a fraction of the amount of investment needed to build a basic steel mill.
The domestic producers assert that the level of research and development (R&D) needed to produce steel substrate, such as HRS, is greater than the R&D specifically needed to produce CORE from the substrate.
According to the domestic producers, the completion process undertaken by Vietnamese producers of CORE is less complex and significant than manufacturing the steel substrate in Taiwan and Korea.
Moreover, the domestic producers contend that more capital is required to build an integrated steel mill that includes blast furnace, casting, and hot rolling, as compared to building a cold-rolling and coating facility.
The domestic producers point to Commerce's finding in
Additionally, the domestic producers cite the recent ITC investigation of CORE from China, India, Italy, Korea and Taiwan, stating that the information contained therein demonstrates that the cost of Taiwanese and Korean HRS inputs accounts for 69 to 79 percent of the price of CORE.
Section 781(b)(3) of the Act directs Commerce to consider additional factors in determining whether to include merchandise assembled or completed in a foreign country within the scope of the order, such as: “(A) The pattern of trade, including sourcing patterns, (B) whether the manufacturer or exporter of the merchandise . . . is affiliated with the person who uses the merchandise . . . to assemble or complete in the foreign country the merchandise that is subsequently imported into the United States, and (C) whether imports into the foreign country of the merchandise . . . have increased after the initiation of the investigation which resulted in the issuance of such order or finding.”
Regarding patterns of trade, the domestic producers contend that exports of CORE from Vietnam to the United States skyrocketed as exports from Korea and Taiwan declined in the period after the filing of the petition in the underlying investigations, as compared to the period before it.
Based on our analysis of the domestic producer's anti-circumvention allegations and the information provided therein, Commerce determines that anti-circumvention inquiries of the AD and CVD orders on CORE from Korea and Taiwan are warranted.
With regard to whether the merchandise from Vietnam is of the same class or kind as the merchandise produced in Korea and Taiwan, the domestic producers presented information to Commerce indicating that, pursuant to section 781(b)(1)(A) of the Act, the merchandise being produced in and/or exported from Vietnam is of the same class or kind as CORE produced in Korea and Taiwan, which is subject to the
With regard to completion or assembly of merchandise in a foreign country, pursuant to section 781(b)(1)(B) of the Act, the domestic producers also presented information to Commerce indicating that the CORE exported from Vietnam to the United States is produced in Vietnam using HRS and CRS from Korea and Taiwan.
Commerce finds that the domestic producers sufficiently addressed the factors described in sections 781(b)(1)(C) and 781(b)(2) of the Act regarding whether the process of assembly or completion of CORE in Vietnam is minor or insignificant. In particular, information in the domestic producers' submission indicates that: (1) The level of investment in coating facilities is minimal when compared with the level of investment for basic steel making facilities;
With respect to the value of the merchandise produced in Korea and Taiwan, pursuant to section 781(b)(1)(D) of the Act, the domestic producers
Finally, with respect to the additional factors listed under section 781(b)(3) of the Act, we find that the domestic producers presented evidence indicating that shipments of CORE from Vietnam to the United States increased since the imposition of the
As these inquiries are initiated on a country-wide basis (
While we believe sufficient factual information has been submitted by the domestic producers supporting their request for inquiries, we do not find that the record supports the simultaneous issuance of a preliminary ruling. Such inquiries are by their nature typically complicated and can require information regarding production in both the country subject to the order and the third country completing the product. As noted above, Commerce intends to request additional information regarding the statutory criteria to determine whether shipments of CORE from Vietnam are circumventing the AD and CVD orders on CORE from Korea and the AD order on CORE from Taiwan. Thus, with further development of the record required before a preliminary ruling can be issued, Commerce does not find it appropriate to issue a preliminary ruling at this time.
In accordance with 19 CFR 351.225(e), Commerce finds that the issue of whether a product is included within the scope of an order cannot be determined based solely upon the application and the descriptions of the merchandise. Accordingly, Commerce will notify by mail all parties on Commerce's scope service list of the initiation of these anti-circumvention inquiries. In addition, in accordance with 19 CFR 351.225(f)(1)(i) and (ii), in this notice of initiation issued under 19 CFR 351.225(e), we have included a description of the product that is the subject of these anti-circumvention inquiries (
In accordance with 19 CFR 351.225(l)(2), if Commerce issues a preliminary affirmative determination, we will then instruct U.S. Customs and Border Protection to suspend liquidation and require a cash deposit of estimated antidumping and countervailing duties, at the applicable rate, for each unliquidated entry of the merchandise at issue, entered or withdrawn from warehouse for consumption on or after the date of initiation of the inquiry. Commerce will establish a schedule for questionnaires and comments on the issues. In accordance with section 781(f) of the Act and 19 CFR 351.225(f)(5), Commerce intends to issue its final determination within 300 days of the date of publication of this initiation.
This notice is published in accordance with 19 CFR 351.225(f).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
In response to requests from ArcelorMittal USA LLC, Nucor Corporation, United States Steel Corporation, Steel Dynamics, Inc. and California Steel Industries (collectively, the domestic producers), the Department of Commerce (Commerce) is initiating a country-wide anti-circumvention inquiries to determine whether imports of certain cold-rolled steel flat products (CRS), which are completed in the Socialist Republic of Vietnam (Vietnam) from hot-rolled steel (HRS) produced in the Republic of Korea (Korea), are circumventing the antidumping duty (AD) and countervailing duty (CVD) orders on CRS from Korea.
Applicable August 2, 2018.
Tyler Weinhold or Fred Baker, AD/CVD Operations, Office VI, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-1121 or (202) 482-2924, respectively.
On July 28, 2015, AK Steel Corporation, ArcelorMittal USA LLC, Nucor Corporation, Steel Dynamics, Inc., and the United States Steel Corporation (the domestic producers) filed petitions seeking the imposition of antidumping and countervailing duties on imports of CRS from Brazil, the
On June 12, 2018, pursuant to section 781(b) of the Tariff Act of 1930, as amended (the Act) and 19 CFR 351.225(h), the domestic producers submitted a request for Commerce to initiate anti-circumvention inquiries to determine whether entities in Vietnam are circumventing the
The products covered by the orders are certain cold-rolled (cold-reduced), flat-rolled steel products, whether or not annealed, painted, varnished, or coated with plastics or other non-metallic substances. The products covered do not include those that are clad, plated, or coated with metal. The products covered include coils that have a width or other lateral measurement (“width”) of 12.7 mm or greater, regardless of form of coil (
(1) Where the nominal and actual measurements vary, a product is within the scope if application of either the nominal or actual measurement would place it within the scope based on the definitions set forth above, and
(2) where the width and thickness vary for a specific product (
Steel products included in the scope of the orders are products in which: (1) Iron predominates, by weight, over each of the other contained elements; (2) the carbon content is 2 percent or less, by weight; and (3) none of the elements listed below exceeds the quantity, by weight, respectively indicated:
• 2.50 percent of manganese, or
• 3.30 percent of silicon, or
• 1.50 percent of copper, or
• 1.50 percent of aluminum, or
• 1.25 percent of chromium, or
• 0.30 percent of cobalt, or
• 0.40 percent of lead, or
• 2.00 percent of nickel, or
• 0.30 percent of tungsten (also called wolfram), or
• 0.80 percent of molybdenum, or
• 0.10 percent of niobium (also called columbium), or
• 0.30 percent of vanadium, or
• 0.30 percent of zirconium
Unless specifically excluded, products are included in this scope regardless of levels of boron and titanium.
For example, specifically included in this scope are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, motor lamination steels, Advanced High Strength Steels (AHSS), and Ultra High Strength Steels (UHSS). If steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium and/or niobium added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, titanium, vanadium, and molybdenum. Motor lamination steels contain micro-alloying levels of elements such as silicon and aluminum. AHSS and UHSS are considered high tensile strength and high elongation steels, although AHSS and UHSS are covered whether or not they are high tensile strength or high elongation steels.
Subject merchandise includes cold-rolled steel that has been further processed in a third country, including but not limited to annealing, tempering, painting, varnishing, trimming, cutting, punching, and/or slitting, or any other processing that would not otherwise remove the merchandise from the scope of the orders if performed in the country of manufacture of the cold-rolled steel.
All products that meet the written physical description, and in which the chemistry quantities do not exceed any one of the noted element levels listed above, are within the scope of the orders unless specifically excluded. The following products are outside of and/or specifically excluded from the scope of the orders:
• Ball bearing steels;
• Tool steels;
• Silico-manganese steel;
• Grain-oriented electrical steels (GOES) as defined in the final determination of the U.S. Department of Commerce in
• Non-Oriented Electrical Steels (NOES), as defined in the antidumping orders issued by the U.S. Department of Commerce in
The products subject to the orders are currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under item numbers: 7209.15.0000, 7209.16.0030, 7209.16.0060, 7209.16.0070, 7209.16.0091, 7209.17.0030, 7209.17.0060, 7209.17.0070, 7209.17.0091, 7209.18.1530, 7209.18.1560, 7209.18.2510, 7209.18.2520, 7209.18.2580, 7209.18.6020, 7209.18.6090, 7209.25.0000, 7209.26.0000, 7209.27.0000, 7209.28.0000, 7209.90.0000, 7210.70.3000, 7211.23.1500, 7211.23.2000, 7211.23.3000, 7211.23.4500, 7211.23.6030, 7211.23.6060, 7211.23.6090, 7211.29.2030, 7211.29.2090, 7211.29.4500, 7211.29.6030, 7211.29.6080, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7225.50.6000, 7225.50.8080, 7225.99.0090, 7226.92.5000, 7226.92.7050, and 7226.92.8050.
The products subject to the orders may also enter under the following HTSUS numbers: 7210.90.9000, 7212.50.0000, 7215.10.0010, 7215.10.0080, 7215.50.0016, 7215.50.0018, 7215.50.0020, 7215.50.0061, 7215.50.0063, 7215.50.0065, 7215.50.0090, 7215.90.5000, 7217.10.1000, 7217.10.2000, 7217.10.3000, 7217.10.7000, 7217.90.1000, 7217.90.5030, 7217.90.5060, 7217.90.5090, 7225.19.0000, 7226.19.1000, 7226.19.9000, 7226.99.0180, 7228.50.5015, 7228.50.5040, 7228.50.5070, 7228.60.8000, and 7229.90.1000.
The HTSUS subheadings above are provided for convenience and U.S. Customs purposes only. The written description of the scope of the orders is dispositive.
These anti-circumvention inquiries cover imports of CRS exported from Vietnam manufactured from HRS produced in Korea.
Section 781(b)(1) of the Act provides that Commerce may find circumvention of an AD or CVD order when merchandise of the same class or kind subject to the order is completed or assembled in a foreign country other than the country to which the order applies. In conducting an anti-circumvention inquiry, under section 781(b)(1) of the Act, Commerce relies on the following criteria: (A) Merchandise imported into the United States is of the same class or kind as any merchandise produced in a foreign country that is the subject of an antidumping or countervailing duty order or finding; (B) before importation into the United States, such imported merchandise is completed or assembled in another foreign country from merchandise which is subject to the order or merchandise which is produced in the foreign country that is subject to the order; (C) the process of assembly or completion in the foreign country referred to in section (B) is minor or insignificant; (D) the value of the merchandise produced in the foreign country to which the AD or CVD order applies is a significant portion of the total value of the merchandise exported to the United States; and (E) the administering authority determines that action is appropriate to prevent evasion of such order or finding. As discussed below, the domestic producers provided evidence with respect to these criteria.
The domestic producers claim that CRS exported to the United States is the same class or kind as that covered by the
The domestic producers note that section 781(b)(l)(B)(ii) of the Act requires that Commerce “must determine whether, prior to importation into the United States, the merchandise in the third country is completed from merchandise produced in the country subject to the antidumping or countervailing duty order.”
The domestic producers maintain that the process for completing CRS from HRS is minor or insignificant. Under section 781(b)(2) of the Act, Commerce considers five factors to determine whether the process of assembly or completion in the foreign country in which the merchandise is completed or assembled is minor or insignificant: (A) The level of investment in the foreign country in which the merchandise is completed or assembled; (B) the level of research and development in the foreign country in which the merchandise is completed or assemble; (C) the nature of the production process in the foreign country in which the merchandise is completed or assembled; (D) the extent of production facilities in the foreign country in which the merchandise is completed or assembled, and (E) whether the value of the processing performed in the foreign country in which the merchandise is completed or assembled represents a small proportion of the value of the merchandise imported into the United States.
The domestic producers contend that the level of investment necessary to construct a factory that can produce CRS from HRS in Vietnam is insignificant. In support of its contention, the domestic producers compare the investment necessary to install a cold-rolling facility with the investment necessary to produce HRS using a fully-integrated production process.
The domestic producers assert that the level of research and development (R&D) in Vietnam is either minimal or non-existent.
According to the domestic producers, the production process undertaken by Vietnamese producers of CRS is less complex than steelmaking, and it is minimal in nature.
The domestic producers provide information indicating that production facilities in Vietnam are more limited compared to facilities in Korea.
The domestic producers assert that producing HRS in Korea accounts for a large percentage of the total value of CRS that is produced in Vietnam using HRS from Korea. As support, the domestic producers again point to
Section 781(b)(3) of the Act directs Commerce to consider additional factors in determining whether to include merchandise assembled or completed in a foreign country within the scope of the order, such as: “(A) the pattern of trade, including sourcing patterns, (B) whether the manufacturer or exporter of the merchandise . . . is affiliated with the person who uses the merchandise . . . to assemble or complete in the foreign country the merchandise that is subsequently imported into the United States, and (C) whether imports into the foreign country of the merchandise . . . have increased after the initiation of the investigation which resulted in the issuance of such order or finding.”
Regarding patterns of trade, the domestic producers contend that exports of CRS from Vietnam to the United States skyrocketed as exports from Korea declined in the period after the initiation of the underlying investigation, as compared to the period before it.
Based on our analysis of the domestic producer's anti-circumvention allegations and the information provided therein, Commerce determines that anti-circumvention inquiries of the AD and CVD orders on CRS from Korea are warranted.
With regard to whether the merchandise from Vietnam is of the same class or kind as the merchandise produced in Korea, the domestic producers presented information to Commerce indicating that, pursuant to section 781(b)(1)(A) of the Act, the merchandise being produced in and/or exported from Vietnam is of the same class or kind as CRS produced in Korea, which is subject to the
With regard to completion or assembly of merchandise in a foreign country, pursuant to section 781(b)(1)(B) of the Act, the domestic producers also presented information to Commerce indicating that the CRS exported from Vietnam to the United States is produced in Vietnam using HRS from Korea.
Commerce finds that the domestic producers sufficiently addressed the factors described in sections 781(b)(1)(C) and 781(b)(2) of the Act regarding whether the process of assembly or completion of CRS in Vietnam is minor or insignificant. In particular, information in the domestic producers' submission indicates that: (1) The level of investment in cold-rolling facilities is minimal when compared with the level of investment for basic steel making facilities;
With respect to the value of the merchandise produced in Korea, pursuant to section 781(b)(1)(D) of the Act, the domestic producers relied on published sources, Commerce's prior conclusions in
Finally, with respect to the additional factors listed under section 781(b)(3) of the Act, we find that the domestic producers presented evidence indicating that shipments of CRS from Vietnam to the United States increased since the imposition of the
As these inquiries are initiated on a country-wide basis (
While we believe sufficient factual information has been submitted by the domestic producers supporting their request for inquiries, we do not find that the record supports the simultaneous issuance of a preliminary ruling. Such inquiries are by their nature typically complicated and can require information regarding production in both the country subject to the order and the third country completing the product. As noted above, Commerce intends to request additional information regarding the statutory criteria to determine whether shipments of CRS from Vietnam are circumventing the AD and CVD orders on CRS from Korea. Thus, with further development of the record required before a preliminary ruling can be issued, Commerce does not find it appropriate to issue a preliminary ruling at this time.
In accordance with 19 CFR 351.225(e), Commerce finds that the issue of whether a product is included within the scope of an order cannot be determined based solely upon the application and the descriptions of the merchandise. Accordingly, Commerce will notify by mail all parties on Commerce's scope service list of the initiation of these anti-circumvention inquiries. In addition, in accordance with 19 CFR 351.225(f)(1)(i) and (ii), in this notice of initiation issued under 19 CFR 351.225(e), we have included a description of the product that is the subject of these anti-circumvention inquiries (
In accordance with 19 CFR 351.225(l)(2), if Commerce issues a preliminary affirmative determination, we will then instruct U.S. Customs and Border Protection to suspend liquidation and require a cash deposit of estimated antidumping and countervailing duties, at the applicable rate, for each unliquidated entry of the merchandise at issue, entered or withdrawn from warehouse for consumption on or after the date of initiation of the inquiry. Commerce will establish a schedule for questionnaires and comments on the issues. In accordance with section 781(f) of the Act and 19 CFR 351.225(f)(5), Commerce intends to issue its final determination within 300 days of the date of publication of this initiation.
This notice is published in accordance with 19 CFR 351.225(f).
The Department of Commerce will submit to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act (44 U.S.C. Chapter 35).
This information collection request may be viewed at
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meeting and webinar/conference call.
NMFS will hold a 2-day Atlantic Highly Migratory Species (HMS) Advisory Panel (AP) meeting in September 2018. The intent of the meeting is to consider options for the conservation and management of Atlantic HMS. The meeting is open to the public.
The AP meeting and webinar will be held from 8:30 a.m. to 6 p.m. on Wednesday, September 5, and from 8:30 a.m. to 3 p.m. on Thursday, September 6.
The meeting will be held at the Sheraton Silver Spring Hotel, 8777 Georgia Avenue, Silver Spring, MD 20910.
The meeting on Wednesday, September 5, and Thursday, September 6, will also be accessible via conference call and webinar. Conference call and webinar access information are available at:
Participants are strongly encouraged to log/dial in 15 minutes prior to the meeting. NMFS will show the presentations via webinar and allow public comment during identified times on the agenda.
Peter Cooper or Brad McHale at (301) 427-8503.
The Magnuson-Stevens Fishery Conservation and Management Act, 16 U.S.C. 1801
The AP has previously consulted with NMFS on: Amendment 1 to the Billfish FMP (April 1999); the HMS FMP (April 1999); Amendment 1 to the HMS FMP (December 2003); the Consolidated HMS FMP (October 2006); and Amendments 1, 2, 3, 4, 5a, 5b, 6, 7, 8, 9, 10, and 11 to the 2006 Consolidated HMS FMP (April and October 2008, February and September 2009, May and September 2010, April and September 2011, March and September 2012, January and September 2013, April and September 2014, March and September 2015, and March, September, and December 2016, and May and September 2017), among other things.
The intent of this meeting is to consider alternatives for the conservation and management of all Atlantic tunas, swordfish, billfish, and shark fisheries. We anticipate discussing:
• Short- and long-term management of Atlantic shortfin mako (emergency rule extension and Draft Amendment 11);
• Bluefin tuna management (Three-year review of Amendment 7 measures and next steps)
• Progress updates on a number of other actions such as Ecosystem-Based Fisheries Management; Amendment 12 (rulemaking to implement NMFS national policy directives); weak-hook and area based management; cross-regional vessel electronic reporting (
• Shark management in general (Amendment 14 regarding quota management; catch-per-unit-effort for sharks; and shark stock assessments)
We also anticipate inviting other NMFS offices to provide updates, if available, on their activities relevant to HMS fisheries such as updates to the Marine Recreational Information Program. The State Department will be invited to provide updates on U.S./Bahama EEZ boundary negotiations. Finally, we intend to invite other NMFS offices and the United States Coast Guard to provide updates on their activities relevant to HMS fisheries.
Additional information on the meeting and a copy of the draft agenda will be posted prior to the meeting at:
This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Peter Cooper at (301) 427-8503 at least 7 days prior to the meeting.
National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995.
Written comments must be submitted on or before October 1, 2018.
Direct all written comments to Jennifer Jessup, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6616, 14th and Constitution Avenue NW, Washington, DC 20230 (or via the internet at
Requests for additional information or copies of the information collection instrument and instructions should be directed to Kurt Iverson (907) 586-7228 or
This request is an extension of a currently approved information collection.
The Magnuson-Stevens Fishery and Conservation Act both authorizes and requires the collection of cost recovery fees for Limited Access Privilege (LAP) programs and Western Alaska Community Development Quota (CDQ) programs. The cost recovery fees may not exceed three percent of the ex-vessel value, and must recover costs associated with the management, data collection, and enforcement of these programs that are directly incurred by government agencies tasked with overseeing these fisheries.
In addition, NMFS collects observer coverage fees to support the funding and deployment of observers on vessels and in plants in the partial observer coverage category. The observer coverage fee must be paid by permit holders in the partial observer coverage category,
Processors that receive and purchase landings of IFQ halibut or sablefish, rockfish, groundfish, and crab subject to observer and/or cost recovery fees must submit an Ex-vessel Value and Volume report under 50 CFR 679.5 or 50 CFR 680.5 that provides information on the pounds purchased and value paid. NMFS uses this information to establish the total ex-vessel value of the fishery, to calculate standard prices, and to establish annual fee percentages in each fishery.
In 2016, due to an associated rule, revisions to the payment collection methods were approved under OMB control number 0648-0727. The extension of the current collection, OMB control number 0648-0711, will incorporate these 2016 revisions, and 0648-0727 will be discontinued.
Payment must be submitted online through eFISH at
• Observer coverage fee; and
• cost recovery fees for the Western Alaska Community Development Quota
Payment for the Individual Fishing Quota (IFQ) Program cost recovery fee is submitted online through eFISH, or by mail or courier if paying with a check. Payment for the Crab Rationalization (CR) Program cost recovery fee is submitted online through eFISH, or by mail or courier if paying with a check. After December 2019, NMFS will no longer accept paper checks for cost recovery program fees. All payments will have to be made online.
The IFQ Registered Buyer Ex-Vessel Volume and Value Report is submitted online through eFISH, or by mail or fax. The Rockfish Ex-Vessel, CR Registered Crab Receiver Ex-Vessel, Pacific Cod Ex-Vessel, and First Wholesale Volume and Value Reports must be submitted online through eFISH. Appeals may be submitted by mail or fax.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
The United States Patent and Trademark Office (USPTO) will submit to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the provisions of the 1995 Paperwork Reduction Act. This notice includes adjustments to the collection showing an increase in the respondents and hourly burdens associated with recent approved fee adjustments.
Further information can be obtained by:
•
•
Written comments and recommendations for the proposed information collection should be sent on or before September 4, 2018 to
Office of Elementary and Secondary Education, Department of Education.
Notice.
The Department of Education (Department) is issuing a notice inviting applications for new awards for fiscal year (FY) 2018 for Grants to States for School Emergency Management (GSEM) program, Catalog of Federal Domestic Assistance (CFDA) number 84.184Q.
For the addresses for obtaining and submitting an application, please refer to our Common Instructions for Applicants to Department of Education Discretionary Grant Programs, published in the
Hamed Negron-Perez, U.S. Department of Education, 400 Maryland Avenue SW, Room 3C130, Washington, DC 20202-6450. Telephone: (202) 453-6725. Email:
If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-800-877-8339.
It is critical for SEAs and LEAs to ensure that every school has an effective, high-quality school EOP in place and that students and staff are prepared to follow it. A 2016 report from the Government Accountability Office (GAO) notes that in a survey of 51 SEAs, over 60 percent required their LEAs to have EOPs and conduct emergency exercises; however, fewer than half of those States surveyed reported they also required their districts or State to review these district or school plans. Additionally, an estimated 59 percent of the surveyed LEAs reported having limited resources available to implement and sustain emergency management planning efforts, thus reinforcing the value of State and Federal support.
Generally, SEAs share with their LEAs information about applicable laws and requirements related to school emergency management planning; they also may support LEAs in fulfilling these obligations. For example, SEAs may provide training, resources, and tools to support school safety and security, including emergency management planning. SEAs may also work with other State agencies or organizations to provide emergency management services to LEAs.
In order to develop and implement high-quality school EOPs, LEA staff must have access to training and technical assistance on developing, implementing, and refining their plans. SEAs can play a critical role in providing the necessary training and technical assistance to LEAs.
In 2014, the Department awarded GSEM grants to 26 SEAs, which allowed SEAs to increase their capacity to provide high-quality technical assistance to their LEAs, while increasing the number of high-quality school EOPs in each district. The Department will build on the prior success of this program by awarding new grants of up to five years to SEAs to further support their LEAs through training and technical assistance. While the new competition will give priority to SEAs that have not previously received GSEM grants, previous GSEM grantees are also eligible for awards.
This priority is:
Projects to increase the long-term internal capacity of SEAs to provide training and technical assistance to LEAs for the development and implementation of high-quality school EOPs.
This priority is:
Projects proposed by applicants that have not previously received a grant under this program. A list of former recipients of this grant may be found at
(1) Provide an established point of contact (
(2) Provide training and technical assistance to LEAs on best practices for developing and implementing school EOPs including, but not limited to, the process described in the “Guide for Developing High-Quality School Emergency Operations Plans”;
(3) Provide training and technical assistance to LEAs on developing or enhancing memoranda of understanding with community partners (
(4) Provide training and technical assistance to LEAs on the implementation of the National Incident Management System (NIMS). Information about current NIMS requirements for States may be accessed at:
(1) Information on:
(a) Training, technical assistance, and resources the applicant currently provides to LEAs on emergency management;
(b) The current number of LEAs served;
(c) The proposed number of LEAs, including rural LEAs that might not otherwise have full access to school emergency management training and resources, that would receive training and technical assistance to improve their school EOPs under the applicant's proposal.
(d) A description of how the SEA will evaluate the quality of training and technical assistance events administered to their LEAs, which should incorporate feedback from LEAs and other stakeholders (
(2) A long-term strategy for improving the applicant's:
(a) Capacity to provide training and technical assistance to LEAs, including rural LEAs that might not otherwise have full access to school emergency management training and resources; and capacity to address the unique needs of students, staff, and visitors with disabilities and other access and functional needs, including individuals with limited English proficiency;
(b) Existing training and technical assistance activities for their LEAs;
(c) Catalog of emergency management resources; and
(d) Alignment of emergency management training, technical assistance, and resources with emergency management planning at the Federal, State, and local levels.
(3) A description of a process for the coordination and sustainability of support that will be provided to LEAs so that they can continue to improve their schools' EOPs beyond the period of Federal financial assistance.
These definitions are:
For the purpose of this definition, the following terms are as defined below:
(1)
(2)
(3)
(4)
(5)
(a)
(b)
(c)
(d)
(i) Incorporates all courses of action to be accomplished for all selected threats and hazards and identified functions;
(ii) Integrates the needs of the whole school community;
(iii) Provides a complete picture of what should happen, when, and at whose direction;
(iv) Estimates time for achieving objectives, with safety remaining as the utmost priority;
(v) Identifies success criteria and a desired end state; and
(vi) Conforms with the planning principles outlined in the “Guide for Developing High-Quality School Emergency Operations Plans.”
(e)
Title IV, part F, subpart 3 of the ESEA (20 U.S.C. 7281).
Contingent upon the availability of funds and the quality of applications, we may make additional awards in subsequent years from the list of unfunded applications from this competition.
1.
• A State school safety center;
• The State emergency management agency; and
• The State homeland security department.
2.
3.
4.
5.
1.
2.
1.
(a)
The Secretary considers the significance of the proposed project. In determining the significance of the proposed project, the Secretary considers the following factors:
(i) The likelihood that the proposed project will result in system change or improvement. (10 points)
(ii) The extent to which the proposed project is likely to build local capacity to provide, improve, or expand services that address the needs of the target population. (10 points)
(b)
The Secretary considers the quality of the design of the proposed project. In determining the quality of the design of the proposed project, the Secretary considers the following factors:
(i) The extent to which the design of the proposed project is appropriate to, and will successfully address, the needs of the target population or other identified needs. (15 points)
(ii) The extent to which the design of the proposed project reflects up-to-date knowledge from research and effective practice. (15 points)
(c)
The Secretary considers the quality of the services to be provided by the proposed project.
(i) In determining the quality of the services to be provided by the proposed project, the Secretary considers the quality and sufficiency of strategies for ensuring equal access and treatment for eligible project participants who are members of groups that have traditionally been underrepresented based on race, color, national origin, gender, age, or disability. (5 points)
In addition, the Secretary considers the following factors:
(ii) The extent to which the services to be provided by the proposed project are appropriate to the needs of the intended recipients or beneficiaries of those services. (10 points)
(iii) The extent to which the training or professional development services to be provided by the proposed project are of sufficient quality, intensity, and duration to lead to improvements in practice among the recipients of those services. (10 points)
(iv) The extent to which the services to be provided by the proposed project involve the collaboration of appropriate partners for maximizing the effectiveness of project services. (5 points)
(d)
The Secretary considers adequacy of resources for the proposed project. In determining the adequacy of resources for the proposed project, the Secretary considers the potential for continued support for the project after Federal funding ends, including as appropriate, the demonstrated commitment of appropriate entities to such support. (20 points)
2.
In addition, in making a competitive grant award, the Secretary also requires various assurances, including those applicable to Federal civil rights laws that prohibit discrimination in programs or activities receiving Federal financial assistance from the Department (34 CFR 100.4, 104.5, 106.4, 108.8, and 110.23).
3.
4.
Please note that, if the total value of your currently active grants, cooperative agreements, and procurement contracts from the Federal Government exceeds $10,000,000, the reporting requirements in 2 CFR part 200, Appendix XII, require you to report certain integrity information to FAPIIS semiannually. Please review the requirements in 2 CFR part 200, Appendix XII, if this grant plus all the other Federal funds you receive exceed $10,000,000.
1.
If your application is not evaluated or not selected for funding, we notify you.
2.
We reference the regulations outlining the terms and conditions of an award in the
3.
4.
(b) At the end of your project period, you must submit a final performance report, including financial information, as directed by the Secretary. If you receive a multiyear award, you must submit an annual performance report that provides the most current performance and financial expenditure information as directed by the Secretary under 34 CFR 75.118. The Secretary may also require more frequent performance reports under 34 CFR 75.720(c). For specific requirements on reporting, please go to
5.
(a) The number of training events provided by the GSEM program to assist LEAs in the development and implementation of high-quality school EOPs.
(b) The extent to which the GSEM program expands the capacity of the SEAs to provide training and technical assistance to LEAs for the development
6.
In making a continuation award, the Secretary also considers whether the grantee is operating in compliance with the assurances in its approved application, including those applicable to Federal civil rights laws that prohibit discrimination in programs or activities receiving Federal financial assistance from the Department (34 CFR 100.4, 104.5, 106.4, 108.8, and 110.23).
You may also access documents of the Department published in the
Federal Student Aid, Department of Education.
Notice.
The Secretary announces the annual updates to the ICR plan formula for 2018 to give notice to borrowers and the public regarding how monthly ICR payment amounts will be calculated for the 2018-2019 year under the William D. Ford Federal Direct Loan (Direct Loan) Program, Catalog of Federal Domestic Assistance number 84.063.
The adjustments to the income percentage factors for the ICR plan formula contained in this notice are applicable from July 1, 2018, to June 30, 2019, for any borrower who enters the ICR plan or has his or her monthly payment amount recalculated under the ICR plan during that period.
Ian Foss, U.S. Department of Education, 830 First Street NE, Room 113H2, Washington, DC 20202. Telephone: (202) 377-3681. Email:
If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service, toll free, at 1-800-877-8339.
Under the Direct Loan Program, borrowers may choose to repay their non-defaulted loans (Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans made to graduate or professional students, and Direct Consolidation Loans) under the ICR plan. The ICR plan bases the borrower's repayment amount on the borrower's income, family size, loan amount, and the interest rate applicable to each of the borrower's loans.
ICR is one of several income-driven repayment plans. Other income-driven repayment plans include the Income-Based Repayment (IBR) plan, the Pay As You Earn Repayment (PAYE) plan, and the Revised Pay As You Earn Repayment (REPAYE) plan. The IBR, PAYE, and REPAYE plans provide lower payment amounts than the ICR plan for most borrowers.
A Direct Loan borrower who repays his or her loans under the ICR plan pays the lesser of: (1) The amount that he or she would pay over 12 years with fixed payments multiplied by an income percentage factor; or (2) 20 percent of discretionary income.
Each year, to reflect changes in inflation, we adjust the income percentage factor used to calculate a borrower's ICR payment, as required by 34 CFR 685.209(b)(1)(ii)(A). We use the adjusted income percentage factors to calculate a borrower's monthly ICR payment amount when the borrower initially applies for the ICR plan or when the borrower submits his or her annual income documentation, as required under the ICR plan. This notice contains the adjusted income percentage factors for 2018, examples of how the monthly payment amount in ICR is calculated, and charts showing sample repayment amounts based on the adjusted ICR plan formula. This information is included in the following three attachments:
In Attachment 1, to reflect changes in inflation, we updated the income percentage factors that were published in the
The income percentage factors reflected in Attachment 1 may cause a borrower's payments to be lower than they were in prior years, even if the borrower's income is the same as in the prior year. The revised repayment amount more accurately reflects the impact of inflation on the borrower's current ability to repay.
You may also access documents of the Department published in the
20 U.S.C. 1087
General notes about the examples in this attachment:
• We have a calculator that borrowers can use to estimate what their payment amounts would be under the ICR plan. The calculator is called the “Repayment Estimator” and is available at
• The interest rates used in the examples are for illustration only. The actual interest rates on an individual borrower's Direct Loans depend on the loan type and when the postsecondary institution first disbursed the Direct Loan to the borrower.
• The Poverty Guideline amounts used in the examples are from the 2018 U.S. Department of Health and Human Services (HHS) Poverty Guidelines for the 48 contiguous States and the District of Columbia. Different Poverty Guidelines apply to residents of Alaska and Hawaii. The Poverty Guidelines for 2018 were published in the
• All of the examples use an income percentage factor corresponding to an adjusted gross income (AGI) in the table in Attachment 1. If an AGI is not listed in the income percentage factors table in Attachment 1, the applicable income percentage can be calculated by following the instructions under the “Interpolation” heading later in this attachment.
• Married borrowers may repay their Direct Loans jointly under the ICR plan. If a married couple elects this option, we add the outstanding balance on the Direct Loans of each borrower and we add together both borrowers' AGIs to determine a joint ICR payment amount. We then prorate the joint payment amount for each borrower based on the proportion of that borrower's debt to the total outstanding balance. We bill each borrower separately.
• For example, if a married couple, John and Sally, has a total outstanding Direct Loan debt of $60,000, of which $40,000 belongs to John and $20,000 to Sally, we would apportion 67 percent of the monthly ICR payment to John and the remaining 33 percent to Sally. To take advantage of a joint ICR payment, married couples need not file taxes jointly; they may file separately and subsequently provide the other spouse's tax information to the borrower's Federal loan servicer.
The formula to amortize a loan with a standard schedule (in which each payment is the same over the course of the repayment period) is as follows:
In the formula—
• M is the monthly payment amount;
• P is the outstanding principal balance of the loan at the time the calculation is performed;
• I is the annual interest rate on the loan, expressed as a decimal (for example, for a loan with an interest rate of 6 percent, 0.06); and
• N is the total number of months in the repayment period (for example, for a loan with a 12-year repayment period, 144 months).
For example, assume that Billy has a $10,000 Direct Unsubsidized Loan with an interest rate of 6 percent.
The remainder of the examples in this attachment will only show the results of the formula.
Joseph and Susan have a combined AGI of $85,724 and are repaying their loans jointly under the ICR plan (for general information regarding joint ICR payments for married couples, see the fifth and sixth bullets under the heading “General notes about the examples in this attachment”).
The result is the income percentage factor that we will use to calculate Joan's monthly repayment amount under the ICR plan.
Below are two charts that provide first-year payment amount estimates for a variety of loan debt sizes and incomes under all of the income-driven repayment plans and the 10-Year Standard Repayment Plan. The first chart is for single borrowers who have a family size of one. The second chart is for a borrower who is married or a head of household and who has a family size of three. The calculations in Attachment 3 assume that the loan debt has an interest rate of 6 percent. For married borrowers, the calculations assume that the borrower files a joint Federal income tax return with his or her spouse and that the borrower's spouse does not have Federal student loans. A field with a “-” character indicates that the borrower in the example would not be eligible to enter the applicable income-driven repayment plan based on the borrower's income, loan debt, and family size.
Bioenergy Technologies Office, Office of Energy Efficiency and Renewable Energy, Department of Energy.
Request for information.
The U.S. Department of Energy (DOE) invites public comment on its Request for Information (RFI) to understand research, capabilities and yet-to-be addressed challenges pertinent to production scale-up of catalysts for the conversion of biomass and waste streams. Additionally, through this RFI, the Bioenergy Technologies Office (BETO) seeks to understand enhancement capabilities of process development units at the National Laboratories in order to increase their impact.
Responses to the RFI must be received no later than September 14, 2018.
Interested parties are to submit comments electronically to
Questions may be addressed to Jim Spaeth, (720) 356-1784, or
DOE posted on its website a RFI to solicit feedback from industry (including but not limited to research organizations, manufacturing organizations, catalyst manufacturers, and catalyst research consortia), academia, research laboratories, government agencies, and other biofuels and bioproducts stakeholders on “catalyst productions capability for biochemical and thermochemical processes.” Specifically, BETO seeks information to help identify and understand additional areas of research, capabilities, and yet-to be-addressed challenges pertinent to production scale-up challenges (typically in multi-kilogram quantities of novel catalysts used in technology development and engineering solutions for the efficient conversion of lignocellulosic, waste, and algal feedstocks to produce biofuels and bioproducts). The RFI [DE-FOA-00001951] is available at:
Because information received in response to this RFI may be used to structure future programs, funding and/or otherwise be made available to the public, respondents are strongly advised to not include any information in their responses that might be considered business sensitive, proprietary, or otherwise confidential. If, however, a respondent chooses to submit business sensitive, proprietary, or otherwise confidential information, it must be clearly and conspicuously marked as such in the response as detailed in the RFI [DE-FOA-00001951] at:
Factors of interest to DOE when evaluating requests to treat submitted information as confidential include: (1) A description of the items; (2) whether and why such items are customarily treated as confidential within the industry; (3) whether the information is generally known by or available from other sources; (4) whether the information has previously been made available to others without obligation concerning its confidentiality; (5) an explanation of the competitive injury to the submitting person that would result from public disclosure; (6) when such information might lose its confidential character due to the passage of time; and (7) why disclosure of the information would be contrary to the public interest.
Office of Electricity, Department of Energy.
Notice of application.
ADG Group Inc. (ADG or Applicant) has applied for authorization to transmit electric energy from the United States to Canada pursuant to the Federal Power Act.
Comments, protests, or motions to intervene must be submitted on or before September 4, 2018.
Comments, protests, motions to intervene, or requests for more information should be addressed to: Office of Electricity, Mail Code: OE-20, U.S. Department of Energy, 1000 Independence Avenue SW, Washington, DC 20585-0350. Because of delays in handling conventional mail, it is recommended that documents be transmitted by overnight mail, by electronic mail to
Exports of electricity from the United States to a foreign country are regulated by the Department of Energy (DOE) pursuant to sections 301(b) and 402(f) of the Department of Energy Organization Act (42 U.S.C. 7151(b) and 7172(f)) and require authorization under section 202(e) of the Federal Power Act (16 U.S.C. 824a(e)).
On July 17, 2018, DOE received an application from ADG for authorization to transmit electric energy from the United States to Canada as a power marketer for a five-year term using existing international transmission facilities.
In its application, ADG states that it does not own, operate, or control any electric power generation, transmission, or distribution facilities, and that it has no franchised electric power service area. The electric energy that the Applicant proposes to export to Canada would be surplus energy purchased from third parties such as electric utilities and other suppliers within the United States pursuant to voluntary agreements. The existing international transmission facilities to be utilized by the Applicant have previously been authorized by Presidential Permits issued pursuant to Executive Order 10485, as amended, and are appropriate for open access transmission by third parties.
Comments and other filings concerning ADG's application to export electric energy to Canada should be clearly marked with OE Docket No. EA-457. An additional copy is to be provided to both Xue Chao (David) Cai, ADG Group Inc., 77 King Street West, Suite 400, Toronto, Ontario, Canada M5K 0A1, and Peter P. Thieman, Dentons US LLP, 1900 K Street NW, Washington, DC 20006.
A final decision will be made on this application after the environmental impacts have been evaluated pursuant to DOE's National Environmental Policy Act Implementing Procedures (10 CFR part 1021) and after a determination is made by DOE that the proposed action will not have an adverse impact on the sufficiency of supply or reliability of the U.S. electric power supply system.
Copies of this application will be made available, upon request, for public inspection and copying at the address provided above, by accessing the program website at
Office of Energy Efficiency and Renewable Energy, Department of Energy (DOE).
Request for information (RFI).
The U.S. Department of Energy (DOE) invites public comment on its Request for Information (RFI) on H2@Scale (Hydrogen at Scale): Determining Opportunities to Facilitate Wide-Scale Hydrogen Adoption for Energy Security and Economic Growth. The Office of Energy Efficiency and Renewable Energy (EERE) is specifically interested in information to quantify the increasing industrial demand for hydrogen, to identify and quantify the available domestic resources capable of generating sufficient hydrogen to sustainably meet the demand in the near- to long-terms across multiple sectors, and to identify opportunities to leverage current industrial infrastructure to better meet the growing demands for hydrogen across sectors.
Responses to the RFI must be received no later than 5:00 p.m. (ET) on October 31, 2018.
Interested parties are invited to submit comments using the Online Response Collector found at the specified web link included in the RFI document. Alternatively, responses can be submitted as an attachment to an email addressed to
Questions may be addressed to
The H2@Scale initiative aims to develop and
Farm Credit Administration.
Notice, regular meeting.
Notice is hereby given, pursuant to the Government in the Sunshine Act, of the regular meeting of the Farm Credit Administration Board (Board).
The regular meeting of the Board will be held at the offices of the Farm Credit Administration in McLean, Virginia, on August 9, 2018, from 9:00 a.m. until such time as the Board concludes its business.
Farm Credit Administration, 1501 Farm Credit Drive, McLean, Virginia 22102-5090. Submit attendance requests via email to
Dale L. Aultman, Secretary to the Farm Credit Administration Board, (703) 883-4009, TTY (703) 883-4056,
This meeting of the Board will be open to the public (limited space available). Please send an email to
• July 12, 2018
• Annual Report on the Farm Credit System's Young, Beginning, and Small Farmer Mission Performance: 2017 Results
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995, the Federal Communications Commission (FCC or the Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collection. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
The Commission may not conduct or sponsor a collection of information unless it displays a currently valid Office of Management and Budget (OMB) control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid OMB control number.
Written comments should be submitted on or before September 4, 2018. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contacts listed below as soon as possible.
Direct all PRA comments to Nicholas A. Fraser, OMB, via email
For additional information or copies of the information collection, contact Cathy Williams at (202) 418-2918. To view a copy of this information collection request (ICR) submitted to OMB: (1) Go to the webpage
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520), the Federal Communications Commission (FCC or the Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collection. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
The Commission is not requesting that individuals who file complaints alleging violations of our rules (complainants) submit confidential information (
The Twenty-First Century Communications and Video Accessibility Act of 2010 (CVAA) directed the Commission to revise its regulations to mandate closed captioning on IP-delivered video programming that was published or exhibited on television with captions after the effective date of the regulations. Accordingly, the Commission requires video programming owners (VPOs) to send program files to video programming distributors and providers (hereinafter VPDs) with required captions, and it requires VPDs to enable the rendering or pass through of all required captions to the end user. The CVAA also directed the Commission to revise its regulations to mandate that all apparatus designed to receive, play back, or record video programming be equipped with built-in closed caption decoder circuitry or capability designed to display closed-captioned video programming, except that apparatus that use a picture screen that is 13 inches or smaller and recording devices must comply only if doing so is achievable. These rules are codified at 47 CFR 79.4 and 79.100-79.104.
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act of 1995 (PRA), the Federal Communications Commission (FCC or Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collections. Comments are requested concerning: whether the proposed collection of information is necessary for the proper
The FCC may not conduct or sponsor a collection of information unless it displays a currently valid Office of Management and Budget (OMB) control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid OMB control number.
Written PRA comments should be submitted on or before October 1, 2018. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all PRA comments to Cathy Williams, FCC, via email to
For additional information about the information collection, contact Cathy Williams at (202) 418-2918.
47 CFR 76.41(b) requires a competitive franchise applicant to include the following information in writing in its franchise application, in addition to any information required by applicable state and local laws:
(1) The applicant's name;
(2) The names of the applicant's officers and directors;
(3) The business address of the applicant;
(4) The name and contact information of a designated contact for the applicant;
(5) A description of the geographic area that the applicant proposes to serve;
(6) The PEG channel capacity and capital support proposed by the applicant;
(7) The term of the agreement proposed by the applicant;
(8) Whether the applicant holds an existing authorization to access the public rights-of-way in the subject franchise service area;
(9) The amount of the franchise fee the applicant offers to pay; and
(10) Any additional information required by applicable state or local laws.
The information collection requirements contained in 47 CFR 76.41(d) states when a competitive franchise applicant files a franchise application with a franchising authority and the applicant has existing authority to access public rights-of-way in the geographic area that the applicant proposes to serve, the franchising authority grant or deny the application within 90 days of the date the application is received by the franchising authority. If a competitive franchise applicant does not have existing authority to access public rights-of-way in the geographic area that the applicant proposes to serve, the franchising authority must perform grant or deny the application within 180 days of the date the application is received by the franchising authority. A franchising authority and a competitive franchise applicant may agree in writing to extend the 90-day or 180-day deadline, whichever is applicable.
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995, the Federal Communications Commission (FCC or the Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collection. Comments are requested concerning: whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees. The FCC may not conduct or sponsor a collection of information unless it displays a currently valid control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid Office of Management and Budget (OMB) control number.
Written PRA comments should be submitted on or before October 1, 2018. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all PRA comments to Nicole Ongele, FCC, via email
For additional information about the information collection, contact Nicole Ongele at (202) 418-2991.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of
In June 2018, the Commission further modified the rules applicable to section 214(a) discontinuance applications. First, all carriers, whether dominant or non-dominant, that seek approval to grandfather data services below speeds of 25 Mbps download speed and 3 Mbps upload speed are now subject to a uniform reduced public comment period of 10 days and an automatic grant period of 25 days. Second, all carriers, whether dominant or non-dominant, seeking authorization to discontinue data services below speeds of 25 Mbps download speed and 3 Mbps upload speed that have previously been grandfathered for a period of at least 180 days are subject to a uniform reduced public comment period of 10 days and an automatic grant period of 31 days, provided they submit a statement as part of their discontinuance application that they have received Commission authority to grandfather the services at issue at least 180 days prior to the filing of the discontinuance application. This statement must reference the file number of the prior Commission authorization to grandfather the services the carrier now seeks to permanently discontinue. Third, carriers are no longer required to file an application to discontinue, reduce, or impair any service for which it has had no customers and no request for service for at least a 30-day period immediately preceding the discontinuance. Fourth, all carriers, whether dominant or non-dominant, that seek approval to discontinue legacy voice service can obtain further streamlined processing with a public comment period of 15 days and an automatic grant period of 31 days, provided (1) they offer a stand-alone interconnected VoIP service throughout the service area, and (2) at least one alternative stand-alone, facilities-based voice service is available from an unaffiliated provider throughout the affected service area (the “alternative options test”). Finally, all carriers, whether dominant or non-dominant, that seek approval to grandfather legacy voice service are now subject to a uniform reduced public comment period of 10 days and an automatic grant period of 25 days. The Commission estimates that it will receive three fewer section 214(a) discontinuance applications annually in light of the Commission's forbearance from applying its section 214(a) discontinuance requirements to services for which the carrier has had no customers and no reasonable requests for service during the preceding 30-day period. The Commission also anticipates that the number of respondents and responses under the adequate replacement test will likely decrease from 5 and 25, respectively, to 2 and 10, respectively. The remaining 15 responses previously attributable to
Tuesday, August 7, 2018 at 10:00 a.m.
1050 First Street NE, Washington, DC
This meeting will be closed to the public.
Compliance matters pursuant to 52 U.S.C. 30109.
Matters relating to internal personnel decisions, or internal rules and practices.
Information the premature disclosure of which would be likely to have a considerable adverse effect on the implementation of a proposed Commission action.
Matters concerning participation in civil actions or proceedings or arbitration.
Judith Ingram, Press Officer, Telephone: (202) 694-1220.
Agency for Toxic Substances and Disease Registry (ATSDR), Department of Health and Human Services (HHS).
Notice of availability; request for comment.
The Agency for Toxic Substances and Disease Registry (ATSDR), within the Department of Health and Human Services (HHS) announces the availability of Set 29 Draft Toxicological Profiles for review and comment. All toxicological profiles issued as “Drafts for Public Comment” represent ATSDR's best efforts to provide important toxicological information on priority hazardous substances. ATSDR is seeking public comments and additional information or reports on studies about the health effects of Tribufos, Bromodichloromethane, Bromomethane, and 2-Hexanone for review and potential inclusion in the profiles. Although ATSDR considers key studies for these substances during the profile development process, this document solicits any relevant, additional information. ATSDR will evaluate the quality and relevance of such data or studies for possible inclusion into the profile.
ATSDR also seeks comments on the organization and format of the Toxicological Profile for Bromodichloromethane. In an effort to improve the usability of the profiles, ATSDR recently made content and organizational changes based on user feedback, as well as data identifying the most used profile content. Changes include: Removing redundant content; adding summary figures and tables to Chapters 1, 2, 5, and 6 that did not exist in previous Toxicological Profiles; and reformatting the Levels of Significant Exposure (LSE) tables in Chapter 2. ATSDR has only applied the changes to the Draft Toxicological Profile for Bromodichloromethane, but intends to use the new format for future profiles. Specifically, ATSDR would like to know:
(1) Does the chapter organization make it easier for you to find the information you need? For example, are you satisfied with the organization of the health effects chapter by organ system rather than exposure route?
(2) Are the new tables and figures clear and useful? Do they make the Toxicological Profile easier to read?
(3) If you have previously used any Toxicological Profile(s) for your work, which parts or content are the most useful to you, and what do you use it for?
(4) Does the profile contain all of the information you need? If no, please elaborate on what additional information would be helpful.
(5) Is there information you would like to see in the profile that is not currently included? If yes, please elaborate on the additional information you would like to see in the profile.
ATSDR remains committed to providing a public comment period for these documents as a means to provide the best service to the public regarding public health.
Comments must be submitted by October 31, 2018.
You may submit comments, identified by docket number ATSDR-2015-0001, by either of the following methods:
•
•
Susan Ingber, Agency for Toxic Substances and Disease Registry, Division of Toxicology and Human Health Sciences, 1600 Clifton Rd. NE, MS F-57, Atlanta, GA, 30329, Email:
The Superfund Amendments and Reauthorization Act of 1986 (SARA) [42 U.S.C. 9601
In addition, CERCLA provides ATSDR with the authority to prepare toxicological profiles for substances not found on the SPL. CERCLA authorizes ATSDR to establish and maintain inventory of literature, research, and studies on the health effects of toxic substances (CERCLA Section 104(i)(1)(B)); to respond to requests for health consultations (CERCLA Section 104(i)(4)); and to support the site-specific response actions conducted by the agency.
The Draft Toxicological Profiles are available online at
Announcing the Intent to Award an Administrative Supplement for two (2) Help America Vote Act (HAVA) Training and Technical Assistance (T/TA) grantees, the National Disability Rights Network (NDRN) 90HAVA0001 and the National Federation of the Blind (NFB) 90HAVA0002.
The Administration for Community Living (ACL) announces the intent to award an administrative supplement to the current Help America Vote Act (HAVA) Training and Technical Assistance (T/TA) grantees held by the National Disability Rights Network (NDRN) and the National Federation of the Blind (NFB). The purpose of the HAVA programs are designed to establish and improve participation in the election process for individuals with a full range of disabilities. In each eligible state and territory, seven percent of HAVA funds are set aside for the Protection and Advocacy Systems (P&As) to ensure that individuals with disabilities have the opportunity to participate in every step of the voting process. After receiving training and technical assistance, P&As may inform others on the availability of accessible voting equipment and its use. The administrative supplement for FY 2018 will be in the amount of $122,721 bringing the total award for FY 2018 to $462,590.
For further information or comments regarding this program supplement, contact Melvenia Wright, U.S. Department of Health and Human Services, Administration for Community Living, Administration on Disabilities, Administration on Intellectual and Developmental Disabilities: telephone (202) 795-7472; email
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the revocation of the Emergency Use Authorization (EUA) (the Authorization) issued to Zalgen Labs, LLC for the ReEBOV Antigen Rapid Test. FDA revoked this Authorization on May 18, 2018, under the Federal Food, Drug, and Cosmetic Act (FD&C Act), as requested by Zalgen Labs, LLC by letter dated March 1, 2018. The revocation, which includes an explanation of the reasons for revocation, is reprinted in this document.
The Authorization is revoked as of May 18, 2018.
Submit written requests for single copies of the revocation to the Office of Counterterrorism and Emerging Threats, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 1, Rm. 4338, Silver Spring, MD 20993-0002. Send one self-addressed adhesive label to assist that office in processing your request or include a Fax number to which the revocation may be sent. See the
Michael Mair, Office of Counterterrorism and Emerging Threats, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 1, Rm. 4336, Silver Spring, MD 20993-0002, 301-796-8510 (this is not a toll-free number).
Section 564 of the FD&C Act (21 U.S.C. 360bbb-3) as amended by the Project BioShield Act of 2004 (Pub. L. 108-276) and the Pandemic and All-Hazards Preparedness Reauthorization Act of 2013 (Pub. L. 113-5) allows FDA to strengthen the public health protections against biological, chemical, nuclear, and radiological agents. Among other things, section 564 of the FD&C Act allows FDA to authorize the use of an unapproved medical product or an unapproved use of an approved medical product in certain situations. On February 24, 2015, FDA issued an EUA to Corgenix, Inc. for the ReEBOV Antigen Rapid Test, subject to the terms of the Authorization. Notice of the issuance of the Authorization was published in the
Pursuant to a request from Zalgen Labs, LLC on March 1, 2018, FDA revoked the EUA for the ReEBOV Antigen Rapid Test on May 18, 2018, because the criteria for issuance were no longer met and these circumstances made such revocation appropriate to protect the public health or safety.
An electronic version of this document and the full text of the revocation are available on the internet at
Having concluded that the criteria for revocation of the Authorization under section 564(g) of the FD&C Act are met, FDA has revoked the EUA for Zalgen Labs, LLC's ReEBOV Antigen Rapid Test. The revocation in its entirety follows and provides an explanation of the reasons for revocation, as required by section 564(h)(1) of the FD&C Act.
Food and Drug Administration, HHS.
Notice of public workshop.
The Division of Pediatric and Maternal Health, Office of Surveillance and Epidemiology, and Office of Pediatric Therapeutics, Food and Drug Administration (FDA or the Agency) are announcing a public workshop entitled “Advancing the Development of Pediatric Therapeutics 5: Advancing Pediatric Pharmacovigilance.” The purpose of this 1-day workshop is to provide a forum to gather information on the latest developments in pediatric pharmacovigilance from the perspective of various stakeholders and to expand the conversation to include the utility and challenges of emerging pharmacovigilance tools, including specific challenges associated with pediatric data tools.
The public workshop will be held on Friday, September 14, 2018, from 8 a.m. to 5 p.m. See the
The public workshop will be held at FDAWhite Oak Campus, 10903 New Hampshire Ave. Bldg. 31 Conference Center, the Great Room (Rm. 1503A), Silver Spring, MD 20993. Entrance for the public workshop participants (non-FDA employees) is through Building 1 where routine security check procedures will be performed. For parking and security information, please refer to
For questions regarding the workshop, contact Denise Pica-Branco, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Silver Spring, MD 20993-0002, 301-796-1732,
Drugs and biologics (products) receive marketing approval only after undergoing premarket review and upon establishment of safety and efficacy through adequate and well-controlled clinical trials. Because all safety issues related to a product may not be detected in the premarket phase, FDA receives and analyzes postmarket safety information to determine if events reported in the postmarketing period are likely to be related to exposure to a product. When FDA determines that reported postmarketing events are likely related to a product, FDA can introduce labeling changes and other activities to inform the professional and lay public.
FDA receives reports through the MedWatch website (
FDA has a specific regulatory mandate to perform pediatric pharmacovigilance and to present or make available the results of such pediatric pharmacovigilance to the Pediatric Advisory Committee.
In this workshop, FDA will gather information on the latest developments in pediatric pharmacovigilance from the perspective of various stakeholders and expand the conversation to include the utility and challenges of emerging pharmacovigilance tools, including specific challenges associated with pediatric data tools.
Registration for onsite participation or via webcast is free and based on space availability, with priority given to early registrants. Early registration is recommended because seating is limited; therefore, FDA may limit the number of participants from each organization. Registrants will receive confirmation when they have been accepted.
If you need special accommodations due to a disability, please contact Denise Pica-Branco (
FDA has verified the website addresses in this document, as of the date this document publishes in the
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or Agency) is announcing an opportunity for public comment on the proposed collection of certain information by the Agency. Under the Paperwork Reduction Act of 1995 (PRA), Federal Agencies are required to publish notice in the
Submit either electronic or written comments on the collection of information by October 1, 2018.
You may submit comments as follows. Please note that late, untimely filed comments will not be considered. Electronic comments must be submitted on or before October 1, 2018. The
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Amber Sanford, Office of Operations, Food and Drug Administration, Three White Flint North, 10A-12M, 11601 Landsdown St., North Bethesda, MD 20852, 301-796-8867,
Under the PRA (44 U.S.C. 3501-3520), Federal Agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal Agencies to provide a 60-day notice in the
With respect to the following collection of information, FDA invites comments on these topics: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
The 2009 Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act) (Pub. L. 111-31) amended the Federal Food, Drug, and Cosmetic Act (FD&C Act) to grant FDA authority to regulate the manufacture, marketing, and distribution of tobacco products to protect public health and to reduce tobacco use by minors. Section 1003(d)(2)(D) of the FD&C Act (21 U.S.C. 393(d)(2)(D)) supports the development and implementation of FDA public education campaigns related to tobacco use. In May 2016, FDA began implementing a public education campaign to help prevent and reduce tobacco use among LGBT young adults and thereby reduce the public health burden of tobacco. The campaign continues to be implemented in 12 U.S. cities and features events, television and radio and print advertisements, digital communications, including videos, social media, and other forms of media. For the purpose of this notice, these campaign elements will be referred to as “advertisements” or “ads.”
In support of the provisions of the Tobacco Control Act that require FDA to protect the public health and to reduce tobacco use, FDA requests OMB approval to collect information needed to evaluate FDA's campaign to reduce tobacco use among LGBT young adults. Comprehensive evaluation of FDA's public education campaigns is needed to ensure campaign messages are effectively received, understood, and accepted by those for whom they are intended. Evaluation is an essential organizational practice in public health and a systematic way to account for and improve public health actions.
To evaluate the effectiveness of FDA's RESPECT at reducing tobacco use among LGBT young adults aged 18 to 24, FDA contracted with RTI International (RTI) to conduct Web-based surveys with the target population in the 12 campaign cities and 12 comparison cities. The surveys include measures of tobacco-related knowledge, attitudes, beliefs, intentions, and use as well as measures of audience awareness of and exposure to campaign events and advertisements. The voluntary surveys also collect information on demographic variables, including sexual orientation, age, sex, race/ethnicity, education, and primary language. Baseline data collection for RESPECT was conducted between February and May 2016. Four subsequent waves of data collection were conducted with new (cross-sectional) and returning (longitudinal) respondents. This design facilitated analysis of relationships between individuals' exposure to campaign activities and baseline to follow-up changes in outcomes of interest between campaign and comparison cities. Information collection for baseline and the first four follow-ups was reviewed and approved by OMB
FDA will continue to implement RESPECT in 12 U.S. cities through April 2019. To complete the evaluation of RESPECT, FDA is requesting an extension of the previously approved information collection in order to conduct two additional waves of data collection with the target population. The proposed sixth and seventh waves of data collection (
As in previous waves, new and returning survey respondents will be
Our goal is to recruit 75 percent of the sample via intercept interviews and 25 percent via social media. To obtain the target number of completed fifth and sixth follow-up questionnaires, an additional 11,904 adults (3,968 annualized) recruited in person and 2,736 adults (912 annualized) recruited via social media will complete screening questionnaires. For the entire evaluation study, a total of 33,717 adults (11,239 annualized) recruited in person will complete screening questionnaires along with 10,617 adults (3,539 annualized) recruited via social media. The estimated burden to complete the screening questionnaire is 5 minutes (0.083 hour), for a total of 2,799 hours (933 annualized) for in-person recruits and 881 hours (294 annualized) for social media recruits.
Based on analysis of response rates from prior waves of data collection, we expect 65 percent of intercept respondents will be deemed eligible and 50 percent of those will complete the fifth follow-up questionnaire. We expect 30 percent of those recruited via social media will be deemed eligible and complete the fifth follow-up questionnaire. Lastly, we expect 50 percent of returning (or longitudinal) respondents to complete the fifth and sixth follow-up questionnaires. We estimate that approximately 2,100 new respondents (700 annualized) and 6,678 returning (2,226 annualized) respondents will complete the fifth and sixth follow-up questionnaires, for a total of 8,778 responses (2,926 annualized).
OMB previously approved 3,156 (1,052 annualized) respondents recruited via social media and 9,456 (3,152 annualized) respondents recruited in person to complete the first four follow-up questionnaires. Adding the fifth and sixth follow-ups brings the total estimated number of follow up questionnaires completed by social media recruits to 5,256 (1,752 annualized) and by in-person recruits to 16,134 (5,378 annualized). At 40 minutes per completed questionnaire, the total burden is 3,507 hours (1,169 annualized) for social media respondents and 10,761 hours (3,587 annualized) for in-person respondents.
OMB also previously approved 393 hours (approximately 132 annualized) for social media respondents and 1,182 hours (394 annualized) for in-person respondents to complete baseline questionnaires. OMB also approved the pilot test of procedures in bars (6 hours [2 annualized]). As these study components are complete, the corresponding burden will not change. Lastly, the original study design included a media tracking component, which included a burden of 414 hours (138 annualized) for completing a 5-minute screening questionnaire and 999 hours (333 annualized) for completing the media tracking questionnaire. However, this component was dropped from the study; hence, the related burden has been deducted from the total study burden.
FDA estimates the burden of this collection of information as follows:
To accommodate the additional waves of data collection, FDA requests approval to increase the number of burden hours under the existing control number. The previous number of approved responses was 53,967 (17,989 annualized), and the previous burden was 14,031 hours (4,677 annualized). The fifth and sixth follow-ups add 23,478 responses (7,826 annualized), which include responses to new venues assessments, screening questionnaires, and the follow-up questionnaires, for a total of 7,074 additional burden hours (2,357 annualized). Removing the media tracking component deducts 6,507 responses (2,169 annualized) and 1,413 burden hours (471 annualized). The totals for the entire evaluation study are increasing by 16,971 responses (5,657 annualized) and 5,661 hours (1,887 annualized) for a new total of 70,938 responses (23,646 annualized) and 19,692 burden hours (approximately 6,566 annualized).
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the National Cancer Advisory Board.
The meeting will be open to the public as indicated below, with attendance limited to space available. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should notify the Contact Person listed below in advance of the meeting. The open session will be videocast and can be accessed from the NIH Videocasting and Podcasting website (
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
This notice is being published less than 15 days prior to the meeting due to scheduling difficulties.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
In the interest of security, NIH has instituted stringent procedures for entrance onto the NCI-Shady Grove campus. Visitors will be asked to show one form of identification (for example, a government-issued photo ID, driver's license, or passport) and to state the purpose of their visit.
Information is also available on the Institute's/Center's home page:
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the Muscular Dystrophy Coordinating Committee (MDCC).
The meeting will be open to the public and accessible by teleconference. Participation is limited to space available. Individuals who plan to participate and need special assistance, such as reasonable accommodations, should notify the Contact Person listed below in advance of the meeting.
Any member of the public interested in presenting oral comments to the committee may notify the Contact Person listed on this notice at least 10 days in advance of the meeting. Interested individuals and representatives of organizations may submit a letter of intent, a brief description of the organization represented, and a short description of the oral presentation. Only one representative of an organization may be allowed to present oral comments and if accepted by the committee, presentations may be limited to five minutes. Both printed and electronic copies are requested for the record. In addition, any interested person may file written comments with the committee by forwarding their statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
More information can be found on the Muscular Dystrophy Coordinating Committee home page:
U.S. Customs and Border Protection, Department of Homeland Security.
Notice of accreditation and approval of Laboratory Service, Inc., as a commercial gauger and laboratory.
Notice is hereby given, pursuant to CBP regulations, that Laboratory Service, Inc., has been approved to gauge petroleum and certain petroleum products and accredited to test petroleum and certain petroleum products for customs purposes for the next three years as of June 12, 2017.
The accreditation and approval of Laboratory Service, Inc., as commercial gauger and laboratory became effective on June 12, 2017. The next triennial inspection date will be scheduled for June 2020.
Melanie Glass, Laboratories and Scientific Services Directorate, U.S. Customs and Border Protection, 1300 Pennsylvania Avenue NW, Suite 1500N, Washington, DC 20229, tel. 202-344-2029.
Notice is hereby given pursuant to 19 CFR 151.12 and 19 CFR 151.13, that Laboratory Service, Inc., 11731 Port Rd., Seabrook, TX 77586, has been approved to gauge petroleum and certain petroleum products and accredited to test petroleum and certain petroleum products for customs purposes, in accordance with the provisions of 19 CFR 151.12 and 19 CFR 151.13. Laboratory Service, Inc., is approved for the following gauging procedures for petroleum and certain petroleum products from the American Petroleum Institute (API):
Laboratory Service, Inc. is accredited for the following laboratory analysis procedures and methods for petroleum and certain petroleum products set forth by the U.S. Customs and Border Protection Laboratory Methods (CBPL) and American Society for Testing and Materials (ASTM):
Anyone wishing to employ this entity to conduct laboratory analyses and gauger services should request and receive written assurances from the entity that it is accredited or approved by the U.S. Customs and Border Protection to conduct the specific test or gauger service requested. Alternatively, inquiries regarding the specific test or gauger service this entity is accredited or approved to perform may be directed to the U.S. Customs and Border Protection by calling (202) 344-1060. The inquiry may also be sent to
Science and Technology Directorate, Department of Homeland Security.
60-Day Notice of Information Collection; request for comment. (Extension of a Currently Approved Collection, 1640-0016).
The Department of Homeland Security (DHS), Science and Technology (S&T) First Responders Group (FRG) is proposing to extend currently approved OMB 1640-0016, an information collection, by inviting the public to comment on the collection: First Responders Community of Practice (FRCoP) User Registration Page (DHS Form 10059 (9/09)). The FRCoP web based tool collects profile information from first responders and select authorized non-first responder users to facilitate networking and formation of online communities. All users are
Comments are encouraged and accepted until October 1, 2018.
You may submit comments, identified by docket number DHS-2018-0035, at:
•
•
DHS/S&T/FRG System Owner: Rochele Smith,
DHS, in accordance with the PRA (6 U.S.C. 193), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collection of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provides the requested data in the desired format. DHS is soliciting comments on the proposed information collection request (ICR) that is described below. The Department of Homeland Security is especially interested in public comment addressing the following issues: (1) Is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
Bureau of Indian Affairs, Interior.
Notice of Establishment and notice of public meetings.
The Department of the Interior is establishing the Bureau of Indian Education (BIE) Standards, Assessments, and Accountability System Negotiated Rulemaking Committee (Committee). The Committee will advise the Secretary of the Interior (Secretary) through the BIE and the Assistant Secretary—Indian Affairs on the development of regulations to fulfill the Secretary's responsibility to define standards, assessments, and accountability system consistent with ESEA section 1111, as amended, for schools funded by BIE on a national, regional, or Tribal basis, as appropriate, taking into account the unique circumstances and needs of such schools and the students served by such schools and the process for requesting a waiver for these definitions. This notice also announces the dates and locations of each of the public meetings of the Committee.
For a listing of the dates of each Committee meeting, refer to “Committee Meetings” under
For a listing of the locations of each Committee meeting, refer to “Committee Meetings” under
The Designated Federal Officer, Sue Bement, Education Program Specialist, Bureau of Indian Education, by any of the following methods:
• (Preferred method) Email to:
• Mail, hand-carry or use an overnight courier service to the Designated Federal Officer, Ms. Sue Bement, C/O The Office of Regulatory Affairs and Collaborative Action, 1001 Indian School Road NW, Suite 312, Albuquerque, NM 87104.
• Telephone: (952) 851-5427.
On September 14, 2017, a notice in the
The April 17, 2018, notice discussed the issues to be negotiated and the interest group representatives proposed as members of the Committee.
The Secretary received additional proposed nominations in response to the April 17, 2018, notice and considered the nominations based on the qualifications outlined in the notice for approval. The nominees were approved to join the Committee and are included in this
The two nominees were received for consideration following the April 17, 2018,
Revised regulations must be put in place as soon as possible, thus the Committee will be expected to meet frequently within a short time frame. The BIE expects to have three in-person meetings and one teleconference, with each in-person meeting lasting three days in length. The BIE has dedicated resources required to: Ensure the Committee is able to conduct meetings; provide technical assistance; and provide any additional support required to fulfill the Committee's responsibilities. The meeting dates and locations are as follows:
Detailed information about Committee meetings, including detailed agendas, can be accessed at
At the first meeting, the Committee will conduct introductions of members at the start of the meeting and will continue with the following items on the agenda:
• Review and discussion of Committee Operations including operating protocols and decision-making criteria;
• Overview and discussion of existing regulations (25 CFR part 30) implemented at BIE schools and an overview topic paper;
• Overview and discussion of ESSA Section 8007(2) and ESEA Section 1111 and standards, assessments, and accountability topic papers;
• Discussion of the Committee's tasks and approach to draft regulations including discussion of draft regulations, outline work; formation of subcommittees and tasks between the first and second meeting; and
• Public comments.
The second meeting will focus on edits to the draft preamble and the proposed rule, public comments, and reaffirm Committee tasks in preparation for the third meeting.
The third meeting will focus on the draft proposed rule for publication, seek consensus on the draft, schedule government-to-government consultations including what key information will be shared during consultation, and public comment.
The final meeting, via WebEx, will review public comments received, discuss any substantive comments that will affect the proposed rule, and seek consensus on a recommended approach to addressing the comments. The final meeting will include a close-out discussion about the process.
Written comments may be sent to the Designated Federal Officer listed in the
All meetings are open to the public; however, transportation, lodging, and means are the responsibility of the participating public.
The Elementary and Secondary Education Act of 1965, as amended, 20 U.S.C. 6301
Bureau of Indian Affairs, Interior.
Notice of Reservation Proclamation.
This notice informs the public that the Acting Assistant Secretary—Indian Affairs proclaimed approximately 1,146.17 acres, more or less, an addition to the reservation of the Bois Forte Band of the Minnesota Chippewa Tribe of Minnesota on July 9, 2018.
Ms. Sharlene M. Round Face, Bureau of Indian Affairs, Division of Real Estate Services, 1849 C Street NW, MS-4642-MIB, Washington, DC 20240, telephone (202) 208-3615.
This notice is published in the exercise of authority delegated by the Secretary of the Interior to the Assistant Secretary—Indian Affairs by part 209 of the Departmental Manual.
A proclamation was issued according to the Act of June 18, 1934 (48 Stat. 984; 25 U.S.C. 5110), for the land described below. The land was proclaimed to be an addition to the reservation of the Bois Forte Band of the Minnesota Chippewa Tribe, Saint Louis County, State of Minnesota.
The above described lands contain a total of 1,146.17 acres, more or less, which are subject to all valid rights, reservations, rights-of-way, and easements of record.
This proclamation does not affect title to the land described above, nor does it affect any valid existing easements for public roads, highways, public utilities, railroads, and pipelines or any other valid easements or rights-of-way or reservations of record.
Bureau of Indian Affairs, Interior.
Notice of Reservation Proclamation.
This notice informs the public that the Principal Deputy Assistant Secretary—Indian Affairs proclaimed approximately 520 acres, more or less, an addition to the reservation of the Rincon Band of Luiseno Mission Indians of the Rincon Reservation, California on July 9, 2018.
Ms. Sharlene M. Round Face, Bureau of Indian Affairs, Division of Real Estate Services, 1849 C Street NW, MS-4642-MIB, Washington, DC 20240, telephone (202) 208-3615.
This notice is published in the exercise of authority delegated by the Secretary of the Interior to the Assistant Secretary—Indian Affairs by part 209 of the Departmental Manual.
A proclamation was issued according to the Act of June 18, 1934 (48 Stat. 986; 25 U.S.C. 5110) for the lands described below. The land was proclaimed to be part of the reservation for the Rincon Band of Luiseno Mission Indians of the Rincon Reservation, California, County of San Diego, and State of California.
The South half, the West half of the Northeast quarter, the Northeast quarter of the Northeast quarter and the Northeast quarter of the Northwest quarter of Section 36, Township 10 South, Range 1 West, San Bernardino Base and Meridian in the County of San Diego, State of California, according to official plat thereof.
The Southeast quarter of the Northeast quarter of Section 36, Township 10 South, Range 1 West, San Bernardino Base and
The above described lands contain a total of 520 acres, more or less, which are subject to all valid rights, reservations, rights-of-way, and easements of record.
This proclamation does not affect title to the lands described above, nor does it affect any valid existing easement for public roads and highways, public utilities, railroads, pipelines, or any other valid easement or rights-of-way or reservation of record.
Bureau of Land Management, Interior.
Notice of auction and sale.
The Secretary of the Interior (Secretary), through the Bureau of Land Management (BLM) New Mexico State Office, is issuing this Notice to conduct an auction and sale from the Federal Helium Program, administered by the BLM New Mexico, Amarillo Field Office. The Helium Stewardship Act of 2013 (HSA) requires the BLM to conduct an annual auction and sale of crude helium. Accordingly, the BLM will once again use the auction and sale process established in the
The schedule for the auction and sale process is:
If payment is not received by September 20, 2018, volumes will be re-offered for sale to all over bidders, proportionally, on September 21, 2018. Subsequently, for these re-offered volumes to count toward October 1, 2018 allocation percentages, payment must be received by September 28, 2018.
The August 31, 2018, helium auction will be held in the main conference room of the Amarillo Field Office, 801 South Fillmore, Suite 500, Amarillo, TX 79101. The BLM's Federal Helium Program HSA Implementation page website is located at
Samuel R.M. Burton, Amarillo Field Manager, at telephone: 806-356-1000, email:
In October 2013, Congress passed the HSA, which requires the Department of the Interior, through the BLM Director, to offer for auction and sale annually a portion of the helium reserves owned by the United States and stored underground at the Cliffside Gas Field near Amarillo, Texas.
On July 23, 2014, the BLM published a “Final Notice for Implementation of Helium Stewardship Act Sales and Auctions” in the
On August 24, 2015, the BLM published a “Notice of Final Action: Crude Helium Sale and Auction for Fiscal Year 2016 Delivery” in the
Both the 2014 and 2015 Final Notices are available from the BLM's HSA Implementation Page website (see
Table 1 identifies the volumes to be offered for auction and sale in FY 2018 for FY 2019 delivery.
1.01 What is the minimum FY 2019 auction price and the FY 2019 sales price? The minimum FY 2019 auction price is $110 per Mcf (one thousand cubic feet of gas measured at standard conditions of 14.65 psia and 60 degrees Fahrenheit). The BLM will announce the FY 2019 sale price after the auction has concluded, and the BLM completes its analysis of the auction information. The BLM will use this information to publish the crude helium price for FY 2019.
1.02 What will happen to the helium offered but not sold in the helium auction? Any volume of helium offered, but not sold in the FY 2019 auction, will be added to the helium available for sale and will be offered in the FY 2019 sale.
1.03 When will the auction and sale take place? The BLM will offer helium for FY 2019 according to the following schedule:
If payment is not received by September 20, 2018, volumes will be re-offered for sale to all over-bidders, proportionally, on September 21, 2018. Subsequently, for these re-offered volumes to count toward October 1, 2018 allocation percentages, payment must be received by September 28, 2018.
1.04 What is the auction format? The auction will be a live auction, held in the main conference room of the Amarillo Field Office at 1:00 p.m. Central Time, on August 31, 2018. The address is 801 South Fillmore, Suite 500, Amarillo, TX 79101. Anyone meeting the HSA definition of a qualified bidder may participate in the auction. The logistics for the auction and the pre-bid qualification form is included in a document entitled, “FY 2019 Helium Auction Notice and Guide” on the BLM's HSA Implementation Page website (see
1.05 Who is qualified to purchase helium at the auction? Only qualified bidders, as defined in 50 U.S.C. 167(9), may participate in and purchase helium at the auction. The BLM will make the final determination of who is a qualified bidder using the HSA's definition of a qualified bidder, regardless of whether or not that person was previously determined to be a qualified bidder. Payment must be received not later than the close of business September 20, 2018.
1.06 How many helium lots does the BLM anticipate offering at the FY 2019 auction? The BLM anticipates auctioning 210 MMcf in a total of 12 lots for delivery in FY 2019. The lots would be divided as follows:
5 lots of 25 MMcf each; and
5 lots of 15 MMcf each; and
2 lots of 5 MMcf each.
1.07 What must I do to bid at auction? The BLM has described the live auction procedures, including detailed bidding instructions and pre-bid registration requirements, in a document entitled, “FY 2019 Auction Notice and Guide,” which is available on the BLM's HSA Implementation Page website (see
1.08 When will helium that is purchased at sale or won at auction be available in the purchaser's storage account? The BLM will transfer the volumes purchased in the FY 2019 auction and sale to the buyer's storage accounts on September 30, 2018.
2.01 Who will be allowed to purchase helium in the FY 2019 sale? The crude helium sale will be separated into two distinct portions, a non-allocated portion and an allocated portion. The non-allocated portion will be ten percent of the total amount offered for sale for FY 2019, and will be available to those storage contract holders who do not have ability to accept delivery of crude helium from the Federal Helium Pipeline (as defined in 50 U.S.C. 167(2)) as of May 30, 2018. The allocated portion will be 90 percent of the total amount offered for sale for FY 2019, and will be available to any person (including individuals, corporations, partnerships, or other entities) with the ability to accept delivery of crude helium from the Federal Helium Pipeline (as defined in 50 U.S.C. 167(2)).
2.02 How will helium sold in the FY 2019 sale be allocated among those participating in the non-allocated sale? The non-allocated sale will be made available to all qualified offerors not eligible to participate in the allocated sales. The minimum volume that can be requested is 1 MMcf. The total volume available for the non-allocated portion of the sale is 9 MMcf. Any volumes not sold at auction will be distributed between the non-allocated (10 percent) and the allocated sale (90 percent). Any volumes not purchased at the non-allocated sale will be sold in the allocated portion.
2.03 How will the helium sold in the FY 2019 sale be allocated among the persons to accept delivery of crude helium from the Federal Helium Pipeline? Any person wishing to participate in the allocated portion of the FY 2019 sale needs to report its excess refining capacity and operational capacity a minimum of 14 calendar days prior to the sale, using the Excess Refining Capacity form. The form can be downloaded from the BLM's HSA Implementation Page website (see
2.04 How does a person apply for access to the Federal Helium Pipeline for the purpose of taking crude helium? The steps for taking crude helium are provided in the BLM's HSA Implementation Page website (see
3.01 When will I receive the helium that I purchase in a sale or win based
3.02 How will the BLM prioritize delivery? The HSA gives priority to Federal in-kind helium (
Supplementary documents referenced in this Notice are available at the BLM's HSA Implementation Page website (see
a. This
b. The HSA (50 U.S.C. 167);
c. FY 2019 Helium Auction Notice and Guide;
d. 2016 Storage Contract (template for information only);
e. Determination of Fair Market Value Pricing of Crude Helium;
f. Storage Fees;
g. Required Forms for Helium Reporting; and
h. FY 2014 through FY 2018
The HSA of 2013 (Pub. L. 113-40) codified to various sections in 50 U.S.C. 167-167q.
Section 512 of the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 895, 29 U.S.C. 1142, provides for the establishment of an Advisory Council on Employee Welfare and Pension Benefit Plans (the Council), consisting of 15 members appointed by the Secretary of Labor (the Secretary) as follows:
• Three representatives of employee organizations (at least one of whom shall be a representative of an organization whose members are participants in a multiemployer plan);
• three representatives of employers (at least one of whom shall be a representative of employers maintaining or contributing to multiemployer plans);
• one representative each from the fields of insurance, corporate trust, actuarial counseling, investment counseling, investment management, and accounting; and
• three representatives from the general public (one of whom shall be a person representing those receiving benefits from a pension plan).
Council members must be qualified to appraise the programs instituted under ERISA. Appointments are for three-year terms. The Council's prescribed duties are to advise the Secretary with respect to carrying out his functions under ERISA, and to submit to the Secretary, or his designee, related recommendations. The Council will meet at least four times each year.
The terms of five Council members expire at the end of this year. The groups or fields they represent are as follows:
(1) Employee organizations;
(2) employers;
(3) actuarial counseling;
(4) investment counseling; and
(5) the general public.
The Department of Labor is committed to equal opportunity in the workplace and seeks a broad-based and diverse Council.
If you or your organization wants to nominate one or more people for appointment to the Council to represent one of the groups or fields specified above, submit nominations to Larry Good, Council Executive Secretary, Frances Perkins Building, U.S. Department of Labor, 200 Constitution Ave. NW, Suite N-5623, Washington, DC 20210, or as email attachments to
Nominations, including supporting letters, should:
• State the person's qualifications to serve on the Council (including any particular specialized knowledge or experience relevant to the nominee's proposed Council position);
• state that the candidate will accept appointment to the Council if offered;
• include which of the five positions (representing groups or fields) you are nominating the candidate to fill;
• include the nominee's full name, work affiliation, mailing address, phone number, and email address;
• include the nominator's full name, mailing address, phone number, and email address;
• include the nominator's signature, whether sent by email or otherwise.
Please do not include any information that you do not want publicly disclosed.
The Department will contact nominees for information on their political affiliation and their status as registered lobbyists. Anyone currently subject to federal registration requirements as a lobbyist is not eligible for appointment. Nominees should be aware of the time commitment for attending meetings and actively participating in the work of the Council. Historically, this has meant a commitment of at least 20 days per year. The Department of Labor has a process for vetting nominees under consideration for appointment.
In accordance with the Federal Advisory Committee Act (Pub. L. 92-463, as amended), the National Science Foundation (NSF) announces the following meeting:
Advisory Committee for Mathematical and Physical Sciences (#66).
August 14, 2018; 12:30 p.m.-5:00 p.m.
August 15, 2018; 8:30 a.m.-4:00 p.m.
National Science Foundation, 2415 Eisenhower Ave. Alexandria, VA 22314.
Open.
Christopher Coox, National Science Foundation, 2415 Eisenhower Ave., Alexandria, VA 22314; Telephone: 703.292.5137; Email:
To provide advice, recommendations, and counsel on major goals and policies pertaining to mathematical and physical sciences programs and activities.
Notice is hereby given that the rules and policies regarding the possession of weapons in United States Courthouses and United States Federal Buildings in the State of Nebraska shall apply to all proceedings conducted in governmental or private facilities in Nebraska by the Atomic Safety and Licensing Board of the U.S. Nuclear Regulatory Commission.
Accordingly, no person other than federal law enforcement personnel or law enforcement personnel from the Dawes County Sheriff's Department, or any other authorized Nebraska state or local law enforcement organization, while performing official duties, shall wear or otherwise carry a firearm, edged weapon, impact weapon, electronic control device, chemical weapon, ammunition, or other dangerous weapon into the limited appearance session scheduled at the Chadron State College Student Center in Chadron, Nebraska, on Sunday, October 28, 2018, or the evidentiary hearing scheduled to begin on Tuesday, October 30, 2018, at the Crawford Community Building in Crawford, Nebraska.
This notice does not apply to state or local law enforcement officers responding to a call for assistance from within the Chadron State College Student Center or the Crawford Community Building.
For the Atomic Safety and Licensing Board.
The Atomic Safety and Licensing Board hereby gives notice that it will convene an evidentiary hearing to receive testimony and exhibits in this proceeding regarding intervenor Oglala Sioux Tribe's (OST) challenge to the May 2012 application of Crow Butte Resources, Inc., (CBR) seeking to amend the existing 10 CFR part 40 source materials license for its Crow Butte in situ uranium recovery (ISR) site to authorize CBR to operate a satellite ISR facility within the Marsland Expansion Area (MEA) in Dawes County, Nebraska. The evidentiary hearing will concern OST's admitted Contention 2, which raises hydrogeological-related environmental and safety matters regarding the proposed license amendment. In addition, the Board gives notice that, in accordance with 10 CFR 2.315(a) and the procedures specified below, it will entertain oral, written, and audio-recorded limited appearance statements from members of the public in connection with the issues raised by Contention 2.
As set forth by the Licensing Board in a July 20, 2018 issuance, OST Contention 2 provides as follows:
The application and final environmental assessment fail to provide sufficient information regarding the geological setting of the area to meet the requirements of 10 CFR part 40, Appendix A, Criteria 4(e) and 5G(2); the National Environmental Policy Act; and NUREG-1569 section 2.6. The application and final environmental assessment similarly fail to provide sufficient information to establish potential effects of the project on the adjacent surface and ground-water resources, as required by NUREG-1569 section 2.7, and the National Environmental Policy Act.
The Board will convene an evidentiary hearing conducted in accord with the procedures set forth in 10 CFR part 2, subpart L, regarding the environmental and safety matters specified in section A above on the following date at the specified location and time:
Any member of the public who plans to attend the hearing is advised that security measures may be employed at the entrance to the room where the hearing will take place, including searches of hand-carried items such as briefcases or backpacks, and is reminded to arrive in sufficient time to allow for security screening. Items that could readily be used as weapons will not be permitted in the room where the evidentiary hearing sessions will be held. Also, during the evidentiary hearing session no signs will be permitted in the hearing room.
A 10 CFR 2.315(a) oral limited appearance session regarding the MEA ISR proceeding will be held on the following date at the specified location and time:
Any person not a party, or the representative of a party, to this proceeding will be permitted to make an oral statement setting forth his or her position on matters of concern relating to the proceeding. Although these statements do not constitute testimony or evidence, they nonetheless may help the Licensing Board and/or the parties in their consideration of the matters of concern in this proceeding relating to OST Contention 2.
Oral limited appearance statements will be entertained during the hours specified in section C above, or such lesser period as may be necessary to accommodate the speakers who are present. In this regard, if all scheduled and unscheduled speakers present at the session have made a presentation, the Licensing Board reserves the right to terminate the session before the ending time listed in section C above. The Board also reserves the right to cancel the Sunday afternoon session scheduled above if there has not been a sufficient showing of public interest as reflected by the number of preregistered speakers.
Any member of the public who plans to attend the limited appearance session is strongly advised to arrive early to allow time to pass through any security measures that may be employed. Attendees are also requested not to bring any unnecessary hand-carried items, such as packages, briefcases, backpacks, or other items that might need to be examined individually. Items that could readily be used as weapons will not be permitted in the room where this session will be held. During the oral limited appearance session, signs no larger than 18 inches by 18 inches will be permitted, but may not be attached to sticks, held over one's head, or moved about in the room.
The time allotted for each limited appearance statement normally will be no more than five minutes, but to ensure everyone will have an opportunity to speak, may be further limited depending on the number of written requests to make an oral statement that are submitted in accordance with section E below and/or the number of persons present at the designated times.
A person wishing to make an oral statement who has submitted a timely written request to do so will be given priority over those who have not filed such a request. To be considered timely, a written request to make an oral statement must either be mailed, faxed, or sent by email so as to be
Written requests to make an oral statement should be submitted to:
As provided in 10 CFR 2.315(a), any person not a party, or the representative of a party, to the proceeding may submit a written statement setting forth his or her position on matters of concern relating to this proceeding. Although these statements do not constitute testimony or evidence, they nonetheless may help the Board or the parties in their consideration of the matters of concern in this proceeding relating to OST Contention 2.
A written limited appearance statement may be submitted at any time, however, for the statement to be the most helpful to the Board and parties relative to the evidentiary hearing on Contention 2, it should be submitted so as to be
As provided in 10 CFR 2.315(a), any person not a party, or the representative of a party, to the proceeding may submit an audio-recorded statement setting forth his or her position on matters of concern relating to this proceeding. Although these statements do not constitute testimony or evidence, they nonetheless may help the Board or the parties in their consideration of the matters of concern in this proceeding relating to OST Contention 2.
To ensure that the Licensing Board members will have the opportunity to review an audio-recorded limited appearance statements prior to the beginning of the evidentiary hearing, an audio-recorded limited appearance statement must be submitted so that it is
Due to technical constraints, all audio-recorded limited appearance statements submitted must be no more than 15 minutes in length.
Audio-recorded limited appearance statements may be sent to the Board one of two ways. An audio-recorded limited appearance statement may be sent by email to
An audio-recorded limited appearance statement may also be sent by mail on either a compact disc (CD) or digital versatile disc (DVD) to:
The CBR application and license and various staff documents relating to the application are available on the NRC website at
Any updates or revisions to the evidentiary hearing schedule or the schedule for the limited appearance session can be found on the NRC website at
It is so ordered.
For the Atomic Safety and Licensing Board.
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Elizabeth Reed, 202-268-3179.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on July 27, 2018, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Elizabeth Reed, 202-268-3179.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on July 27, 2018, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Elizabeth Reed, 202-268-3179.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on July 27, 2018, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Elizabeth Reed, 202-268-3179.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on July 27, 2018, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Elizabeth Reed, 202-268-3179.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on July 27, 2018, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Elizabeth Reed, 202-268-3179.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on July 27, 2018, it filed with the Postal Regulatory Commission a
On April 16, 2018, NYSE Arca, Inc. (“Exchange” or “NYSE Arca”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1)
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to list and trade shares (“Shares”) of the following under NYSE Arca Rule 8.600-E, which governs the listing and trading of Managed Fund Shares:
Commentary .06 to Rule 8.600-E provides that, if the investment adviser to the investment company issuing Managed Fund Shares is affiliated with a broker-dealer, such investment adviser shall erect a “fire wall” between the investment adviser and the broker-dealer with respect to access to information concerning the composition and/or changes to such investment company portfolio. In addition, Commentary .06 further requires that personnel who make decisions on the open-end fund's portfolio composition must be subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding the open-end fund's portfolio.
According to the Registration Statement, the Fund's investment objective is current income consistent with preservation of capital. Under normal market conditions,
The Fixed Income Securities in which the Fund may invest are the following:
• U.S. Government Securities, including U.S. Treasury Bills, U.S. Treasury Notes and Bonds, U.S. Treasury Floating Rate Notes, Treasury Inflation-Protected Securities (“TIPS”), and obligations of U.S. agencies or instrumentalities (
• agency and non-agency asset-backed securities (“ABS”);
• U.S. dollar-denominated foreign securities, including emerging market securities;
• Adjustable-Rate Mortgage Securities (“ARMs”);
• junior and senior loans;
• bank loans, loan participations and assignments;
• agency and non-agency mortgage-backed securities (“MBS”);
• collateralized mortgage obligations (“CMOs”);
• zero coupon and pay-in-kind securities;
• corporate bonds;
• Non-US government securities, supranational entities obligations issued by foreign governments, or international agencies and instrumentalities;
• inflation-linked and inflation-indexed securities;
• money market instruments;
• mortgage-related securities (such as Government National Mortgage Association or Federal National Mortgage Association certificates);
• mortgage dollar rolls;
• variable and floating rate securities;
• Rule 144A securities;
• taxable municipal securities;
• step-coupon securities; and
• stripped securities.
The Fund may hold any portion of its assets in cash (U.S. dollars, foreign currencies or multinational currency units) and/or cash equivalents.
While the Fund, under normal market conditions, will invest at least 80% of its net assets in the securities and financial instruments described above, the Fund may invest its remaining assets in the securities and financial instruments referenced below.
The Fund may enter into short sales of Fixed Income Securities.
The Fund may invest in exchange-traded funds (“ETFs”)
The Fund may invest in bilateral credit default swaps, bilateral interest rate swaps and bilateral standardized commodity and equity index total return swaps. The Fund may invest in the following swaps: Interest rate, credit default, credit default swaps index (“CDX”), commodity, equity-linked, fixed income, credit default, credit-linked and currency exchange swaps or an index or indexes of the foregoing. The Fund may invest in swaptions.
The Fund may invest in the following options: U.S. exchange-traded and over-the-counter (“OTC”) options on Fixed Income Securities, domestic and foreign equity and fixed income indices, CDX, U.S. Treasury futures contracts, interest rates and currencies.
The Fund may invest in futures on Fixed Income Securities, domestic and foreign equity and fixed income indices, interest rates and CDX.
The Fund may invest in publicly or privately issued interests in investment pools whose underlying assets are credit default, credit-linked, interest rate, currency exchange, equity-linked or other types of swap contracts and related underlying securities or securities loan agreements.
The Fund may invest in non-exchange-traded open-end investment company securities.
With respect to any of the Fund's investments identified above, the Fund may purchase securities on a forward commitment or when-issued or delayed delivery basis.
Investments in derivative instruments will be consistent with the Fund's investment objective and policies. The Fund will typically use derivative instruments as a substitute for taking a position in the underlying asset where advantageous and/or as part of a strategy designed to reduce exposure to other risks, such as interest rate risk. The Fund may also use derivative instruments to enhance returns, manage portfolio duration, or manage the risk of securities price fluctuations. To limit the potential risk associated with such transactions, the Fund segregates or “earmarks” assets determined to be liquid by the Adviser in accordance with procedures established by the Trust's Board of Trustees (the “Board”) to cover its obligations under derivative instruments. In addition, the Fund has included appropriate risk disclosure in its offering documents, including leveraging risk. Leveraging risk is the risk that certain transactions of the Fund, including the Fund's use of derivatives, may give rise to leverage, causing the Fund to be more volatile than if it had not been leveraged. Because the markets for certain securities, or the securities themselves, may be unavailable or cost prohibitive as compared to derivative instruments, suitable derivative transactions may be an efficient alternative for the Fund to obtain the desired asset exposure.
According to the Registration Statement, the Fund issues and sells Shares of the Fund only in Creation Units of 100,000 Shares on a continuous basis through the Distributor at the net asset value (“NAV”) next determined after receipt of an order in proper form on any business day. The size of a Creation Unit is subject to change.
The consideration for purchase of Creation Units generally consists of “Deposit Securities” and the “Cash Component”, which generally correspond pro rata, to the extent practicable, to the Fund securities, or, as permitted by the Fund, the “Cash Deposit.” Together, the Deposit Securities and the Cash Component or, alternatively, the Cash Deposit, constitute the “Fund Deposit,” which represents the minimum initial and subsequent investment amount for a Creation Unit of the Fund.
The Transfer Agent and Custodian, through the National Securities Clearing Corporation (“NSCC”), makes available on each business day, prior to the opening of the Core Trading Session on NYSE Arca (currently 9:30 a.m., Eastern Time (“E.T.”)), the identity and the required number of each Deposit Security and the amount of the Cash Component to be included in the current Fund Deposit (based on information at the end of the previous business day).
The Fund may also permit the substitution of an amount of cash (a “cash-in-lieu” amount) to replace any Deposit Security of the Fund that is a non-deliverable instrument. The amount of cash contributed will be equivalent to the price of the instrument listed as a Deposit Security. The Fund reserves the right to permit the substitution of a “cash in-lieu” amount to be added to replace any Deposit Security under specified circumstances.
To be eligible to place orders with the Distributor and to create a Creation Unit of the Fund, an entity must be: (i) A “Participating Party” (
To initiate a creation order for a Creation Unit, an Authorized Participant must submit an irrevocable order to purchase Shares in proper form to the Transfer Agent no later than 2:00
Shares may be redeemed only in Creation Units at their NAV next determined after receipt of a redemption request in proper form on a business day and only through a Participating Party or DTC Participant who has executed an Authorized Participant Agreement.
With respect to the Fund, State Street, through the NSCC, makes available immediately prior to the opening of the Core Trading Session on the NYSE Arca on each business day, the identity of the Fund's securities and/or an amount of cash that will be applicable to redemption requests received in proper form on that day. The Fund's securities received on redemption generally correspond pro rata, to the positions in the Fund's portfolio. The Fund's securities received on redemption (“Fund Securities”) will generally be identical to Deposit Securities that are applicable to creations of Creation Units.
Subject to the terms of the applicable Authorized Participant Agreement and any creation and redemption procedures adopted by the Fund and provided to all Authorized Participants, to initiate a redemption order for a Creation Unit, an Authorized Participant must submit an irrevocable order to redeem Shares in proper form to the Transfer Agent no later than 2:00 p.m., E.T. on any business day for redemption of Creation Units to be effected based on the NAV of shares of the Fund on that business day.
Unless cash only redemptions are available or specified for the Fund, the redemption proceeds for a Creation Unit generally consists of Fund Securities—as announced on the business day of the request for a redemption order received in proper form—plus cash in an amount equal to the difference between the NAV of the Shares being redeemed, as next determined after a receipt of a request in proper form, and the value of the Fund Securities, less the redemption transaction fee and variable fees.
On each business day, before commencement of trading in Fund Shares on NYSE Arca, the Fund discloses on its website the identities and quantities of the portfolio instruments and other assets held by the Fund that form the basis for the Fund's calculation of NAV at the end of the business day. The NAV of the Shares of the Fund is determined once each day the New York Stock Exchange (the “NYSE”) is open, as of the close of its regular trading session (normally 4:00 p.m., E.T.) (“NYSE Close”).
In order to provide additional information regarding the intra-day value of Shares of the Fund, one or more major market data vendors disseminates every 15 seconds an updated Intraday Indicative Value (“IIV”) for the Fund as calculated by an information provider or market data vendor. A third party market data provider calculates the IIV for the Fund.
With respect to specific derivatives:
• Foreign currency derivatives may be valued intraday using market quotes, or another proxy as determined to be appropriate by the third party market data provider.
• Futures may be valued intraday using the relevant futures exchange data, or another proxy as determined to be appropriate by the third party market data provider.
• Swaps may be valued using intraday data from market vendors, or based on underlying asset price, or another proxy as determined to be appropriate by the third party market data provider.
• Exchange listed options may be valued intraday using the relevant exchange data, or another proxy as determined to be appropriate by the third party market data provider.
• OTC options and swaptions may be valued intraday through option valuation models (
The Fund's disclosure of derivative positions in the applicable Disclosed Portfolio includes information that market participants can use to value these positions intraday. On a daily basis, the Fund discloses the information regarding the Disclosed Portfolio required under NYSE Arca Rule 8.600-E (c)(2) to the extent applicable.
The Adviser believes there will be minimal, if any, impact to the arbitrage mechanism as a result of the use of derivatives. Market makers and participants should be able to value derivatives as long as the positions are disclosed with relevant information. The Adviser believes that the price at which Shares of the Fund trade will continue to be disciplined by arbitrage opportunities created by the ability to purchase or redeem Shares of the Fund at their NAV, which should ensure that Shares of the Fund will not trade at a material discount or premium in relation to their NAV.
The Adviser does not believe there is any significant impact to the settlement or operational aspects of the Fund's arbitrage mechanism due to the use of derivatives. Because derivatives generally are not eligible for in-kind transfer, they will be substituted with a “cash in lieu” amount when the Fund processes purchases or redemptions of block-size “Creation Units” (as described above) in-kind.
The Exchange is submitting this proposed rule change because the portfolio for the Fund would not meet all of the “generic” listing requirements of Commentary .01 to NYSE Arca Rule 8.600-E applicable to the listing of Managed Fund Shares. The Fund's portfolio would meet all such requirements except for those set forth in Commentary .01(b)(5) and Commentary .01(a)(1).
The Fund will not comply with the requirement of Commentary .01(b)(5) to NYSE Arca Rule 8.600-E that non-agency, non-government-sponsored entity (“GSE”) and privately-issued mortgage-related and other asset-backed securities components of a portfolio shall not account, in the aggregate, for more than 20% of the weight of the fixed income portion of the portfolio.
As noted above, the Fund may invest in equity securities that are non-exchange-traded securities of other open-end investment company securities (
(A) Component stocks (excluding Derivative Securities Products and Index-Linked Securities) that in the aggregate account for at least 90% of the equity weight of the portfolio (excluding such Derivative Securities Products and Index-Linked Securities) each shall have a minimum market value of at least $75 million;
(B) Component stocks (excluding Derivative Securities Products and Index-Linked Securities) that in the aggregate account for at least 70% of the equity weight of the portfolio (excluding such Derivative Securities Products and Index-Linked Securities) each shall have a minimum monthly trading volume of 250,000 shares, or minimum notional volume traded per month of $25,000,000, averaged over the last six months;
(C) The most heavily weighted component stock (excluding Derivative Securities Products and Index-Linked Securities) shall not exceed 30% of the equity weight of the portfolio, and, to the extent applicable, the five most heavily weighted component stocks (excluding Derivative Securities Products and Index-Linked Securities) shall not exceed 65% of the equity weight of the portfolio;
(D) Where the equity portion of the portfolio does not include Non-U.S. Component Stocks, the equity portion of the portfolio shall include a minimum of 13 component stocks; provided, however, that there shall be no minimum number of component stocks if (i) one or more series of Derivative Securities Products or Index-Linked Securities constitute, at least in part, components underlying a series of Managed Fund Shares, or (ii) one or more series of Derivative Securities Products or Index-Linked Securities account for 100% of the equity weight of the portfolio of a series of Managed Fund Shares;
(E) Except as provided herein, equity securities in the portfolio shall be U.S. Component Stocks listed on a national securities exchange and shall be NMS Stocks as defined in Rule 600 of Regulation NMS under the Securities Exchange Act of 1934.
The Exchange notes that Commentary .01(A) through (D) to Rule 8.600-E exclude application of those provisions to certain “Derivative Securities Products” that are exchange-traded investment company securities, including Investment Company Units (as described in NYSE Arca Rule 5.2-E(j)(3)), Portfolio Depositary Receipts (as described in NYSE Arca Rule 8.100-E)) and Managed Fund Shares (as described in NYSE Arca Rule 8.600-E).
The Exchange notes that the Commission has previously approved
The Exchange notes that, other than Commentary .01(a)(1)(A) through (E) and Commentary.01(b)(5) to Rule 8.600-E, the Fund's portfolio will meet all other requirements of Rule 8.600-E.
The Fund's website (
On a daily basis, the Fund discloses the information required under NYSE Arca Rule 8.600-E (c)(2) to the extent applicable. The website information will be publicly available at no charge.
In addition, a basket composition file, which includes the security names and share quantities, if applicable, required to be delivered in exchange for the Fund's Shares, together with estimates and actual cash components, is publicly disseminated daily prior to the opening of the Exchange via the NSCC. The basket represents one Creation Unit of the Fund. Authorized Participants may refer to the basket composition file for information regarding Fixed Income Securities, and any other instrument that may comprise the Fund's basket on a given day.
Investors can also obtain the Trust's Statement of Additional Information (“SAI”), the Fund's Shareholder Reports, and the Fund's Forms N-CSR and Forms N-SAR, filed twice a year. The Fund's SAI and Shareholder Reports will be available free upon request from the Trust, and those documents and the Form N-CSR, Form N-PX and Form N-SAR may be viewed on-screen or downloaded from the Commission's website at
With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Shares of the Fund. Trading in Shares of the Fund will be halted if the circuit breaker parameters in NYSE Arca Rule 7.12-E have been reached. Trading also may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. These may include: (1) The extent to which trading is not occurring in the securities and/or the financial instruments comprising the Disclosed Portfolio of the Fund; or (2) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. Trading in the Shares will be subject to NYSE Arca Rule 8.600-E (d)(2)(D), which sets forth circumstances under which Shares of the Fund may be halted.
The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities. Shares will trade on the NYSE Arca Marketplace from 4:00 a.m. to 8:00 p.m. E.T. in accordance with NYSE Arca Rule 7.34-E (Early, Core, and Late Trading Sessions). The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. As provided in NYSE Arca Rule 7.6-E, the minimum price variation (“MPV”) for quoting and entry of orders in equity securities traded on the NYSE Arca Marketplace is $0.01, with the exception of securities that are priced less than $1.00 for which the MPV for order entry is $0.0001.
The Shares will conform to the initial and continued listing criteria under NYSE Arca Rule 8.600-E. The Exchange represents that, for initial and continued listing, the Fund will be in compliance with Rule 10A-3 under the Act, as provided by NYSE Arca Rule 5.3-E. The
The Exchange represents that trading in the Shares will be subject to the existing trading surveillances administered by the Exchange, as well as cross-market surveillances administered by the Financial Industry Regulatory Authority (“FINRA”) on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws. The Exchange represents that these procedures are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect violations of Exchange rules and federal securities laws applicable to trading on the Exchange.
The surveillances referred to above generally focus on detecting securities trading outside their normal patterns, which could be indicative of manipulative or other violative activity. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations.
The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the Shares, ETFs, ETNs, certain exchange-traded options and certain futures with other markets and other entities that are members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading in the Shares, ETFs, ETNs, certain exchange-traded options and certain futures from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares, ETFs, ETNs, certain exchange-traded options and certain futures from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement (“CSSA”). The Exchange is able to access from FINRA, as needed, trade information for certain Fixed Income Securities held by the Fund reported to FINRA's Trade Reporting and Compliance Engine (“TRACE”). FINRA also can access data obtained from the Municipal Securities Rulemaking Board (“MSRB”) relating to certain municipal bond trading activity for surveillance purposes in connection with trading in the Shares.
In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees.
All statements and representations made in this filing regarding (a) the description of the portfolio or reference assets, (b) limitations on portfolio holdings or reference assets, or (c) the applicability of Exchange rules and surveillance procedures shall constitute continued listing requirements for listing the Shares on the Exchange.
The issuer has represented to the Exchange that it will advise the Exchange of any failure by the Fund to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will monitor for compliance with the continued listing requirements. If the Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under NYSE Arca Rule 5.5-E(m).
Prior to the commencement of trading, the Exchange will inform its Equity Trading Permit (“ETP”) Holders in an Information Bulletin (“Bulletin”) of the special characteristics and risks associated with trading the Shares of the Fund. Specifically, the Bulletin will discuss the following: (1) The procedures for purchases and redemptions of Shares in Creation Units (and that Shares are not individually redeemable); (2) NYSE Arca 9.2-E(a), which imposes a duty of due diligence on its ETP Holders to learn the essential facts relating to every customer prior to trading the Shares; (3) the risks involved in trading the Shares during the Early and Late Trading Sessions when an updated IIV will not be calculated or publicly disseminated; (4) how information regarding the IIV and the Disclosed Portfolio is disseminated; (5) the requirement that ETP Holders deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (6) trading information.
In addition, the Bulletin will reference that the Fund is subject to various fees and expenses described in the Registration Statement. The Bulletin will discuss any exemptive, no-action, and interpretive relief granted by the Commission from any rules under the Act. The Bulletin will also disclose that the NAV for the Shares of the Fund is calculated after 4:00 p.m. E.T. each trading day.
The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5) that an exchange have rules that are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanism of a free and open market and, in general, to protect investors and the public interest.
The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in NYSE Arca Rule 8.600-E. The Exchange has in place surveillance procedures that are adequate to properly monitor trading in the Shares in all trading sessions and to deter and detect violations of Exchange rules and federal securities laws applicable to trading on the Exchange. The Adviser is not registered as a broker-dealer but the Adviser is affiliated with a broker-dealer and has implemented and will maintain a “fire wall” with respect to such broker-dealer regarding access to information concerning the composition and/or changes to the Fund's portfolio. The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the Shares, ETFs, ETNs, certain exchange-traded options and certain futures with other markets and other entities that are members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading in the Shares, ETFs, ETNs, certain exchange-traded options and certain futures from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares, ETFs, ETNs, certain exchange-traded options and certain futures from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. The Exchange is able to access from FINRA, as needed, trade information for certain fixed income securities held by the Fund reported to FINRA's TRACE. FINRA also can access data obtained from the MSRB relating to certain municipal bond trading activity for surveillance purposes in connection with trading in the Shares.
The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that the Exchange will obtain a representation from the issuer
As described above, deviations from the generic requirements of Commentary .01(a) are necessary for the Fund to achieve its investment objective in a manner that is cost-effective and that maximizes investors' returns. Further, the proposed alternative requirements are narrowly tailored to allow the Fund to achieve its investment objective in manner that is consistent with the principles of Section 6(b)(5) of the Act. As a result, it is in the public interest to approve listing and trading of Shares of the Fund on the Exchange pursuant to the requirements set forth herein.
The Adviser represents that permitting limited investments in non-agency, non-GSE and privately-issued mortgage-related and other asset-backed securities, as described above, would be in the best interest of the Fund's shareholders because such investments have the potential to reduce the overall risk profile of the Fund's portfolio. In the Adviser's view, such investments would reduce the Fund's risk with respect to non-agency, non-GSE and privately-issued mortgage-related and other asset-backed securities by diversifying the Fund's exposure among borrowers of such debt issues. In addition, by allowing the Fund to allocate up to 30% of the weight of its Fixed Income Securities investments in such issues would afford the Fund greater flexibility to invest in the most liquid available Fixed Income Securities issues, in that such issues are expected to be as liquid, or more liquid, than other possible Fund investments.
The Exchange also believes that it is appropriate and in the public interest to approve listing and trading of Shares of the Fund on the Exchange notwithstanding that the Fund would not meet the requirements of Commentary .01(a)(1)(A) through (E) to Rule 8.600-E with respect to the Fund's investments in non-exchange-traded open-end investment company securities. Investments in such equity securities will not be principal investments of the Fund. Such investments, which may include mutual funds that invest, for example, principally in fixed income securities, would be utilized to help the Fund meet its investment objective and to equitize cash in the short term. Because such securities have a net asset value based on the value of securities and financial assets the investment company holds, the Exchange believes it is both unnecessary and inappropriate to apply to such investment company securities the criteria in Commentary .01(a)(1).
The Exchange notes that it would be difficult or impossible to apply to non-exchange-traded investment company securities the generic quantitative criteria (
The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of an additional type of actively managed ETF that will enhance competition among market participants, to the benefit of investors and the marketplace. As noted above, the Exchange has in place surveillance procedures relating to trading in the Shares and may obtain information via ISG from other exchanges that are members of ISG or with which the Exchange has entered into a CSSA. In addition, as noted above, investors have ready access to information regarding the Fund's holdings, the IIV, the Disclosed Portfolio, and quotation and last sale information for the Shares.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act. The Exchange notes that the proposed rule change will facilitate the listing and trading of an issue of Managed Fund Shares that, through permitted use of an increased level of non-agency ABS and MBS above that currently permitted by the generic listing requirements of Commentary .01 to NYSE Arca Rule 8.600-E, will enhance competition among market participants, to the benefit of investors and the marketplace.
No written comments were solicited or received with respect to the proposed rule change.
The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Exchange Act
Pursuant to Section 19(b)(2)(B) of the Exchange Act,
Interested persons are invited to submit written views, data, and arguments concerning the foregoing, including whether the proposed rule change as modified by Amendment No. 1 is consistent with Section 6(b)(5) or any other provision of the Exchange Act, or the rules and regulations thereunder. Although there do not appear to be any issues relevant to approval or disapproval that would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b-4 under the Exchange Act,
Interested persons are invited to submit written data, views, and arguments regarding whether the proposal should be approved or disapproved by August 23, 2018. Any person who wishes to file a rebuttal to any other person's submission must file that rebuttal by September 6, 2018.
Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2018-25. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website (
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On December 18, 2017, The Options Clearing Corporation (“OCC”) filed with the Securities and Exchange Commission (“Commission”) proposed rule change SR-OCC-2017-020 (“Proposed Rule Change”) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
Pursuant to Section 19(b)(1) of the Act
This proposed rule change by the OCC would make certain revisions to OCC's Rules and By-Laws to enhance OCC's existing tools to address the risks of liquidity shortfalls and credit losses and to establish new tools by which OCC could re-establish a matched book following a default. Each of the tools proposed herein is contemplated to be deployed by OCC in an extreme stress event that has placed OCC into a recovery or orderly wind-down scenario.
In its filing with the Commission, OCC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. OCC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of these statements.
The purpose of this proposed rule change is to make certain revisions to OCC's Rules and By-Laws Laws that are designed to enhance OCC's existing tools to address the risks of liquidity shortfalls and credit losses and to establish tools by which OCC could re-establish a matched book following a default. Each of the tools proposed herein is contemplated to be deployed by OCC in an extreme stress event that has placed OCC into a recovery or orderly wind-down scenario. Each of the proposed revisions also is designed to further OCC's compliance, in whole or in part, with the provisions of the Commission's rules identified immediately below.
On September 28, 2016, the Commission adopted amendments to Rule 17Ad-22
• Rule 17Ad-22(e)(3)(ii) requires that each CCA “establish, implement, maintain and enforce written policies and procedures reasonably designed to . . . [m]aintain a sound risk management framework for comprehensively managing legal, credit, liquidity, operational, general business, investment, custody, and other risks that arise in or are borne by the [CCA], which . . . [i]ncludes plans for the recovery and orderly wind-down of the [CCA] necessitated by credit losses, liquidity shortfalls, losses from general business risk, or any other losses.”
• Rule 17Ad-22(e)(4)(viii) requires that each CCA “establish, implement, maintain and enforce written policies and procedures reasonably designed to . . . [e]ffectively identify, measure, monitor, and manage its credit exposures to participants and those arising from its payment, clearing, and settlement processes, including by . . . [a]ddressing allocation of credit losses the [CCA] may face if its collateral and other resources are insufficient to fully cover its credit exposures, including the repayment of any funds the [CCA] may borrow from liquidity providers.”
• Rule 17Ad-22(e)(4)(ix) requires that each CCA “establish, implement, maintain and enforce written policies and procedures reasonably designed to . . . [e]ffectively identify, measure, monitor, and manage its credit exposures to participants and those arising from its payment, clearing, and settlement processes, including by . . . [d]escribing the [CCA's] process to replenish any financial resources it may use following a default or other event in which use of such resources is contemplated.”
• Rule 17Ad-22(e)(7)(ix) requires that each CCA “establish, implement, maintain and enforce written policies
• Rule 17Ad-22(e)(13) requires that each CCA “establish, implement, maintain and enforce written policies and procedures reasonably designed to . . . [e]nsure the covered clearing agency has the authority and operational capacity to take timely action to contain losses and liquidity demands and continue to meet its obligations. . .”
• Rule 17Ad-22(e)(23)(i) requires that each CCA “establish, implement, maintain and enforce written policies and procedures reasonably designed to . . . [p]ublicly disclos[e] all relevant rules and material procedures, including key aspects of its default rules and procedures.”
• Rule 17Ad-22(e)(23)(ii) requires that each CCA “establish, implement, maintain and enforce written policies and procedures reasonably designed to. . . [p]rovid[e] sufficient information to enable participants to identify and evaluate the risks, fees, and other material costs they incur by participating in the covered clearing agency.”
OCC meets the definition of a CCA and is therefore subject to the requirements of the CCA rules, including new Rules 17Ad-22(e)(3)(ii), (e)(4)(viii), (e)(4)(ix), (e)(7)(ix), (e)(13), (e)(23)(i) and (e)(23)(ii).
In order to enhance OCC's existing tools to address the risks of liquidity shortfalls and credit losses and to establish new tools by which OCC could re-establish a matched book following a default, OCC is proposing to make the following revisions to its Rules and By-Laws:
(1) Revise the existing assessment powers in Section 6 of Article VIII of OCC's By-Laws, specifically to:
(a) Establish a rolling “cooling-off period” that would be triggered by the payment of a proportionate charge against the Clearing Fund (“triggering proportionate charge”), during which period the aggregate liability of a Clearing Member to replenish the Clearing Fund (inclusive of assessments) would be 200% of the Clearing Member's required contribution as of the time immediately preceding the triggering proportionate charge;
(b) Clarify that a Clearing Member that chooses to terminate its membership status during a cooling-off period will not be liable for replenishment of the Clearing Fund immediately following the expiration of such cooling-off period, provided that the withdrawing Clearing Member satisfies enumerated criteria, including providing notice of such termination by no later than the end of the cooling-off period and by closing-out and/or transferring of all its open positions with OCC by no later than the last day of the cooling-off period; and
(c) Delineate between the obligation of a Clearing Member to replenish its contributions to the Clearing Fund and its obligations to meet additional “assessments” that may be levied following a proportionate charge to the Clearing Fund.
(2) Adopt a new Rule 1011
(3) Adopt a new Rule 1111 that would provide authority to:
(a) Allow OCC to call for voluntary tear-ups (“Voluntary Tear-Up,” as defined below) of non-defaulting Clearing Member and/or customer positions at any time following the suspension or default of a Clearing Member, with the scope of any such Voluntary Tear-Ups being determined by the Risk Committee of OCC's Board (“Risk Committee”);
(b) Allow OCC's Board to vote to tear-up the “Remaining Open Positions” (defined below) of a defaulted Clearing Member, as well as any “Related Open Positions” (defined below) in a circumstance where OCC has attempted one or more auctions of such defaulted Clearing Member's remaining open positions and OCC has determined that it may not have sufficient resources to satisfy its obligations and liabilities resulting from such default with the scope of any such tear-up (“Partial Tear-Up”) being determined by the Risk Committee; and
(c) Allow OCC's Board to vote to re-allocate losses, costs and fees imposed upon holders of positions extinguished in a Partial Tear-Up through a special charge levied against remaining non-defaulting Clearing Members.
(4) Revise the descriptions and authorizations in Article VIII of OCC's By-Laws concerning the use of the Clearing Fund to reflect the discretion of OCC to use remaining Clearing Fund contributions to re-allocate losses imposed on non-defaulting Clearing Members and customers from a Voluntary Tear-Up or a mandatory tear-up (“Partial Tear-Up,” as defined below).
Each of the proposed revisions to OCC's Rules and By-Laws is described in more detail in the following sub-sections:
OCC's current assessment powers are described in Section 6 of Article VIII of OCC's By-Laws. Section 6 establishes a general requirement for each Clearing Member to promptly make good any deficiency in its required contribution to the Clearing Fund whenever an amount is paid out of its Clearing Fund contribution (whether by proportionate
OCC proposes to revise Section 6 of Article VIII of OCC's By-Laws to make three primary modifications regarding its existing authority to assess proportionate charges against Clearing Members' contributions to the Clearing Fund. First, the proposal introduces an automatic minimum fifteen calendar day “cooling-off” period that begins when a proportionate charge is assessed by OCC against Clearing Members' Clearing Fund contributions. While the cooling-off period will continue for a minimum of fifteen consecutive calendar days, if one or more of the events described in clauses (i) through (iv) of Article VIII, Section 5(a) of OCC's By-Laws occur(s) during that fifteen calendar day period and result in one or more proportionate charges against the Clearing Fund, the cooling-off period shall be extended through either (i) the fifteenth calendar day from the date of the most recent proportionate charge resulting from the subsequent event, or (ii) the twentieth day from the date of the proportionate charge that initiated the cooling-off period, whichever is sooner.
During a cooling-off period, each Clearing Member would have its aggregate liability to replenish the Clearing Fund capped at 200% of the Clearing Member's then-required contribution to the Clearing Fund. Once the cooling-off period ends each remaining Clearing Member would be required to replenish the Clearing Fund in the amount necessary to meet its then-required contribution. Once the cooling-off period ends, any remaining losses or expenses suffered by OCC as a result of any event described in clauses (i) through (iv) of Article VIII, Section 5(a) of OCC's By-Laws that occurred during such cooling-off period could not be charged against the amounts Clearing Members have contributed to replenish the Clearing Fund upon the expiration of the cooling-off period.
Second, in connection with the cooling-off period, the proposal would extend the time frame within which a Clearing Member may provide a termination notice to OCC to avoid liability for replenishment of the Clearing Fund after the cooling-off period and would modify the obligations of such a terminating Clearing Member for closing-out and transferring its remaining open positions. Specifically, to effectively terminate its status as a Clearing Member and not be liable for replenishing the Clearing Fund after the cooling-off period, a Clearing Member would be required to: (i) notify OCC in writing of its intent to terminate not later than the last day of the cooling-off period, (ii) not initiate any opening purchase or opening writing transaction, and, if the Clearing Member is a Market Loan Clearing Member or a Hedge Clearing Member, not initiate any Stock Loan transaction, through any of its accounts, and (iii) close-out or transfer all of its open positions by no later than the last day of the cooling-off period. If a Clearing Member fails to satisfy all of these conditions by the end of a given cooling-off period, it would not have completed all of the requirements necessary to terminate its status as a Clearing Member under Article VIII, Section 6 of OCC's By-Laws and therefore it would remain subject to the obligation to replenish the Clearing Fund after the end of the cooling-off period.
Third, the proposal would clarify the distinction between “replenishment” of the Clearing Fund and a Clearing Member's obligation to answer “assessments.” In this context, the term “replenish” (and its variations) shall to refer to a Clearing Member's standing duty, following any proportionate charge against the Clearing Fund, to return its Clearing Fund contribution to the amount required from such Clearing Member for the month in question.
OCC proposes to add new Rule 1011, which will provide a framework by which OCC could receive voluntary payments in a circumstance where a Clearing Member has defaulted and OCC has determined that, notwithstanding the availability of any remaining resources under OCC Rules 707, 1001, 1104 through 1107, 2210 and 2211,
OCC proposes to add new Rule 1111, which, in relevant part, will establish a framework by which non-defaulting Clearing Members and non-defaulting customers of Clearing Members could be given an opportunity to voluntarily extinguish (
While Risk Committee approval is not needed to commence a voluntary tear-up, the Risk Committee would be responsible for determining the appropriate scope of each voluntary tear-up. To ensure OCC retains sufficient flexibility to effectively deploy this tool in an extreme stress event, proposed Rule 1111(c) is drafted to provide the Risk Committee with discretion to determine the appropriate scope of each voluntary tear-up.
Once the Risk Committee has determined the scope of the Voluntary Tear-Up, OCC will initiate the call for voluntary tear-ups by issuing a “Voluntary Tear-Up Notice.” The Voluntary Tear-Up Notice shall inform all non-defaulting Clearing Members of the opportunity to participate in a Voluntary Tear-Up.
OCC is not proposing a tear-up process that would require the imposition of “gains haircutting” (
In OCC's proposed tear-up process, the holders of torn-up positions would be assigned a Tear-Up Price and OCC would draw on its remaining financial resources in order to extinguish the torn-up positions at the assigned Tear-Up Price without forcing a reduction in the amount of unpaid value of such positions. OCC is amending the Initial Filing to clarify that while OCC does not intend, in the first instance, for its tear-up process to serve as a means of loss allocation, circumstances may arise such that, despite best efforts, OCC has inadequate remaining financial resources to extinguish torn-up positions at their assigned Tear-Up Price without forcing a reduction in the amount of unpaid value of such positions (
The proposed changes would provide OCC with two separate and non-exclusive means of equitably re-allocating the losses, costs or expenses imposed upon the holders of torn-up positions as a result of the tear-up(s). First, the proposed changes to Article VIII would provide OCC discretion to use remaining Clearing Fund contributions to re-allocate losses imposed on non-defaulting Clearing Members and customers from such tear-up(s). Second, Rule 1111(a) would provide that if OCC subsequently recovers from the defaulted Clearing Member or the estate(s) of the defaulted Clearing Member(s) and the amount of such recovery exceeds the amount OCC received in voluntary payments, then non-defaulting Clearing Members and non-defaulting customers that voluntarily tore-up open positions and incurred losses from such tear-ups would be repaid from the amount of the recovery in excess of the amount OCC received in voluntary payments.
With respect to Voluntary Tear-Ups, new Rule 1111(h) would clarify that no action or omission by OCC pursuant to and in accordance Rule 1111 shall constitute a default by OCC.
OCC proposes to add new Rule 1111, which, in relevant part, will provide the Board with discretion to extinguish the remaining open positions of any defaulted Clearing Member or customer of such defaulted Clearing Member(s) (such positions, “Remaining Open Positions”), as well as any related open positions as necessary to mitigate further disruptions to the markets affected by the Remaining Open Positions (such positions, “Related Open Positions”), in a circumstance where a Clearing Member has defaulted and OCC has determined that, notwithstanding the availability of any remaining resources under OCC Rules 707, 1001, 1104 through 1107, 2210 and 2211, OCC may not have sufficient resources to satisfy its obligations and liabilities resulting from such default (such tear-ups hereinafter collectively referred to as “Partial Tear-Ups”). Like the determination for Voluntary Tear-Ups, the Risk Committee shall determine the appropriate scope of each Partial Tear-Up and such determination shall (i) be based on then-existing facts and circumstances, (ii) be in furtherance of the integrity of OCC and the stability of the financial system, and (iii) take into consideration the legitimate interests of Clearing Members and market participants. Once the Risk Committee has determined the scope of the Partial Tear-Up, OCC will initiate the Partial Tear-Up process by issuing a “Partial Tear-Up Notice.” The Partial Tear-Up Notice shall (i) identify the Remaining Open Positions and Related Open Positions designated for tear-up, (ii) identify the open positions of non-defaulting Clearing Members and non-defaulting customers that will be subject to Partial Tear-Up (such positions, “Tear-Up Positions”), (iii) specify the termination price (“Partial Tear-Up Price”) for each position to be torn-up, and (iv) list the date and time as of which the Partial Tear-Up will occur.
The scope of any Partial Tear-Up will be determined in accordance with Rule 1111(e).
Rule 1111(e)(iii) provides that every Partial Tear-Up position is automatically terminated upon and with effect from the Partial Tear-Up Time, without the need for any further step by any party to such Cleared Contract or Cleared Security, and that upon termination, either OCC or the relevant Clearing Member (as the case may be) shall be obligated to pay the other the applicable Partial Tear-Up Price. Rule
Rule 1111(g) provides that to the extent losses imposed upon non-defaulting Clearing Members and non-defaulting customers resulting from a Partial Tear-Up can reasonably be determined, the Board may elect to re-allocate such losses among all non-defaulting Clearing Members through a special charge to all non-defaulting Clearing Members in an amount corresponding to each such non-defaulting Clearing Member's proportionate share of the variable amount of the Clearing Fund at the time such Partial Tear-Up is conducted.
With respect to Partial Tear-Ups, new Rule 1111(h) would clarify that no action or omission by OCC pursuant to and in accordance Rule 1111 shall constitute a default by OCC.
Section 17A(b)(3)(F) of the Securities Exchange Act of 1934 (“Act”),
As stated above, each of the changes is designed to provide OCC with tools to address the risks OCC might confront in a recovery and orderly wind-down scenario. In this regard, the proposed changes are designed to further address the risks of liquidity shortfalls and credit losses resulting from a Clearing Member default or certain other loss events and to establish tools to enable OCC to re-establish a matched book and limit OCC's potential exposure to losses from a Clearing Member default, in each case as might result from an unprecedented loss scenario that exceeds OCC's standard risk management and default management procedures. OCC's process in crafting the proposed changes was informed by published guidance from OCC's primary regulators (the Commission and the Commodity Futures Trading Commission), the publications of key international organizations (including the Bank for International Settlements, the International Organization of Securities Commissions and the Financial Stability Board) and the publications of key industry trade organizations. OCC's proposal was further informed by conversations with, among others, OCC's Board, OCC's Risk Committee, Clearing Members and market participants.
Informed by these perspectives, OCC has crafted the proposed changes with the aim of enhancing its ability to address an unprecedented loss event but also, to the extent possible, providing a reasonable amount of certainty to Clearing Members, customers and other stakeholders about the potential consequences of such an event and the resources and tools that would be expected to be available to OCC in support of its clearing operations.
As stated above, the proposed changes are designed to enable OCC to further address the risks of liquidity shortfalls and credit losses resulting from a Clearing Member default or certain other loss events and to re-establish a matched book and limit OCC's potential exposure to losses from a Clearing Member default, in each case as might result from an unprecedented loss scenario that exceeds OCC's standard risk management and default management procedures. OCC believes that the proposed changes will facilitate its ability to fully allocate, and ultimately extinguish, the loss so that it has a better opportunity of withstanding an extreme stress scenario without sacrificing its viability as a going concern or its ability to continue to provide its critical clearing services. In this regard, OCC believes that the proposed changes remove impediments to and perfect the mechanism of a national system for the prompt and accurate clearance and settlement of securities transactions, consistent with Section 17A(b)(3)(F) of the Act.
The proposed changes are designed to enhance the stability of the clearing system generally and are aimed at ensuring that OCC has adequate tools and resources to better protect market participants from the risks of extreme stress scenarios and unprecedented loss events. In this regard, OCC believes that the proposed changes are reasonably designed to protect investors and the public interest, consistent with Section 17A(b)(3)(F) of the Act.
The proposed changes also are designed to further OCC's compliance, in whole or in part, with the provisions of the Commission's rules discussed immediately below:
In relevant part, Rule 17Ad-22(e)(3)(ii) requires that each CCA “establish, implement, maintain and enforce written policies and procedures reasonably designed to . . . plan[] for the recovery and orderly wind-down of the [CCA] necessitated by credit losses, liquidity shortfalls, losses from general
In relevant part, Rule 17Ad-22(e)(4)(viii) requires that each CCA “establish, implement, maintain and enforce written policies and procedures reasonably designed to . . . [a]ddress[ ] allocation of credit losses the [CCA] may face if its collateral and other resources are insufficient to fully cover its credit exposures . . .”
In relevant part, Rule 17Ad-22(e)(4)(ix) requires that each CCA “establish, implement, maintain and enforce written policies and procedures reasonably designed to . . . [d]escrib[e] the [CCA's] process to replenish any financial resources it may use following a default or other event in which use of such resources is contemplated.”
OCC believes that the proposed approach improves predictability for OCC and for Clearing Members regarding the size of Clearing Fund contributions that are likely to be subject to assessments for proportionate charges. Additionally, replacing the five business day withdrawal period with the withdrawal period commensurate with the cooling-off period (which, as proposed would be a minimum of fifteen calendar days) would give Clearing Members a more reasonable period in which to meet the wind-down and termination requirements necessary to cap their liability. OCC believes that this would afford them greater certainty regarding their maximum liability with respect to the Clearing Fund during extreme stress events, which in turn, facilitates Clearing Members' management of their own risk management, and to the extent applicable, regulatory capital considerations. And OCC believes this increased predictability would also be beneficial to OCC by helping it to more reliably understand the amount of Clearing Fund contributions that will likely be available to it after a proportionate charge is assessed.
OCC believes that the relative certainty provided by the proposed cooling-off period and 200% cap on assessments ultimately could reduce the risks of successive or “cascading” defaults, in which the financial demands on remaining non-defaulting Clearing Members to continually replenish OCC's Clearing Fund (and similar guaranty funds at other CCPs to which such Clearing Members might belong) have the effect of further weakening such Clearing Members to the point of default. In this regard, the proposed changes are designed to provide OCC, Clearing Members and other stakeholders with sufficient time to manage the ongoing default(s)
OCC recognizes that the proposed changes would limit the maximum amount of Clearing Fund resources that could be available to OCC in an extreme stress scenario, which introduces the possibility, however remote, that the proposed 200% cap ultimately could be reached. If during any cooling-off period the amount of aggregate proportionate charges against the Clearing Fund approaches the 200% cap, the amount remaining in the Clearing Fund may no longer be sufficient to comply with the applicable minimum regulatory financial resources requirements in the CCAs. In any such event, OCC's existing authority under Rule 603 would permit OCC to call on participants for additional initial margin, which could ensure that OCC's minimum financial resources remain in excess of applicable CCA requirements.
Given the products cleared by OCC and the composition of its clearing membership, OCC has determined that a minimum 15-calendar day cooling-off period, rolling up to a maximum of 20 calendar days, is likely to be a sufficient amount of time for OCC to manage the ongoing default(s) and take necessary steps in furtherance of stabilizing the clearing system. Further, through conversations with Clearing Members, OCC believes that the proposed cooling-off period is likely to be a sufficient amount for Clearing Members (and their customers) to orderly reduce or rebalance their positions, in an attempt to mitigate stress losses and exposure to potential initial margin increases as they navigate the stress event. Through conversations with Clearing Members, OCC also believes that the proposed cooling-off period is likely to be a sufficient amount for certain Clearing Members to orderly close-out their positions and transfer customer positions as they withdraw from clearing membership. OCC believes the proposed cooling-off period, coupled with the other proposed changes to OCC's assessment powers, is likely to provide Clearing Members with an adequate measure of stability and predictability as to the potential use of Clearing Fund resources, which OCC believes removes the existing incentive for Clearing Members to withdraw following a proportionate charge.
In light of the foregoing, OCC believes that the proposed changes would enhance and strengthen its process to replenish the Clearing Fund following a default or other event in which use of the Clearing Fund is contemplated, in accordance with Rule 17Ad-22(e)(4)(ix).
In relevant part, Rule 17Ad-22(e)(7)(ix) requires that each CCA “establish, implement, maintain and enforce written policies and procedures reasonably designed to . . . [d]escrib[e] the [CCA's] process to replenish any liquid resources that the clearing agency may employ during a stress event.”
In relevant part, Rule 17Ad-22(e)(13) requires that each CCA “establish, implement, maintain and enforce written policies and procedures reasonably designed to . . . [e]nsure the [CCA] has the authority and operational capacity to take timely action to contain losses and liquidity demands and continue to meet its obligations . . .”
In relevant part, Rule 17Ad-22(e)(23)(i) requires that each CCA “establish, implement, maintain and enforce written policies and procedures reasonably designed to . . . [p]ublicly disclos[e] all relevant rules and material procedures, including key aspects of its default rules and procedures.”
In relevant part, Rule 17Ad-22(e)(23)(ii) requires that each CCA “establish, implement, maintain and enforce written policies and procedures reasonably designed to . . . [p]rovid[e] sufficient information to enable participants to identify and evaluate the risks, fees, and other material costs they incur by participating in the covered clearing agency.”
(B)
Section 17A(b)(3)(I) of the Act
Written comments were not and are not intended to be solicited with respect to the proposed rule change, and none have been received.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commissions internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent Fields, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal or identifying information from comment submissions. You should submit only information that you wish to make available publicly.
All submissions should refer to File Number SR-OCC-2017-020 and should be submitted on or before August 17, 2018.
For the Commission by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange is filing a proposal to amend Exchange Rule 518, Complex Orders, to update its rule text regarding stock-option orders, in connection with the upcoming launch of such orders on the Exchange.
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend Exchange Rule 518, Complex Orders, to update its rule text regarding stock-option orders, in connection with the upcoming launch of such orders on the Exchange. In particular, the Exchange is proposing to (i) adopt new rule text to introduce a new price protection feature for certain stock-option strategies, (ii) delete certain existing rule text to eliminate an unnecessary execution price restriction for the stock component of a stock-option strategy, and (iii) make certain minor clarifying edits to existing rule text.
Complex orders began trading on the Exchange on October 24, 2016.
Currently, the Exchange provides price protection for certain complex option trading strategies such as Vertical Spreads
The Exchange now proposes to adopt new subsection (g) in Rule 518, Interpretations and Policies .01, to provide a price protection feature for certain stock-option strategies that have a single option component tied to a stock component with a standard deliverable.
The examples below provide an illustration of how the protection is calculated for Buy-Write and Married-Put strategies. For the purposes of the following examples the PSV used in the calculations is $.10.
Following is an example of the operation of the price protection feature for a Married-Put Strategy:
In its simplest terms the parity price of a put option can be expressed as (Strike Price − Stock Price = Put Option Parity Price). If, for example, the stock is trading at $45.00 and the Strike Price of the put option is $50.00, the parity price of the put option would then be $5.00 ($50.00 − $45.00 = $5.00). The Exchange is able to leverage the parity relationship between the components to establish a minimum option trading price limit for Married-Put Strategies by simply subtracting the PSV from the strike price of the option. The effect on the option price can be seen in the following calculation (($50.00 − $0.10) − $45.00 = $49.90 − $45.00 = $4.90). The Exchange will calculate the parity protected price for a Married-Put Strategy by leveraging the put option parity formula by simply subtracting the PSV from the strike price of the option. This would result in a parity protected price for the strategy of $49.90 using the figures above.
This allows for the stock component and the option component prices to fluctuate to achieve the strategy's net price, but ensures that the strategy will not trade below its parity protected price. Married Put Strategy interest received to sell a price protected Married-Put Strategy below $49.90 will be placed on the Strategy Book
In its simplest terms the parity price of a call option can be expressed as (Stock Price − Strike Price = Call Option Parity Price). If, for example, the stock is trading at $45.00 and the Strike Price of the call option is $40.00, the parity price of the call option would then be $5.00 ($45.00 − $40.00 = $5.00). The Exchange is able to leverage the parity relationship between the components to establish a minimum option trading price limit for Buy-Write Strategies by adding the PSV to the strike price of the option. The effect on the option price can be seen in the following calculation ($45.00 − ($40.00 + $.10) = $45.00 − $40.10 = $4.90). The Exchange will calculate the parity protected price for a Buy-Write Strategy by leveraging the call option parity formula by simply adding the PSV to the strike price of the option. This would result in a parity protected price for the strategy of $40.10 net debit using the figures above.
This allows for the stock component and the option component prices to fluctuate to achieve the strategy's net price, but ensures that the strategy will not trade below its parity protected price. Buy-Write strategy interest received to sell a price protected Buy-Write Strategy below $40.10 net debit will be placed on the Strategy Book at $40.10 net debit.
Second, the Exchange proposes to delete certain existing rule text from Exchange Rule 518, Interpretations and Policies .01, subsection (b), to eliminate an unnecessary execution price restriction for the stock component of a stock-option strategy. Exchange Rule 518, Interpretations and Policies .01 subsection (b), contains a paragraph that provides that, “[t]he execution price of the underlying security component must be also within the high-low range for the day in the underlying security at the time the stock-option order is processed and within a certain price from the current market, which the Exchange will establish and communicate to Members via Regulatory Circular. If the underlying security component price is not within these parameters, the stock-option order is not executable.”
The Exchange believes that the execution price restriction for the stock component of a stock-option strategy is unnecessary because all complex orders on the Exchange, including stock-option orders, receive Implied Complex MIAX Best Bid or Offer (“icMBBO”) protection.
Finally, the Exchange proposes to make a number of minor, non-substantive edits to Rule 518, Interpretations and Policies .05(e), to add clarity and precision to the Exchange's rule text. Since the Exchange will be introducing the trading of complex strategies which include a “stock” component, the Exchange seeks to clarify certain aspects of the rule that are intended to apply only to the “option” component of a complex strategy. Specifically, the Exchange proposes to clarify the definition of a Wide Market Condition, as described in Interpretations and Policies .05, subsection (e)(1), so that it is clear that it is only applying to the “option” component of a complex strategy. The new proposed rule text will provide that, “[a] `wide market condition' is defined as any individual option component of a complex strategy having, at the time of evaluation, an MBBO
Similarly, the Exchange proposes to clarify that Simple Market Auction or Timer Events (“SMAT Events”) pertain only to “option” components of a complex strategy, by amending Interpretations and Policies .05, subsection (e)(2)(i) and (e)(2)(ii), to include the term “option component” in the first sentence of each section. By definition, the Exchange's Simple Market is comprised of option interest only, on the Simple Order Book, therefore providing additional detail to the existing rule adds clarity to the Exchange's rules.
The Exchange believes that its proposed rule change is consistent with Section 6(b) of the Act
The Exchange believes establishing a parity price protection for certain Buy-Write and Married-Put strategies promotes just and equitable principles of trade and removes impediments to and perfects the mechanisms of a free and open market and a national market system and, in general, protects investors and the public interest by ensuring that strategies are not executed at potentially erroneous prices.
Given the relationship that the stock price, strike price, and option price have to each other, the Exchange is able to calculate a minimum option trading price limit for the option leg of certain stock-option strategies with a call or a put component. Specifically, the parity price of a call option can be derived by subtracting the strike price from the stock price (Stock Price − Strike Price = Call Option Parity Price); and the parity price of a put option can be derived by subtracting the stock price from the strike price (Strike Price − Stock Price = Put Option Parity Price). Using these relationships the PSV may be applied to establish a minimum option trading price limit that the System will prevent the option leg from trading below to establish a parity protected price for the strategy to ensure the strategy does not trade below its parity protected price at a potentially erroneous price.
The Exchange believes that Members will benefit from the proposed risk protection measure as the protection ensures that these stock-option strategies are not executed below their parity protected price as calculated by the Exchange. Consequently, the proposed risk protection is designed to encourage Members to submit additional order flow and liquidity to the Exchange in these strategies, thereby removing impediments to and perfecting the mechanisms of a free and open market and a national market system and, in general, protecting investors and the public interest. This protection should provide Members with confidence that protections are in place on the Exchange to reduce the risk of these strategies being executed at potentially erroneous prices. As a result, the Exchange believes that the proposed price protection feature will promote just and equitable principles of trade.
Additionally the Exchange's proposal to remove unnecessary rule text from its current rule which requires that the execution price of the underlying security component be within the high-low range for the day in the underlying security at the time the stock-option order is processed is consistent with Section 6(b) of the Act
Finally, the Exchange proposes to make minor non-substantive changes to its rule to clarify that Wide Market Conditions and Simple Market Auction or Timer Events on the Exchange are related to the “option” components only for complex strategies. The Exchange believes the proposed changes promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system because they seek to add clarity and precision to the Exchange's rules. The Exchange believes that the proposed rule changes will provide greater clarity to Members and the public regarding the Exchange's Rules, and it is in the public interest for rules to be accurate and concise so as to eliminate the potential for confusion.
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes the proposed rule change will foster competition as it provides a risk protection mechanism for certain complex strategies entered on the Exchange and may promote competition by enabling Members to trade more aggressively on the Exchange knowing that these strategies will not be executed below [sic] parity protected price at potentially erroneous prices. Accordingly, the price protection feature should instill additional confidence in Members that submit certain stock-option orders to the Exchange that their orders receive price protection, and thus should encourage Members to submit additional order flow and liquidity to the Exchange, thereby removing impediments to and perfecting the mechanisms of a free and open market and a national market system and, in general, protecting investors and the public interest.
The removal of unnecessary rule text pertaining to the execution price of the stock component of a stock-option order does not impose any burden on competition as the proposed change will align the Exchange's rule with that of other exchanges.
The Exchange does not believe the proposed rule change will impose any burden on intra-market competition as price protection is available to all market participants that submit orders in certain stock-option strategies. The Exchange further believes that the proposed price protection should promote inter-market competition, and result in more competitive order flow to the Exchange by protecting market participants from potentially erroneous executions occurring at prices below the parity protected price of the strategy, as calculated by the Exchange.
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act, and believes the proposed change will enhance competition.
Written comments were neither solicited nor received.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate, it has become effective pursuant to 19(b)(3)(A) of the Act
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange is filing with the Securities and Exchange Commission (“Commission”) a proposed rule change to amend the Fee Schedule on the BOX Market LLC (“BOX”) options facility. The text of the proposed rule change is available from the principal office of the Exchange, at the Commission's Public Reference Room and also on the Exchange's internet website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend Section VI. (Technology Fees) of the BOX Fee Schedule to establish BOX Connectivity Fees for Participants and non-Participants who connect to the BOX network. Connectivity fees will be based upon the amount of bandwidth that will be used by the Participant or non-Participant. Further, BOX Participants or non-Participants connected as of the last trading day of each calendar month will be charged the applicable Connectivity Fee for that month. The Connectivity Fees will be as follows:
The Exchange also proposes to amend certain language and numbering in Section VI.A to reflect the changes discussed above. Specifically, BOX proposes to add the title “Third Party Connectivity Fees” under Section VI.A. Further, the Exchange proposes to add Section VI.A.2 which details the proposed BOX Connectivity Fees discussed above.
Participants and non-Participants with ten (10) Gigabit Connections will be charged a monthly fee of $5,000 per connection. Participants and non-Participants with non-10 Gigabits Connections will be charged a monthly fee of $1,000 per connection. The Exchange notes that another exchange in the industry has similar connectivity fees.
Next, the Exchange is amending Section VI.C. High Speed Vendor Feed (“HSVF”) of the Fee Schedule. Specifically, BOX is proposing to delete Section VI.C. and reclassify the HSVF Connection as a Port Fee. The Exchange believes this reclassification is more accurate, as HSVF subscription is not dependent on a physical connection to the Exchange. Instead, subscribers must be credentialed by BOX to receive the HSVF. The HSVF Fee will remain unchanged, BOX will assess a HSVF Port Fee of $1,500 per month
The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Act, in general, and Section 6(b)(4) and 6(b)(5)of the Act,
The Exchange believes that the proposed Connectivity Fees in general constitute an equitable allocation of fees, and are not unfairly discriminatory, because they allow the Exchange to recover costs associated with offering access through the network connections. The proposed Connectivity Fees are also expected to offset the costs BOX incurs in maintaining, and implementing ongoing improvements to the trading systems, including connectivity costs, costs incurred on software and hardware enhancements and resources dedicated to software development, quality assurance, and technology support. The Exchange believes that its proposed fees are reasonable in that they are competitive with those charged by another exchange. Further, the Exchange believes that the proposed Connectivity Fees are not unfairly discriminatory as they are assessed to all market participants who wish to connect to the BOX network.
The Exchange believes that the proposed HSVF Port Fee is reasonable as it is similar to fees assessed at another exchange in the industry.
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. Unilateral action by BOX in establishing fees for services provided to its Participants and others using its facilities will not have an impact on competition. As a small Exchange in the already highly competitive environment for options trading, BOX does not have the market power necessary to set prices for services that are unreasonable or unfairly discriminatory in violation of the Exchange Act. BOX's proposed fees, as described herein, are comparable to and generally lower than fees charged by other options exchanges for the same or similar services. Lastly, the Exchange believes the proposed change will not impose a burden on intramarket competition as the proposed fees are applicable to all Participants and others using its facilities that connect to BOX.
No written comments were either solicited or received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Exchange Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend the rule change if it appears to the Commission that the action is necessary or appropriate in the public interest, for the protection of investors, or would otherwise further the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
The following is a notice of applications for deregistration under section 8(f) of the Investment Company Act of 1940 for the month of July 2018. A copy of each application may be obtained via the Commission's website by searching for the file number, or for an applicant using the Company name box, at
The Commission: Secretary, U.S. Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
Shawn Davis, Branch Chief, at (202) 551-6413 or Chief Counsel's Office at (202) 551-6821; SEC, Division of Investment Management, Chief Counsel's Office, 100 F Street NE, Washington, DC 20549-8010.
For the Commission, by the Division of Investment Management, pursuant to delegated authority.
On May 30, 2018, The Options Clearing Corporation (“OCC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change SR-OCC-2018-008 (“Proposed Rule Change”) pursuant to Section 19(b) of the Securities Exchange Act of 1934 (“Act”)
(1) Reorganize, restate, and consolidate the provisions of OCC's By-Laws and Rules relating to the Clearing Fund into a newly revised Chapter X of OCC's Rules;
(2) modify the coverage level of OCC's Clearing Fund sizing requirement to protect OCC against losses stemming from the default of the two Clearing Member Groups that would potentially cause the largest aggregate credit exposure for OCC in extreme but plausible market conditions (
(3) adopt a new risk tolerance for OCC to cover a 1-in-50 year hypothetical market event at a 99.5% confidence level over a two-year look-back period;
(4) adopt a new Clearing Fund and stress testing methodology, which would be underpinned by a new scenario-based one-factor risk model stress testing approach, as detailed in the newly proposed Policy and Methodology Description;
(5) document governance, monitoring, and review processes related to Clearing Fund and stress testing;
(6) provide for certain anti-procyclical limitations on the reduction in Clearing Fund size from month to month;
(7) increase the minimum Clearing Fund contribution requirement for Clearing Members to $500,000;
(8) modify OCC's allocation weighting methodology for Clearing Fund contributions;
(9) reduce from five to two business days the timeframe within which Clearing Members are required to fund Clearing Fund deficits due to monthly or intra-month resizing or due to Rule amendments;
(10) provide additional clarity in OCC's Rules regarding certain anti-procyclicality measures in OCC's margin model; and
(11) make a number of other non-substantive clarifying, conforming, and organizational changes to OCC's By-Laws, Rules, Collateral Risk Management Policy, Default Management Policy, and filed procedures, including retiring OCC's existing Clearing Fund Intra-Month Re-sizing Procedure, Financial Resources Monitoring and Call Procedure (“FRMC Procedure”), and Monthly Clearing Fund Sizing Procedure, as these procedures would no longer be relevant to OCC's proposed Clearing Fund and stress testing methodology and would be replaced by the proposed Rules, Policy, and Methodology Description described herein.
On June 7, 2018, OCC filed Amendment No. 1 to the Proposed Rule Change.
The Proposed Rule Change concerns proposed changes to OCC's By-Laws
As enumerated in the Notice of Filing, the specific modifications that OCC proposes are as follows: (1) Reorganize, restate, and consolidate the provisions of OCC's By-Laws and Rules relating to the clearing fund into a revised Chapter X of OCC's Rules; (2) modify the coverage level of OCC's clearing fund sizing requirement to protect OCC against losses stemming from the default of the two clearing member groups that would potentially cause the largest aggregate credit exposure for OCC in extreme but plausible market conditions (
The remainder of this section will first provide an overview of OCC's current process for sizing the clearing fund, followed by a more detailed discussion of the specific changes proposed by OCC, with particular focus on the following categories: (a) Stress testing; (b) total financial resources; (c) financial resource sufficiency; (d) allocation of clearing fund contributions; and (e) textual clarification and consolidation.
OCC's process for determining the size of its clearing fund was initially approved in 2011,
As described in detail below, OCC is proposing three primary changes to the existing approach. First, instead of simply relying on its margin model, OCC would rely on the proposed stress testing framework, including both sizing and sufficiency stress tests. Second, OCC would set the size of its clearing fund based on a Cover 2 Standard. Third, OCC would eliminate the current $1.8 billion static buffer because it would be obsolete in light of the new sizing stress tests and increased coverage afforded by the move to a Cover 2 Standard that, together, would function as a dynamic buffer.
OCC proposes to adopt a new stress testing methodology, as detailed in both the proposed Policy and the proposed
The stress scenarios used in OCC's proposed methodology would consist of two types of scenarios: Historical scenarios and hypothetical scenarios.
OCC's proposed stress testing framework would categorize OCC's inventory of stress tests by each stress test's intended purpose: Adequacy, sizing, sufficiency, and informational.
As noted above, OCC proposes to (i) to adopt a new clearing fund methodology, which would be underpinned by a new scenario-based one-factor risk model stress testing approach,
As discussed above, OCC proposes to replace the methodology by which it determines the monthly clearing fund size with an approach based on hypothetical stress scenarios that assume SPX shocks (up and down) associated with a 1-in-80-year market event.
As its benchmark for identifying extreme but plausible market conditions, OCC proposes to adopt a credit risk tolerance defined by OCC's largest potential aggregate credit exposure to two clearing member groups under a 1-in-50-year hypothetical market event as opposed to the greater of exposures arising under an idiosyncratic default or a minor systemic default.
OCC believes that sizing the clearing fund to cover a 1-in-80-year event would provide sufficient coverage in excess of the exposures estimated under a 1-in-50-year event to justify no longer collecting the $1.8 prudential margin of safety.
Currently, OCC does not constrain month-over-month changes in the size of the clearing fund. OCC proposes to adopt two limitations on month-over-month decreases in the size of the clearing fund. First, OCC proposes to prohibit a clearing fund decrease of more than 5 percent month-over-month.
In addition to revising the methodology for sizing OCC's total financial resources, OCC proposes generally to reduce the time in which each clearing member must make its clearing fund contribution.
As noted above, OCC proposes to (i) adopt a new clearing fund methodology, as detailed in the newly-proposed Policy and Methodology Description and (ii) document governance, monitoring, and review processes related to the clearing fund and stress testing.
Currently, OCC monitors the sufficiency of its financial resources daily by estimating whether the size of the clearing fund is sufficient to cover a maximum potential loss from a simulated idiosyncratic default.
OCC's current procedures also call for increases to the total size of the clearing fund in more extreme scenarios. When OCC observes credit exposures estimated under the idiosyncratic default
OCC proposes to revise this process by replacing the above-described idiosyncratic default approach with an approach that compares the size of the clearing fund to the exposures estimated under a set of historical scenario stress tests (“Sufficiency Stress Tests”).
OCC proposes to call for additional margin when it observes that one or more clearing member groups' exposure under a Sufficiency Stress Test exceeds 75 percent of the clearing fund.
OCC also proposes to revise the process for increasing the size of the clearing fund under more extreme scenarios. OCC proposes to increase the size of the clearing fund when it observes a Sufficiency Stress Test exposure in excess of 90 percent of the clearing fund.
Additionally, OCC proposes to add a new threshold at which it would commence enhanced monitoring of a clearing member group.
OCC proposes to establish, as part of its rules, processes for the governance, monitoring, and review of the stress testing framework and clearing fund methodology described above.
On a daily basis, OCC's staff would monitor the size of the clearing fund against OCC's risk tolerance and sufficiency stress tests.
On a monthly basis, OCC's staff would provide reports and analyses of the daily stress tests to OCC's Management Committee and RC.
On an annual basis, OCC's Model Validation Group would be required to perform a model validation of OCC's clearing fund methodology.
As noted above, OCC proposes to (i) increase the minimum clearing fund contribution requirement for clearing members to $500,000 and (ii) modify OCC's allocation weighting methodology for clearing fund contributions.
Currently, the minimum amount a clearing member must contribute to OCC's clearing fund (the “fixed amount”) is $150,000.
In addition to the fixed amount described above, most clearing members are required to contribute an additional amount to OCC's clearing fund (the “variable amount”). The variable amount is based on the weighted average of each clearing member's proportionate share of total risk, open interest, and volume.
Finally, as noted above, OCC proposes to (i) reorganize, restate, and consolidate the provisions of OCC's By-Laws and Rules relating to the Clearing Fund into a newly-revised Chapter X of OCC's Rules; (ii) provide additional clarity in OCC's Rules regarding certain anti-procyclicality measures in OCC's margin model; and (iii) make a number of other non-substantive clarifying, conforming, and organizational changes to OCC's By-Laws, Rules, and filed procedures, including retiring OCC's existing Clearing Fund Intra-Month Re-sizing Procedure, Financial Resources Monitoring and Call Procedure, and Monthly Clearing Fund Sizing Procedure, as these procedures would be replaced by the proposed Rules, Policy, and Methodology Description.
The primary provisions that address OCC's Clearing Fund are currently located in Article VIII of the By-Laws and Chapter X of the Rules.
The changes to the provisions currently residing in OCC's By-Laws require an affirmative vote of two-thirds of the directors then in office, but not less than a majority of the number of directors fixed by the By-Laws; however, changes to OCC's rules generally require only a majority vote of OCC's Board of Directors.
OCC's existing methodology for calculating margin requirements incorporates measures designed to ensure that margin requirements are not lower than those that would be calculated using volatility estimated over a historical look-back period of at least ten years.
OCC proposes a number of clarifying, conforming, and organizational changes to its By-Laws, Rules, Collateral Risk Management Policy, Default Management Policy, and Clearing Fund-related procedures in connection with the proposed enhancements to its Pre-Funded Financial Resources and the relocation of OCC's Clearing Fund-related By-Laws into Chapter X of the Rules.
In addition to the relocation of rules described above, OCC would also make minor, non-substantive revisions. For example, OCC would replace text referencing “computed contributions to the Clearing Fund” and “as fixed at the time” with text stating “required contributions to the Clearing Fund” and “as calculated at the time” to more accurately reflect that these rules are intended to refer to a Clearing Member's required Clearing Fund contribution
Further, OCC proposes to update references to Article VIII of the By-Laws in its Collateral Risk Management Policy and Default Management Policy to reflect the relocation of OCC's Clearing Fund-related By-Laws into Chapter X of the Rules.
Finally, OCC proposes to replace procedures regarding its processes for (i) the monthly resizing of its Clearing Fund, (ii) the addition of financial resources, and (iii) the execution of any intra-month resizing of the Clearing Fund.
As noted above, the Commission received five comment letters—AACC Letter I, CBOE Letter I, MLPRO Letter I, WEX Letter I, and GS Letter I—supporting the changes in the Proposed Rule Change.
Regarding the clearing fund sizing methodology, AACC believes that the proposal would implement a number of measures intended to provide stability and consistency to the size of OCC's clearing fund.
AACC states that, from a theoretical perspective, OCC's proposed sizing methodology constitutes a significant improvement over the current sizing methodology in that the size of the clearing fund would be less influenced by changes in volatility because OCC is introducing other risk drivers into the sizing methodology as well as monitoring and augmenting such risk drivers on a daily basis based on market conditions.
Commenters also believe that the proposal would improve OCC's risk models by correcting existing shortcomings.
Regarding the changes to the clearing fund allocation methodology, commenters believe that the proposal would better align clearing members' required clearing fund contribution to the risk they present to OCC and other market participants.
Commenters AACC and WEX believe that the proposed changes would have positive effects on the listed options market.
Section 19(b)(2)(C) of the Act directs the Commission to approve a proposed rule change of a self-regulatory organization if it finds that such
Section 17A(b)(3)(F) of the Act requires that the rules of a clearing agency be designed to, among other things, promote the prompt and accurate clearance and settlement of securities transactions, assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible, and, in general, to protect investors and the public interest.
First, as described above, OCC's current process for sizing the clearing fund was established in 2011 and strengthened under a 2015 interim approach. The current process is essentially an extension of OCC's margin model. In general, margin requirements for clearing members are very reactive to market movements and changes in clearing member portfolios. Because OCC's current process for sizing the clearing fund is based on a relatively dynamic daily margin process, the size of the clearing fund can at times be volatile and cyclical in nature. The Proposed Rule Change would base the sizing and monitoring of OCC's clearing fund on a stable inventory of stress tests rather than continuing to rely on a dynamic margin model. The Commission believes this new approach would provide OCC with a more precise, rigorous, and stable assessment of the financial resources it would need to hold in its clearing fund to cover its credit risk exposure to its members in extreme but plausible market conditions.
Second, with respect to the robustness of the new stress testing framework itself, the Commission believes that the stress tests proposed in OCC's framework are an improvement over OCC's current approach in this area, as the stress tests comprise a wide range of foreseeable stress scenarios. The scenarios cover historical events as extreme as the 2008 financial crisis and 1987 market crash as well as hypothetical events derived from a dataset of historical S&P returns. OCC's proposed stress testing framework would also include a category of stress tests designed specifically for review of OCC's financial resources against implausible scenarios and reverse stress tests. Such stress tests would not directly affect the total amount of OCC's financial resources, but would facilitate a more forward looking risk management process. Accordingly, while as an ongoing supervisory matter the Commission expects OCC to consider and, as necessary, implement future enhancements to its suite of stress tests, the Commission believes that the suite of stress tests that OCC proposes to establish in its risk management framework pursuant to the Proposed Rule Change represents a material improvement to OCC's current risk management practices for estimating potential future losses in extreme but plausible market conditions.
Third, as described above, OCC proposes to adopt several enhancements to its methodology for determining the size of its clearing fund. OCC proposes to adopt an internal credit risk tolerance based on hypothetical stress scenarios, which would provide OCC with a benchmark that it believes represents extreme but plausible market conditions. The Commission believes that establishing such a tolerance is a valuable step in accurately estimating the total financial resources necessary to cover OCC's exposures in extreme but plausible market conditions. Next, OCC proposes to set the size of its clearing fund to cover a scenario that is more extreme than its internal tolerance to ensure consistent coverage, which the Commission believes would be another valuable step in accurately estimating OCC's necessary total financial resources. Further, OCC proposes to cover its two largest credit exposures when setting the size of the clearing fund, which goes further than OCC's current practice of covering the greater of OCC's single largest exposure or two random exposures. For the same reasons, the Commission believes this, too, would improve OCC's risk management practices. Finally, OCC proposes to limit the potential reductions in the size of the clearing fund month-over-month. Such limitations would avoid large drops in the clearing fund size over a short period of time and unnecessary reductions followed by immediate calls for additional resources at the beginning of each month.
Fourth, the proposal discussed above would expand and improve upon the scope of stress scenarios against which OCC monitors is financial resources. Under the proposal, OCC would continue to review the size of its clearing fund against exposures under a stress scenario designed to replicate the 1987 market crash, and would also introduce monitoring against other historical scenarios such as the largest market moves up and down observed during the 2008 financial crisis. In addition, OCC would continue its practice of collecting additional resources in margin collateral and clearing fund requirements where stress exposures exceed 75 percent and 90 percent, respectively, of the size of the clearing fund. Based on a review of the parameters of the scenario replicating the 1987 market crash, the Commission believes that the scenario presents potential losses that are extreme while also plausible in light of their historical basis. Additionally, the Commission believes that the scenario would provide stress exposure estimates that would be meaningful for the monitoring of OCC's total financial resources. The Commission also believes that the introduction of new historical scenarios, such as those replicating the financial crisis, would provide additional depth to the monitoring of OCC's financial resources. The Commission believes, therefore, that the changes proposed in the Proposed Rule Change include the adoption of a wide range of stress scenarios for the testing of OCC's financial resources.
Fifth, OCC would document its periodic review and analysis of its stress testing framework and clearing fund methodology, which would include (1) daily review of stress test outputs, (2) monthly (or more frequently as needed) analysis of the stress test results, scenarios, models, parameters, and assumptions, and (3) annual validation of the clearing fund methodology. OCC also would clearly define the process for escalating the results of its daily and monthly analyses and require on an annual basis Board level review and
Taken together, and for the reasons discussed above, the Commission believes that the proposed changes will increase the likelihood that OCC will have sufficient financial resources in excess of margin to address credit losses that could arise from a wide range of stress scenarios including, but not limited to, the default of the participant family that would potentially cause the largest aggregate credit exposure for OCC in extreme but plausible market conditions. Having an improved capacity to access and apply sufficient financial resources to credit losses in a wide range of stress scenarios should, in turn, enhance OCC's ability to continue to promptly and accurately clear and settle securities transactions for participants in the options markets during periods of market stress. Therefore, the Commission believes that the proposal is consistent with promoting the prompt and accurate clearance and settlement of securities transactions.
The Commission further believes that the proposed changes are consistent with assuring the safeguarding of securities and funds which are in OCC's custody or control, or for which it is responsible. By establishing a clearing fund that is sized to address credit losses that could arise from a wide range of stress scenarios including, but not limited to, the default of the participant family that would potentially cause the largest aggregate credit exposure for OCC in extreme but plausible market conditions, the proposal will enhance OCC's ability to use the clearing fund as a means to safeguard the securities and funds it holds for its Clearing Members during periods of market stress. In addition, the Commission believes that the proposed changes to OCC's allocation weighting will allow OCC to better manage its credit exposures to its clearing members by better aligning each clearing member's contributions to the credit risk it poses to OCC. This improved ability to manage credit exposure in the form of clearing fund amounts more closely calibrated to credit exposure should, in turn, improve OCC's ability to rely upon the clearing fund as a resource to safeguard the securities and funds it holds during periods of market stress.
Finally, the Commission believes that OCC's proposed measures addressing the potential procyclical nature of clearing fund obligations, as well as the textual clarifications and reorganization set forth in the proposal, are consistent with the protection of investors and the public interest. The enhanced certainty for Clearing Members that should be achieved in the form of clearly established and understood limitations on the reduction in Clearing Fund size from month to month should make it easier for Clearing Members, and their customers and investors more broadly, to more easily anticipate and manage financial resource demands that can arise from OCC's risk management processes in respect of the clearing fund. In addition, the reorganization and consolidation of rule provisions related to OCC's clearing fund would enhance the readability of OCC's public-facing rules, and additional clarification of OCC's margin rules would promote transparency by providing the public with information about OCC's risk management processes. The Commission believes that the additional clarity, predictability and transparency provided by these proposed changes would generally be consistent with the protection of investors and the public interest by removing potential sources of confusion, surprise or misunderstanding regarding the operations and potential consequences of OCC's risk management processes in respect of the clearing fund.
Accordingly, and for the reasons stated above, the Commission finds that the Proposed Rule Change is consistent with Section 17A(b)(3)(F) of the Act.
Rules 17Ad-22(e)(4)(i) and (iii) under the Act requires, among other things, that OCC establish, implement, maintain, and enforce written policies and procedures reasonably designed to effectively identify, measure, monitor, and manage its credit exposures to participants and those arising from its payment, clearing, and settlement processes by, among other things, maintaining financial resources at the minimum to enable OCC to cover a wide range of foreseeable stress scenarios that include, but are not limited to, the default of the participant family that would potentially cause the largest aggregate credit exposure for OCC in extreme but plausible market conditions.
As described above, the proposal includes enhancements to OCC's methodology for sizing its clearing fund to ensure that it maintains sufficient financial resources, including: (i) Adoption of an internal credit risk tolerance that OCC believes represents extreme but plausible market conditions; (ii) sizing the clearing fund to cover credit exposures under scenarios that are more extreme than OCC's risk tolerance, (iii) sizing the clearing fund to cover the default of the two clearing member groups that that would potentially cause the largest aggregate credit exposure for OCC; (iv) limiting the potential reduction in clearing fund size month-over-month; and (v) shortening the time by which each clearing member must fund its clearing fund contribution.
Taken together, the Commission believes that proposed changes described above are designed to improve the process by which OCC sizes its total financial resources and are consistent with the requirements of Rules 17Ad-22(e)(4)(i) and (iii) under the Act. First, the proposal is designed to cover credit exposures in excess of those posed by any one clearing member group because OCC is proposing to cover the largest aggregate exposure to two clearing member groups. Second, the proposal is designed to cover credit exposures in extreme but plausible market conditions because OCC proposes to size its clearing fund based on scenarios that are more extreme than those that OCC believes to represent extreme but plausible market conditions. Further, based on the Commission's detailed analysis of the relevant scenarios through the supervisory process, the Commission believes that OCC has defined extreme but plausible scenarios in an acceptable manner for the markets served. Finally, the Commission believes that proposal would support the consistent and stable maintenance of an appropriate level of total financial resources by limiting month-over-month reductions in the size of clearing fund and requiring clearing members to make clearing fund contributions within two business days. Accordingly, the Commission believes that the proposed modifications to OCC's clearing fund sizing methodology are consistent with Rule 17Ad-22(e)(4)(i) and (iii).
Rule 17Ad-22(e)(4)(vi) under the Act requires OCC to establish, implement, maintain, and enforce written policies and procedures reasonably designed to effectively identify, measure, monitor, and manage its credit exposures to participants and those arising from its payment, clearing, and settlement processes by testing the sufficiency of its total financial resources available to meet the minimum financial resource requirements under paragraphs Rules 17Ad-22(e)(4)(i) through (iii).
After reviewing and assessing the proposal, the Commission believes that the proposed changes described above are consistent with Rules 17Ad-22(e)(4)(vi) and (vii) under the Act,
In addition, the Commission believes that (i) the daily testing of OCC's financial resources against the sufficiency stress tests, including stress tests based on market movements in the 2008 financial crisis and the 1987 market crash included in the proposal would be consistent with the daily stress testing requirements of Rule 17Ad-22(e)(4)(vi)(A), as described above; (ii) the at least monthly analysis of stress test results, scenarios, models, parameters, and assumptions, with more frequent review and analysis as required would be consistent with the monthly comprehensive analysis requirements set forth in Rule 17Ad-22(e)(4)(vi)(B) and (C) as described above; and (iii) the annual validation of OCC's clearing fund methodology discussed in more detail above would be consistent with model validation requirements of Rule 17Ad-22(e)(4)(vii). The proposal also contemplates the reporting and escalation of such testing, analyses, and validations to OCC's management and Board of Directors, which the Commission believes would be consistent with the reporting requirements of Rule 17Ad-22(e)(4)(vi)(D).
Accordingly, taken together and for the reasons discussed above, the Commission believes that the proposed stress testing and clearing fund methodology governance changes are consistent with Rules 17Ad-2(e)(4)(vi) and (vii).
As noted above, Rule 17Ad-22(e)(4) under the Act requires that OCC establish, implement, maintain, and enforce written policies and procedures reasonably designed to, among other things, effectively manage its credit exposures to participants.
As discussed above, OCC manages its credit exposures not covered by margin through the allocation of clearing fund requirements to its clearing members. OCC proposes to determine the size of is clearing fund based on the measurement of its credit exposures under hypothetical stress scenarios, and to monitor such exposures under historical stress scenarios. OCC also proposes to increase the initial and minimum clearing fund contribution amounts from $150,000 to $500,000, and to modify the allocation weighting used to determine the variable amount that most clearing members contribute to the clearing fund. Specifically, under the proposal, the proposed clearing fund contribution requirements would be based on an allocation methodology of 70 percent of total risk, 15 percent of open interest and 15 percent of open interest (as opposed to the current weighting of 35 percent total risk, 50 percent open interest, and 15 percent volume).
The Commission believes that the changes described above are reasonably designed to improve OCC's management of its credit exposures to participants. First, OCC's overall clearing fund size has increased significantly since the current initial and minimum contributions were set in 2000 and OCC's requirements are lower than the minimum requirements imposed by other CCPs. The Commission believes that the proposed changes to OCC's initial and minimum clearing fund contribution amounts are designed to better manage the risks posed by clearing members with minimal open interest, and are commensurate with the growth of OCC's clearing fund over time. The Commission also believes that the changes to OCC's allocation weighting will allow OCC to better manage its credit exposures to its clearing members by better aligning each clearing member's contributions to the credit risk it poses to OCC, thereby allowing OCC to better manage its credit exposures to its participants.
Accordingly, based on the foregoing, the Commission believes that the proposed changes pertaining to the sizing, monitoring, and allocation of clearing fund requirements are consistent with Exchange Act Rule 17Ad-22(e)(4).
Rule 17Ad-22(e)(1) under the Act requires that OCC establish, implement, maintain, and enforce written policies and procedures reasonably designed to
The Commission believes that the proposed consolidation and reorganization of OCC's Rules described above would improve readability by locating all rules related to the clearing fund in one place, thereby enhancing the clarity, transparency, consistency, and understandability of OCC's Rules related to the clearing fund. Additionally, by amending the Rules to accurately reflect OCC's current margin practices, the Commission believes OCC's Rules will be more transparent and understandable.
Accordingly, the Commission finds that the proposed textual reorganization and clarifications are consistent with Rule 17Ad-22(e)(1).
On the basis of the foregoing, the Commission finds that the Proposed Rule Change is consistent with the requirements of the Act, and in particular, the requirements of Section 17A of the Act
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On December 8, 2017, The Options Clearing Corporation (“OCC”) filed with the Securities and Exchange Commission (“Commission”) proposed rule change SR-OCC-2017-021 (“Proposed Rule Change”) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
Pursuant to Section 19(b)(1) of the Act
This Partial Amendment No. 2 would make the following three amendments to the Initial Filing: (1) Removal of sections of the RWD Plan concerning OCC's proposed authority to require cash settlement of certain physically delivered options and single stock futures; (2) updating the list of OCC's Critical Support Functions;
With regard to the removal of sections of the RWD Plan concerning OCC's proposed authority to require cash settlement of certain physically delivered options and single stock futures, OCC proposes to amend the following text on pages 16 and 55-56 of the Initial Filing (new text is underlined and proposed deletions are marked in strikethrough text).
OCC also proposes to amend the following text on pages 22-23 and 61-63 of the Initial Filing (including associated footnotes).
OCC plans to resubmit the proposed cash settlement tool previously filed in SR-OCC-2017-018 and SR-OCC-2017-807 on a separate timeline from the rest of its enhanced and new tools for recovery scenarios and would submit a subsequent filing to the Commission to amend the RWD Plan at that time.
In addition, OCC proposes to make the following amendments on pages 32 and 72 of the Initial Filing.
With regard to updating the list of OCC's Critical Support Functions, the amendment would revise OCC's RWD Plan to consistently identify one of OCC's internal functions as a Critical Support Function.
Finally, OCC proposes to make two changes to Chapter 5 of the RWD Plan, which would align an exhibit, a related list and a related paragraph with the certain changes OCC is contemporaneously proposing in Amendment No. 2 to proposed rule change SR-OCC-2017-020 concerning enhanced and new tools for recovery scenarios.
OCC has included an updated Exhibit 5 containing its RWD Plan as well as an Exhibit 4 showing the changes proposed in this Partial Amendment No. 2 to the proposed rule text in the Initial Filing, with the proposed changes in the Initial Filing marked in underlined and strikethrough text. Exhibits 4 and 5 have been redacted and filed separately with the Commission and confidential treatment for Exhibits 4 and 5 is requested pursuant to 17 CFR 240.24b-2.
The partial amendment would not change the purpose of or basis for the proposed rule change. All other representations in the Initial Filing remain as stated therein and no other changes are being made.
As the Commission stated in Securities Exchange Act Release No. 83485, the Commission shall by order approve or disapprove the proposed rule change by August 23, 2018.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commissions internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent Fields, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal or identifying information from comment submissions. You should submit only information that you wish to make available publicly.
All submissions should refer to File Number SR-OCC-2017-021 and should be submitted on or before August 17, 2018.
For the Commission by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to codify the definitions of the protocols that Members can use to enter quotes and orders on the Exchange.
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to codify the definitions of the protocols that Members use to enter quotes and orders on the Exchange, specifically, the Specialized Quote Feed (“SQF”), Ouch to Trade Options (“OTTO”), Financial Information eXchange (“FIX”), and Nasdaq Precise (“Precise”). On April 27, 2017, the Exchange filed a proposed rule change that established the ports that Members use to connect to the Exchange, including ports used for quote and order entry—
As it relates to FIX, OTTO, and SQF, the proposed language is substantially similar to the language included in SR-GEMX-2017-07 with changes to more clearly and accurately reflect the certain information included on each protocol, such as by separating out different categories of messages (
As proposed, Supplementary Material .03 to Rule 715 (
When the Exchange initially filed to adopt order and quote entry protocols, it described the FIX protocol as follows: “FIX is an interface that allows market participants to connect and send orders and auction orders into the Exchange. Data includes the following: (1) Options Symbol Directory Messages; (2) System Event Messages (
The Exchange now proposes to codify the following definition of FIX in its rulebook: “Financial Information eXchange” or “FIX” is an interface that allows Members and their Sponsored Customers to connect, send, and receive messages related to orders and auction orders to the Exchange. Features include the following: (1) Execution messages; (2) order messages; (3) risk protection triggers and cancel notifications; and (4) post trade allocation messages.
When the Exchange initially filed to adopt order and quote entry protocols, it described the OTTO protocol as follows: “OTTO is an interface that allows market participants to connect and send orders, auction orders and auction responses into the Exchange. Data includes the following: (1) Options Auction Notifications (
The Exchange now proposes to codify the following definition of OTTO in its rulebook: “Ouch to Trade Options” or “OTTO” is an interface that allows Members and their Sponsored Customers to connect, send, and receive messages related to orders, auction orders, and auction responses to the Exchange. Features include the following: (1) Options symbol directory messages (
When the Exchange initially filed to adopt order and quote entry protocols, it described the SQF protocol as follows: “SQF is an interface that allows market makers to connect and send quotes, sweeps and auction responses into the Exchange. Data includes the following: (1) Options Auction Notifications (
The Exchange now proposes to codify the following definition of SQF in its rulebook: “Specialized Quote Feed” or “SQF” is an interface that allows market makers to connect, send, and receive messages related to quotes, Immediate-or-Cancel Orders, and auction responses to the Exchange. Features include the following: (1) Options symbol directory messages (
“Nasdaq Precise” or “Precise” is a front-end interface that allows Electronic Access Members and their Sponsored Customers to send orders to the Exchange and perform other related functions. Features include the following: (1) Order and execution management: Enter, modify, and cancel orders on the Exchange, and manage executions (
Precise is a software application that is offered by the Exchange to EAMs and their Sponsored Customers. Use of Precise is completely voluntary. The Exchange makes Precise available to EAMs and their Sponsored Customers as a convenience for entering and managing orders, but the protocol is not an exclusive means for any user to send orders to GEMX. Precise is merely a front-end interface to the Exchange's existing trading system, and is designed as an alternative to the Exchange's other protocols (
Precise provides users with access to GEMX's regular order book. The protocol offers order and execution features that allow users to send, modify, and cancel their orders, and manage executions. For example, the protocol offers users the capability to stage larger orders and divide them into smaller orders for execution (
Precise also provides risk management capabilities that allow users to set customizable risk parameters.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange believes that the proposed rule change is consistent with the protection of investors and the public interest as it codifies the protocols used to connect to the Exchange's trading system. As discussed above, the Exchange previously filed to establish FIX, OTTO, and SQF in SR-GEMX-2017-07. These protocols will now be codified in the Exchange's rulebook. In addition, the Exchange has briefly described Precise in various proposed rule changes filed with the Commission. In the interest of transparency, the Exchange has included a more fulsome description of the functionalities offered via Precise in this proposed rule change, and is codifying language in its rules that would describe this protocol.
While no functional changes to the protocols are proposed in this filing, the Exchange believes that including a description of the protocols in its rulebook will benefit Members by increasing transparency around the operation of the Exchange. Furthermore, the proposed definitions being included in the rulebook will more clearly and accurately reflect the information included on the protocols, and will be harmonized with language to be included in the rules of its affiliated exchanges to the extent that the protocols operate in the same manner. The protocols described in this filing provide a range of important features to Members, including the ability to submit quotes and orders, and perform other functions necessary to manage trading on the Exchange. The Exchange believes codifying the quote and order entry protocols will increase transparency to the Members that use these protocols to connect to the Exchange.
In accordance with Section 6(b)(8) of the Act,
No written comments were either solicited or received.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to codify the definitions of the protocols that Members can use to enter quotes and orders on the Exchange.
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to codify the definitions of the protocols that Members use to enter quotes and orders on the Exchange, specifically, the Specialized Quote Feed (“SQF”), Ouch to Trade Options (“OTTO”), Financial Information eXchange (“FIX”), and Nasdaq Precise (“Precise”). On June 23, 2017, the Exchange filed a proposed rule change that established the ports that Members use to connect to the Exchange, including ports used for quote and order entry—
As it relates to FIX, OTTO, and SQF, the proposed language is substantially similar to the language included in SR-ISE-2017-62 with changes to more clearly and accurately reflect the certain information included on each protocol, such as by separating out different categories of messages (
As proposed, Supplementary Material .03 to Rule 715 (
When the Exchange initially filed to adopt order and quote entry protocols, it described the FIX protocol as follows: “FIX is an interface that allows market participants to connect and send orders and auction orders into the Exchange. Data includes the following: (1) Options Symbol Directory Messages; (2) System Event Messages (
The Exchange now proposes to codify the following definition of FIX in its rulebook: “Financial Information eXchange” or “FIX” is an interface that allows Members and their Sponsored Customers to connect, send, and receive messages related to orders and auction orders to the Exchange. Features include the following: (1) Execution messages; (2) order messages; (3) risk protection triggers and cancel notifications; and (4) post trade allocation messages.
When the Exchange initially filed to adopt order and quote entry protocols, it described the OTTO protocol as follows: “OTTO is an interface that allows market participants to connect and send orders, auction orders and auction responses into the Exchange. Data includes the following: (1) Options Auction Notifications (
The Exchange now proposes to codify the following definition of OTTO in its rulebook: “Ouch to Trade Options” or “OTTO” is an interface that allows Members and their Sponsored Customers to connect, send, and receive messages related to orders, auction orders, and auction responses to the Exchange. Features include the following: (1) options symbol directory messages (
When the Exchange initially filed to adopt order and quote entry protocols, it described the SQF protocol as follows: “SQF is an interface that allows market makers to connect and send quotes, sweeps and auction responses into the Exchange. Data includes the following: (1) Options Auction Notifications (
The Exchange now proposes to codify the following definition of SQF in its rulebook: “Specialized Quote Feed” or “SQF” is an interface that allows market makers to connect, send, and receive messages related to quotes, Immediate-or-Cancel Orders, and auction responses to the Exchange. Features include the following: (1) Options symbol directory messages (
“Nasdaq Precise” or “Precise” is a front-end interface that allows Electronic Access Members and their Sponsored Customers to send orders to the Exchange and perform other related
Precise is a software application that is offered by the Exchange to EAMs and their Sponsored Customers. Use of Precise is completely voluntary. The Exchange makes Precise available to EAMs and their Sponsored Customers as a convenience for entering and managing orders, but the protocol is not an exclusive means for any user to send orders to ISE. Precise is merely a front-end interface to the Exchange's existing trading system, and is designed as an alternative to the Exchange's other protocols (
Precise provides users with access to ISE's regular and complex order books. The protocol offers order and execution features that allow users to send, modify, and cancel their orders, and manage executions. For example, the protocol offers users the capability to stage larger orders and divide them into smaller orders for execution (
Precise also provides risk management capabilities that allow users to set customizable risk parameters.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange believes that the proposed rule change is consistent with the protection of investors and the public interest as it codifies the protocols used to connect to the Exchange's trading system. As discussed above, the Exchange previously filed to establish FIX, OTTO, and SQF in SR-ISE-2017-62. These protocols will now be codified in the Exchange's rulebook. In addition, the Exchange has briefly described Precise in various proposed rule changes filed with the Commission. In the interest of transparency, the Exchange has included a more fulsome description of the functionalities offered via Precise in this proposed rule change, and is codifying language in its rules that would describe this protocol.
While no functional changes to the protocols are proposed in this filing, the Exchange believes that including a description of the protocols in its rulebook will benefit Members by increasing transparency around the operation of the Exchange. Furthermore, the proposed definitions being included in the rulebook will more clearly and accurately reflect the information included on the protocols, and will be harmonized with language to be included in the rules of its affiliated exchanges to the extent that the protocols operate in the same manner. The protocols described in this filing provide a range of important features to Members, including the ability to submit quotes and orders, and perform other functions necessary to manage trading on the Exchange. The Exchange believes codifying the quote and order entry protocols will increase transparency to the Members that use these protocols to connect to the Exchange.
In accordance with Section 6(b)(8) of the Act,
No written comments were either solicited or received.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to codify the definitions of the protocols that Members can use to enter quotes and orders on the Exchange.
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to codify the definitions of the protocols that Members use to enter quotes and orders on the Exchange, specifically, the Specialized Quote Feed (“SQF”), Ouch to Trade Options (“OTTO”), and Financial Information eXchange (“FIX”). On July 20, 2017, the Exchange filed a proposed rule change that established the ports that Members use to connect to the Exchange, including ports used for quote and order entry—
The proposed language is substantially similar to the language included in SR-MRX-2017-13 with changes to more clearly and accurately reflect the certain information included on each protocol, such as by separating out different categories of messages (
As proposed, Supplementary Material .03 to Rule 715 (
When the Exchange initially filed to adopt order and quote entry protocols, it described the FIX protocol as follows: “FIX is an interface that allows market participants to connect and send orders and auction orders into the Exchange. Data includes the following: (1) Options Symbol Directory Messages; (2) System Event Messages (
The Exchange now proposes to codify the following definition of FIX in its rulebook: “Financial Information eXchange” or “FIX” is an interface that allows Members and their Sponsored Customers
When the Exchange initially filed to adopt order and quote entry protocols, it described the OTTO protocol as follows: “OTTO is an interface that allows market participants to connect and send orders, auction orders and auction responses into the Exchange. Data includes the following: (1) Options Auction Notifications (
The Exchange now proposes to codify the following definition of OTTO in its rulebook: “Ouch to Trade Options” or “OTTO” is an interface that allows Members and their Sponsored Customers to connect, send, and receive messages related to orders, auction orders, and auction responses to the Exchange. Features include the following: (1) Options symbol directory messages (
When the Exchange initially filed to adopt order and quote entry protocols, it described the SQF protocol as follows: “SQF is an interface that allows market makers to connect and send quotes, sweeps and auction responses into the Exchange. Data includes the following: (1) Options Auction Notifications (
The Exchange now proposes to codify the following definition of SQF in its rulebook: “Specialized Quote Feed” or “SQF” is an interface that allows market makers to connect, send, and receive messages related to quotes, Immediate-or-Cancel Orders, and auction responses to the Exchange. Features include the following: (1) Options symbol directory messages (
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange believes that the proposed rule change is consistent with the protection of investors and the public interest as it codifies the protocols used to connect to the Exchange's trading system. As discussed above, the Exchange previously filed to establish FIX, OTTO, and SQF in SR-MRX-2017-13. These protocols will now be codified in the Exchange's rulebook.
While no functional changes to the protocols are proposed in this filing, the Exchange believes that including a description of the protocols in its
In accordance with Section 6(b)(8) of the Act,
No written comments were either solicited or received.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
OCC proposes to amend the definition of the term “flexibly structured option” as provided in Article I, Section 1.F.(8) of OCC's By-Laws to conform the definition to a recent rule change by Cboe Exchange, Inc. (“Cboe Options” or “CBOE”). The proposed changes to OCC's By-Laws can be found in Exhibit 5 to the filing. All terms with initial capitalization that are not otherwise defined herein have the same meaning as set forth in the By-Laws and Rules.
In its filing with the Commission, OCC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. OCC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of these statements.
Flexibly structured options are options that give investors the ability to customize basic option features including size, expiration date, exercise style, and certain exercise prices. OCC currently defines a “flexibly structured option” as an option having variable terms that are negotiated between the parties to a confirmed trade pursuant to Exchange Rules and that do not correspond to the variable terms
Pursuant to a recent rule change, Cboe Options has made all flexibly structured options fungible with subsequently-introduced non-flexibly structured options series having identical variable terms.
Cboe Options has requested that OCC amend its By-Laws to allow Cboe Options' rule change to become effective. Cboe Options noted in its rule change that the change “will have the effect of more FLEX Options becoming fungible with Non-Flex Options, which will potentially increase the liquidity available to traders of FLEX Options.”
To clear and settle flexibly structured options traded on Cboe Options in a manner that is consistent with Cboe Options' rules, OCC proposes to amend its definition of “flexibly structured option” in Article I of its By-Laws by deleting “(other than a series of quarterly options or short term options)” in the two instances in which it appears in the definition.
The second instance of “(other than a series of quarterly options or short term options)” in the flexibly structured option definition was adopted in 2009 to provide, consistent with Cboe Options rules then in effect and as an exception to general fungibility, that a quarterly options or short term options series with the same terms as a flexibly structured option would not become fungible with that flexibly structured option. As noted above, Cboe Options has recently adopted a rule change to eliminate this restriction and allow all flexibly structured options to become fungible with non-flexibly structured options series having identical variable terms that are later opened for trading on the exchange.
Section 17A(b)(3)(F) of the Securities Exchange Act of 1934, as amended (“Act”)
However, the rules, as proposed by the CBOE, help to ensure that FLEX market participants cannot avoid the protections provided to retail investors in the standardized options market simply by trading FLEX Options. In this regard, once a series is open for trading, new FLEX Options are not permitted in that series. In addition, once a Non-FLEX Options series is open, all outstanding FLEX Options in the same series become fungible with the standardized market, are traded pursuant to standardized market trading rules, and are aggregated for position and exercise limit purposes. These rules help to alleviate these surrogate concerns and should help to ensure that FLEX Options market continues to operate as intended.
The proposed rule change would help to further address this concern by allowing all flexibly structured options to become fungible with non-flexibly structured options series with the same terms that are later opened for trading on the exchange.
In addition, the proposed rule change is not inconsistent with the existing By-Laws and Rules of OCC, including any rules proposed to be amended.
Section 17A(b)(3)(I) of the Act
Written comments on the proposed rule change were not and are not intended to be solicited with respect to the proposed rule change and none have been received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly.
All submissions should refer to File Number SR-OCC-2018-010 and should be submitted on or before August 23,
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
60-Day notice and request for comments.
The Small Business Administration (SBA) intends to request approval, from the Office of Management and Budget (OMB) for the collection of information described below. The Paperwork Reduction Act (PRA) of 1995, requires federal agencies to publish a notice in the
Submit comments on or before October 1, 2018.
Send all comments to Susan Suckfiel, Supervisory Financial Analyst, Office of Capital Access, Small Business Administration, 409 3rd Street, 8th Floor, Washington, DC 20416.
Susan Suckfiel, Supervisory Financial Analyst, 202-205-6443,
SBA Form 1050, Settlement Sheet is used in SBA's 7(a) Loan Program to collect information from lenders and borrowers regarding the disbursement of loan proceeds. SBA relies on this information during the guaranty purchase review process as a component in determining whether to honor a loan guaranty. The currently approved form primarily requires the lender and borrower to certify to whether they complied with a series of loan requirements. The current form also requires submission of documentation (
The form will be divided into several sections to clearly identify the information to be submitted. The revised form will continue to collect the same basic identifying information such as loan amount, loan number and lender's name. In addition, the form will continue to require certifications from both the lender and borrower regarding compliance with the disbursement requirements and accuracy of information submitted. However, generally the enumerated statements will be reduced or combined and replaced with requests for specific information. the revised form will include a listing of all of the uses of loan proceeds. For each applicable use, information regarding the names of the payees, the amount disbursed, and the authorized amount remaining will be collected. The revised form will also include a section to document the borrower's equity injection of cash, assets, and any seller contribution (on full standby for the life of the loan).
These changes will allow the lender to more clearly document all of the sources and uses of funds at the time of loan closing. This additional information will better allow both lenders and SBA staff to ensure that the necessary information is collected at the time of loan origination
SBA is requesting comments on (i) Whether the collection of information is necessary for the agency to properly
U.S. Small Business Administration.
Notice.
This is a notice of an Administrative declaration of a disaster for the State of California dated 07/25/2018.
Issued on 07/25/2018.
Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
Notice is hereby given that as a result of the Administrator's disaster declaration, applications for disaster loans may be filed at the address listed above or other locally announced locations.
The following areas have been determined to be adversely affected by the disaster:
The Interest Rates are:
The number assigned to this disaster for physical damage is 15614 5 and for economic injury is 15615 0.
The States which received an EIDL Declaration # are California, Oregon.
U.S. Small Business Administration.
Notice.
This is a notice of an Administrative declaration of a disaster for the Commonwealth of Pennsylvania dated 07/24/2018.
Issued on 07/24/2018.
Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
Notice is hereby given that as a result of the Administrator's disaster declaration, applications for disaster loans may be filed at the address listed above or other locally announced locations.
The following areas have been determined to be adversely affected by the disaster:
The Interest Rates are:
The number assigned to this disaster for physical damage is 15586 6 and for economic injury is 15587 0.
The State which received an EIDL Declaration # is Pennsylvania.
U.S. Small Business Administration.
Notice.
This is a notice of an Administrative declaration of a disaster for the State of Maryland dated 07/25/2018.
Issued on 07/25/2018.
Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
Notice is hereby given that as a result of the Administrator's disaster declaration, applications for disaster loans may be filed at the address listed above or other locally announced locations.
The following areas have been determined to be adversely affected by the disaster:
The Interest Rates are:
The number assigned to this disaster for physical damage is 15610 6 and for economic injury is 15611 0.
The State which received an EIDL Declaration # is Maryland.
U.S. Small Business Administration.
Notice.
This is a notice of an Administrative declaration of a disaster for the Commonwealth of Pennsylvania dated 07/25/2018.
Issued on 07/25/2018.
Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
Notice is hereby given that as a result of the Administrator's disaster declaration, applications for disaster loans may be filed at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster:
The Interest Rates are:
The number assigned to this disaster for physical damage is 15612 6 and for economic injury is 15613 0.
The State which received an EIDL Declaration # is Pennsylvania.
Surface Transportation Board.
Decision seeking comment.
The Board is seeking comment on whether to make adjustments to its 2017 annual cost of capital determination, revenue adequacy determination, and Uniform Railroad Costing System calculations, to account for a one-time revaluation of rail carriers' deferred tax liabilities due to the reduction of the federal corporate income tax rate in the Tax Cuts and Jobs Act enacted in December 2017.
Comments are due by August 16, 2018. Reply comments are due by September 5, 2018.
Jonathon Binet, (202) 245-0368. Federal Information Relay Service (FIRS) for the hearing impaired: (800) 877-8339.
Additional information is contained in the Board's decision, which is available on our website,
This action will not significantly affect either the quality of the human environment or energy conservation.
By the Board, Board Members Begeman and Miller.
Office of the United States Trade Representative.
Notice with request for comments.
The Office of the United States Trade Representative (USTR) is providing notice that Vietnam has requested the establishment of a dispute settlement panel under the
Although USTR will accept any comments during the course of the dispute settlement proceedings, you should submit your comment on or before September 4, 2018, to be assured of timely consideration by USTR.
USTR strongly prefers electronic submissions made through the Federal eRulemaking Portal:
Assistant General Counsel Ryan Majerus at
Section 127(b)(1) of the Uruguay Round Agreements Act (URAA) (19 U.S.C. 3537(b)(1)) requires notice and opportunity for comment after the United States submits or receives a request for the establishment of a WTO dispute settlement panel. Pursuant to this provision, USTR is providing notice that Vietnam has requested a dispute settlement panel pursuant to the WTO
On January 8, 2018, Vietnam requested consultations with the United States. You can find the consultation request at
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Vietnam's request for establishment of a panel appears to be concerned with the alleged use of “zeroing”, timeliness of a request for revocation, applying a Vietnam-wide entity rate based on facts available, and Section 129 of the URAA. Vietnam claims that certain alleged measures of the United States are not consistent with the United States' obligations under Articles 1, 2, 6, 9, 11, and 18 the WTO
USTR invites written comments concerning the issues raised in this dispute. All submissions must be in English and sent electronically via
To submit comments via
The
For any comments submitted electronically that contain business confidential information (BCI), the file name of the business confidential version should begin with the characters “BC”. Any page containing BCI must clearly be marked “BUSINESS CONFIDENTIAL” on the top and bottom of that page and the submission should clearly indicate, via brackets, highlighting, or other means, the specific information that is business confidential. If you request business confidential treatment, you must certify in writing that disclosure of the information would endanger trade secrets or profitability, and that the information would not customarily be released to the public. Filers of submissions containing BCI also must submit a public version of their comments. The file name of the public version should begin with the character
USTR may determine that information or advice contained in a comment, other than BCI, is confidential in accordance with section 135(g)(2) of the Trade Act of 1974 (19 U.S.C. 2155(g)(2)). If a submitter believes that information or advice is confidential, s/he must clearly designate the information or advice as confidential and mark it as “SUBMITTED IN CONFIDENCE” at the top and bottom of the cover page and each succeeding page, and provide a non-confidential summary of the information or advice.
Pursuant to section 127(e) of the URAA (19 U.S.C. 3537(e)), USTR will maintain a docket on this dispute settlement proceeding, docket number USTR-2018-0021, accessible to the public at
Federal Aviation Administration (FAA), DOT.
Notice.
This notice contains a summary of a petition seeking relief from specified requirements of Federal Aviation Regulations. The purpose of this notice is to improve the public's awareness of, and participation in, the FAA's exemption process. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number and must be received on or before August 7, 2018.
Send comments identified by docket number FAA-2018-0472 using any of the following methods:
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A.W. Pendergrass (202) 267-4713, Office of Rulemaking, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591.
This notice is published pursuant to 14 CFR 11.85.
Federal Highway Administration (FHWA), DOT.
Notice of limitation on claims for judicial review of actions by the California Department of Transportation (Caltrans).
The FHWA, on behalf of Caltrans, is issuing this notice to announce actions taken by Caltrans that are final. The actions relate to a proposed highway project, the State Route 84 (SR 84) Expressway Widening and SR 84/Interchange 680 (I-680) Interchange Improvements Project from post miles 17.9 to 22.9 on SR 84 and from post miles 10.3 to 15.3 on I-680 in the County of Alameda, State of California. Those actions grant licenses, permits, and approvals for the project.
By this notice, the FHWA, on behalf of Caltrans, is advising the public of final agency actions subject to 23 U.S.C. 139(
For Caltrans: Brian Gassner, Environmental
Effective July 1, 2007, the Federal Highway Administration (FHWA) assigned, and the California Department of Transportation (Caltrans) assumed, environmental responsibilities for this project pursuant to 23 U.S.C. 327. Notice is hereby given that Caltrans has taken final agency actions subject to 23 U.S.C. 139(
This notice applies to all Federal agency decisions as of the issuance date of this notice and all laws under which such actions were taken, including but not limited to:
23 U.S.C. 139(
U.S. Customs and Border Protection, Department of Homeland Security; Department of the Treasury.
Notice of proposed rulemaking.
This document proposes to amend U.S. Customs and Border Protection (CBP) regulations to implement changes to the drawback regulations as directed by the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA). These proposed regulations establish a new process for drawback pursuant to TFTEA which liberalizes the merchandise substitution standard, simplifies recordkeeping requirements, extends and standardizes timelines for filing drawback claims, and requires the electronic filing of drawback claims. TFTEA allows a transition period wherein drawback claimants will have the choice between filing claims under the existing process detailed in the current regulations or filing claims under the proposed new process. This document explains how filings during the transition period will work, discusses the interim policy guidance procedures for filing claims prior to these regulations becoming final, and proposes to make TFTEA-related changes, dealing with bonds, regarding joint and several liability for the importer of the goods and the drawback claimant, and technical corrections and conforming changes to CBP regulations. This document also proposes to clarify the prohibition on the filing of a substitution drawback claim for internal revenue excise tax paid on imported merchandise in situations where no excise tax was paid upon the substituted merchandise; or the substituted merchandise is the subject of a different claim for refund or drawback of tax under any provision of the Internal Revenue Code. CBP is proposing these amendments regarding excise taxes to protect the revenue by clarifying the relationship between drawback claims and Federal excise tax liability. Further, CBP proposes to add a basic importation and entry bond condition to foster compliance.
Comments must be received on or before September 17, 2018.
You may submit comments, identified by docket number USCBP-2018-0029, by
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Randy Mitchell, U.S. Customs and Border Protection, Office of Trade, Trade Policy and Programs, 202-863-6532,
Interested persons are invited to participate in this rulemaking by submitting written data, views, or arguments on all aspects of the proposed rule. CBP also invites comments that relate to the economic, environmental, or federalism effects that might result from this proposed rulemaking. Comments that will provide the most assistance to CBP will reference a specific portion of the proposed rulemaking, explain the reason for any recommended change, and include data, information, or authority to support such recommended change.
Drawback, as provided for in section 313 of the Tariff Act of 1930, as amended (19 U.S.C. 1313), is the refund or remission, in whole or in part, of duties, taxes, and fees imposed and paid under Federal law upon importation or entry and due on the imported merchandise. Drawback is a privilege, not a right, subject to compliance with prescribed rules and regulations administered by U.S. Customs and Border Protection (CBP).
In essence, a drawback claim is a request for a refund or remission of certain duties, taxes, and fees imposed upon importation which is filed with CBP after the merchandise or articles have been exported or destroyed. There are three main categories of drawback: Manufacturing drawback, rejected merchandise drawback, and unused merchandise drawback. Each main category of drawback is discussed, in turn, below.
Manufacturing drawback may be claimed on exported articles that have been manufactured or produced in the United States with imported duty-paid merchandise (direct identification manufacturing drawback), as well as on exported articles that have been manufactured or produced in the United States using domestic merchandise substituted for imported duty-paid merchandise meeting the statutory criteria (substitution manufacturing drawback).
Rejected merchandise drawback may be available upon the exportation or destruction of imported duty-paid merchandise entered or withdrawn for consumption meeting the statutory criteria (
Unused merchandise drawback may be claimed on imported merchandise that was exported or destroyed without having been used within the United States (direct identification unused merchandise drawback) as well as on goods that were exported or destroyed without being used that were substituted for imported merchandise meeting the appropriate criteria (substitution unused merchandise drawback).
Originally, as provided for in section 3 of the second Act of Congress, the Tariff Act of July 4, 1789, drawback of 99% of duties paid on imported merchandise (except distilled spirits) was permitted if the merchandise was exported within a year. However, drawback expanded over time to, among other things, provide for refunds of taxes and fees in some situations, allow for merchandise to be destroyed as an alternative to exportation, allow for the substitution of goods on which drawback could be claimed, and provide more than just a single year within which goods must be exported or destroyed.
Historically, drawback claims were submitted entirely on paper. While filing a claim entirely on paper is currently still an option, most drawback claims consist of two portions: The electronic transmission of the entry summary data for the designated imported merchandise via the CBP-authorized electronic data interchange (EDI); and the physical delivery of the CBP Form 7551 (Drawback Entry) and all required documents supporting the claim. For TFTEA-Drawback claims, filers will electronically transmit the drawback entry summary data and the entry summary data for the designated imported merchandise to CBP and will upload all documents required to support the claim. CBP has programmed the Automated Commercial Environment (ACE) for receiving
Upon receipt of a claim, CBP conducts an initial review, which allows CBP the opportunity to work with claimants to ensure that the claim is complete and timely. Once a complete claim is timely filed, drawback specialists review the supporting documentation to ensure that the claim is properly documented and the amount of the drawback is correctly calculated. In many instances, it is necessary for CBP to contact claimants to obtain additional supporting documentation, such as when there are questions regarding the identity of the merchandise in transfer scenarios or to confirm the actual date and fact of exportation. If additional information is required, CBP will send a request for information (CBP Form 28) to the claimant through the ACE portal or through the end of the transition period by physically transmitting the request, depending upon the method used to file the claim was filed. Claimants generally respond via the method by which they were contacted. The increased use of electronic filing and correspondence will expedite claim processing and payment.
Requests for information do not toll the deadlines for timely filing. In any event, claimants are bound by the deadlines for claims with respect to filing, amending, and perfecting.
On February 24, 2016, the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) (Pub. L. 114-125, 130 Stat. 122, February 24, 2016) was signed into law. Section 906 of TFTEA,
Section 906(q)(3) of TFTEA provides for a transition period, beginning February 24, 2018, and ending February 23, 2019, during which claimants may file claims under the current drawback process and regulations detailed in part 191 (and under section 313 of the Tariff Act of 1930 as in effect on the day before TFTEA was signed into law) or under the amended statute and the implementing regulations (proposed part 190). February 23, 2019, is the last day of the transition period. During the transition period, claimants may choose which process to file on a claim-by-claim basis, meaning that claimants may file some claims under the old drawback process and some claims under the TFTEA-Drawback process throughout the entirety of the transition period. For purposes of this document, “TFTEA-Drawback” is the term generally used to refer to drawback under section 1313, as amended by TFTEA, and the implementing regulations contained in proposed Part 190.
While TFTEA-Drawback claims have been accepted in ACE since February 24, 2018, it is not until February 24, 2019, that all claims must be filed in compliance with the amended statute. Section II.B,
Claimants are precluded from filing TFTEA-Drawback substitution claims for imported merchandise associated with an entry summary if any other merchandise covered on that entry summary has been designated as the basis of a claim under part 191, including during the transition period. Nevertheless, claimants may continue to make claims (including substitution claims) under part 191 for these entries through the end of the transition period on February 23, 2019. Similarly, claimants are precluded from filing any drawback claims under part 191 for imported merchandise associated with an entry summary if any other merchandise covered on that entry summary has been designated as the basis of a TFTEA-Drawback substitution claim, including during the transition period. These limitations exist because drawback refund amounts are claimed at the entry summary header level (
While all TFTEA-Drawback claims must be filed electronically, it is not until February 24, 2019 (the first day after the end of the transition period), that all drawback claims must be filed electronically.
By moving to a fully electronic environment as of February 24, 2019, CBP will be able to better validate all drawback claims based upon certain criteria specific to the type of drawback claim, including (but not limited to) the timeliness of the claim, the amount of refund claimed, and the suitability of
Many of the benefits for drawback claim processing noted above are made possible by systematic enhancements in ACE concerning line item reporting. Line item reporting, which is required for all TFTEA-Drawback claims, requires claimants to provide certain relevant information for the designated imported merchandise on a drawback claim associated with the line item on an entry summary, including the tariff classification, quantity, and value, as well as the duties, taxes, and fees assessed thereon. Line item reporting will enable more system validations at the line level and will help ensure that CBP does not overpay refunds.
All TFTEA-Drawback claims must be filed not later than 5 years after the date the merchandise on which drawback is claimed was imported.
Section 906(b) provides a new standard for determining which merchandise may be substituted for imported merchandise as the basis for a substitution claim. This standard generally requires that both the imported merchandise and the exported merchandise be classified or classifiable within the same the 8-digit number in the Harmonized Tariff Schedule of the United States (HTSUS) classification. This standard replaces the “same kind and quality” and “commercially interchangeable” standards that were applied, respectively, to substitution manufacturing drawback claims (19 U.S.C. 1313(b)) and substitution unused merchandise drawback claims (19 U.S.C. 1313(j)(2)). Prior to TFTEA, determining whether goods were of the same kind and quality or were commercially interchangeable was a commodity-specific question that imposed burdens on claimants (to prove that the merchandise met the applicable standard) and on CBP (to research and rule on the eligibility of the goods to be substituted). The new standards will reduce much of the above-cited burdens by generally eliminating uncertainty as to the whether the standard for substitution has been met.
Substitution under 19 U.S.C. 1313(b), for manufacturing drawback claims, is subject to a new standard that requires the substituted merchandise used in manufacturing to be classifiable under the same 8-digit HTSUS subheading number as the designated imported merchandise. Similarly, substitution under 19 U.S.C. 1313(j)(2), for unused merchandise drawback claims, is subject to a new standard that requires the substituted merchandise to be classifiable under the same 8-digit HTSUS subheading number as the imported merchandise, except that there are restrictions with respect to HTSUS basket provisions (
Under the new substitution standards, the correct HTSUS classification is a critical aspect of the exercise of reasonable care. Accordingly, importers and drawback claimants should take note that prospective rulings on classification may be requested pursuant to 19 CFR 177.1(a)(1).
Certain types of merchandise are exempt from the new substitution standards discussed above. Substitution manufacturing claims for sought chemical elements have a special rule for source material regardless of the 8-digit HTSUS subheading number.
Section 906(g) of TFTEA provides for a “lesser of” rule, as a safeguard, to ensure that the revenue is protected in light of the liberalization and simplification of the standards for substitution drawback claims. The “lesser of” rule provides that the refund will be equal to 99 percent of the lesser of the amount of duties, taxes, and fees paid with respect to the imported merchandise and/or that would have been paid on the substituted merchandise had it been imported. In all claims subject to the “lesser of” rule, it is incumbent on the claimant to properly calculate the proper amount of the claimed refund.
For manufacturing drawback claims, the substituted merchandise is that which was used in manufacturing, in lieu of the designated imported merchandise, and the “lesser of” comparison is based upon the amount of duties, taxes, and fees that would apply to the substituted merchandise if it were imported (with this amount reduced by the value of the materials recovered during destruction, if applicable).
The “lesser of” rule does not apply to claims for wine based on 19 U.S.C. 1313(j)(2) or to claims for finished petroleum products under 19 U.S.C. 1313(p).
Section 906(g) of TFTEA provides for the refund of taxes and fees, along with duties, for manufacturing drawback claims.
There is also a noteworthy difference regarding the statutory provisions for substitution manufacturing drawback claims whereby the merchandise must be imported duty-paid.
CBP currently requires all drawback claimants, regardless of the type of claim, to calculate drawback refunds based on the invoice value of the designated imported merchandise. TFTEA-Drawback direct identification claims will continue to be calculated based on the invoice value of the designated imported merchandise. This includes all drawback claims that are based upon direct identification (
Section 906(g) of TFTEA authorized CBP to calculate refunds based upon the per unit average of the duties, taxes, and fees reported on the entry summary line item that covered the designated imported merchandise if this method would result in simplification of the drawback claims process for CBP without posing a risk to the revenue of the United States. Per unit averaging requires that the drawback claimant calculate the per unit average value of the designated imported merchandise (
This determination was made only after much internal consideration as well as outreach to various trade stakeholders. A significant justification for the use of per unit averaging exclusively for substitution claims is that TFTEA imposed a “lesser of” rule for drawback claims involving substitution that safeguards against risks to the revenue. Simply put, by importing high and low value goods together on a single line, the claimant could manipulate the drawback claim through per-unit averaging by strategically exporting or destroying the low value goods, where the per-unit average of duties, taxes, and fees to be refunded was greater than that associated with the low value goods. The lesser of rule prevents this type of manipulation. No “lesser of” rule was authorized under TFTEA for direct identification claims.
The application of per unit averaging method of calculating drawback refunds requires the equal apportionment of the amount of duties, taxes, and fees eligible for drawback for all units covered by a single line item on an entry summary to each unit of merchandise (and is required for certain substitution drawback claims). In this method, the ratio of the total value of imported units as reported on a line item divided by the total quantity of imported units reported on a line item is to be multiplied by the quantity of units designated as the basis for the drawback claim to determine the
A substitution unused merchandise drawback claim is filed for 500 exported articles with a value of $110 per unit. The 500 units of designated imported merchandise were reported on an entry summary line item that covered 1000 units with an entered value of $100,000 and a duty rate of 2.5%. Therefore, regarding the amount of duties to be refunded pursuant to the “lesser of” methodology, the calculation of drawback will be based on the per unit value of $100 for the designated imported merchandise rather than the value of $110 for the exported merchandise.
The designated imported merchandise has a per unit value of $100. This applicable duty rate (2.5%) is applied to the average per unit value ($100) to determine the amount of duties apportioned to each unit at $2.50.
The amount available for a drawback refund is 99% of the duties paid per unit ($2.50), which is $2.48. This amount of refundable duties per unit ($2.48) is multiplied by the quantity of designated imported merchandise (500 units) to calculate the total amount available for the drawback refund, which is $1,240. Similar calculations must be completed for applicable taxes and fees as well.
A substitution manufacturing drawback claim is filed for 200 exported finished articles with a value of $400 per unit.
The substituted merchandise has a per unit value of $180. This applicable duty rate (3.1%) is applied to the average per unit value ($180) to determine the amount of duties apportioned to each unit at $5.58.
The amount available for a drawback refund is 99% of the duties paid per unit ($5.58), which is $5.52. This amount of refundable duties per unit ($5.52) is multiplied by the quantity of designated imported merchandise (600 units) to calculate the total amount available for the drawback refund, which is $3,312. Similar calculations must be completed for applicable taxes and fees as well.
Per unit averaging facilitates verification of the amounts of drawback refunds claimed. CBP does not receive invoice data that is usefully searchable electronically. By moving to the per unit averaging calculation methodology for substitution claims that is based on entry summary line data, CBP will gain the ability to automate validations of refund calculations made by the claimant. This should lead to faster and more efficient processing of claims, which will benefit both drawback claimants and CBP. These efficiencies are gained through the use of entry summary line item data, which is required for all TFTEA-Drawback claims, and will enable the per unit averaging calculation to take place as an automated verification rather than a manual process.
A consequence of using per unit averaging for substitution claims under TFTEA-Drawback is that a single entry summary line item cannot be used for both direct identification and substitution drawback claims. Consequently, CBP proposes to limit each line on an entry summary to designation as the basis for either direct identification or substitution claims, but never both. Therefore, all associated imported merchandise on that line may only be designated as the basis for either direct identification or substitution claims under TFTEA-Drawback. If both types of claims were allowed on a single line on an entry summary, CBP would be unable to issue full refunds for all drawback claims that could lawfully be made against a specific entry summary line item in some situations. For example, in some situations where substitution claims using the per unit average of the line item were to be claimed prior to a direct identification claim, the total amount of drawback remaining on the line may not be sufficient to pay the proper amount of drawback tied to the high value goods.
CBP has also chosen this proposed policy in expectation of the efficiencies to be gained by both claimants and CBP regarding calculating and verifying refunds. Accordingly, importers and drawback claimants need to be aware of the limitation on line item designations prior to importing merchandise or receiving transferred merchandise, because the first-filed claim on a line will dictate the type of claim available for any remaining merchandise of the same line.
For all TFTEA-Drawback claims, section 906(o) replaced the previous requirement to maintain supporting records for three years from the date of payment of the claim with the new requirement to maintain records for three years from the date of liquidation of the claim.
Currently, claimants for manufacturing drawback are required to provide a bill of materials or formula to CBP upon request, for any claim filed. CBP has and will continue to request these records for review in the context of verifications, audits, and other administrative actions. The purpose of this requirement is to ensure that the claims are consistent with the applicable bill(s) of materials or formula(s) that accompanied the
Claimants whose exported goods are the basis for a claim of drawback must provide proof that establishes fully the date and fact of exportation and the identity of the exporter. These requirements are provided for in proposed § 190.72. Under TFTEA-Drawback, proof of exportation is required in the form of export summary data that is provided as part of a complete drawback claim filed with CBP. However, the underlying supporting records must fully prove the exportation through records kept in the normal course of business. TFTEA also provides for proof of export to be established via an electronic export system of the United States, as determined by the Commissioner of CBP.
Section 906 removed the longstanding requirements for the submission of Certificates of Delivery (CDs) and Certificates of Manufacture and Delivery (CMDs) by stating that no additional certificates of transfer or manufacture shall be required 19 U.S.C. 1313(b), and by stating that no additional certificates of transfer are required in 19 U.S.C. 1313(c), (j), and (p). Section 906(l),
As previously explained in part 5(d), above, there is a limitation that imported merchandise on a single entry summary line item cannot be designated as the basis for both direct identification and substitution drawback claims under TFTEA, due to the different methods of calculating refund amounts. Because the transferor can transfer the merchandise covered by a specific line item to different transferees, the transferees might unwittingly attempt to file different types of claims, which is not permitted. In an effort to best inform transferees of the possible limitation, if a transferor has already filed a certain type of drawback claim designating a portion of merchandise from an entry summary line item, or otherwise has knowledge of an already-filed claim that does likewise, then the transferor must designate whether the merchandise is eligible for substitution or direct identification claims and notify the transferee of that designation at the time of transfer. This should help transferees to avoid attempting to make drawback claims for the transferred merchandise under the mutually exclusive bases of direct identification and substitution. If, at the time of transfer, the transferor is not aware of a particular type of drawback claim already filed relating to the entry summary line item, then the designation shall so indicate to the transferee. Notification of the designation from the transferor to the transferee must be documented in records, which may include records kept in the normal course of business. Notwithstanding the designation made, however, the type of the first drawback claim to be filed relating to that entry summary line item will dictate the type of any subsequent claims relating to that same entry summary line item.
Because this notification requirement is not effective until February 24, 2018, parties who anticipate making substitution-based claims under TFTEA-Drawback designating imported merchandise that was entered and transferred prior to this date, should consult with the transferor about whether the transferred merchandise potentially is eligible for substitution-based claims under TFTEA-Drawback. Such eligibility only exists if the transferred merchandise was not previously used as the basis for any non-TFTEA drawback claim, because all types of non-TFTEA drawback claims must be calculated based on invoice values, which conflicts with the use of per unit averaging when determining refunds for imported merchandise on a single entry summary line item.
It is important to note, again, that this notification of designation requirement is proposed in an effort to better inform claimants of possible limitations on the type of drawback claim that can be filed in situations involving transferred merchandise. The designation, however, is not a guarantee of the type of claim that can be filed. Drawback claimants must remain aware that the first drawback claim to be filed on a given entry summary line item will control the type of claim that subsequently can be filed in the case of transferred merchandise.
Section 906(f) established joint and several liability for the drawback claimant and the importer of the imported merchandise that is designated as the basis of the claim.
TFTEA-Drawback claims must be filed electronically. A complete TFTEA-Drawback claim will consist of the successful transmission of the data required for the TFTEA-Drawback entry and the upload of all required documents supporting the claim. When submitting the claim, the filer must provide, among other things, the drawback entry number, filing port code, claimant ID number, drawback provision, total drawback claim amount requested, the import entry summary(s) and line item number(s) for the designated imported merchandise, other required line item data including the HTSUS subheading number at the 10-digit level, information on exportation or destruction, and, if applicable, the NAFTA coding sheet. Proposed section 190.51 provides detailed information about specific data elements, certifications, and supporting documents that may be required depending on the particular type of drawback claim.
After transmission, the filer will receive an automated message indicating either that the electronic transmission has been accepted or rejected. In the case of a rejection, the automated message will inform the filer regarding the reason(s) for the rejection. Uploads of required forms, and any other supporting documentation should be submitted through ACE, Document Image System, after the successful electronic transmission. Further, related to filing claims electronically, as noted below in the section explaining the proposed regulations, a definition for “drawback office” has been added to § 190.2 clarifying that CBP has the authority to share or transfer work between drawback offices at its discretion.
For the interim period between February 24, 2018 and the date on which the new TFTEA-Drawback regulations will become effective, CBP developed interim procedures for accepting electronically filed TFTEA-Drawback claims. Specifically, to enable ACE to recognize and accept such claims, notwithstanding the absence of the necessary regulatory requirements for a complete TFTEA-Drawback claim, ACE was programed with provisional placeholder requirements, modeled on the draft regulatory package then under development. Corresponding provisional Customs and Trade Automated Interface Requirements (CATAIR) Guidelines were provided to enable claimants to program their systems to interface with these provisional placeholder requirements in ACE. And on February 9, 2018, CBP posted on its website a document entitled
The
The interim procedures outlined and explained in the
The programming specifics for electronic transmission are explained in more detail in the TFTEA-Drawback CATAIR Guidelines, which can be accessed at:
While the processes regarding general and specific manufacturing rulings detailed in appendices A and B of the proposed part 190 will be largely unchanged from those described in the appendices of part 191, TFTEA does have some impact on existing rulings. The existing rulings were issued based on the requirements of 19 CFR part 191, which do not comport with the TFTEA-Drawback requirements (
Similar to manufacturing rulings, drawback privileges granted under 19 CFR part 191 will not comport with TFTEA-Drawback. The privileges are the waiver of prior notice of intent to export or destroy and accelerated payment. With each claim that is filed under 19 CFR part 190, a certification of conformity with TFTEA-Drawback is required for claimants to continue to operate under one or both privileges if granted pursuant to 19 CFR part 191. Unlike for manufacturing rulings, these certifications will be made electronically with each TFTEA-Drawback claim. These certifications are limited to the drawback provisions under which they were originally granted in accordance with 19 CFR part 191, except that privileges granted under 19 U.S.C. 1313(j)(1) and 19 CFR 191 may be applied to TFTEA-Drawback
The certification processes described above are designed to ease the administrative burden on CBP while minimizing the disruption to those operating under existing manufacturing rulings and/or privileges. However, claimants are responsible for performing the requisite due diligence prior to filing any TFTEA-Drawback claims; and, the consequences of false or inaccurate claims include, but are not limited to, the denial of drawback refunds and the associated privileges, noted above.
The Internal Revenue Code (IRC) of 1986, as amended, codified as title 26 of the United States Code (26 U.S.C.), is the main body of domestic statutory tax law of the United States and includes laws covering Federal excise taxes. Federal excise taxes are imposed on the manufacture and distribution of certain consumer goods, including upon the importation of distilled spirits, wines, beer, tobacco products, and certain imported taxable fuel and petroleum products. While there are also excise taxes on other products, it is these taxes, because of the structure of the tax and the manner in which they are collected, that are eligible for drawback under 19 U.S.C. 1313.
Chapter 51 of the IRC sets forth excise tax collection and related provisions applicable to distilled spirits, wines, and beer. In general, this chapter provides that a Federal excise tax is imposed on all wines, distilled spirits, and beer produced in or imported into the United States. 26 U.S.C. 5001, 5041, 5051.
Statutory exceptions to the required payment of Federal excise tax exist. For example, when wine, distilled spirits, or beer are exported after payment or determination of tax, the IRC provides for “drawback” in an amount equal to the tax paid. 26 U.S.C. 5055, 5062. Under these provisions, the excise taxes are refunded upon exportation. Similarly, drawback is also available when wine, distilled spirits, or beer are exported from bonded premises regulated by the Alcohol and Tobacco Tax and Trade Bureau (TTB), where no tax has been paid, although tax liability attached at the time of production or import. While tax must ordinarily be paid upon removal of wine, distilled spirits, or beer from TTB-bonded premises, the removal may occur “without payment of tax” for the purpose of export. 26 U.S.C. 5214(a), 5362(c), 5053(a). Although removed from a TTB-bonded facility, the product is still subject to bond and still carries a tax liability until the product is exported. 26 U.S.C. 5053, 5175, 5362. Similarly, Title 19 also provides for “drawback equal in amount to the tax found to have been paid or determined on . . . bottled spirits and wines manufactured or produced in the United States” upon exportation. 19 U.S.C. 1313(d). Under these drawback provisions, a refund is made upon exportation if tax has already been paid, or if an unpaid tax liability exists, it is extinguished upon exportation. The net economic effect is identical.
Under Chapter 52 of the IRC, a Federal excise tax is imposed on all tobacco products and cigarette papers and tubes manufactured in or imported into the United States. 26 U.S.C. 5701. The tax on domestically-produced tobacco products and cigarette papers and tubes is imposed at the time of manufacture but generally is not paid or determined until the products are removed from TTB-bonded premises. 26 U.S.C. 5702, 5703. Upon exportation of tobacco products and cigarette papers and tubes upon which the tax has been paid, the IRC permits drawback of the tax paid. 26 U.S.C. 5706. In addition, tobacco products and cigarette papers and tubes may be removed from TTB-bonded premises, without the payment of Federal excise tax, for export. 26 U.S.C. 5704. Under these provisions, the excise tax liability is extinguished upon exportation. The net economic effect is identical.
Chapter 32 of the IRC imposes various excise taxes, including taxes on gasoline, diesel fuel, and kerosene (taxable fuel). For example, 26 U.S.C. 4081 imposes tax on the removal of taxable fuel from any refinery or terminal and on entry into the United States for consumption, use, or warehousing. The IRC permits the refund of this tax when taxable fuel is exported. 26 U.S.C. 6416, 6427. When the taxable fuel is imported into an IRS-registered facility, it is taxed upon removal from the facility and is not eligible for drawback under 19 U.S.C. 1313. Some taxable fuel, however, is not imported into an IRS-registered facility, in which case the tax is due upon importation and may be eligible for drawback under 19 U.S.C. 1313.
Under customs law, a form of drawback known as “substitution drawback” also occurs when products are imported into the United States and sufficiently similar products are exported or destroyed. 19 U.S.C. 1313(j)(2). Treasury Department audits and analyses have revealed that for a number of years, CBP has received and approved claims for substitution drawback under 19 U.S.C. 1313(j)(2) for imported bottled and bulk wine, even in circumstances in which no excise tax was paid on the substituted exported merchandise. CBP has not identified a record of the first time it granted a section 1313(j)(2) drawback claim for wine based on exported merchandise on which tax had not been paid—a claim for “double drawback,” drawback of the excise tax on both the imported product and the exported product.
An example of a claim for “double drawback” of wine proceeds as follows:
A domestic winery imports 100 liters of wine, pays Federal excise tax on the wine, and sells the imported wine in the United States. The domestic winery then exports 100 liters of its domestically-produced wine from TTB-bonded premises without payment of Federal excise tax. The domestic winery files a § 1313(j)(2) drawback claim with CBP on the basis that the 100 liters of domestically-produced wine are commercially interchangeable with the to the 100 liters of imported wine. The domestic winery receives a refund of 99 percent of the Federal excise taxes that it paid on the 100 liters of imported wine.
In this example, imported products are introduced into the U.S. market, in net effect, free of 99 percent of Federal excise tax. As a result, in this example, the U.S. Treasury ultimately receives only one percent of the Federal excise tax on the imported products that are consumed in the United States. By contrast, domestically-produced wine consumed in the United States is fully taxed. This practice results in revenue loss from having untaxed goods circulating in commerce. It also has the effect of giving imported wine a clear tax advantage in the domestic market over domestically produced wine. Because the revenue loss (or tax break) comes in the form of a reduction of tax on imported product, it puts domestically produced products at a disadvantage as compared to imports in the U.S. market.
This result is inconsistent with the broader statutory excise tax regime, which (on net) generally imposes excise taxes on all subject goods consumed in the United States, whether produced domestically or imported for domestic
CBP currently permits this practice only with respect to wine. But as explained, the IRC imposes excise tax and provides exemptions from such tax for other goods, including distilled spirits, beer, tobacco products, and certain taxable fuel. Some producers have already requested that CBP extend its current treatment of wine to distilled spirits, and it is possible that firms dealing in these other goods may seek similar treatment.
The allowance of substitution drawback claims in circumstances where internal revenue taxes have not been paid on the substituted product results in imported product being introduced into commerce with no net payment of excise tax—a “double drawback” that is at odds with the broader statutory schemes of both customs drawback and excise taxation.
As noted above, the IRC generally imposes excise taxes upon all covered domestic products and products imported for domestic consumption. The Customs Modernization and Informed Compliance Act (Mod Act), Public Law 103-182, 632, 107 Stat. 2057 (1993) (enacted as Title VI of the North American Free Trade Agreement Implementation Act), added a clause to 19 U.S.C. 1313(v) providing in relevant part that “[m]erchandise that is exported or destroyed to satisfy any claim for drawback shall not be the basis of any other claim for drawback.” This provision is best read to preclude, among other things, exported or destroyed merchandise from being used as the basis for
While Congress did not specifically define the term “drawback” in § 1313(v), its meaning is clear in context and within the broader statutory scheme governing drawback and excise taxes. In context, drawback encompasses the refund or remission of an excise tax that was paid, determined, or otherwise imposed by Federal law. The term is often used to refer to the refund of taxes that have been paid previously.
Accordingly, when wine, distilled spirits, beer, tobacco products, or other products subject to excise tax are exported from TTB-bonded premises “without payment of tax,” pursuant to 26 U.S.C. 5214, 5362, 5053, or 5704, the extinguishment of tax liability upon export is best understood as a form of drawback within the broad prohibition of 19 U.S.C. 1313(v).
This interpretation is further supported by the broader statutory scheme, which operates (in net effect) to subject all wine, distilled spirits, and beer consumed in the United States, whether produced domestically or imported, to an excise tax. The evident purpose of section 1313(v) is to advance that objective by preventing excessive revenue loss through multiple claims for drawback based on a single export. And to the same end, the statutes that govern withdrawal of wine, distilled spirits, beer, or tobacco products from TTB-bonded premises authorize regulations that may be necessary to protect revenue.
A contrary interpretation would undermine the statutory scheme of excise taxes that applies to imports and cause undue revenue loss. As just one example, a contrary reading of the statutory scheme would appear to permit an importer of distilled spirits to manufacture inexpensive liquor and destroy it, without having paid the excise tax imposed on domestically-produced liquor under 26 U.S.C. 5001. The importer in this scenario could then use the destruction of that domestically-produced liquor to seek a drawback under 19 U.S.C. 1313(j)(2) of the excise tax on liquor they import. Because the excise tax per gallon may far exceed the marginal cost of production of some types of liquor,
A contrary interpretation would also seem to permit the following hypothetical transaction:
A distilled spirits importer imports 200 gallons of liquor into a TTB-bonded facility. It pays excise tax on 100 gallons and sells those in the United States. It then exports the remaining 100 gallons without payment of Federal excise tax. The importer files a § 1313(j)(2) drawback claim with CBP on the basis that the 100 gallons of imported liquor sold in the United States is commercially interchangeable with the 100 gallons of imported liquor exported without payment of excise tax. The importer receives a refund of 99 percent of the Federal excise taxes that it paid on the 100 imported gallons sold in the United States.
In this hypothetical, too, imported products would be introduced into the U.S. market, in net effect, free of 99 percent of Federal excise tax. As a result, the U.S. Treasury would receive only one percent of the Federal excise tax on the imported products that are consumed in the United States. Such essentially tax-free treatment of domestically-consumed imported
Because drawback under 19 U.S.C. 1313 does not require CBP to verify whether substitute exported merchandise is tax paid, CBP does not have records that would identify instances of double drawback at issue here. Treasury Department audits and analyses have revealed that CBP began refunding excise taxes on wine under 19 U.S.C. 1313(j)(2) in approximately 2004 when the San Francisco office permitted drawback for such a claim. Some of these drawback claims may have included a double refund. It is possible that this change took place due to a misunderstanding of a 2004 amendment to the drawback statute designed to provide for drawback of the Harbor Maintenance Tax.
Because of the concern that the statutory scheme was being subverted and because of concerns with revenue losses both realized and potential, on October 15, 2009, CBP proposed amending title 19 of the Code of Federal Regulations to preclude the filing of substitution drawback claims for internal revenue excise tax paid on imported merchandise in situations where no excise tax was paid upon the substituted merchandise or where the substituted merchandise had been the subject of a different claim for refund or drawback of excise tax under any provision of the IRC.
A number of importers of distilled spirits have since sought the same treatment for their products that wine currently receives. Consistent with the analysis in this document, CBP has denied these requests, but has not corrected the treatment of wine through a notice and comment process, as required by 19 U.S.C. 1625(c).
For the reasons explained above, CBP believes that the phrase “any other claim for drawback” in section 1313(v), read in context of the broader statutory scheme, encompasses the refund or remission of an excise tax that was paid, determined, or otherwise imposed by Federal law. To the extent section 1313(v) can be considered ambiguous, however, CBP has determined that there are compelling economic and fiscal reasons to resolve any ambiguity to preclude substitution drawback claims for excise tax paid on imported merchandise where no excise tax was paid on the substituted merchandise.
As explained below, firms dealing in distilled spirits, beer, tobacco products, and certain taxable fuels have a strong economic incentive to seek the same double drawback treatment currently afforded to wine. If CBP fails to adopt a uniform interpretation and application of section 1313(v), firms dealing in other products subject to Federal excise tax could also pursue substitution drawback claims similar to those that have been made for wine under section 1313(j)(2). The statutory provisions governing excise tax on other goods—beer, distilled spirits, tobacco products, and certain fuels—are substantially similar (and in many material respects, identical) to those governing excise tax on wine. Maintaining the current treatment of drawback claims for wine risks a growth in future revenue loss attributable to double drawback.
While proponents of the double drawback practice argue that it promotes exports, the observed economic effects of the practice do not support the view that it is an effective or efficient export promotion measure. Double drawback also places domestic products made for domestic consumption, which are subject to excise tax across the board, at a relative disadvantage to products imported for domestic consumption, for which 99 percent of the excise tax may be refunded based on a double drawback claim. The interpretation of section 1313(v) reflected in this proposed rule would avoid such market-distorting disparities.
A more detailed analysis follows in two parts. First, the available trade data suggest that double drawback promotes imports. In contrast, the trade data provide little evidence that total wine exports increased in response to double drawback. Second, a revenue analysis elucidates the incentives that double drawback creates for firms that deal in goods other than wine and provides initial projections of U.S. Government revenue loss that could result if these firms were provided the same double drawback treatment currently available only for substituted wine.
Imported wine that benefits from double drawback enters the U.S. market with a substantial tax advantage over domestically produced wine. While this tax advantage exists for all imported wine benefiting from double drawback, it is largest for imported bulk wine. Because the customs value of imported bulk wine is lower than the value for bottled wine, excise tax levied by volume comprises a greater percentage of its average price, meaning that producers have a stronger economic incentive to claim double drawback on bulk wine.
U.S. import statistics are consistent with these incentives. Import volumes of wine have grown rapidly during the period double drawback has been available. In 2004, total U.S. imports of wine, either bottled or bulk, were 576 million liters by volume.
In contrast to the rapid growth of imports, the U.S. trade statistics provide little evidence that total wine exports by volume increased from 2004 to 2016. The total volume of wine exports only grew by 5.5 percent over that period.
Although the value of U.S. bottled wine exports has risen from 2004 to 2016 (from $600 million to $1.05 billion), the average unit value of the exports also increased during that period (from $2.30 to $6.10).
While U.S. trade statistics do not indicate a significant increase in total wine exports, they do indicate a change in the composition of exports while double drawback has been available. From 2004 to 2016, the share of exported wine in bulk containers rose from 20.8 percent to 50.6 percent by volume, consistent with the shift in composition of imports discussed above.
In short, while it is not possible to say that double drawback is the primary driver of the wine trade trends, available trade data are consistent with the view that double drawback may have promoted wine imports but that it has not been an effective export promotion measure.
Maintaining the current double drawback treatment of wine and extending that treatment to other products subject to excise tax—distilled spirits, beer, tobacco products, and certain taxable fuels—would cause significant revenue loss to the U.S. Government.
Because drawback claims have not previously captured the tax-paid status on substituted exports, the exact amount of revenue lost to double drawback involving imported wine is not certain. Nevertheless, analysis of CBP import data and individual drawback claims at the firm level permit a reasonable estimate of the historical revenue loss from double drawback treatment of wine imports.
Excise taxes on most products addressed in this rule are applied based on volume, not as a percentage of value. For example, the standard excise tax on wine is $1.07 per wine gallon.
A second factor of particular concern is the market-distorting incentive for re-routing shipments that an expansion of double drawback would create. Double drawback creates an incentive for firms that both import and export to route a shipment destined for another country through the United States to claim excise tax relief on imports into the United States. Under this approach, first, a firm imports 200 units of, for example, distilled spirits. It removes 100 units from customs custody for domestic sale and pays excise tax for their import. It then imports the second 100 units into TTB bond, without
The following estimates also assume a 7 percent reduction in revenue loss by comparison to the historical data concerning wine due to the Craft Beverage Modernization Act (CBMA), Public Law 115-97, § 13801-13808 (2017). The CBMA provides lower overall effective tax rates for smaller producers than for larger producers. This assessment of the effects of the CBMA is based on the assumption that most double drawback claims would be taken by large multinational firms paying the full rate on marginal imports above the limit identified in the CBMA. The transaction costs involved in drawback support the view that drawback most benefits larger firms that are involved in both exporting and importing.
The following estimates further assume that double drawback of wine, distilled spirits, and beer would grow with real GDP. That is, Treasury assumes that consumption of excise-taxed beverages, and drawback on those taxes, would grow with the overall economy. Treasury uses the Administration's forecast of taxable fuel and tobacco excise tax revenue to estimate change over time. Both of these forecasts decrease slightly over time, consistent with recent trends in excise revenue.
In total, the incentives for firms that deal in distilled spirits, beer, tobacco products, and certain fuels—in addition to the continued double drawback treatment of wine—could cause a revenue loss of $674 million to $3.3 billion on an average annual basis over the next ten years, if double drawback treatment were extended to commodities other than wine and not eliminated.
In fiscal year 2015, CBP paid $54.9 million in excise tax refunds and had initial tax collections from wine imports of $335 million, according to CBP data.
With respect to distilled spirits, fiscal year 2016 excise tax revenue from imports was $1.5 billion, according to TTB collections data. A large portion of imports are, however, imported into TTB bond and then are treated as domestic collections. U.S. Census Bureau data suggest actual import excise tax revenue is closer to $2.6 billion.
With respect to beer, fiscal year 2016 excise tax revenue from imports was $542 million, according to TTB collections data. The tax of $18 per barrel is 12.3 percent of the value of imports and 15.5 percent of the value of exports,
With respect to tobacco products, fiscal year 2016 excise tax revenue on imports was $829 million according to TTB collections data. The tax incentives to claim double drawback are especially strong for tobacco products. For instance, in 2016, the Federal excise tax on a carton of cigarettes was 199 percent of the average customs value of a carton of imported cigarettes and 408 percent of the average export value of a carton of cigarettes exported from the United States based on U.S. Census Bureau trade data.
Finally, with respect to taxable fuels, current annual excise tax revenue on imports is roughly $2 billion according to U.S. Census Bureau data on imports of gasoline and diesel fuel.
This proposed rule would protect the integrity of excise tax revenue collections by ensuring that 19 U.S.C. 1313(j)(2) substitution drawback is not employed to evade the statutory prohibition on using a single exportation as the basis for two drawback claims. It would preclude the filing of substitution drawback claims for excise tax paid on imported merchandise in situations where no excise tax was paid upon the substituted merchandise or limit the amount of drawback allowable to the amount of taxes paid (and not returned by refund, credit, or drawback) on the substituted merchandise, and thus eliminate double drawback. CBP invites comments from interested members of the public on this proposal.
The following proposed regulatory amendments are generally based on 19 U.S.C. 1313, including the new requirements, timeframes, and related operational decisions necessitated by TFTEA. When proposed regulatory language is based, at least in part, on authority other than 19 U.S.C. 1313, these instances are noted below.
CBP based the regulatory structure of the proposed new part 190 on the current part 191 in order to ease the transition for drawback practitioners by attempting to ensure, wherever possible, that the numerical regulations in each part correspond with each other. In some regulations, while the name of a section has changed, the content of the proposed section generally aligns with the content of the corresponding section in part 191. For example, § 191.10, Certificate of delivery, deals with transfers of merchandise and requirements related to certificates of delivery as evidence of the transfers. However, proposed § 190.10, Transfer of merchandise, also deals with transfers of merchandise but it is not called “certificate of delivery” because TFTEA eliminated certificates of delivery (as well as certificates of manufacture and delivery). In other instances, it was necessary to reserve a section (
New part 190 is drafted with a scope section and a section regarding claims filed under NAFTA followed by 19 subparts: General Provisions; Manufacturing Drawback; Unused Merchandise Drawback; Rejected Merchandise; Completion of Drawback Claims; Verification of Claims; Exportation and Destruction; Liquidation and Protest of Drawback Entries; Waiver of Prior Notice of Intent to Export; Accelerated Payment of Drawback; Internal Revenue Tax on Flavoring Extracts and Medicinal or Toilet Preparations (Including Perfumery) Manufactured From Domestic Tax-Paid Alcohol; Supplies for Certain Vessels and Aircraft; Meats Cured With Imported Salt; Materials for Construction and Equipment of Vessels and Aircraft Built for Foreign Ownership and Account; Foreign-Built Jet Aircraft Engines Processed in the United States; Merchandise Exported From Continuous CBP Custody; Distilled Spirits, Wines, or Beer Which Are Unmerchantable or Do Not Conform to Sample or Specifications; Substitution of Finished Petroleum Derivatives; Merchandise Transferred to a Foreign Trade Zone From CBP Custody; Drawback Compliance Program.
Section 190.0 briefly describes the scope of the new proposed part 190 dealing with drawback as amended by TFTEA.
Section 190.0a states that claims involving NAFTA are provided for in part 181. This section contains only grammatical changes from the corresponding section in part 190.
Section 190.1 briefly describes the authority of the Commissioner of CBP to prescribe, and of the Secretary of the Treasury to approve, rules and regulations regarding drawback. It is proposed to amend the corresponding section in part 191 as well as to identify Treasury Department Order Number 100-16 and DHS Delegation Order 7010.3 as sources of authority.
Section 190.2 lists definitions used throughout the proposed part 190. This section differs from the corresponding section in part 191 in that the definitions for certificate of delivery, certificate of manufacture and delivery, and commercially interchangeable merchandise have been removed and the definitions for the following terms were added: Bill of materials; document; drawback office; formula; intermediate party; per unit averaging; schedule B; sought chemical element; and wine.
Section 190.3 provides information regarding the duties, taxes, and fees subject or not subject to drawback. This proposed regulation differs from the corresponding regulation in part 191 in that it generally provides for refunds of duties, taxes, and fees based on the changes to 19 U.S.C. 1313(l) stemming from TFTEA. This proposed regulation differs from the current corresponding regulation in part 191 by allowing drawback on the merchandise processing fee (MPF) generally, whereas 19 CFR 191.3(a)(4) limits drawback on MPF to situations only involving claims under 19 U.S.C. 1313(j) and 19 U.S.C. 1313(p)(2)(A)(iii) or (iv). Consistent with the Miscellaneous Trade and Technical Corrections Act of 2004 (Pub. L. 108-429), which amended 19 U.S.C. 1313 to allow, inter alia, harbor maintenance taxes (HMT) refunds, this proposed regulation also allows drawback on HMT for claims under the provisions which provide for drawback of tax.
Similarly, but subject to the limitations under 19 U.S.C. 1313 prior to being amended by TFTEA, this document proposes to update 19 CFR 191.3 by creating a new paragraph (a)(5) to allow drawback on HMT, but limited to situations involving only claims under 19 U.S.C. 1313(j) and 19 U.S.C. 1313(p)(2)(A)(iii) or (iv). In addition, 19 CFR 191.3(b)(1) is revised to otherwise prohibit HMT refunds except under the provisions specified in proposed new paragraph (a)(5). Relatedly, section 191.3 is retitled as “duties, taxes, and fees subject or not subject to drawback” for clarifying purposes.
Section 190.4 provides information regarding drawback and merchandise in which the U.S. Government has an interest. This section replicates the corresponding section in part 191.
Section 190.5 states that drawback is available on goods shipped to Guantanamo Bay and that drawback under 1313(j)(1) is permitted on merchandise shipped to certain insular possessions and trust territories. This section differs from the corresponding section in the current part 191 because the Miscellaneous Trade and Technical Corrections Act of 2004 (Pub. L. 108-429), amended 19 U.S.C. 1313 by adding paragraph (y) to allow drawback under 19 U.S.C. 1313(j)(1) on entries shipped from the customs territory of the United States to the U.S. Virgin Islands, American Samoa, Wake Island, Midway Islands, Kingman Reef, Guam, Canton Island, Enderbury Island, Johnston Island, and Palmyra Island.
Section 190.6 specifies who has the authority to sign or electronically certify drawback documents. This section differs from the corresponding section in part 191 in that it provides for electronic signatures, removes references to Certificates of Delivery and Certificates of Manufacture and Delivery, and includes additional references to bill of materials and formulas.
Section 190.7 provides information on general manufacturing drawback rulings, states that the process to modify these rulings is the same as provided for in § 190.8, and also clarifies the longstanding CBP procedures for the modification of these rulings. This section differs from the corresponding section in part 191 in that it makes TFTEA-conforming changes, such as adding the requirement to provide the 8-digit HTSUS number, and it contains grammatical and nomenclature changes.
Section 190.8 provides information on specific manufacturing drawback rulings and establishes a process to modify these rulings to comply with TFTEA-Drawback requirements by providing the ability to annotate the ruling with the 8-digit HTSUS numbers for rulings issued prior to February 24, 2018, if accompanied by the relevant certification. This section differs from the corresponding section in part 191 in that it makes TFTEA-conforming changes, such as adding the requirement to provide the 8-digit HTSUS number, and it contains grammatical and nomenclature changes.
Section 190.9 provides information regarding agency relationships detailing how the owner of the identified merchandise, the designated imported merchandise, and/or the substituted merchandise used to produce an exported article may employ another person to do part, or all, of the manufacture or production under 19 U.S.C. 1313(a) or (b). This section is similar to the corresponding section in part 191; however, it updates the language by removing references to Certificates of Delivery and includes the requirement to provide the 10-digit HTSUS number.
Section 190.10 provides information regarding documenting and maintaining records regarding transfers of merchandise. This section contains significant differences specific to TFTEA-Drawback, from the corresponding section in part 191.
Section 190.11 provides information on the valuation of the designated imported merchandise for drawback claims, as well as for the application of the “lesser of” rules for substitution claims (
Section 190.12 provides information regarding situations when a claimant files under an incorrect provision and this section states that the claim may be deemed filed pursuant to any other provision if it is determined that drawback is allowable under that provision but not under the provision as originally filed. With the exception of cross-references, this section is generally unchanged from the corresponding section in part 191.
Section 190.13 states that drawback is available under 19 U.S.C. 1313(q) on imported packaging material when used to package or repackage merchandise or articles exported or destroyed pursuant to certain other provisions. This section differs from the corresponding section in part 191 due to grammatical changes.
Section 190.14 provides for identification of merchandise or articles through accounting methods in situations not involving substitution, which remain the same as in part 191 and are based on a standard of fungibility. This section differs from the corresponding section in part 191 regarding the five-year time period and generally due to minor clarifying edits as well as grammatical and nomenclature changes.
Section 190.15 provides general information regarding recordkeeping requirements. With the exception of the recordkeeping time period, this section is unchanged from the corresponding section in part 191.
Section 190.21 provides the general rule regarding direct identification manufacturing drawback claims. This section differs from the corresponding regulation in part 191 in that it incorporates changes such as the amount of drawback provided for and the limitation of drawback of duties regarding flour or by-products of imported wheat.
Section 190.22 provides the general rule regarding substitution manufacturing drawback claims. This section differs from the corresponding regulation in part 191 in that it incorporates changes to 19 U.S.C. 1313(b) brought about in Section 906 of TFTEA such as the 8-digit HTSUS substitution standard and provides for the “lesser of” rule as it applies to TFTEA-Drawback and also contains grammatical and nomenclature changes. This section also includes language regarding the preclusion of claiming Federal excise taxes discussed in detail in the section titled
Section 190.23 details the methods and requirements for claiming drawback specific to manufacturing claims. This section differs significantly from the corresponding section in part 191 in that it is titled differently, it provides for a different methodology for claiming drawback (relative value) and it is slightly reordered.
Section 190.24 directs parties involved in drawback-related transactions to § 190.10, the general section dealing with transfers of merchandise. This section differs from the corresponding section in part 191 by referencing the appropriate section in the proposed part dealing with transfers of merchandise.
Section 190.25 directs parties involved in the destruction of merchandise for drawback-related transactions to § 190.71, which contains the procedures for destroying merchandise under CBP supervision. This section is nearly identical to the corresponding section in part 191.
Section 190.26 provides information regarding recordkeeping requirements generally and specifically requires documents enabling CBP to trace the articles manufactured or produced from importation, through any transfers, to exportation or destruction. This section is substantially similar to the corresponding section in part 191 but it differs due to certain grammatical and nomenclature changes and it contains TFTEA-based modifications such as requiring the 8-digit HTSUS number rather than referencing same kind and quality.
Section 190.27 provides general information on the time limitations regarding manufacturing drawback. This
Section 190.28 details the parties entitled to file a claim in situations involving manufacturing drawback. This section differs from the corresponding section in part 191 due only to a few grammatical changes.
Section 190.29 requires a claimant filing a manufacturing drawback claim to make certifications regarding the availability of the applicable bill of materials or formula including the HTSUS subheading number(s) and the quantities of merchandise. This regulation is new and does not have a corresponding regulation in part 191; however, the type of documentation covered by this certification has generally been required by CBP as part of a manufacturing drawback claim.
Section 190.31 provides the general rule regarding direct identification unused merchandise drawback claims. This section differs from the corresponding regulation in part 191 in that it incorporates TFTEA-based changes to 19 U.S.C. 1313(j)(1) such as the 5-year period for filing a claim and it contains grammatical and nomenclature changes.
Section 190.32 provides the general rule regarding substitution unused merchandise drawback claims. This section differs from the corresponding regulation in part 191 in that it incorporates TFTEA-based changes to 19 U.S.C. 1313(j)(2) such as the 5-year period for filing a claim and HTSUS-based substitution determinations, provides for the “lesser of” rule regarding allowable refunds, and contains grammatical and nomenclature changes. This section also explains the special substitution rule for wine, which is not provided for in the corresponding section of part 191, and includes language regarding the preclusion of claiming Federal excise taxes discussed in detail in the section titled
Section 190.33 details the parties entitled to claim in situations regarding unused merchandise drawback. This section differs from the corresponding regulation in part 191 in that it incorporates TFTEA-based changes such as referencing records kept in the normal course of business; it does not reference terms such as commercially interchangeable and certificate of delivery, which were eliminated for TFTEA-Drawback; and it contains grammatical and nomenclature changes.
Section 190.34 directs parties involved in drawback-related transactions to § 190.10, the general section dealing with transfers of merchandise. This section differs from the corresponding section in part 191 in that it merely directs to the general section dealing with transfers of merchandise rather than detailing specifics.
Section 190.35 contains specific instructions regarding the required notice of intent to export, destroy, or return merchandise, and the process regarding CBP's determination to examine merchandise. The process described in this section replicates the process as laid out in the corresponding section in part 191, with only grammatical and nomenclature changes.
Section 190.36 contains information regarding obtaining a one-time waiver of the requirement to provide notice of intent to export. The process described in this section replicates the process as laid out in the corresponding section in part 191.
Section 190.37 directs parties involved in the destruction of merchandise for drawback claims to § 190.71, which contains the procedures for destroying merchandise under CBP supervision. The process described in this section replicates the process as laid out in the corresponding section in part 191 and contains only one nomenclature change.
Section 190.38 provides information regarding recordkeeping requirements generally and specifically requires documents enabling CBP to trace the merchandise from importation, through any transfers, to exportation or destruction. This section is substantially similar to the process as laid out in the corresponding section in part 191 and contains grammatical and nomenclature changes.
Section 190.41 provides for drawback claims under 19 U.S.C. 1313(c) regarding rejected merchandise involving goods that do not conform to sample or specifications, were shipped without consent of the consignee, or determined to be defective at the time of importation. This section differs from the corresponding section in part 191 in that it contains nomenclature changes and includes additional language regarding goods sold at retail and returned, removes certain language regarding satisfactory evidence and includes language regarding the amount of drawback allowable.
Section 190.42 sets forth the general procedures for filing, documenting, and certifying claims under rejected merchandise drawback. This regulation differs from the corresponding regulation in part 191 in that it includes the expanded time frame of 5 years from the date of importation for filing claims and directs claimants to § 190.71 for procedures regarding the destruction of merchandise under CBP supervision. This regulation also differs from the current corresponding regulation in part 191 (at § 191.42(a)), which requires that the merchandise be in CBP custody prior to exportation or destruction. This was rendered obsolete by the Miscellaneous Trade and Technical Corrections Act of 2004 (Pub. L. 108-429), which removed the requirement that the merchandise be in CBP custody prior to exportation or destruction. Accordingly, it is proposed to update § 191.42(a) as well.
Section 190.43 informs claimants of the possibility of filing a direct identification unused merchandise claim under 19 U.S.C. 1313(j)(1) in lieu of a rejected merchandise claim, to the extent that the merchandise qualifies. This section replicates the corresponding section in part 191; however, the section title, unused merchandise drawback claim, differs from the corresponding section title in part 191, which is unused merchandise claim.
Section 190.44 is reserved. The corresponding regulation in part 191 directs claimants to § 191.71 for the procedures for destroying merchandise under CBP supervision. This section is unnecessary as a stand-alone regulation because the citation to § 190.71, dealing with destruction under CBP supervision, is included in § 190.42, as discussed above.
Section 190.45 is a new regulation regarding the special rule for substitution for returned retail merchandise, a subset of rejected merchandise provided for in 19 U.S.C. 1313(c). This section includes requirements that have been in effect since 2004, when the Miscellaneous Trade and Technical Corrections Act of
Section 190.51 provides information regarding what constitutes a complete drawback claim and delineates those supporting documents that must be uploaded to complete a claim. This proposed section explains the requirement that the successful electronic transmission of drawback claims in the CBP-authorized EDI system includes upload of supporting documentation. This section, at 190.51(a)(4), includes the prohibition against designating imported merchandise from a line item on an entry summary as part of a TFTEA-Drawback substitution claim under part 190 if any other merchandise covered on that entry summary has been designated as the basis of a claim under part 191 (and the corresponding regulation in part 191 is similarly amended at 191.51(a)(3)). This section also provides information regarding the official date of filing, calculation of refunds relative to drawback-eligible duties, taxes, and fees, as well as information regarding the reporting of the HTSUS classifications and Department of Commerce Schedule B commodity numbers applicable to imported, substituted, exported, and destroyed merchandise and articles. This section also differs from the corresponding section in part 191 due to corrections of clerical errors in (b)(2)(i) regarding the mathematical calculations included in the example.
Section 190.52 concerns rejecting, perfecting, or amending drawback claims, including the applicable timeframes and limitations. This section differs from the corresponding section in part 191 in that it includes the TFTEA-based 5-year deadline and includes certain grammatical and nomenclature changes.
Section 190.53 details CBP's authority to require claimants to restructure claims if necessary to foster administrative efficiency. This section differs from the corresponding section in part 191 due only to nomenclature changes.
Section 190.61 provides information regarding the verification of drawback claims, including how verification is done and its impact on liquidation. This section differs from the corresponding section in part 191 slightly due to simplification of the language related to the electronic environment for TFTEA-Drawback claims and grammatical and nomenclature changes.
Section 190.62 provides information regarding criminal and civil penalties related to drawback claims. This section replicates the corresponding section in part 191.
Section 190.63 is a new regulation detailing the joint and several liability of the importer of the merchandise designated as the basis of a drawback claim and the party claiming drawback.
Section 190.71 provides procedures and requirements regarding obtaining drawback on articles destroyed under CBP supervision. This section differs from the corresponding section in part 191 due to grammatical and nomenclature changes.
Section 190.72 provides requirements regarding proof of export in drawback claims. This section differs from the corresponding section in part 191 in that it lists the required summary data for establishing exportation and references certain supporting documents to prove export.
Section 190.73 states that records kept through an electronic export system of the United States Government may be considered as actual proof of exportation only if CBP has officially approved the use of that electronic export system as proof of compliance. The corresponding regulation in part 191 provided information regarding export summary procedures.
Section 190.74 provides information regarding exportation by mail and how to claim drawback. This section differs from the corresponding section in part 191 due to grammatical and nomenclature changes.
Section 190.75 provides information regarding exportation by the U.S. Government and how to claim drawback. This section differs slightly from the corresponding section in part 191 due to grammatical changes and it does not contain the reference to section 191.73, which in part 191 provided detailed information on export summary procedures (the relevant data elements from the export summary are now incorporated into the drawback entry summary, as provided for in 19 CFR 190.51(a)).
Section 190.76 is reserved as corresponding section 191.76 provides information regarding landing certificates, which are now obsolete.
Section 190.81 provides information regarding the liquidation of drawback claims. The Miscellaneous Trade and Technical Corrections Act of 2004 (Pub. L. 108-429), amended 19 U.S.C. 1504 to expressly impose limitations on the liquidation of drawback entries. Pursuant to this 2004 amendment, unless a claim for drawback is extended or suspended, an entry or claim for drawback not liquidated within 1 year from the date of entry or claim will be deemed liquidated at the drawback amount asserted at the time of entry or claim. Accordingly, this document in § 190.81 and in § 191.81 proposes to clarify this 2004 modification regarding drawback claims and deemed liquidations.
Section 190.82 specifies who is entitled to claim drawback. This section differs from the corresponding section in part 191 due only to grammatical changes.
Section 190.83 specifies who is entitled to receive drawback payments. This section replicates the corresponding section in part 191.
Section 190.84 provides information regarding protest procedures involving drawback claims. This section differs from the corresponding section in part 191 due only to a grammatical change.
Section 190.91 provides procedures regarding applying for and obtaining the privilege of waiver of prior notice of intent to export. This section differs from the corresponding section in part 191 in that it references the need to meet the standard for substitution rather than using the term commercially interchangeable, it discusses grandfathering in existing privilege holders relative to TFTEA-based changes, and it contains grammatical and nomenclature changes.
Section 190.92 provides procedures regarding applying for and obtaining the privilege of accelerated payment in which payment of drawback claims may be obtained prior to liquidation. This section differs from the corresponding section in part 191 due to grammatical and nomenclature changes.
Section 190.93 provides for the combined privileges of waiver of prior notice and accelerated payment and states that applications may be for one privilege, both privileges separately, or both privileges in a combined application. This section replicates the corresponding section in part 191.
In addition to the proposed regulations described immediately below in subpart J (§§ 190.101—190.106), the Department of the Treasury and CBP are also considering transferring the administration of drawback refunds provided for in subpart J from CBP to the Alcohol and Tobacco Tax and Trade Bureau (TTB). This part of the law solely involves drawback for the export of domestic products, and such a transfer would place with the agency with responsibility for taxation of domestic products. It would also enable exporters of flavoring extracts and medicinal or toilet preparations to claim the full amount of drawback available at a single agency. CBP and TTB would greatly appreciate comments on this proposal.
Section 190.101 states that 19 U.S.C. 1313(d) provides for drawback for the refund of internal revenue tax upon the exportation of flavoring extracts and medicinal or toilet preparations (including perfumery) manufactured or produced in the United States in part from the domestic tax-paid alcohol. This section differs from the corresponding section in part 191 due only to grammatical changes.
Section 190.102 provides that provisions relating to direct identification drawback (contained in subpart B of this part) will apply to claims for drawback filed upon the exportation of flavoring extracts and medicinal or toilet preparations (including perfumery) manufactured or produced in the United States in part from the domestic tax-paid alcohol. This section differs from the corresponding section in part 191 due to grammatical and nomenclature changes and in paragraph (e), which states that the time period for completing claims is three years from the date of export.
Section 190.103 details additional requirements in situations where a declaration of the manufacturer showing whether a claim has been or will be filed by the manufacturer with the regional Director, National Review Center, TTB, is necessary. TTB was previously referred to as the Bureau of Alcohol, Tobacco and Firearms. This regulation has been updated throughout for accuracy, including updating the statutory citations to 26 U.S.C. 5111-5114, dealing with the Internal Revenue Code. This section also differs from the current corresponding section in part 191 due to grammatical and nomenclature changes. For the same reasons detailed here, it is proposed to update § 191.103 as well.
Section 190.104 provides information regarding required certificates involving drawback and TTB. This regulation has been updated for accuracy because, among other things, the relevant TTB Form (5100.4), was updated in November of 2015. This section also differs from the current corresponding section in part 191 due to grammatical and nomenclature changes. It is proposed to update that section, § 191.104, as well.
Section 190.105 provides that the drawback office must ascertain the final amount of drawback due by reference to the specific manufacturing ruling under which drawback was claimed. This section differs from the corresponding section in part 191, which requires that the final amount be made in reference to the certificate of manufacture and delivery, which is no longer required in TFTEA-Drawback.
Section 190.106 provides for the limitation of drawback available in situations in which the declaration required by § 190.103 of this subpart shows that a claim has been or will be filed and it states that drawback may not be granted absent receipt from TTB of a copy of TTB Form 5100.4 (Certificate of Tax-Paid Alcohol). This section also differs from the current corresponding section in part 191 due to grammatical and nomenclature changes regarding TTB. It is proposed to update that section, § 191.106, as well.
Section 190.111 states that 19 U.S.C. 1309 provides for drawback on articles laden as supplies on certain vessels or aircraft of the United States or as supplies including equipment upon, or used in the maintenance or repair of, certain foreign vessels or aircraft. This section replicates the corresponding section in part 191.
Section 190.112 provides procedures regarding obtaining drawback in situations involving supplies for certain vessels and aircraft and states that the provisions of this subpart will override other conflicting provisions of this part. This section differs from the corresponding section in part 191 due to TFTEA-based changes, such as the 5-year time period for filing claims, and due to grammatical and nomenclature changes.
Section 190.121 states that 19 U.S.C. 1313(f) provides for drawback allowance on meats cured with imported salt. This section replicates the corresponding section in part 191.
Section 190.122 provides procedures regarding obtaining drawback in situations involving meats cured with imported salt. This section differs from the corresponding section in part 191 in that the organizational structure was changed because paragraph (b), regarding modifying a paper form, was removed, and grammatical changes have been made.
Section 190.123 provides that drawback will be refunded in aggregate amounts of not less than $100 and will not be subject to the retention of 1 percent of duties paid for claims involving meats cured with imported salt. This section differs from the corresponding section in part 191 due to grammatical changes.
Section 190.131 states that 19 U.S.C. 1313(g) provides for drawback on materials for construction and equipment for vessels and aircraft for foreign ownership and account. This section replicates the corresponding section in part 191.
Section 190.132 states that other provisions of this part relating to direct identification manufacturing drawback will apply to claims for drawback filed under 19 U.S.C. 1313(g) and this subpart insofar as applicable to and not inconsistent with the provisions of this subpart. This section differs from the corresponding section in part 191 due to grammatical changes.
Section 190.133 provides an explanation of terms specific to this subpart dealing with drawback on materials for construction and equipment for vessels and aircraft for foreign ownership and account. This section differs from the corresponding section in part 191 due to grammatical and nomenclature changes.
Section 190.141 states that 19 U.S.C. 1313(h) provides for drawback on the exportation of jet aircraft engines manufactured or produced abroad that have been overhauled, repaired, rebuilt,
Section 190.142 states that other provisions of this part relating to direct identification manufacturing drawback will apply to claims for drawback filed under 19 U.S.C. 1313(h) and this subpart insofar as applicable to and not inconsistent with the provisions of this subpart. This section differs from the corresponding section in part 191 due to a grammatical change.
Section 190.143 provides specifics relating to the filing of entry and the contents of the entry regarding claims filed under this subpart. This section differs from the corresponding section in part 191 by removing the reference to CBP Form 7551 (as this data will be submitted through ACE) and due to grammatical changes.
Section 190.144 states that drawback under this subpart will be refunded in aggregate amounts of not less than $100 and will not be subject to the deduction of 1 percent of duties paid. This section differs from the corresponding section in part 191 due to grammatical changes.
Section 190.151 states that 19 U.S.C. 1557(a) provides for drawback on merchandise upon which duties have been paid and which has remained continuously in bonded warehouse or otherwise in CBP custody for a specified period of time, when exported to certain locations. This section differs from the corresponding section in part 191 due to grammatical and nomenclature changes.
Section 190.152 provides specified exceptions for when drawback will be allowed on merchandise released from CBP custody. This section differs from the corresponding section in part 191 due to grammatical and nomenclature changes.
Section 190.153 provides information regarding when merchandise is considered in continuous CBP custody in certain scenarios. This section differs from the corresponding section in part 191 due to grammatical and nomenclature changes.
Section 190.154 provides information regarding filing a direct export entry or entry for merchandise transported to another port for exportation. This section differs from the corresponding section in part 191 by not requiring the filing of CBP Form 7551 (as the data will be transmitted through ACE) and due to grammatical and nomenclature changes.
Section 190.155 states that the regulations in 19 CFR part 18 will be followed to the extent possible when merchandise is withdrawn from a warehouse for exportation. This section differs from the corresponding section in part 191 due to grammatical changes.
Section 190.156 provides information regarding the filing of a bill of lading and applicable timeframes. This section differs from the corresponding section in part 191 due to grammatical and nomenclature changes.
Section 190.157 is reserved as the corresponding section in part 191 directed readers to section 191.76 regarding landing certificates, which are now obsolete.
Section 190.158 provides for procedures of liquidation for a complete drawback claim in accordance with § 190.81. This section differs from the corresponding section in part 191 due to grammatical changes.
Section 190.159 states that drawback due under this subpart will not be subject to the deduction of 1 percent of duties paid. This section differs from the corresponding section in part 191 due to grammatical changes.
Section 190.161 provides for the refund, remission, abatement or credit regarding imported distilled spirits, wines, or beer found after entry to be unmerchantable or not to conform to sample or specifications and which are returned to CBP custody. This section differs from the corresponding section in part 191 due to nomenclature changes.
Section 190.162 states that export procedures as provided for at § 190.42 apply, except that the claimant must be the importer. This section differs from the corresponding section in part 191 due to grammatical changes.
Section 190.163 provides for the required documentation in claims setting forth in detail the facts which cause the merchandise to be unmerchantable and any additional evidence that the drawback office requires to establish that the merchandise is unmerchantable. This section differs from the corresponding section in part 191 due to grammatical and nomenclature changes.
Section 190.164 states that there is no time limit for the return to CBP custody for merchandise covered under this subpart. This section differs from the corresponding section in part 191 due only to nomenclature changes.
Section 190.165 states that exportations by mail are not permitted for merchandise covered in this subpart. This section differs from the corresponding section in part 191 due only to grammatical changes.
Section 190.166 provides information regarding the destruction of merchandise under this subpart. This section differs from the corresponding section in part 191 due only to grammatical and nomenclature changes.
Section 190.167 states that no deduction of 1 percent of the internal revenue taxes paid or determined will be made in allowing entries under 26 U.S.C. 5062(c), as amended. This section differs from the corresponding section in part 191 due only to grammatical changes.
Section 190.168 is reserved because the 90-day time limit for exportation or destruction from the date of notification of acceptance of the drawback entry it is contrary to the statutory requirement that a claim be filed after exportation or destruction. Accordingly, this section differs from the corresponding section in part 191.
Section 190.171 states that 19 U.S.C. 1313(p) provides for drawback on the basis of qualified articles including petroleum derivatives imported or manufactured or produced in the United States (and qualified under 19 U.S.C. 1313(a) or (b)). TFTEA permits MPF refunds for all claims under 19 U.S.C. 1313(p), therefore there is no limitation on MPF refunds as there was in paragraph (c) in part 191. Additionally, there is a new paragraph (c) that explains the calculation of drawback for claims on petroleum derivatives. This paragraph requires per unit averaging for refunds, but clarifies that the refunds are not subject to the “lesser of” rule. Finally, this paragraph includes the preclusion of claiming Federal excise taxes discussed in detail in the section titled
Section 190.172 provides relevant definitions for purposes of this subpart. This section replicates the corresponding section in part 191.
Section 190.173 provides specific requirements for drawback when the basis is 19 U.S.C. 1313(p) with no manufacture. This section replicates the corresponding section in part 191.
Section 190.174 provides specific requirements for drawback when the basis is 19 U.S.C. 1313(p) with a manufacture under 19 U.S.C. 1313(a) or (b). This section replicates the corresponding section in part 191.
Section 190.175 provides specific requirements regarding the identity of drawback claimants and maintenance of
Section 190.176 states that the general procedures for filing claims are applicable to claims filed under 19 U.S.C. 1313(p) unless otherwise specified in this section. This section differs from the corresponding section in part 191 due to the timeframe for recordkeeping being changed to 3 years from the date of liquidation (rather than from the date of payment) and due to grammatical and nomenclature changes.
Section 190.181 states that drawback is provided under 19 U.S.C. 81c for merchandise transferred to a foreign trade zone for the sole purpose of exportation, storage, or destruction, with certain exceptions. This section replicates the corresponding section in part 191.
Section 190.182 states that merchandise in a foreign trade zone for purposes specified in § 190.181 will be given status as zone-restricted merchandise on proper application as provided for in 19 CFR 146.44. This section differs from the corresponding section in part 191 due only to grammatical changes.
Section 190.183 provides filing procedures for certain articles manufactured or produced in the United States, including transfers to a foreign trade zone. This section differs from the corresponding section in part 191 due to grammatical and nomenclature changes, and due to changes related to the electronic filing provisions of section 906 of TFTEA.
Section 190.184 states that the procedure described in subpart O of this part will be followed, as applicable, for drawback on merchandise transferred to a foreign trade zone from continuous CBP custody and provides information on the drawback entry, required certifications, modifications, and endorsement. This section differs from the corresponding section in part 191 due to grammatical and nomenclature changes, and due to changes related to the electronic filing environment of TFTEA-Drawback.
Section 190.185 states that the procedure described in subparts C and D of this part will be followed, as applicable, for drawback on merchandise under this subpart and provides information on the drawback entry, required certifications, modifications, and endorsement. This section differs from the corresponding section in part 191 due to grammatical and nomenclature changes, and to the electronic filing environment provisions of section 906 of TFTEA.
Section 190.186 provides information regarding which person may be considered the transferor and states that drawback may be claimed by, and paid to, the transferor. This section differs from the corresponding section in part 191 due only to grammatical changes.
Section 190.191 provides general information regarding the CBP drawback compliance program. This section differs from the corresponding section in part 191 due only to nomenclature changes.
Section 190.192 provides information regarding obtaining certification for the compliance program. This section differs from the corresponding section in part 191 due only to grammatical and nomenclature changes.
Section 190.193 provides the application procedure for the compliance program. This section differs from the corresponding section in part 191 due only to grammatical and nomenclature changes.
Section 190.194 describes the actions taken on the application to participate in the compliance program. This section differs from the corresponding section in part 191 due only to grammatical and nomenclature changes.
Section 190.195 relates to combined applications for certification in the drawback compliance program and privileges regarding the waiver of prior notice and/or accelerated payment of drawback. This section replicates the corresponding section in Part 191.
Appendix A to Part 190 sets forth the general manufacturing drawback rulings, accompanied by instructions for how to submit a letter of notification to operate thereunder. This appendix differs from Appendix A to part 191 due to grammatical and nomenclature changes as well as changes to conform to TFTEA-Drawback requirements.
Appendix B to Part 190 provides the sample formats for applications for specific manufacturing drawback rulings. This appendix differs from Appendix B to part 191 due to grammatical and nomenclature changes as well as changes to conform to TFTEA-Drawback requirements.
NAFTA drawback, which is separately provided for in subpart E of part 181 of the CBP regulations (19 CFR part 181), provides for special provisions in situations where goods were imported into the United States and then subsequently exported to either Canada or Mexico. While TFTEA left NAFTA drawback unchanged, minor conforming edits to part 181 are necessary to correct certain errors or to allow for interaction with both the proposed part 190 and existing part 191 during the transition period. For example, 19 CFR 181.50(a) includes an inaccurate reference to subpart G of part 191, stating that it is for liquidation procedures. However, it is subpart H of part 191 that deals with liquidation (and protest) procedures while subpart G of part 191 deals with exportation and destruction. Accordingly, it is proposed to amend § 181.50(a) to update the reference so it accurately cites to subpart H of part 191 and to include an accompanying reference to subpart H of part 190. Further, § 181.50(c) includes a specific reference to § 191.92 addressing accelerated payment. Accordingly, it is proposed to amend this regulation to also include a reference to the corresponding section of the proposed new part 190,
As stated above, the existing regulations in part 191 are mostly unchanged with this rulemaking. However, it is proposed to amend the scope section of part 191, § 191.0, to make reference to the drawback provisions in proposed part 190 and to note that claims cannot be filed under part 191 on or after February 24, 2019. Additionally, as noted above in the section detailing the differences between the sections in part 190 and the corresponding sections in part 191, some sections in part 191 are outdated for reasons other than TFTEA, such as those affected by the Miscellaneous Trade and Technical Corrections Act of 2004. Therefore, as noted above in the section detailing the proposed changes to part 190, where changes were required due to non-TFTEA reasons, it is proposed to amend §§ 191.0, 191.1, 191.3, 191.5, 191.42, 191.51, 191.81, 191.103, 191.104, and 191.106 and new § 191.45 to address returned retail merchandise.
Finally, it is important to note that it is CBP's intention to remove part 191 at a future date, but not until after the completion of the transition period. The
For the reasons outlined above in the section titled
These changes are intended to preclude the filing of substitution drawback claims under 19 U.S.C. 1313(b), 19 U.S.C. 1313(j)(2), and 19 U.S.C. 1313(p) in circumstances in which internal revenue taxes have not been paid on the substituted domestic product, or where that merchandise is subject to a different claim for refund or drawback of IRC taxes. The proposed amendments still allow for the return of 99 percent of the duties, taxes, and fees paid on the imported merchandise upon export, or when IRC taxes have been paid on substituted domestic product and the substituted merchandise is not the subject of a separate claim for refund or drawback of such taxes.
Executive Orders 13563 and 12866 direct agencies to assess costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule is an “economically significant regulatory action” under section 3(f) of Executive Order 12866. Accordingly, this proposed rule has been reviewed by the Office of Management and Budget (“OMB”). CBP and Treasury have prepared an economic analysis of the potential impacts of this rule for public awareness. The analysis can be found in the public docket for this rulemaking at
Executive Order 13771 directs agencies to reduce regulation and control regulatory costs, and provides that “for every one new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process.”
This rule is a significant regulatory action under section 3(f) of Executive Order 12866, and is hence subject to the requirements of Executive Order 13771. Most of the regulatory amendments proposed in this rule are the result of the Trade Facilitation and Trade Enforcement Act of 2015 (P.L. 114-125), which amended 19 U.S.C. 1313, the statute guiding CBP drawback regulations, and required CBP to promulgate regulations implementing these changes by February 24, 2018. This rule includes both a regulatory action and a deregulatory action that implement TFTEA's requirements. Because these actions are related to drawback, CBP chose to include both actions in this rule instead of promulgating two separate rules. On net, this rule imposes a regulatory burden (and is thus a regulatory action) because its regulatory impacts exceed its deregulatory impacts. This rule's regulatory impacts (
This section examines the impact of this proposed rule on small entities per the requirements of the Regulatory Flexibility Act (5 U.S.C. 601
Under the RFA and SBREFA, if an agency can certify (typically through a screening analysis) that a rule will not have a “significant economic impact on a substantial number of small entities,” a detailed assessment of the rule's impact on small entities is not required. Otherwise, an agency must complete an initial regulatory flexibility analysis (IRFA) exploring the impact of the proposed rulemaking on small entities.
The proposed Modernized Drawback rule would fundamentally change the drawback process and consequently affect all trade members eligible for drawback (
Because the Small Business Administration's (SBA) guidelines on small entities under the RFA do not explicitly define small entity standards for the importers, exporters, manufacturers, producers, and intermediate parties potentially affected by the rule, CBP used data on the industries in which these parties operate to determine the number of small entities potentially affected by this rule. CBP began by compiling a list of all 9,017 unique drawback claimants who filed claims between 2007 and 2016 and matching the claimant identification number (“claimant ID”) to the operator/owner name and address listed in internal CBP databases. Next, CBP assigned a random number to each of the claimants in that list and sorted the data in ascending order by the random number assigned. Using public and proprietary databases, CBP then pulled information like the entity type (subsidiary or parent company), primary line of business, employee size, and revenue on the claimants in ascending order until the agency had market data for 100 unique entities.
Table 1 shows the industries, according to their North American Industrial Classification System (NAICS) code, in the sample of entities affected by this rule and the SBA's small entity size standards for these industries. For the most part, the SBA's size standards are the average annual receipts or the average employment of a firm.
Of the small drawback claimants sampled and included in Table 1, the average number of employees at these entities ranged from 1 to 1,000 and their annual revenue measured from less than $0.5 million to $391.0 million (see Table 2 and Table 3). Table 2 compares the low range average number of employees at the small entities sampled and the overall average for the corresponding NAICS industry. Table 3 shows the average annual revenue of the small entities sampled by NAICS industry using the low range of annual revenue data available as well as the average annual revenue for all U.S. entities in each industry.
Based on the share of drawback claimants sampled, CBP assumes that 69 percent of drawback claimants affected by this rule over the 2018 to 2027 period of analysis, or 6,844 claimants, would be small entities. These drawback claimants would incur costs related to ACE system modifications, electronic claim submission requirements, additional full desk reviews, and expanded recordkeeping requirements; however, these costs would differ depending on their filing preferences and claim review.
Each unique drawback claimant would need to either modify its existing drawback system, acquire add-on drawback software, or hire a customs broker to comply with this rule's new drawback regulations outlined in 19 CFR part 190. CBP estimates that approximately 200 small entity drawback claimants (69 percent of the estimated 290 total claimants) would modify their ACE filing systems in 2018 to comply with all of the new drawback regulations outlined in 19 CFR part 190.
All drawback claimants must also retain drawback records for an extended period of time with this rule. CBP finds that all 6,844 small drawback claimants would sustain $59.99 in expenses between 2021 and 2027, or approximately $4 each year over the 10-year period of analysis, to electronically store drawback claim documentation.
Table 4 outlines the rule's different costs to small entities, while Table 5 shows this rule's potential range of costs to small entities. As shown, small entities could incur undiscounted annual costs from this rule as low as $154 if a small claimant only incurs an added recordkeeping cost and add-on drawback software cost and up to $9,022 if a small claimant experiences the rule's high ACE drawback system modification cost, full desk review cost (once over the 10-year analysis), and added recordkeeping cost. About 97 percent of small drawback claimants would likely sustain a cost of $943 (Cost C + Cost D + Cost E in Table 5) or less per year from this rule, while the remaining 3 percent could incur higher annual cost measuring up to $9,022.
CBP compares the rule's low ($154), medium ($943), and high ($9,022) range of monetized costs per year to the annual revenue of the small drawback claimants sampled. At the low range, this rule's $154 monetized cost would represent less than 1 percent of annual revenue for 100 percent (68) of the small entities sampled with revenue data available,
Under all three ranges, the share of this rule's costs on the annual revenue of small entities is less than 1 percent for the vast majority of entities sampled. Small entities would experience an impact of 3 percent or more only under the high cost range of $9,022. Assuming that the share of this rule's total annualized cost to small entities is equal to the estimated share of drawback claimants affected by this rule over the 2018 to 2027 period of analysis (69 percent), the total annualized cost of this rule to all small entities would equal $5.0 million under the primary estimation method.
This rule would also result in benefits as well as net monetary transfers to drawback claimants. This rule would provide time and resource savings from forgone paper-based drawback claims, form submissions, and ruling and predetermination requests that offset some of the rule's costs to small entities. CBP estimates that 2,849 small paper-based drawback claimants (69 percent of the estimated 4,129 total claimants) would enjoy $8 in cost savings for each paper claim avoided. These claimants would likely file an average of three drawback claims per year, at an annual cost saving of $24.
This rule's share of net monetary transfers to small entities is unknown. This rule would introduce $35.3 million to $42.4 million in annualized net transfers from the U.S. Government to drawback claimants (using a 7 percent discount rate). These transfers would average between $3,600 and $4,300 per claimant based on the projected 9,919 unique drawback claimants affected by this rule. Some small entities may receive more or less than this average, and potentially even negative net transfers if they make net payments to the U.S. Government.
According to the results from this screening analysis, CBP believes that a substantial number of trade members who could be considered “small” may be affected by this proposed rule.
This IRFA includes the following:
1. A description of the reasons why the action by the agency is being considered;
2. A succinct statement of the objectives of, and legal basis for, the proposed rule;
3. A description—and, where feasible, an estimate of the number—of small entities to which the proposed rule would apply;
4. A description of the projected reporting, recordkeeping, and other compliance requirements of the proposed rule, including an estimate of the classes of small entities that would be subject to the requirement and the types of professional skills necessary for preparation of the report or record;
5. An identification, to the extent practicable, of all relevant federal rules that may duplicate, overlap, or conflict with the proposed rule; and
6. A description of any significant alternatives to the proposed rule which accomplish the stated objectives of applicable statutes and which minimize any significant economic impact of the proposed rule on small entities.
Section 906 of the Trade Facilitation and Trade Enforcement Act of 2015 (P.L. 114-125) (TFTEA), signed into law on February 24, 2016, seeks to simplify and modernize the current drawback procedures through amendments to 19 U.S.C. 1313, the statute guiding CBP drawback regulations. Section 906(q) of TFTEA requires CBP to promulgate regulations implementing these changes and allows for a one-year transition period (February 24, 2018-February 23, 2019) in which trade members can follow either the old drawback statute and corresponding regulations as written prior to TFTEA or the amended statute.
To fulfill TFTEA's requirements, CBP, through this rulemaking, proposes to add an entirely new part of drawback regulations in proposed 19 CFR part 190 that would replace the current drawback regulations contained in 19 CFR part 191. Proposed 19 CFR part 190 would directly reflect the following major amendments made by TFTEA, as well as another amendment required to protect U.S. Government revenue: (1) Require the electronic filing of drawback claims; (2) liberalize the standard for substituting merchandise for drawback; (3) generally require per-unit averaging calculation for substitution drawback; (4) generally require substitution drawback claims to be calculated on a “lesser of” basis; (5) expand the scope of drawback refunds; (6) establish joint and several liability for drawback claims; (7) modify the rulings process; (8) standardize the timeframe for eligibility to claim drawback; (9) modify recordkeeping requirements; and (10) eliminate “double drawback” of excise taxes. The proposed rule would also make minor amendments to the drawback regulations in accordance with TFTEA.
TFTEA requires CBP to prescribe drawback regulations in accordance with the new statute and allows for a one-year transition period in which trade members can follow either the old drawback statute and corresponding regulations as written prior to TFTEA or the amended statute until February 23, 2019. CBP proposes to implement new drawback regulations consistent with TFTEA in 2018. These new regulations aim to modernize the current drawback process.
As discussed in the screening analysis above, the proposed Modernized Drawback rule would fundamentally change the drawback process and consequently affect all trade members eligible for drawback (
This rule proposes several new reporting, recordkeeping, and other compliance requirements for all drawback claimants, including those considered small. Among these changes, CBP proposes to require drawback claimants filing under the new drawback regulations outlined in 19 CFR part 190 to:
• Submit new data elements with their claims, including Form 7551: Drawback Entry summary data at the line, rather than header, level; claimed merchandise data at the 10-digit HTSUS subheading level; line designations; and consistent units of measurement for claimed import, export, or destruction data beginning in 2018.
• File their complete drawback claims electronically using ACE and DIS, thus not allowing for manual, paper-based claims.
• Submit additional data, including exported, destroyed, or substituted merchandise values for substitution claims filed under 19 U.S.C. 1313(b) and 19 U.S.C. 1313(j)(2); accounting methodologies used for direct identification drawback claims (if applicable); unique identifiers linking imports to exports or destructions; per-unit averages for substitution claims; and “lesser of” rule calculations for substitution claims.
Along with these reporting requirements, CBP would change the recordkeeping standards for all drawback claimants filing under the new regulations in 19 CFR part 190. Consistent with TFTEA, this rule would change the drawback recordkeeping timeframe for all drawback claimants from three years from CBP's date of payment of the drawback claim to three years from the liquidation of the claim. CBP estimates that drawback claimants would generally have to retain records for one extra year with this rule's new recordkeeping requirement than under the current three-year recordkeeping period, though some trade members may need to retain records for up to four more years under this rule.
This rule would also require parties that split entry summary line items when transferring merchandise (transferors) to provide notification to the recipients (transferees) as to whether that merchandise is eligible for substitution or direct identification drawback. Notification of this designation from the transferor to the transferee must be documented in records, which may include records kept in the normal course of business.
Furthermore, this rule would require all drawback claimants filing manufacturing drawback claims under the new regulations in 19 CFR part 190 (which would account for about 20 percent of all claims filed with this rule) to maintain applicable BOMs and/or formula records
CBP does not believe that any federal rule duplicates, overlaps, or conflicts with the proposed rule.
CBP considered two other alternatives in addition to the proposed rule.
The first regulatory alternative CBP considered would implement all of the proposed rule's changes in 2018 rather than in 2019, offering no transition period. With this alternative, paper-based filers must begin filing their drawback claims electronically in 2018, but they would receive the benefits of drawback modernization in 2018 and beyond. With this alternative, paper-based filers, including those considered small, would begin to incur electronic filing costs in 2018 rather than 2019 like under the rule. This alternative would also lead to relatively more full desk reviews for claimants, including those considering small, than under the rule. Drawback claimants, including those considered small, would sustain an annualized cost of $8.0 million from this alternative under the primary estimation method, which is slightly higher than the proposed rule's $7.6 million annualized cost to trade members (using a 7 percent discount rate). On a per-claimant basis, Alternative 1 would cost $810 annually over the period of analysis compared to the rule's nearly $770 cost per unique claimant.
The second regulatory alternative CBP considered would implement all of the proposed rule's changes, except it would not change the current regulatory standard for substituting merchandise for drawback (
In conclusion, because the proposed Modernized Drawback rule would presumably affect all drawback claimants, it would likely impact a substantial number of small entities in each industry submitting such claims. CBP cannot certify whether the rule's (negative) impact on these small entities would be significant. CBP welcomes public comments on the data and findings included in this RFA analysis. Comments that will provide the most assistance to CBP will reference a specific portion of the RFA analysis, explain the reason for any recommended change, and include data, information, or authority that supports a recommended change. If CBP does not receive comments contradicting the RFA analysis findings, CBP may certify that this rule would not have a significant economic impact on a substantial number of small entities at the final rule stage.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), an agency may not conduct, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number assigned by OMB. The collections of information for this notice of proposed rulemaking are included in an existing collection for CBP Forms 7551, 7552, and 7553 (OMB control number 1651-0075).
This rule proposes, among other things, to eliminate the submission requirement for CBP Form 7552 for drawback claimants who file electronically under the new, proposed drawback regulations in 19 CFR part 190. Drawback claimants filing by paper under the current drawback regulations in 19 CFR part 191 would still be required to submit the paper CBP Form 7552 until this rule's requirements become mandatory in 2019. Based on this change, CBP estimates a decrease in
To allow stakeholders immediate benefit from these proposed regulations (
CBP and Treasury invite interested members of the public to comment on these proposed effective and applicability dates.
This proposed regulation is being issued in accordance with 19 CFR 0.1(a)(1) pertaining to the authority of the Secretary of the Treasury (or that of his or her delegate) to approve regulations pertaining to certain customs revenue functions.
Bonds, Copyrights, Counterfeit goods, Customs duties and inspection, Imports, Reporting and recordkeeping requirements, Restricted merchandise, Seizures and forfeitures.
Administrative practice and procedure, Canada, Customs duties and inspection, Exports, Mexico, Reporting and recordkeeping requirements, Trade agreements.
Alcohol and alcoholic beverages, Claims, Customs duties and inspection, Exports, Foreign trade zones, Guantanamo Bay Naval Station, Cuba, Packaging and containers, Reporting and recordkeeping requirements, Trade agreements.
Alcohol and alcoholic beverages, Claims, Customs duties and inspection, Exports, Foreign trade zones, Guantanamo Bay Naval Station, Cuba, Packaging and containers, Reporting and recordkeeping requirements, Trade agreements.
For the reasons given above, it is proposed to amend 19 CFR chapter I as set forth below:
19 U.S.C. 66, 1623, 1624.
Section 113.62 is also issued under 19 U.S.C. 1313(k).
(a) * * *
(4) If a person who is not the principal makes a drawback claim with respect to merchandise imported by the principal (see part 190 of this chapter), the principal and surety (jointly and severally) agree to pay, as demanded by CBP, any erroneous drawback payment in an amount not to exceed the lesser of:
(i) The amount of duties, taxes, and fees that the person claimed with respect to the imported merchandise; or
(ii) The amount of duties, taxes, and fees that the importer authorized the other person to claim with respect to the imported merchandise.
(iii) The amount of the erroneous drawback payment.
(m)
19 U.S.C. 66, 1202 (General Note 3(i), Harmonized Tariff Schedule of the United States), 1624, 3314;
5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized Tariff Schedule of the United States), 1313, 1624; §§ 190.2, 190.10, 190.15, 190.23, 190.38, 190.51 issued under 19 U.S.C. 1508; § 190.84 also issued under 19 U.S.C. 1514; §§ 190.111, 190.112 also issued under 19 U.S.C. 1309; §§ 190.151(a)(1), 190.153, 190.157, 190.159 also issued under 19 U.S.C. 1557; §§ 190.182-190.186 also issued under 19 U.S.C. 81c; §§ 190.191-190.195 also issued under 19 U.S.C. 1593a.
This part sets forth general provisions applicable to all drawback claims and specialized provisions applicable to specific types of drawback claims filed under 19 U.S.C. 1313, as amended. For drawback claims and specialized provisions applicable to specific types of drawback claims filed pursuant to 19 U.S.C. 1313, as it was in effect on or before February 24, 2016, please see part 191 of this title. Additional drawback provisions relating to the North American Free Trade Agreement (NAFTA) are contained in subpart E of part 181 of this chapter.
Claims for drawback filed under the provisions of part 181 of this chapter must be filed separately from claims filed under the provisions of this part.
Pursuant to DHS Delegation number 7010.3, the Commissioner of CBP has the authority to prescribe, and pursuant to Treasury Order No. 100-16 (set forth in the appendix to part 0 of this chapter), the Secretary of the Treasury has the sole authority to approve, rules and regulations regarding drawback.
For the purposes of this part:
(1) For manufacturing drawback pursuant to section 1313(b), substituted merchandise must be classifiable under the same 8-digit HTSUS subheading number as the imported designated merchandise;
(2) For direct identification drawback pursuant to section 1313(c)(2), substituted merchandise must be classifiable under the same 8-digit HTSUS subheading number and have the same specific product identifier (such as part number, SKU, or product code) as the imported designated merchandise;
(3) For direct identification drawback pursuant to section 1313(j)(2), substituted merchandise must be classifiable under the same 8-digit HTSUS subheading number as the imported designated merchandise except for wine which may also qualify pursuant to § 190.32(d), but when the 8-digit HTSUS subheading number under which the imported merchandise is classified begins with the term “other,” then the other merchandise may be substituted for imported merchandise for drawback purposes if the other merchandise and such imported merchandise are classifiable under the same 10-digit HTSUS statistical reporting number and the article description for that 10-digit HTSUS statistical reporting number does not begin with the term “other”; and
(4) For substitution drawback of finished petroleum derivatives pursuant to section 1313(p), a substituted article must be of the same kind and quality as the qualified article for which it is substituted, that is, the articles must be commercially interchangeable or described in the same 8-digit HTSUS subheading number (
(a) Drawback is allowable pursuant to 19 U.S.C. 1313 of on duties, taxes, and fees paid on imported merchandise which were imposed under Federal law upon entry or importation, including:
(1) Ordinary customs duties, including:
(i) Duties paid on an entry, or withdrawal from warehouse, for consumption for which liquidation has become final;
(ii) Estimated duties paid on an entry, or withdrawal from warehouse, for consumption, for which liquidation has not become final, subject to the conditions and requirements of § 190.81(b); and
(iii) Tenders of duties after liquidation of the entry, or withdrawal from warehouse, for consumption for which the duties are paid, subject to the conditions and requirements of § 190.81(c), including:
(A) Voluntary tenders (for purposes of this section, a “voluntary tender” is a payment of duties on imported merchandise in excess of duties included in the liquidation of the entry, or withdrawal from warehouse, for consumption, provided that the liquidation has become final and that the other conditions of this section and § 190.81 are met);
(B) Tenders of duties in connection with notices of prior disclosure under 19 U.S.C. 1592(c)(4); and
(C) Duties restored under 19 U.S.C. 1592(d).
(2) Marking duties assessed under section 304(c), Tariff Act of 1930, as amended (19 U.S.C. 1304(c));
(3) Internal revenue taxes which attach upon importation (
(4) Merchandise processing fees (
(5) Harbor maintenance taxes (
(b) Drawback is not allowable on antidumping and countervailing duties which were imposed on any merchandise entered, or withdrawn from warehouse, for consumption (
(c) Drawback is not allowed when the identified merchandise, the designated imported merchandise, or the substituted merchandise (when applicable), consists of an agricultural product which is duty-paid at the over-quota rate of duty established under a tariff-rate quota, except that:
(1) Agricultural products as described in this paragraph are eligible for drawback under 19 U.S.C. 1313(j)(1); and
(2) Tobacco otherwise meeting the description of agricultural products in this paragraph is eligible for drawback under 19 U.S.C. 1313(j)(1) or 19 U.S.C. 1313(a).
(a)
(b)
(1) Department, branch, agency, or instrumentality of the U.S. Government which purchased it; or
(2) Supplier, or any of the parties specified in § 190.82, provided the claim is supported by documentation signed by a proper officer of the department, branch, agency, or instrumentality concerned certifying that the right to drawback was reserved by the supplier or other parties with the knowledge and consent of the department, branch, agency, or instrumentality.
(c)
Guantanamo Bay Naval Station is considered foreign territory for drawback purposes and, accordingly, drawback may be permitted on articles shipped there from the customs territory of the United States. Drawback is not allowed, except on claims made under 19 U.S.C. 1313(j)(1), on articles shipped from the customs territory of the United States to the U.S. Virgin Islands, American Samoa, Wake Island, Midway Islands, Kingman Reef, Guam, Canton Island, Enderbury Island, Johnston Island, or Palmyra Island.
(a) Documents listed in paragraph (b) of this section must be signed or electronically certified only by one of the following:
(1) The president, a vice president, secretary, treasurer, or any other employee legally authorized to bind the corporation;
(2) A full partner of a partnership;
(3) The owner of a sole proprietorship;
(4) Any employee of the business entity with a power of attorney;
(5) An individual acting on his or her own behalf; or
(6) A licensed customs broker with a power of attorney to sign the applicable drawback document.
(b) The following documents require execution in accordance with paragraph (a) of this section:
(1) Drawback entries;
(2) Notices of Intent to Export, Destroy, or Return Merchandise for Purposes of Drawback;
(3) Certifications of exporters on bills of lading or evidence of exportation (
(4) Abstracts, schedules and extracts from monthly abstracts, and bills of materials and formulas, if not included as part of a drawback claim.
(c) The following documents (
(1) A letter of notification of intent to operate under a general manufacturing drawback ruling under § 190.7;
(2) An application for a specific manufacturing drawback ruling under § 190.8;
(3) An application for waiver of prior notice under § 190.91;
(4) An application for approval of accelerated payment of drawback under § 190.92; and
(5) An application for certification in the Drawback Compliance Program under § 190.193.
(a)
(b)
(2)
(3)
(i) Name and address of manufacturer or producer (if the manufacturer or producer is a separately-incorporated subsidiary of a corporation, the subsidiary corporation must submit a letter of notification in its own name);
(ii) In the case of a business entity, the names of the persons listed in § 190.6(a)(1) through (6) who will sign drawback documents;
(iii) Locations of the factories which will operate under the letter of notification;
(iv) Identity (by T.D. or CBP Decision number and title) of the general manufacturing drawback ruling under which the manufacturer or producer will operate;
(v) Description of the merchandise and articles, unless specifically described in the general manufacturing drawback ruling, and the applicable 8-digit HTSUS subheading number(s);
(vi) Description of the manufacturing or production process, unless specifically described in the general manufacturing drawback ruling;
(vii) Basis of claim used for calculating drawback; and
(viii) IRS (Internal Revenue Service) number (with suffix) of the manufacturer or producer.
(c)
(1)
(i) The letter of notification is complete (
(ii) The general manufacturing drawback ruling identified by the manufacturer or producer is applicable to the manufacturing or production process;
(iii) The general manufacturing drawback ruling identified by the manufacturer or producer will be followed without variation; and
(iv) The described manufacturing or production process is a manufacture or production as defined in § 190.2 of this subpart.
(2)
(3)
(d)
(e)
(a)
(b)
(c)
(1) Name and address of the applicant;
(2) Internal Revenue Service (IRS) number (with suffix) of the applicant;
(3) Description of the type of business in which engaged;
(4) Description of the manufacturing or production process, which shows how the designated and substituted merchandise is used to make the article that is to be exported or destroyed;
(5) In the case of a business entity, the names of persons listed in § 190.6(a)(1) through (6) who will sign drawback documents;
(6) Description of the imported merchandise including specifications and applicable 8-digit HTSUS subheading(s);
(7) Description of the exported article and applicable 8-digit HTSUS subheadings;
(8) How manufacturing drawback is calculated;
(9) Summary of the records kept to support claims for drawback; and
(10) Identity and address of the recordkeeper if other than the claimant.
(d)
(e)
(1)
(2)
(f)
(g)
(2)
(A) The location of a factory, or the addition of one or more factories where the methods followed and records maintained are the same as those at another factory operating under the existing specific manufacturing drawback ruling of the manufacturer or producer;
(B) The succession of a sole proprietorship, partnership or corporation to the operations of a manufacturer or producer;
(C) A change in name of the manufacturer or producer;
(D) A change in the persons who will sign drawback documents in the case of a business entity;
(E) A change in the basis of claim used for calculating drawback;
(F) A change in the decision to use or not to use an agent under § 190.9 of this chapter, or a change in the identity of an agent under that section;
(G) A change in the drawback office where claims will be filed under the ruling (
(H) An authorization to continue operating under a ruling approved under 19 CFR part 191 (
(I) Any combination of the foregoing changes.
(ii) A limited modification, as provided for in this paragraph (g)(2), must contain only the modifications to be made, in addition to identifying the specific manufacturing drawback ruling and being signed by an authorized person. To effect a limited modification, the manufacturer or producer must file with the drawback office(s) where claims were originally filed a letter stating the modifications to be made. The drawback office will promptly acknowledge acceptance of the limited modifications.
(iii) To transfer a claim to another drawback office, the manufacturer or producer must file with the second drawback office where claims will be
(iv) To file a claim under this part based on a ruling approved under 19 CFR part 191, the manufacturer or producer must file a supplemental application for a limited modification no later than February 23, 2019, which provides the following:
(A) Revised parallel columns with the required annotations for the applicable 8-digit HTSUS subheading number(s);
(B) Revised bill of materials or formula with the required annotations for the applicable 8-digit HTSUS subheading number(s); and
(C) A certification of continued compliance, which states: “The undersigned acknowledges the current statutory requirements under 19 U.S.C. 1313 and the regulatory requirements in 19 CFR part 190, and hereby certifies its continuing eligibility for operating under the manufacturing drawback ruling in compliance therewith.”
(h)
(1) No drawback claim is filed under the ruling for a period of 5 years and notice of termination is published in the Customs Bulletin; or
(2) The manufacturer or producer to whom approval of the ruling was issued files a request to terminate the ruling, in writing, with CBP Headquarters (Attention: Entry Process and Duty Refunds Branch, Regulations and Rulings, Office of Trade).
(a)
(b)
(i) Terms of compensation to show that the relationship is an agency rather than a sale;
(ii) How transfers of merchandise and articles will be recorded by the principal and its agent;
(iii) The work to be performed on the merchandise by the agent for the principal;
(iv) The degree of control that is to be exercised by the principal over the agent's performance of work;
(v) The party who is to bear the risk of loss on the merchandise while it is in the agent's custody; and
(vi) The period that the contract is in effect.
(2)
(3)
(c)
(2)
(d)
(i) Quantity of merchandise transferred from the principal to the agent;
(ii) Date of transfer of the merchandise from the principal to the agent;
(iii) Date of manufacturing or production operations performed by the agent;
(iv) Total quantity, description, and 10-digit HTSUS classification of merchandise appearing in or used in manufacturing or production operations performed by the agent;
(v) Total quantity, description, and 10-digit HTSUS classification of articles produced in manufacturing or production operations performed by the agent;
(vi) Quantity and 10-digit HTSUS classification of articles transferred from the agent to the principal; and
(vii) Date of transfer of the articles from the agent to the principal.
(2)
(a)
(i) Imports and pays duties, taxes, and/or fees on such imported merchandise;
(ii) Receives such imported merchandise;
(iii) In the case of 19 U.S.C. 1313(j)(2), receives such imported merchandise, substituted merchandise, or any combination of such imported and substituted merchandise; or
(iv) Receives an article manufactured or produced under 19 U.S.C. 1313(a) and/or (b).
(2) The transferring party must maintain records that:
(i) Document the transfer of that merchandise or article;
(ii) Identify such merchandise or article as being that to which a potential right to drawback exists; and
(iii) Assign such right to the transferee (
(b)
(1) The party to whom the merchandise or articles are delivered;
(2) Date of physical delivery;
(3) Import entry number and entry line item number;
(4) Quantity delivered and, for substitution claims, total quantity attributable to the relevant import entry line item number;
(5) Total duties, taxes, and fees paid on, or attributable to, the delivered merchandise, and, for substitution claims, total duties, taxes, and fees paid on, or attributable to, the relevant import entry line item number;
(6) Date of importation;
(7) Port where import entry filed;
(8) Person from whom received;
(9) Description of the merchandise delivered;
(10) The 10-digit HTSUS classification for the designated imported merchandise (such HTSUS number must be from the entry summary line item and other entry documentation for the merchandise); and
(11) If the merchandise transferred is substituted for the designated imported merchandise under 19 U.S.C. 1313(j)(2), the 10-digit HTSUS classification of the substituted merchandise (as if it had been imported).
(c)
(i) Whether the transferor has claimed or will claim drawback relating to any merchandise reported on the entry summary line item (specifying either direct identification or substitution as the basis for the claim);
(ii) Whether the transferor has previously transferred any merchandise reported on the entry summary line item and whether the transferor has knowledge regarding a drawback claim being filed relating that transferred merchandise (specifying either direct identification or substitution); and
(iii) Whether the transferor has not previously transferred any merchandise reported on the entry summary line item.
(2) Notification of this designation from the transferor to the transferee(s) must be documented in records.
(3) Notwithstanding the designation made, the basis for the first-filed claim relating to merchandise reported on that entry summary line item (either direct identification or substitution) will be the exclusive basis for any subsequent claims for any other merchandise reported on that same entry summary line item.
(d)
(e)
(f)
The values declared to CBP as part of a complete drawback claim pursuant to § 190.51 must be established as provided below. If the drawback eligible merchandise or articles are destroyed, then the value of the imported merchandise and any substituted merchandise must be reduced by the value of materials recovered during destruction in accordance with 19 U.S.C. 1313(x).
(a)
(1)
(2)
(b)
(c)
(d)
A drawback claim filed pursuant to any provision of section 313 of the Act, as amended (19 U.S.C. 1313) may be deemed filed pursuant to any other provision thereof should the drawback office determine that drawback is not allowable under the provision as originally filed, but that it is allowable under such other provision. To be allowable under such other provision, the claim must meet each of the requirements of such provision. The claimant may raise alternative provisions prior to liquidation and by protest (
(a)
(b)
(a)
(b)
(1) The lots of merchandise or articles to be so identified must be fungible as defined in § 190.2;
(2) The person using the identification method must be able to establish that inventory records (for example, material control records), prepared and used in the ordinary course of business, account for the lots of merchandise or articles to be identified as being received into and withdrawn from the same inventory. Even if merchandise or articles are received or withdrawn at different geographical locations, if such inventory records treat receipts or withdrawals as being from the same inventory, those inventory records may be used to identify the merchandise or articles under this section, subject to the conditions of this section. If any such inventory records (that is, inventory records prepared and used in the ordinary course of business) treat receipts and withdrawals as being from different inventories, those inventory records must be used and receipts into or withdrawals from the different inventories may not be accounted for together. If units of merchandise or articles can be specifically identified (for example, by serial number), the merchandise or articles must be specifically identified and may not be identified by accounting method, unless it is established that inventory records, prepared and used in the ordinary course of business, treat the merchandise or articles to be identified as being received into and withdrawn from the same inventory (subject to the above conditions);
(3) Unless otherwise provided in this section or specifically approved by CBP (by a binding ruling under part 177 of this chapter), all receipts (or inputs) into and all withdrawals from the inventory must be recorded in the accounting record;
(4) The records which support any identification method under this section are subject to verification by CBP (
(5) Any accounting method which is used by a person for drawback purposes under this section must be used exclusively, without using other methods for a period of at least one year, unless approval is given by CBP for a shorter period.
(c)
(1)
(ii)
(2)
(ii)
(3)
(ii)
(B)
(iii)
(B)
(C)
(D)
(iv)
(B)
(C)
(4)
(A) The total units of a particular receipt of the fungible merchandise in the inventory at the time of a withdrawal to;
(B) The total units of all receipts of the fungible merchandise (including each receipt into inventory) at the time of the withdrawal;
(C) Is applied to the withdrawal, so that the withdrawal consists of a proportionate quantity of units from each particular receipt and each receipt is correspondingly decreased. Withdrawals and corresponding decreases to receipts are rounded to the nearest whole number.
(ii)
(5)
(i) The fact and date(s) of use in manufacture or production of the
(ii) The fact and date(s) of manufacture or production of the exported or destroyed articles (
(d)
(2) In order for a proposed accounting method to be approved by CBP for purposes of this section, it must meet the following criteria:
(i) For purposes of calculations of drawback, the proposed accounting method must be either revenue neutral or favorable to the Government; and
(ii) The proposed accounting method should be:
(A) Generally consistent with commercial accounting procedures, as applicable for purposes of drawback;
(B) Consistent with inventory or material control records used in the ordinary course of business by the person proposing the method; and
(C) Easily administered by CBP.
Pursuant to 19 U.S.C. 1508(c)(3), all records which pertain to the filing of a drawback claim or to the information contained in the records required by 19 U.S.C. 1313 in connection with the filing of a drawback claim must be retained for 3 years after liquidation of such claims or longer period if required by law (under 19 U.S.C. 1508, the same records may be subject to a different period for different purposes).
Section 313(a) of the Act, as amended (19 U.S.C. 1313(a)), provides for drawback upon the exportation, or destruction under CBP supervision, of articles manufactured or produced in the United States with the use of imported merchandise, provided that those articles have not been used in the United States prior to such exportation or destruction. The amount of drawback allowable shall not exceed 99 percent of the amount of duties, taxes, and fees paid with respect to the imported merchandise. However, duties may not be refunded upon the exportation or destruction of flour or by-products produced from imported wheat. Where two or more products result, drawback must be distributed among the products in accordance with their relative values, as defined in § 190.2, at the time of separation. Merchandise may be identified for drawback purposes under 19 U.S.C. 1313(a) in the manner provided for and prescribed in § 190.14.
(a)(1)
(ii)
(
(
(B)
(
(
(C)
(2)
(ii)
(b)
(c)
(d)
(2)
(i) All or substantially all of the rights, privileges, immunities, powers, duties, and liabilities of the predecessor; or
(ii) The assets and other business interests of a division, plant, or other business unit of such predecessor, provided that the value of the transferred assets and interests (realty, personalty, and intangibles, exclusive of the drawback rights) exceeds the value of such drawback rights, whether vested or contingent.
(3)
(ii)
(iii)
(iv)
(e)
(2)
(3)
Claims must be based on one or more of the methods specified in paragraph (a) of this section and comply with all other requirements specified in this section.
(a)
(2)
(3)
(4)
(b)
(c)
(2)
Evidence of any transfers of merchandise (
A claimant may destroy merchandise and obtain drawback by complying with the procedures set forth in § 190.71 relating to destruction.
(a)
(i) The date or inclusive dates of manufacture or production;
(ii) The quantity, identity, and 8-digit HTSUS subheading number(s) of the imported duty-paid merchandise or drawback products used in or appearing in (
(iii) The quantity, if any, of the non-drawback merchandise used, when these records are necessary to determine the quantity of imported duty-paid merchandise or drawback product used in the manufacture or production of the exported or destroyed articles or appearing in them;
(iv) The quantity and description of the articles manufactured or produced;
(v) The quantity of waste incurred, if applicable; and
(vi) That the articles on which drawback is claimed were exported or destroyed within 5 years after the importation of the duty-paid merchandise, without having been used in the United States prior to such exportation or destruction. (If the articles were commingled after manufacture or production, their identity may be maintained in the manner prescribed in § 190.14.)
(2)
(i) To determine, and the CBP official to verify, the applicable import entry and any transfers of the merchandise associated with the claim; and
(ii) To identify with respect to that import entry, and any transfers of the merchandise, the imported merchandise or drawback products used in manufacture or production.
(b)
(1) The quantity, identity, and specifications of the merchandise designated (imported duty-paid, or drawback product);
(2) The quantity, identity, and specifications of the substituted merchandise before its use to manufacture or produce (or appearing in) the exported or destroyed articles;
(3) That, within 5 years after the date of importation of the imported duty-paid merchandise, the manufacturer or producer used the designated merchandise in manufacturing or production and that during the same 5-year period it manufactured or produced the exported or destroyed articles; and
(4) If the designated merchandise is a sought chemical element, as defined in § 190.2, that was contained in imported material and a substitution drawback claim is made based on that chemical element:
(i) The duty paid on the imported material must be apportioned among its constituent components. The claim on the chemical element that is the designated merchandise must be limited to the duty apportioned to that element on a unit-for-unit attribution using the unit of measure set forth in the HTSUS that is applicable to the imported material. If the material is a compound with other constituents, including impurities, and the purity of the compound in the imported material is shown by satisfactory analysis, that purity, converted to a decimal equivalent of the percentage, is multiplied against the entered amount of the material to establish the amount of pure compound. The amount of the element in the pure compound is to be determined by use of the atomic weights of the constituent elements and converting to the decimal equivalent of their respective percentages and multiplying that decimal equivalent against the above-determined amount of pure compound.
(ii) The amount claimed as drawback based on the sought chemical element must be deducted from the duty paid on the imported material that may be claimed on any other drawback claim.
(c)
(d)
(e)
(2)
(ii)
(f)
(a)
(b)
(1) The designated merchandise is used in manufacture or production within 5 years after importation;
(2) Within the 5-year period described in paragraph (b)(1) of this section, the exported or destroyed articles, or drawback products, were manufactured or produced; and
(3) The completed articles must be exported or destroyed under CBP supervision within 5 years of the date of importation of the designated merchandise, or within 5 years of the earliest date of importation associated with a drawback product.
(c)
The exporter (or destroyer) will be entitled to claim drawback, unless the exporter (or destroyer), by means of a certification, assigns the right to claim drawback to the manufacturer, producer, importer, or intermediate party. Such certification must also affirm that the exporter (or destroyer) has not and will not itself claim drawback or assign the right to claim drawback on the particular exportation or destruction to any other party. The certification provided for under this section may be a blanket certification for a stated period. Drawback is paid to the claimant, who may be the manufacturer, producer, intermediate party, importer, or exporter (or destroyer).
At the time of filing a claim under 19 U.S.C. 1313(a) or (b), the claimant must certify the following:
(a) The claimant is in possession of the applicable bill of materials or formula for the exported or destroyed article(s), which will be promptly provided upon request;
(b) The bill of materials or formula identifies the imported and/or substituted merchandise and the exported or destroyed article(s) by their 8-digit HTSUS subheading numbers; and
(c) The bill of materials or formula identifies the manufactured quantities of the imported and/or substituted merchandise and the exported or destroyed article(s).
(a)
(b)
(c)
(a)
(b)
(i) The amount of duties, taxes, and fees paid with respect to the imported merchandise; or
(ii) The amount of duties, taxes, and fees that would apply to the exported
(2)
(i) The amount of duties, taxes, and fees paid with respect to the imported merchandise (reduced by the value of materials recovered during destruction as provided in 19 U.S.C. 1313(x)); or
(ii) The amount of duties, taxes, and fees that would apply to the destroyed article if the destroyed article had been imported (reduced by the value of materials recovered during destruction as provided in 19 U.S.C. 1313(x)).
(3)
(c)
(d)
(2)
(3)
(i) The claimant specifies on the drawback entry that the basis for substitution is the alternative substitution standard for wine; and
(ii) The claimant provides a certification, as part of the complete claim (see 190.51(a)), stating that:
(A) The imported wine and the exported wine are a Class 1 grape wine (as defined in 27 CFR 4.21(a)(1)) of the same color (
(B) The imported wine and the exported wine are table wines (as defined in 27 CFR 4.21(a)(2)) and the alcoholic content does not exceed 14 percent by volume; and
(C) The price variation between the imported wine and the exported wine does not exceed 50 percent.
(e)
(f)
(i) Imported merchandise which the predecessor, before the date of succession, imported; or
(ii) Imported and/or substituted merchandise that was transferred to the predecessor from the person who imported and paid duty on the imported merchandise.
(2)
(i) All or substantially all of the rights, privileges, immunities, powers, duties, and liabilities of the predecessor; or
(ii) The assets and other business interests of a division, plant, or other business unit of such predecessor, provided that the value of the transferred assets and interests (realty, personalty, and intangibles, exclusive of the drawback rights) exceeds the value of such drawback rights, whether vested or contingent.
(3)
(ii)
(iii)
(iv)
(a)
(2) The exporter or destroyer may waive the right to claim drawback and assign such right to the importer or any intermediate party. A drawback claimant under 19 U.S.C. 1313(j)(1) other than the exporter or destroyer must secure and retain a certification signed by the exporter or destroyer waiving the right to claim drawback, and did not and will not authorize any other party to claim the exportation or destruction for drawback (
(b)
(i) In situations where the exporter or destroyer of the substituted merchandise is also the importer of the imported merchandise, that party will be entitled to claim drawback.
(ii) In situations where the person who imported and paid the duty on the imported merchandise transfers the imported merchandise, substituted merchandise, or any combination of imported and substituted merchandise to the person who exports or destroys that merchandise, the exporter or destroyer will be entitled to claim drawback. (Any such transferred
(iii) In situations where the transferred merchandise described in paragraph (b)(1)(ii) of this section is the subject of further transfer(s), such transfer(s) must be documented by records, including records kept in the normal course of business, and the exporter or destroyer will be entitled to claim drawback (multiple substitutions are not permitted).
(2) The exporter or destroyer may waive the right to claim drawback and assign such right to the importer or to any intermediate party, provided that the claimant had possession of the substituted merchandise prior to its exportation or destruction. A drawback claimant under 19 U.S.C. 1313(j)(2) other than the exporter or destroyer must secure and retain a certification signed by the exporter or destroyer that such party waived the right to claim drawback, and did not and will not authorize any other party to claim the exportation or destruction for drawback (
Any transfer of merchandise (
(a)
(b)
(c)
(d)
(e)
(a)
(1)
(i) Required information.
(A) Name, address, and Internal Revenue Service (IRS) number (with suffix) of applicant;
(B) Name, address, and IRS number(s) (with suffix(es)) of exporter(s), if applicant is not the exporter;
(C) Export period covered by this application;
(D) Commodity/product lines of imported and exported merchandise covered in this application (and the applicable HTSUS numbers);
(E) The origin of the above merchandise;
(F) Estimated number of export transactions covered in this application;
(G) Estimated number of drawback claims and estimated time of filing those claims to be covered in this application;
(H) The port(s) of exportation;
(I) Estimated dollar value of potential drawback claims to be covered in this application;
(J) The relationship between the parties involved in the import and export transactions; and
(K) Provision(s) of drawback covered under the application;
(ii) Written declarations regarding:
(A) The reason(s) that CBP was not notified of the intent to export; and
(B) Whether the applicant, to the best of its knowledge, will have future exportations on which unused merchandise drawback might be claimed; and
(iii) A certification that the following documentary evidence will be made available for CBP to review upon request:
(A) For the purpose of establishing that the imported merchandise was not used in the United States (for purposes of drawback under 19 U.S.C. 1313(j)(1)) or that the exported merchandise was not used in the United States and satisfied the requirements for substitution with the imported merchandise (for purposes of drawback under 19 U.S.C. 1313(j)(2)), and, as applicable:
(
(
(
(B) Evidence establishing compliance with all other applicable drawback requirements.
(2)
(3)
(b)
(1) Information provided by the claimant in the written application;
(2) Any of the information listed in paragraphs (a)(1)(iii)(A)(1) through (3) of this section and requested by CBP under paragraph (b); and
(3) The applicant's prior record with CBP.
(c)
(d)
(e)
A claimant may destroy merchandise and obtain unused merchandise drawback by complying with the procedures set forth in § 190.71 relating to destruction.
(a)
(b)
(1) To determine, and CBP to verify, the applicable import entry or transfer(s) of drawback-eligible merchandise;
(2) To determine, and CBP to verify, the applicable exportation or destruction; and
(3) To identify, with respect to the import entry or any transfer(s) of drawback-eligible merchandise, the imported merchandise designated as the basis for the drawback claim.
Section 313(c) of the Act, as amended (19 U.S.C. 1313(c)), provides for drawback upon the exportation or destruction under CBP supervision of imported merchandise which has been entered, or withdrawn from warehouse, for consumption, duty-paid, and which: Does not conform to sample or specifications; has been shipped without the consent of the consignee; or has been determined to be defective as of the time of importation; or ultimately sold at retail by the importer or the person who received the merchandise from the importer, and for any reason returned to and accepted by the importer or the person who received the merchandise from the importer. The total amount of drawback allowable will be 99 percent of the amount of duties paid with respect to the imported, duty-paid merchandise. See subpart P for drawback of internal revenue taxes for unmerchantable or nonconforming distilled spirits, wines, or beer.
(a)
(b)
(1) Submit a statement signed by the importer and every other person, other than the ultimate purchaser, that owned the goods, that no other claim for drawback was made on the goods by any other person; and
(2) Certify that records are available to support the statement required in paragraph (b)(1) of this section.
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Rejected merchandise may be the subject of an unused merchandise drawback claim under 19 U.S.C. 1313(j)(1), in accordance with subpart C of this part, to the extent that the merchandise qualifies therefor.
(a)
(b)
(2) The claimant must also show by evidence satisfactory to CBP that drawback may be claimed by—
(i) Designating an entry of merchandise that was imported within 1 year before the date of exportation or destruction of the merchandise described in paragraph (a) under CBP supervision.
(ii) Certifying that the same 8-digit HTSUS subheading number and specific product identifier (such as part number, SKU, or product code) apply to both the merchandise designated for drawback (in the import documentation) and the returned merchandise.
(c)
(d)
(a)
(2)
(i) Claimant identification number, name, and address;
(ii) Broker identification number, name, and address (if applicable);
(iii) Surety code, bond type, and amount of bond;
(iv) Port code for the drawback office that will review the claim;
(v) Drawback entry number and provision(s) under which drawback is claimed;
(vi) Statement of eligibility for applicable privileges (as provided for in subpart I of this part);
(vii) Amount of refund claimed for each of relevant duties, taxes, and fees (calculated to two decimal places);
(viii) For each designated import entry line item, the entry number and the line item number designating the merchandise, a description of the merchandise, a unique import tracing identification number(s) (ITIN) (used to associate the imported merchandise and any substituted merchandise with any intermediate products (if applicable) and the drawback-eligible exported or destroyed merchandise or finished article(s)), as well as the following information for the merchandise designated as the basis for the drawback claim: The 10-digit HTSUS classification and associated duty rate(s), amount of duties paid, applicable entered value (
(ix) For manufacturing claims under 19 U.S.C. 1313(a) or (b), the basis of the claim (as provided for in § 190.23), the ruling number, the factory location, the date(s) of use of the imported and/or substituted merchandise in manufacturing/processing, the 10-digit HTSUS classification for the imported merchandise and/or which would have been applicable to the substituted merchandise had it been imported, the quantity and unit of measure (using the unit(s) of measure required under the HTSUS, if applicable) of the imported and/or substituted merchandise in manufacturing/processing, unique manufacture tracing identification number(s) (MTIN) (used to associate the manufactured merchandise, including any intermediate products, with the drawback-eligible exported or destroyed finished article(s)), and a certification from the claimant that provides as follows: “The article(s) described above were manufactured or produced and disposed of as stated herein in
(x) Indicate whether the designated imported merchandise, other substituted merchandise, or finished article (for manufacturing claims) was transferred to the drawback claimant prior to the exportation or destruction of the eligible merchandise, and for unused merchandise drawback claims under 19 U.S.C. 1313(j), provide a certification from the client that provides as follows: “The undersigned hereby certifies that the merchandise herein described is unused in the United States and further certifies that this merchandise was not subjected to any process of manufacture or other operation except the allowable operations as provided for by regulation.”;
(xi) Indicate whether the eligible merchandise was exported or destroyed and provide the applicable 10-digit HTSUS or Department of Commerce Schedule B classification, quantity, and unit of measure (the unit of measure specified must be the same as that which was required under the HTSUS for the designated imported merchandise) and, for claims under 19 U.S.C. 1313(c), specify the basis as one of the following:
(A) Merchandise does not conform to sample or specifications;
(B) Merchandise was defective at time of importation;
(C) Merchandise was shipped without consent of the consignee; or
(D) Merchandise sold at retail and returned to the importer or the person who received the merchandise from the importer;
(xii) For eligible merchandise that was exported, the unique export identifier (the number used to associate the export transaction with the appropriate documentary evidence of exportation), bill of lading number, export destination, name of exporter, the applicable comparative value pursuant to 19 CFR 190.11(b) (
(xiii) For eligible merchandise that was destroyed, the name of the destroyer and, if substituted, the applicable comparative value pursuant to 19 CFR 190.11(c) (
(xiv) For substitution unused merchandise drawback claims under 19 U.S.C. 1313(j)(2), a certification from the claimant that provides as follows: “The undersigned hereby certifies that the substituted merchandise is unused in the United States and that the substituted merchandise was in our possession prior to exportation or destruction.”;
(xv) For NAFTA drawback claims provided for in subpart E of part 181, the foreign entry number and date of entry, the HTSUS classification for the foreign entry, the amount of duties paid for the foreign entry and the applicable exchange rate, and, if applicable, a certification from the claimant that provides as follows: “Same condition to NAFTA countries—The undersigned certifies that the merchandise herein described is in the same condition as when it was imported under the above import entry(s) and further certifies that this merchandise was not subjected to any process of manufacture or other operation except the allowable operations as provided for by regulation.”; and
(xvi) All certifications required in this part and as otherwise deemed necessary by CBP to establish compliance with the applicable laws and regulations, as well as the following declaration: “The undersigned acknowledges statutory requirements that all records supporting the information on this document are to be retained by the issuing party for a period of 3 years from the date of liquidation of the drawback claim. All required documentation that must be uploaded in accordance with 19 CFR 190.51 will be provided to CBP within 24 hours of the filing of the drawback claim. The undersigned acknowledges that a false certification of the foregoing renders the drawback claim incomplete and subject to denial. The undersigned is fully aware of the sanctions provided in 18 U.S.C. 1001, and 18 U.S.C. 550, and 19 U.S.C. 1593a.”
(3)
(4)
(b)
(i)
(ii)
(2)
(i) Relative value ratio for each line item. The value of each line item of entered merchandise subject to a merchandise processing fee is calculated (to four decimal places) by dividing the value of the line item subject to the fee by the total value of entered merchandise subject to the fee. The result is the relative value ratio.
(ii) Merchandise processing fee apportioned to each line item. To apportion the merchandise processing fee to each line item, the relative value ratio for each line item is multiplied by the merchandise processing fee paid.
(iii) Amount of merchandise processing fee eligible for drawback per line item. The amount of merchandise processing fee apportioned to each line item is multiplied by 99 percent to calculate that portion of the fee attributable to each line item that is eligible for drawback.
(iv) Amount of merchandise processing fee eligible for drawback per unit of merchandise. To calculate the amount of a merchandise processing fee eligible for drawback per unit of merchandise, the line item amount that is eligible for drawback is divided by the number of units covered by that line item (to two decimal places).
(v) Limitation on amount of merchandise processing fee eligible for drawback for substitution claims. The amount of a merchandise processing fee eligible for drawback per unit of merchandise for drawback claims based upon substitution is subject to the limitations set forth in §§ 190.22(a)(1)(ii) (manufacturing claims) and 190.32(b) (unused merchandise claims), as applicable.
(vi)(A)
(B)
(2)
(3)
(i)
(b)
(c)
(i)
(ii)
(A) if the substituted merchandise was imported, the HTSUS classification applicable at the time of entry (
(B) if the substituted merchandise was not imported, the HTSUS classification that would have been reported to CBP for the applicable entry summary(s) and other entry documentation, for the domestically produced substituted merchandise, at the time of entry of the designated imported merchandise.
(iii)
(iv)
(A) if the HTSUS classification is reported, then it must be the HTSUS classification that would have been applicable to the destroyed merchandise or articles if they had been entered for consumption at the time of destruction; or
(B) if the Schedule B commodity number is reported, then it must be the Schedule B commodity number that would have been reported for the destroyed merchandise or articles if the EEI had been required for an exportation at the time of destruction.
(2)
(d)
(e)
(i)
(ii)
(iii)
(2)
(i) The claimant establishes to the satisfaction of CBP that the claimant was unable to file the drawback claim because of an event declared by the President to be a major disaster, within the meaning given to that term in 42 U.S.C. 5122(2), on or after January 1, 1994; and
(ii) The claimant files a request for such extension with CBP no later than 1 year from the last day of the 5-year period referred to in paragraph (e)(1) of this section.
(3)
(a)
(b)
(1) Records or other documentary evidence of exportation, as provided for in § 190.72, which shows that the articles were shipped by the person filing the drawback entry, or a letter of endorsement from exporter which must be attached to such bill of lading, showing that the party filing the entry is authorized to claim drawback and receive payment (the claimant must have on file and make available to CBP upon request, the endorsement from the exporter assigning the right to claim drawback);
(2) A copy of the import entry and invoice annotated for the merchandise identified or designated;
(3) A copy of the export invoice annotated to indicate the items on which drawback is being claimed; and
(4) Records documenting the transfer of the merchandise including records kept in the normal course of business upon which the claim is based (
(c)
(a)
(1) The number of transactions of the claimant (imports and exports);
(2) The value of the claims;
(3) The frequency of claims;
(4) The product or products being claimed; and
(5) For 19 U.S.C. 1313(a) and 1313(b) claims, the provisions, as applicable, of the general manufacturing drawback ruling or the specific manufacturing drawback ruling.
(b)
(1) Complexities caused by multiple commodities or the applicable general manufacturing drawback ruling or the specific manufacturing drawback ruling;
(2) Variable and conflicting manufacturing and inventory periods (for example, financial, accounting and manufacturing records maintained are significantly different);
(3) Complexities caused by multiple manufacturing locations;
(4) Complexities caused by difficulty in adjusting accounting and inventory records (for example, records maintained—financial or accounting—are significantly different); and/or
(5) Complexities caused by significantly different methods of operation.
(a)
(b)
(c)
(d)
(2)
(3)
(a)
(b)
(a)
(b)
(1) The amount of duties, taxes, and fees that the person claimed with respect to the imported merchandise; or
(2) The amount of duties, taxes, and fees that the importer authorized the other person to claim with respect to the imported merchandise.
(c)
(a)
(b)
(c)
(a)
(1) Date of export;
(2) Name of exporter;
(3) Description of the goods;
(4) Quantity and unit of measure;
(5) Schedule B number or HTSUS number; and
(6) Country of ultimate destination.
(b)
(1) Records or other documentary evidence of exportation (originals or copies) issued by the exporting carrier, such as a bill of lading, air waybill, freight waybill, Canadian Customs manifest, and/or cargo manifest;
(2) Records from a CBP-approved electronic export system of the United States Government (§ 190.73);
(3) Official postal records (originals or copies) which evidence exportation by mail (§ 190.74);
(4) Notice of lading for supplies on certain vessels or aircraft (§ 190.112); or
(5) Notice of transfer for articles manufactured or produced in the United States which are transferred to a foreign trade zone (§ 190.183).
Records kept through an electronic export system of the United States Government may be considered as actual proof of exportation only if CBP has officially approved the use of that electronic export system as proof of compliance for drawback claims. Official approval will be published as a general notice in the Customs Bulletin.
If the merchandise on which drawback is to be claimed is exported by mail or parcel post, the official postal records (original or copies) which describe the mail shipment will be sufficient to prove exportation. The postal record must be identified on the drawback entry, and must be retained by the claimant and submitted as part of the drawback claim (
(a)
(b)
(a)
(1) Liquidation of the designated import entry or entries becomes final pursuant to paragraph (e); or
(2) Deposit of estimated duties on the imported merchandise and before liquidation of the designated import entry or entries.
(b)
(2) However, if final liquidation of the import entry discloses that the total amount of import duty is different from the total estimated duties deposited, except in those cases when drawback is 100% of the duty, the party responsible
(i) Be liable for 1 percent of all increased duties found to be due on that portion of merchandise recorded on the drawback entry; or
(ii) Be entitled to a refund of 1 percent of all excess duties found to have been paid as estimated duties on that portion of the merchandise recorded on the drawback entry.
(c)
(i) The tender or payment is specifically identified as duty on a specifically identified entry, or withdrawal from warehouse, for consumption;
(ii) Liquidation of the specifically identified entry, or withdrawal from warehouse, for consumption became final prior to such tender or payment; and
(iii) Liquidation of the drawback entry in which that specifically identified import entry, or withdrawal from warehouse, for consumption is designated has not become final.
(2)
(d)
(e)
(2)
(ii)
(f)
(2)
(g)
Unless otherwise provided in this part (
Drawback is paid to the claimant (
Procedures to protest the denial, in whole or in part, of a drawback entry must be in accordance with part 174 of this chapter (19 CFR part 174).
(a)
(2)
(3)
(b)
(2)
(i) Required information:
(A) Name, address, and Internal Revenue Service (IRS) number (with suffix) of applicant;
(B) Name, address, and Internal Revenue Service (IRS) number (with suffix) of current exporter(s) (if more than 3 exporters, such information is required only for the 3 most frequently used exporters), if applicant is not the exporter;
(C) Export period covered by this application;
(D) Commodity/product lines of imported and exported merchandise covered by this application;
(E) Origin of merchandise covered by this application;
(F) Estimated number of export transactions during the next calendar year covered by this application;
(G) Port(s) of exportation to be used during the next calendar year covered by this application;
(H) Estimated dollar value of potential drawback during the next calendar year covered by this application;
(I) The relationship between the parties involved in the import and export transactions; and
(J) Provision(s) of drawback covered by the application.
(ii) A written declaration whether or not the applicant has previously been denied a waiver request, or had an approval of a waiver revoked, by any other drawback office, and whether the applicant has previously requested a 1-time waiver of prior notice under § 190.36, and whether such request was approved or denied; and
(iii) A certification that the following documentary evidence will be made available for CBP review upon request:
(A) For the purpose of establishing that the imported merchandise was not used in the United States (for purposes of drawback under 19 U.S.C. 1313(j)(1)) or that the exported merchandise was not used in the United States and satisfies the requirements for substitution with the imported merchandise (for purposes of drawback under 19 U.S.C. 1313(j)(2)), and, as applicable:
(B) Any other evidence establishing compliance with other applicable drawback requirements, upon CBP's request under paragraph (b)(2)(iii) of this section.
(3)
(c)
(i) The presence or absence of unresolved CBP charges (duties, taxes, or other debts owed CBP);
(ii) The accuracy of the claimant's past drawback claims;
(iii) Whether waiver of prior notice was previously revoked or suspended; and
(iv) The presence or absence of any failure to present merchandise to CBP for examination after CBP had timely notified the party filing a Notice of Intent to Export, Destroy, or Return Merchandise for Purposes of Drawback on CBP Form 7553 of CBP's intent to examine the merchandise (
(2)
(3)
(d)
(e)
(f)
(g)
(a)
(2)
(3)
(b)
(1)
(i) Company name and address;
(ii) Internal Revenue Service (IRS) number (with suffix);
(iii) Identity (by name and title) of the person in claimant's organization who will be responsible for the drawback program;
(iv) Description of the bond coverage the applicant intends to use to cover accelerated payments of drawback (
(A) Identity of the surety to be used;
(B) Dollar amount of bond coverage for the first year under the accelerated payment procedure; and
(C) Procedures to ensure that bond coverage remains adequate (that is, procedures to alert the applicant when and if its accelerated payment potential liability exceeds its bond coverage);
(v) Description of merchandise and/or articles covered by the application;
(vi) Provision(s) of drawback covered by the application; and
(vii) Estimated dollar value of potential drawback during the next 12-month period covered by the application.
(2)
(3)
(4)
(i) The name of the official in the claimant's organization who is responsible for oversight of the claimant's drawback program;
(ii) The procedures and controls demonstrating compliance with the statutory and regulatory drawback requirements;
(iii) The parameters of claimant's drawback recordkeeping program, including the retention period and method (for example, paper, electronic, etc.);
(iv) A list of the records that will be maintained, including at least sample import documents, sample export documents, sample inventory and transportation documents (if applicable), sample laboratory or other documents establishing the qualification of merchandise or articles for substitution under the drawback law (if applicable), and sample manufacturing documents (if applicable);
(v) The procedures that will be used to notify CBP of changes to the claimant's drawback program, variances from the procedures described in this application, and violations of the statutory and regulatory drawback requirements; and
(vi) The procedures for an annual review by the claimant to ensure that its drawback program complies with the statutory and regulatory drawback requirements and that CBP is notified of any modifications from the procedures described in this application.
(c)
(d)
(e)
(i) The presence or absence of unresolved CBP charges (duties, taxes, fees, or other debts owed CBP);
(ii) The accuracy of the claimant's past drawback claims; and
(iii) Whether accelerated payment of drawback or waiver of prior notice of intent to export was previously revoked or suspended.
(2)
(3)
(4)
(f)
(g)
(h)
(i)
An applicant for the procedures provided for in §§ 190.91 and 190.92 of this subpart may apply for only one procedure, both procedures separately, or both procedures in one application package (
(a)
(b)
(a)
(b)
(c)
(d)
(2)
(e)
(f)
(g)
(a)
(b)
(2)
(i) Quantity and description of the exported products;
(ii) Identity of the alcohol used by serial number of package or tank car;
(iii) Name and registry number of the distilled spirits plant from which the alcohol was withdrawn;
(iv) Date of withdrawal;
(v) Serial number of the applicable record of tax determination (
(vi) Drawback office where the claim will be filed.
(3)
(a)
(b)
(1) Quantity of alcohol in proof gallons;
(2) Serial number of each package;
(3) Amount of tax paid on the alcohol;
(4) Name, registry number, and location of the distilled spirits plant;
(5) Date of withdrawal;
(6) Name of the manufacturer using the alcohol in producing the exported articles;
(7) Address of the manufacturer and its manufacturing plant; and
(8) Customs drawback office where the drawback claim will be processed.
(c)
The drawback office will ascertain the final amount of drawback due by reference to the specific manufacturing drawback ruling under which the drawback claimed is allowable.
(a)
(b)
(c)
(d)
Section 309 of the Act, as amended (19 U.S.C. 1309), provides for drawback on articles laden as supplies on certain vessels or aircraft of the United States or as supplies including equipment upon, or used in the maintenance or repair of, certain foreign vessels or aircraft.
(a)
(b)
(c)
(d)
(1) The name of the vessel or identity of the aircraft on which articles were or are to be laden;
(2) The number and kind of packages and their marks and numbers;
(3) A description of the articles and their weight (net), gauge, measure, or number; and
(4) The name of the exporter.
(e)
(2)
(f)
(g)
(h)
(2)
(i) The identity of the vessel or aircraft;
(ii) A description of the fuel supplies laden;
(iii) The quantity laden; and
(iv) The date of lading.
(3)
(i)
Section 313(f) of the Act, as amended (19 U.S.C. 1313(f)), provides for the allowance of drawback upon the exportation of meats cured with imported salt.
Other provisions of this part relating to direct identification manufacturing drawback will apply to claims for drawback under this subpart insofar as applicable to and not inconsistent with the provisions of this subpart.
Drawback allowed under this subpart will be refunded in aggregate amounts of not less than $100 and will not be subject to the retention of 1 percent of duties paid.
Section 313(g) of the Act, as amended (19 U.S.C. 1313(g)), provides for drawback on imported materials used in the construction and equipment of vessels and aircraft built for foreign account and ownership, or for the government of any foreign country, notwithstanding that these vessels or aircraft may not be exported within the strict meaning of the term.
Other provisions of this part relating to direct identification manufacturing drawback will apply to claims for drawback filed under this subpart insofar as applicable to and not inconsistent with the provisions of this subpart.
(a)
(b)
(c)
Section 313(h) of the Act, as amended (19 U.S.C. 1313(h)), provides for drawback on the exportation of jet aircraft engines manufactured or produced abroad that have been overhauled, repaired, rebuilt, or reconditioned in the United States with the use of imported merchandise, including parts.
Other provisions of this part will apply to claims for drawback filed under this subpart insofar as applicable to and not inconsistent with the provisions of this subpart.
(a)
(b)
Drawback allowed under this subpart will be refunded in aggregate amounts of not less than $100, and will not be subject to the deduction of 1 percent of duties paid.
(a)
(2)
(b)
No remission, refund, abatement, or drawback of duty will be allowed under this subpart because of the exportation or destruction of any merchandise after its release from Government custody, except in the following cases:
(a) When articles are exported or destroyed on which drawback is expressly provided for by law;
(b) When prohibited articles have been regularly entered in good faith and are subsequently exported or destroyed pursuant to statute and regulations prescribed by the Secretary of the Treasury; or
(c) When articles entered under bond are destroyed within the bonded period, as provided in 19 U.S.C. 1557(c), or destroyed within the bonded period by death, accidental fire, or other casualty, and satisfactory evidence of destruction is furnished to CBP (
(a)
(b)
(c)
(d)
(2)
(a)
(b)
The regulations in part 18 of this chapter concerning the supervision of lading and certification of exportation of merchandise withdrawn from warehouse for exportation without payment of duty will be followed to the extent applicable.
(a)
(b)
(c)
(d)
(e)
When the drawback claim has been completed and the bill of lading filed, together with the landing certificate, if required, the reports of inspection and lading made, and the clearance of the exporting conveyance established by the record of clearance in the case of direct exportation or by certificate in the case of transportation and exportation, the drawback office will verify the importation by referring to the import records to ascertain the amount of duty paid on the merchandise exported. To the extent appropriate and not inconsistent with the provisions of this subpart, drawback entries will be liquidated in accordance with the provisions of § 190.81.
Drawback due under this subpart will not be subject to the deduction of 1 percent.
Section 5062(c), Internal Revenue Code, as amended (26 U.S.C. 5062(c)), provides for the refund, remission, abatement or credit to the importer of internal revenue taxes paid or determined incident to importation, upon the exportation, or destruction under CBP supervision, of imported distilled spirits, wines, or beer found after entry to be unmerchantable or not to conform to sample or specifications and which are returned to CBP custody.
The export procedure will be the same as that provided in § 190.42 for rejected merchandise, except that the claimant must be the importer and must comply with all other provisions in this subpart.
(a)
(b)
There is no time limit for the return to CBP custody of distilled spirits, wine, or beer subject to refund of taxes under the provisions of this subpart. The claimant must return the merchandise to CBP custody prior to exportation or destruction and claims are subject to the filing deadline set forth in 19 U.S.C. 1313(r)(1).
Merchandise covered by this subpart must not be exported by mail.
(a)
(b)
No deduction of 1 percent of the internal revenue taxes paid or determined will be made in allowing entries under § 5062(c), Internal Revenue Code, as amended (26 U.S.C. 5062(c)).
(a)
(b)
(1) In cases where there is no manufacture, upon exportation of the imported article, an article of the same kind and quality, or any combination thereof; or
(2) In cases where there is a manufacture or production, upon
(c)
(1)
(2)
(3)
The following are definitions for purposes of this subpart only:
(a)
(b)
(c)
When the basis for drawback under 19 U.S.C. 1313(p) is imported duty-paid petroleum derivatives (that is, not articles manufactured under 19 U.S.C. 1313(a) or (b)), the requirements for drawback are as follows:
(a)
(b)
(c)
(1) Imported the qualified article in at least the quantity of the exported article; or
(2) Purchased or exchanged (directly or indirectly) from an importer an imported qualified article in at least the quantity of the exported article;
(d)
(e)
When the exported article which is the basis for a drawback claim under 19 U.S.C. 1313(p) is petroleum derivatives which were manufactured or produced in the United States and qualify for drawback under the manufacturing drawback law (19 U.S.C. 1313(a) or (b)), the requirements for drawback are as follows:
(a)
(1) Have been manufactured or produced as described in 19 U.S.C. 1313(a) or (b) from crude petroleum or a petroleum derivative; and
(2) Be a “qualified article” as defined in § 190.172(a) of this subpart;
(b)
(c)
(1) Manufactured or produced the qualified article in at least the quantity of the exported article; or
(2) Purchased or exchanged (directly or indirectly) from a manufacturer or producer described in 19 U.S.C. 1313(a) or (b) the qualified article in at least the quantity of the exported article;
(d)
(e)
(1) During the period provided for in the manufacturer's or producer's specific manufacturing drawback ruling (
(2) Within 180 days after the close of the period in which the qualified article is manufactured or produced; and
(f)
(a)
(b)
(2)
(ii) Subject to paragraph (b)(2)(iii) of this section, any intermediate party in the chain of commerce leading to the exporter from the manufacturer, producer, or importer of a qualified article may also transfer to the exporter or to another intermediate party an article of the same kind and quality as the article purchased or exchanged from the prior transferor (whether the manufacturer, producer, importer, or another intermediate transferor) in a quantity not greater than the quantity of the article purchased or exchanged.
(iii) Under either paragraph (b)(2)(i) or (b)(2)(ii) of this section, the article transferred, regardless of its origin (imported, manufactured, substituted, or any combination thereof), will be the
(c)
(a)
(b)
(c)
(1) The claim is filed on the drawback entry; and
(2) The claimant provides a certification stating the basis (such as company records, or customer's written certification), for the information contained therein and certifying that:
(i) The exported merchandise was exported within 180 days of entry of the designated, imported merchandise;
(ii) The qualified article and the exported article are commercially interchangeable or both articles are subject to the same 8-digit HTSUS subheading number;
(iii) To the best of the claimant's knowledge, the designated imported merchandise, the qualified article and the exported article have not and will not serve as the basis of any other drawback claim;
(iv) Evidence in support of the certification will be retained by the person providing the certification for 3 years after liquidation of the claim; and
(v) Such evidence will be available for verification by CBP.
(d)
(1) The claim is filed on the drawback entry;
(2) All documents required to be filed with a manufacturing claim under 19 U.S.C. 1313(a) or (b) are filed with the claim;
(3) The claim identifies the specific refinery or production facility at which the derivatives were manufactured or produced;
(4) The claim states the period of manufacture for the derivatives; and
(5) The claimant provides a certification stating the basis (such as company records or a customer's written certification), for the information contained therein and certifying that:
(i) The exported merchandise was exported during the manufacturing period for the qualified article or within 180 days after the close of that period;
(ii) The qualified article and the exported article are commercially interchangeable or both articles are classifiable under the same 8-digit HTSUS subheading number;
(iii) To the best of the claimant's knowledge, the designated imported merchandise, the qualified article and the exported article have not and will not serve as the basis of any other drawback claim;
(iv) Evidence in support of the certification will be retained by the person providing the certification for 3 years after liquidation of the claim; and
(v) Such evidence will be available for verification by CBP.
The fourth proviso of § 3 of the Foreign Trade Zones Act of June 18, 1934, as amended (19 U.S.C. 81c), provides that merchandise transferred to a foreign trade zone for the sole purpose of exportation, storage or destruction (except destruction of distilled spirits, wines, and fermented malt liquors), will be considered to be exported for the purpose of drawback, provided there is compliance with the regulations of this subpart.
Merchandise in a foreign trade zone for the purposes specified in § 190.181 will be given status as zone-restricted merchandise on proper application (
(a)
(b)
(2)
(3)
(i) Number and location of the foreign trade zone;
(ii) Number and kind of packages and their marks and numbers;
(iii) Description of the articles, including weight (gross and net), gauge, measure, or number; and
(iv) Name of the transferor.
(c)
(d)
I, ________ (member of firm, officer representing corporation, agent, or attorney), of ____, declare that, to the best of my knowledge and belief, the particulars of transfer stated in this entry, the notices of transfer, and receipts are correct, and that the merchandise was transferred to a foreign trade zone for the sole purpose of exportation, destruction, or storage, not to be removed from the foreign trade zone for domestic consumption.
(a)
(b)
(c)
(d)
(2)
The merchandise described in the entry was received from ______ on ____; 20__; in Foreign Trade Zone No. __, (City and State)
(3)
I, ________ of the firm of ____, declare that the merchandise described in this entry was duly entered at the customhouse on arrival at this port; that the duties thereon have been paid as specified in this entry; and that it was transferred to Foreign Trade Zone No. __, located at ____, (City and State) for the sole purpose of exportation, destruction, or storage, not to be removed from the foreign trade zone for domestic consumption. I further declare that to the best of my knowledge and belief, this merchandise is in the same quantity, quality, value, and package, unavoidable wastage and damage excepted, as it was at the time of importation; that no allowance nor reduction of duties has been made for damage or other cause except as specified in this entry; and that no part of the duties paid has been refunded by drawback or otherwise.
(a)
(b)
(c)
(d)
(2)
The merchandise described in this entry was received from ______on ____, 20 __, in Foreign Trade Zone No. __, ____(City and State).
(3)
I, ________ of the firm of _____, declare that the merchandise described in the within entry was duly entered at the customhouse on arrival at this port; that the duties thereon have been paid as specified in this entry; and that it was transferred to Foreign Trade Zone No. __, located at ____ (City and State) for the sole purpose of exportation, destruction, or storage, not to be removed from the foreign trade zone for domestic consumption. I further declare that to the best of my knowledge and belief, said merchandise is the same in quantity, quality, value, and package as specified in this entry; that no allowance nor reduction in duties has been made; and that no part of the duties paid has been refunded by drawback or otherwise.
The person named in the foreign trade zone operator's certification on the notice of transfer or the drawback entry, as applicable, will be considered to be the transferor. Drawback may be claimed by, and paid to, the transferor.
This subpart sets forth the requirements for the drawback compliance program in which claimants and other parties in interest, including customs brokers, may participate after being certified by CBP. Participation in the program is voluntary. Under the program, CBP is required to inform potential drawback claimants and related parties clearly about their rights and obligations under the drawback law and regulations. Reduced penalties and/or warning letters may be issued once a party has been certified for the program, and is in general compliance with the appropriate procedures and requirements thereof.
(a)
(b)
(1) Understands the legal requirements for filing claims, including the nature of the records that are required to be maintained and produced and the time periods involved;
(2) Has in place procedures that explain the CBP requirements to those employees involved in the preparation of claims, and the maintenance and production of required records;
(3) Has in place procedures regarding the preparation of claims and maintenance of required records, and the production of such records to CBP;
(4) Has designated a dependable individual or individuals who will be responsible for compliance under the program, and maintenance and production of required records;
(5) Has in place a record maintenance program approved by CBP regarding original records, or if approved by CBP, alternative records or recordkeeping formats for other than the original records; and
(6) Has procedures for notifying CBP of variances in, or violations of, the drawback compliance program or other alternative negotiated drawback compliance program, and for taking corrective action when notified by CBP of violations and problems regarding such program.
(c)
(a)
(b)
(c)
(1) Name of applicant, address, IRS number (with suffix), and the type of business in which engaged, as well as the name(s) of the individual(s) designated by the applicant to be responsible for compliance under the program;
(2) A description of the nature of the applicant's drawback program, including the type of drawback in which involved (such as, manufacturing, or unused or rejected merchandise), and the applicant's particular role(s) in the drawback claims process (such as claimant and/or importer, manufacturer or producer, agent-manufacturer, complementary recordkeeper, subcontractor, intermediate party (possessor or purchaser), or exporter (destroyer)); and
(3) Size of applicant's drawback program. For example, if the applicant is a claimant, the number of claims filed over the previous 12-month period should be included, along with the number estimated to be filed over the next 12-month period, and the estimated amount of drawback to be claimed annually. Other parties should describe the extent to which they are involved in drawback activity, based upon their particular role(s) in the drawback process; for example, manufacturers should explain how much manufacturing they are engaged in for drawback, such as the quantity of drawback product produced on an annual basis, as established by the certificates of manufacture and delivery they have executed.
(d)
(1) The name and title of the official in the applicant's organization who is responsible for oversight of the applicant's drawback program, and the name and title, with mailing address and, if available, fax number and email address, of the person(s) in the applicant's organization responsible for the actual maintenance of the applicant's drawback program;
(2) If the applicant is a manufacturer and the drawback involved is manufacturing drawback, a copy of the letter of notification of intent to operate under a general manufacturing drawback ruling or the application for a specific manufacturing drawback ruling (
(3) A description of the applicant's drawback record-keeping program, including the retention period and method (for example, paper, and electronic.);
(4) A list of the records that will be maintained, including at least sample import documents, sample export documents, sample inventory and transportation documents (if applicable), sample laboratory or other documents establishing the qualification of merchandise or articles for substitution under the drawback law (if applicable), and sample manufacturing documents (if applicable);
(5) A description of the applicant's specific procedures for:
(i) How drawback claims are prepared (if the applicant is a claimant); and
(ii) How the applicant will fulfill any requirements under the drawback law and regulations applicable to its role in the drawback program;
(6) A description of the applicant's procedures for notifying CBP of variances in, or violations of, its drawback compliance program or negotiated alternative drawback compliance program, and procedures for taking corrective action when notified by CBP of violations or other problems in such program; and
(7) A description of the applicant's procedures for annual review to ensure that its drawback compliance program meets the statutory and regulatory drawback requirements and that CBP is notified of any modifications from the procedures described in this application.
(a)
(2)
(i) The presence or absence of unresolved customs charges (duties, taxes, fees, or other debts owed CBP);
(ii) The accuracy of the claimant's past drawback claims; and
(iii) Whether accelerated payment of drawback or waiver of prior notice of intent to export was previously revoked or suspended.
(b)
(c)
(d)
(e)
(i) The certification privilege was obtained through fraud or mistake of fact;
(ii) The program participant is no longer in compliance with the customs laws and CBP regulations, including the requirements set forth in § 190.192;
(iii) The program participant has repeatedly filed false drawback claims or false or misleading documentation or other information relating to such claims; or
(iv) The program participant is convicted of any felony or has committed acts which would constitute a misdemeanor or felony involving theft, smuggling, or any theft-connected crime.
(2)
(3)
(f)
(2)
An applicant for certification in the drawback compliance program may also, in the same application, apply for waiver of prior notice of intent to export and accelerated payment of drawback, under subpart I of this part. Alternatively, an applicant may separately apply for certification in the drawback compliance program and either or both waiver of prior notice and accelerated payment of drawback. In the
A. There follow various general manufacturing drawback rulings which have been designed to simplify drawback procedures. Any person that can comply with the conditions of any one of these rulings may notify a CBP drawback office in writing of its intention to operate under the ruling (
1. Name and address of manufacturer or producer;
2. IRS (Internal Revenue Service) number (with suffix) of manufacturer or producer;
3. Location[s] of factory[ies] which will operate under the general ruling;
4. If a business entity, names of persons who will sign drawback documents (
5. Identity (by T.D. number and title, as stated in this Appendix) of general manufacturing drawback ruling under which the manufacturer or producer intends to operate;
6. Description of the merchandise and articles, unless specifically described in the general manufacturing drawback ruling, and 8-digit HTSUS subheading number, and the quantity of the merchandise;
7. Only for General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) for Petroleum or Petroleum Derivatives, the name of each article to be exported or, if the identity of the product is not clearly evident by its name, what the product is, and the abstract period to be used for each refinery (monthly or other specified period (not to exceed 1 year)), subject to the conditions in the General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) for Petroleum or Petroleum Derivatives, I. Procedures and Records Maintained, 4(a) or (b);
8. Basis of claim used for calculating drawback; and
9. Description of the manufacturing or production process, unless specifically described in the general manufacturing drawback ruling.
For the General Manufacturing Drawback Ruling under § 1313(a), the General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) for Component Parts, and the General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) or 1313(b) for Agents, if the drawback office has doubts as to whether there is a manufacture or production, as defined in § 190.2, the manufacturer or producer will be asked to provide details of the operation purported to be a manufacture or production.
10. For the General Manufacturing Drawback Ruling where substituted merchandise will be used, the bill of materials and/or formulas annotated with the 8-digit HTSUS classifications.
B. These general manufacturing drawback rulings supersede general “contracts” previously published under the following Treasury Decisions (T.D.s): 81-74, 81-92, 81-181, 81-234, 81-300, 83-53, 83-59, 83-73, 83-77, 83-80, 83-84, 83-123, 84-49, and 85-110. Anyone currently operating under any of the above-listed Treasury Decisions will automatically be covered by the superseding general ruling, including all privileges of the previous “contract”.
Imported merchandise or drawback products are used in the manufacture of the exported articles upon which drawback claims will be based.
Exported articles on which drawback will be claimed will be manufactured in the United States using imported merchandise or drawback products.
The manufacturer or producer manufactures or produces for its own account. The manufacturer or producer may manufacture or produce articles for the account of another or another manufacturer or producer may manufacture or produce for the account of the manufacturer or producer under contract within the principal and agency relationship outlined in T.D.s 55027(2) and 55207(1) (
The imported merchandise or drawback products will be used to manufacture or produce articles in accordance with § 190.2.
Drawback law mandates the assignment of relative values when two or more products necessarily are produced concurrently in the same operation. If multiple products are produced records, which may include records kept in the normal course of business, will be maintained of the market value of each product at the time it is first separated in the manufacturing process.
The appearing-in basis may not be used if multiple products are produced.
Records, which may include records kept in the normal course of business, will be maintained showing the extent of any loss or gain in net weight or measurement of the imported merchandise, caused by atmospheric conditions, chemical reactions, or other factors.
Stock in process does not result; or if it does result, details will be given in claims as filed, and it will not be included in the computation of the merchandise used to manufacture the finished articles on which drawback is claimed.
No drawback is payable on any waste which results from the manufacturing operation. Unless the claim for drawback is based on the quantity of merchandise appearing in the exported articles, records will be maintained to establish the value, the quantity, and the disposition of any waste that results from manufacturing the exported articles. If no waste results, records will be maintained to establish that fact.
Records, which may include records kept in the normal course of business, will be maintained to establish:
1. That the exported articles on which drawback is claimed were produced with the use of the imported merchandise, and
2. The quantity of imported merchandise
The inventory records of the manufacturer or producer must show how the drawback recordkeeping requirements set forth in 19 U.S.C. 1313(a) and part 190 of the CBP Regulations will be met, as discussed under the heading “Procedures And Records Maintained”. If those records do not establish satisfaction of those legal requirements, drawback cannot be paid.
Drawback will be claimed on the full quantity of merchandise used in producing the exported articles only if there is no waste or valueless or unrecovered waste in the manufacturing operation. A drawback claim may be based on the quantity of eligible merchandise that appears in the exported articles, regardless of whether there is waste, and no records of waste need be maintained. If there is valuable waste recovered from the manufacturing operation and records are kept which show the quantity and value of the waste, drawback may be claimed on the quantity of eligible material used to produce the exported articles less the amount of that merchandise which the value of the waste would replace.
The manufacturer or producer must:
1. Comply fully with the terms of this general ruling when claiming drawback;
2. Open its factory and records for examination at all reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at least 3 years from the date of liquidation of any drawback claim predicated in whole or in part upon this general ruling;
4. Keep its letter of notification of intent to operate under this general ruling current by reporting promptly to the drawback office which liquidates its claims any changes in the information required by the General Instructions of this Appendix to be included therein (I. General Instructions, 1 through 10) or the corporate name or corporate organization by succession or reincorporation;
5. Keep a copy of this general ruling on file for ready reference by employees and require all officials and employees concerned to familiarize themselves with the provisions of this general ruling; and
6. Issue instructions to insure proper compliance with title 19, United States Code, section 1313, part 190 of the CBP Regulations and this general ruling.
Manufacturers or producers operating under this general manufacturing drawback ruling must comply with T.D.s 55027(2) and 55207(1), and 19 U.S.C. 1313(b), if applicable, as well as 19 CFR part 190 (
The imported merchandise or drawback products or other substituted merchandise will be used to manufacture or produce articles in accordance with § 190.2.
Records, which may include records kept in the normal course of business, will be maintained to establish:
1. Quantity, kind, quality, and 8-digit HTSUS subheading number of merchandise transferred from the principal to the agent;
2. Date of transfer of the merchandise from the principal to the agent;
3. Date of manufacturing or production operations performed by the agent;
4. Total quantity and description of merchandise (including 8-digit HTSUS subheading number) appearing in or used in manufacturing or production operations performed by the agent;
5. Total quantity and description of articles (including 8-digit HTSUS subheading number) produced in manufacturing or production operations performed by the agent;
6. Quantity, kind, quality, and 8-digit HTSUS subheading number of articles transferred from the agent to the principal; and
7. Date of transfer of the articles from the agent to the principal.
The manufacturer or producer will:
1. Comply fully with the terms of this general ruling when manufacturing or producing articles for account of the principal under the principal's general manufacturing drawback ruling or specific manufacturing drawback ruling, as appropriate;
2. Open its factory and records for examination at all reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at least 3 years from the date of liquidation of any drawback claim predicated in whole or in part upon this general ruling;
4. Keep its letter of notification of intent to operate under this general ruling current by reporting promptly to the drawback office which liquidates the claims any changes in the information required by the General Instructions of this Appendix to be included therein (I. General Instructions, 1 through 10) or the corporate name or corporate organization by succession or reincorporation;
5. Keep a copy of this general ruling on file for ready reference by employees and require all officials and employees concerned to familiarize themselves with the provisions of this general ruling; and
6. Issue instructions to help ensure proper compliance with title 19, United States Code, section 1313, part 190 of the CBP Regulations and this general ruling.
Drawback may be allowed under 19 U.S.C. 1313(a) upon the exportation of bags or meat wrappers manufactured with the use of imported burlap or other textile material, subject to the following special requirements:
Imported merchandise or drawback products (burlap or other textile material) are used in the manufacture of the exported articles upon which drawback claims will be based.
Exported articles on which drawback will be claimed will be manufactured in the United States using imported merchandise or drawback products.
The manufacturer or producer manufactures or produces for its own account. The manufacturer or producer may manufacture or produce articles for the account of another, or another manufacturer or producer may manufacture or produce for the account of the manufacturer or producer under contract within the principal and agency relationship outlined in T.D.s 55027(2) and 55207(1) (
The imported merchandise or drawback products will be used to manufacture or produce articles in accordance with § 190.2.
Not applicable.
Not applicable.
No drawback is payable on any waste which results from the manufacturing operation. Unless the claim for drawback is based on the quantity of merchandise appearing in the exported articles, records will be maintained to establish the value, the quantity, and the disposition of any waste that results from manufacturing the exported articles. If no waste results, records will be maintained to establish that fact.
Records, which may include records kept in the normal course of business, will be maintained to establish:
1. That the exported articles on which drawback is claimed were produced with the use of the imported merchandise; and
2. The quantity of imported merchandise
To obtain drawback the claimant must establish that the completed articles were exported within 5 years after importation of the imported merchandise. Records establishing compliance with these requirements will be available for audit by CBP during business hours. Drawback is not payable without proof of compliance.
The inventory records of the manufacturer or producer must show how the drawback recordkeeping requirements set forth in 19 U.S.C. 1313(a) and part 190 of the CBP Regulations will be met, as discussed under the heading “Procedures and Records Maintained”. If those records do not establish compliance with those legal requirements, drawback cannot be paid. Each lot of imported material received by a manufacturer or producer must be given a lot number and kept separate from other lots until used. The records of the manufacturer or producer must show, as to each manufacturing lot or period of manufacture, the 8-digit HTSUS classification, the quantity of material used from each imported lot and the number of each kind and size of bags or meat wrappers obtained.
All bags or meat wrappers manufactured or produced for the account of the same exporter during a specified period may be designated as one manufacturing lot. All exported bags or meat wrappers must be identified by the exporter.
Drawback will be claimed on the quantity of merchandise used in producing the exported articles only if there is no waste or valueless or unrecovered waste in the manufacturing operation. Drawback may be claimed on the quantity of eligible merchandise that appears in the exported articles, regardless of whether there is waste, and no records of waste need be maintained. If there is valuable waste recovered from the manufacturing operation and records are kept which show the quantity and value of the waste, drawback may be claimed on the quantity of eligible material used to produce the exported articles, less the amount of that merchandise which the value of the waste would replace.
The manufacturer or producer must:
1. Comply fully with the terms of this general ruling when claiming drawback;
2. Open its factory and records for examination at all reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at least 3 years from the date of liquidation of any drawback claim predicated in whole or in part upon this general ruling;
4. Keep its letter of notification of intent to operate under this general ruling current by reporting promptly to the drawback office which liquidates its claims any changes in the information required by the General Instructions of this Appendix to be included therein (I. General Instructions, 1 through 10) or the corporate name or corporate organization by succession or reincorporation.
5. Keep a copy of this general ruling on file for ready reference by employees and require all officials and employees concerned to familiarize themselves with the provisions of this general ruling; and
6. Issue instructions to help ensure proper compliance with 19, United States Code, § 1313, part 190 of the CBP Regulations and this general ruling.
The
The exported articles will have been manufactured in the United States using components described in the parallel columns above.
The manufacturer or producer manufactures or produces for its own account. The manufacturer or producer may manufacture or produce articles for the account of another or another manufacturer or producer may manufacture or produce for the account of the manufacturer or producer under contract within the principal and agency relationship outlined in T.D.s 55027(2) and 55207(1) (
The components described in the parallel columns will be used to manufacture or produce articles in accordance with § 190.2.
Not applicable.
No drawback is payable on any waste which results from the manufacturing operation. Unless the claim for drawback is based on the quantity of components appearing in the exported articles, records will be maintained to establish the value (or the lack of value), the quantity, and the disposition of any waste that results from manufacturing the exported articles. If no waste results, records will be maintained to establish that fact.
Records, which may include records kept in the normal course of business, will be maintained to establish:
1. The identity, specifications, and 8-digit HTSUS classification of the designated merchandise;
2. The quantity of merchandise classifiable under the same 8-digit HTSUS classification as the designated merchandise
3. That, within 5 years after the date of importation of the designated merchandise, the manufacturer or producer used the merchandise to produce articles. During the same 5-year period, the manufacturer or producer produced
The inventory records of the manufacturer or producer must show how the drawback recordkeeping requirements set forth in 19 U.S.C. 1313(b) and part 190 of the CBP Regulations will be met, as discussed under the heading “Procedures And Records Maintained”. If those records do not establish satisfaction of those legal requirements, drawback cannot be paid.
Drawback will be claimed on the quantity of eligible components used in producing the exported articles only if there is no waste or valueless or unrecovered waste in the manufacturing operation. Drawback may be claimed on the quantity of eligible components that appear in the exported articles, regardless of whether there is waste, and no records of waste need be maintained. If there is valuable waste recovered from the manufacturing operation and records are kept which show the quantity and value of the waste, drawback may be claimed on the quantity of eligible components used to produce the exported articles less the amount of those components which the value of the waste would replace.
The manufacturer or producer will:
1. Comply fully with the terms of this general ruling when claiming drawback;
2. Open its factory and records for examination at all reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at least 3 years from the date of liquidation of any drawback claim predicated in whole or in part upon this general ruling;
4. Keep its letter of notification of intent to operate under this general ruling current by reporting promptly to the drawback office which liquidates its claims any changes in the information required by the General Instructions of this Appendix to be included therein (I. General Instructions, 1 through 10) or the corporate name or corporate organization by succession or reincorporation;
5. Keep a copy of this general ruling on file for ready reference by employees and require all officials and employees concerned to familiarize themselves with the provisions of this general ruling; and
6. Issue instructions to insure proper compliance with title 19, United States Code, section 1313, part 190 of the CBP Regulations and this general ruling.
Drawback may be allowed under the provision of 19 U.S.C. 1313(a) upon the exportation of linseed oil, linseed oil cake, and linseed oil meal, manufactured or produced with the use of imported flaxseed, subject to the following special requirements:
Imported merchandise or drawback products (flaxseed) are used in the manufacture of the exported articles upon which drawback claims will be based.
Exported articles on which drawback will be claimed will be manufactured in the United States using imported merchandise or drawback products.
The manufacturer or producer manufactures or produces for its own account. The manufacturer or producer may manufacture or produce articles for the account of another or another manufacturer or producer may manufacture or produce for the account of the manufacturer or producer under contract within the principal and agency relationship outlined in T.D.s 55027(2) and 55207(1) (
The imported merchandise or drawback products will be used to manufacture or produce articles in accordance with § 190.2.
Drawback law mandates the assignment of relative values when two or more products necessarily are produced concurrently in the same operation. If multiple products are produced records will be maintained of the market value of each product at the time it is first separated in the manufacturing process (when a claim covers a manufacturing period, the entire period covered by the claim is the time of separation of the products and the value per unit of product is the market value for the period (
Records will be maintained showing the extent of any loss or gain in net weight or measurement of the imported merchandise, caused by atmospheric conditions, chemical reactions, or other factors.
No drawback is payable on any waste which results from the manufacturing operation. Unless the claim for drawback is based on the quantity of merchandise appearing in the exported articles, records will be maintained to establish the value, the quantity, and the disposition of any waste that results from manufacturing the exported articles. If no waste results, records will be maintained to establish that fact.
Records, which may include records kept in the normal course of business, will be maintained to establish:
1. That the exported articles on which drawback is claimed were produced with the use of the imported merchandise; and
2. The quantity of imported merchandise
To obtain drawback the claimant must establish that the completed articles were exported within 5 years after importation of the imported merchandise. Records establishing compliance with these requirements will be available for audit by CBP during business hours. Drawback is not payable without proof of compliance.
The inventory records of the manufacturer or producer must show how the drawback recordkeeping requirements set forth in 19 U.S.C. 1313(a) and part 190 of the CBP Regulations will be met, as discussed under the heading “Procedures and Records Maintained”. If those records do not establish satisfaction of those legal requirements, drawback cannot be paid.
The inventory records of the manufacturer or producer will show the inclusive dates of manufacture; the quantity, identity, value, and 8-digit HTSUS classification of the imported flaxseed or screenings, scalpings, chaff, or scourings used; the quantity by actual weight and value, if any, of the material removed from the foregoing by screening prior to crushing; the quantity and kind of domestic merchandise added, if any; the quantity by actual weight or gauge and value of the oil, cake, and meal obtained; and the quantity and value, if any, of the waste incurred. The quantity of imported flaxseed, screenings, scalpings, chaff, or scourings used or of material removed will not be estimated nor computed on the basis of the quantity of finished products obtained, but will be determined by actually weighing the said flaxseed, screenings, scalpings, chaff, scourings, or other material; or, at the option of the crusher, the quantities of imported materials used may be determined from CBP weights, as shown by the import entry covering such imported materials, and the Government weight certificate of analysis issued at the time of entry. The entire period covered by an abstract will be deemed the time of separation of the oil and cake covered thereby.
If the records of the manufacturer or producer do not show the quantity of oil cake used in the manufacture or production of the exported oil meal and the quantity of oil meal obtained, the net weight of the oil meal exported will be regarded as the weight of the oil cake used in the manufacture thereof.
If various tanks are used for the storage of imported flaxseed, the mill records must establish the tank or tanks in which each lot or cargo is stored. If raw or processed oil manufactured or produced during different periods of manufacture is intermixed in storage, a record must be maintained showing the quantity, identity, kind, and 8-digit HTSUS classification of oil so intermixed. Identity of merchandise or articles in either instance must be in accordance with § 190.14.
Drawback will be claimed on the quantity of merchandise used in producing the exported articles only if there is no waste or valueless or unrecovered waste in the manufacturing operation. Drawback may be claimed on the quantity of eligible merchandise that appears in the exported articles, regardless of whether there is waste, and no records of waste need be maintained. If there is valuable waste recovered from the manufacturing operation and records are kept which show the quantity and value of the waste, drawback may be claimed on the quantity of eligible material used to produce the exported articles, less the amount of that merchandise which the value of the waste would replace.
The manufacturer or producer will:
1. Comply fully with the terms of this general ruling when claiming drawback;
2. Open its factory and records for examination at all reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at least 3 years from the date of liquidation of any drawback claim predicated in whole or in part upon this general ruling;
4. Keep its letter of notification of intent to operate under this general ruling current by reporting promptly to the drawback office which liquidates its claims any changes in the information required by the General Instructions of this Appendix to be included therein (I. General Instructions, 1 through 10) or the corporate name or corporate organization by succession or reincorporation.
5. Keep a copy of this general ruling on file for ready reference by employees and require all officials and employees concerned to familiarize themselves with the provisions of this general ruling; and
6. Issue instructions to insure proper compliance with 19, United States Code, § 1313, part 190 of the CBP Regulations and this general ruling.
Drawback may be allowed under 19 U.S.C. 1313(a) upon the exportation of dressed, redressed, dyed, redyed, bleached, blended, or striped fur skins or fur skin articles manufactured or produced by any one or a combination of the foregoing processes with the use of fur skins or fur skin articles, such as plates, mats, sacs, strips, and crosses, imported in a raw, dressed, or dyed condition, subject to the following special requirements:
Imported merchandise or drawback products (fur skins or fur skin articles) are used in the manufacture of the exported articles upon which drawback claims will be based.
Exported articles on which drawback will be claimed will be manufactured in the United States using imported merchandise or drawback products.
The manufacturer or producer manufactures or produces for its own account. The manufacturer or producer may manufacture or produce articles for the account of another or another manufacturer or producer may manufacture or produce for the account of the manufacturer or producer under contract within the principal and agency relationship outlined in T.D.s 55027(2) and 55207(1) (
The imported merchandise or drawback products will be used to manufacture or produce articles in accordance with § 190.2.
Drawback will not be allowed under this general manufacturing drawback ruling when the process performed results only in the restoration of the merchandise to its condition at the time of importation.
Not applicable.
Records will be maintained showing the extent of any loss or gain in net weight or measurement of the imported merchandise, caused by atmospheric conditions, chemical reactions, or other factors.
No drawback is payable on any waste which results from the manufacturing operation. Unless the claim for drawback is based on the quantity of merchandise appearing in the exported articles, records will be maintained to establish the value, the quantity, and the disposition of any waste that results from manufacturing the exported articles. If no waste results, records will be maintained to establish that fact.
Records, which may include records kept in the normal course of business, will be maintained to establish:
1. That the exported articles on which drawback is claimed were produced with the use of the imported merchandise; and
2. The quantity of imported merchandise
To obtain drawback the claimant must establish that the completed articles were exported within 5 years after importation of the imported merchandise. Records establishing compliance with these requirements will be available for audit by CBP during business hours. Drawback is not payable without proof of compliance.
The inventory records of the manufacturer or producer must show how the drawback recordkeeping requirements set forth in 19 U.S.C. 1313(a) and part 190 of the CBP Regulations will be met, as discussed under the heading “Procedures and Records Maintained”. If those records do not establish satisfaction of those legal requirements, drawback cannot be paid.
The records of the manufacturer or producer must show, as to each lot of fur skins and/or fur skin articles used in the manufacture or production of articles for exportation with benefit of drawback, the lot number and date or inclusive dates of manufacture or production, the quantity, identity, description, and 8-digit HTSUS classification of the imported merchandise used, the condition in which imported, the process or processes applied thereto, the quantity, description, and 8-digit HTSUS classification of the finished articles obtained, and the quantity of imported pieces rejected, if any, or spoiled in manufacture or production.
Drawback will be claimed on the quantity of merchandise used in producing the exported articles only if there is no waste or valueless or unrecovered waste in the manufacturing operation. Drawback may be claimed on the quantity of eligible merchandise that appears in the exported articles, regardless of whether there is waste, and no records of waste need be maintained. If there is valuable waste recovered from the manufacturing operation and records are kept which show the quantity and value of the waste, drawback may be claimed on the quantity of eligible material used to produce the exported articles, less the amount of that merchandise which the value of the waste would replace. (If rejects and/or spoilage are incurred, the quantity of imported merchandise used will be determined by deducting from the quantity of fur skins or fur skin articles put into manufacture or production the quantity of such rejects and/or spoilage.)
The manufacturer or producer will:
1. Comply fully with the terms of this general ruling when claiming drawback;
2. Open its factory and records for examination at all reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at least 3 years from the date of liquidation of any drawback claim predicated in whole or in part upon this general ruling;
4. Keep its letter of notification of intent to operate under this general ruling current by reporting promptly to the drawback office which liquidates its claims any changes in the information required by the General Instructions of this Appendix to be included therein (I. General Instructions, 1 through 10) or the corporate name or corporate organization by succession or reincorporation.
5. Keep a copy of this general ruling on file for ready reference by employees and require all officials and employees concerned to familiarize themselves with the provisions of this general ruling; and
6. Issue instructions to insure proper compliance with 19, United States Code,
The
1. Orange juice from concentrate (reconstituted juice).
2. Frozen concentrated orange juice.
3. Bulk concentrated orange juice.
The manufacturer or producer manufactures or produces for its own account. The manufacturer or producer may manufacture or produce articles for the account of another or another manufacturer or producer may manufacture or produce for the account of the manufacturer or producer under contract within the principal and agency relationship outlined in T.D.s 55027(2) and 55207(1) (
1. Orange juice from concentrate (reconstituted juice). Concentrated orange juice for manufacturing is reduced to a desired 11.8° Brix by a blending process to produce orange juice from concentrate. The following optional blending processes may be used:
i. The concentrate is blended with fresh orange juice (single strength juice); or
ii. The concentrate is blended with essential oils, flavoring components, and water; or
iii. The concentrate is blended with water and is heat treated to reduce the enzymatic activity and the number of viable microorganisms.
2. Frozen concentrated orange juice. Concentrated orange juice for manufacturing is reduced to a desired degree Brix of not less than 41.8° Brix by the following optional blending processes:
i. The concentrate is blended with fresh orange juice (single strength juice); or
ii. The concentrate is blended with essential oils and flavoring components and water.
3. Bulk concentrated orange juice. Concentrated orange juice for manufacturing is blended with essential oils and flavoring components which would enable another processor such as a dairy to prepare finished frozen concentrated orange juice or orange juice from concentrate by merely adding water to the (intermediate) bulk concentrated orange juice.
Not applicable.
Records, which may include records kept in the normal course of business, will be maintained to establish:
1. The 8-digit HTSUS classification, identity, and specifications of the designated merchandise;
2. The quantity of merchandise classifiable under the same 8-digit HTSUS classification as the designated merchandise
3. That, within 5 years after the date of importation of the designated merchandise, the manufacturer or producer used the designated merchandise to produce articles. During the same 5-year period, the manufacturer or producer produced
To obtain drawback it must be established that the completed articles were exported within 5 years after the importation of the imported merchandise. Records establishing compliance with these requirements must be available for audit by CBP during business hours. No drawback is payable without proof of compliance.
The inventory records of the manufacturer or producer must show how the drawback recordkeeping requirements set forth in 19 U.S.C. 1313(b) and part 190 of the CBP Regulations will be met, as discussed under the heading “Procedures And Records Maintained”, and will show what components were blended with the concentrated orange juice for manufacturing. If those records do not establish satisfaction of those legal requirements drawback cannot be paid.
The basis of claim for drawback will be the quantity of concentrated orange juice for manufacturing used in the production of the exported articles. It is understood that when fresh orange juice is used as “cutback”, it will not be included in the “pound solids” when computing the drawback due.
The manufacturer or producer will:
1. Comply fully with the terms of this general ruling when claiming drawback;
2. Open its factory and records for examination at all reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at least 3 years from the date of liquidation of any drawback claim predicated in whole or in part upon this general ruling;
4. Keep its letter of notification of intent to operate under this general ruling current by reporting promptly to the drawback office which liquidates its claims any changes in the information required by the General Instructions of this Appendix to be included therein (I. General Instructions, 1 through 10) or the corporate name or corporate organization by succession or reincorporation;
5. Keep a copy of this general ruling on file for ready reference by employees and require all officials and employees concerned to familiarize themselves with the provisions of this general ruling; and
6. Issue instructions to insure proper compliance with title 19, United States Code, section 1313, part 190 of the CBP Regulations and this general ruling.
See the General Instructions, I.A.7., for this general drawback ruling. Each article to be exported must be named. When the identity of the product is not clearly evident by its name, there must be a statement as to what the product is,
The manufacturer or producer manufactures or produces for its own account. The manufacturer or producer may manufacture or produce articles for the account of another or another manufacturer or producer may manufacture or produce for the account of the manufacturer or producer under contract within the principal and agency relationship outlined in T.D.s 55027(2) and 55207(1) (
Heated crude oil is charged to an atmospheric distillation tower where it is subjected to fractionation. The charge to the distillation tower consists of a single crude oil, or of commingled crudes which are fed to the tower simultaneously or after blending in a tank. During fractionation, components of different boiling ranges are separated.
Fractionation results in 17 products. In order to insure proper distribution of drawback to each of these products, the manufacturer or producer agrees to record the relative values at the time of separation. The entire period covered by an abstract is to be treated as the time of separation. The value per unit of each product will be the average market value for the abstract period.
The manufacturer or producer can vary the proportionate quantity of each product. The manufacturer or producer understands that drawback is payable on exported products only to the extent that these products could have been produced from the designated merchandise. The records of the manufacturer or producer must show that all of the products exported for which drawback will be claimed under this general manufacturing drawback ruling could have been produced concurrently on a practical operating basis from the designated merchandise.
The manufacturer or producer agrees to establish the amount to be designated by reference to the Industry Standards of Potential Production published in T.D. 66-16.
There are no valuable wastes as a result of the processing.
Because the manufacturer or producer keeps records on a volume basis rather than a weight basis, it is anticipated that the material balance will show a volume gain. For the same reason, it is possible that occasionally the material balance will show a volume loss. Fluctuations in type of crude used, together with the type of finished product desired make an estimate of an average volume gain meaningless. However, records will be kept to show the amount of loss or gain with respect to the production of export products.
The use of any domestic merchandise acquired in exchange for imported merchandise that meets the same kind and quality specifications contained in the parallel columns of this general ruling shall be treated as use of the imported merchandise.
Records, which may include records kept in the normal course of business, will be maintained to establish:
1. The identity, specifications, and 8-digit HTSUS classification of the merchandise designated;
2. The quantity of merchandise classifiable under the same 8-digit HTSUS classification as the designated merchandise used to produce the exported articles.
3. That, within 5 years after importation, the manufacturer or producer used the designated merchandise to produce articles. During the same 5-year period, the manufacturer or producer produced the exported articles.
4(a). The manufacturer or producer agrees to use a 28-31 day period (monthly) abstract period for each refinery covered by this general manufacturing drawback ruling, or
(b). The manufacturer or producer agrees to use an abstract period (not to exceed 1 year) for each refinery covered by this general manufacturing drawback ruling. The manufacturer or producer certifies that if it were to file abstracts covering each manufacturing period of not less than 28 days and not more than 31 days (monthly) within the longer period, in no such monthly abstract would the quantity of designated merchandise exceed the material introduced into the manufacturing process during that monthly period. (Select (a) or (b), and state which is selected in the application, and, if (b) is selected, specify the length of the particular abstract period chosen (not to exceed 1 year (
5. On each abstract of production the manufacturer or producer agrees to show the value per barrel to five decimal places.
6. The manufacturer or producer agrees to file claims in the format set forth in exhibits A through F which are attached to this general manufacturing drawback ruling. The manufacturer or producer realizes that to obtain drawback the claimant must establish that the completed articles were exported within 5 years after importation of the imported merchandise. Records establishing compliance with these requirements will be available for audit by CBP during business hours. It is understood that drawback is not payable without proof of compliance. Records will be kept in accordance with T.D. 84-49, as amended by T.D. 95-61.
It is understood that the refiner can reserve as the basis for future payment the right to drawback only on the number of barrels of raw material computed by subtracting from Line E the larger of Lines A or B, of a given Exhibit E. It is further understood that this right to future payment can be claimed only against products concurrently producible with the products listed in Column 21, in the quantities shown in Column 22 of such Exhibit E. Such residual right can be transferred to another refinery of the same refiner only when Line B of Exhibit E is larger than Line A. Unless the number of residual barrels is specifically computed and rights thereto are expressly reserved on Exhibit E, such residual rights will be deemed waived. The procedure the manufacturer or producer must follow in preparing drawback entries claiming this residual right is illustrated in the attached sample Exhibit E-1. It is understood that claims involving residual rights must be filed only at the port where the Exhibit E reserving such right was filed.
The manufacturer or producer realizes that inventory control is of major importance. In
The above-noted records will provide the required audit trail from the initial source documents to the drawback claims of the manufacturer or producer and will support adherence with the requirements discussed under the heading PROCEDURES AND RECORDS MAINTAINED.
The amount of raw material on which drawback may be based will be computed by multiplying the quantity of each product exported by the drawback factor for that product. The amount of raw material which may be designated as the basis for drawback on the exported products produced at a given refinery and covered by a drawback entry must not exceed the quantity of such raw material used at the refinery during the abstract period or periods from which the exported products were produced. The quantity of raw material to be designated as the basis for drawback on exported products must be at least as great as the quantity of raw material which would be required to produce the exported products in the quantities exported.
The manufacturer or producer specifically agrees that it will:
1. Comply fully with the terms of this general ruling when claiming drawback;
2. Open its refinery and records for examination at all reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at least 3 years from the date of liquidation of any drawback claim predicated in whole or in part upon this application;
4. Keep this application current by reporting promptly to the drawback office which liquidates its claims any changes in the information required by the General Instructions of this Appendix to be included therein (I. General Instructions, 1 through 10) or the corporate name or corporate organization by succession or reincorporation;
5. Keep a copy of this general ruling on file for ready reference by employees and require all officials and employees concerned to familiarize themselves with the provisions of this general ruling; and
6. Issue instructions to insure proper compliance with title 19, United States Code, section 1313, part 190 of the CBP Regulations and this general ruling.
The
1. A 4% weight tolerance so that the piece goods used in manufacture will be not more than 4% lighter or heavier than the imported piece goods which will be designated;
2. A tolerance of 4% in the aggregate thread count per square inch so that the piece goods used in manufacture will have an aggregate thread count within 4%, more or less of the aggregate thread count of the imported piece goods which will be designated. In each case, the average yarn number of the domestic piece goods will be the same or greater than the average yarn number of the imported piece goods designated, and in each case, the substitution and tolerance will be employed only within the same family of fabrics,
Finished piece goods.
The manufacturer or producer manufactures or produces for its own account. The manufacturer or producer may manufacture or produce articles for the account of another or another manufacturer or producer may manufacture or produce for the account of the manufacturer or producer under contract within the principal and agency relationship outlined in T.D.s. 55027(2) and 55207(1) (
Piece goods are subject to any one of the following finishing productions:
1. Bleaching,
2. Mercerizing,
3. Dyeing,
4. Printing,
5. A combination of the above, or
6. Any additional finishing processes.
Not applicable.
Rag waste may be incurred. No drawback is payable on any waste which results from the manufacturing operation. Unless the claim for drawback is based on the quantity of merchandise appearing in the exported articles, the records of the manufacturer or producer must show the quantity of rag waste, if any, and its value. In instances where rag waste occurs and it is impractical to account for the actual quantity of rag waste incurred, it may be assumed that such rag waste constituted 2% of the piece goods put into the finishing processes. If necessary to establish the quantity of merchandise (eligible piece goods) appearing in the exported articles, such waste records must also be kept.
Unless the claim for drawback is based on the quantity of merchandise appearing in the exported articles, the records of the manufacturer or producer must show the yardage lost by shrinkage or gained by stretching during manufacture or production, and the quantity of remnants resulting and of spoilage incurred, if any. If necessary to establish the quantity of merchandise (eligible piece goods) appearing in the exported articles, such records for shrinkage, gain and spoilage will also be kept.
Records, which may include records kept in the normal course of business, will be maintained to establish:
1. The identity, specifications, and 8-digit HTSUS classification of the designated merchandise;
2. The quantity of merchandise classifiable under the same 8-digit HTSUS classification as the designated merchandise
3. That, within 5 years after the date of importation of the designated merchandise, the manufacturer or producer used the merchandise to produce articles. During the same 5-year period, the manufacturer or producer produced
To obtain drawback the claimant must establish that the completed articles were exported within 5 years after the importation of the imported merchandise. Records establishing compliance with these requirements will be available for audit by CBP during business hours. Drawback is not payable without proof of compliance.
The inventory records of the manufacturer or producer must show how the drawback recordkeeping requirements set forth in 19 U.S.C. 1313(b) and part 190 of the CBP Regulations will be met, as discussed under the heading “Procedures And Records Maintained”. If those records do not establish satisfaction of those legal requirements, drawback cannot be paid.
Drawback will be claimed on the quantity of eligible piece goods used in producing the exported articles only if there is no waste or valueless or unrecovered waste in the manufacturing operation. Drawback may be claimed on the quantity of eligible piece goods that appears in the exported articles, regardless of whether there is waste, and no records of waste need be maintained. If there is valuable waste recovered from the manufacturing operation and records are kept which show the quantity and value of the waste from each lot of piece goods, drawback may be claimed on the quantity of eligible piece goods used to produce the exported articles less the amount of piece goods which the value of the waste would replace.
The manufacturer or producer will:
1. Comply fully with the terms of this general ruling when claiming drawback;
2. Open its factory and records for examination at all reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at least 3 years from the date of liquidation of any drawback claim predicated in whole or in part upon this general ruling;
4. Keep its letter of notification of intent to operate under this general ruling current by reporting promptly to the drawback office which liquidates its claims any changes in the information required by the General Instructions of this Appendix to be included therein (I. General Instructions, 1 through 10) or the corporate name or corporate organization by succession or reincorporation;
5. Keep a copy of this general ruling on file for ready reference by employees and require all officials and employees concerned to familiarize themselves with the provisions of this general ruling; and
6. Issue instructions to insure proper compliance with title 19, United States Code, section 1313, part 190 of the CBP Regulations and this general ruling.
Drawback may be allowed under 19 U.S.C. 1313(b) upon the exportation of hard or soft refined sugars and sirups manufactured from raw sugar, subject to the following special requirements:
A. The drawback allowance must not exceed an amount calculated pursuant to regulations prescribed by the Secretary of the Treasury, of the duties, taxes, and fees paid on a quantity of raw sugar designated by the refiner which contains a quantity of sucrose not in excess of the quantity required to manufacture the exported sugar or sirup, ascertained as provided in this general rule.
B. The refined sugars and sirups must have been manufactured with the use of duty-paid, duty-free, or domestic sugar, or combinations thereof, within 5 years after the date of importation, and must have been exported within 5 years from the date of importation of the designated sugar.
C. All granulated sugar testing by the polariscope 99.5 [degrees] and over will be deemed hard refined sugar. All refined sugar testing by the polariscope less than 99.5 [degrees] will be deemed soft refined sugar. All “blackstrap,” “unfiltered sirup,” and “final molasses” will be deemed sirup.
D. The imported duty-paid sugar selected by the refiner as the basis for the drawback claim (designated sugar) must be classifiable under the same 8-digit HTSUS classification as that used in the manufacture of the exported refined sugar or sirup and must have been used within 5 years after the date of importation. Duty-paid sugar which has been used at a plant of a refiner within 5 years after the date on which it was imported by such refiner may be designated as the basis for the allowance of drawback on refined sugars or sirups manufactured at another plant of the same refiner.
E. For the purpose of distributing the drawback, relative values must be established between hard refined (granulated) sugar, soft refined (various grades) sugar, and sirups at the time of separation. The entire period covered by an abstract will be deemed the time of separation of the sugars and sirups covered by such abstract.
F. The sucrose allowance per pound on hard refined (granulated) sugar established by an abstract, as provided for in this general ruling, will be applied to hard refined sugar commercially known as loaf, cut loaf, cube, pressed, crushed, or powdered sugar manufactured from the granulated sugar covered by the abstract.
G. The sucrose allowance per gallon on sirup established by an abstract, as provided for in this general ruling, will be applied to sirup further advanced in value by filtration or otherwise, unless such sirup is the subject of a special manufacturing drawback ruling.
H. As to each lot of imported or domestic sugar used in the manufacture of refined sugar or sirup on which drawback is to be claimed, the raw stock records must show the refiner's raw lot number, the number and character of the packages, the settlement weight in pounds, the settlement polarization, and the 8-digit HTSUS classification. Such records covering imported sugar must show, in addition to the foregoing, the import entry number, date of importation, name of importing carrier, country of origin, the Government weight, and the Government polarization.
I. The melt records must show the date of melting, the number of pounds of each lot of raw sugar melted, and the full analysis at melting.
J. There must be kept a daily record of final products boiled showing the date of the melt, the date of boiling, the magma filling serial number, the number of the vacuum pan or crystallizer filling, the date worked off, and the sirup filling serial number.
K. The sirup manufacture records must show the date of boiling, the period of the melt, the sirup filling serial number, the number of barrels in the filling, the magma filling serial number, the quantity of sirup, its disposition in tanks or barrels and the refinery serial manufacture number.
L. The refined sugar stock records must show the refinery serial manufacture number, the period of the melt, the date of manufacture, the grade of sugar produced, its polarization, the number and kind of packages, and the net weight. When soft sugars are manufactured, the commercial grade number and quantity of each must be shown.
M. Each lot of hard or soft refined sugar and each lot of sirup manufactured, regardless of the character of the containers or vessels in which it is packed or stored, must be marked immediately with the date of manufacture and the refinery manufacture number applied to it in the refinery records provided for and shown in the abstract, as provided for in this general ruling, from such records. If all the sugar or sirup contained in any lot manufactured is not intended for exportation, only such of the packages as are intended for exportation need be marked as prescribed above, provided there is filed with the drawback office immediately after such marking a statement showing the date of manufacture, the refinery manufacture number, the number of packages marked, and the quantity of sugar or sirup contained therein. No drawback will be allowed in such case on any sugar or sirup in excess of the quantity shown on the statement as having been marked. If any packages of sugar or sirup so marked are repacked into other containers, the new containers must be marked with the marks which appeared on the original containers and a revised statement covering such repacking and remarking must be filed with the drawback office. If sirups from more than one lot are stored in the same tank, the refinery records must show the refinery manufacture number and the quantity of sirup from each lot contained in such tank.
N. An abstract from the foregoing records covering manufacturing periods of not less than 1 month nor more than 3 months, unless a different period will have been authorized, must be filed when drawback is to be claimed on any part of the refined sugar or sirup manufactured during such period. Such abstract must be filed by each refiner with the drawback office where drawback claims are filed on the basis of this general ruling. Such abstract must consist of: (1) A raw stock record (accounting for Refiner's raw lot No., Import entry No., Packages No. and kind, Pounds, Polarization, By whom imported or withdrawn, Date of importation, Date of receipt by refiner, Date of melt, Importing carrier, Country of origin); (2) A melt record [number of pounds in each lot melted] (accounting for Lot No. Pounds, and Polarization degrees and pounds sucrose); (3) Sirup stock records (accounting for Date of boiling, Refinery serial manufacture No., Quantity of sirup in gallons, and Pounds sucrose contained therein); (4) Refined sugar stock record (accounting for Refinery serial production No., Date of manufacture, Hard or soft refined, Polarization and No., Net weight in pounds); (5) Recapitulation (consisting of (in pounds): (a) Sucrose in process at beginning of period, (b) sucrose melted during period, (c) sucrose in process at end of period, (d) sucrose used in manufacture, and (e) sucrose contained in manufacture, in which item (a) plus item (b), minus item (c), should equal item (d)); and (6) A statement as follows:
I, _____, the ___ refiner at the ___ refinery of ___, located at ___, do solemnly and truly declare that each of the statements contained in the foregoing abstract is true to the best of my knowledge and belief and can be verified by the refinery records, which have been kept in accordance with Treasury Decision 83-59 and Appendix A of 19 CFR part 190 and which are at all times open to the inspection of CBP.
O. The refiner must file with each abstract a statement, showing the average market values of the products specified in the abstract and including a statement as follows:
I, _____, (Official capacity) of the ___ (Refinery), do solemnly and truly declare that the values shown above are true
P. At the end of each calendar month the refiner must furnish to the drawback office a statement showing the actual sales of sirup and the average market values of refined sugars for the calendar month.
Q. The sucrose allowance to be applied to the various products based on the abstract and statement provided for in this general ruling will be in accordance with the example set forth in Treasury Decision 83-59.
R. [Reserved.]
S. Drawback entries under this general ruling must state the polarization in degrees and the sucrose in pounds for the designated imported sugar. Drawback claims under this general ruling must include a statement as follows:
I, _____, the ___ of ___, located at ___ declare that the sugar (or sirup) described in this entry, was manufactured by said company at its refinery at ___ and is part of the sugar (or sirup) covered by abstract No. __, filed at the port of __; that, subject to 19 U.S.C. 1508 and 1313(t), the refinery and other records of the company verifying the statements contained in said abstract are now and at all times hereafter will be open to inspection by CBP. I further declare that the above-designated imported sugar (upon which the duties have been paid) was received by said company on _ and was used in the manufacture of sugar and sirup during the period covered by abstract No. __, CBP No. __, on file with the port director at ___.
I further declare that the sugar or sirup specified therein was exported as stated in the entry.
T. General Statement. The refiner manufactures or produces for its own account. The refiner may manufacture or produce articles for the account of another or another manufacturer or producer may manufacture or produce for the refiner's account under contract within the principal and agency relationship outlined in T.D.s 55027(2) and 55207(1) (
U. Waste. No drawback is payable on any waste which results from the manufacturing operation. Unless drawback claims are based on the “appearing in” method, records will be maintained to establish the value (or the lack of value), the quantity, and the disposition of any waste that results from manufacturing the exported articles. If no waste results, records to establish that fact will be maintained.
V. Loss or Gain. The refiner will maintain records showing the extent of any loss or gain in net weight or measurement of the sugar caused by atmospheric conditions, chemical reactions, or other factors.
W. [Reserved]
X. Procedures and Records Maintained.
Records, which may include records kept in the normal course of business, will be maintained to establish:
1. The identity, specifications, and 8-digit HTSUS classification of the designated merchandise;
2. The quantity of merchandise classifiable under the same 8-digit HTSUS classification as the designated merchandise
3. That, within 5 years of the date of importation of the designated merchandise, the refiner used the designated merchandise to produce articles. During the same 5-year period, the refiner produced
To obtain drawback the claimant must establish that the completed articles were exported within 5 years after the importation of the imported merchandise. Records establishing compliance with these requirements will be available for audit by CBP during business hours. Drawback is not payable without proof of compliance.
Y. General requirements. The refiner will:
1. Comply fully with the terms of this general ruling when claiming drawback;
2. Open its factory and records for examination at all reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at least 3 years from the date of liquidation of any drawback claim predicated in whole or in part upon this general ruling;
4. Keep its letter of notification of intent to operate under this general ruling current by reporting promptly to the drawback office which liquidates its claims any changes in the information required by the General Instructions of this Appendix to be included therein (I. General Instructions, 1 through 10) or the corporate name or corporate organization by succession or reincorporation;
5. Keep a copy of this general ruling on file for ready reference by employees and require all officials and employees concerned to familiarize themselves with the provisions of this general ruling; and
6. Issue instructions to insure proper compliance with title 19, United States Code, section 1313, part 190 of the CBP Regulations and this general ruling.
1. The duty-paid, duty-free, or domestic steel used instead of the imported, duty-paid steel (or drawback products) will be interchangeable for manufacturing purposes with the duty-paid steel. To be interchangeable a steel must be able to be used in place of the substituted steel without any additional processing step in the manufacture of the article on which drawback is to be claimed.
2. Because the duty-paid steel (or drawback products) that is to be designated as the basis for drawback is dutiable according to its value, the amount of duty can vary with its size (gauge, width, or length) or composition (
3. Any fluctuation in market value caused by a factor other than quality does not affect drawback.
4. If the steel is coated or plated with a base metal, in addition to meeting the requirements for uncoated or unplated steel set forth in the parallel columns, the base-metal coating or plating on the duty-paid, duty-free, or domestic steel used in place of the duty-paid steel (or drawback products) will have the same composition and thickness as the coating or plating on the duty-paid steel. If the coated or plated duty-paid steel is within an SAE, AISI, ASTM specification, then any duty-paid, duty-free, or domestic coated or plated steel must be covered by the same specification and grade (if two or more grades are in the specification).
The exported articles will have been manufactured in the United States using steels described in the parallel columns above.
The manufacturer or producer manufactures or produces for its own account.
The manufacturer or producer may manufacture or produce articles for the account of another or another manufacturer or producer may manufacture or produce for the account of the manufacturer or producer under contract within the principal and agency relationship outlined in T.D.s 55027(2) and 55207(1) (
The steel described in the parallel columns will be used to manufacture or produce articles in accordance with § 190.2.
Not applicable.
No drawback is payable on any waste which results from the manufacturing operation. Unless the claim for drawback is based on the quantity of steel appearing in the exported articles, records will be maintained to establish the value (or the lack of value), the quantity, and the disposition of any waste that results from manufacturing the exported articles. If no waste results, records to establish that fact will be maintained.
The manufacturer or producer will maintain records showing the extent of any loss or gain in net weight or measurement of the steel caused by atmospheric conditions, chemical reactions, or other factors.
Records, which may include records kept in the normal course of business, will be maintained to establish:
1. The identity, specifications, and 8-digit HTSUS classification of the designated merchandise;
2. The quantity of merchandise of the designated merchandise
3. That, within 5 years of the date of importation of the designated merchandise, the manufacturer or producer used the merchandise to produce articles. During the same 5-year period, the manufacturer or producer produced
To obtain drawback the claimant must establish that the completed articles were exported within 5 years after the importation of the imported merchandise. Records establishing compliance with these requirements will be available for audit by CBP during business hours. Drawback is not payable without proof of compliance.
The inventory records of the manufacturer or producer must show how the drawback recordkeeping requirements set forth in 19 U.S.C. 1313(b) and part 190 of the CBP Regulations will be met, as discussed under the heading “Procedures And Records Maintained”. If those records do not establish satisfaction of those legal requirements, drawback cannot be paid.
Drawback will be claimed on the quantity of steel used in producing the exported articles only if there is no waste or valueless or unrecovered waste in the manufacturing operation. Drawback may be claimed on the quantity of eligible steel that appears in the exported articles, regardless of whether there is waste, and no records of waste need be maintained. If there is valuable waste recovered from the manufacturing operation and records are kept which show the quantity and value of the waste from each lot of steel, drawback may be claimed on the quantity of eligible steel used to produce the exported articles less the amount of that steel which the value of the waste would replace.
The manufacturer or producer will:
1. Comply fully with the terms of this general ruling when claiming drawback;
2. Open its factory and records for examination at all reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at least 3 years from the date of liquidation of any drawback claim predicated in whole or in part upon this general ruling;
4. Keep its letter of notification to operate under this general ruling current by reporting promptly to the drawback office which liquidates its claims any changes in the information required by the General Instructions of this Appendix to be included therein (I. General Instructions, 1 through 10) or the corporate name or corporate organization by succession or reincorporation;
5. Keep a copy of this general ruling on file for ready reference by employees and require all officials and employees concerned to familiarize themselves with the provisions of this general ruling; and
6. Issue instructions to insure proper compliance with title 19, United States Code, section 1313, part 190 of the CBP Regulations and this general ruling.
The sugars
Edible substances (including confectionery) and/or beverages and/or ingredients therefor.
The manufacturer or producer manufactures or produces for its own account. The manufacturer or producer may manufacture or produce articles for the account of another or another manufacturer or producer may manufacture or produce for the account of the manufacturer or producer under contract within the principal and agency relationship outlined in T.D.s 55027(2) and 55207(1) (
The sugars are subjected to one or more of the following operations to form the desired product(s):
1. Mixing with other substances,
2. Cooking with other substances,
3. Boiling with other substances,
4. Baking with other substances,
5. Additional similar processes.
Not applicable.
No drawback is payable on any waste which results from the manufacturing operation. Unless the claim for drawback is based on the quantity of sugar appearing in the exported articles, records will be maintained to establish the value (or the lack of value), the quantity, and the disposition of any waste that results from manufacturing the exported articles. If no waste results, records to establish that fact will be maintained.
The manufacturer or producer will maintain records showing the extent of any loss or gain in net weight or measurement of the sugar caused by atmospheric conditions, chemical reactions, or other factors.
Records, which may include records kept in the normal course of business, will be maintained to establish:
1. The identity, specifications, and 8-digit HTSUS classification of the designated merchandise;
2. The quantity of merchandise classifiable under the same 8-digit HTSUS classification as the designated merchandise
3. That, within 5 years of the date of importation of the designated merchandise, the manufacturer or producer used the merchandise to produce articles. During the same 5-year period, the manufacturer or producer produced
To obtain drawback the claimant must establish that the completed articles were exported within 5 years after the importation of the imported merchandise. Records establishing compliance with these requirements will be available for audit by CBP during business hours. Drawback is not payable without proof of compliance.
The inventory records of the manufacturer or producer, will show how the drawback recordkeeping requirements set forth in 19 U.S.C. 1313(b) and part 190 of the CBP Regulations will be met, as discussed under the heading “Procedures And Records Maintained”. If those records do not establish satisfaction of those legal requirements, drawback cannot be paid.
Drawback will be claimed on the quantity of sugar used in producing the exported articles only if there is no waste or valueless or unrecovered waste in the manufacturing operation. Drawback may be claimed on the quantity of eligible sugar that appears in the exported articles regardless of whether there is waste, and no records of waste need be maintained. If there is valuable waste recovered from the manufacturing operation and records are kept which show the quantity and value of the waste, drawback may be claimed on the quantity of eligible material used to produce the exported articles less the amount of that sugar which the value of the waste would replace.
The manufacturer or producer will:
1. Comply fully with the terms of this general ruling when claiming drawback;
2. Open its factory and records for examination at all reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at least 3 years from the date of liquidation of any drawback claim predicated in whole or in part upon this general ruling;
4. Keep its letter of notification of intent to operate under this general ruling current by reporting promptly to the drawback office which liquidates its claims any changes in the information required by the General Instructions of this Appendix to be included therein (I. General Instructions, 1 through 10) or the corporate name or corporate organization by succession or reincorporation;
5. Keep a copy of this general ruling on file for ready reference by employees and require all officials and employees concerned to familiarize themselves with the provisions of this general ruling; and
6. Issue instructions to insure proper compliance with title 19, United States Code, section 1313, part 190 of the CBP Regulations and this general ruling.
Drawback may be allowed under 19 U.S.C. 1313(a) upon the exportation of bleached, mercerized, printed, dyed, or redyed piece goods manufactured or produced by any one or a combination of the foregoing processes with the use of imported woven piece goods, subject to the following special requirements:
Imported merchandise or drawback products (woven piece goods) are used in the manufacture of the exported articles upon which drawback claims will be based.
Exported articles on which drawback will be claimed will be manufactured in the United States using imported merchandise or drawback products.
The manufacturer or producer manufactures or produces for its own account. The manufacturer or producer may manufacture or produce articles for the account of another or another manufacturer or producer may manufacture or produce for the account of the manufacturer or producer under contract within the principal and agency relationship outlined in T.D.s 55027(2) and 55207(1) (
The imported merchandise or drawback products will be used to manufacture or produce articles in accordance with § 190.2.
The piece goods used in manufacture or production under this general manufacturing drawback ruling may also be subjected to one or more finishing processes. Drawback will not be allowed under this general manufacturing drawback ruling when the process performed results only in the restoration of the merchandise to its condition at the time of importation.
Not applicable.
Rag waste may be incurred. No drawback is payable on any waste which results from the manufacturing operation. Unless the claim for drawback is based on the quantity of merchandise appearing in the exported articles, the records of the manufacturer or producer must show the quantity of rag waste, if any, its value, and its disposition. If no waste results, records will be maintained to establish that fact. In instances where rag waste occurs and it is impractical to account for the actual quantity of rag waste incurred, it may be assumed that such rag waste constituted 2% of the woven piece goods put into process. If necessary to establish the quantity of merchandise (eligible piece goods) appearing in the exported articles, such waste records will also be kept.
Unless the claim for drawback is based on the quantity of merchandise appearing in the exported articles, the records of the manufacturer or producer must show the yardage lost by shrinkage or gained by stretching during manufacture, and the quantity of remnants resulting and of spoilage incurred, if any. If necessary to establish the quantity of merchandise (eligible piece goods) appearing in the exported articles, such records for shrinkage, gain, and spoilage will also be kept.
Records, which may include records kept in the normal course of business, will be maintained to establish:
1. That the exported articles on which drawback is claimed were produced with the use of the imported merchandise; and
2. The quantity of imported merchandise
To obtain drawback the claimant must establish that the completed articles were exported within 5 years after importation of the imported merchandise. Records establishing compliance with these
The inventory records of the manufacturer or producer must show how the drawback recordkeeping requirements set forth in 19 U.S.C. 1313(a) and part 190 of the CBP Regulations will be met, as discussed under the heading “Procedures and Records Maintained”. If those records do not establish satisfaction of those legal requirements, drawback cannot be paid.
The records of the manufacturer or producer must show, as to each lot of piece goods manufactured or produced for exportation with benefit of drawback, the lot number and the date or inclusive dates of manufacture or production, the quantity, identity, value, and 8-digit HTSUS classification of the imported (or drawback product) piece goods used, the condition in which imported or received (whether in the gray, bleached, dyed, or mercerized), the working allowance specified in the contract under which they are received, the process or processes applied thereto, and the quantity and description of the piece goods obtained. The records must also show the yardage lost by shrinkage or gained by stretching during manufacture or production, and the quantity of remnants resulting and of spoilage incurred.
Drawback will be claimed on the quantity of merchandise used in producing the exported articles only if there is no waste or valueless or unrecovered waste in the manufacturing operation. Drawback may be claimed on the quantity of eligible merchandise that appears in the exported articles, regardless of whether there is waste, and no records of waste need be maintained. If there is valuable waste recovered from the manufacturing operation and records are kept which show the quantity and value of the waste, drawback may be claimed on the quantity of eligible material used to produce the exported articles, less the amount of that merchandise which the value of the waste would replace. (If remnants and/or spoilage occur during manufacture or production, the quantity of imported merchandise used will be determined by deducting from the quantity of piece goods received and put into manufacture or production the quantity of such remnants and/or spoilage. The remaining quantity will be reduced by the quantity thereof which the value of the rag waste, if any, would replace.)
The manufacturer or producer will:
1. Comply fully with the terms of this general ruling when claiming drawback;
2. Open its factory and records for examination at all reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at least 3 years from the date of liquidation of any drawback claim predicated in whole or in part upon this general ruling;
4. Keep its letter of notification of intent to operate under this general ruling current by reporting promptly to the drawback office which liquidates its claims any changes in the information required by the General Instructions of this Appendix to be included therein (I. General Instructions, 1 through 10) or the corporate name or corporate organization by succession or reincorporation.
5. Keep a copy of this general ruling on file for ready reference by employees and require all officials and employees concerned to familiarize themselves with the provisions of this general ruling; and
6. Issue instructions to insure proper compliance with 19, United States Code, § 1313, part 190 of the CBP Regulations and this general ruling.
Applications for specific manufacturing drawback rulings using these sample formats must be submitted to and reviewed and approved by CBP Headquarters.
U.S. Customs and Border Protection, Entry Process and Duty Refunds, Regulations and Rulings, Office of Trade, 90 K Street NE—10th Floor (Mail Stop 1177), Washington, DC 20229-1177.
Dear Sir or Madam: We, (Applicant's Name), a (State,
(Section 190.8(a) of the CBP Regulations provides that each manufacturer or producer of articles intended for exportation with the benefit of drawback must apply for a specific manufacturing drawback ruling, unless operating under a general manufacturing drawback ruling under § 190.7 of the CBP Regulations. CBP will not approve an application which shows an unincorporated division or company as the applicant (
(Give the address of the factory(s) where the process of manufacture or production will take place. If the factory is a different legal entity from the applicant, so state and indicate if operating under an Agent's general manufacturing drawback ruling.)
(List persons legally authorized to bind the corporation who will sign drawback documents. Section 190.6 of the CBP Regulations permits only the president, vice president, secretary, treasurer, or any employee legally authorized to bind the corporation to sign for a corporation. In addition, a person within a business entity with a customs power of attorney for the company may sign. A customs power of attorney may also be given to a licensed customs broker. This heading should be changed to Names of Partners or Proprietor in the case of a partnership or sole proprietorship, respectively (
(The four offices where drawback claims can be filed are located at: New York, NY; Houston, TX; Chicago, IL; San Francisco, CA.)
(An original application and two copies must be filed. If the applicant intends to file drawback claims at more than one drawback office, one additional copy of the application must be furnished for each additional office indicated.)
(The following questions must be answered:)
1. Who will be the importer of the designated merchandise?
(If the applicant will not always be the importer of the designated merchandise, does the applicant understand its obligations to maintain records to support the transfer under § 190.10, and its liability under § 190.63?)
2. Will an agent be used to process the designated or the substituted merchandise into articles?
(If an agent is to be used, the applicant must state it will comply with T.D.s 55027(2) and 55207(1) and § 190.9, as applicable, and that its agent will submit a letter of notification of intent to operate under the general manufacturing drawback ruling for agents (
3. Will the applicant be the exporter?
(If the applicant will not be the exporter in every case but will be the claimant, the manufacturer must state that it will reserve the right to claim drawback with the knowledge and written consent of the exporter (19 CFR 190.82).)
The imported merchandise which we will designate in our claims will be classifiable under the same 8-digit HTSUS classification as the merchandise used in producing the exported articles on which we claim drawback.
Fluctuations in the market value resulting from factors other than quality will not affect the drawback.
(In order to successfully claim drawback it is necessary to prove that the duty-paid, duty-free or domestic merchandise which is to be substituted for the imported merchandise is “classifiable under the same 8-digit HTSUS classification”. In order to enable CBP to rule on “the same 8-digit HTSUS classification”, the application must include a detailed description of the designated imported merchandise and of the substituted duty-paid, duty-free or domestic merchandise to be used to produce the exported articles, as well as provide the Bill of Materials and/or formulas annotated with the HTSUS classifications.)
(It is essential that all the characteristics which determine the quality of the merchandise are provided in the application in order to substantiate that the merchandise meets the “the same 8-digit HTSUS classification” statutory requirement. These characteristics should clearly distinguish merchandise of different qualities. For example, USDA standards; FDA standards; industry standards,
(The descriptions of the “the same 8-digit HTSUS subheading number” merchandise should be formatted in the parallel columns. The left-hand column will consist of the name and specifications of the designated imported merchandise under the heading set forth above. The right-hand column will consist of the name, specifications, and 8-digit HTSUS subheading number for the duty-paid, duty-free or domestic merchandise under the heading set forth above. Amendments to rulings will be required if any changes to the HTSUS classifications occur.)
(Name each article to be exported. When the identity of the product is not clearly evident by its name state what the product is,
(Drawback under § 1313(b) is not allowable except where a manufacture or production exists. Manufacture or production is defined, for drawback purposes, in § 190.2. In order to obtain drawback under § 1313(b), it is essential for the applicant to show use in manufacture or production by giving a thorough description of the manufacturing process. This description should include the name and exact condition of the merchandise listed in the Parallel Columns, a complete explanation of the processes to which it is subjected in this country, the effect of such processes, the name and exact description of the finished article, and the use for which the finished article is intended. When applicable, give equations of the chemical reactions. The attachment of a flow chart in addition to the description showing the manufacturing process is an excellent means of illustrating whether or not a manufacture or production has occurred. Flow charts can clearly illustrate if and at what point during the manufacturing process by-products and wastes are generated.)
(This section should contain a description of the process by which each item of merchandise listed in the parallel columns above is used to make or produce every article that is to be exported.)
(Some processes result in the separation of the merchandise used in the same operation into two or more products. List all of the products. State that you will record the market value of each product at the time it is first separated in the manufacturing process. If this section is not applicable to you, then state so.)
(Drawback law mandates the assignment of relative values when two or more products necessarily are produced concurrently in the same operation. For instance, the refining of flaxseed necessarily produces linseed oil and linseed husks (animal feed), and drawback must be distributed to each product in accordance with its relative value. However, the voluntary election of a steel fabricator, for instance, to use part of a lot of imported steel to produce automobile doors and part of the lot to produce automobile fenders does not call for relative value distribution.)
(The relative value of a product is its value divided by the total value of all products, whether or not exported. For example, 100 gallons of drawback merchandise are used to produce 100 gallons of products, including 60 gallons of product A, 20 gallons of product B, and 20 gallons of product C. At the time of separation, the unit values of products A, B, and C are $5, $10, and $50 respectively. The relative value of product A is $300 divided by $1500 or
(Drawback is allowable on exports of any of multiple products, but is not allowable on exports of valuable waste. In making this distinction between a product and valuable waste, the applicant should address the following significant elements: (1) The nature of the material of which the residue is composed; (2) the value of the residue as compared to the value of the principal manufactured product and the raw material; (3) the use to which it is put; (4) its status under the tariff laws, if imported; (5) whether it is a commodity recognized in commerce; (6) whether it must be subjected to some process to make it saleable.)
(Some processes result in the separation of fixed proportions of each product, while other processes afford the opportunity to increase or decrease the proportion of each product. An example of the latter is petroleum refining, where the refiner has the option to increase or decrease the production of one or more products relative to the others. State under this heading whether you can or cannot vary the proportionate quantity of each product.) (The MULTIPLE PRODUCTS section consists of two sub-sections: Relative Values and Producibility. If multiple products do not result from your operation state “not applicable” for the entire section. If multiple products do result from your operation Relative Values will always apply. However, Producibility may or may not apply. If Producibility does not apply to your multiple product operation state “Not Applicable” for this sub-section.)
(Many processes result in residue materials which, for drawback purposes, are treated as wastes. Describe any residue materials which you believe should be so treated. If no waste results, include a positive statement to that effect under this heading.)
(If waste occurs, state: (1) Whether or not it is recovered, (2) whether or not it is valueless, and (3) what you do with it. This information is required whether claims are made on a “used in” or “appearing in” basis and regardless of the amount of waste incurred.)
(Irrecoverable wastes are those consisting of materials which are lost in the process. Valueless wastes are those which may be recovered but have no value. These irrecoverable and valueless wastes do not reduce the drawback claim provided the claim is based on the quantity of imported material used in manufacturing. If the claim is based upon the quantity of imported merchandise appearing in the exported article, irrecoverable and valueless waste will cause a reduction in the amount of drawback.)
(Valuable wastes are those recovered wastes which have a value either for sale or for use in a different manufacturing process. However, it should be noted that this standard applies to the entire industry and is not a selection on your part. An option by you not to choose to sell or use the waste in some different operation does not make it valueless if another manufacturer can use the waste. State what you do with the waste. If you have to pay someone to get rid of it, or if you have buyers for the waste, you must state so in your application regardless of what “Basis” you are using.)
(If you recover valuable waste and if you choose to claim on the basis of the quantity of imported or substituted merchandise used in producing the exported articles (less valuable waste), state that you will keep records to establish the quantity and value of the waste recovered. See “Basis of Claim for Drawback” section below.)
(Some processes result in another type of residual material, namely, stock in process, which affects the allowance of drawback. Stock in process may exist when residual material resulting from a manufacturing or processing operation is reintroduced into a subsequent manufacturing or processing operation;
(If stock in process occurs and claims are to be based on stock in process, the application must include a statement to that effect. The application must also include a statement that merchandise is considered to be used in manufacture at the time it was originally processed so that the stock in process will not be included twice in the computation of the merchandise used to manufacture the finished articles on which drawback is claimed.)
(Some manufacturing processes result in an intangible loss or gain of the net weight or measurement of the merchandise used. This loss or gain is caused by atmospheric conditions, chemical reactions, or other factors. State the approximate usual percentage or quantity of such loss or gain. Note that percentage values will be considered to be measured “by weight” unless otherwise specified. Loss or gain does not occur during all manufacturing processes. If loss or gain does not apply to your manufacturing process, state “Not Applicable.”)
We will maintain records to establish:
1. The identity, specifications, and 8-digit HTSUS subheading number of the merchandise we designate;
2. The quantity of merchandise classifiable under the same 8-digit HTSUS subheading number as the designated merchandise
3. That, within 5 years after the date of importation, we used the designated merchandise to produce articles. During the same 5-year period, we produced
We realize that to obtain drawback the claimant must establish that the completed articles were exported within 5 years after the importation of the imported merchandise. Our records establishing our compliance with these requirements will be available for audit by CBP during business hours. We understand that drawback is not payable without proof of compliance.
(Describe your inventory records and state how those records will meet the drawback recordkeeping requirements set forth in 19 U.S.C. 1313(b) and part 190 of the CBP Regulations as discussed under the heading PROCEDURES AND RECORDS MAINTAINED. To insure compliance the following areas, as applicable, should be included in your discussion:)
(Proof of time frames may be specific or inclusive,
(There are three different bases that may be used to claim drawback: (1) Used in; (2) appearing in; and (3) used in less valuable waste.)
(The “used in” basis may be employed only if there is either no waste or valueless or unrecovered waste in the operation. Irrecoverable or valueless waste does not
(For example, if 100 pounds of material, valued at $1.00 per pound, were used in manufacture resulting in 10 pounds of irrecoverable or valueless waste, the 10 pounds of irrecoverable or valueless waste would not reduce the drawback. In this case drawback would be payable on 99% of the duties, taxes, and fees paid on the 100 pounds of designated material used to produce the exported articles.)
(The “appearing in” basis may be used regardless of whether there is waste. If the “appearing in” basis is used, the claimant does not need to keep records of waste and its value. However, the manufacturer must establish the identity and quantity of the merchandise appearing in the exported product and provide this information. Waste reduces the amount of drawback when claims are made on the “appearing in” basis. Drawback is payable on 99 percent of the duties, taxes, and fees paid on the quantity of material designated, which may not exceed the quantity of eligible material that appears in the exported articles. “Appearing in” may not be used if multiple products are involved.)
(Based on the previous example, drawback would be payable on the 90 pounds of merchandise which actually went into the exported product (appearing in) rather than the 100 pounds used in as set forth previously.)
(The “used in less valuable waste” basis may be employed when the manufacturer recovers valuable waste, and keeps records of the quantity and value of waste from each lot of merchandise. The value of the waste reduces the amount of drawback when claims are based on the “used in less valuable waste” basis. When valuable waste is incurred, the drawback allowance on the exported article is based on the duties, taxes, and fees paid on the quantity of merchandise used in the manufacture, reduced by the quantity of such merchandise which the value of the waste would replace. Thus in this case, drawback is claimed on the quantity of eligible material actually used to produce the exported product, less the amount of such material which the value of the waste would replace. Note section 190.26(c) of the CBP Regulations.)
(Based on the previous examples, if the 10 pounds of waste had a value of $.50 per pound, then the 10 pounds of waste, having a total value of $5.00, would be equivalent in value to 5 pounds of the designated material. Thus the value of the waste would replace 5 pounds of the merchandise used, and drawback is payable on 99 percent of the duties, taxes, and fees paid on the 95 pounds of imported material designated as the basis for the allowance of drawback on the exported article rather than on the 100 pounds “used in” or the 90 pounds “appearing in” as set forth in the above examples.)
(Two methods exist for the manufacturer to show the quantity of material used or appearing in the exported article: (1) Schedule or (2) Abstract.)
(A “schedule” shows the quantity of material used in producing each unit of product. The schedule method is usually employed when a standard line of merchandise is being produced according to fixed formulas. Some schedules will show the quantity of merchandise used to manufacture or produce each article and others will show the quantity appearing in each finished article. Schedules may be prepared to show the quantity of merchandise either on the basis of percentages or by actual weights and measurements. A schedule determines the amount that will be needed to produce a unit of product before the material is actually used in production.)
(An “abstract” is the summary of the records which shows the total quantity used in producing all products during the period covered by the abstract. The abstract looks at a period of time, for instance 3 months, in which the quantity of material has been used. An abstract looks back at how much material was actually used after a production period has been completed.)
(An applicant who fails to indicate the “schedule” choice must base its claims on the “abstract” method. State which Basis and Method you will use. An example of Used In by Schedule follows:)
We will claim drawback on the quantity of (specify material) used in manufacturing (exported article) according to the schedule set forth below. (Section 190.8(f) of the CBP Regulations requires submission of the schedule with the application for a specific manufacturing drawback ruling. An applicant who desires to file supplemental schedules with the drawback office whenever there is a change in the quantity or material used should state:)
We request permission to file supplemental schedules with the drawback office covering changes in the quantities of material used to produce the exported articles, or different styles or capacities of containers of such exported merchandise. (Neither the “appearing in” basis nor the “schedule” method for claiming drawback may be used where the relative value procedure is required.)
(List the imported merchandise or drawback products.)
(Name each article to be exported. When the identity of the product is not clearly evident by its name state what the product is,
(If the merchandise used under § 1313(a) is not also used under § 1313(b), the sections entitled PROCESS OF MANUFACTURE OR PRODUCTION, BY-PRODUCTS, LOSS OR GAIN, and STOCK IN PROCESS should be included here to cover merchandise used under § 1313(a). However, if the merchandise used under § 1313(a) is also used under § 1313(b) these sections need not be repeated unless they differ in some way from the § 1313(b) descriptions.)
We will maintain records to establish:
1. That the exported articles on which drawback is claimed were produced with the use of the imported merchandise, and
2. The quantity of imported merchandise
We realize that to obtain drawback the claimant must establish that the completed articles were exported within 5 years after importation of the imported merchandise. We understand that drawback is not payable without proof of compliance.
(This section must be completed separately from that set forth under the § 1313(b) portion of your application. The legal requirements under § 1313(a) differ from those under § 1313(b).)
(Describe your inventory procedures and state how you will identify the imported merchandise from date of importation until it is incorporated in the articles to be exported. Also describe how you will identify the finished articles from the time of manufacture until shipment.)
(
The Applicant specifically agrees that it will:
1. Operate in full conformance with the terms of this application for a specific manufacturing drawback ruling when claiming drawback;
2. Open its factory and records for examination at all reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at least 3 years from the date of liquidation of any drawback claim predicated in whole or in part upon this application;
4. Keep this application current by reporting promptly to the drawback office which liquidates its claims any changes in the number or locations of its offices or factories, the corporate name, the persons who will sign drawback documents, the basis of claim used for calculating drawback, the decision to use or not to use an agent under § 190.9 or the identity of an agent under that section, or the corporate organization by succession or reincorporation;
5. Keep this application current by reporting promptly to CBP Headquarters all other changes affecting information contained in this application;
6. Keep a copy of this application and the letter of approval by CBP Headquarters on file for ready reference by employees and require all officials and employees concerned to familiarize themselves with the provisions of this application and that letter of approval; and
7. Issue instructions to insure proper compliance with title 19, United States Code, section 1313, part 190 of the CBP Regulations and this application and letter of approval.
I declare that I have read this application for a specific manufacturing drawback ruling; that I know the averments and agreements contained herein are true and correct; and that my signature on this __ day of ____ 20_, makes this application binding on
U.S. Customs and Border Protection, Entry Process and Duty Refunds Branch, Commercial and Trade Facilitation Division, Regulations and Rulings, Office of Trade, 90 K Street NE—10th Floor (Mail Stop 1177), Washington, DC 20229-1177.
Dear Sir or Madam: We, (Applicant's Name), a (State,
(Section 190.8(a) of the CBP Regulations provides that each manufacturer or producer of articles intended for exportation with the benefit of drawback will apply for a specific manufacturing drawback ruling, unless operating under a general manufacturing drawback ruling under § 190.7 of the CBP Regulations. CBP will not approve an application which shows an unincorporated division or company as the applicant (
(Give the address of the factory(s) where the process of manufacture or production will take place. If the factory is a different legal entity from the applicant, so state and indicate if operating under an Agent's general manufacturing drawback ruling.)
(List persons legally authorized to bind the corporation who will sign drawback documents. Section 190.6 of the CBP Regulations permits only the president, vice president, secretary, treasurer, or any employee legally authorized to bind the corporation to sign for a corporation. In addition, a person within a business entity with a customs power of attorney for the company may sign. A customs power of attorney may also be given to a licensed customs broker. This heading should be changed to NAMES OF PARTNERS or PROPRIETOR in the case of a partnership or sole proprietorship, respectively (
(The four offices where drawback claims can be filed are located at: New York, NY; Houston, TX; Chicago, IL; San Francisco, CA.)
(An original application and two copies must be filed. If the applicant intends to file drawback claims at more than one drawback office, one additional copy of the application must be furnished for each additional office indicated.)
(The following questions must be answered:)
1. Who will be the importer of the designated merchandise?
(If the applicant will not always be the importer of the designated merchandise, does the applicant understand its obligations to maintain records to support the transfer under § 190.10, and its liability under § 190.63?)
2. Will an agent be used to process the designated or the substituted merchandise into articles?
(If an agent is to be used, the applicant must state it will comply with T.D.s 55027(2) and 55207(1), and § 190.9, as applicable, and that its agent will submit a letter of notification of intent to operate under the general manufacturing drawback ruling for agents (
3. Will the applicant be the exporter?
(If the applicant will not be the exporter in every case but will be the claimant, the manufacturer must state that it will reserve the right to claim drawback with the knowledge and written consent of the exporter (19 CFR 190.82).)
(Following
The imported merchandise which we will designate on our claims will be classifiable under the same 8-digit HTSUS subheading number as to the merchandise used in producing the exported articles on which we claim drawback, such that the merchandise used would, if imported, be subject to the same rate of duty as the imported designated merchandise.
Fluctuations in the market value resulting from factors other than quality will not affect the drawback.
(In order to successfully claim drawback it is necessary to prove that the duty-paid, duty-free or domestic merchandise which is to be substituted for the imported merchandise is “classifiable under the same 8-digit HTSUS subheading number”. In order to enable CBP to rule on “same 8-digit HTSUS subheading number”, the application must include a detailed description of the designated imported merchandise and of the
(It is essential that all the characteristics which determine the quality of the merchandise are provided in the application in order to substantiate that the merchandise meets the “same 8-digit HTSUS subheading number” statutory requirement. These characteristics should clearly distinguish merchandise of different qualities. For example, USDA standards; FDA standards; industry standards,
(In order to expedite the specific manufacturing drawback ruling review process, it will be helpful if you provide copies of technical standards/specifications (particularly industry standards such as ASTM standards) referred to in your application.)
(The descriptions of the “same 8-digit HTSUS subheading number” merchandise should be formatted in the parallel columns. The left-hand column will consist of the name and specifications of the designated imported merchandise under the heading set forth above. The right-hand column will consist of the name, specifications, and 8-digit HTSUS subheading number for the duty-paid, duty-free or domestic merchandise under the heading set forth above. Amendments to rulings will be required if any changes to the HTSUS classifications occur.)
(Name each article to be exported. When the identity of the product is not clearly evident by its name state what the product is,
(Drawback under § 1313(b) is not allowable except where a manufacture or production exists. Manufacture or production is defined, for drawback purposes, in § 190.2. In order to obtain drawback under § 1313(b), it is essential for the applicant to show use in manufacture or production by giving a thorough description of the manufacturing process. This description should include the name and exact condition of the merchandise listed in the Parallel Columns, a complete explanation of the processes to which it is subjected in this country, the effect of such processes, the name and exact description of the finished article, and the use for which the finished article is intended. When applicable, give equations of the chemical reactions. The attachment of a flow chart in addition to the description showing the manufacturing process is an excellent means of illustrating whether or not a manufacture or production has occurred. Flow charts can clearly illustrate if and at what point during the manufacturing process by-products and wastes are generated.)
(This section should contain a description of the process by which each item of merchandise listed in the parallel columns above is used to make or produce every article that is to be exported.)
(Some processes result in the separation of the merchandise used in the same operation into two or more products. List all of the products. State that you will record the market value of each product or by-product at the time it is first separated in the manufacturing process. If this section is not applicable to you, then state so.)
(Drawback law mandates the assignment of relative values when two or more products necessarily are produced concurrently in the same operation. For instance, the refining of flaxseed necessarily produces linseed oil and linseed husks (animal feed), and drawback must be distributed to each product in accordance with its relative value. However, the voluntary election of a steel fabricator, for instance, to use part of a lot of imported steel to produce automobile doors and part of the lot to produce automobile fenders does not call for relative value distribution.)
(The relative value of a product is its value divided by the total value of all products, whether or not exported. For example, 100 gallons of drawback merchandise are used to produce 100 gallons of products, including 60 gallons of product A, 20 gallons of product B, and 20 gallons of product C. At the time of separation, the unit values of products A, B, and C are $ 5, $ 10, and $ 50 respectively. The relative value of product A is $ 300 divided by $ 1500 or
(Drawback is allowable on exports of any of multiple products, but is not allowable on exports of valuable waste. In making this distinction between a product and valuable waste, the applicant should address the following significant elements: (1) the nature of the material of which the residue is composed; (2) the value of the residue as compared to the value of the principal manufactured product and the raw material; (3) the use to which it is put; (4) its status under the tariff laws, if imported; (5) whether it is a commodity recognized in commerce; (6) whether it must be subjected to some process to make it saleable.)
(Some processes result in the separation of fixed proportions of each product, while other processes afford the opportunity to increase or decrease the proportion of each product. An example of the latter is petroleum refining, where the refiner has the option to increase or decrease the production of one or more products relative to the others. State under this heading whether you can or cannot vary the proportionate quantity of each product.)
(The MULTIPLE PRODUCTS section consists of two sub-sections: Relative Values and Producibility. If multiple products do not result from your operation state “Not Applicable” for the entire section. If multiple products do result from your operation Relative Values will always apply. However, Producibility may or may not apply. If Producibility does not apply to your multiple product operation state “Not Applicable” for this sub-section.)
(Many processes result in residue materials which, for drawback purposes, are treated as waste. Describe any residue materials which you believe should be so treated. If no waste results, include a positive statement to that effect under this heading.)
(If waste occurs, state: (1) whether or not it is recovered, (2) whether or not it is valueless, and (3) what you do with it. This information is required whether claims are made on a “used in” or “appearing in” basis and regardless of the amount of waste incurred.)
(Irrecoverable wastes are those consisting of materials which are lost in the process. Valueless wastes are those which may be recovered but have no value. These irrecoverable and valueless wastes do not reduce the drawback claim provided the claim is based on the quantity of imported material used in manufacturing. If the claim is based upon the quantity of imported merchandise appearing in the exported article, irrecoverable and valueless waste will cause a reduction in the amount of drawback.)
(Valuable wastes are those recovered wastes which have a value either for sale or for use in a different manufacturing process. However, it should be noted that this standard applies to the entire industry and is not a selection on your part. An option by you not to choose to sell or use the waste in some different operation does not make it valueless if another manufacturer can use the waste. State what you do with the waste. If you have to pay someone to get rid of it, or if you have buyers for the waste, you must state so in your application regardless of what “Basis” you are using.)
(If you recover valuable waste and if you choose to claim on the basis of the quantity of imported or substituted merchandise used in producing the exported articles less valuable waste, state that you will keep records to establish the quantity and value of the waste recovered. See “Basis of Claim for Drawback” section below.)
(Some processes result in another type of residual material, namely, stock in process, which affects the allowance of drawback. Stock in process may exist when residual material resulting from a manufacturing or processing operation is reintroduced into a subsequent manufacturing or processing operation;
(If stock in process occurs and claims are to be based on stock in process, the application must include a statement to that effect. The application must also include a statement that merchandise is considered to be used in manufacture at the time it was originally processed so that the stock in process will not be included twice in the computation of the merchandise used to manufacture the finished articles on which drawback is claimed.)
(Some manufacturing processes result in an intangible loss or gain of the net weight or measurement of the merchandise used. This loss or gain is caused by atmospheric conditions, chemical reactions, or other factors. State the approximate usual percentage or quantity of such loss or gain. Note that percentage values will be considered to be measured “by weight” unless otherwise specified. Loss or gain does not occur during all manufacturing processes. If loss or gain does not apply to your manufacturing process, state “Not Applicable.”)
We will maintain records to establish:
1. The identity, specifications, and 8-digit HTSUS subheading number of the merchandise we designate;
2. The quantity of merchandise classifiable under the same 8-digit HTSUS subheading number as the designated merchandise
3. That, within 5 years after the date of importation, we used the designated merchandise to produce articles. During the same 5-year period, we produced
We realize that to obtain drawback the claimant must establish that the completed articles were exported within 5 years after the importation of the imported merchandise. Our records establishing our compliance with these requirements will be available for audit by CBP during business hours. We understand that drawback is not payable without proof of compliance.
(Describe your inventory records and state how those records will meet the drawback recordkeeping requirements set forth in 19 U.S.C. 1313(b) and part 190 of the CBP Regulations as discussed under the heading PROCEDURES AND RECORDS MAINTAINED. To help ensure compliance the following areas, as applicable, should be included in your discussion:)
(Proof of time frames may be specific or inclusive,
(If you do not describe the inventory records that you will use, a statement that the legal requirements will be met by your inventory procedures is acceptable. However, it should be noted that without a detailed description of the inventory procedures set forth in the application, a judgment as to the adequacy of such a statement cannot be made until a drawback claim is verified. Approval of this application for a specific manufacturing drawback ruling merely constitutes approval of the ruling application as submitted; it does not constitute approval of the applicant's record keeping procedures if, for example, those procedures are merely described as meeting the legal requirements, without specifically stating how the requirements will be met. Drawback is not payable without proof of compliance.)
(There are three different bases that may be used to claim drawback: (1) used in; (2) appearing in; and (3) used in less valuable waste.)
(The “used in” basis may be employed only if there is either no waste or valueless or unrecovered waste in the operation. Irrecoverable or valueless waste does not reduce the amount of drawback when claims are based on the “used in” basis. Drawback is payable in the amount of 99 percent of the duties, taxes, and fees paid on the quantity of imported material designated as the basis for the allowance of drawback on the exported articles. The designated quantity may not exceed the quantity of material actually used in the manufacture of the exported articles.)
(For example, if 100 pounds of material, valued at $1.00 per pound, were used in manufacture resulting in 10 pounds of irrecoverable or valueless waste, the 10 pounds of irrecoverable or valueless waste would not reduce the drawback. In this case drawback would be payable on 99% of the duties, taxes, and fees paid on the 100 pounds of designated material used to produce the exported articles.)
(The “appearing in” basis may be used regardless of whether there is waste. If the “appearing in” basis is used, the claimant does not need to keep records of waste and its value. However, the manufacturer must establish the identity and quantity of the merchandise appearing in the exported product and provide this information. Waste reduces the amount of drawback when claims are made on the “appearing in” basis. Drawback is payable on 99 percent of the duties, taxes, and fees paid on the quantity of material designated, which may not exceed the quantity of eligible material that appears in the exported articles. “Appearing in” may not be used if multiple products are involved.)
(Based on the previous example, drawback would be payable on the 90 pounds of merchandise which actually went into the exported product (appearing in) rather than the 100 pounds used in as set forth previously.)
(The “used in less valuable waste” basis may be employed when the manufacturer recovers valuable waste, and keeps records of the quantity and value of waste from each lot of merchandise. The value of the waste reduces the amount of drawback when claims are based on the “used in less valuable waste” basis. When valuable waste is incurred, the drawback allowance on the exported article is based on the duties, taxes, and fees paid on the quantity of merchandise used in the manufacture, reduced by the quantity of such merchandise which the value of the waste would replace. Thus in this case, drawback is claimed on the quantity of eligible material actually used to produce the exported product, less the amount of such material which the value of the waste would replace. Note section 190.26(c) of the CBP Regulations.)
(Based on the previous examples, if the 10 pounds of waste had a value of $.50 per pound, then the 10 pounds of waste, having a total value of $ 5.00, would be equivalent
(Two methods exist for the manufacturer to show the quantity of material used or appearing in the exported article: (1) Schedule or (2) Abstract.)
(A “schedule” shows the quantity of material used in producing each unit of product. The schedule method is usually employed when a standard line of merchandise is being produced according to fixed formulas. Some schedules will show the quantity of merchandise used to manufacture or produce each article and others will show the quantity appearing in each finished article. Schedules may be prepared to show the quantity of merchandise either on the basis of percentages or by actual weights and measurements. A schedule determines the amount that will be needed to produce a unit of product before the material is actually used in production.)
(An “abstract” is the summary of the records which shows the total quantity used in producing all products during the period covered by the abstract. The abstract looks at a period of time, for instance 3 months, in which the quantity of material has been used. An abstract looks back at how much material was actually used after a production period has been completed.)
(An applicant who fails to indicate the “schedule” choice must base its claims on the “abstract” method. State which Basis and Method you will use. An example of Used In by Schedule would read:)
We will claim drawback on the quantity of (specify material) used in manufacturing (exported article) according to the schedule set forth below.
(Section 190.8(f) of the CBP Regulations requires submission of the schedule with the application for a specific manufacturing drawback ruling. An applicant who desires to file supplemental schedules with the drawback office whenever there is a change in the quantity or material used should state:)
We request permission to file supplemental schedules with the drawback office covering changes in the quantities of material used to produce the exported articles, or different styles or capacities of containers of such exported merchandise.
(Neither the “appearing in” basis nor the “schedule” method for claiming drawback may be used where the relative value procedure is required.)
The Applicant specifically agrees that it will:
1. Operate in full conformance with the terms of this application for a specific manufacturing drawback ruling when claiming drawback;
2. Open its factory and records for examination at all reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at least 3 years from the date of liquidation of any drawback claim predicated in whole or in part upon this application;
4. Keep this application current by reporting promptly to the drawback office which liquidates its claims any changes in the number or locations of its offices or factories, the corporate name, the persons who will sign drawback documents, the basis of claim used for calculating drawback, the decision to use or not to use an agent under § 190.9 or the identity of an agent under that section, or the corporate organization by succession or reincorporation;
5. Keep this application current by reporting promptly to CBP Headquarters, all other changes affecting information contained in this application;
6. Keep a copy of this application and the letter of approval by CBP Headquarters on file for ready reference by employees and require all officials and employees concerned to familiarize themselves with the provisions of this application and that letter of approval; and
7. Issue instructions to insure proper compliance with title 19, United States Code, section 1313, part 190 of the CBP Regulations and this application and letter of approval.
I declare that I have read this application for a specific manufacturing drawback ruling; that I know the averments and agreements contained herein are true and correct; and that my signature on this __ day of __ 20_, makes this application binding on
U.S. Customs and Border Protection, Entry Process and Duty Refunds Branch, Commercial and Trade Facilitation Division, Regulations and Rulings, Office of Trade, 90 K Street NE—10th Floor (Mail Stop 1177), Washington, DC 20229-1177.
Dear Sir or Madam: We, (Applicant's Name), a (State,
(Section 190.8(a) of the CBP Regulations provides that each manufacturer or producer of articles intended for exportation with the benefit of drawback must apply for a specific manufacturing drawback ruling, unless operating under a general manufacturing drawback ruling under § 190.7 of the CBP Regulations. CBP will not approve an application which shows an unincorporated division or company as the applicant (
(Give the address of the factory(s) where the process of manufacture or production will take place. If the factory is a different legal entity from the applicant, so state and indicate if operating under an Agent's general manufacturing drawback ruling.)
(List persons legally authorized to bind the corporation who will sign drawback documents. Section 190.6 of the CBP Regulations permits only the president, vice president, secretary, treasurer, or any employee legally authorized to bind the corporation to sign for a corporation. In addition, a person within a business entity with a customs power of attorney for the company may sign. A customs power of attorney may also be given to a licensed customs broker. This heading should be changed to NAMES OF PARTNERS or PROPRIETOR in the case of a partnership or sole proprietorship, respectively (
(The four offices where drawback claims can be filed are located at: New York, NY; Houston, TX; Chicago, IL; San Francisco, CA.)
(An original application and two copies must be filed. If the applicant intends to file drawback claims at more than one drawback office, one additional copy of the application must be furnished for each additional office indicated.)
(The exact material placed under this heading in individual cases will vary, but it should include such information as the type of business in which the manufacturer is engaged, whether the manufacturer is manufacturing for its own account or is performing the operation on a toll basis (including commission or conversion basis) for the account of others, whether the manufacturer is a direct exporter of its
(If an agent is to be used, the applicant must state it will comply with T.D.s 55027(2) and 55207(1), and § 190.9, as applicable, and that its agent will submit a letter of notification of intent to operate under the general manufacturing drawback ruling for agents (
(Regarding drawback operations conducted under § 1313(d), the data may describe the flavoring extracts, medicinal, or toilet preparations (including perfumery) manufactured with the use of domestic tax-paid alcohol; and where such alcohol is obtained or purchased.)
(Drawback under § 1313(d) is not allowable except where a manufacture or production exists. “Manufacture or production” is defined, for drawback purposes, in § 190.2. In order to obtain drawback under § 1313(d), it is essential for the applicant to show use in manufacture or production by giving a thorough description of the manufacturing process. Describe how the tax-paid material is processed into the export article.)
(Many processes result in residue materials which, for drawback purposes, are treated as wastes. Describe any residue materials which you believe should be so treated. If no waste results, include a positive statement to that effect under this heading.) (If waste occurs, state: (1) whether or not it is recovered, (2) whether or not it is valueless, and (3) what you do with it. This information is required whether claims are made on a “used in” or “appearing in” basis and regardless of the amount of waste incurred.)
(Irrecoverable wastes are those consisting of materials which are lost in the process. Valueless wastes are those which may be recovered but have no value. These irrecoverable and valueless wastes do not reduce the drawback claim provided the claim is based on the quantity of domestic tax-paid alcohol used in manufacturing. If the claim is based upon the quantity of domestic tax-paid alcohol appearing in the exported article, irrecoverable and valueless waste will cause a reduction in the amount of drawback.)
(Valuable wastes are those recovered wastes which have a value either for sale or for use in a different manufacturing process. However, it should be noted that this standard applies to the entire industry and is not a selection on your part. An option by you not to choose to sell or use the waste in some different operation, does not make it valueless if another manufacturer can use the waste. State what you do with the waste. If you have to pay someone to get rid of it, or if you have buyers for the waste, you must state so in your application regardless of what “Basis” you are using.)
(If you recover valuable waste and if you choose to claim on the basis of the quantity of domestic tax-paid alcohol used in producing the exported articles (less valuable waste), state that you will keep records to establish the quantity and value of the waste recovered. See “Basis of Claim for Drawback” section below.)
(Some processes result in another type of residual material, namely, stock in process, which affects the allowance of drawback. Stock in process may exist when residual material resulting from a manufacturing or processing operation is reintroduced into a subsequent manufacturing or processing operation;
(If stock in process occurs and claims are to be based on stock in process, the application must include a statement to that effect. The application must also include a statement that the domestic tax-paid alcohol is considered to be used in manufacture at the time it was originally processed so that the stock in process will not be included twice in the computation of the domestic tax-paid alcohol used to manufacture the finished articles on which drawback is claimed.)
(Some manufacturing processes result in an intangible loss or gain of the net weight or measurement of the merchandise used. This loss or gain is caused by atmospheric conditions, chemical reactions, or other factors. State the approximate usual percentage or quantity of such loss or gain. Note that percentage values will be considered to be measured “by weight” unless otherwise specified. Loss or gain does not occur during all manufacturing processes. If loss or gain does not apply to your manufacturing process, state “Not Applicable.”)
We will maintain records to establish:
1. That the exported articles on which drawback is claimed were produced with the use of a particular lot (or lots) of domestic tax-paid alcohol, and
2. The quantity of domestic tax-paid alcohol
We realize that to obtain drawback the claimant must establish that the completed articles were exported within 5 years after the tax has been paid on the domestic alcohol. Our records establishing our compliance with these requirements will be available for audit by CBP during business hours. We understand that drawback is not payable without proof of compliance.
(Describe your inventory records and state how those records will meet the drawback recordkeeping requirements set forth in 19 U.S.C. 1313(d) and part 190 of the CBP Regulations as discussed under the heading PROCEDURES AND RECORDS MAINTAINED. To help ensure compliance the following areas should be included in your discussion:)
(There are three different bases that may be used to claim drawback: (1) used in; (2) appearing in; and (3) used in less valuable waste.)
(The “used in” basis may be employed only if there is either no waste or valueless or unrecovered waste in the operation. Irrecoverable or valueless waste does not reduce the amount of drawback when claims are based on the “used in” basis. Drawback is payable in the amount of 100% of the tax paid on the quantity of domestic alcohol used in the manufacture of flavoring extracts and medicinal or toilet preparation (including perfumery).)
(For example, if 100 gallons of alcohol, valued at $ 1.00 per gallon, were used in manufacture resulting in 10 gallons of irrecoverable or valueless waste, the 10 gallons of irrecoverable or valueless waste would not reduce the drawback. In this case drawback would be payable on 100% of the tax paid on the 100 gallons of domestic alcohol used to produce the exported articles.)
The “appearing in” basis may be used regardless of whether there is waste. If the “appearing in” basis is used, the claimant does not need to keep records of waste and its value. However, the manufacturer must establish the identity and quantity of the merchandise appearing in the exported product and provide this information. Waste reduces the amount of drawback when claims are made on the “appearing in” basis. Drawback is payable on 100% of the tax paid on the quantity of domestic alcohol which appears in the exported articles.
(Based on the previous example, drawback would be payable on the 90 gallons of
(The “used in less valuable waste” basis may be employed when the manufacturer recovers valuable waste, and keeps records of the quantity and value of waste from each lot of domestic tax-paid alcohol. The value of the waste reduces the amount of drawback when claims are based on the “used in less valuable waste” basis. When valuable waste is incurred, the drawback allowance on the exported article is based on the quantity of tax-paid alcohol used to manufacture the exported articles, reduced by the quantity of such alcohol which the value of the waste would replace.)
(Based on the previous examples, if the 10 gallons of waste had a value of $.50 per gallon, then the 10 gallons of waste, having a total value of $ 5.00, would be equivalent in value to 5 gallons of the tax-paid alcohol. Thus the value of the waste would replace 5 gallons of the alcohol used, and drawback is payable on 100% of the tax paid on 95 gallons of alcohol rather than on the 100 gallons “used in” or the 90 gallons “appearing in” as set forth in the above examples.) (Two methods exist for the manufacturer to show the quantity of material used or appearing in the exported article: (1) Schedule or (2) Abstract.)
(A “schedule” shows the quantity of material used in producing each unit of product. The schedule method is usually employed when a standard line of merchandise is being produced according to fixed formulas. Some schedules will show the quantity of merchandise used to manufacture or produce each article and others will show the quantity appearing in each finished article. Schedules may be prepared to show the quantity of merchandise either on the basis of percentages or by actual weights and measurements. A schedule determines the amount that will be needed to produce a unit of product before the material is actually used in production.)
(An “abstract” is the summary of the records which shows the total quantity used in producing all products during the period covered by the abstract. The abstract looks at a period of time, for instance 3 months, in which the quantity of material has been used. An abstract looks back at how much material was actually used after a production period has been completed.)
(An applicant who fails to indicate the “schedule” choice must base its claims on the “abstract” method. State which Basis and Method you will use. An example of Used In by schedule follows:)
We will claim drawback on the quantity of (specify material) used in manufacturing (exported article) according to the schedule set forth below.
(Section 190.8(f) of the CBP Regulations requires submission of the schedule with the application for a specific manufacturing drawback ruling. An applicant who desires to file supplemental schedules with the drawback office whenever there is a change in the quantity or material used should state:)
We request permission to file supplemental schedules with the drawback office covering changes in the quantities of material used to produce the exported articles, or different styles or capacities of containers of such exported merchandise.
(Neither the “appearing in” basis nor the “schedule” method for claiming drawback may be used where the relative value procedure is required.)
The Applicant specifically agrees that it will:
1. Operate in full conformance with the terms of this application for a specific manufacturing drawback ruling when claiming drawback;
2. Open its factory and records for examination at all reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at least 3 years from the date of liquidation of any drawback claim predicated in whole or in part upon this application;
4. Keep this application current by reporting promptly to the drawback office which liquidates its claims any changes in the number or locations of its offices or factories, the corporate name, the persons who will sign drawback documents, the basis of claim used for calculating drawback, the decision to use or not to use an agent under § 190.9 or the identity of an agent under that section, the drawback office where claims will be filed under the ruling, or the corporate organization by succession or reincorporation;
5. Keep this application current by reporting promptly to CBP Headquarters, all other changes affecting information contained in this application;
6. Keep a copy of this application and the letter of approval by CBP Headquarters on file for ready reference by employees and require all officials and employees concerned to familiarize themselves with the provisions of this application and that letter of approval; and
7. Issue instructions to insure proper compliance with title 19, United States Code, section 1313, part 190 of the CBP Regulations and this application and letter of approval.
I declare that I have read this application for a specific manufacturing drawback ruling; that I know the averments and agreements contained herein are true and correct; and that my signature on this _ day of ____ 20 _, makes this application binding on
U.S. Customs and Border Protection, Entry Process and Duty Refunds Branch, Commercial and Trade Facilitation Division, Regulations and Rulings, Office of Trade, 90 K Street NE—10th Floor (Mail Stop 1177), Washington, DC 20229-1177.
Dear Sir or Madam: We, (Applicant's Name), a (State,
(Section 190.8(a) of the CBP Regulations provides that each manufacturer or producer of articles intended for exportation with the benefit of drawback must apply for a specific manufacturing drawback ruling, unless operating under a general manufacturing drawback ruling under § 190.7 of the CBP Regulations. CBP will not approve an application which shows an unincorporated division or company as the applicant (
(Give the address of the factory(s) or shipyard(s) at which the construction and equipment will take place. If the factory or shipyard is a different legal entity from the applicant, so state and indicate if operating under an Agent's general manufacturing drawback ruling.)
(List persons legally authorized to bind the corporation who will sign drawback documents. Section 190.6 of the CBP Regulations permits only the president, vice president, secretary, treasurer, or any employee legally authorized to bind the corporation to sign for a corporation. In addition, a person within a business entity with a customs power of attorney for the company may sign. A customs power of attorney may also be given to a licensed customs broker. This heading should be changed to NAMES OF PARTNERS or PROPRIETOR in the case of a partnership or sole proprietorship, respectively (
(The four offices where drawback claims can be filed are located at: New York, NY;
(An original application and two copies must be filed. If the applicant intends to file drawback claims at more than one drawback office, one additional copy of the application must be furnished for each additional office indicated.)
(The following questions must be answered:
1. Who will be the importer of the merchandise? (If the applicant will not always be the importer, does the applicant understand its obligations to maintain records to support the transfer under 19 CFR 190.10, and its liability under 19 CFR 190.63?)
2. Who is the manufacturer?
(Is the applicant constructing and equipping for his own account or merely performing the operation on a toll basis for others?)
(If an agent is to be used, the applicant must state it will comply with T.D.s 55027(2) and 55207(1), and § 190.9, as applicable, and that its agent will submit a letter of notification of intent to operate under the general manufacturing drawback ruling for agents (
3. Will the applicant be the drawback claimant?
(State how the vessel will qualify for drawback under 19 U.S.C. 1313(g). Who is the foreign person or government for whom the vessel is being made or equipped?)
(There must be included under this heading the following statement:
We are particularly aware of the terms of § 190.76(a)(1) of and subpart M of part 190 of the CBP Regulations, and will comply with these sections where appropriate.)
(Describe the imported merchandise or drawback products.)
(Name the vessel or vessels to be made with imported merchandise or drawback products.)
(What is required here is a clear, concise description of the process of construction and equipment involved. The description should also trace the flow of materials through the manufacturing process for the purpose of establishing physical identification of the imported merchandise or drawback products and of the articles resulting from the processing.)
(Many processes result in residue materials which, for drawback purposes, are treated as wastes. Describe any residue materials which you believe should be so treated. If no waste results, include a positive statement to that effect under this heading.)
(If waste occurs, state: (1) whether or not it is recovered, (2) whether or not it is valueless, and (3) what you do with it. This information is required whether claims are made on a “used in” or “appearing in” basis and regardless of the amount of waste incurred.)
(Irrecoverable wastes are those consisting of materials which are lost in the process. Valueless wastes are those which may be recovered but have no value. These irrecoverable and valueless wastes do not reduce the drawback claim provided the claim is based on the quantity of imported material used in manufacturing. If the claim is based upon the quantity of imported merchandise appearing in the exported article, irrecoverable and valueless waste will cause a reduction in the amount of drawback.)
(Valuable wastes are those recovered wastes which have a value either for sale or for use in a different manufacturing process. However, it should be noted that this standard applies to the entire industry and is not a selection on your part. An option by you not to choose to sell or use the waste in some different operation does not make it valueless if another manufacturer can use the waste. State what you do with the waste. If you have to pay someone to get rid of it, or if you have buyers for the waste, you must state so in your application regardless of what “Basis” you are using.)
(If you recover valuable waste and if you choose to claim on the basis of the quantity of imported or substituted merchandise used in producing the exported articles (less valuable waste), state that you will keep records to establish the quantity and value of the waste recovered. See “Basis of Claim for Drawback” section below.)
(Some manufacturing processes result in an intangible loss or gain of the net weight or measurement of the merchandise used. This loss or gain is caused by atmospheric conditions, chemical reactions, or other factors. State the approximate usual percentage or quantity of such loss or gain. Note that percentage values will be considered to be measured “by weight” unless otherwise specified. Loss or gain does not occur during all manufacturing processes. If loss or gain does not apply to your manufacturing process, state “Not Applicable.”)
We will maintain records to establish:
1. That the exported article on which drawback is claimed was constructed and equipped with the use of a particular lot (or lots) of imported material; and
2. The quantity of imported merchandise
We realize that to obtain drawback the claimant must establish that the completed articles were exported within 5 years after the importation of the imported merchandise. Our records establishing our compliance with these requirements will be available for audit by CBP during business hours. We understand that drawback is not payable without proof of compliance.
(Describe your inventory records and state how those records will meet the drawback recordkeeping requirements set forth in 19 U.S.C. 1313 and part 190 of the CBP Regulations as discussed under the heading PROCEDURES AND RECORDS MAINTAINED. To help ensure compliance the following should be included in your discussion:)
(There are three different bases that may be used to claim drawback: (1) Used in; (2) appearing in; and (3) used in less valuable waste.)
(The “used in” basis may be employed only if there is either no waste or valueless or unrecovered waste in the operation. Irrecoverable or valueless waste does not reduce the amount of drawback when claims are based on the “used in” basis. Drawback is payable in the amount of 99 percent of the duties, taxes, and fees paid on the quantity of imported material used to construct and equip the exported article.)
(For example, if 100 pounds of material, valued at $ 1.00 per pound, were used in manufacture resulting in 10 pounds of irrecoverable or valueless waste, the 10 pounds of irrecoverable or valueless waste would not reduce the drawback. In this case drawback would be payable on 99% of the duties, taxes, and fees paid on the 100 pounds of imported material used in constructing and equipping the exported articles.)
(The “appearing in” basis may be used regardless of whether there is waste. If the “appearing in” basis is used, the claimant does not need to keep records of waste and its value. However, the manufacturer must establish the identity and quantity of the merchandise appearing in the exported product and provide this information. Waste reduces the amount of drawback when claims are made on the “appearing in” basis. Drawback is payable on 99 percent of the duties, taxes, and fees paid on the quantity of imported material which appears in the exported articles. “Appearing in” may not be used if multiple products are involved.)
(Based on the previous example, drawback would be payable on the 90 pounds of imported material which actually went into the exported product (appearing in) rather than the 100 pounds used in as set forth previously.)
(The “used in less valuable waste” basis may be employed when the manufacturer recovers valuable waste, and keeps records of the quantity and value of waste from each lot of merchandise. The value of the waste reduces the amount of drawback when claims are based on the “used in less
(Based on the previous examples, if the 10 pounds of waste had a value of $.50 per pound, then the 10 pounds of waste, having a total value of $5.00, would be equivalent in value to 5 pounds of the imported material. Thus the value of the waste would replace 5 pounds of the merchandise used, and drawback is payable on 99 percent of the duties, taxes, and fees paid on the 95 pounds of imported material rather than on the 100 pounds “used in” or the 90 pounds “appearing in” as set forth in the above examples.)
(Two methods exist for the manufacturer to show the quantity of material used or appearing in the exported article: (1) Schedule or (2) Abstract.)
(A “schedule” shows the quantity of material used in producing each unit of product. The schedule method is usually employed when a standard line of merchandise is being produced according to fixed formulas. Some schedules will show the quantity of merchandise used to manufacture or produce each article and others will show the quantity appearing in each finished article. Schedules may be prepared to show the quantity of merchandise either on the basis of percentages or by actual weights and measurements. A schedule determines the amount that will be needed to produce a unit of product before the material is actually used in production.)
(An “abstract” is the summary of the records which shows the total quantity used in producing all products during the period covered by the abstract. The abstract looks at a period of time, for instance 3 months, in which the quantity of material has been used. An abstract looks back at how much material was actually used after a production period has been completed.)
(An applicant who fails to indicate the “schedule” choice must base its claims on the “abstract” method. State which Basis and Method you will use. An example of Used In by Schedule would read:)
We will claim drawback on the quantity of (specify material) used in manufacturing (exported article) according to the schedule set forth below.
(Section 190.8(f) of the CBP Regulations requires submission of the schedule with the application for a specific manufacturing drawback ruling. An applicant who desires to file supplemental schedules with the drawback office whenever there is a change in the quantity or material used should state:)
We request permission to file supplemental schedules with the drawback office covering changes in the quantities of material used to produce the exported articles, or different styles or capacities of containers of such exported merchandise.
(Neither the “appearing in” basis nor the “schedule” method for claiming drawback may be used where the relative value procedure is required.)
The Applicant specifically agrees that it will:
1. Operate in full conformance with the terms of this application for a specific manufacturing drawback ruling when claiming drawback;
2. Open its factory and records for examination at all reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at least 3 years from the date of liquidation of any drawback claim predicated in whole or in part upon this application;
4. Keep this application current by reporting promptly to the drawback office which liquidates its claims any changes in the number or locations of its offices or factories, the corporate name, the persons who will sign drawback documents, the basis of claim used for calculating drawback, the decision to use or not to use an agent under § 190.9 or the identity of an agent under that section, the drawback office where claims will be filed under the ruling, or the corporate organization by succession or reincorporation;
5. Keep this application current by reporting promptly to CBP Headquarters, all other changes affecting information contained in this application;
6. Keep a copy of this application and the letter of approval by CBP Headquarters on file for ready reference by employees and require all officials and employees concerned to familiarize themselves with the provisions of this application and that letter of approval; and
7. Issue instructions to help ensure proper compliance with title 19, United States Code, section 1313, part 190 of the CBP Regulations and this application and letter of approval.
I declare that I have read this application for a specific manufacturing drawback ruling; that I know the averments and agreements contained herein are true and correct; and that my signature on this __ day of ____ 20 _, makes this application binding on
5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized Tariff Schedule of the United States), 1313, 1624;
This part sets forth general provisions applicable to drawback claims and specialized provisions applicable to specific types of drawback claims filed under 19 U.S.C. 1313, prior to the February 24, 2016, amendments to the U.S. drawback law. Drawback claims may not be filed under this part after February 23, 2019. For drawback claims filed under 19 U.S.C. 1313, as amended, see part 190. Additional drawback provisions relating to the North American Free Trade Agreement (NAFTA) are contained in subpart E of part 181 of this chapter.
Pursuant to DHS Delegation number 7010.3, the Commissioner of CBP has the authority to prescribe, and pursuant to Treasury Department Order No. 100-16 (set forth in the appendix to part 0 of this chapter), the Secretary of the Treasury has the sole authority to approve, rules and regulations regarding drawback.
The revisions and additions read as follows:
(a) * * *
(5) Harbor maintenance taxes (
(b) Duties and fees not subject to drawback include:
(1) Harbor maintenance taxes (see § 24.24 of this chapter) except where unused merchandise drawback pursuant to 19 U.S.C. 1313(j) or drawback for substitution of finished petroleum derivatives pursuant to 19 U.S.C. 1313(p)(2)(A)(iii) or (iv) is claimed;
(2) Merchandise processing fees (see § 24.23 of this chapter), except where unused merchandise drawback pursuant to 19 U.S.C. 1313(j) or drawback for substitution of finished petroleum derivatives pursuant to 19 U.S.C. 1313(p)(2)(A)(iii) or (iv) is claimed; and
(3) Antidumping and countervailing duties on merchandise entered, or withdrawn from warehouse, for consumption on or after August 23, 1988.
Guantanamo Bay Naval Station is considered foreign territory for drawback purposes and, accordingly, drawback may be permitted on articles shipped there. Drawback is not allowed, except on claims made under 19 U.S.C. 1313(j)(1), on articles shipped to the U.S. Virgin Islands, American Samoa, Wake Island, Midway Islands, Kingman Reef, Guam, Canton Island, Enderbury Island, Johnston Island, or Palmyra Island. Puerto Rico is not considered foreign territory for drawback purposes and, accordingly, drawback may not be permitted on articles shipped there from elsewhere in the customs territory of the United States.
(a) * * * For purposes of drawback of internal revenue tax imposed under Chapters 32, 38, 51, and 52 of the Internal Revenue Code of 1986, as amended (IRC), drawback granted on the export or destruction of substituted merchandise will be limited to the amount of taxes paid (and not returned by refund, credit, or drawback) on the substituted merchandise.
(b) * * *
(4) For purposes of drawback of internal revenue tax imposed under Chapters 32, 38, 51, and 52 of the Internal Revenue Code of 1986, as amended (IRC), drawback granted on the export or destruction of substituted merchandise will be limited to the amount of taxes paid (and not returned by refund, credit, or drawback) on the substituted merchandise.
(a)
(b)
(1) Submit a statement signed by the importer and every other person, other than the ultimate purchaser, that owned the goods that no other claim for drawback was made on the goods by any other person; and
(2) Certify that records are available to support the statement required in paragraph (b)(1) of this section.
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(a)
(b)
(2) The claimant must also show by evidence satisfactory to CBP that drawback may be claimed by—
(i) Designating an entry of merchandise that was imported within 1 year before the date of exportation or destruction of the merchandise described in paragraph (a) of this section under CBP supervision.
(ii) Certifying that the same 8-digit HTSUS subheading number and specific product identifier (such as part number, SKU, or product code) apply to both the merchandise designated for drawback (in the import documentation) and the returned merchandise.
(c)
(d)
(a) * * *
(3)
(a)
(1) Liquidation of the designated import entry or entries becomes final pursuant to paragraph (e) of this section; or
(2) Deposit of estimated duties on the imported merchandise and before liquidation of the designated import entry or entries.
(b)
(2) However, if final liquidation of the import entry discloses that the total amount of import duty is different from the total estimated duties deposited, except in those cases when drawback is 100% of the duty, the party responsible for the payment of liquidated duties, as applicable, will:
(i) Be liable for 1 percent of all increased duties found to be due on that portion of merchandise recorded on the drawback entry; or
(ii) Be entitled to a refund of 1 percent of all excess duties found to have been paid as estimated duties on that portion of the merchandise recorded on the drawback entry.
(c)
(i) The tender or payment is specifically identified as duty on a specifically identified entry, or withdrawal from warehouse, for consumption;
(ii) Liquidation of the specifically identified entry, or withdrawal from warehouse, for consumption became final prior to such tender or payment; and
(iii) Liquidation of the drawback entry in which that specifically identified import entry, or withdrawal from warehouse, for consumption is designated has not become final.
(2)
(d)
(e)
(2)
(ii)
(iii)
(f)
(2)
(g)
(a)
(b)
(2)
(i) Quantity and description of the exported products;
(ii) Identity of the alcohol used by serial number of package or tank car;
(iii) Name and registry number of the distilled spirits plant from which the alcohol was withdrawn;
(iv) Date of withdrawal;
(v) Serial number of the applicable record of tax determination (
(vi) CBP office where the claim will be filed.
(3)
(a)
(b)
(1) Quantity of alcohol in proof gallons;
(2) Serial number of each package;
(3) Amount of tax paid on the alcohol;
(4) Name, registry number, and location of the distilled spirits plant;
(5) Date of withdrawal;
(6) Name of the manufacturer using the alcohol in producing the exported articles;
(7) Address of the manufacturer and its manufacturing plant; and
(8) CBP drawback office where the drawback claim will be processed.
(c)
(a)
(b)
(c)
(d)
(d)
Approved:
(1) The application of duty-free treatment for all AGOA-eligible goods in the apparel sector from Rwanda is suspended for purposes of section 506A of the 1974 Act, effective July 31, 2018.
(2) In order to reflect in the HTS that, beginning on July 31, 2018, the application of duty-free treatment for all AGOA-eligible goods in the apparel sector from Rwanda shall be suspended, the HTS is modified as set forth in Annex I to this proclamation.
(3) In order to reflect in the HTS the modifications to the rules of origin under the USBFTA, general note 30 to the HTS is modified as provided in Annex II to this proclamation.
(4) The modifications to the HTS set forth in Annex II shall be effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after the date that is 30 days after the date of publication of this proclamation in the
(5) In order to conform the HTS to the most recent amendments to the Convention, the HTS is modified as set forth in Annex III to this proclamation.
(6) The modifications to the HTS set forth in Annex III shall be effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after the later of (i) the date that is 30 days after the date of publication of this proclamation in the
(7) In order to correct technical errors in the annex to Proclamation 9693, Note 18(c)(iii) in subchapter III of chapter 99 of the HTS is modified by deleting the phrase “Subheadings 9903.45.21 and 9903.45.22 shall likewise” and by inserting in lieu thereof the phrase “Subheading 9903.45.25 shall”; and Note 18(g) is modified by deleting “For purposes of” and by inserting in lieu thereof “Subject to the provisions of subdivision (c)(iii) of this note, for purposes of”.
(8) Any provisions of previous proclamations and Executive Orders that are inconsistent with the actions taken in this proclamation are superseded to the extent of such inconsistency.
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