Notices. Notice

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

BILLING CODE 4910-15-P DEPARTMENT OF HOMELAND SECURITY Federal Emergency Management Agency [FEMA-3282-EM] Kansas; Amendment No. 1 to Notice of an Emergency Declaration AGENCY: Federal Emergency Management Agency, DHS. ACTION: Notice. SUMMARY: This notice amends the notice of an emergency for the State of Kansas (FEMA-3282-EM), dated December 12, 2007, and related determinations. EFFECTIVE DATE: December 19, 2007. FOR FURTHER INFORMATION CONTACT: Peggy Miller, Disaster Assistance Directorate, Federal Emergency Management Agency, Washington, DC 20472,

(202)646-2705. SUPPLEMENTARY INFORMATION: Notice is hereby given that the incident period for this emergency is closed effective December 19, 2007. (The following Catalog of Federal Domestic Assistance Numbers

(202)646-2705. SUPPLEMENTARY INFORMATION: The Federal Emergency Management Agency

(FEMA)hereby gives notice that pursuant to the authority vested in the Administrator, under Executive Order 12148, as amended, Willie G. Nunn, of FEMA is appointed to act as the Federal Coordinating Officer for this declared disaster. This action terminates my appointment of Thomas P. Davies as Federal Coordinating Officer for this disaster. (The following Catalog of Federal Domestic Assistance Numbers

(CFDA)are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund Program; 97.032, Crisis Counseling; 97.033, Disaster Legal Services Program; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance; 97.048, Individuals and Households Housing; 97.049, Individuals and Households Disaster Housing Operations; 97.050 Individuals and Households Program—Other Needs, 97.036, Public Assistance Grants; 97.039, Hazard Mitigation Grant Program.) R. David Paulison, Administrator, Federal Emergency Management Agency. [FR Doc. E8-1210 Filed 1-23-08; 8:45 am] BILLING CODE 9110-10-P DEPARTMENT OF HOMELAND SECURITY Federal Emergency Management Agency [Docket No. FEMA-2008-0002] National Advisory Council AGENCY: Federal Emergency Management Agency, DHS. ACTION: Notice of Federal Advisory Committee Meeting. SUMMARY: This notice announces the date, time, location and agenda for the next meeting of the National Advisory Council (NAC). At the meeting, new members will be introduced and sworn in. The meeting will be open to the public. DATES: *Meeting Dates:* Tuesday, February 12, 2008, 8:30 a.m. to 5 p.m. and Wednesday, February 13, 2008, 8:30 a.m. to 3:30 p.m. A public comment period will take place on the afternoon of February 13, 2008 between 2:15 p.m. and 2:45 p.m. *Comment Date:* Written comments or requests to make oral presentations must be received by February 5, 2008. ADDRESSES: The meeting will be held at the Washington Marriott Hotel, 1221 22nd Street, NW., Washington, DC 20037 in the Georgetown I/II meeting rooms. Persons wishing to make an oral presentation or who are unable to attend or speak at the meeting may submit written comments. Written comments and requests to make oral presentations at the meeting should be provided to the Designated Federal Officer, Alyson Price, at the address listed below and must be received by February 5, 2008. All submissions received must include the docket number: FEMA-2008-0002 and may be submitted by any one of the following methods: *Federal Rulemaking Portal:* *http://www.regulations.gov* . Follow instructions for submitting comments on the Web site. *E-mail:* *FEMA-RULES@dhs.gov* . Include docket number in the subject line of the message. *Facsimile:*

(866)466-5370. *Mail:* Alyson Price, Designated Federal Officer, Federal Emergency Management Agency, 500 C Street, SW., (E Street, 3rd Floor), Washington, DC 20472. *Hand Delivery/Courier:* National Advisory Council, DFO c/o Rules Docket Clerk, Office of the Chief Counsel, Federal Emergency Management Agency, Room 835, 500 C Street, SW., Washington, DC 20472. *Instructions:* All submissions received must include the docket number: FEMA-2008-0002. Comments received will also be posted without alteration at *http://www.regulations.gov* , including any personal information provided. *Docket:* For access to the docket to read background documents or comments received by the National Advisory Council, go to *http://www.regulations.gov* . FOR FURTHER INFORMATION CONTACT: Alyson Price, Designated Federal Officer, Federal Emergency Management Agency, 500 C Street, SW., (E Street, 3rd Floor), Washington, DC 20472, telephone 202-646-3746, fax 202-646-3061, and e-mail *Alyson.Price@dhs.gov* . SUPPLEMENTARY INFORMATION: Notice of this meeting is given under the Federal Advisory Committee Act (FACA), Public Law 92-463, as amended (5 U.S.C. App. 1 *et seq.* ). The NAC will be holding this meeting on Tuesday and Wednesday, February 12 and 13, 2008 in Georgetown I/II of the Washington Marriott Hotel, 1221 22nd Street, NW., Washington, DC 20037. Tentative Agenda of Council Meeting, February 12-13, 2008 Tuesday, February 12, 2008

(1)Introduction and swearing-in of new members;

(2)Highlights/Updates from FEMA Headquarters;

(3)NAC Operations Overview;

(4)FEMA Administrator's remarks; and

(5)Council Discussion. Wednesday, February 13, 2008

(1)Summary of previous day;

(2)Council Discussion;

(3)Public comment period; and

(4)Closing remarks/Next steps. A final agenda will be posted on the NAC Web site prior to the meeting at *http://www.fema.gov/about/nac/* . A public comment period will take place on February 13, 2008, between 2:15 p.m. and 2:45 p.m. *Public Attendance:* The meeting is open to the public. Persons with disabilities who require special assistance should advise the Designated Federal Officer of their anticipated special needs as early as possible. Members of the public who wish to make comments on the afternoon of Wednesday, February 13, 2008 are requested to register in advance. In order to allow as many people as possible to speak, speakers are requested to limit their remarks to three minutes. For those wishing to submit written comments, please follow the procedure noted above. Dated: January 17, 2008. R. David Paulison, Administrator, Federal Emergency Management Agency. [FR Doc. E8-1220 Filed 1-23-08; 8:45 am] BILLING CODE 9110-21-P DEPARTMENT OF HOMELAND SECURITY Federal Emergency Management Agency [FEMA-1739-DR] Nebraska; Major Disaster and Related Determinations AGENCY: Federal Emergency Management Agency, DHS. ACTION: Notice. SUMMARY: This is a notice of the Presidential declaration of a major disaster for the State of Nebraska (FEMA-1739-DR), dated January 11, 2008, and related determinations. EFFECTIVE DATE: January 11, 2008. FOR FURTHER INFORMATION CONTACT: Peggy Miller, Disaster Assistance Directorate, Federal Emergency Management Agency, Washington, DC 20472,

(202)646-2705. SUPPLEMENTARY INFORMATION: Notice is hereby given that, in a letter dated January 11, 2008, the President declared a major disaster under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121-5206 (the Stafford Act), as follows: I have determined that the damage in certain areas of the State of Nebraska resulting from a severe winter storm during the period of December 10-12, 2007, is of sufficient severity and magnitude to warrant a major disaster declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. §§ 5121-5206 (the Stafford Act). Therefore, I declare that such a major disaster exists in the State of Nebraska. In order to provide Federal assistance, you are hereby authorized to allocate from funds available for these purposes such amounts as you find necessary for Federal disaster assistance and administrative expenses. You are authorized to provide Public Assistance in the designated areas, Hazard Mitigation throughout the State, and any other forms of assistance under the Stafford Act that you deem appropriate. Consistent with the requirement that Federal assistance be supplemental, any Federal funds provided under the Stafford Act for Hazard Mitigation will be limited to 75 percent of the total eligible costs. Federal funds provided under the Stafford Act for Public Assistance also will be limited to 75 percent of the total eligible costs, except for any particular projects that are eligible for a higher Federal cost-sharing percentage under the FEMA Public Assistance Pilot Program instituted pursuant to 6 U.S.C. § 777. If Other Needs Assistance under Section 408 of the Stafford Act is later requested and warranted, Federal funding under that program also will be limited to 75 percent of the total eligible costs. Further, you are authorized to make changes to this declaration to the extent allowable under the Stafford Act. The Federal Emergency Management Agency

(FEMA)hereby gives notice that pursuant to the authority vested in the Administrator, under Executive Order 12148, as amended, Justo Hernandez, of FEMA is appointed to act as the Federal Coordinating Officer for this declared disaster. The following areas of the State of Nebraska have been designated as adversely affected by this declared major disaster: Gage, Jefferson, Johnson, Nemaha, Otoe, Pawnee, Richardson, and Thayer Counties for Public Assistance. All counties within the State of Nebraska are eligible to apply for assistance under the Hazard Mitigation Grant Program. (The following Catalog of Federal Domestic Assistance Numbers

(202)646-2705. SUPPLEMENTARY INFORMATION: Notice is hereby given that the incident period for this disaster is closed effective January 10, 2008. (The following Catalog of Federal Domestic Assistance Numbers

(202)646-2705. SUPPLEMENTARY INFORMATION: The notice of a major disaster declaration for the State of Oregon is hereby amended to include the following area among those areas determined to have been adversely affected by the catastrophe declared a major disaster by the President in his declaration of December 8, 2007. The Confederated Tribes of the Coos, Lower Umpqua and Siuslaw Indians located within Coos County for Public Assistance. (The following Catalog of Federal Domestic Assistance Numbers

(COAC)AGENCY: U.S. Customs and Border Protection, Department of Homeland Security (DHS). ACTION: Notice of Federal Advisory Committee meeting. SUMMARY: The Departmental Advisory Committee on Commercial Operations of U.S. Customs and Border Protection and Related Homeland Security Functions (popularly known as “COAC”) will meet on February 13, 2008 in Tucson, AZ. The meeting will be open to the public. DATES: COAC will meet Wednesday, February 13th from 1 p.m. to 5 p.m. Please note that the meeting may close early if the committee has completed its business. ADDRESSES: The meeting will be held at the JW Marriott Starr Pass Resort & Spa, 3800 W. Starr Blvd., Tucson, AZ 85745. Written material and comments should reach the contact person listed below by February 7th. Requests to have a copy of your material distributed to each member of the committee prior to the meeting should reach the contact person at the address below by February 7, 2008. Comments must be identified by USCBP-2008-0001 and may be submitted by one of the following methods: • *Federal eRulemaking Portal: http://www.regulations.gov.* Follow the instructions for submitting comments. • *E-mail: traderelations@dhs.gov.* Include the docket number in the subject line of the message. • *Fax:* 202-344-2064. • *Mail:* Ms. Wanda Tate, Office of International Affairs and Trade Relations, U.S. Customs and Border Protection, Department of Homeland Security, Room 8.5C, Washington, DC 20229. *Instructions:* All submissions received must include the words “Department of Homeland Security” and the docket number for this action. Comments received will be posted without alteration at *http://www.regulations.gov,* including any personal information provided. *Docket:* For access to the docket to read background documents or comments received by the COAC, go to *http://www.regulations.gov.* FOR FURTHER INFORMATION CONTACT: Ms. Wanda Tate, Office of International Affairs and Trade Relations, U.S. Customs and Border Protection, Department of Homeland Security, 1300 Pennsylvania Ave., NW., Room 8.5C, Washington, DC 20229; *traderelations@dhs.gov* ; telephone 202-344-1440; facsimile 202-344-2064. SUPPLEMENTARY INFORMATION: Pursuant to the Federal Advisory Committee Act (5 U.S.C., app.), DHS hereby announces the meeting of the Departmental Advisory Committee on Commercial Operations of U.S. Customs and Border Protection and Related Homeland Security Functions (COAC). COAC is tasked with providing advice to the Secretary of Homeland Security, the Secretary of the Treasury, and the Commissioner of U.S. Customs and Border Protection

(CBP)on matters pertaining to the commercial operations of CBP and related functions within DHS or the Department of the Treasury. The fifth meeting of the tenth term of COAC will be held at the date, time and location specified above. A tentative agenda for the meeting is set forth below. Tentative Agenda 1. Secure Freight Initiative/Advance Trade Data (10+2). 2. International Container Security. 3. C-TPAT (Customs-Trade Partnership Against Terrorism). 4. ITDS (International Trade Data System). 5. International Trade Issues/Updates. 6. Import Safety. 7. Intellectual Property Rights. 8 . World Customs Organization Updates. Procedural This meeting is open to the public. Please note that the meeting may close early if all business is finished. Participation in COAC deliberations is limited to committee members, Department of Homeland Security officials, and persons invited to attend the meeting for special presentations. All visitors to the hotel must check-in with CBP officials at registration held in the lobby at the JW Marriott Starr Pass Resort & Spa. Since seating is limited, all persons attending this meeting should provide notice, preferably by close of business Thursday, February 8, 2008, to Ms. Wanda Tate, Office of Trade Relations, U.S. Customs and Border Protection, Department of Homeland Security, Washington, DC 20229, telephone 202-344-1440; facsimile 202-344-2064. Information on Services for Individuals With Disabilities For information on facilities or services for individuals with disabilities or to request special assistance at the meeting, contact Ms. Wanda Tate as soon as possible. Dated: January 18, 2008. Michael C. Mullen, Assistant Commissioner, Office of International Affairs and Trade Relations, U.S. Customs and Border Protection. [FR Doc. E8-1214 Filed 1-23-08; 8:45 am] BILLING CODE 9111-14-P DEPARTMENT OF HOMELAND SECURITY Bureau of Customs and Border Protection [USCBP-2007-0083] Proposed Interpretation of the Expression “Sold for Exportation to the United States” for Purposes of Applying the Transaction Value Method of Valuation in a Series of Sales AGENCY: Customs and Border Protection, Department of Homeland Security. ACTION: Proposed interpretation; solicitation of comments. SUMMARY: “Transaction value” is the primary method of appraising imported merchandise and is defined in 19 U.S.C. 1401a as “the price actually paid or payable for merchandise when sold for exportation to the United States,” plus specified additions to that amount. This document provides notice to interested parties that Customs and Border Protection

(CBP)proposes a new interpretation of the phrase “sold for exportation to the United States” for purposes of applying the transaction value method of valuation in a series of sales importation scenario. CBP proposes that in a transaction involving a series of sales, the price actually paid or payable for the imported goods when sold for exportation to the United States is the price paid in the last sale occurring prior to the introduction of the goods into the United States, instead of the first (or earlier) sale. Under this proposal, transaction value will normally be determined on the basis of the price paid by the buyer in the United States. This proposed interpretation reflects the conclusions of the Technical Committee on Customs Valuation as set forth in Commentary 22.1, entitled *“Meaning of the Expression ‘Sold for Export to the Country of Importation’ in a Series of Sales.”* DATES: Comments must be received on or before March 24, 2008. ADDRESSES: You may submit comments, identified by docket number USCBP 2007-0083, by one of the following methods: • *Federal eRulemaking Portal: http://www.regulations.gov.* Follow the instructions for submitting comments via docket number USCBP 2007-0083. • *Mail:* Trade and Commercial Regulations Branch, 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 proposed interpretive rule. 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, Customs and Border Protection, 799 9th Street, NW., 5th Floor, Washington, DC. Arrangements to inspect submitted comments should be made in advance by calling Joseph Clark at

(202)572-8768. FOR FURTHER INFORMATION CONTACT: Lorrie Rodbart, Valuation and Special Programs Branch, Regulations and Rulings, Office of International Trade,

(202)572-8740. SUPPLEMENTARY INFORMATION: Public Participation Interested persons are invited to submit written data, views, or arguments on all aspects of the proposed interpretation. If appropriate to a specific comment, the commenter should reference the specific portion of the proposed interpretation, explain the reason for any recommended change, and include data, information, or authority that support such recommended change. Background I. Transaction Value—The Valuation Agreement and U.S. Value Law The Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade

(GATT)(Valuation Agreement) sets forth the methods for determining the value of imported goods. 1 The General Introductory Commentary to the Valuation Agreement provides that the primary basis for customs value is “transaction value” as defined in Article 1. Article 1 provides that the customs value of imported merchandise “shall be the transaction value, that is the price actually paid or payable for the goods when *sold for export to the country of importation,* adjusted in accordance with the provisions of Article 8. * * * ” [Emphasis added] The Agreement does not define the phrase “sold for export to the country of importation.” 1 This Agreement was one of the codes resulting in 1979 from the Multilateral Trade Negotiations in GATT and provides a detailed set of valuation rules. These rules expanded and gave greater precision to the general valuation principles established in the GATT. The United States enacted the provisions of this Agreement into U.S. law in the Trade Agreements Act of 1979 (TAA), Public Law 96-39, 93 Stat. 144, codified at 19 U.S.C. 1401a. *See also* 19 U.S.C. 2503(a) and (c)(1). As a result of the 1994 Agreement establishing the World Trade Organization (WTO), the Agreement on Implementation of Article VII of the GATT is now commonly referred to as the WTO Valuation Agreement. For ease of reference, this document will refer to this Agreement as the Valuation Agreement. All Members of the WTO are required to implement and apply the provisions of the Valuation Agreement. Under the U.S. value law, set forth at 19 U.S.C. 1401a, transaction value is also the primary method of determining the appraised value. 2 The U.S. value law substantively incorporates the definitions of “transaction value” and “price actually paid or payable” contained in the Valuation Agreement. The statutory additions that form part of transaction value are the ones provided for in Article 8 of the Valuation Agreement. Neither 19 U.S.C. 1401a, nor the implementing regulations set forth in part 152 of title 19 of the Code of Federal Regulations (19 CFR part 152), defines the phrase “sold for exportation to the United States.” 2 Transaction value is the price actually paid or payable for the merchandise when sold for exportation to the United States plus specified amounts. *See* 19 U.S.C. 1401a(b)(1). II. Determining Transaction Value in a Series of Sales Situation When the import transaction involves only one sale, it is generally easy to identify the sale for exportation to the United States for purposes of determining the price actually paid or payable. In that situation, there is only one buyer, usually located in the United States, and one seller, usually located in another country. Difficulties arise when the import transaction involves a series of sales. Since it is common for import transactions to involve multiple parties and multiple sales, the issue of which sale must be used to calculate the price actually paid or payable arises frequently. Although this series of sales issue is critical to the proper determination of transaction value, the statute does not explicitly address this question. CBP's current interpretation is to base transaction value on the price paid by the buyer in the first or earlier sale ( *e.g.* , the sale between the manufacturer and the intermediary) provided the importer can establish by sufficient evidence that this was an arm's length sale and that, at the time of such sale, the merchandise was clearly destined for exportation to the United States. *See* T.D. 96-87, vols. 30/31 Cust. B. & Dec. Nos. 52/1 (January 2, 1997); Customs Informed Compliance Publication, entitled *Bona Fide Sales and Sales for Exportation to the United States,* and; numerous CBP rulings. 3 Application of this “first-sale” principle often results in the transaction value being determined on the basis of the price paid by a foreign buyer to a foreign seller. CBP has reassessed this current interpretation in light of a recent decision issued by the Technical Committee on Customs Valuation. 3 The informed compliance publication, as well as customs rulings issued since 1989, are available to the public for downloading from the CBP Web site at *http://www.customs.gov.* III. Technical Committee on Customs Valuation: Commentary 22.1, Meaning of the Expression “Sold for Export to the Country of Importation” in a Series of Sales Article 18 of the Valuation Agreement established the Technical Committee on Customs Valuation (Technical Committee) “with a view to ensuring, at the technical level, uniformity in interpretation and application of this Agreement”. 4 One of the responsibilities of the Technical Committee is to furnish information and advice on matters concerning the valuation of imported goods for customs purposes, as may be requested by any WTO Member or the Committee on Customs Valuation. The advice may take the form of advisory opinions, commentaries or explanatory notes (referred to collectively as instruments). At its 24th Session held at the WCO in April, 2007, the Technical Committee adopted Commentary 22.1, entitled *“Meaning of the Expression ‘Sold for Exportation to the Country of Importation’ in a Series of Sales.”* 5 The series of sales issue had been on the agenda of the Technical Committee for several sessions. Recognizing that this issue is important to the proper application of the transaction value method under Articles 1 and 8, and that different administrations have adopted different interpretations, the Technical Committee decided to study and clarify this issue. 6 4 Article 18 established the Technical Committee under the auspices of the Customs Cooperation Council, now known as the World Customs Organization (WCO). The WCO publishes the instruments of the Technical Committee in the Customs Valuation Compendium. Article 18 also established the Committee on Customs Valuation. 5 Commentary 22.1 was published in July, 2007, as part of Amending Supplement 6, WCO Customs Valuation Compendium. A copy is included as “Attachment A” to this document. 6 The Technical Committee asked Members to provide information about how each Administration addressed the series of sales issue. In response, the U.S. Administration submitted a copy of T.D. 96-87. In Commentary 22.1, the Technical Committee states, “[a] series of sales consists of two or more successive contracts for sales of goods. A basic issue in a series of sales is which sale should be used to determine the transaction value under Articles 1 and 8 of the Agreement. The purpose of this document is to clarify this issue.” The Commentary includes an example illustrating a series of sales situation. In the example, A is a retail store located in the country of importation, B is a pen distributor located in country Z, and C is a pen manufacturer located in country X. A contracts with B for the purchase/sale of 1,000 pens of styles xx and yy. B contracts with C for the same amounts and styles of pens. C subsequently ships the pens directly to A. One of the questions posed was whether the price actually paid or payable for the imported goods when sold for export to the country of importation is the price A pays B in the last sale or the price B pays C in the first sale. In the section of Commentary 22.1 entitled, *“Guidance derived from the provisions of the Agreement,”* the Technical Committee notes that the Agreement does not define or otherwise directly address the meaning of the expression “sold for export to the country of importation.” Therefore, the Technical Committee analyzes in great detail various provisions of the Agreement for guidance regarding the meaning of this phrase, including, for example, Article 8 relating to the adjustments that must be made to the price actually paid or payable in the determination of transaction value. On the basis of this analysis, and in consideration of the fact that different countries' administrations may find it difficult to verify relevant information including accounting records that relate to the first sale, the Technical Committee reached the following conclusions: The Technical Committee is of the view that the underlying assumption of Article 1 is that normally the buyer would be located in the country of importation and that the price actually paid or payable would be based on the price paid by this buyer. The Technical Committee concludes that in a series of sales situation, the price actually paid or payable for the imported goods when sold for export to the country of importation is the price paid in the *last sale* occurring prior to the introduction of the goods into the country of importation, instead of the first (or earlier) sale. This is consistent with the purpose and overall text of the Agreement. [Emphasis added] In the example, consistent with the conclusion, the sale between A and B represents such a sale. Therefore, the price actually paid or payable for the imported goods when sold for export to Country I is 10,000 c.u. (the price A pays B in the last sale). In view of the fact that CBP's current interpretation of the expression “sold for exportation to the United States” for purposes of applying the transaction value method of valuation in a series of sales situation is contrary to the considered views of the Technical Committee, as reflected in Commentary 22.1, CBP has undertaken a thorough examination of this series of sales issue under the U.S. value law. Based on this examination, CBP has concluded that the current interpretation as set forth in T.D. 96-87 and in CBP ruling letters is not correct. The reasons for this conclusion are discussed below. CBP is proposing a new interpretation to address how transaction value will be determined in a series of sales situation that is consistent with the conclusions of the Technical Committee in Commentary 22.1. CBP further notes its understanding that most WTO Members already apply the interpretation set forth in Commentary 22.1. Therefore, adoption of the proposed interpretation would conform the U.S. interpretation regarding the application of transaction value in a series of sales to the current interpretation of most other WTO Members. Discussion of Proposed Interpretation I. Transaction Value—Statutory Language Transaction value is derived from the price the buyer actually paid the seller for the imported merchandise. In this regard, the current statute directs that “the transaction value of * imported merchandise* is the price actually paid or payable for the merchandise when sold for exportation to the United States.” [Emphasis added] *See* 19 U.S.C. 1401a(b)(1) and 19 CFR 152.103(b). The term “price actually paid or payable” means the total payment made, or to be made, for imported merchandise by the buyer to, or for the benefit of, the seller. *See* 19 U.S.C. 1401a(b)(4)(A) and 19 CFR 152.102(f). In determining transaction value, various costs must be added to the price actually paid or payable, to the extent they are not already included. *See* 19 U.S.C. 1401a(b)(1)(A)-(E). 7 These additions form an integral part of transaction value. If sufficient information is not available with respect to any of the specified amounts, the transaction value of the imported merchandise concerned will be treated, for purposes of this section, as one that cannot be determined. *See* 19 U.S.C. 1401a(b)(1). The statute also specifies certain limitations on the use of transaction value. For example, a related party transaction value is acceptable if it “closely approximates * * * the transaction value of identical merchandise, or of similar merchandise, in sales to unrelated *buyers in the United States* * * *.” [Emphasis added] *See* 19 U.S.C. 1401a(b)(2)(B)(i). 8 7 These additions are listed in footnote 11 of this document. 8 The various methods of establishing that a related party transaction value is acceptable are specified in 19 U.S.C. 1401a(b)(2)(B). II. Transaction Value—Legislative History Prior to the enactment of the TAA, imported merchandise was appraised, in general, on its export value. 9 Verification of facts in the country of export was frequently required to determine export value. The legislative history of the TAA makes it clear that Congress intended to replace the complicated “export value” system requiring investigations into the pricing practices in a foreign country with one in which the requisite information was easily obtainable and the determination of the appraised value was predictable and straightforward. *See* S. Rep. No. 96-249 and H. Rep. No. 96-317 to accompany H.R. 4537, 96th Cong. 1st Sess. (1979). 9 Export value was defined as the “price, *at the time of exportation* to the United States * * * at which such or similar merchandise is *freely sold or,* in the absence of sales, *offered for sale in the principal markets of the country of exportation,* in the usual wholesale quantities and in the ordinary course of trade, for exportation to the United States.” [Emphasis added] 19 U.S.C. 1401a(b)

(1976)and 19 U.S.C. 1402(d) (1976). The “export value” statute required an appraisement based on sales in the country of exportation at the time of the exportation, *i.e.* , the value of “exported merchandise.” The methods of valuation * * * represent a simplification of U.S. law and add significantly more predictability regarding the value which will be used for customs purposes. The use of transaction value as the primary basis for customs valuation will allow use of the price which the buyer and seller agreed to in their transaction as the basis for valuation, rather than having to resort to the more difficult concepts of “freely offered,” “ordinary course of trade,” “principal markets of the country of exportation,” and “usual wholesale quantities” contained in existing U.S. law. S. Rep. No. 96-249, at 119. An attempt has been made to ensure that these new rules are fair and simple, conform to commercial reality, and allow traders to predict, with a reasonable degree of accuracy, the duty that will be assessed to their products. *H. Rep. No. 96-317, at 79.* The Court of Appeals for the Federal Circuit

(CAFC)quoted the Senate Report language with approval in *Generra Sportswear Co.* v. *United States,* 905 F.2d 377, 380 (Fed. Cir. 1990). In *Generra,* the CAFC also indicated that the transaction value statute was enacted in order to provide a “straightforward approach” to valuation that would not require Customs to engage in “formidable fact-finding.” *See also VWP of America* v. *Untied States,* 175 F.3d 1327 (Fed. Cir. 1999). In *Salant* v. *United States,* 86 F. Supp. 2d 1301 (C.I.T. 2000), a case involving the interpretation of the assist provision (assists are one of the additions to the price actually paid or payable), the Court of International Trade

(CIT)indicated that the legislative history of the U.S. value law includes an examination of the GATT Valuation Code (Valuation Agreement) noting that 19 U.S.C. 1401a implemented the Agreement in the U.S. law. It is therefore appropriate to examine the analysis of this issue by the Technical Committee. To that end, it is noted that the Technical Committee stated in Commentary 22.1: Article 1 does not refer to import transactions involving a series of sales and consequently does not provide criteria in that respect. Therefore, guidance must be sought from the purpose and the overall text of the Agreement, including an examination of its provisions. In addition, certain practical considerations are relevant. Accordingly, the Technical Committee undertook a detailed examination of the Agreement. This examination included the General Introductory Commentary, the text, and interpretative notes to Articles 1, 6, 7, 8, and 9. The Technical Committee concluded that “there are various indications in the General Introductory Commentary, Article 1 and other provisions of the Agreement that it was envisaged that Article 1 would normally be based on sales to buyers in the country of importation.” 10 Two of these indications, Article 8 regarding adjustments and Article 7 regarding the fallback method, are discussed below. 10 These are addressed in detail in Commentary 22.1. *See* “Attachment” to this document In paragraphs 14-20, Commentary 22.1, the Technical Committee analyzes the adjustments that must be made to the price actually paid or payable pursuant to Article 8. The Technical Committee observes that the determination of the proper sale upon which transaction value is based under Article 1 ( *i.e.* , the first or last sale) directly affects what adjustments can be made under Article 8. Article 8 requires the addition of specified costs, including certain commissions *incurred by the buyer,* certain goods and services (referred to as assists under U.S. law) *supplied by the buyer,* certain royalties and license fees *paid by the buyer* and certain proceeds that *accrue to the seller.* Because these costs must be *incurred by the buyer, supplied by the buyer, paid by the buyer* or must *accrue to the seller,* the Technical Committee observes that “in many cases it would not be possible to make the Article 8 adjustments if transaction value was determined based on (the price actually paid or payable by the buyer in) the first sale”, a result that was not intended. Based on the provisions of Article 1, Article 8, and the General Introductory Commentary, the Technical Committee states that “the Article 8 adjustments are intended to fully reflect the substance of the entire transaction” and that “it is essential to apply transaction value in a series of sales situation in a manner that takes into account the substance of the entire commercial import transaction and permits the proper application of Article 8.” The Technical Committee concludes that this occurs when transaction value is based on the last sale rather than the first sale: . . . [F]or example, under Article 8.1(a) and (c), selling commissions or royalties and license fees, are only to be included in the Customs value where they are incurred or paid *by the buyer.* Similarly, under Article 8.1(b), *the buyer* must supply the assist. In a series of sales, a buyer who is located in the country of importation would rarely be the buyer in the first sale. (Paragraph 17) Moreover, in a series of sales, the buyer in the first sale is not necessarily the party who pays the royalties or provides the assists. Therefore, the application of the first sale may preclude the addition of certain selling commissions, royalties and assists that otherwise would be included in the transaction value. Similarly, under Article 8.1(d), only proceeds that accrue directly or indirectly *to the seller* may be added to the price actually paid or payable. Proceeds paid by the buyer in the country of importation would not necessarily revert to the seller in the first sale. (Paragraph 18) In sum, a transaction value based on the first sale may not fully reflect the substance of the inputs resulting from, or forming part of the entire commercial chain as envisioned by the General Introductory Commentary, and Articles 1 and 8. In contrast, a transaction value based on the last sale will more fully reflect the substance of the entire transaction as envisioned. (Paragraph 21) As indicated above, Article 8 is implemented in U.S. law in 19 U.S.C. 1401a(b)(1)(A)-(E). These provisions are substantively the same as Article 8 and include these same references to costs incurred by or paid by the buyer or proceeds that accrue *to the seller.* 11 Therefore, the above considerations would also apply to the U.S. law. This means that the series of sales issue has a direct impact on the additions that can be made under 19 U.S.C. 1401a(b)(1)(A)-(E). In fact, CBP has encountered many situations where certain royalties, selling commissions or other required statutory additions could not be included in the transaction value due to the application of the first sale principle. 11 The additions under 19 U.S.C. 1401a(b)(1) include:

(A)The packing costs *incurred by the buyer* with respect to the imported merchandise;

(B)Any selling commission *incurred by the buyer* with respect to the imported merchandise;

(C)The value, apportioned as appropriate, of any assist; (An assist is defined as specified items if *supplied* directly or indirectly, and free of charge or at reduced cost, *by the buyer* of imported merchandise for use in connection with the production or the sale for export to the United States of the merchandise)

(D)Any royalty or license fee related to the imported merchandise that *the buyer* is required to pay, directly or indirectly, as a condition of the sale of the imported merchandise for exportation to the Untied States; and

(E)The proceeds of any subsequent resale, disposal, or use of the imported merchandise that *accrue* , directly or indirectly, *to the seller.* [Emphasis added] After analyzing various provisions of the Valuation Agreement that directly relate to the determination of transaction value under Article 1 ( *i.e.* , the General Introductory Commentary, Article 1, Article 8, and the Note to Article 8), Commentary 22.1 refers to other provisions of the Valuation Agreement for further guidance ( *i.e.* , Articles 6, 7 and 9). For example, in paragraph 23, the Technical Committee refers to the text of Article 7 (commonly referred to as “the fallback method”) and finds indications therein that Article 1 was intended to be determined on the basis of the last sale, instead of the first (or earlier) sale. The fallback method is used when transaction value (Article 1) and the other methods of valuation (Articles 2-6) cannot be applied to determine the value. Paragraph 23 states: As provided in paragraph 2 of the Note to Article 7, the methods of valuation to be employed under Article 7 should be those laid down in Articles 1 through 6 but with a reasonable flexibility. However, Article 7 indicates that this flexibility does not extend to allow the use of certain prices, including “the price of goods on the domestic market of the country of exportation” ( *see* Article 7.2). This gives a clear indication of the intended scope of Article 1, namely that a sale that is prohibited under a flexible application of Article 1 cannot possibly be considered as valid under the normal application of Article 1. In a series of sales situation, the first sale often involves a sale between a producer and a local distributor in the same country. Clearly, these sales cannot be used to determine the Customs value under Article 7. It follows that such sales should also not be used to determine the value under Article 1. The provisions of Article 7, including its prohibitions, are implemented in U.S. law in 19 U.S.C. 1401a(f). 12 CBP is of the view that these same observations can be made on the basis of 19 U.S.C. 1401a(f). CBP has also observed many instances where the first sale is between a manufacturer and distributor each located in the country of exportation ( *e.g., see E.C. McAfee Co.* v. *United States,* 842 F.2d 314 (Fed. Cir. 1988), discussed below). The fact that Congress expressly prohibited the use of these sale prices under the fallback method (which permits a flexible application of the other statutory methods) provides a good indication that Congress assumed that these sale prices would not be used to determine transaction value. This anomaly does not arise when transaction value is determined on the basis of the last sale. 12 19 U.S.C. 1401a(f)(1) states: If the value of imported merchandise cannot be determined, or otherwise used for the purposes of this Act, under subsections

(b)through (e), the merchandise shall be appraised for the purposes of this Act on the basis of a value that is derived from the methods set forth in such subsections, with such methods being reasonably adjusted to the extent necessary to arrive at a value. 19 U.S.C. 1401a(f)(2)(C) states: Imported merchandise may not be appraised, for the purposes of this Act, on the basis of the price of merchandise in the domestic market of the country of exportation. Based on its examination of all the provisions of the Valuation Agreement, and the Agreement's underlying purpose, the Technical Committee stated that it is of the view that the underlying assumption of Article 1 is that normally the buyer would be located in the country of importation and that the price actually paid or payable would be based on the price paid by this buyer. The Technical Committee therefore concluded that in a series of sales situation the price actually paid or payable is the price paid in the last sale occurring prior to the introduction of the goods into the country of importation, rather than the first, or earlier, sale. Although Congress also did not explicitly address the series of sales issue in the U.S. value law, based on an examination of all the provisions of 19 U.S.C. 1401a and the legislative history, CBP is of the view that the underlying assumption of transaction value was that normally the buyer would be located in the United States and that the price actually paid or payable would be based on the price paid by this buyer. In light of the concerns expressed about export value ( *i.e.* , that it was a complex valuation system that required foreign inquiries in order to determine the value), CBP is of the view that had Congress intended that under the transaction value statute the price actually paid or payable ought to be the price paid by a buyer in the first sale (usually a buyer located outside the U.S.) or that the required additions ought to be based on the costs incurred by that buyer in the first sale, it would have so provided. CBP also maintains that if Congress had intended that transaction value would be determined on the basis of a domestic sale in the country of exportation, it would not have included this prohibition under a flexible application of transaction value under the fallback method. CBP is of the view that basing transaction value on the last sale occurring prior to the introduction of the goods into the United States reflects the proper construction of the statute and carries out the legislative intent of the TAA. In addition, it establishes a straightforward rule for determining transaction value in a series of sales situation that does not require CBP to engage in formidable fact-finding or to conduct foreign inquiries. This new approach will enable traders to predict with a reasonable degree of accuracy the customs value based on information readily available in the U.S. In addition, this proposal is consistent with the provisions and purpose of the Valuation Agreement, as clarified by the Technical Committee. III. Court Decisions on Series of Sales Issue A. Early court decisions and the invocation of the export value statute. Two early court cases that considered the series of sales issue under the transaction value statute were *E.C. McAfee Co.* v. *United States,* 842 F.2d 314 (Fed. Cir. 1988) and *Nissho Iwai American Corp.* v. *United States,* 982 F.2d 505 (Fed. Cir. 1992). *E.C. McAfee Co.* v. *United States* involved the importation of made-to-measure suits. The U.S. purchaser ordered the suits from a Hong Kong distributor who then contracted with a tailor in Hong Kong to assemble the clothing. After receiving the completed clothing from the tailor, the Hong Kong distributor delivered the clothing to the freight forwarder for transport to the United States and the purchaser in the U.S. The issue presented was whether transaction value should be determined on the basis of the price the U.S. purchaser paid to the distributor or the lower price the distributor paid to the Hong Kong tailor who assembled the clothing. Although the transaction value statute applied to the importations at issue in *McAfee* , the CAFC concluded that it was necessary to follow the judicial precedents decided under the prior export value statute. The court adopted Customs' reasoning that the export value decisions were applicable to the issue presented because the phrase “for exportation to the United States” in the old export value statute “is not significantly different from the quoted provision of the current statute.” *McAfee* 842 F.2d 314, 318. 13 The *McAfee* Court reasoned: 13 The merchandise at issue in *McAfee* was addressed by CBP (formerly the U.S. Customs Service) in TAA #10/065056, entitled “ *Export Value: Dutiability of Sales from Manufacturers to Distributors* ” Customs Service Decision 81-72, 15 Cust. B. & Dec. 876, Oct. 17, 1980. In this ruling, CBP concluded that case law decided under the export value statute was also applicable to the interpretation of the transaction value statute, noting that both statutes include the language “for exportation to the United States.” CBP is now of the view that this conclusion was erroneous because CBP relied on the only phrase common to both statutes and did not take into account the remainder of the new statutory text that reflects the significant analytical change that Congress intended. (TAA #10 was subsequently revoked by an unpublished ruling, TAA #40/542643, October 19, 1981 due to discrepancies in the facts presented). The cited [export value] cases assume, without explanation, that if the importer establishes that his claimed, lower valuation falls within the statute, the importer is entitled to the benefit of that valuation even though Customs valuation also satisfies the same statutory requirements. While an argument could be made that Customs should have the option to impose the higher duty in such circumstances, the cited precedent is to the contrary. [Parenthetical added] *McAfee* at 318. 14 14 CBP issued a general notice indicating that the holding of *McAfee* is limited by the language of the court to the facts of that particular case. According to the notice, the principles set forth within the court case should only be applied to the importation of made-to-measure clothing and only in situations where the distributor and tailor are located in the same country. *See* 22 Cust. B. & Dec. No. 18, 7-8 (May 4, 1988). The CAFC primarily relied on *United States* v. *Getz Bros. & Co,* 55 C.C.P.A 11

(1967)and other cases decided under the export value statute in finding that the price actually paid or payable must be based on the price the Hong Kong distributor paid to the Hong Kong tailor. It is noteworthy that *McAfee* did not take into account any of the new language in the transaction value statute or the legislative history of 19 U.S.C. 1401a. The CAFC subsequently considered another series of sales situation in *Nissho Iwai American Corp.* v. *United States,* cited above, which involved imported subway cars. The issue presented was whether transaction value should be determined using the price the U.S. customer paid to the intermediary or the price the intermediary's parent company paid to the manufacturer. Relying on the analysis in *McAfee,* and the export value case law cited therein regarding the phrase “for exportation to the United States,” the CAFC determined that transaction value must be based on the “first sale;” that is, the sale between the intermediary and the manufacturer so long as that sale constitutes a viable transaction value. 15 15 In *Nissho Iwai,* the imported merchandise consisted of subway cars custom manufactured for the New York City Metropolitan Transit Authority (MTA). The MTA contracted with Nissho Iwai American Corporation

(NIAC)for subway cars made according to its specifications. NIAC assigned its contract rights to its Japanese corporate parent, Nissho Iwai Corporation (NIC), and NIC contracted with the manufacturer, Kawasaki Heavy Industries (Kawasaki), for the subway cars. Kawasaki was directly involved in the negotiations and sale between MTA and NIAC and was named as the manufacturer in the MTA-NIAC contract. The custom-made subway cars manufactured by Kawasaki were imported by NIAC. The court in *Nissho Iwai* utilized a two-prong test for determining whether the “first-sale” was a viable transaction value: The sale must be an arm's length sale and the goods must be clearly destined for export to the U.S. Based on the facts presented, the CAFC determined that these criteria were met and held that the custom-made subway cars at issue must be appraised based on the price the intermediary paid the manufacturer. In *Synergy Sport International, Ltd.* v. *United States,* 17 C.I.T. 18 (1993), another transaction value case involving a series of sales that was decided shortly after *Nissho Iwai,* the CIT applied the reasoning in *Nissho Iwai* and concluded that the imported garments at issue should be appraised based on the price the intermediary paid to the manufacturer. The CIT stated that there was no allegation that the sale was not an arm's length sale and determined that the garments were clearly destined for export to the United States by virtue of the labels the manufacturer was required to place on the garments. 16 16 That case involved garments imported by Synergy, a Hong Kong company with offices in the United States. Synergy sold the garments to J.C. Penney in the U.S. After J.C. Penney placed its order with Synergy, Synergy placed an order with Chinatex, the Chinese manufacturer. The issue presented was whether the garments should be appraised based on the price J.C. Penney paid to Synergy or on the price Synergy paid to Chinatex. Thus, the early court decisions that required transaction value to be determined on the basis of the price actually paid or payable in the first sale are based primarily on case law decided under the prior export value law and the similarity of some language from the export value law. B. Recent Decisions Departing From the Statutory Analysis in Prior Court Cases on Series of Sales More recently, the CAFC again had occasion to consider the relevance of certain court decisions decided under the prior export value law to the application of the transaction value statute. In *VWP of America, Inc.* v. *United States,* 175 F.3d 1327 (Fed. Cir. 1999), the CAFC held that the prior export value case law cannot properly account for the significant differences between the two statutes, citing *Generra,* which quoted from S. Rep. No. 96-249, as discussed above: In *Generra Sportswear Co.* v. *United States,* 905 F.2d 377, 380 (Fed. Cir. 1990), we referred to “the critical difference” between “export value” under pre-1979 law and “transaction value” under the present statute. In that context, we quoted with approval material from legislative history of the Trade Agreements Act: The use of transaction value as the primary basis for customs valuation will allow use of the price which the buyer and seller agreed to in their transaction as the basis for valuation, rather than having to resort to the more difficult concepts of “freely offered,” “ordinary course of trade,” “principal markets of the country of exportation,” and “usual wholesale quantities” contained in existing U.S. law. [a]s the Court of International Trade itself recognized, *Getz* and *Bjelland* were decided under the export value statute, which was repealed in 1979. In determining that transactions between [the parties] were not viable, the court applied incorrect standards, specifically, standards relevant under the now superseded export value statute. The correct standards are those set forth in the provisions of 19 U.S.C. 1401a discussed above. *VWP of America, Inc.* v. *United States* at 1334. The substantial differences between export value and transaction value were also noted by the CIT in *Moss Manufacturing Co., Inc.* v. *United States,* 714 F. Supp. 1223 (C.I.T. 1989), *aff'd,* 896 F.2d 535 (Fed. Cir. 1990). In light of the decisions in *VWP* and *Moss,* CBP is of the view that notwithstanding the fact that the export value and transaction value statutes each contain the phrase “for exportation to the United States,” the two statutes are substantially different. Therefore, the analysis of the series of sales issue under the transaction value statute should be based on a full analysis of the provisions of 19 U.S.C. 1401a and its legislative history, rather than on the only common wording found in both statutes and the cases decided under the export value statute. IV. Difficulties in Administering the First Sale Principle in a Series of Sales The application of the first-sale principle for transaction value in a series of sales requires considerable review of the specific facts and documentation presented. For example, determining whether fungible goods are clearly destined to the U.S. when they are sold to the intermediary is never clear-cut, especially when the merchandise is shipped to a foreign intermediary prior to the importation into the U.S. For example, the intermediary often sells the same merchandise both to buyers in the U.S. and to buyers in other countries but the claim is made that the inventory records and other evidence establish that the imported merchandise was clearly destined to the U.S. In these cases, CBP must review the inventory records and other evidence in order to evaluate the claim. In other cases, importers claim that the submitted paper trail relating to all the various sales in the series of sales is sufficient to establish that the imported merchandise was destined for a particular U.S. customer. Determining whether the merchandise was clearly destined to the U.S. customer requires a review of all of these documents and extensive fact-finding. Considerable fact-finding is also necessary to determine whether a particular first sale transaction is a *bona fide* arm's length sale, especially when some or all of the parties involved in the series of sales are related parties or when the series of sales involves more than two sales and when additional parties, such as buying and/or selling agents, are involved in the series of sales transactions. In these cases, before a determination can be made that the first sale represents transaction value, it is necessary to examine the roles of the various parties and whether the claimed first sale is a *bona fide* arm's length sale. If the buyer and seller are related, CBP has to consider whether the relationship between the parties has affected the price. Assuming that a determination has been made that the first sale is an arm's length sale and that the goods are clearly destined to the U.S., additional fact-finding is necessary to determine whether all the statutory additions have been properly reflected. The first sale principle also presents post-entry audit verification issues. This is due to the fact that the first sale usually involves a foreign sale and CBP does not have easy access to the records, including accounting records, which may be needed for verification purposes. CBP lacks direct access to the books and records relevant to the first sale transaction. 17 17 On December 8, 1993, Title VI (Customs Modernization of “Mod Act”), of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057), went into effect. Title VI amended many sections of the Tariff Act of 1930, as amended, and related laws. Under the provisions of the Mod Act and 19 CFR part 163, certain persons are required to maintain specified records pertaining to the import transaction for examination and inspection by CBP ( *i.e.* , an owner, importer, consignee, importer of record, and entry filer and other specified persons). Under these provisions, CBP may initiate an investigation or compliance assessment, audit or other inquiry for the purpose of ascertaining the correctness of the entry and insuring compliance with the customs laws. When transaction value is based on the last sale, it is likely that at least one of the parties to that sale would be subject to the recordkeeping requirements and the pertinent information relating to the sale is easily verified by CBP. This is often not the case when transaction value is determined based on the first sale. The first-sale principle for determining transaction value also makes it difficult for an importer to meet its obligations under 19 U.S.C. 1484 to use reasonable care to properly declare the value of imported merchandise. 18 The importer's burden increases greatly when an importer declares a transaction value based on the first sale, a sale for which the importer may not have access to all the transaction documents and the surrounding details. In addition, without knowledge of all the particulars surrounding that sale, it is difficult for the importer to attest to the truthfulness of the value declaration as required by 19 U.S.C. 1485(a). For example, it may be impossible to know whether all the applicable statutory additions have been fully and accurately reported. 18 Section 484, as amended by the Customs Modernization Act, requires importers to use reasonable care to correctly value and classify entered merchandise. *See* 19 U.S.C. 1484. The proposed interpretation in this document addresses the above concerns by establishing a transparent standard for determining transaction value that is easily applied and based on information available in the United States. Under the proposal, transaction value is based on the price paid in the last sale occurring prior to the introduction of the goods into the United States, instead of the first (or earlier) sale. This will generally be the price paid by the buyer in the United States. CBP will be better able to verify the accuracy of the declared value when transaction value is based on the last sale. As a result, both CBP and importers will be better able to meet their shared responsibilities with respect to proper customs valuation. V. Relevance of Technical Committee Commentary 22.1, Meaning of the Expression “Sold for Export to the Country of Importation” in a Series of Sales to Interpretation of U.S. Value Statute (19 U.S.C. 1401a) The courts have previously considered the relevance of the Valuation Agreement as interpreted by the Committee on Customs Valuation to the proper interpretation of 19 U.S.C. 1401a. Recognizing that 19 U.S.C. 1401a was promulgated specifically to implement the provisions of the Valuation Agreement, both the CAFC and the CIT have noted the importance of interpreting 19 U.S.C. 1401a in a manner consistent with GATT obligations. *See Luigi Bormioli Corp., Inc.* v. *United States,* 304 F.3d 1362 (Fed. Cir. 2002) and *Caterpillar Inc.* v. *United States,* 20 C.I.T. 1169, 941 F. Supp 1241 (CIT 1996). For this same reason, the CIT determined in *Salant,* cited above, that the legislative history of 19 U.S.C. 1401a includes an examination of the Valuation Agreement. In the *Luigi Bormioli* case, the CAFC relied on a decision by the Committee on Customs Valuation regarding the proper interpretation of transaction value under Article 1 of the Valuation Agreement and under 19 U.S.C. 1401a. In that case, the CAFC considered the validity of T.D. 85-111, which concerned the treatment of interest payments under the transaction value statute. In T.D. 85-111, CBP determined that interest payments are not included in transaction value when the conditions specified therein are satisfied. This decision was issued in order to implement Decision 3.1 of the Committee on Customs Valuation, entitled *“Treatment of Interest Charges in the Customs Value of Imported Goods.”* The court in *Luigi Bormioli* noted that in the background to the document CBP stated, “the 1994 GATT Committee Decision had prompted Customs to reassess its previous position.” In upholding T.D. 85-11, the CAFC emphasized the fact that it incorporated the conclusions of the Committee on Customs Valuation in Decision 3.1 regarding the treatment of interest under the Valuation Agreement. It also noted that the Committee decision established a uniform and logical policy regarding the treatment of interest payments and the documentation required, and that such policy was consistent with the U.S. law and with the policy of the U.S. law. In its analysis, the *Luigi Bormioli* Court stated: We must first consider whether T.D. 85-111 is consistent with the statute. Although all the detailed criteria of T.D. 85-111 cannot be found in the explicit language of the statute, we think that the statute must be interpreted to be consistent with GATT obligations, absent contrary indications in the statutory language or its legislative history. See *Fed. Mogul Corp.* v. *United States,* 63 F.3d 1572, 1581 (Fed. Cir. 1990) (“Absent express Congressional language to the contrary, statutes should not be interpreted to conflict with international obligations.”). Here there are no such contrary indications. The GATT approach is quite consistent with the statute. Like 19 U.S.C. 1401a(b)(4)(A), the GATT broadly defines “price actually paid or payable.” See 1994 GATT Interpretive Note. GATT is also consistent with the policy of the statute. The GATT parameters not only provide a uniform method to evaluate when ‘interest’ charges are included in transaction value, but they also serve to prevent importers from manipulating the amount of duties assessed on particular merchandise by simply designating part of the payment made for that merchandise as “interest.” Without a policy that requires both sufficient documentation of the transaction, and evidence of comparable prevailing rates and sales, an importer could easily reduce the “price actually paid or payable” of the goods by denominating charges that actually represented a portion of the price of the goods as “interest.” *Thus, we construe the statute to make it consistent with GATT.* *Under that construction, T.D. 85-111 is consistent with the statute because it is the same as GATT. In all relevant respects T.D. 85-111 and the 1984 GATT Committee decision set forth the same criteria* * * * [Emphasis added] *Luigi Bormioli* at 1369. CBP is of the view that this decision strongly supports an interpretation of 19 U.S.C. 1401a that is consistent with the Valuation Agreement as clarified by the Technical Committee in Commentary 22.1. There are no contrary indications in the statutory language of 19 U.S.C. 1401a or its legislative history. In fact, CBP notes that most of the provisions in 19 U.S.C. 1401a mirror the provisions of the Valuation Agreement. Moreover, the relevant definitions of transaction value and price actually paid or payable and the provisions regarding the additions to be made to the price actually paid or payable under the Valuation Agreement and the U.S. value law are substantively identical. Similar to the circumstances considered in the CAFC's analysis and holding in *Luigi Bormioli,* CBP has reassessed its current position regarding the determination of transaction value in light of a decision issued by a Committee established under Article 18 of the Valuation Agreement and is proposing to adopt that Committee's conclusions. Most important, Commentary 22.1 clarifies the series of sales issue and provides a uniform method for determining transaction value in a series of sales in a manner that CBP believes is consistent with the text and legislative history of the U.S. value law. Conclusions I. Proposal for Adoption of Commentary 22.1 For the reasons discussed in this document, CBP proposes to change its current position with regard to the determination of transaction value in a series of sales context and to adopt the conclusions in Commentary 22.1. Specifically, CBP is proposing that in a series of sales situation, the price actually paid or payable for the imported goods when sold for exportation to the United States is the price paid in the last sale occurring prior to the introduction of the goods into the United States, instead of the first (or earlier) sale. The result will be that transaction value is normally determined on the basis of the price paid by the buyer in the United States. If this proposed interpretation is adopted, it will result in the revocation of T.D. 96-87, the modification or revocation of administrative rulings that have analyzed the series of sales issue using the first-sale criteria, and the revocation of any treatment previously accorded by CBP to substantially identical transactions. In addition, the application of *McAfee, Nissho Iwai* and *Synergy* would be limited to the specific entries at issue in those cases. II. Application of Proposed Interpretation to U.S. Value Law In order to facilitate a greater understanding of how the proposed interpretation set forth in this document would apply to U.S. value law, it is useful to examine the proposed interpretation in the context of a series of sales example. The example, set forth in paragraphs 4-9 of Commentary 22.1 (attached), reflects a common fact pattern addressed in numerous first-sale rulings issued by CBP; namely, the buyer in the country of importation ( *i.e.* , the U.S.) begins the series of sales by agreeing to purchase certain items (in this case, pens) according to its specifications from a foreign distributor. The foreign distributor then orders these items from an unrelated manufacturer according to the buyer's specifications and the merchandise is shipped directly from the manufacturer to the buyer in the U.S. The example also presents an issue that often arises in first-sale rulings; namely, whether one or more additions to the price actually paid or payable apply. In the example, the buyer in the country of importation is required to pay certain proceeds of a subsequent resale to the distributor. The issue is whether these proceeds accrue, directly or indirectly, to the seller as provided in 19 U.S.C. 1401a(b)(1)(E). Based on the facts presented in Commentary 22.1 and the various assumptions made ( *e.g.* , all the relevant documentation pertaining to both sales can be produced), the pens in the example would currently qualify for appraisement based on the first sale between the distributor and the manufacturer if they were imported into the U.S. Based on the facts presented, the first sale is an arm's length sale and the pens were always clearly destined to the United States. Under this interpretation, the proceeds of the subsequent resale from the buyer in the U.S. to the distributor could not be included in the transaction value absent evidence that such proceeds accrued directly or indirectly to the seller in the first sale ( *i.e.* , the manufacturer). Under the proposed interpretation, the sale between the buyer in the U.S. and the distributor is the last sale prior to the introduction of the pens into the United States. Therefore, transaction value would be determined based on the price paid by the buyer in the U.S. to the distributor in this last sale. The proceeds of the subsequent resale paid by this buyer accrue directly to the seller in this last sale ( *i.e.* , the distributor). Therefore, under the proposed interpretation, these proceeds would be added to the price actually paid or payable pursuant to 19 U.S.C. 1401a(b)(1)(E). Basing transaction value on the sale from the buyer in the U.S. to the foreign distributor is consistent with the statement in Commentary 22.1 that the underlying assumption of Article 1 (transaction value) is that normally the buyer would be located in the country of importation and that the price actually paid or payable would be based on the price paid by this buyer. Basing transaction value on this sale also allows for the inclusion of the applicable additions to the price actually paid or payable, in this case, the proceeds of the subsequent resale. Solicitation of Comments CBP will consider written comments timely submitted in accordance with the instructions set forth in the ADDRESSES section of this document in its review of the proposed interpretation of the term “sold for exportation to the United States” for purposes of applying the transaction value method of valuation in a series of sales importation scenario. Before making this proposed interpretation final, consideration will be given to any written comments timely received on this matter. Dated: January 17, 2008. W. Ralph Basham, Commissioner, U.S. Customs and Border Protection. Attachment—Meaning of the Expression “Sold for Export to the Country of Importation” in a Series of Sales 1. Introduction 1. A series of sales consists of two or more successive contracts for sales of goods. A basic issue in a series of sales is which sale should be used to determine the transaction value under Articles 1 and 8 of the Agreement. Advisory Opinion 14.1—Meaning of the expression “sold for export to the country of importation”—does not clarify the meaning of this phrase as applied to a series of sales situation. The purpose of this document is to clarify this issue. 2. As provided in the General Introductory Commentary of the Agreement, the primary basis for Customs value is transaction value. Transaction value is defined in Article 1 as “the price actually paid or payable for the goods when sold for export to the country of importation adjusted in accordance with the provisions of Article 8”. Price actually paid or payable is defined in the Note to Article 1 as “the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods”. 3. In a series of sales, it is necessary to establish which of the sales should be taken into account in order to identify the price actually paid or payable for the goods when sold for export to the country of importation. Any series of sales will include a last sale occurring in the commercial chain prior to the introduction of the goods into the country of importation (the last sale) and a first (or earlier) sale in the commercial chain. 1 In the example below, there are two successive contracts for sales of the imported goods, one between importer A and distributor B (the last sale) and another between distributor B and manufacturer C (the first sale). 1 In a series of sales, it is common to refer to the various sales as the last sale and the first (or earlier) sale whether or not these terms are consistent with the chronological order of the sales contracts. 2. Example Illustrating a Series of Sales Situation 4. A is a retail store located in the country of importation I, B is a pen distributor located in country Z, and C is a pen manufacturer located in country X. There is no relationship between A, B, or C within the meaning of Article 15.4. 5. On July 10, 2004, retailer A contracts with distributor B for the purchase/sale of certain pens. Pursuant to the A-B sales contract: • A agrees to purchase 1,000 pens from B for 10,000 currency units (c.u.); • B will provide A with 400 pens of style xx and 600 pens of style yy; • Each pen will display A's name and address; • B can obtain the pens from any pen manufacturer in country X; • The pens will be shipped directly from the manufacturer to A; • Title will pass from B to A when the pens are boarded on the ship in country X; • Payment is due within 30 days of shipment; • A agrees to pay B 20% of the resale price for each pen A sells prior to October 1, 2004. 6. On July 12, 2004, B contracts with manufacturer C for the purchase/sale of certain pens. Pursuant to the B-C sales contract: • B agrees to purchase 1,000 pens from C for 8,000 c.u.; • C will provide B with 400 pens of style xx and 600 pens of style yy; • Each pen will display A's name and address; • C will ship the pens directly to A; • Title passes from C to B when the pens leave C's factory; • Payment is due within 30 days of shipment. 7. On August 10, 2004, C ships the pens to A. On August 20, the pens arrive in country I and A files a Customs entry. On September 1, A pays B 10,000 c.u. On September 5, B pays C 8,000 c.u. Prior to October 1, A sells 400 pens at 15 c.u. each. On October 5, A pays B 1,200 c.u. (20% of A's resale price for pens sold prior to October 1). 8. In this example, the last sale is the one between A and B and the first sale is the one between B and C. 3. Questions 9. Assuming transaction value is the appropriate basis for determining the Customs value of the imported pens, and that A is able to produce all the documentation pertaining to both the A-B and B-C sales (contracts, purchase orders, invoices, payment records):

(1)Is the price actually paid or payable for the imported goods when sold for export to country I 10,000 c.u. (the price A pays B in the last sale) or 8,000 c.u. (the price B pays C in the first sale)?

(2)Should the 1,200 c.u. payment from A to B be added to the price actually paid or payable as “proceeds of a subsequent resale of the imported goods that accrues directly or indirectly to the seller” pursuant to Article 8.1(d)? 4. Analysis Guidance Derived From the Provisions of the Agreement 10. The Agreement does not define or otherwise directly address the meaning of the expression “sold for export to the country of importation.” However, it is easy to identify the sale for export to the country of importation that is used to determine transaction value under Article 1 when the import transaction involves only one sale. In that situation, there is only one buyer, usually located in the country of importation, and one seller, usually located in another country. 11. Article 1 does not refer to import transactions involving a series of sales and consequently does not provide criteria in that respect. Therefore, guidance must be sought from the purpose and the overall text of the Agreement, including an examination of its provisions. In addition, certain practical considerations are relevant. 12. As set forth below, there are various indications in the General Introductory Commentary, Article 1 and other provisions of the Agreement that it was envisaged that Article 1 would normally be based on sales to buyers in the country of importation. 13. There is explicit language in Article 1 that reflects the intended scope of Article 1. Pursuant to Article 1.1(a)(i), the Customs value of imported goods shall be the transaction value provided that there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which are imposed or required by law or by the public authorities in the country of importation. The emphasized text is a good indication that the underlying assumption of Article 1.1(a)(i) was that the buyer of the goods sold for export to the country of importation would normally be located in the country of importation. 2 2 This assumption would not apply if there was no buyer in the country of importation. 14. The intended scope of Article 1 is also reflected in the provisions regarding the adjustments to the price actually paid or payable. The General Introductory Commentary makes it clear that the proper determination of transaction value depends on the application of Article 1 in conjunction with Article 8. Paragraph 1 of the General Introductory Commentary provides that “the primary basis for Customs value under the Agreement is `transaction value' as defined in Article 1”. It further states that “Article 1 is to be read together with Article 8, which provides, inter alia, for adjustments to the price actually paid or payable in cases where certain specific elements which are considered to form a part of the value for Customs purposes are incurred by the buyer but are not included in the price actually paid or payable for the imported goods. 15. Article 8 also provides for the inclusion in the transaction value of certain considerations which may pass from the buyer to the seller in the form of specified goods or services rather than in the form of money.” 3 If the specified amounts are not already included in the price actually paid or payable, Article 8 requires their addition. In others words, the transaction value method is intended to take account of the substance of the entire commercial import transaction preceding import of the goods, including the economic inputs and related transactions which arise therefrom. 3 These goods or services are often referred to as assists. 16. Therefore, as mandated by the General Introductory Commentary, it is essential to apply transaction value in a series of sales situation in a manner that takes into account the substance of the entire commercial import transaction and permits the proper application of Article 8. 17. In many cases, it would not be possible to make the Article 8 adjustments if transaction value was determined based on the first sale. For example, under Article 8.1(a) and (c), selling commissions or royalties and licence fees, are only to be included in the Customs value where they are incurred or paid by the buyer. Similarly, under Article 8.1(b), the buyer must supply the assist. In a series of sales, a buyer who is located in the country of importation would rarely be the buyer in the first sale. 18. Moreover, in a series of sales, the buyer in the first sale is not necessarily the party who pays the royalties or provides the assists. Therefore, the application of the first sale may preclude the addition of certain selling commissions, royalties and assists that otherwise would be included in the transaction value. Similarly, under Article 8.1(d), only proceeds that accrue directly or indirectly to the seller may be added to the price actually paid or payable. Proceeds paid by the buyer in the country of importation would not necessarily revert to the seller in the first sale. 19. The example is illustrative. If the transaction value is determined on the basis of the first sale between B and C, C is considered the seller of the imported goods and the proceeds of the subsequent resale from A to B would not be proceeds that accrue directly to the seller. In the absence of evidence that the proceeds accrued indirectly to the seller, such proceeds could not be added pursuant to Article 8.1(d). However, if the transaction value is determined on the basis of the last sale between A and B, B is considered the seller and the proceeds paid to B would fall squarely within the provisions of Article 8.1(d). Under the latter interpretation, the transaction value takes into account the substance of the entire commercial transaction. In contrast, application of the first sale results in a transaction value that does not fully reflect the substance of the entire transaction. 20. In sum, a transaction value based on the first sale may not fully reflect the substance of the inputs resulting from, or forming part of the entire commercial chain as envisioned by the General Introductory Commentary, and Articles 1 and 8. In contrast, a transaction value based on the last sale will more fully reflect the substance of the entire transaction as envisioned. 21. Certain provisions of the Agreement use the terms “buyer” and “importer” interchangeably. For example, while Article 8.1(a)(i) stipulates that buying commissions incurred by the buyer are not to be added to the price actually paid or payable, the Note to that Article defines the term “buying commissions” as “fees paid by an importer to the importer's agent for the service of representing the importer abroad in the purchase of the goods being valued.” Also, while Article 8.1(b) stipulates that the value of certain elements supplied by the buyer is to be added to the price actually paid or payable, paragraph 2 of the Note to Paragraph 1(b)(ii) of Article 8 explains the value of the element in relation to the importer. Furthermore, paragraph 4 of that Note provides an illustrative case where an importer is the buyer who supplies the producer with a mould to be used in the production of the imported goods. 22. The Note to Article 6 states that “as a general rule, Customs value is determined under this Agreement on the basis of information readily available in the country of importation”. This concept is also reflected in Article 7: “If the Customs value of the imported goods cannot be determined under the provisions of Articles 1 to 6, inclusive, the Customs value shall be determined using reasonable means consistent with the principles and general provisions of this Agreement * * * and on the basis of data available in the country of importation.” With respect to the determination of transaction value under Article 1, it is the last sale, rather than the first sale, that will normally satisfy this general rule. As noted, the last sale normally involves a buyer located in the country of importation and information about this sale will usually be more readily available in the country of importation than information about the first sale. 23. As provided in paragraph 2 of the Note to Article 7, the methods of valuation to be employed under Article 7 should be those laid down in Articles 1 through 6 but with a reasonable flexibility. However, Article 7 indicates that this flexibility does not extend to allow the use of certain prices, including “the price of goods on the domestic market of the country of exportation” (see Article 7.2). This gives a clear indication of the intended scope of Article 1, namely that a sale that is prohibited under a flexible application of Article 1 cannot possibly be considered as valid under the normal application of Article 1. In a series of sales situation, the first sale often involves a sale between a producer and a local distributor in the same country. Clearly, these sales cannot be used to determine the Customs value under Article 7. It follows that such sales should also not be used to determine the value under Article 1. 24. There are also other indications in the Agreement that it was not envisaged that the determination of transaction value would diverge, depending on whether the import transaction involved a single sale or a series of sales. For example, in the General Introductory Commentary, the Members recognize the need for a uniform system of valuation. In a series of sales, determining transaction value based on the last sale addresses this need for uniformity. In a single sale situation, the price actually paid or payable will normally be represented by the price paid by the buyer in the country of importation. If, in a series of sales situation, transaction value is based on the last sale, the result will generally be the same; namely, a transaction value based on the price paid by the buyer in the country of importation. On the other hand, if transaction value is based on the first sale, then the price actually paid or payable will generally be represented by the price paid by a buyer outside the country of importation and the result is a different transaction value. 25. It should also be noted that the Agreement allows Members to apply different treatments in certain cases. In this regard, Article 8.2 specifies that in framing its legislation, each Member shall provide for the inclusion in or the exclusion from the Customs value of certain transportation costs. Article 9 specifies that the currency conversion rate to be used shall be that in effect at the time of exportation or the time of importation, as provided by each Member. Since Article 1 provides no such choice, the logical conclusion is that the authors envisaged that the resulting transaction value would be the same whether the importation involves a single sale or a series of sales (i.e., transaction value would normally be determined based on the price paid by the buyer in the country of importation). Otherwise, they would have either specified how transaction value should be determined in a series of sales situation or provided an explicit choice to Members. Practical Consideration 26. In practice, the Customs administration may face difficulties in verifying information, including accounting records, related to the first sale when such information is held by the foreign intermediary or seller. This could include, for example, information and accounting records pertaining to the total payment made by the foreign intermediary to the seller and the Article 8 adjustments. Such difficulties are alleviated when the last sale is applied. 5. Conclusion 27. The Technical Committee is of the view that the underlying assumption of Article 1 is that normally the buyer would be located in the country of importation and that the price actually paid or payable would be based on the price paid by this buyer. The Technical Committee concludes that in a series of sales situation, the price actually paid or payable for the imported goods when sold for export to the country of importation is the price paid in the last sale occurring prior to the introduction of the goods into the country of importation, instead of the first (or earlier) sale. This is consistent with the purpose and overall text of the Agreement. 28. In the example, consistent with the conclusion, the sale between A and B represents such a sale. Therefore, the price actually paid or payable for the imported goods when sold for export to country I is 10,000 c.u. (the price A pays B in the last sale). 29. Accordingly, the 1,200 c.u. payment from A to B represents proceeds of a subsequent resale of the imported goods that accrues directly or indirectly to the seller under Article 8.1(d) that must be added to the price actually paid or payable in determining transaction value. Com. 22.1 Amending Supplement No. 6—July 2007 [FR Doc. E8-1140 Filed 1-23-08; 8:45 am] BILLING CODE 9111-14-P DEPARTMENT OF THE INTERIOR Bureau of Land Management [ES-956-07-1910-4482; Group No. 29, Illinois] Eastern States: Filing of Plat of Survey AGENCY: Bureau of Land Management, Interior. ACTION: Notice of filing of plat of survey; Minnesota. SUMMARY: The Bureau of Land Management

(BLM)will file the plat of survey of the lands described below in the BLM-Eastern States, Springfield, Virginia, 30 calendar days from the date of publication in the **Federal Register** . FOR FURTHER INFORMATION CONTACT: Bureau of Land Management, 7450 Boston Boulevard, Springfield, Virginia 22153. Attn: Cadastral Survey. SUPPLEMENTARY INFORMATION: This survey was requested by the U.S. Army Corps of Engineers. The lands we surveyed are: Third Principal Meridian, Illinois T. 3 N., R. 10 W. The plat of survey represents the corrective survey of a portion of the Lock and Dam No. 27 Acquisition Boundary in Township 3 North, Range 10 West of the Third Principal Meridian, The State of Illinois, and was accepted December 27, 2007. This corrective survey placed Angle Points Nos. 70 and 71 in their correct positions. We will place a copy of the plat we described in the open files. It will be available to the public as a matter of information. If BLM receives a protest against this survey, as shown on the plat, prior to the date of the official filing, we will stay the filing pending our consideration of the protest. We will not officially file the plat until the day after we have accepted or dismissed all protests and they have become final, including decisions on appeals. Dated: January 16, 2008. Joseph W. Beaudin, Acting Chief Cadastral Surveyor. [FR Doc. E8-1176 Filed 1-23-08; 8:45 am] BILLING CODE 4310-GJ-P DEPARTMENT OF THE INTERIOR Bureau of Land Management [ID-200-1120-DD-241A] Notice of Public Meeting, Twin Falls District Resource Advisory Council Meeting, Idaho AGENCY: Bureau of Land Management, Interior. ACTION: Notice of public meeting. SUMMARY: In accordance with the Federal Land Policy and Management Act (FLPMA), the Federal Advisory Committee Act of 1972 (FACA), and the Federal Lands Recreation Enhancement Act of 2004 (FLREA), the U.S. Department of the Interior, Bureau of Land Management

(BLM)Twin Falls District Resource Advisory Council

(RAC)will meet as indicated below. DATES: February 21, 2008. The meeting will start at 8:30 a.m. and end no later than 4 p.m. The public comment period will be from 9:30 a.m. to 10 a.m. The meeting will be held at the Red Lion Canyon Springs Hotel, 1357 Blue Lakes Boulevard, Twin Falls, Idaho, 83301. FOR FURTHER INFORMATION CONTACT: Heather Tiel-Nelson, Twin Falls District, Idaho, 2536 Kimberly Road, Twin Falls, Idaho 83301,

(208)736-2352. SUPPLEMENTARY INFORMATION: The 15-member RAC advises the Secretary of the Interior, through the Bureau of Land Management, on a variety of planning and management issues associated with public land management in Idaho. The agenda will include the following topics: welcome to new members, Field Office updates, energy projects discussion, Twin Falls District fire rehabilitation efforts and planning for upcoming tours for the RAC. Additional topics may be added and will be included in local media announcements. More information is available at *www.blm.gov/id/st/en/res/resource_advisory.3.html* . All meetings are open to the public. The public may present written comments to the RAC in advance of or at the meeting. Each formal RAC meeting will also have time allocated for receiving public comments. Depending on the number of persons wishing to comment and time available, the time for individual oral comments may be limited. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should contact the BLM as provided above. Dated: January 15, 2008. Bill Baker, District Manager. [FR Doc. E8-1134 Filed 1-23-08; 8:45 am] BILLING CODE 4310-GG-P DEPARTMENT OF THE INTERIOR Bureau of Land Management [CO-922-08-1310-FI; COC65947] Notice of Proposed Reinstatement of Terminated Oil and Gas Lease AGENCY: Bureau of Land Management, Interior. ACTION: Notice of Proposed Reinstatement of Terminated Oil and Gas Lease SUMMARY: Under the provisions of 30 U.S.C. 188(d) and (e), and 43 CFR 3108.2-3(a) and (b)(1), the Bureau of Land Management

(BLM)received a petition for reinstatement of oil and gas lease COC65947 from Laramie Energy, LLC for lands in Garfield County, Colorado. The petition was filed on time and was accompanied by all the rentals due since the date the lease terminated under the law. FOR FURTHER INFORMATION CONTACT: Bureau of Land Management, Milada Krasilinec, Land Law Examiner, Branch of Fluid Minerals Adjudication, at 303.239.3767. SUPPLEMENTARY INFORMATION: The lessee has agreed to the amended lease terms for rentals and royalties at rates of $10.00 per acre or fraction thereof, per year and 16 2/3 percent, respectively. The lessee has paid the required $500 administrative fee and $163 to reimburse the Department for the cost of this **Federal Register** notice. The lessee has met all the requirements for reinstatement of the lease as set out in Section 31(d) and

(e)of the Mineral Lands Leasing Act of 1920 (30 U.S.C. 188), and the Bureau of Land Management is proposing to reinstate lease COC65947 effective June 1, 2007, under the original terms and conditions of the lease and the increased rental and royalty rates cited above. Dated: January 16, 2008. Milada Krasilinec, Land Law Examiner. [FR Doc. E8-1160 Filed 1-23-08; 8:45 am] BILLING CODE 4310-JB-P DEPARTMENT OF THE INTERIOR Bureau of Land Management [ID-110-1430-EU 241A; DBG-08-1005] Notice of Realty Action; Direct and Competitive Sales of Public Land, Idaho and Proposed Plan Amendment AGENCY: Bureau of Land Management, Interior. ACTION: Notice of Realty Action and Proposed Plan Amendment. SUMMARY: Thirty-four parcels of public land in Ada, Adams, Canyon, Gem, Payette, Valley, and Washington Counties, Idaho are being proposed for direct and competitive sale under the provisions of the Federal Land Policy Management Act of 1976 (FLPMA), and the Federal Lands Transaction and Facilitation Act of 2000 (FLTFA) at no less than the appraised fair market value. Three parcels may be disposed of under the authority of the Recreation and Public Purposes Act of 1926, as amended (R&PP). Five of these parcels require amendment of the Cascade Resource Management Plan

(RMP)prior to sale. DATES: Comments on the proposed sales must be received by March 10, 2008. Protests on the proposed RMP amendment must be received or postmarked by February 25, 2008. ADDRESSES: Comments regarding the proposed sales, as well as sealed bids, should be addressed to Rosemary Thomas, Four Rivers Field Manager, Bureau of Land Management, Boise District Office, 3948 Development Avenue, Boise, Idaho 83705, the location where the public auction will be held. Protests to the proposed RMP amendment must be sent to the Director (760), Chief, Planning and Environmental Coordination, Bureau of Land Management, 1849 C Street, NW., Washington, DC 20240. FOR FURTHER INFORMATION CONTACT: Information regarding the competitive sale procedures, including the environmental assessment, appraisals, and maps can be obtained at the public reception desk at the BLM Boise District Office, from 8 a.m. to 4:30 p.m., Monday through Friday (except Federal holidays), or by contacting Effie Schultsmeier, Four Rivers Realty Specialist, at the above address or phone

(208)384-3357. SUPPLEMENTARY INFORMATION: The following described public lands have been examined and found suitable for transfer out of Federal ownership by sale utilizing direct and competitive sale procedures under the authority of Section 203 and Section 209 of FLPMA (90 Stat. 2750, 43 U.S.C. 1713 and 1719), and/or the R&PP Act (43 U.S.C. 869, *et seq.* ). *Parcel 1.* These lands encompass the existing Clay Peak Motorcycle Park and will be offered to Payette County via direct sale or other authority. T. 8 N., R. 5 W., Boise Meridian, Payette County, Idaho Section 1: Lots 1, 2, 3, 4, S 1/2 NE 1/4 , SW 1/4 NW 1/4 , S 1/2 . Section 2: Lots 1 & 2, S 1/2 NE 1/4 , NE 1/4 SE 1/4 , NE 1/4 SE 1/4 , and that portion (approx. 25 acres) of the NW 1/4 SE 1/4 remaining in federal ownership. Section 12: N 1/2 NE 1/4 , SW 1/4 NE 1/4 , that portion of the NW 1/4 lying north and east of the Northeasterly right-of-way boundary of State Highway 52. Aggregating approximately 948.04 acres, more or less. Appraised value $1,422,000. *Parcel 2.* These lands will be offered for direct sale to Canyon County to be used as a buffer zone around the Pickles Butte Sanitary Landfill, for expansion of an existing shooting range, and for additional dispersed and OHV recreation. T. 2 N., R. 3 W., Boise Meridian, Canyon County, Idaho Section 20: S 1/2 S 1/2 ; Section 21: NW 1/4 NE 1/4 , NE 1/4 NW 1/4 ; E 1/2 SW 1/4 NE 1/4 , E 1/2 W 1/2 SE 1/4 ; Section 28: N 1/2 , N 1/2 SE 1/4 , SE 1/4 SE 1/4 ; Section 29: N 1/2 NE 1/4 ; Aggregating approximately 820.00 acres, more or less. Appraised value $4,100,000. *Parcel 3.* This isolated parcel near the City of Star will be offered to the City of Star via direct sale or other authority. T. 5 N., R. 1 W., Boise Meridian, Ada County, Idaho Section 31: N 1/2 SE 1/4 ; Containing 80.00 acres, more or less Appraised value $2,360,000. *Parcel 4.* This isolated parcel near the City of Cascade will be offered for competitive sale. T. 14 N., R. 3 E., Boise Meridian, Valley County, Idaho Section 25: Lot 13; Containing 8.76 acres, more or less. Appraised value $1,095,000. *Parcel 5.* This isolated parcel near existing developments in Canyon County will be offered to the City of Caldwell via direct sale or other authority. T. 3 N., R. 3 W., Boise Meridian, Canyon County, Idaho Section 15: Lots 2 and 3; Containing 29.57 acres, more or less. Appraised value $1,242,000. *Parcel 6.* These lands will be offered for direct sale to Adams County for landfill purposes. T. 15 N., R. 1 W., Boise Meridian, Adams County, Idaho Section 17: NW 1/4 NE 1/4 ; Section 18: NW 1/4 SE 1/4 ; Aggregating 80.00 acres, more or less Appraised value $102,000. The following 28 parcels will be sold through open, competitive bidding. *Parcel 7.* T. 8 N., R. 2 W., Boise Meridian, Payette County, Idaho Section 18: Lots 5, 6, E 1/2 SW 1/4 ; Containing 158.64 acres, more or less. Appraised value $15,864. *Parcel 8.* T.8 N., R. 2 W., Boise Meridian, Payette County, Idaho Section 19: NE 1/4 , E 1/2 NW 1/4 , NE 1/4 SW 1/4 , N 1/2 SE 1/4 ; Containing 360.00 acres, more or less. Appraised value $36,000. *Parcel 9.* T.8 N., R. 2 W., Boise Meridian, Payette County, Idaho Section 20: NW 1/4 ; Containing 160.00 acres, more or less. Appraised value $16,000. *Parcel 10.* T.8 N., R. 3 W., Boise Meridian, Payette County, Idaho Section 23: W 1/2 NE 1/4 , SE 1/4 NE 1/4 ; Containing 120.00 acres, more or less. Appraised value $12,000. *Parcel 11.* T.8 N., R. 3 W., Boise Meridian, Payette County, Idaho Section 24: NE 1/4 NW 1/4 , S 1/2 NW 1/4 , NE 1/4 SW 1/4 ; Containing 160.00 acres, more or less. Appraised value $16,000. *Parcel 12.* T.10 N., R. 3 W., Boise Meridian, Washington County, Idaho Section 26: NW 1/4 NW 1/4 ; Containing 40.00 acres, more or less. Appraised value $4,000. *Parcel 13.* T.10 N., R. 3 W., Boise Meridian, Washington County, Idaho Section 27: SW 1/4 SE 1/4 ; Containing 40.00 acres, more or less. Appraised value $4,000. *Parcel 14.* T.11 N., R. 2 W., Boise Meridian, Washington County, Idaho Section 1: Lot 1, SE 1/4 NE 1/4 ; Containing 80.18 acres, more or less. Appraised value $8,018. *Parcel 15.* T.14 N., R. 2 W., Boise Meridian, Adams County, Idaho Section 1: SE 1/4 SW 1/4 ; Containing 40.00 acres, more or less. Appraised value $4,560. *Parcel 16.* T.15 N., R. 1 W., Boise Meridian, Adams County, Idaho Section 3: Lot 4; Containing 39.11 acres, more or less. Appraised value $41,000. *Parcel 17.* T.15 N., R. 1 W., Boise Meridian, Adams County, Idaho Section 9: S 1/2 NW 1/4 ; Containing 80.00 acres, more or less. Appraised value $160,000. *Parcel 18.* T.15 N., R. 2 W., Boise Meridian, Adams County, Idaho Section 13: N 1/2 N 1/2 ; Containing 160.00 acres, more or less. Appraised value $70,400. *Parcel 19.* T.17 N., R. 1 W., Boise Meridian, Adams County, Idaho Section 5: Lot 4, SW 1/4 NW 1/4 ; Containing 73.45 acres, more or less. Appraised value $8,373. *Parcel 20.* T.1 N., R. 3 W., Boise Meridian, Canyon County, Idaho Section 26: SE 1/4 NE 1/4 ; Containing 40.00 acres, more or less. Appraised value $19,280. *Parcel 21.* T.1 N., R. 3 W., Boise Meridian, Canyon County, Idaho Section 25: SW 1/4 NW 1/4 ; Containing 40.00 acres, more or less. Appraised value $19,280. *Parcel 22.* Removed from sale. *Parcel 23.* T.8 N., R. 3 W., Boise Meridian, Payette County, Idaho Section 33: S 1/2 S 1/2 ; Containing 160.00 acres, more or less. Appraised value $16,000. *Parcel 24.* T.8 N., R. 2 W., Boise Meridian, Payette County, Idaho Section 31: S 1/2 SE 1/4 ; Containing 80.00 acres, more or less. Appraised value $8,000. *Parcel 25.* T.8 N., R. 2 W., Boise Meridian, Payette County, Idaho Section 32: SW 1/4 NE 1/4 , N 1/2 SW 1/4 ; Containing 120.00 acres, more or less. Appraised value $12,000. *Parcel 26.* T. 7 N., R. 3 W., Boise Meridian, Gem County, Idaho Section 4: Lots 1, 2, 3, 4, S 1/2 N 1/2 , E 1/2 SE 1/4 ; Containing 398.90 acres, more or less. Appraised value $45,475. *Parcel 27.* T. 7 N., R. 3 W., Boise Meridian, Gem County, Idaho Section 2: SW 1/4 NE 1/4 ; Containing 40.00 acres, more or less. Appraised value $4,000. *Parcel 28.* T.15 N., R. 2 W., Boise Meridian, Washington County, Idaho Section 35: NW 1/4 SE 1/4 ; Containing 40.00 acres, more or less. Appraised value $4,000. *Parcel 29.* T.11 N., R. 1 E., Boise Meridian, Gem County, Idaho Section 24: SW 1/4 NW 1/4 ; Containing 40.00 acres, more or less. Appraised value $4,000. *Parcel 30.* T.11 N., R. 2 E., Boise Meridian, Gem County, Idaho Section 19: Lot 7; Containing 40.23 acres, more or less. Appraised value $4,586. *Parcel 31.* T. 9 N., R. 2 E., Boise Meridian, Boise County, Idaho Section 19: Lot 3; Containing 22.25 acres, more or less. Appraised value $2,225. *Parcel 32.* T. 9 N., R. 2 E., Boise Meridian, Boise County, Idaho Section 18: Lot 2; Containing 21.98 acres, more or less. Appraised value $2,200. *Parcel 33.* T. 7 N., R. 2 W., Boise Meridian, Gem County, Idaho Section 8 : NE 1/4 NW 1/4 ; Containing 40.00 acres, more or less. Appraised value $4,000. *Parcel 34.* T. 7 N., R. 2 W., Boise Meridian, Gem County, Idaho Section 17: NE 1/4 NE 1/4 ; Containing 40.00 acres, more or less. Appraised value $4,000. *Parcel 35.* T. 7 N., R. 3 W., Boise Meridian, Payette County, Idaho Section 5: Lot 1, SE 1/4 NE 1/4 ; Containing 80.08 acres, more or less. Appraised value $8,080. If tracts offered for direct sale are not purchased by the identified party(s), the subject tracts may subsequently be offered for open competitive sale. The 1988 Cascade RMP identified parcels 6 through 35 as suitable for disposal subject to a site-specific analysis. An RMP amendment is required to allow the sale of parcels 1 through 5. BLM has prepared an Environmental Assessment

(EA)for these proposed sales, including the plan amendment, pursuant to the National Environmental Policy Act. BLM will be accepting public comments on the proposed sale until March 10, 2008. As of January 24, 2008, the above described land is segregated from appropriation under the public land laws, including the mining laws, except for the Recreation and Public Purposes Act and the sale provisions of the FLPMA. The segregative effect will terminate upon issuance of a patent, publication in the **Federal Register** of a termination of the segregation, or January 25, 2010, whichever first occurs, unless extended by the BLM State Director in accordance with 43 CFR 2711.1-2(d) prior to the termination date. If tracts offered for direct sale are not purchased by the identified party(s), the subject tracts may subsequently be offered for open competitive sale. Whether sold through direct or competitive sale, each of the above parcels will be transferred subject to the following terms, conditions, and reservations: 1. A reservation to the United States of a right-of-way for ditches and canals constructed by the authority of the United States under the Act of August 30, 1890 (43 U.S.C. 945); 2. Pursuant to the requirements established by section 120(h) of the Comprehensive Environmental Response, Compensation, and Liability Act [42 U.S.C. 9620(h)] (CERCLA), as amended by the Superfund Amendments and Reauthorization Act of 1988 (100 Stat. 1670), notice is hereby given that the above-described lands have been examined and no evidence was found to indicate that any hazardous substances had been stored for one year or more, nor had any hazardous substances been disposed of or released on the subject property. 3. All purchasers/patentees, by accepting a patent, covenant and agree to indemnify, defend, and hold the United States harmless from any costs, damages, claims, causes of action, penalties, fines, liabilities, and judgments of any kind or nature arising from the past, present, and future acts or omissions of the patentees or their employees, agents, contractors, lessees, or any third party, arising out of or in connection with the patentee's use, occupancy, or operations on the patented real property. This indemnification and hold harmless agreement includes, but is not limited to, acts and omissions of the patentees and their employees, agents, contractors, or lessees, or any third party, arising out of or in connection with the use and/or occupancy of the patented real property which has already resulted or does hereafter result in:

(1)Violations of Federal, state, and local laws and regulations that are now or may in the future become applicable to the real property;

(2)Judgments, claims or demands of any kind assessed against the United States;

(3)Costs, expenses, or damages of any kind incurred by the United States;

(4)Releases or threatened releases of solid or hazardous waste(s), and/or hazardous substance(s), as defined by Federal or state environmental laws, off, on, into or under land, property and other interests of the United States;

(5)Activities by which solid waste or hazardous substance(s) or waste, as defined by Federal and state environmental laws are generated, released, stored, used or otherwise disposed of on the patented real property, and any cleanup response, remedial action or other actions related in any manner to said solid or hazardous substance(s) or waste(s); or

(6)Natural resource damages as defined by Federal and state law. This covenant shall be construed as running with the parcel of land patented or otherwise conveyed by the United States, and may be enforced by the United States in a court of competent jurisdiction. The patent to the following parcels would be issued with a reservation of a right-of-way for a federal aid highway. Parcel 1—IDBL-047699 FEDERAL AID HIGHWAY (SEC 17) Idaho Dept. of Transportation, Act of November 9, 1921 (42 Stat. 216) Parcel 1—IDI-26915 FEDERAL AID HIGHWAY (SEC 317) Idaho Dept. of Transportation, Act of August 27, 1958 (23 U.S.C.317(A)) Parcel 16—IDI-4973 FEDERAL AID HIGHWAY (SEC 317) Idaho Dept. of Transportation, Act of August 27, 1958 (23 U.S.C. 317(A)) The following parcels would be transferred subject to specific valid existing rights, as described below. Parcel 1—IDBL-056202 TRANSMISSION LINE RIGHT-OF-WAY Idaho Power Co., Act of March 4, 1911, as amended (43 U.S.C. 961) Parcel 1—IDI-13054 TRANSMISSION LINE RIGHT-OF-WAY Idaho Power Co., Act of October 21, 1976 (43 U.S.C. 1761) Parcel 1—IDI-20018 TRANSMISSION LINE RIGHT-OF-WAY Idaho Power Co., Act of October 21, 1976 (43 U.S.C. 1761) Parcel 1—IDI-22927 ROAD RIGHT-OF-WAY Payette County, Act of October 21, 1976 (43 U.S.C. 1761) Parcel 1—IDI-30003 TEL & TELEGRAPH RIGHT-OF-WAY Qwest, Act of October 21, 1976 (43 U.S.C. 1761) Parcel 1—IDI-31924 ROAD RIGHT-OF-WAY Idaho Power Co., Act of October 21, 1976 (43 U.S.C. 1761) Parcel 1—IDI-33588 POWER LINE RIGHT-OF-WAY Idaho Power Co., Various Authorities/Statutes Parcel 2—IDI-001025 IRRIGATION FACILITY RIGHT-OF-WAY Farm Development Corp., Act of March 3, 1891, as amended (43 U.S.C. 946-949) Parcel 2—IDI-0005012 TRANSMISSION LINE RIGHT-OF-WAY Idaho Power Co., Act of October 21, 1976 (43 U.S.C. 1761) Parcel 2—IDI-0015221 TRANSMISSION LINE RIGHT-OF-WAY Idaho Power Co., Act of March 4, 1911, as amended (43 U.S.C. 961) Parcel 2—IDI-0015222 TRANSMISSION LINE RIGHT-OF-WAY Idaho Power Co., Act of March 4, 1911, as amended (43 U.S.C. 961) Parcel 2—IDI-20732 IRRIGATION FACILITY RIGHT-OF-WAY Bing/Frost Ranch Co., Act of July 26, 1866 Parcel 2—IDI-20932 IRRIGATION FACILITY RIGHT-OF-WAY Desert Sun Farms, Inc., Act of July 26, 1866 Parcel 2—IDI-29683 ROAD & PARKING RIGHT-OF-WAY Joe DeCleur, Act of October 21, 1976 (43 U.S.C. 1761) Parcel 2—IDI-34099 ROAD RIGHT-OF-WAY Canyon County Solid Waste Dept., Act of October 21, 1976 (43 U.S.C. 1761) Parcel 2—IDI-35131 ROAD RIGHT-OF-WAY Ralph Sevy, Act of October 21, 1976 (43 U.S.C. 1761) Parcel 3—IDI-20849 ROAD RIGHT-OF-WAY Robert Morrison, Act of October 21, 1976 (43 U.S.C. 1761) Parcel 3—IDI-30448 WATER FACILITY RIGHT-OF-WAY Star Sewer & Water, Act of October 21, 1976 (43 U.S.C. 1761) Parcel 4—IDI-35649 TRAIL RIGHT-OF-WAY Southern Valley County Recreation District, Act of October 21, 1976 (43 U.S.C. 1761) Parcel 6—IDI-22584 TEL & TELEGRAPH RIGHT-OF-WAY Council Telephone Co., Act of October 21, 1976 (43 U.S.C. 1761) Parcel 6—IDI-33309 ROAD RIGHT-OF-WAY Adams County, Act of October 21, 1976 (43 U.S.C. 1761) Parcel 6—IDI-33794 TRANSMISSION LINE RIGHT-OF-WAY Idaho Power Co., Act of October 21, 1976 (43 U.S.C. 1761) Parcel 6—IDI-34097 TRANSMISSION LINE AND ROAD RIGHT-OF-WAY Idaho Power Co., Act of October 21, 1976 (43 U.S.C. 1761) Parcel 6—IDI-34111 TEL & TELEGRAPH RIGHT-OF-WAY Cambridge Telephone, Act of October 21, 1976 (43 U.S.C. 1761) Parcel 16—IDI-0733 TRANSMISSION LINE RIGHT-OF-WAY Idaho Power Co., Act of March 4, 1911, as amended (43 U.S.C. 961) Parcel 16—IDI-22584 TEL & TELEGRAPH RIGHT-OF-WAY Council Telephone Co., Act of October 21, 1976 (43 U.S.C. 1761) Parcel 16—IDI-31364 ROAD RIGHT-OF-WAY Alan Gamblin, Act of October 21, 1976 (43 U.S.C. 1761) The following authorizations are revocable Land Use Permits that may or may not be included as valid existing rights on the affected patent, depending on whether or not the permits have been revoked prior to patent issuance. Parcel 2—IDI-24390 LAND USE PERMIT—BEE HIVES Honeygold Corp., Act of October 21, 1976 (43 U.S.C. 1732) Parcel 2—IDI-24410 LAND USE PERMIT—BEE HIVES Hamilton Honey LLC, Act of October 21, 1976 (43 U.S.C. 1732) Parcel 2—IDI-24421 LAND USE PERMIT—AIR STRIP Valley Air Service, Act of October 21, 1976 (43 U.S.C. 1732) The public lands will not be offered for sale until at least 60 days after the date of publication of this notice in the **Federal Register** , and then at no less than the appraised fair market value. These lands will be offered for sale on May 6, 2008, pursuant to 43 CFR 2711.3-1. In the event of sale, the unreserved mineral estate will be conveyed simultaneously with the surface estate. The unreserved mineral interests have been determined to have no known mineral value pursuant to 43 CFR 2720.2 (a). Acceptance of the sale offer will constitute an application for conveyance of the unreserved mineral interests. The purchaser will be required to pay a $50.00 non-refundable filing fee for conveyance of the available mineral interests. Competitive Sale Procedures The sales will be by sealed bid, followed by oral auction. Sealed bids must be received at the BLM Boise District Office at the above address no later than 4:30 p.m. MDT on the day before the sale. Federal law requires that bidders must be U.S. citizens 18 years of age or older, or in the case of a corporation, subject to the laws of any State of the U.S. Proof of citizenship shall accompany the bid. At 10 a.m. MDT on May 6, 2008, sealed bids will be opened at the BLM Boise District Office, and the highest acceptable sealed bid will be determined for each parcel. An oral auction will follow the determination of the highest acceptable sealed bid at or in excess of the appraised fair market value, with the opening oral bid being for not less than the highest acceptable sealed bid. Oral bidding will continue until the highest bid is determined. If no oral bids are received, the highest acceptable sealed bid will be considered the purchaser. If neither a sealed nor an oral bid is received for a particular parcel, that parcel will remain available for over-the-counter sale at the appraised fair market value for a period of 180 days following the sale date. The purchaser will have 30 days from the date of acceptance of the high bid to submit a deposit of 20 percent of the purchase price and the $50.00 filing fee for conveyance of mineral interests. The purchaser must remit the remainder of the purchase price within 180 days from the date of the sale. Payments must be by certified check, postal money order, bank draft or cashiers check payable to the U.S. Department of the Interior—BLM. Failure to meet conditions established for this sale will void the sale, and any monies received will be forfeited to the BLM. *Public Comments:* For a period until March 10, 2008, the public and interested parties may submit written comments regarding the proposed sale to the BLM Four Rivers Field Manager at the above address. Before including your address, phone number, e-mail address, or other personal identifying information in your comment, be advised that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold from public review your personal identifying information, we cannot guarantee that we will be able to do so. The BLM will make available for public review, in their entirety, all comments submitted by businesses or organizations, including comments by individuals in their capacity as an official or representative of a business or organization. Any adverse comments on the proposed sales will be reviewed by the BLM Idaho State Director, who may sustain, vacate, or modify this realty action and issue a final determination. In the absence of any objections, the realty action will become the final determination of the Department of the Interior. (Authority: 43 CFR 2711.1-2(a)). Protests on the proposed plan amendment must be received or postmarked no later than February 25, 2008 and must be sent to the Director (760), Chief, Planning and Environmental Coordination, at the above address. Any protest to the plan amendment should include:

(1)Name, address, telephone number and interest of protesting party,

(2)identification of the issue being protested,

(3)a statement on the parts of the plan being protested,

(4)a copy of all documents addressing the issues that were submitted during the planning process, and

(5)a concise statement explaining why the State Director's decision is believed to be in error. The State Director will make a final decision on this proposed plan amendment following the Governor's consistency review and resolution of any protests that may be received by the Director. (Authority: 43 CFR 1610.5-2) Parcels 1 through 5, which require a plan amendment, will not be sold prior to the completion of the plan amendment. Dated: January 16, 2008. John Sullivan, Acting Four Rivers Field Manager. [FR Doc. E8-1162 Filed 1-23-08; 8:45 am] BILLING CODE 4310-GG-P DEPARTMENT OF JUSTICE Antitrust Division Public Comment and Response on Proposed Final Judgment Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)-(h), the United States hereby publishes below five comments received on the proposed Final Judgment in *United States* v. *Federation of Physicians and Dentists,* Case No. 1:05-cv-431, which were filed on December 17, 2007, in the United States District Court for the Southern District of Ohio, together with the United States' response to the comments. Copies of the comments and the response are available for inspection at the Department of Justice, Antitrust Division; 325 Seventh Street, NW.; Room 200; Washington, DC 20530 (telephone

(202)514-2481); and at the Office of the Clerk of the United States District Court for the Southern District of Ohio, Potter Stewart U.S. Courthouse, Room 103, 100 East Fifth Street, Cincinnati, Ohio 45202 (telephone

(513)564-7500). Copies of any of these materials may be obtained upon request and payment of a copying fee. J. Robert Kramer II, Director of Operations, Antitrust Division. In the United States District Court for the Southern District of Ohio Western Division United States of America, Plaintiff, vs. Federation of Physicians and Dentists, et al., Defendants. [Case No. 1:05-cv-431] Hon. Sandra S. Beckwith, C.J. Hon. Timothy S. Hogan, M.J. Plaintiff United States' Response to Public Comments Pursuant to the requirements of the Antitrust Procedures and Penalties Act (“APPA” or “Tunney Act”), 15 U.S.C. 16(b)-(h), the United States submits this response to five public comments relating to the proposed Final Judgment that has been lodged with the Court for eventual entry in this case. After review of the comments, the United States continues to believe that the proposed Final Judgment will provide an effective and appropriate remedy for the antitrust violation alleged in the Complaint. Following publication of the comments and this response to them in the **Federal Register,** pursuant to 15 U.S.C. 16(d), the United States will request that the Court enter the proposed Final Judgment. I. Procedural History On June 24, 2005, the United States filed this civil antitrust action, alleging that the Federation of Physicians and Dentists (“Federation”) and Federation employee Lynda Odenkirk, along with physician co-defendants Drs. Warren Metherd, Michael Karram, and James Wendel, coordinated a conspiracy among about 120 obstetrician-gynecologist physicians (“OB-GYNs”) practicing in greater Cincinnati, Ohio, that unreasonably restrained interstate trade and commerce in violation of Section 1 of the Sherman Act, 15 U.S.C. 1. The physician defendants agreed to a judgment that was filed concurrently with the Complaint and entered by this Court on November 14, 2005, as being in the public interest. (Dkt. Entry #36). The Federation and Ms. Odenkirk (the “Federation defendants”), however, contested the charges. On January 26, 2006, the United States filed with the Court a motion seeking entry of partial summary judgment on liability against the Federation defendants. (Dkt. entry ## 40, 47). After briefing on this motion was completed, the Federation defendants filed an unopposed motion requesting the Court to order that the case be referred to mediation. (Dkt. entry # 63). On April 14, 2006, the Court ordered that the case be referred to mediation. Following two mediation conferences and protracted settlement negotiations, on June 19, 2007, the United States filed with the Court a settlement stipulation (Dkt. Entry # 81) with the Federation defendants, consenting to entry of the proposed Final Judgment (Dkt. entry # 81-2), which was lodged with the Court pending the parties' compliance with the APPA. On July 18, 2007, the United States published the Stipulation, proposed Final Judgment, and Competitive Impact Statement (“CIS”) (Dkt. Entry # 84) in the **Federal Register** 39450 (2007), as required by the APPA to facilitate public comments on the proposed Final Judgment. A summary of the terms of the proposed Final Judgment and CIS was published for seven consecutive days in the Cincinnati Enquirer from July 20 through July 26, 2007, and in the *Washington Post* from July 18 through July 24, 2007, also pursuant to the APPA. The 60-day period for public comments on the proposed Final Judgment began on July 27, 2007, and expired on September 24, 2007. During that period, five comments were submitted. II. Summary of the Complainant's Allegations The Federation is a membership organization of physicians and dentists, headquartered in Tallahassee, Florida. the Federation's membership includes economically independent physician groups in private practice in many states, including Ohio. The Federation has offered member physicians assistance in negotiating fees and other terms in their contracts with health care insurers. In spring 2002, several Cincinnati OB-GYNs became interested in joining the Federation to negotiate higher fees from health care insurers. The physician defendants assisted the Federation in recruiting other Cincinnati-area OB-GYNs as members. By June 2002, the membership of the Federation had grown to include a large majority of competing OB-GYN physicians in the Cincinnati area. Withe substantial assistance from the physician defendants and Ms. Odenkirk, the Federation coordinated and helped implement its members' concerted demands to insurers for higher fees and related terms, accompanied by threats of contract terminations. From September 2002 through the fall of 2003, Ms. Odenkirk communicated with the physician defendants and other cincinnati-area OB-GYN Federation members to coordinate their contract negotiations with health care insurers. Along with the physician defendants, Ms. Odenkirk developed a strategy to intensify Federation member physicians' pressure on health care insurers to renegotiate their contracts, including informing member physicians about the status of competing member groups' negotiations and taking steps to coordinate their negotiations. The agreement coordinated by the Federation defendants forced Cincinnati-area health care insurers to raise fees paid to Federation member OB-GYNs above the levels that would likely have resulted if Federation members had negotiated competitively with those insurers. As a result of the conspirators' conduct, the three largest Cincinnati-area health care insurers each were forced to increase fees paid to most Federation member 0B-GYNs by approximately 15-20% starting July 1, 2003, followed by cumulative increases of approximately 20-25% starting January 1, 2004, and approximately 25-30% effective January 1, 2005. This conduct by Federation member OB-GYNs, coordinated by the Federation defendants, also caused other insurers to raise the fees that they paid to Federation OB-GYN members. The increased fees paid by health care insurers to Federation OB-GYN members in the Cincinnati area are ultimately borne by employers and their employees. iii. Summary of Relief to be Obtained Under the Proposed Final Judgment The proposed Final Judgment is designed to enjoin the Federation defendants from taking future actions that could facilitate private-practice physicians in coordinating their dealings with payers for health care services. It accordingly prohibits the Federation defendants from being involved in its private-practice members' negotiations or contracting with health insurers or other payers for health care services anywhere in the United States. The proposed Final Judgment prohibits the Federation defendants from providing any services to any physician in private practice (defined as an “independent physician”) regarding such physician's negotiation, contracting, or other dealings with any payer. The proposed Final Judgment also prohibits the Federation defendants from

(1)representing any independent physician with any payer (including as a messenger);

(2)reviewing or analyzing, for any such physician, any proposed or actual contract or contract term between the physician and any payer; and

(3)communicating with any independent physician about the status of that physician's, or any other physician's, negotiations, contracting, or participation with any payer. The Federation defendants are also generally prohibited from communicating about any proposed or actual contract or contract term between any independent physician and any payer. In addition, the proposed Final Judgment enjoins the Federation defendants from responding to any question initiated by any payer, except to state that the Final Judgment prohibits such a response. Finally, the proposed Final Judgment generally prohibits the Federation defendants from training or educating, or attempting to train or educate, any independent physician in any aspect of contracting or negotiating with any payer. The proposed decree includes exceptions to these prohibitions covering conduct that neither threatens competitive harm nor undermines the clarity of the prohibitions. For example, the proposed decree limits its prohibition on training or educating independent physicians in any aspect of contracting or negotiating with payers by allowing the Federation defendants to

(1)Speak on general topics (including contracting), when

(a)invited to do so as part of a regularly scheduled medical educational seminar offering continuing medical education credit,

(b)advance written notice has been given to Plaintiff, and

(c)documents relating to what was said by the Federation defendants are retained by them for possible inspection by the United States.

(2)Publish articles on general topics (including contracting) in a regularly disseminated newsletter; and

(3)Provide education to independent physicians regarding the regulatory structure (including legislative developments) of workers compensation, Medicaid, and Medicare, except Medicare Advantage, provided that such conduct does not violate any other injunctive provision of the proposed Final Judgment. In a section titled “permitted conduct,” the proposed decree permits certain other conduct as well:

(1)Federation defendants may engage in activities involving physician participation in written fee surveys that are covered by the “safety zone” under Statement 6 of the 1996 Statements of Antitrust Enforcement Policy in Health Care, 4 Trade Reg. Rep.

(CCH)¶ 13,153, which addresses provider participation in exchanges of price and cost information;

(2)Federation defendants and Federation members may engage in lawful union organizational efforts and activities;

(3)Federation defendants may petition governmental entities in accordance with doctrine established in *Eastern Railroad Presidents Conference* v. *Noerr Motor Freight, Inc.,* 365 U.S. 127 (1961), and its progeny; and

(4)Federation physician members may choose independently, or with other members or employees of such member's bona fide solo practice or practice groups, the health insurers with which to contract, and/or to refuse to enter into discussions or negotiations with any health care payer. The proposed Final Judgment clarifies that it does not alter the Federation's obligations under the decree entered by the district court in Delaware in a prior, similar case against the Federation, *United States* v. *Federation of Physicians and Dentists, Inc.,* CA 98-475 JJF (D. Del., consent judgment entered Nov. 6, 2002) (the “ *Delaware* decree”). If there is any conflict between the injunctive provisions of the proposed Final Judgment and the injunctive provisions or conduct permitted by the *Delaware* decree, the proposed Final Judgment controls. The proposed Final Judgment embodies more stringent relief than that provided by the *Delaware* decree because it prohibits the Federation, for example, from representing physicians in their dealings with payers as a messenger and reviewing and analyzing physician contracts with any payer. The *Delaware* decree had permitted such conduct in limited circumstances. IV. Summary of Public Comments and the United States' Responses to Them During the 60-day public comment period, the United States received comments from one individual and four medical societies. Upon review, the United States believes that nothing in the comments warrants a change in the proposed Final Judgment or suggests that the proposed Final Judgment is not in the public interest. None of the comments contend that the proposed decree fails adequately to redress the violations and competitive harm alleged in the Complaint. Rather, two of the comments contend that the proposed Final Judgment is too stringent, and another implies the same point. Two other comments contend that this case resulted from an unfair application of the antitrust laws to physicians in their dealings with insurers. The remaining comment generally criticizes what is characterized as an unreasonably aggressive antitrust enforcement policy by the Department of Justice and Federal Trade Commission with respect to physicians. The United States addresses these concerns below and explains why the proposed Final Judgment is appropriate. A. Comments Questioning the Charges Brought Against the Federation Defendants 1. Summary of Comments Submitted by Dr. Michael Connair and the American Academy of Orthopaedic Surgeons Dr. Michael Connair, an orthopedic surgeon in Connecticut and a Vice President of the defendant Federation of Physicians and dentists, has submitted a comment (attachment 1) that criticizes the United States' Competitive Impact Statement (“CIS”) (Dkt. Entry # 84) as “reflect[ing] a misguided DOJ enforcement policy that ignores antitrust principles and that encourages anticompetitive behavior by insurers.” According to Dr. Connair, the CIS ignores that Cincinnati “physicians were forced to react to anti-competitive behaviors by Cincinnati insurers because the Department of Justice did not enforce antitrust principles against those insurers.” Similarly, the American Academy of Orthopaedic Surgeons' comment (Attachment 2) expresses the Academy's belief that this case “is the result of the antitrust laws not being applied equally to the insurance industry as they are to physicians or other professions,” which “would reduce competition in the insurance industry and, ultimately, harm consumers.” The Academy's comment also asserts that “[i]n this case, the physicians appeared to be reacting to anticompetitive behaviors by Cincinnati insurers which artifically lowered prices below Medicare levels.” 2. United States' Response to Comments Submitted by Dr. Michael Connair and the American Academy of Orthopaedic Surgeons Dr. Connair's and the Academy's comments challenge the United States' decision to prosecute the defendants' alleged anticompetitive conduct, rather than alleged anticompetitive actions by health insurers. Such an argument is outside the scope of this APPA proceeding because the APPA does not permit the Court to review the efficacy or “correctness” of the United States' enforcement policy or its determination to pursue—or not pursue—a particular claim in the first instance. As explained by the District Court for the District of Columbia, in a Tunney Act “public interest” proceeding, the district court should not second-guess the prosecutorial decisions of the Antitrust Division regarding the nature of the claims brought in the first instance; “rather, the court is to compare the complaint filed by the United States with the proposed consent decree and determine whether the proposed decree clearly and effectively addresses the anticompetitive harms initially identified.” *United States* v. *The Thomson Corp,* 949 F. Supp. 907, 913 (D.D.C. 1996); *accord, United States* v. *Microsoft Corp.,* 56 F.3d 1448, 1459 (D.C. Cir. 1995) (in APPA proceeding, “district court is not empowered to review the actions or behavior of the Department of Justice; the court is only authorized to review the decree itself”). Although the comments of Dr. Connair and the Academy are beyond the scope of an APPA proceeding, the United States nevertheless observes that their comments are incorrect as a matter of fact and law. The United States believes that the uncontested evidence and law presented in support of its motion for summary judgment, which the Court was not called on to decide in view of the parties' proposed settlement, strongly supports the Complaint's allegations that the Federation defendants violated the antitrust laws. (Dkt. Entry ## 1, 47). Further, even if the Federation defendants believed that Cincinnati insurers had colluded on payments made to OB-GYNs, as the comments imply, such circumstances would provide no defense for the Federation defendants' coordination of Cincinnati OB-GYNs price fixing. Controlling law is clear “[t]hat a particular practice may be unlawful is not, in itself, a sufficient justification for collusion among competitors to prevent it.” *FTC* v. *Indiana Fed'n of Dentists,* 476 U.S. 447, 465 (1986). B. Comments Arguing that the Proposed Final Judgment is Overly Restrictive 1. Summary of Comments Submitted by the Connecticut State Medical Society, Connecticut Orthopedic Society, and Utah State Orthopaedic Society The Connecticut State Medical Society

(CSMS)comments (Attachment 3) that the proposed Final Judgment is “unnecessarily restrictive and more onerous than final decrees typically proposed by both the [Department of Justice] and the Federal Trade Commission

(FTC)under similar circumstances in that it precludes the Federation from engaging in *lawful* conduct including representing physicians in their dealing with payers as messengers and from reviewing and analyzing physician contracts with any third-party payer.” The CSMS asks the United States to modify the proposed Final Judgment to allow the defendant Federation to participate in

(1)qualified risk-sharing and qualified clinically integrated joint arrangements,

(2)messenger-model arrangements, and

(3)communications with physicians about insurer contracts. The Connecticut Orthopedic Society comments (Attachment 4) in support of the letter submitted by the CSMS. The Utah State Orthopaedic Society's (“USOS's”) comment (Attachment 5) states that the defendant Federation has served as a messenger for orthopedists in Utah with productive results. Based on the Utah experience, the comment “presume[s] that the activities in Cincinnati have been handled in a similar fashion by the Federation.” The USOS's comment further expresses the “hope * * * [that] the ‘messenger model’ throughout the country is managed legally by those that employ it.” 2. United States' Response to Comments Submitted by the Connecticut State Medical Society, Connecticut Orthopedic Society, and Utah State Orthopaedic Society These comments seek entry of a decree that essentially tracks the *Delaware* decree. The United States had agreed to resolve its earlier case against the Federation, in part, to give the Federation an opportunity to conduct some of its activities in a lawful manner that should not have led to anticompetitive results. The Federation defendants' actions in Cincinnati, as alleged in the United States' Complaint (Dkt. Entry # 1) and demonstrated in its summary judgment brief (Dkt. Entry # 47), however, have shown that such a decree is insufficient to prevent the Federation defendants from engaging in substantial anticompetitive conduct and, therefore, that a more restrictive decree is appropriate. The Federation defendants' alleged conduct in Cincinnati demonstrates that the USOS's expressed “hope” that the Federation defendants have employed the “messenger model” appropriately elsewhere has not been realized. Had the Federation defendants' complied with the *Delaware* decree, it plainly would have prevented them from coordinating Cincinnati OB-GYNs' fee negotiations with health insurers. The Federation defendants nonetheless have steadfastly maintained that their conduct challenged in this matter complied with the *Delaware* decree, which—like the proposed Final Judgment—is nationwide in scope. Accordingly, the United States decided in this matter to negotiate a more restrictive proposed Final Judgment with the Federation defendants that assures that the Federation will not again engage in conduct that has the anticompetitive effect alleged in the complaint. The proposed Final Judgment thus provides appropriate additional assurance that the type of conduct that occurred in Cincinnati, despite the *Delaware* decree, will not recur. In short the orthopedic groups' comments fail to recognize that the Federation defendants' conduct in Cincinnati has shown that the *Delaware* decree is insufficient to prevent their recurrent anticompetitive conduct and, therefore, that a more stringent decree is required. “While the resulting [proposed Final Judgment] may curtail the exercise of liberties that the [Federation defendants] might otherwise enjoy, that is a necessary and, in cases such as this, unavoidable consequence of the [recurrent] violation.” *Nat'l Soc'y of Prof'l Eng'rs* v. *United States* , 435 U.S. 679, 697 (1978). Although the proposed Final Judgment “goes beyond a simple proscription against the precise conduct previously pursued[,] that is entirely appropriate” under the circumstances. *Id.* at 698. Conclusion After considering the five comments received, the United States continues to believe that the proposed Final Judgment reasonably and appropriately addresses the harm alleged in the Complaint. Therefore, following publication of this response to comments in the **Federal Register** and submission of the United States' certification of compliance with the APPA, the United States intends to request entry of the proposed Final Judgment once the Court determines that entry is in the public interest. Dated: December 17, 2007. Respectfully submitted, For Plaintiff United States of America Gregory G. Lockhart, United States Attorney. /s/ Gerald F. Kaminski Gerald F. Kaminski, *Assistant United States Attorney,* Bar No. 0012532. Office of the United States Attorney, 221 E. 4th Street, Suite 400, Cincinnati, Ohio 45202,

(513)684-3711. /s/ Steven Kramer Steven Kramer *Attorney, Antitrust Division.* U.S. Department of Justice, 1401 H Street, NW., Suite 4000, Washington, DC 20530,

(202)307-0997, *steven.kramer@usdoj.gov* . BILLING CODE 4401-11-M EN24JA08.002 EN24JA08.003 EN24JA08.004 EN24JA08.005 EN24JA08.006 EN24JA08.007 EN24JA08.008 EN24JA08.009 EN24JA08.010 EN24JA08.011 EN24JA08.012 EN24JA08.013 EN24JA08.014 EN24JA08.015 [FR Doc. 08-227 Filed 1-23-08; 8:45 am]

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