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Code · REGISTER · 2007-06-27 · Agricultural Marketing Service, USDA · Notices

Notices. Confirmation of regulations

20,055 words·~91 min read·/register/2007/06/27/07-3133

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

BILLING CODE 3410-02-P DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 948 [Docket No. AMS-FV-06-0180; FV06-948-610 Review] Irish Potatoes Grown in Colorado; Section 610 Review AGENCY: Agricultural Marketing Service, USDA. ACTION: Confirmation of regulations. SUMMARY: This action summarizes the results under the criteria contained in section 610 of the Regulatory Flexibility Act (RFA), of an Agricultural Marketing Service
(AMS)review of Marketing Order No. 948, regulating the handling of Irish potatoes grown in Colorado (order). AMS has determined that the order should be continued. ADDRESSES: Interested persons may obtain a copy of the review. Requests for copies should be sent to the Docket Clerk, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 20250-0237; Fax:
(202)720-8938;e-mail: *moab.docketclerk@usda.gov* or Internet: *http://www.regulations.gov* . FOR FURTHER INFORMATION CONTACT: Teresa Hutchinson or Gary D. Olson, Northwest Marketing Field Office, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, Portland, Oregon 97204; Telephone:
(503)326-2724; Fax:
(503)326-7440; or e-mail: *Teresa.Hutchinson@usda.gov* or *GaryD.Olson@usda.gov* . SUPPLEMENTARY INFORMATION: Marketing Order No. 948, as amended (7 CFR part 948), regulates the handling of Irish potatoes grown in Colorado, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” The State of Colorado is divided into three areas for marketing order purposes. Currently, only Area No. 2 and Area No. 3 are active. Area No. 1, commonly known as the Western Slope, includes and consists of the counties of Routt, Eagle, Pitkin, Gunnison, Hinsdale, La Plata, in the State of Colorado, and all counties in said State west of the aforesaid counties. Area No. 2, commonly known as the San Luis Valley, includes and consists of the counties of Chaffee, Saguache, Huerfano, Las Animas, Mineral, Archuleta, Rio Grande, Conejos, Costilla, and Alamosa in the State of Colorado. Area No. 3, commonly known as Northern Colorado, includes and consists of all the remaining counties in the State of Colorado which are not included in Area No. 1 or Area No. 2. The order establishes administrative committees for each of these areas (area committees). The Area No. 2 administrative committee is comprised of 14 members and their respective alternates. Nine members represent producers and five members represent handlers. Two producers are from Rio Grande County, two producers are from either Saguache County or Chaffee County, one producer is from Conejos County, two producers are from Alamosa County, one producer represents all other counties in Area No. 2, and one producer represents certified seed producers in Area No. 2. Two handlers represent bulk handlers in Area No. 2 and three handlers represent handlers in Area No. 2 other than bulk handlers. The Area No. 3 administrative committee is comprised of five members and their respective alternates. Three producers and two handlers represent producers and handlers from any county in Area No. 3. With regulations in Area No. 1 suspended, there is currently no need for an Area No. 1 administrative committee. The order also establishes the Colorado Potato Committee
(CPC)which is comprised of six members and alternates selected by the Department of Agriculture (USDA). Three members and three alternates are selected from nominations of Area No. 2 committee members or alternates, and three members and three alternates are selected from nominations of Area No. 3 committee members or alternates. Currently, there are approximately 175 producers and 95 handlers of Colorado potatoes in both of the active areas. The majority of producers and handlers may be classified as small entities. The regulations implemented under the order are applied uniformly and designed to benefit all entities, regardless of size. AMS published in the **Federal Register** on February 18, 1999 (64 FR 8014), a plan to review certain regulations, including Marketing Order No. 948, under criteria contained in section 610 of the RFA (5 U.S.C. 601-612). Updated plans were published in the **Federal Register** on January 4, 2002 (67 FR 525), August 14, 2003 (68 FR 48574), and again on March 24, 2006 (71 FR 14827). Accordingly, AMS published a notice of review and request for written comments on the Colorado potato marketing order in the February 21, 2006, issue of the **Federal Register** (71 FR 8810). The deadline for comments ended April 24, 2006. Two comments were received in support of the order, and are discussed later in this document. The review was undertaken to determine whether the Colorado potato marketing order should be continued without being changed, amended, or rescinded to minimize the impacts on small entities. In conducting this review, AMS considered the following factors:
(1)The continued need for the order;
(2)the nature of complaints or comments received from the public concerning the order;
(3)the complexity of the order;
(4)the extent to which the order overlaps, duplicates, or conflicts with other Federal rules, and, to the extent feasible, with State and local governmental rules; and
(5)the length of time since the order has been evaluated or the degree to which technology, economic conditions, or other factors have changed in the area affected by the order. The order authorizes grade, size, quality, maturity, pack, and container regulations as well as inspection requirements. The grade, size, quality, maturity, and inspection regulations are also applied to imported potatoes under section 608e of the Act. The order also authorizes the area committees to establish projects including marketing research and development projects, designed to assist, improve, or promote the marketing, distribution, and consumption of potatoes. These order requirements have helped ensure that only quality product reaches the consumer. Quality requirements have helped increase and maintain demand for Colorado potatoes over the years. The compilation and dissemination of statistical information has helped producers and handlers make production and marketing decisions. Funds to administer the order are obtained from handler assessments. Regarding complaints or comments received from the public concerning the order, USDA received two comments, one each from the Area No. 2 and Area No. 3 Committees. Both comments were in favor of the continuation of the order and addressed each of the five factors under consideration by AMS. Marketing order issues and programs are discussed at public meetings, and all interested persons are allowed to express their views. All comments are considered in the decision making process by the area committees and the USDA before any program changes are implemented. In considering the order's complexity, AMS has determined that the order is not unduly complex. During the review, the order was also checked for duplication and overlap with other regulations. AMS did not identify any relevant Federal rules, or State and local regulations that duplicate, overlap, or conflict with the marketing order for Colorado potatoes. There is a Colorado State marketing order for potatoes authorized to conduct programs similar to those under the Federal order. However, the State program cooperates with the Federal order to ensure that their efforts are not duplicative. For instance, the State order currently conducts production and marketing research and market promotion, which are authorized—but not being conducted—under the Federal order. The order was established in August 1941. During the 65 years the order has been effective, AMS and the Colorado potato industry have continuously monitored marketing operations. Changes in regulations have been implemented to reflect current industry operating practices, and to solve marketing problems as they occur. The goal of periodic evaluations is to assure that the order and the regulations implemented under it fit the needs of the industry and are consistent with the Act. The CPC and both area committees meet several times a year to discuss the order and the various regulations issued thereunder, and to determine if, or what, changes may be necessary to reflect current industry practices. As a result, regulatory changes have been made numerous times over the years to address industry operation changes and to improve program administration. In addition, in 1960, the area committees made several recommendations to improve quality regulations and program operations through formal amendment of the order. An amendment hearing was subsequently held in Denver, Colorado, on February 1-2, 1960, to receive evidence regarding the recommendations. As a result, a referendum was held June 20-28, 1960, to determine producer support for the proposed amendments. The proposed amendments were favored by a majority of the producers voting in the referendum. Based on the potential benefits of the order to producers, handlers, and consumers, AMS has determined that the Colorado potato marketing order should be continued. The order was established to help the Colorado potato industry work with USDA to solve marketing problems. The order regulations on grade, size, quality, maturity, pack, container, and marketing research and development activities continue to be beneficial to producers, handlers, and consumers. AMS will continue to work with the Colorado potato industry in maintaining an effective marketing order program. Dated: June 21, 2007. Lloyd C. Day, Administrator, Agricultural Marketing Service. [FR Doc. E7-12396 Filed 6-26-07; 8:45 am] BILLING CODE 3410-02-P DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 1209 [Docket No. : AMS-FV-07-0019; FV-06-704 FR] Mushroom Promotion, Research, and Consumer Information Order; Reallocation of Mushroom Council Membership AGENCY: Agricultural Marketing Service, USDA. ACTION: Final rule. SUMMARY: The Department of Agriculture
(USDA)is adopting, as a final rule, without change, an interim final rule that reapportioned the membership of the Mushroom Council (Council) to reflect shifts in United States mushroom production. The final rule continues in effect the realignment of the Mushroom Promotion, Research, and Consumer Information Order's (Order) four United States geographic regions, and reallocates Council member representation in two of the four United States geographic regions (Regions 1 and 4). The Council, which administers the Order, proposed the amendments in conformance with Order requirements to review—at least every 5 years and not more than every three years—the geographic distribution of United States mushroom production volume and import volume. These changes to the Council are effective for the Secretary of Agriculture's 2008 appointments. DATES: Effective Date: July 27, 2007. FOR FURTHER INFORMATION CONTACT: Daniel Manzoni, Marketing Specialist, or Sonia N. Jimenez, Chief, Research and Promotion Branch, Fruit and Vegetable Programs, AMS, USDA, Stop 0244-Room 0634-S, 1400 Independence Avenue, SW., Washington, DC 20250-0244; telephone
(202)720-9915 or
(888)720-9917 (toll free); fax:
(202)205-2800; or e-mail: *daniel.manzoni@usda.gov* or *sonia.jimenez@usda.gov.* SUPPLEMENTARY INFORMATION: This rule is issued under the Mushroom Promotion, Research, and Consumer Information Order [7 CFR part 1209]. The Order is authorized under the Mushroom Promotion, Research, and Consumer Information Act of 1990
(Act)[7 U.S.C. 6101-6112]. Executive Order 12866 The Office of Management and Budget has waived the review process required by Executive Order 12866 for this action. Executive Order 12988 This rule has been reviewed under Executive Order 12988, Civil Justice Reform. The rule is not intended to have a retroactive effect and will not affect or preempt any other State or Federal law authorizing promotion or research relating to an agricultural commodity. The Act provides that any person subject to the Order may file a written petition with the Department of Agriculture (Department) if they believe that the Order, any provision of the Order, or any obligation imposed in connection with the Order, is not established in accordance with law. In any petition, the person may request a modification of the Order or an exemption from the Order. The petitioner is afforded the opportunity for a hearing on the petition. After a hearing, the Department would rule on the petition. The Act provides that the district court of the United States in any district in which the petitioner resides or conducts business shall have the jurisdiction to review the Department's ruling on the petition, provided a complaint is filed not later than 20 days after the date of the entry of the ruling. Final Regulatory Flexibility Analysis and Paperwork Reduction Act In accordance with the Regulatory Flexibility Act
(RFA)[5 U.S.C. 601 *et seq.* ], the Agricultural Marketing Service
(AMS)has examined the economic impact of this rule on small entities. The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such action so that small businesses will not be unduly or disproportionately burdened. The Small Business Administration defines, in 13 CFR part 121, small agricultural producers as those having annual receipts of no more than $750,000 and small agricultural service firms (importers) as having receipts of no more than $6,500,000. There are 97 producers and 18 importers subject to the Order, and thus, eligible to serve on the Council. The majority of these producers and importers are considered small entities as defined by the Small Business Administration. Producers and importers of 500,000 pounds or less of mushrooms for the fresh market are exempt from the Order. The Order provides for the establishment of a Council consisting of at least four members and not more than nine members. For the purpose of nominating and appointing producers to the Council, the United States is divided into four geographic regions (Regions 1, 2, 3, and 4) with Council member representation allocated for each region based on the geographic distribution of mushroom production. For importers (referred to as Region 5), one Council member seat is allocated when imports, on average, exceed 35,000,000 pounds of mushrooms annually. The Order also specifies that the Council will review—at least every five years and not more than every three years—the geographic distribution of United States mushroom production volume and import volume, and recommend changes accordingly. At its June 2006 meeting, the Council reviewed mushroom production volume in the United States and import volume for the July 1, 2002, through June 30, 2005, yearly periods. Based on the data, the Council reviewed and discussed reapportionment proposals. After considerable discussion, the Council approved a reapportionment proposal for recommendation to the Department. The Council recommended reapportionment of the Order's four United States geographic regions, and the reallocation of Council member representation in two of the four United States regions (Regions 1 and 4) to reflect shifts in United States mushroom production. This rule adopts the interim final rule that realigns the four United States geographic regions, and reallocates Council member representation in two of the four United States geographic regions as follows: Region 1—the States of Colorado, Oklahoma, Wyoming, Washington, Oregon, Florida, Illinois, Tennessee, Texas and Utah; Region 2—the State of Pennsylvania; Region 3—the State of California; and Region 4—all other States including the District of Columbia and the Commonwealth of Puerto Rico. Also, the number of Council member representation is reallocated as follows: from one member to three members for Region 1 and from two members to zero members for Region 4. Representation for Region 2, Region 3, and importers remains unchanged at three members, two members, and one member respectively. The overall impact is favorable for producers and importers because the producers and importers will have more equitable representation on the Council based on United States mushroom production volume and import volume. In accordance with the Office of Management and Budget
(OMB)regulation [5 CFR Part 1320] which implements the Paperwork Reduction Act of 1995
(PRA)[44 U.S.C. Chapter 35], the information collection requirements under the PRA, there are no new requirements contained in this rule. The information collection requirements have been previously approved by the Office of Management and Budget
(OMB)under OMB control number 0581-0093. This rule does not result in a change to the information collection and recordkeeping requirements previously approved. In terms of alternatives to this rule, this action reflects the volume thresholds and procedures that have been established previously under the provisions of the Order for reallocation of Council membership. There are no Federal rules that duplicate, overlap, or conflict with this rule. Background The Order is authorized under the Mushroom Promotion, Research, and Consumer Information Act of 1990 [7 U.S.C. 6101-6112], and is administered by the Council. Under the Order, the Council administers a nationally coordinated program of research, development, and information designed to strengthen the fresh mushroom's position in the market place and to establish, maintain, and expand markets for fresh mushrooms. The program is financed by an assessment of $0.0043 cents per pound on any person who produces or imports over 500,000 pounds of mushrooms for the fresh market annually. Under the Order, handlers collect and remit producer assessments to the Council, and assessments paid by importers are collected and remitted by the United States Customs Service. The Order provides for the establishment of a Council consisting of at least four members and not more than nine members. For the purpose of nominating and appointing producers to the Council, the United States is divided into four geographic regions (Regions 1, 2, 3, and 4) with Council member representation allocated for each region based on the geographic distribution of mushroom production. For importers (referred to as Region 5), one Council member seat is allocated when imports, on average, exceed 35,000,000 pounds of mushrooms annually. Section 1209.30(d) of the Order provides that at least every five years and not more than every three years, the Council shall review changes in the geographic distribution of mushroom production volume throughout the United States and import volume, using the average annual mushroom production and imports over the preceding four years. Based on the review, the Council is required to recommend reapportionment of the regions or modification of the number of members from such regions, or both, to reflect shifts in the geographic distribution of mushroom production volume and importer representation. The Order provides that each producer region that produces, on average, at least 35 million pounds of mushrooms annually is entitled to one member. Further, each producer region is entitled to an additional member for each 50 million pounds of annual production, on average, in excess of the initial 35 million pounds required to qualify for representation, until the nine seats on the Council are filled. For purposes of this rule and as provided under the Order, “on average” reflects a rolling average of production or imports during the last three fiscal years. Under the current Order, regions and Council member representation for each region are the following: Region 1: Colorado, Connecticut, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New York, New Hampshire, North Dakota, Ohio, Rhode Island, South Dakota, Vermont, Wisconsin, and Wyoming—1 producer member; Region 2: Delaware, Maryland, New Jersey, Pennsylvania, the District of Columbia, West Virginia, and Virginia—3 producer members; Region 3: Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah, and Washington—2 producer members; Region 4: Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Carolina, Oklahoma, the Commonwealth of Puerto Rico, South Carolina, Tennessee, and Texas—2 producer members; and Region 5: importers; 1 member. Based on data for July 1, 2002, through June 30, 2005, there are about 725 million pounds of mushrooms assessed on average annually under the Order. Currently, the Order's Regions 1, 2, 3, 4, and 5 represent 32 million pounds, 382 million pounds, 133 million pounds, 113 million pounds, and 65 million pounds, respectively. Since Region 1 represents 32 million pounds of mushroom production, the region no longer qualifies for member representation because production within the region falls below the 35 million pounds Order requirement. Based on data for the July 1, 2002, through June 30, 2005, the Order is revised to reapportion membership of the Council to reflect shifts in the geographic distribution of mushroom production. The annual average production of mushrooms for the Order's Regions 1, 2, 3, 4, and 5 as adopted in this rule will be 168 million pounds, 382 million pounds, 109 million pounds, 0 million pounds, and 65 million pounds. As adopted in this rule, Regions 1, 2, and 3 will be comprised of states with mushroom production, and Region 4 will be comprised of all other states with no mushroom production. Based on a review of United States mushroom production volume and import volume, this rule adopts amendments to change the four United States geographic regions as follows: Region 1—the States of Colorado, Oklahoma, Wyoming, Washington, Oregon, Florida, Illinois, Tennessee, Texas and Utah; Region 2—the State of Pennsylvania; Region 3—the State of California; and Region 4—all other States including the District of Columbia and the Commonwealth of Puerto Rico. Also, the amendments changes the number of Council member representatives from one member to three members for Region 1 and from two members to zero members for Region 4. Representation for Region 2, Region 3, and importers remain unchanged at three members, two members, and one member, respectively. The amendments, which represent shifts in mushroom production volume, provides more equitable producer and importer representation on the Council based on U. S. mushroom production volumes and import volumes. Nominations and appointments to the Council are conducted pursuant to §§ 1209.30 and 1209.230. Nominations for Council positions for terms of office that begin January 1, 2008 will be based on the amendments contained in this rule. An interim final rule that reapportions the four United States geographic regions, and reallocates Council member representation under the Order was published in the **Federal Register** on March 19, 2007 [72 FR 12701]. The interim final rule provided for a 30-day comment period, which ended on April 18, 2007. One comment was received from the Council supporting the change. After consideration of all relevant material presented, including the Board's recommendation and other information, the interim final rule as published in the **Federal Register** (72 FR 12701, March 19, 2007) is adopted, as a final rule, without change. List of Subjects in 7 CFR Part 1209 Administrative practice and procedure, Advertising, Consumer information, Marketing agreements, Mushroom promotion, Reporting and recording, Requirements. For the reasons set forth in the preamble, 7 CFR part 1209 is amended as follows: PART 1209—MUSHROOM PROMOTION, RESEARCH, AND CONSUMER INFORMATION ORDER 1. The authority citation for 7 CFR part 1209 continues to read as follows: Authority: 7 U.S.C. 6101-6112. Accordingly, the interim final rule amending 7 CFR part 1209, which was published in the March 19, 2007, **Federal Register** at 72 FR 12701 is adopted as a final rule without change. Dated: June 21, 2007. Lloyd C. Day, Administrator, Agricultural Marketing Service. [FR Doc. E7-12402 Filed 6-26-07; 8:45 am] BILLING CODE 3410-02-P NUCLEAR REGULATORY COMMISSION 10 CFR Part 70 RIN 3150-AH62 Conforming Administrative Changes AGENCY: Nuclear Regulatory Commission. ACTION: Final rule. SUMMARY: The Nuclear Regulatory Commission
(NRC)is making conforming changes to citations in the regulatory text. This action is necessary to inform the public of these conforming changes to NRC regulations. DATES: *Effective Date:* June 27, 2007. FOR FURTHER INFORMATION CONTACT: Michael K. Williamson, Office of Federal and State Materials and Environmental Management Programs, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone:
(301)415-6234, e-mail: *mkw1@nrc.gov* . SUPPLEMENTARY INFORMATION: In September 2000, when part 70 was amended, a new Subpart H to part 70 was added which resulted in former § 70.61 being redesignated as § 70.81 and former § 70.62 being redesignated as § 70.82. Additionally, former § 70.71 was redesignated as § 70.91. NRC is amending its regulations to make conforming changes to citations in the regulatory text by replacing § 70.61 with § 70.81, replacing § 70.62 with § 70.82, and replacing § 70.71 with § 70.91, to update and correct cross-references within 10 CFR part 70. In addition, in September 2000, § 70.14 was redesignated as § 70.17 as referenced in § 70.51. Because these amendments deal solely with correcting cross references in the regulations, the notice and comment provisions of the Administrative Procedure Act do not apply, under 5 U.S.C. 553(b)(B), because good cause exists to make these ministerial changes without unnecessary notices and public procedure. This amendment will become effective upon publication in the **Federal Register** . Good cause exists to dispense with the usual 30-day delay in the effective date, under 5 U.S.C. 553(d)(3), because this amendment is of a minor and administrative nature. Environmental Impact: Categorical Exclusion The NRC has determined that this final rule is the type of action described in categorical exclusion 10 CFR 51.22(c)(2). Therefore, neither an environmental impact statement nor an environmental assessment has been prepared for this final rule. Paperwork Reduction Act This final rule does not contain new or amended information collection requirements subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ). Existing requirements were approved by the Office of Management and Budget (OMB), approval numbers 3150-0009, 3150-0028, and 3150-0056. Public Protection Notification The NRC may not conduct or sponsor, and a person is not required to respond to, a request for information or an information collection requirement unless the requesting document displays a currently valid OMB control number. Regulatory Analysis A regulatory analysis has not been prepared for this final rule, because this rule is administrative, in that it amends the regulations to reflect administrative conforming changes made to 10 CFR part 70. This is considered a minor non-substantive amendment and will not have a significant impact on NRC licensees or the public. Backfit Analysis The NRC has determined that the backfit rule (§§ 50.109, 70.76, 72.62, or 76.76) does not apply to this final rule because this amendment does not involve any provisions that would impose backfits as defined in the backfit rule. This amendment is considered a minor non-substantive amendment; therefore, a backfit analysis is not required. List of Subjects in 10 CFR Part 70 Criminal penalties, Hazardous materials transportation, Material control and accounting, Nuclear materials, Packaging and containers, Radiation protection, Reporting and recordkeeping requirements, Scientific equipment, Security measures, Special nuclear material. For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act of 1974, as amended, and 5 U.S.C. 552 and 553, NRC is making the following conforming changes to 10 CFR Part 70. PART 70—DOMESTIC LICENSING OF SPECIAL NUCLEAR MATERIAL 1. The authority citation for part 70 continues to read as follows: Authority: Secs. 51, 53, 161, 182, 183, 68 Stat. 929, 930, 948, 953, 954, as amended, sec. 234, 83 Stat. 444, as amended, (42 U.S.C. 2071, 2073, 2201, 2232, 2233, 2282, 2297f); secs. 201, as amended, 202, 204, 206, 88 Stat. 1242, as amended, 1244, 1245, 1246 (42 U.S.C. 5841, 5842, 5845, 5846). Sec. 193, 104 Stat. 2835, as amended by Pub. L. 104-134, 110 Stat. 1321, 1321-349 (42 U.S.C. 2243); sec. 1704, 112 Stat. 2750 (44 U.S.C. 3504 note). Sections 70.1(c) and 70.20a(b) also issued under secs. 135, 141, Pub. L. 97-425, 96 Stat. 2232, 2241 (42 U.S.C. 10155, 10161). Section 70.7 also issued under Pub. L. 95-601, sec. 10, 92 Stat. 2951 (42 U.S.C. 5851). Section 70.21(g) also issued under sec. 122, 68 Stat. 939 (42 U.S.C. 2152). Section 70.31 also issued under sec. 57d, Pub. L. 93-377, 88 Stat. 475 (42 U.S.C. 2077). Sections 70.36 and 70.44 also issued under secs. 184, 68 Stat. 954, as amended (42 U.S.C. 2234). Section 70.81 also issued under secs. 186, 187, 68 Stat. 955 (42 U.S.C. 2236, 2237). Section 70.82 also issued under sec. 108, 68 Stat. 939, as amended (42 U.S.C. 2138). 2. In § 70.19, the introductory text in paragraph
(c)is revised to read as follows: § 70.19 General license for calibration or reference sources.
(c)The general license in paragraph
(a)of this section is subject to the provisions of §§ 70.32, 70.50, 70.55, 70.56, 70.91, 70.81, and 70.82; the provisions of §§ 74.11 and 74.19 of this chapter; and to the provisions of parts 19, 20, and 21 of this chapter. In addition, persons who receive title to own, acquire, deliver, receive, possess, use or transfer one or more calibration or reference sources under this general license: 3. In § 70.20a, paragraph
(a)is revised to read as follows: § 70.20a General license to possess special nuclear material for transport.
(a)A general license is issued to any person to possess formula quantities of strategic special nuclear material of the types and quantities subject to the requirements of §§ 73.20, 73.25, 73.26 and 73.27 of this chapter, and irradiated reactor fuel containing material of the types and quantities subject to the requirements of § 73.37 of this chapter, in the regular course of carriage for another or storage incident. Carriers generally licensed under § 70.20b are exempt from the requirements of this section. Carriers of irradiated reactor fuel for the United States Department of Energy are also exempt from the requirements of this section. The general license is subject to the applicable provisions of §§ 70.7
(a)through (e), 70.32
(a)and (b), and §§ 70.42, 70.52, 70.55, 70.91, 70.81, 70.82 and 10 CFR 74.11. 4. In § 70.20b, paragraph
(b)is revised to read as follows: § 70.20b General license for carriers of transient shipments of formula quantities of strategic special nuclear material, special nuclear material of moderate strategic significance, special nuclear material of low strategic significance, and irradiated reactor fuel.
(b)Persons generally licensed under this section are exempt from the requirements of parts 19 and 20 of this chapter and the requirements of this part, except §§ 70.32
(a)and (b), 70.52, 70.55, 70.91, 70.81, and 70.82. 5. In § 70.51, paragraph (c)(2) is revised to read as follows: § 70.51 Records requirements.
(c)* * *
(2)If there is a conflict between the Commission's regulations in this part, license condition, or other written Commission approval or authorization pertaining to the retention period for the same type of record, the retention period specified in the regulations in this part for these records shall apply unless the Commission, under § 70.17 has granted a specific exemption from the record retention requirements specified in the regulations in this part. Dated at Rockville, Maryland, this 8th day of June, 2007. For the Nuclear Regulatory Commission. Luis A. Reyes, Executive Director for Operations. [FR Doc. E7-12423 Filed 6-26-07; 8:45 am] BILLING CODE 7590-01-P DEPARTMENT OF THE TREASURY Office of Thrift Supervision 12 CFR Parts 563b and 575 [No. OTS-2007-0014] RIN 1550-AC07 Stock Benefit Plans in Mutual-to-Stock Conversions and Mutual Holding Company Structures AGENCY: Office of Thrift Supervision, Treasury. ACTION: Final rule. SUMMARY: The Office of Thrift Supervision
(OTS)is clarifying its regulations regarding stock benefit plans established after mutual-to-stock conversions or in mutual holding company structures. In addition, OTS is modifying the voting requirements for the adoption of certain stock benefit plans in mutual holding company structures by providing that the plans must be approved by a majority of the minority shares voting on the plan. Also, OTS is making several minor changes to the regulations governing mutual-to-stock conversions and minority stock issuances. DATES: This rule is effective on October 1, 2007. FOR FURTHER INFORMATION CONTACT: Donald W. Dwyer,
(202)906-6414, Director, Applications, Examinations and Supervision—Operations; Aaron B. Kahn,
(202)906-6263, Assistant Chief Counsel, Business Transactions Division or David A. Permut,
(202)906-7505, Senior Attorney, Business Transactions Division, Office of Chief Counsel, Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552. SUPPLEMENTARY INFORMATION: I. Introduction On July 20, 2006, OTS published a notice of proposed rulemaking
(NPR)that proposed changes to the OTS mutual-to-stock conversion regulations, 12 CFR Part 563b (Conversion Regulations), and the OTS mutual holding company regulations, 12 CFR Part 575 (MHC Regulations) regarding stock benefit plans established after mutual-to-stock conversions or in mutual holding company
(MHC)structures. 1 1 See 71 FR 41179 (Jul. 20, 2006). Savings associations that propose to convert to stock form are subject to the Conversion Regulations. Subsidiary mutual holding companies and savings associations (collectively, Subsidiary Companies) in MHC structures that propose to issue common stock in a minority stock issuance (Minority Stock Issuance) (that is, a stock offering in which the Subsidiary Company issues stock to entities other than the parent MHC) are subject to both the Conversion Regulations and the MHC Regulations, including the provisions therein pertaining to stock benefit plans. For several years, the MHC Regulations have required that a majority of the outstanding minority shares approve stock benefit plans. In the NPR, OTS proposed to reduce the voting requirements for the establishment of stock benefit plans in MHC structures, by:
(1)Eliminating the requirement for a separate minority shareholder vote when more than a year has passed after a Minority Stock Issuance that was conducted in accordance with the stock purchase priorities set forth in Part 563b; and
(2)during the first year after a Minority Stock Issuance conducted in accordance with the Part 563b conversion priorities, requiring that a majority of the minority shares that actually vote on the matter, as opposed to a majority of outstanding minority shares, approve the stock benefit plans. In addition, OTS proposed a number of other changes to its regulations. OTS proposed, among other things, to:
(i)Clarify the Conversion Regulations and the MHC Regulations by referring to the specific type of plan addressed, rather than referring to plans in terms of their tax-qualified or non-tax qualified nature;
(ii)eliminate 12 CFR 575.7(b)(3), which requires stock offering materials to disclose the amount of any discount on minority stock;
(iii)add certain provisions to the plan size limits in sections 575.8(a)(3) and 575.8(a)(4) that parallel the restrictions in the Conversion Regulations;
(iv)amend 12 CFR 575.8 to state that the quantitative limits on the size of plans in section 575.8 supersede related quantitative limits in the Conversion Regulations;
(v)amend section 575.8 to state that plan restrictions in proposed sections 563b.500(a)(4) through 563b.500(a)(14) apply in the context of a Minority Stock Issuance for only one year after the Subsidiary Company engages in a Minority Stock Issuance that is conducted in accordance with the purchase priorities set forth in the Conversion Regulations; and
(vi)amend the Conversion Regulations to permit converting savings associations to set smaller maximum purchase limitations in conversion stock offerings. Also, OTS proposed to move or delete several provisions in order to organize the regulations more effectively and to clarify the regulations. II. Description of Comments OTS received 84 comments, from 78 commenters, regarding the NPR. Of these comment letters, 19 were submitted by individual investors, 47 were submitted by savings associations, savings banks, or holding companies, or insiders thereof, two were submitted by legal counsel for savings associations or holding companies, eight were submitted by investment advisors and related entities, two were submitted by counsel for investment advisors, and six were submitted by trade associations. All of the comment letters except one (that is, 83 comments) addressed, either solely, or among other issues, the issue of the elimination of the minority vote more than one year after completion of a Minority Stock Issuance. Of these 83 comments, 53 were in favor of the proposed elimination of the vote requirement, and 30 objected to the elimination of the requirement. The comments were, without exception, divided based on the type of commenter. All of the comments in favor of the proposal were submitted by savings associations or savings banks, holding companies, insiders of such entities, counsel that routinely represents such entities, or trade associations that include such entities. All of the comments from individual investors, investment advisors, counsel for investment advisors, and one trade association that does not have savings associations as members, opposed the elimination of the voting requirement. Of the 53 comments in favor of the proposed change, 45 indicated that the minority voting requirement enables minority shareholders to obtain leverage in the affairs of the Subsidiary Company beyond the confines of the establishment of a plan, and to engage in hostile activities. Certain of the comments claimed that activist shareholders' concerns are not with the plans themselves, but that activist shareholders use the leverage that the vote on such plans provides, in order to pursue other goals. Forty comments claimed that the minority vote “disenfranchises” the MHC. Eight comments claimed that a minority vote is contrary to the concept of MHC control over the Subsidiary Company, and three comments claimed that the proposal “preserves the full benefits of the MHC charter.” Four comments claimed that the minority vote ignores the interests of depositors. Also, 41 comments asserted that minority voting requirements are unnecessary because OTS imposes restrictions on the size of plans, and 39 comments claimed that market forces will limit plans to reasonable levels. One comment noted that the staff of the Federal Deposit Insurance Corporation
(FDIC)has provided advice that the lack of a minority vote after one year is acceptable. 2 One comment noted that there is no “majority of the minority” voting requirement under state law. Another comment observed that nothing in stock exchange rules or the NASDAQ rules requires a majority of the minority vote when there is a majority shareholder. 2 *See* , letter from John P. Henrie, Section Chief, Risk Management and Applications Section, FDIC, to Mr. Raymond A. Tiernan, Esquire (July 6, 2005) (FDIC Letter). *See also* , letter from the Board of Governors of the Federal Reserve System to Raymond A. Tiernan, Esq. (Sept. 22, 2006). Three comments claimed that the minority vote requirement was unduly burdensome. One comment claimed that the minority vote might hamper the ability of an institution to attract management. One comment claimed that a minority vote was unnecessary because directors have fiduciary duties, and must comply with them. Finally, two comments stated that investors who object to the lack of a minority vote simply should not purchase the stock. Of the 30 comments that objected to the proposal, 26 stated that the elimination of the voting requirement presented conflict of interest concerns. Eight comments stated that the proposal was contrary to good corporate governance. Two comments claimed that the lack of a voting requirement amounts to an exemption from OTS' Conflicts of Interest Regulation (Conflict Regulation). 3 In addition, two comments claimed that the proposal would harm shareholders. 3 12 CFR 563.200 (2006). Three comments asserted that plans are “excessive” or “significant” already. Four comments stated that, in light of recent concerns regarding options, or recent corporate problems, this was not an optimal time to make the proposed changes. Three comments stated that the requirement for a minority vote is not unduly restrictive, either because the minority vote adds little actual expense, or because the benefits are worth the expense. Three commenters claimed that the proposal, if adopted, will have an unfavorable effect on the cost of capital, or will not help the market for the securities. One comment stated that, to the extent the regulation would cause Subsidiary Companies to wait until a year has passed to enact stock benefit plans, the plans would be more expensive, because it is likely the stock price would rise over time. Four of the comments that objected to the proposal claimed that depositors of the MHC have no real voice in the selection of the MHC's directors. Two comments suggested that benefit plans should be put to a depositor vote. Two comments objected to the applicability of the rule to existing MHC structures, and indicated that the regulation, if adopted, should apply only to MHC structures established after promulgation of the proposed regulation. Finally, seven comments claimed that OTS did not provide a sufficient explanation for the proposed rule change. Forty-six comments addressed other aspects of the NPR. Of these comments, 37 were form letters from savings associations and savings banks that generally praised the proposed regulations for clarifying the regulations. Two comments objected to the change to the majority of the minority vote requirement from a majority of outstanding shares to a majority of shares actually voting. Four comments stated that the regulations would reduce regulatory burden. Two comments supported the reduction in the maximum purchase limitations for stock offerings. One comment expressed support for the proposed changes to several specific provisions of § 575.8. One comment questioned the need to eliminate the requirement to disclose the reasons for the discount on minority stock in a Minority Stock Issuance. Finally, six other comments suggested certain specific changes to the regulation, which are discussed separately below. III. Discussion of the Final Regulation A. Requirement of a majority of the minority vote OTS, in issuing the NPR, stated that it believed the minority vote requirement after one year was unduly restrictive. In full conversions, the Conversion Regulations require a vote for only one year after the mutual-to-stock conversion. While Minority Stock Issuances are distinguishable from full conversions because Subsidiary Companies that issue stock have a continuing mutual interest, and entities that complete a full conversion do not have such an interest, stock benefit plans established more than one year after a Minority Stock Issuance do not affect the mutual interest if the plans are funded with stock repurchases. Under such circumstances, plans do not reduce the percentage of stock held by minority shareholders below the percentage that they held upon completion of the Minority Stock Issuance. Also, although the “majority of the minority” voting requirement has existed for over ten years, it is our understanding that a stock benefit plan put to a shareholder vote has never failed to receive the requisite vote. Under these circumstances, and given the regulatory burdens to which depository institutions are subjected, it is appropriate to inquire whether the cost of obtaining a vote exceeds the benefits. Further, the FDIC has not required a “majority of the minority” vote more than one year after a minority stock issuance. 4 Therefore, under existing regulations, OTS has been subjecting MHC structures that are under its jurisdiction to requirements that are more onerous than MHC structures that are regulated by the FDIC. 4 *See* FDIC Letter. OTS has carefully considered the comments received in response to the NPR. Most of the comments that opposed the proposed elimination of the majority of the minority vote requirement after one year following a Minority Stock Issuance asserted that the proposal created an unacceptable conflict of interest. Without the requirement of a separate minority vote, conflicts of interest exist in the context of stock benefit plans in an MHC structure, because individuals who direct the voting of the MHC's stock also participate in the plan. The commenters who noted that stock exchange rules and state authorities do not require a separate minority vote where there is a majority shareholder are correct. However, it is not the mere existence of a majority shareholder that may raise conflict of interest concerns. Instead, it is the fact that in MHC structures, the individuals who direct the vote of the MHC's shares have participants in the stock benefit plans that the MHC votes to authorize. Several commenters claimed that, notwithstanding any potential conflict of interest, a minority vote was unnecessary because directors already have fiduciary duties, OTS regulates the size of plans, or market forces will control the size of plans. OTS does not believe, however, that the existence of fiduciary duties guarantees that parties with such duties will always act appropriately. For example, the Conflict Regulation states that directors and other parties have fiduciary duties, but imposes certain requirements to ensure that the relevant parties comply with their fiduciary duties. Also, although OTS regulations provide some limitations on the size of stock benefit plans, OTS believes that, within such limitations (absent supervisory concerns), the size of plans is a shareholder decision. Further, while accounting and disclosure requirements exist with respect to stock benefit plans, such requirements do not necessarily eliminate conflict of interest issues. The essence of several comments that supported the proposal was that the MHC should always have the sole ability to control the operations of the Subsidiary Company. Historically, however, OTS has required a majority of the minority vote when a Subsidiary Company proposes to engage in certain actions that would have a significant direct effect on minority shareholders. 5 Although the relevant statutes and regulations generally preserve the continuing control of the mutual, majority interest, OTS has long recognized that it is appropriate to consider minority interests separately in certain situations. 6 5 In addition to requiring a majority of the minority vote for stock benefit plans, OTS regulations require a separate minority shareholder vote for the establishment of a charitable foundation in connection with a Minority Stock Issuance, and for any second-step stock conversion. *See* 12 CFR 575.11(i) and 575.12(a)(3). In addition, minority shareholders must vote separately with respect to any charitable foundation established in connection with a second-step conversion. *See* 12 CFR 563b.555. 6 *See, e.g.* , the discussion regarding the imposition of the majority of the minority voting requirement regarding stock benefit plans, 59 FR 22725 at 22729 (May 3, 1994), and the discussion regarding the imposition of a majority of the minority vote requirement in the context of second-step conversions, 67 FR 52010, at 52015 (Aug. 9, 2002). Several commenters who supported the proposal asserted that activist shareholders often have used the minority vote requirement for stock benefit plans as leverage to influence management to take actions the activist shareholders sought on other matters. Even if certain minority shareholders have used the minority vote requirement as a means of pursuing other interests, however, it does not mean that the purpose of the minority voting requirements is invalid. Having considered the public comments, and considering the conflict of interest issues involved, OTS concludes that it is appropriate to continue to impose the separate minority shareholder vote requirement for stock benefit plans in MHC structures, regardless of the amount of time that has passed since the most recent Minority Stock Issuance. B. Minority Vote Required for Approval of Stock Benefit Plans In the NPR, OTS proposed to change the minority vote required for approval of a stock benefit plan, from a majority of all outstanding minority shares to a majority of minority shares actually voting. OTS believes this change is appropriate because a simple majority shareholder vote is the standard for approval of most corporate measures. While the OTS stock charter requires that a majority of all shareholders vote on plans, the charter itself does not require a majority of the minority vote on any issue. OTS believes that in instances where a stock benefit plan is presented for a shareholder vote, it is reasonable to consider only the votes of the minority shareholders voting on the plan issue, particularly given that all minority shareholders are given notice of the vote, and such notice will be required to set forth the applicable vote requirement. C. Definitions in § 563b.500(a) of Types of Stock Benefit Plans In the NPR, OTS proposed to clarify 12 CFR 563b.500(a) by referring to the specific type of plan addressed (that is, an Employee Stock Ownership Plan (ESOP), Stock Option Plan (Option Plan), or Management Recognition Plan (MRP)), rather than referring to plans in terms of their tax-qualified or non-tax-qualified nature. One commenter objected to this proposed change as it related to tax-qualified plans, noting that converting savings associations do implement tax-qualified plans other than ESOPs. OTS believes that the proposed regulation adequately addressed the possibility that tax-qualified plans would not necessarily be ESOPs. Proposed section 563b.500(a) defined the term “ESOP” as an employee stock ownership plan or other tax-qualified employee stock benefit plan. Accordingly, OTS is not revising this provision in the final regulations. OTS is, however, revising the definition of the term “ESOP” in section 575.8(a)(3) to conform to the section 563b.500(a) definition. D. Plan Requirements in Section 563b.500(a) One commenter claimed that sections 563b.500(a)(4) and 563b.500(a)(5), as proposed, were ambiguous. The commenter claimed that section 563b.500(a)(4) could be read either as limiting an individual to receiving 25 percent or less of the shares of each type of plan, or as applying to 25 percent of all of the shares issued under the various plans. Proposed section 563b.500(a)(4) required that “[n]o individual receives more than 25 percent of the shares under your ESOP, MRP, or Option Plan.” In order to make it clear that the 25 percent limitation will be applied to each plan separately, OTS is revising the regulation to require that no individual receive more than 25 percent of the shares under “any plan.” Proposed section 563b.500(a)(5) required that “[y]our directors who are not your officers do not receive more than five percent of the shares of your MRP or Option Plan individually, or 30 percent of any such plan in the aggregate.” Although the proposal did not revise the language of the previous regulatory requirement, and parties engaging in conversions or Minority Stock Issuances have not claimed the language is unclear, OTS is revising the section to provide greater clarity. The final regulation provides that “Each of your directors who is not an officer does not receive more than five percent of the shares of your MRP or Option Plan, and all of your directors who are not officers do not receive, in the aggregate, more than 30 percent of the shares of your MRP or Option Plan.” E. Disclosure of Discounts on Minority Stock in Minority Stock Issuances In the NPR, OTS proposed to rescind 12 CFR 575.7(b)(3), which requires stock offering materials to disclose the amount of any discount on minority stock due to the minority status of the stock to be offered, and how the amount of the discount was determined. OTS explained that the general securities offering disclosure requirements, which require disclosure of material information, are sufficient to address the issue of disclosure of the amount and reasons for any such discount. One commenter believed that more explanation regarding this proposed change was appropriate, including an explanation of why OTS did not consider generally applicable securities disclosure requirements to provide a basis for sufficient disclosure when the regulation was initially promulgated. Information regarding the amount and derivation of the discount on Minority Stock Issuances due to the minority nature of the stock is included in the appraisal for the securities offering, which is an exhibit to the offering materials. Accordingly, information regarding the discount is available to any potential purchaser in the Minority Stock Issuance. Where OTS determines that one of its regulatory requirements is redundant, OTS believes it is appropriate to remove the redundant requirement. Accordingly, OTS is rescinding section 575.7(b)(3) as proposed. F. Plan Size Restrictions in § 575.8 The restrictions on the size of stock benefit plans set forth at 12 CFR 575.8(a)(3) through 575.8(a)(7) are set forth both in terms of the percentage of the savings association's outstanding common stock and in terms of the percentage of the savings association's stockholders' equity. One commenter suggested that all limits based on the equity of a savings association should be eliminated, and stated that such limits penalize holding companies that leverage their capital to generate better returns for stockholders. The NPR did not propose any substantive change in the limitations in section 575.8(a) pertaining to stockholders' equity. These limitations have been in place since the MHC Regulations were initially promulgated in 1993. OTS is not aware of any situations in which the stockholders' equity provisions placed an additional burden on MHCs. Moreover, OTS believes it is appropriate to include a limitation based on the equity of a Subsidiary Company, given that stock benefit plans award management a share of the equity of the Subsidiary Company. G. Proposed Changes to § 575.8(a)(9) In the NPR, OTS proposed to retain the existing aggregate limitation on the size of the Option Plans and MRPs set forth at section 575.8(a)(9) of the MHC Regulations, and to clarify that the limitation therein is a separate limitation on Option Plans and MRPs that applies to each Minority Stock Issuance. One commenter suggested that the section be revised to provide that existing benefit plans would not have to be reduced if those plans exceeded the 25 percent limitation as a result of stock repurchases. OTS does not intend to require a reduction in the size of preexisting plans in the situation where the common stock encompassed by those plans exceeds 25 percent of the outstanding stock as a result of stock becoming treasury stock through repurchases prior to a new stock issuance. However, because OTS believes that it would be highly unlikely for preexisting plans to continue to exceed the 25 percent limitation after the close of a subsequent stock issuance, even where such plans would exceed the 25 percent limitation prior to the issuance, OTS is not adding language to the regulation that would explicitly except that situation from the regulatory limitation. IV. Regulatory Findings A. Paperwork Reduction Act OTS has determined that this rule does not involve a change to collections of information previously approved under the Paperwork Reduction Act (44 U.S.C. 3501 *et seq.* ). B. Executive Order 12866 The Director of OTS has determined that this rule does not constitute a “significant regulatory action” for purposes of Executive Order 12866. C. Regulatory Flexibility Act Pursuant to section 605(b) of the Regulatory Flexibility Act
(RFA)(5 U.S.C. 601), the Director certifies that this rule will not have a significant economic impact on a substantial number of small entities. The rule makes certain changes that should reduce burdens on all savings associations, including small institutions. First, the rule clarifies the regulations regarding stock benefit plans in connection with mutual-to-stock conversions and Minority Stock Issuances. These clarifications will reduce the burden of complying with the OTS regulations on stock benefit plans. Second, OTS has reduced the voting requirement to adopt stock benefit plans in MHC structures, which reduces burden on institutions establishing stock benefit plans. Finally, the rule will reduce burden by broadening the purchase limitations, thereby promoting a wider distribution of stock in a Conversion Offering or Minority Stock Issuance. All of the changes are minor and should not have a significant impact on small institutions. Accordingly, OTS has determined that a Regulatory Flexibility Analysis is not required. D. Unfunded Mandates Reform Act of 1995 OTS has determined that the rule will not result in expenditures by state, local, or tribal governments or by the private sector of $100 million or more and that a budgetary impact statement is not required under Section 202 of the Unfunded Mandates Reform Act of 1995, Pub. L. 104-4 (Unfunded Mandates Act). The rule would make certain changes that should reduce burdens on savings associations. First, the rule clarifies OTS regulations regarding stock benefit plans in connection with mutual-to-stock conversions and Minority Stock Issuances, which should reduce the burden of complying with the OTS regulations on stock benefit plans. Second, OTS has reduced the voting requirement to adopt stock benefit plans in MHC structures, which reduces burden on institutions establishing stock benefit plans. Finally, the rule will reduce burden by broadening the purchase limitations, to promote a wider distribution of stock in a Conversion Offering or Minority Stock Issuance. All of the changes are minor and should not have a significant impact on small institutions. Accordingly, a budgetary impact statement is not required under section 202 of the Unfunded Mandates Act. List of Subjects 12 CFR Part 563b Reporting and recordkeeping requirements, Savings associations, Securities. 12 CFR Part 575 Administrative practice and procedure, Capital, Holding companies, Reporting and recordkeeping requirements, Savings Associations, Securities. Accordingly, the Office of Thrift Supervision amends Chapter V of title 12 of the Code of Federal Regulations, as set forth below. PART 563b—CONVERSIONS FROM MUTUAL TO STOCK FORM 1. The authority citation for part 563b continues to read as follows: Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 2901; 15 U.S.C. 78c, 78l, 78m, 78n, 78w. § 563b.385 [Amended] 2. Amend § 563b.385(a) by removing the phrase “between one percent and” and adding the words “up to” in its place. 3. Revise § 563b.500 to read as follows: § 563b.500. What management stock benefit plans may I implement?
(a)During the 12 months after your conversion, you may implement a stock option plan (Option Plan), an employee stock ownership plan or other tax-qualified employee stock benefit plan (collectively, ESOP), and a management recognition plan (MRP), provided you meet all of the following requirements.
(1)You disclose the plans in your proxy statement and offering circular and indicate in your offering circular that there will be a separate shareholder vote on the Option Plan and the MRP at least six months after the conversion. No shareholder vote is required to implement the ESOP. Your ESOP must be tax-qualified.
(2)Your Option Plan does not encompass more than ten percent of the number of shares that you issued in the conversion. (3)(i) Your ESOP and MRP do not encompass, in the aggregate, more than ten percent of the number of shares that you issued in the conversion. If you have tangible capital of ten percent or more following the conversion, OTS may permit your ESOP and MRP to encompass, in the aggregate, up to 12 percent of the number of shares issued in the conversion; and
(ii)Your MRP does not encompass more than three percent of the number of shares that you issued in the conversion. If you have tangible capital of ten percent or more after the conversion, OTS may permit your MRP to encompass up to four percent of the number of shares that you issued in the conversion.
(4)No individual receives more than 25 percent of the shares under any plan.
(5)Your directors who are not your officers do not receive more than five percent of the shares of your MRP or Option Plan individually, or 30 percent of any such plan in the aggregate.
(6)Your shareholders approve each of the Option Plan and the MRP by a majority of the total votes eligible to be cast at a duly called meeting before you establish or implement the plan. You may not hold this meeting until six months after your conversion.
(7)When you distribute proxies or related material to shareholders in connection with the vote on a plan, you state that the plan complies with OTS regulations and that OTS does not endorse or approve the plan in any way. You may not make any written or oral representations to the contrary.
(8)You do not grant stock options at less than the market price at the time of grant.
(9)You do not fund the Option Plan or the MRP at the time of the conversion.
(10)Your plan does not begin to vest earlier than one year after shareholders approve the plan, and does not vest at a rate exceeding 20 percent per year.
(11)Your plan permits accelerated vesting only for disability or death, or if you undergo a change of control.
(12)Your plan provides that your executive officers or directors must exercise or forfeit their options in the event the institution becomes critically undercapitalized (as defined in § 565.4 of this chapter), is subject to OTS enforcement action, or receives a capital directive under § 565.7 of this chapter.
(13)You file a copy of the proposed Option Plan or MRP with OTS and certify to OTS that the plan approved by the shareholders is the same plan that you filed with, and disclosed in, the proxy materials distributed to shareholders in connection with the vote on the plan.
(14)You file the plan and the certification with OTS within five calendar days after your shareholders approve the plan.
(b)You may provide dividend equivalent rights or dividend adjustment rights to allow for stock splits or other adjustments to your stock in your ESOP, MRP, and Option Plan.
(c)The restrictions in paragraph
(a)of this section do not apply to plans implemented more than 12 months after the conversion, provided that materials pertaining to any shareholder vote regarding such plans are not distributed within the 12 months after the conversion. If a plan adopted in conformity with paragraph
(a)of this section is amended more than 12 months following your conversion, your shareholders must ratify any material deviations to the requirements in paragraph (a). PART 575—MUTUAL HOLDING COMPANIES 4. The authority citation for part 575 continues to read as follows: Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1828, 2901. 5. Amend § 575.7 by: a. Removing the first sentence of paragraph (a); b. Removing paragraphs (b)(1) and (3); c. Removing the word “not” from paragraph (b)(2); d. Redesignating paragraph (b)(2) as paragraph (a)(9); e. Redesignating paragraphs (c), (d), and
(e)as (b), (c), and
(d)respectively; and f. Revising newly designated paragraph (d). The revision reads as follows: § 575.7 Issuances of stock by savings association subsidiaries of mutual holding companies.
(d)*Procedural and substantive requirements.* The procedural and substantive requirements of 12 CFR part 563b shall apply to all mutual holding company stock issuances under this section, unless clearly inapplicable, as determined by OTS. For purposes of this paragraph (d), the term *conversion* as it appears in the provisions of Part 563b of this chapter shall refer to the stock issuance, and the term *converted* or *converting savings association* shall refer to the savings association undertaking the stock issuance. 6. In § 575.8, revise paragraphs (a)(3) through (a)(9) and add paragraph
(c)to read as follows: § 575.8 Contents of Stock Issuance Plans.
(a)Mandatory provisions. * * *
(3)Provide that all employee stock ownership plans or other tax-qualified employee stock benefit plans (collectively, ESOPs) must not encompass, in the aggregate, more than either 4.9 percent of the outstanding shares of the savings association's common stock or 4.9 percent of the savings association's stockholders' equity at the close of the proposed issuance.
(4)Provide that all ESOPs and management recognition plans
(MRPs)must not encompass, in the aggregate, more than either 4.9 percent of the outstanding shares of the savings association's common stock or 4.9 percent of the savings association's stockholders' equity at the close of the proposed issuance. However, if the savings association's tangible capital equals at least ten percent at the time of implementation of the plan, OTS may permit such ESOPs and MRPs to encompass, in the aggregate, up to 5.88 percent of the outstanding common stock or stockholders' equity at the close of the proposed issuance.
(5)Provide that all MRPs must not encompass, in the aggregate, more than either 1.47 percent of the common stock of the savings association or 1.47 percent of the savings association's stockholders' equity at the close of the proposed issuance. However, if the savings association's tangible capital is at least ten percent at the time of implementation of the plan, OTS may permit MRPs to encompass, in the aggregate, up to 1.96 percent of the outstanding shares of the savings association's common stock or 1.96 percent of the savings association's stockholders' equity at the close of the proposed issuance.
(6)Provide that all stock option plans (Option Plans) must not encompass, in the aggregate, more than either 4.9 percent of the savings association's outstanding common stock at the close of the proposed issuance or 4.9 percent of the savings association's stockholders' equity at the close of the proposed issuance.
(7)Provide that an ESOP, a MRP or an Option Plan modified or adopted no earlier than one year after the close of: the proposed issuance, or any subsequent issuance that is made in substantial conformity with the purchase priorities set forth in part 563b, may exceed the percentage limitations contained in paragraphs (a)(3) through
(6)of this section (plan expansion), subject to the following two requirements. First, all common stock awarded in connection with any plan expansion must be acquired for such awards in the secondary market. Second, such acquisitions must begin no earlier than when such plan expansion is permitted to be made. (8)(i) Provide that the aggregate amount of common stock that may be encompassed under all Option Plans and MRPs, or acquired by all insiders of the association and associates of insiders of the association, must not exceed the following percentages of common stock or stockholders' equity of the savings association, held by persons other than the savings association's mutual holding company parent at the close of the proposed issuance: Institution size Officer and director purchases (percent) $ 50,000,000 or less 35 $ 50,000,001-100,000,000 34 $100,000,001-150,000,000 33 $150,000,001-200,000,000 32 $200,000,001-250,000,000 31 $250,000,001-300,000,000 30 $300,000,001-350,000,000 29 $350,000,001-400,000,000 28 $400,000,001-450,000,000 27 $450,000,001-500,000,000 26 Over $500,000,000 25
(ii)The percentage limitations contained in paragraph 8(i) may be exceeded provided that all stock acquired by insiders and associates of insiders or awarded under all MRPs and Option Plans in excess of those limitations is acquired in the secondary market. If acquired for such awards on the secondary market, such acquisitions must begin no earlier than one year after the close of the proposed issuance or any subsequent issuance that is made in substantial conformity with the purchase priorities set forth in Part 563b.
(iii)In calculating the number of shares held by insiders and their associates under this provision, shares awarded but not delivered under an ESOP, MRP, or Option Plan that are attributable to such persons shall not be counted as being acquired by such persons.
(9)Provide that the amount of common stock that may be encompassed under all Option Plans and MRPs must not exceed, in the aggregate, 25 percent of the outstanding common stock held by persons other than the savings association's mutual holding company parent at the close of the proposed issuance.
(c)*Applicability of provisions of § 563b.500(a) to minority stock issuances.* Notwithstanding § 575.7(d) of this section, § 563b.500(a)(2) and
(3)do not apply to minority stock issuances, because the permissible sizes of ESOPs, MRPs, and Option Plans in minority stock issuances are subject to each of the requirements set forth at paragraphs (a)(3) through (a)(9) of this section. Section 563b.500, paragraphs (a)(4) through (14), apply for one year after the savings association engages in a minority stock issuance that is conducted in accordance with the purchase priorities set forth in part 563b. In addition to the shareholder vote requirement for Option Plans and MRPs set forth at § 563b.500(a)(6), any Option Plans and MRPs put to a shareholder vote after a minority stock issuance that is conducted in accordance with the purchase priorities set forth in part 563b must be approved by a majority of the votes cast by stockholders other than the mutual holding company. Dated: June 18, 2007. By the Office of Thrift Supervision. John M. Reich, Director [FR Doc. E7-12168 Filed 6-26-07; 8:45 am] BILLING CODE 6720-01-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 65 [Docket No. FAA-2007-27108; Amendment No. 65-50] RIN 2120-AI83 Inspection Authorization 2-Year Renewal AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Direct final rule; confirmation of effective date. SUMMARY: On January 30, 2007, the FAA issued a direct final rule, “Inspection Authorization 2-Year Renewal,” which amended the renewal period for inspection authorizations and requested comments. This document responds to the comments received and confirms the effective date of the rule. DATES: The effective date for the direct final rule published on January 30, 2007 (72 FR 4400) is confirmed as March 1, 2007. ADDRESSES: The complete docket for the direct final rule on Inspection Authorization, Docket No. 27108 may be examined at *http://dms.dot.gov* at any time or go to the Docket Management Facility in Room W12-140 of the West Building, Ground Floor at 1200 New Jersey Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: Kim Barnette (AFS-350), Aircraft Maintenance Division, General Aviation and Avionics Branch, Flight Standards Service, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591, telephone
(202)493-4922. SUPPLEMENTARY INFORMATION: Background On January 30, 2007, the FAA published a direct final rule (72 FR 4933) amending the renewal period for inspection authorizations. The rule became effective on March 1, 2007. The direct final rule is the product of discussions between industry representatives (including the Professional Aviation Maintenance Association) and the FAA. The discussions led to a consensus to change the 1-year inspection authorization renewal period to once every two years. Under the direct final rule, the expiration date of an inspection authorization changed from March 31 of each year to March 31 of each odd-numbered year. The intent of the rule is to relieve administrative costs associated with renewing inspection authorizations for both FAA and the IA holders without affecting safety. The rule retains the annual activity requirement for each year of the 2-year IA period. Consistent with the annual aspects of the former rule, an IA holder must perform one of the five activities listed in § 65.93 (a)(1)-(5) during the first year of the 2-year IA period. A new paragraph
(c)states if the IA holder does not complete one of those activities by March 31 of the first year, the holder may not exercise the inspection authorization privileges after that date. However, the holder may resume exercising IA privileges during the second year if the IA holder passes an oral test given by an FAA inspector to determine if the holder's knowledge of applicable regulations and standards is current. If the holder passes the oral test, the FAA will consider the first year requirement completed. Each IA holder must also perform one of the five activities listed in § 65.93 (a)(1)-(5) during the second year of the inspection authorization period to be eligible for renewal. Discussion of Comments The FAA received approximately 60 comments in response to the IA renewal period direct final rule. The comments generally were supportive of the two-year renewal period. Commenters stated they were happy to see the FAA become actively involved in reviewing inspection authorization procedures and agreed that the change would result in time and money savings. Many who commented favorably on the direct final rule also took the opportunity to recommend other and more significant changes to the regulations applicable to IA holders. Several commenters suggested completely restructuring the cycle for renewing IA holders to provide for individual expiration dates for each IA holder based on date of birth or the date of the initial grant of IA authority. A number of commenters said the annual activity requirement should be eliminated and a two-year period for the activity requirement should be established. The Aircraft Electronics Association
(AEA)suggested the FAA establish a rating system for IA holders similar to the rating system for repair stations. Several comments addressed matters of the FAA's oversight of IA holders. These comments will be evaluated by the FAA as it considers possible future actions to amend the rules relating to IAs, but they address matters beyond the limited scope of the direct final rule. The FAA could not adopt those proposals without further rulemaking, and the significance of those actions would require FAA to issue a notice of proposed rulemaking prior to amending the rule. Three commenters misunderstood one provision in the rule. The rule permits an IA who fails to meet the annual activity requirement during the first year the option to take an oral test from an FAA inspector and thereafter exercise IA privileges during the remainder of the second year of the two-year IA period. For purposes of later renewal, the oral test would be counted as meeting the activity for the first year. (The individual also could choose to reapply for IA authority, the only means available under the prior rule when the activity requirement was not met.) The rule does not require, as these commenters thought, that all IA holders must take an oral test during the two-year IA renewal cycle to be able to renew their authority. Several commenters mistakenly thought the rule requires each IA holder to submit a list of activities each year to the FAA that demonstrates the IA holder's compliance with the annual activity requirement. This is not the case. Rather, the rule requires an applicant for renewal every two years to present evidence of compliance with the annual activity requirement for each of the preceding two years. A number of commenters expressed concern that some IA holders inadvertently may continue to exercise IA privileges into the second year of the two-year renewal period even though they failed to meet the annual activity requirement before March 31 of the first year. The FAA is aware of this possibility because similar events occurred under the prior rule. Each year under the old rule, a few IA holders failed to renew during March and then mistakenly continued to perform IA responsibilities. The instances were rare, and the FAA addressed them without significant difficulties as part of its routine oversight of IA holders. There is a multi-decade history of the annual activity requirement for IA holders and nothing in the rule change disturbed that requirement. Indeed, not only was it retained, but the request for comments on this rule served as a way of reminding IA holders of the longstanding annual activity requirement. The FAA does not expect IA holders to perform differently or to lose sight of this core element of the rule simply because of the two-year renewal cycle. As in the past, the FAA will monitor compliance with the regulations and take enforcement action where appropriate. The FAA also will use the refresher course training curriculum as a way of ensuring that IA holders attending training are reminded of the rule requirement, and FAA inspectors will regularly address the matter in the context of their routine checks of IAs. Finally, because 2008 will be the first year under the new two-year renewal cycle, FAA will remind each IA of the annual activity requirements for March 2008 through the FAA Information for Operations procedure. Conclusion After consideration of the comments submitted in response to the final rule, the FAA has determined that no further rulemaking action is necessary. Amendment 65-50 remains in effect as adopted. Issued in Washington, DC on June 20, 2007. James J. Ballough, Director, Flight Standards Service. [FR Doc. E7-12453 Filed 6-26-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 97 [Docket No. 30557; Amdt. No. 3224] Standard Instrument Approach Procedures; Miscellaneous Amendments AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Final rule. SUMMARY: This amendment amends Standard Instrument Approach Procedures (SIAPs) for operations at certain airports. These regulatory actions are needed because of changes occurring in the National Airspace System, such as the commissioning of new navigational facilities, addition of new obstacles, or changes in air traffic requirements. These changes are designed to provide safe and efficient use of the navigable airspace and to promote safe flight operations under instrument flight rules at the affected airports. DATES: This rule is effective June 27, 2007. The compliance date for each SIAP is specified in the amendatory provisions. The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of June 27, 2007. ADDRESSES: Availability of matter incorporated by reference in the amendment is as follows: *For Examination* — 1. FAA Rules Docket, FAA Headquarters Building, 800 Independence Ave., SW., Washington, DC 20591; 2. The FAA Regional Office of the region in which affected airport is located; or 3. The National Flight Procedures Office, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 or, 4. The National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: *http://www.archives.gov/federal_register/code_of_federal_regu­la­tions/ibr_locations.html* . *For Purchase* —Individual SIAP copies may be obtained from: 1. FAA Public Inquiry Center (APA-200), FAA Headquarters Building, 800 Independence Avenue, SW., Washington, DC 20591; or 2. The FAA Regional Office of the region in which the affected airport is located. *By Subscription* —Copies of all SIAPs, mailed once every 2 weeks, are for sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. FOR FURTHER INFORMATION CONTACT: Donald P. Pate, Flight Procedure Standards Branch (AFS-420), Flight Technologies and Programs Division, Flight Standards Service, Federal Aviation Administration, Mike Monroney Aeronautical Center, 6500 South MacArthur Blvd. Oklahoma City, OK 73169 (Mail Address: P.O. Box 25082 Oklahoma City, OK 73125) telephone:
(405)954-4164. SUPPLEMENTARY INFORMATION: This amendment to Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) amends Standard Instrument Approach Procedures (SIAPs). The complete regulatory description of each SIAP is contained in the appropriate FAA Form 8260, as modified by the National Flight Data Center (FDC)/Permanent Notice to Airmen (P-NOTAM), which is incorporated by reference in the amendment under 5 U.S.C. 552(a), 1 CFR part 51, and § 97.20 of the Code of Federal Regulations. Materials incorporated by reference are available for examination or purchase as stated above. The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the **Federal Register** expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained in FAA form documents is unnecessary. The provisions of this amendment state the affected CFR sections, with the types and effective dates of the SIAPs. This amendment also identifies the airport, its location, the procedure identification and the amendment number. The Rule This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP as amended in the transmittal. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained for each SIAP as modified by FDC/P-NOTAMs. The SIAPs, as modified by FDC P-NOTAM, and contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these chart changes to SIAPs, the TERPS criteria were applied to only these specific conditions existing at the affected airports. All SIAP amendments in this rule have been previously issued by the FAA in a FDC NOTAM as an emergency action of immediate flight safety relating directly to published aeronautical charts. The circumstances which created the need for all these SIAP amendments requires making them effective in less than 30 days. Further, the SIAPs contained in this amendment are based on the criteria contained in TERPS. Because of the close and immediate relationship between these SIAPs and safety in air commerce, I find that notice and public procedure before adopting these SIAPs are impracticable and contrary to the public interest and, where applicable, that good cause exists for making these SIAPs effective in less than 30 days. Conclusion 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. 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. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. List of Subjects in 14 CFR Part 97 Air Traffic Control, Airports, Incorporation by reference, and Navigation (Air). Issued in Washington, DC on June 15, 2007. James J. Ballough, Director, Flight Standards Service. Adoption of the Amendment Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal regulations, Part 97, 14 CFR part 97, is amended by amending Standard Instrument Approach Procedures, effective at 0901 UTC on the dates specified, as follows: PART 97—STANDARD INSTRUMENT APPROACH PROCEDURES 1. The authority citation for part 97 continues to read as follows: Authority: 49 U.S.C. 106(g), 40103, 40106, 40113, 40114, 40120, 44502, 44514, 44701, 44719, 44721-44722. 2. Part 97 is amended to read as follows: By amending: § 97.23 VOR, VOR/DME, VOR or TACAN, and VOR/DME or TACAN; § 97.25 LOC, LOC/DME, LDA, LDA/DME, LDA w/GS, SDF, SDF/DME; § 97.27 NDB, NDB/DME; § 97.29 ILS, MLS, TLS, GLS, WAAS PA, MLS/RNAV; § 97.31 RADAR SIAPs; § 97.33 RNAV SIAPs; § 97.35 COPTER SIAPs, § 97.37 Takeoff Minima and Obstacle Departure Procedures. Identified as follows: * * *Effective Upon Publication EFFECTIVE UPON PUBLICATION FDC date State City Airport FDC No. Subject 6/13/07 NJ NEWARK NEWARK LIBERTY INTL 7/4255 RNAV
(RNP)Y RWY 22L, ORIG-B. [FR Doc. E7-12118 Filed 6-26-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF HOMELAND SECURITY Bureau of Customs and Border Protection DEPARTMENT OF THE TREASURY 19 CFR Parts 10, 163, and 178 [USCBP-2007-0001] [CBP Dec. 07-50] RIN 1505-AB75 United States-Jordan Free Trade Agreement AGENCIES: Customs and Border Protection, Department of Homeland Security; Department of the Treasury. ACTION: Interim regulations; solicitation of comments. SUMMARY: This document amends title 19 of the Code of Federal Regulations (“CFR”) on an interim basis to implement the preferential tariff treatment and other customs-related provisions of the U.S.-Jordan Free Trade Agreement entered into by the United States and the Hashemite Kingdom of Jordan. DATES: Interim rule effective June 27, 2007; comments must be received by August 27, 2007. ADDRESSES: You may submit comments, identified by *docket number,* by *one* of the following methods: • *Federal eRulemaking Portal: http://www.regulations.gov.* Follow the instructions for submitting comments via docket number USCBP-2007-0001. • *Mail:* Trade and Commercial Regulations Branch, Regulations and Rulings, Office of International Trade, U.S. Customs and Border Protection, 1300 Pennsylvania Avenue, NW. (Mint Annex), Washington, DC 20229. *Instructions:* All submissions received must include the agency name and docket number for this rulemaking. All comments received will be posted without change to *http://www.regulations.gov,* including any personal information provided. For detailed instructions on submitting comments and additional information on the rulemaking process, see the “Public Participation” heading of the SUPPLEMENTARY INFORMATION section of this document. *Docket:* For access to the docket to read background documents or comments received, go to *http://www.regulations.gov.* Submitted comments may also be inspected during regular business days between the hours of 9 a.m. and 4:30 p.m. at the Trade and Commercial Regulations Branch, Regulations and Rulings, U.S. Customs and Border Protection, 799 9th Street, NW., 5th Floor, Washington, DC. Arrangements to inspect submitted comments should be made in advance by calling Mr. Joseph Clark at
(202)572-8768. FOR FURTHER INFORMATION CONTACT: *Operational Aspects:* Seth Mazze, Office of International Trade (202-344-2634). *Legal Aspects:* Holly Files, Office of International Trade (202-572-8817). SUPPLEMENTARY INFORMATION: Public Participation Interested persons are invited to participate in this rulemaking by submitting written data, views, or arguments on all aspects of the interim rule. CBP also invites comments that relate to the economic, environmental, or federalism effects that might result from this interim rule. Comments that will provide the most assistance to CBP will reference a specific portion of the interim rule, explain the reason for any recommended change, and include data, information, or authority that support such recommended change. See ADDRESSES above for information on how to submit comments. Background On October 24, 2000, the United States and the Hashemite Kingdom of Jordan (the “Parties”) signed the U.S.-Jordan Free Trade Agreement (“US-JFTA”), which is designed to eliminate tariffs and other trade barriers between the two countries. The provisions of the US-JFTA were adopted by the United States with the enactment on September 28, 2001 of the United States-Jordan Free Trade Area Implementation Act (the “Act”), Public Law 107-43, 115 Stat. 243 (19 U.S.C. 2112 note). On December 7, 2001, the President signed Proclamation 7512 to implement the provisions of the US-JFTA. The Proclamation, which was published in the **Federal Register** on December 13, 2001 (66 FR 64497), modified the Harmonized Tariff Schedule of the United States (“HTSUS”) as set forth in Annexes I and II of the Proclamation. The modifications to the HTSUS included the addition of new General Note 18, incorporating the relevant US-JFTA rules of origin as set forth in the Act, and the insertion throughout the HTSUS of the preferential duty rates applicable to individual products under the US-JFTA where the special program indicator “JO” appears in parenthesis in the “Special” rate of duty subcolumn. U.S. Customs and Border Protection (“CBP”) is responsible for administering the provisions of the US-JFTA and the Act that relate to the importation of goods into the United States from Jordan. Therefore, the regulations set forth in this document pertain specifically to US-JFTA customs-related provisions, such as rules of origin, that govern the duty-free or reduced-duty treatment of products imported into the United States from Jordan. These rules do not confer origin or establish a criterion for determining the origin of imported goods for any other purpose. For example, origin determinations for country of origin marking purposes under 19 U.S.C. 1304 are not affected. Article 2 and Annex 2.2 of the US-JFTA set forth the rules of origin and documentary requirements that apply for purposes of obtaining preferential treatment under the US-JFTA. Annex 2.1 of the US-JFTA sets forth the terms for the immediate elimination or staged reduction of duties on products of Jordan, with all products to become duty free within a ten-year period (by the year 2010). Under Annex 2.2 of the US-JFTA and § 102 of the Act, to be eligible for reduced or duty-free treatment under the US-JFTA, a good imported into the United States from Jordan must meet three basic requirements:
(1)It must be imported directly from Jordan into the customs territory of the United States;
(2)it must be a product of Jordan, *i.e.* , it must be either wholly the growth, product, or manufacture of Jordan or a new or different article of commerce that has been grown, produced, or manufactured in Jordan; and
(3)if it is a new or different article of commerce, it must have a minimum domestic content, *i.e.* , at least 35 percent of its appraised value must be attributed to the cost or value of materials produced in Jordan plus the direct costs of processing operations performed in Jordan. Annex 2.2 of the US-JFTA further provides that:
(1)The cost or value of U.S.-produced materials may be counted toward the Jordanian domestic content requirement to a maximum of 15 percent of the appraised value of the imported good; and
(2)simple combining or packaging operations or mere dilution with water or another substance will confer neither Jordanian origin on an imported good nor Jordanian or U.S. origin on a constituent material of an imported good. In addition, for purposes of demonstrating compliance with the origin criteria, Annex 2.2 of the US- JFTA establishes the requirements for submitting a declaration, when requested by CBP, that provides all pertinent information concerning the production or manufacture of an imported good. In this document, CBP is setting forth in a new Subpart K in Part 10 of title 19 of the Code of Federal Regulations (CBP regulations) on an interim basis, regulations to implement the preferential tariff treatment and other customs-related provisions of the US-JFTA. The interim regulations are discussed in detail below. Discussion of Amendments Part 10, Subpart K General Provisions Section 10.701 outlines the scope of new Subpart K, Part 10, of the CBP regulations. This section also clarifies that, except where the context otherwise requires, the requirements contained in Subpart K, Part 10, are in addition to general administrative and enforcement provisions set forth elsewhere in the CBP regulations. Thus, for example, the specific merchandise entry requirements contained in Subpart K, Part 10, are in addition to the basic entry requirements contained in Parts 141-143 of the CBP regulations. Section 10.702 sets forth definitions of terms or expressions used in multiple contexts or places within Subpart K, Part 10. The definition of “wholly the growth, product, or manufacture of Jordan” in paragraph
(r)reflects the definition set forth in Annex 2.2 of the US-JFTA except that reference is made to “Jordan” rather than to a “Party” in order to reflect a U.S. import context. Additional definitions that apply in a more limited Subpart K, Part 10, context are set forth elsewhere with the substantive provisions to which they relate. Import Requirements Section 10.703 sets forth the procedure for claiming US-JFTA preferential tariff treatment at the time of importation. Unlike certain other free trade agreements to which the United States is a Party, such as the North American Free Trade Agreement (NAFTA) and the United States-Chile Free Trade Agreement (US-CFTA), the US-JFTA does not specify a procedure for making a post-importation claim. Therefore, Subpart K, Part 10, contains no regulatory provisions governing such claims. However, a protest against an alleged error in the liquidation of an entry may be brought under the normal procedures to contest a denial of US-JFTA benefits ( *see* Part 174, CBP regulations (19 CFR Part 174)). Section 10.704, as provided in Annex 2.2, paragraph 10(b), of the US-JFTA, requires a U.S. importer, upon request, to submit a declaration setting forth all pertinent information concerning the production or manufacture of the good. Section 10.705 sets forth certain importer obligations regarding the truthfulness of information and documents submitted in support of a claim for preferential tariff treatment. Section 10.706 provides that the importer's declaration is not required for certain non-commercial or low-value importations. Section 10.707 implements the portion of Annex 2.2, paragraph 10(b) of the US-JFTA concerning the maintenance of records necessary for the preparation of the declaration. Section 10.708 provides for the denial of US-JFTA tariff benefits if the importer fails to comply with any of the requirements under Subpart K, Part 10, CBP regulations. Rules of Origin Section 10.709 sets forth the basic country of origin rules for obtaining preferential tariff treatment under the US-JFTA, as set forth in Annex 2.2 of the US-JFTA, § 102 of the Act, and General Note 18, HTSUS. Paragraph (a)(1) requires an eligible US-JFTA good to be either “wholly the growth, product, or manufacture of Jordan” or “new or different article of commerce which has been grown, produced, or manufactured in Jordan,” reflecting standards set forth in Annex 2.2, paragraph 1(a), of the US-JFTA and § 102(a)(1)(A)(ii) of the Act. Paragraph (a)(2) of § 10.709 references the value-content requirement set forth in Annex 2.2, paragraph 1(c), of the US-JFTA and § 102(a)(1)(B) of the Act. Paragraph (b)(1) of § 10.709 implements Annex 2.2, paragraph 2, of the US-JFTA and § 102(a)(2) of the Act, relating to the simple combining or packaging or mere dilution exceptions to the “new or different article of commerce” requirement. Since the language in the US-JFTA and the Act in this regard is identical to that used in the Caribbean Basin Economic Recovery Act (“CBERA”) ( *see* 19 U.S.C. 2703(a)(2)), paragraph (b)(1) incorporates by reference the examples and principles set forth in § 10.195(a)(2) of CBP's implementing CBERA regulations (19 CFR 10.195(a)(2)). Paragraph (b)(2) reflects the exception to the “new or different article of commerce” requirement set forth in the footnote to Annex 2.2, paragraph 4, of the US-JFTA and in § 102(d) of the Act, relating to the processing of certain fruits into juices. Paragraph
(c)of § 10.709 provides that the rules of origin for textile and apparel products found in § 102.21 of the CBP regulations (19 CFR 102.21) will be used to determine whether textile and apparel goods from Jordan satisfy the “wholly the growth, product, or manufacture” or “new or different article of commerce” requirements of § 10.709(a), consistent with Annex 2.2, paragraph 9, of the US-JFTA and § 102(c) of the Act. Section 10.710 sets forth provisions relating to the 35 percent value-content requirement of the US-JFTA. Paragraph
(a)specifies the basic requirement contained in Annex 2.2, paragraph 1(c), of the US-JFTA and § 102(a)(1)(B)(i) of the Act. Paragraph
(b)allows the inclusion of U.S.-produced materials up to 15 percent of the appraised value, as provided for in Annex 2.2, paragraph 5, of the US-JFTA and § 102(a)(1)(B)(ii) of the Act. Paragraph
(c)concerns the cost or value of materials that may be applied toward satisfaction of the 35 percent value-content requirement and is based on provisions contained in the US-JFTA, the Act, and § 10.196 of CBP's CBERA regulations (19 CFR 10.196). Paragraph (c)(1) defines “materials produced in Jordan” in a manner similar to the approach taken in section 10.196(a) of CBP's CBERA regulations. Paragraph (c)(1)(ii) was specifically drafted to reflect:
(1)The application of the simple combining or packaging or mere dilution language to materials, as provided in Annex 2.2, paragraph 2, of the US-JFTA; and
(2)the country of origin language which also applies to materials under Annex 2.2, paragraph 4, of the US-JFTA. The last sentence of paragraph (c)(1)(ii) refers to the useful examples contained in § 10.196(a) of CBP's CBERA regulations, and the words “except where the context otherwise requires” are intended to alert the reader to the fact that some aspects of those examples apply only in a CBERA context. Paragraph (c)(2) sets forth the elements includable under the cost or value of materials, as provided in Annex 2.2, paragraph 6, of the US-JFTA. Paragraph
(d)sets forth provisions regarding direct costs of processing operations for purposes of the 35 percent value-content requirement, as contained in Annex 2.2, paragraph 7, of the US-JFTA and § 102(b) of the Act. Section 10.711 reflects the definition of “imported directly,” as set forth in Annex 2.2, paragraph 8, of the US-JFTA. Section 10.712 provides that claims for preferential tariff treatment under the US-JFTA will be subject to such verification as the CBP port director deems necessary. Inapplicability of Notice and Delayed Effective Date Requirements Under the Administrative Procedure Act (“APA”) (5 U.S.C. 553), agencies generally are required to publish a notice of proposed rulemaking in the **Federal Register** that solicits public comment on the proposed regulatory amendments, consider public comments in deciding on the content of the final amendments, and publish the final amendments at least 30 days prior to their effective date. However, section 553(a)(1) of the APA provides that the standard prior notice and comment procedures and delayed effective date provisions of 5 U.S.C. 553(d) do not apply to an agency rulemaking to the extent that it involves a foreign affairs function of the United States. CBP has determined that these interim regulations involve a foreign affairs function of the United States because they implement preferential tariff treatment and related provisions of the US-JFTA. Therefore, the rulemaking requirements under the APA do not apply and this interim rule will be effective upon publication. However, CBP is soliciting comments in this interim rule and will consider all comments it receives before issuing a final rule. Executive Order 12866 and Regulatory Flexibility Act CBP has determined that this document is not a regulation or rule subject to the provisions of Executive Order 12866 of September 30, 1993 (58 FR 51735, October 1993), because it pertains to a foreign affairs function of the United States and implements an international agreement, as described above, and therefore is specifically exempted by section 3(d)(2) of Executive Order 12866. Because a notice of proposed rulemaking is not required under section 553(b) of the APA for the reasons described above, CBP notes that the provisions of the Regulatory Flexibility Act, as amended (5 U.S.C. 601 *et seq.* ), do not apply to this rulemaking. Accordingly, CBP also notes that this interim rule is not subject to the regulatory analysis requirements or other requirements of 5 U.S.C. 603 and 604. Paperwork Reduction Act These regulations are being issued without prior notice and public procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553). For this reason, the collections of information contained in these regulations have been reviewed and, pending receipt and evaluation of public comments, approved by the Office of Management and Budget in accordance with the requirements of the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1651-0128. The collections of information in these regulations are in §§ 10.703 and 10.704. This information is required in connection with claims for preferential tariff treatment and for the purpose of the exercise of other rights under the US-JFTA and the Act and will be used by CBP to determine eligibility for a tariff preference or other rights or benefits under the US-JFTA and the Act. The likely respondents are business organizations including importers, exporters and manufacturers. *Estimated total annual reporting burden:* 500. *Estimated average annual burden per respondent:* 12 minutes. *Estimated number of respondents:* 2,500. *Estimated annual frequency of responses:* 1. Comments concerning the collections of information and the accuracy of the estimated annual burden, and suggestions for reducing that burden, should be directed to the Office of Management and Budget, Attention: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503. A copy should also be sent to the Trade and Commercial Regulations Branch, Regulations and Rulings, U.S. Customs and Border Protection, 1300 Pennsylvania Avenue, NW. (Mint Annex), Washington, DC 20229. Signing Authority This document is being issued in accordance with section 0.1(a)(1) of the CBP Regulations (19 CFR 0.1(a)(1)) pertaining to the authority of the Secretary of the Treasury (or his/her delegate) to approve regulations related to certain customs revenue functions. List of Subjects 19 CFR Part 10 Customs duties and inspection, Exports, Imports, Preference programs, Reporting and recordkeeping requirements, Trade agreements (United States-Jordan Free Trade Agreement). 19 CFR Part 163 Administrative practice and procedure, Customs duties and inspection, Exports, Imports, Reporting and recordkeeping requirements, Trade agreements. 19 CFR Part 178 Administrative practice and procedure, Exports, Imports, Reporting and recordkeeping requirements. Amendments to the CBP Regulations Accordingly, chapter I of title 19, Code of Federal Regulations (19 CFR chapter I), is amended as set forth below. PART 10—ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE, ETC. 1. The general authority citation for part 10 continues to read and the specific authority for new Subpart K is added to read as follows: Authority: 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized Tariff Schedule of the United States), 1321, 1481, 1484, 1498, 1508, 1623, 1624, 3314; Sections 10.701 through 10.712 also issued under 19 U.S.C. 1202 (General Note 18, HTSUS) and Pub. L. 107-43, 115 Stat. 243 (19 U.S.C. 2112 note). 2. Part 10, CBP regulations, is amended by adding Subpart K to read as follows: Subpart K—United States-Jordan Free Trade Agreement General Provisions Sec. 10.701 Scope. 10.702 Definitions. Import Requirements 10.703 Filing of claim for preferential tariff treatment. 10.704 Declaration. 10.705 Importer obligations. 10.706 Declaration not required. 10.707 Maintenance of records. 10.708 Effect of noncompliance; failure to provide documentation regarding third-country transportation. Rules of Origin 10.709 Country of origin criteria. 10.710 Value-content requirement. 10.711 Imported directly. Origin Verifications 10.712 Verification of claim for preferential tariff treatment. Subpart K—United States-Jordan Free Trade Agreement General Provisions § 10.701 Scope. This subpart implements the duty preference and related customs provisions applicable to imported goods under the United States-Jordan Free Trade Agreement (the US-JFTA) signed on October 24, 2000, and under the United States-Jordan Free Trade Area Implementation Act (the Act; 115 Stat. 243). Except as otherwise specified in this subpart, the procedures and other requirements set forth in this subpart are in addition to the customs procedures and requirements of general application contained elsewhere in this chapter. Additional provisions implementing certain aspects of the US-JFTA are contained in Part 163 of this chapter. § 10.702 Definitions. The following definitions apply for purposes of §§ 10.701 through 10.712:
(a)*Claim for preferential tariff treatment.* “Claim for preferential tariff treatment” means a claim that a good is entitled to the duty rate applicable under the US-JFTA;
(b)*Customs authority.* “Customs authority” means the competent authority that is responsible under the law of a country for the administration of customs laws and regulations;
(c)*Customs territory of the United States.* “Customs territory of the United States” means the 50 states, the District of Columbia, and Puerto Rico;
(d)*Days.* “Days” means calendar days unless otherwise specified;
(e)*Entered.* “Entered” means entered, or withdrawn from warehouse for consumption, in the customs territory of the United States;
(f)*Good.* “Good” means any merchandise, product, article, or material;
(g)*Harmonized System.* “Harmonized System” means the *Harmonized Commodity Description and Coding System,* including its General Rules of Interpretation, Section Notes, and Chapter Notes, as adopted and implemented by the Parties in their respective tariff laws;
(h)*Heading.* “Heading” means the first four digits in the tariff classification number under the Harmonized System;
(i)*HTSUS.* “HTSUS” means the *Harmonized Tariff Schedule of the United States* as promulgated by the U.S. International Trade Commission;
(j)*Material.* “Material” means a good that is used in the production of another good;
(k)*New or different article of commerce.* “New or different article of commerce” means a good that has been substantially transformed into a new and different article of commerce having a new name, character, or use distinct from the good or material from which it was so transformed;
(l)*Party.* “Party” means the United States or the Hashemite Kingdom of Jordan;
(m)*Preferential tariff treatment.* “Preferential tariff treatment” means the duty rate applicable under the US-JFTA;
(n)*Subheading.* “Subheading” means the first six digits in the tariff classification number under the Harmonized System;
(o)*Territory.* “Territory” means:
(1)With respect to Jordan, the land, maritime and air space under its sovereignty, and the exclusive economic zone within which it exercises sovereign rights and jurisdiction in accordance with international law and its domestic law; and
(2)With respect to the United States,
(i)The customs territory of the United States, which includes the 50 states, the District of Columbia, and Puerto Rico,
(ii)The foreign trade zones located in the United States and Puerto Rico, and
(iii)Any areas beyond the territorial seas of the United States within which, in accordance with international law and its domestic law, the United States may exercise rights with respect to the seabed and subsoil and their natural resources;
(p)*Textile or apparel good.* “Textile or apparel good” means a good listed in the Annex to the Agreement on Textiles and Clothing (commonly referred to as “the ATC”), which is part of the WTO Agreement;
(q)*WTO Agreement.* “WTO Agreement” means the *Marrakesh Agreement Establishing the World Trade Organization* of April 15, 1994;
(r)*Wholly the growth, product, or manufacture of Jordan.* “Wholly the growth, product, or manufacture of Jordan” refers both to any good which has been entirely grown, produced, or manufactured in Jordan and to all materials incorporated in a good which have been entirely grown, produced, or manufactured in Jordan, as distinguished from goods or materials imported into Jordan from another country, whether or not such goods or materials were substantially transformed into new or different articles of commerce after their importation into Jordan. Import Requirements § 10.703 Filing of claim for preferential tariff treatment. An importer may make a claim for US-JFTA preferential tariff treatment by including on the entry summary, or equivalent documentation, the symbol “JO” as a prefix to the subheading of the HTSUS under which each qualifying good is classified, or by the method specified for equivalent reporting via an authorized electronic data interchange system. § 10.704 Declaration.
(a)*Contents.* An importer who claims preferential tariff treatment for a good under the US-JFTA must submit, at the request of the port director, a declaration setting forth all pertinent information concerning the production or manufacture of the good. A declaration submitted to CBP under this paragraph:
(1)Need not be in a prescribed format but must be in writing or must be transmitted electronically pursuant to any electronic means authorized by CBP for that purpose;
(2)Must include the following information:
(i)The legal name, address, telephone, and e-mail address (if any) of the importer of record of the good;
(ii)The legal name, address, telephone, and e-mail address (if any) of the responsible official or authorized agent of the importer signing the declaration (if different from the information required by paragraph (a)(2)(i) of this section);
(iii)The legal name, address, telephone and e-mail address (if any) of the exporter of the good (if different from the producer);
(iv)The legal name, address, telephone and e-mail address (if any) of the producer of the good (if known);
(v)A description of the good, quantity, numbers, and marks of packages, invoice numbers, and bills of lading;
(vi)A description of the operations performed in the production of the good in Jordan and identification of the direct costs of processing operations;
(vii)A description of any materials used in the production of the good that are wholly the growth, product, or manufacture of Jordan or the United States, and a statement as to the cost or value of such materials;
(viii)A description of the operations performed on, and a statement as to the origin and cost or value of, any foreign materials used in the good that are claimed to have been sufficiently processed in Jordan so as to be materials produced in Jordan; and
(ix)A description of the origin and cost or value of any foreign materials used in the good that have not been substantially transformed in Jordan.
(3)Must include a statement, in substantially the following form: “I certify that: The information on this document is true and accurate and I assume the responsibility for proving such representations. I understand that I am liable for any false statements or material omissions made on or in connection with this document; I agree to maintain, and present upon request, documentation necessary to support these representations; The goods comply with all the requirements for preferential tariff treatment specified for those goods in the United States-Jordan Free Trade Agreement; and This document consists of __ pages, including all attachments.”
(b)*Responsible official or agent.* The declaration must be signed and dated by a responsible official of the importer or by the importer's authorized agent having knowledge of the relevant facts.
(c)*Language.* The declaration must be completed in the English language.
(d)*Applicability of declaration.* The declaration may be applicable to:
(1)A single importation of a good into the United States, including a single shipment that results in the filing of one or more entries and a series of shipments that results in the filing of one entry; or
(2)Multiple importations of identical goods into the United States that occur within a specified blanket period, not exceeding 12 months, set out in the declaration. For purposes of this paragraph, “identical goods” means goods that are the same in all respects relevant to the production that qualifies the goods for preferential tariff treatment. § 10.705 Importer obligations.
(a)*General.* An importer who makes a claim for preferential tariff treatment under § 10.703 of this subpart:
(1)Will be deemed to have certified that the good is eligible for preferential tariff treatment under the US-JFTA:
(2)Is responsible for the truthfulness of the information and data contained in the declaration provided for in § 10.704 of this subpart;
(3)Is responsible for submitting any supporting documents requested by CBP and for the truthfulness of the information contained in those documents. CBP will allow for the direct submission by the exporter or producer of business confidential or other sensitive information, including cost and sourcing information.
(b)*Information provided by exporter or producer.* The fact that the importer has made a claim for preferential tariff treatment or prepared a declaration based on information provided by an exporter or producer will not relieve the importer of the responsibility referred to in paragraph
(a)of this section. § 10.706 Declaration not required.
(a)*General.* Except as otherwise provided in paragraph
(b)of this section, an importer will not be required to submit a declaration under § 10.704 of this subpart for:
(1)A non-commercial importation of a good; or
(2)A commercial importation for which the value of the goods does not exceed U.S. $2,500.
(b)*Exception.* If the port director determines that an importation described in paragraph
(a)of this section may reasonably be considered to have been carried out or planned for the purpose of evading compliance with the rules and procedures governing claims for preference under the US-JFTA, the port director will notify the importer that for that importation the importer must submit to CBP a declaration. The importer must submit such a declaration within 30 days from the date of the notice. Failure to timely submit the declaration will result in denial of the claim for preferential tariff treatment. § 10.707 Maintenance of records.
(a)*General.* An importer claiming preferential tariff treatment for a good under § 10.703 of this subpart must maintain, for five years after the date of the claim for preferential tariff treatment, all records and documents necessary for the preparation of the declaration.
(b)*Applicability of other recordkeeping requirements.* The records and documents referred to in paragraph
(a)of this section are in addition to any other records required to be made, kept, and made available to CBP under Part 163 of this chapter.
(c)*Method of maintenance.* The records and documents referred to in paragraph
(a)of this section must be maintained by importers as provided in § 163.5 of this chapter. § 10.708 Effect of noncompliance; failure to provide documentation regarding third-country transportation.
(a)*Effect of noncompliance.* If the importer fails to comply with any requirement under this subpart, including submission of a complete declaration under § 10.704 of this subpart, when requested, the port director may deny preferential tariff treatment to the imported good.
(b)*Failure to provide documentation regarding third country transportation.* Where the requirements for preferential tariff treatment set forth elsewhere in this subpart are met, the port director nevertheless may deny preferential treatment to a good if the good is shipped through or transshipped in a country other than Jordan or the United States, and the importer of the good does not provide, at the request of the port director, evidence demonstrating to the satisfaction of the port director that the good was “imported directly”, as that term is defined in § 10.711(a) of this subpart. Rules of Origin § 10.709 Country of origin criteria.
(a)*General.* Except as otherwise provided in paragraph
(b)of this section, a good imported directly from Jordan into the customs territory of the United States will be eligible for preferential tariff treatment under the US-JFTA only if:
(1)The good is either:
(i)Wholly the growth, product, or manufacture of Jordan; or
(ii)A new or different article of commerce that has been grown, produced, or manufactured in Jordan; and
(2)With respect to a good described in paragraph (a)(1)(ii) of this section, the good satisfies the value-content requirement specified in § 10.710 of this subpart.
(b)*Exceptions* —(1) *Combining, packaging, and diluting operations.* No good will be considered to meet the requirements of paragraph (a)(1) of this section by virtue of having merely undergone simple combining or packaging operations, or mere dilution with water or mere dilution with another substance that does not materially alter the characteristics of the good. The principles and examples set forth in § 10.195(a)(2) of this part will apply equally for purposes of this paragraph.
(2)*Certain juices.* A good will not be considered to meet the requirements of paragraph (a)(1) of this section if the good:
(i)Is imported into Jordan, and, at the time of importation, would be classified in heading 0805, HTSUS; and
(ii)Is processed in Jordan into a good classified in any of subheadings 2009.11 through 2009.30, HTSUS.
(c)*Textile and apparel goods.* For purposes of determining whether a textile or apparel good meets the requirements of paragraph (a)(1) of this section, the provisions of § 102.21 of this chapter will apply. § 10.710 Value-content requirement.
(a)*General.* A good described in § 10.709(a)(1)(ii) may be eligible for preferential tariff treatment under the US-JFTA only if the sum of the cost or value of the materials produced in Jordan, plus the direct costs of processing operations performed in Jordan, is not less than 35 percent of the appraised value of the good at the time it is entered.
(b)*Materials produced in the United States.* For purposes of determining the percentage referred to paragraph
(a)of this section, an amount not to exceed 15 percent of the appraised value of the good at the time it is entered may be attributed to the cost or value of materials produced in the customs territory of the United States. A material is “produced in the customs territory of the United States” for purposes of this paragraph if it is either:
(1)Wholly the growth, product, or manufacture of the United States; or
(2)Subject to the exceptions specified in § 10.709(b) of this subpart, substantially transformed in the United States into a new and different article of commerce that has a new name, character, or use, which is then used in Jordan in the production or manufacture of a new or different article of commerce that is imported into the United States. Except where the context otherwise requires, the examples set forth in § 10.196(a) of this part will apply for purposes of this paragraph.
(c)*Cost or value of materials* —(1) *Materials produced in Jordan defined.* For purposes of paragraph
(a)of this section, the words “materials produced in Jordan” refer to those materials incorporated into a good that are either:
(i)Wholly the growth, product, or manufacture of Jordan; or
(ii)Subject to the exceptions specified in § 10.709(b) of this subpart, substantially transformed in Jordan into a new and different article of commerce that has a new name, character, or use, which is then used in Jordan in the production or manufacture of a new or different article of commerce that is imported into the United States. Except where the context otherwise requires, the examples set forth in § 10.196(a) of this part will apply for purposes of this paragraph.
(2)*Determination of cost or value of materials.*
(i)Except as provided in paragraph (c)(2)(ii) of this section, the cost or value of materials produced in Jordan or in the United States includes:
(A)The manufacturer's actual cost for the materials;
(B)When not included in the manufacturer's actual cost for the materials, the freight, insurance, packing, and all other costs incurred in transporting the materials to the manufacturer's plant;
(C)The actual cost of waste or spoilage, less the value of recoverable scrap; and
(D)Taxes and/or duties imposed on the materials by a Party, provided they are not remitted upon exportation.
(ii)Where a material is provided to the manufacturer without charge, or at less than fair market value, its cost or value will be determined by computing the sum of:
(A)All expenses incurred in the growth, production, or manufacture of the material, including general expenses;
(B)An amount for profit; and
(C)Freight, insurance, packing, and all other costs incurred in transporting the material to the manufacturer's plant.
(iii)If the pertinent information needed to compute the cost or value of a material is not available, the port director may ascertain or estimate the value thereof using all reasonable ways and means at his or her disposal.
(d)*Direct costs of processing operations* —(1) *Items included.* For purposes of paragraph
(a)of this section, the words “direct costs of processing operations” mean those costs either directly incurred in, or which can be reasonably allocated to, the growth, production, manufacture, or assembly of the specific goods under consideration. Such costs include, but are not limited to the following, to the extent that they are includable in the appraised value of the imported goods:
(i)All actual labor costs involved in the growth, production, manufacture, or assembly of the specific goods, including fringe benefits, on-the-job training, and the cost of engineering, supervisory, quality control, and similar personnel;
(ii)Dies, molds, tooling, and depreciation on machinery and equipment which are allocable to the specific goods;
(iii)Research, development, design, engineering, and blueprint costs insofar as they are allocable to the specific goods; and
(iv)Costs of inspecting and testing the specific goods.
(2)*Items not included.* For purposes of paragraph
(a)of this section, the words “direct costs of processing operations” do not include items that are not directly attributable to the goods under consideration or are not costs of manufacturing the product. These include, but are not limited to:
(i)Profit; and
(ii)General expenses of doing business that either are not allocable to the specific goods or are not related to the growth, production, manufacture, or assembly of the goods, such as administrative salaries, casualty and liability insurance, advertising, and salesmen's salaries, commissions, or expenses. § 10.711 Imported directly.
(a)*General.* To be eligible for preferential tariff treatment under the US-JFTA, a good must be imported directly from Jordan into the customs territory of the United States. For purposes of this requirement, the words “imported directly” mean:
(1)Direct shipment from Jordan to the United States without passing through the territory of any intermediate country;
(2)If shipment is from Jordan to the United States through the territory of an intermediate country, the goods in the shipment do not enter into the commerce of the intermediate country and the invoices, bills of lading, and other shipping documents show the United States as the final destination; or
(3)If shipment is through an intermediate country and the invoices and other documents do not show the United States as the final destination, the goods in the shipment are imported directly only if they:
(i)Remained under the control of the customs authority in the intermediate country;
(ii)Did not enter into the commerce of the intermediate country except for the purpose of a sale other than at retail, provided that the goods are imported as a result of the original commercial transaction between the importer and the producer or the producer's sales agent; and
(iii)Have not been subjected to operations other than loading and unloading, and other activities necessary to preserve the goods in good condition.
(b)*Documentary evidence.* An importer making a claim for preferential tariff treatment under the US-JFTA may be required to demonstrate, to CBP's satisfaction, that the goods were “imported directly” as that term is defined in paragraph
(a)of this section. An importer may demonstrate compliance with this section by submitting documentary evidence. Such evidence may include, but is not limited to, bills of lading, airway bills, packing lists, commercial invoices, receiving and inventory records, and customs entry and exit documents. Origin Verifications § 10.712 Verification of claim for preferential treatment. A claim for preferential tariff treatment made under § 10.703 of this subpart, including any statements or other information submitted to CBP in support of the claim, will be subject to such verification as the port director deems necessary. In the event that the port director for any reason is prevented from verifying the claim, or is provided with insufficient information to verify or substantiate the claim, the port director may deny the claim for preferential tariff treatment. PART 163—RECORDKEEPING 3. The authority citation for part 163 continues to read as follows: Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1484, 1508, 1509, 1510,1624. 4. Section 163.1(a)(2) is amended by redesignating paragraph (a)(2)(viii) as (a)(2)(ix) and adding a new paragraph
(viii)to read as follows: § 163.1 Definitions.
(a)* * *
(2)* * *
(viii)The maintenance of any documentation that the importer may have in support of a claim for preferential tariff treatment under the United States-Jordan Free Trade Agreement (US-JFTA), including a US-JFTA declaration. 5. The Appendix to part 163 is amended by adding a new listing under section IV in numerical order to read as follows: Appendix to Part 163—Interim (a)(1)(A) List. IV. * * * § 10.704 US-JFTA records that the importer may have in support of a US-JFTA claim for preferential tariff treatment, including an importer's declaration. PART 178—APPROVAL OF INFORMATION COLLECTION REQUIREMENTS 6. The authority citation for part 178 continues to read as follows: Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 *et seq.* 7. Section 178.2 is amended by adding new listings for §§ 10.703 and 10.704 to the table in numerical order to read as follows: § 178.2 Listing of OMB control numbers. 19 CFR section Description OMB control No. * * * * * * * §§ 10.703 and 10.704 Claim for preferential tariff treatment under the U.S.-Jordan Free Trade Agreement 1651-0128. * * * * * * * Deborah J. Spero, Acting Commissioner, Customs and Border Protection. Approved: June 21, 2007. Timothy E. Skud, Deputy Assistant Secretary of the Treasury. [FR Doc. 07-3133 Filed 6-26-07; 8:45 am]
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  • 7 CFR 948
  • 7 USC 601-674
  • 5 USC 601-612
  • 7 CFR 1209
  • 7 USC 6101-6112
  • 13 CFR 121
  • 5 CFR 1320
  • 10 CFR 70
  • 68 Stat. 929
  • 83 Stat. 444
  • 88 Stat. 1242
  • 104 Stat. 2835
  • Pub. L. 104-134
  • 112 Stat. 2750
  • Pub. L. 97-425
  • 96 Stat. 2232
  • Pub. L. 95-601
  • 92 Stat. 2951
  • 68 Stat. 939
  • Pub. L. 93-377
  • 88 Stat. 475
  • 68 Stat. 954
  • 68 Stat. 955
  • 12 CFR 563
  • 12 CFR 575
  • 12 CFR 575.7(b)(3)
  • 12 CFR 575.8
  • 12 CFR 563.200
  • 12 CFR 575.11(i)
  • 12 CFR 575.8(a)(3)
  • Pub. L. 104-4
  • 14 CFR 65
  • 14 CFR 97
  • 1 CFR 51
  • Pub. L. 107-43
  • 115 Stat. 243
  • 19 CFR 174
  • 19 CFR 10
  • 19 CFR 163
  • 19 CFR 178
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