22312 Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules

Compliance With Executive Orders

12612, 12778 and 12866, the Regulatory

Flexibility Act, 5 U.S.C. 601 et seq., and

the Paperwork Reduction Act, 44 U.S.C.

Ch. 35

For purposes of the Regulatory

Flexibility Act, 5 U.S.C. 601 et seq., SBA

certifies that this proposed rule, if

promulgated in final form, will not have

a significant economic impact on a

substantial number of small entities.

The SBA certifies that this proposed

rule, if promulgated in final form, will

not constitute a significant regulatory

action for the purposes of Executive

Order 12866, since the proposed change

is not likely to result in an annual effect

on the economy of $100 million or

more.

The SBA certifies that the proposed

rule, if promulgated in final form,

would not impose additional reporting

or recordkeeping requirements which

would be subject to the Paperwork

Reduction Act, 44 U.S.C. Chapter 35.

The SBA certifies that this proposed

rule would not have federalism

implications warranting the preparation

of a Federalism Assessment in

accordance with Executive Order 12612.

Further, for purposes of Executive

Order 12778, SBA certifies that this

proposed rule, if promulgated in final

form, is drafted, to the extent

practicable, in accordance with the

standards set forth in section 2 of that

Order.

(Catalog of Federal Domestic Assistance

Program No. 59.012)

List of Subjects in 13 CFR Part 122

Loan programs—business, Small

businesses.

Accordingly, pursuant to the

authority contained in section 5(b)(6) of

the Small Business Act (15 U.S.C.

634(b)(6)), SBA proposes to amend part

122, chapter I, title 13, Code of Federal

Regulations, as follows:

PART 122—BUSINESS LOANS

1. The authority citation for part 122

would continue to read as follows:

Authority: 15 U.S.C. 634(b)(6), 636(a),

636(m).

2. Section 122.61–11(a) would be

amended by revising the last sentence to

read as follows:

§ 122.61–11 Program procedure.

(a) Participation of intermediary by

State. * * * Further, no intermediary

may undertake Program activities in

more than one State unless the SBA

Associate Administrator for Financial

Assistance determines in writing that it

would be in the best interest of the

small business community to operate

across State lines.

* * * * *

Dated: March 31, 1995.

Philip Lader,

Administrator.

[FR Doc. 95–11156 Filed 5–4–95; 8:45 am]

BILLING CODE 8025–01–M

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 10, 12, 102, 134 and 177

[RIN 1515–AB19; RIN 1515–AB34]

Rules for Determining the Country of

Origin of a Good for Purposes of

Annex 311 of the North American Free

Trade Agreement; Rules of Origin

Applicable to Imported Merchandise

AGENCY: U.S. Customs Service,

Department of the Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document proposes to

amend the interim Customs Regulations,

published in the Federal Register on

January 3, 1994, as T.D. 94–4, which

established the rules for determining

when the country of origin of a good is

one of the parties to the North American

Free Trade Agreement for purposes of

Annex 311 of that Agreement. This

document also republishes, with some

modifications, proposed amendments to

the Customs Regulations to set forth

uniform rules governing the

determination of the country of origin of

imported merchandise, which were also

published in the Federal Register on

January 3, 1994. The purpose of the

proposals set forth in this document is

to clarify the intent, or otherwise

facilitate understanding of, the

previously-published interim and

proposed regulatory amendments. In

addition, this document solicits public

comments on the appropriate effective

date for a final rule action regarding the

interim and proposed regulatory

amendments.

DATES: Comments must be received on

or before June 19, 1995.

ADDRESSES: Written comments

(preferably in triplicate) may be

addressed to the Regulations Branch,

U.S. Customs Service, Franklin Court,

1301 Constitution Avenue, NW.,

Washington, DC 20229. Comments

submitted may be inspected at the

Regulations Branch, Office of

Regulations and Rulings, Franklin

Court, 1099 14th Street, N.W., Suite

4000, Washington, D.C.

FOR FURTHER INFORMATION CONTACT:

Sandra Gethers, Office of Regulations

and Rulings (202–482–6980).

SUPPLEMENTARY INFORMATION:

Background

On January 3, 1994, Customs

published T.D. 94–4 in the Federal

Register (59 FR 110) setting forth

interim regulations to establish rules for

determining the country of origin of a

good for purposes of Annex 311 of the

North American Free Trade Agreement

(NAFTA). The United States, Canada

and Mexico entered into the NAFTA on

December 17, 1992, and the provisions

of the NAFTA were adopted by the

United States with the enactment of the

North American Free Trade Agreement

Implementation Act, Public Law 103–

182, 107 Stat. 2057. T.D. 94–4 stated

that the interim regulations were

effective on January 1, 1994, and also

provided for a 90-day public comment

period which was subsequently

extended to July 5, 1994, by a notice

published in the Federal Register on

March 11, 1994 (59 FR 11547). On

February 3, 1994, a notice was

published in the Federal Register (59

FR 5082) setting forth corrections to the

interim regulations contained in T.D.

94–4.

On January 3, 1994, Customs also

published a document in the Federal

Register (59 FR 141) which proposed to

amend the Customs Regulations to set

forth uniform rules governing the

determination of the country of origin of

imported merchandise; this notice of

proposed rulemaking represented a

refinement and replacement of an

earlier proposal published in the

Federal Register on September 25, 1991

(56 FR 48448). This January 3, 1994,

document proposed: (1) To amend

§ 102.0 of the interim regulations

published as T.D. 94–4 so that those

interim regulations would apply not

only for the purposes stated in Annex

311 of the NAFTA but would also apply

in the broader context of country of

origin determinations ‘‘for purposes of

the Customs and related laws and the

navigation laws of the United States’’;

and (2) to amend various provisions

within Parts 4, 10, 12, 134 and 177 of

the Customs Regulations (19 CFR Parts

4, 10, 12, 134 and 177) to ensure that the

rules contained in interim Part 102

would control wherever language

requiring a country of origin

determination appears in those other

regulatory provisions. Thus, under this

notice of proposed rulemaking the

interim rules set forth in T.D. 94–4

would apply wherever a provision of

the Customs and related laws or the
Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules 22313

navigation laws or a regulation

thereunder uses language such as ‘‘new

and different article of commerce’’,

‘‘wholly the growth, product, or

manufacture’’, ‘‘product of’’, or

‘‘substantial transformation’’ for

purposes of establishing the criteria for

country of origin of a good. The notice

of proposed rulemaking provided for a

90-day public comment period which

was subsequently extended to July 5,

1994, by a notice published in the

Federal Register on March 10, 1994 (59

FR 11225).

In view of the fact that the January 3,

1994, notice of proposed rulemaking

presented the same regulatory scheme

as the rules contained in T.D. 94–4, each

document referred to the other and

stated that public comments submitted

in response to either document would

be considered in connection with the

review of both documents. The notice of

proposed rulemaking further indicated

that the background section and interim

Part 102 regulatory texts set forth in T.D.

94–4 were applicable to it. Thus, it was

intended that the two documents be

read together so that, following public

notice and comment procedures, one

final rule document could be derived

from the interim and proposed rule

documents, consistent with the overall

goal of promulgating uniform rules of

origin for Customs and related purposes.

The publication of the interim

regulations set forth in T.D. 94–4 was

specifically intended to fulfill the

United States obligation under

paragraph 1 of NAFTA Annex 311

which provides that the parties to the

NAFTA shall establish, by January 1,

1994, rules (referred to as ‘‘Marking

Rules’’) for determining whether a good

is a good of a party (that is, whether the

country of origin of a good is either the

United States, Canada or Mexico) for

purposes of the following NAFTA

Annexes: (1) Annex 311 (Country of

Origin Marking); (2) Annex 300–B

(Textile and Apparel Goods); and (3)

Annex 302.2 (Tariff Elimination). T.D.

94–4 set forth these interim ‘‘Marking

Rules’’ as a new Part 102 of the Customs

Regulations (19 CFR Part 102), entitled

‘‘Rules of Origin’’, and also set forth

consequential conforming interim

amendments to existing sections within

Parts 12 and 134 of the Customs

Regulations (19 CFR Parts 12 and 134).

Interim Part 102 consists of §§ 102.0–

102.20 and, following § 102.0 (Scope), is

divided into two subparts. Subpart A is

entitled ‘‘General’’ and consists of

§ 102.1 (Definitions), and Subpart B is

entitled ‘‘Rules of Origin’’ and consists

of §§ 102.11 through 102.20. Section

102.11 sets forth the general rules for

determining the country of origin of a

good and consists of paragraphs (a)

through (d) which are applied in a

hierarchical and sequential manner.

Thus, reference must be had first to

paragraph (a) which provides that the

country of origin of a good is: under

subparagraph (1), the country in which

the good is wholly obtained or

produced; under subparagraph (2), the

country in which the good is produced

exclusively from domestic materials; or,

under subparagraph (3), the country in

which each foreign material

incorporated in the good undergoes an

applicable change in tariff classification

set out in § 102.20 and/or satisfies any

other applicable requirements contained

in that section or elsewhere in Part 102.

If the country of origin cannot be

determined under paragraph (a) because

the good does not meet the terms of

subparagraph (1), (2) or (3), then resort

must be had to paragraph (b) and, if that

fails, then to paragraph (c) and, if that

fails, finally to paragraph (d). Sections

102.12–102.19 set forth additional rules

that serve to interpret, clarify, limit or

otherwise control the application of the

general rules contained in § 102.11 as

well as the specific rules contained in

§ 102.20. Section 102.20 contains the

specific change in tariff classification

rules and/or related requirements

referred to in the country of origin rule

set forth in § 102.11(a)(3); the rules in

§ 102.20 are set forth for each

Harmonized Tariff Schedule of the

United States (HTSUS) chapter, and the

applicable rule is determined by the

HTSUS tariff classification that is

applicable to the finished good at the

time the country of origin determination

is being made.

Based on a review of the comments

received in response to the interim and

proposed rule documents published in

the Federal Register on January 3, 1994,

and as a result of independent review of

the interim and proposed texts within

Customs, it has been determined (1) that

some clarification and further

explanation of the intent behind the

proposed uniform rule concept should

be provided and (2) that some changes

should be made to the interim and

proposed texts and that those changes

should be the subject of public notice

and comment procedures before

proceeding to the final rule stage in this

matter; the interim texts as published in

T.D. 94–4 (and as subsequently

corrected) remain in effect pending

completion of such final rule action. In

addition, Customs believes, for the

reasons set forth below, that public

comments should be solicited at this

time regarding the appropriate use of a

delayed effective date for any final rule

that results from the interim and

proposed rules, including any changes

thereto as proposed in this document.

Accordingly, this document (1)

provides supplemental background

information regarding the proposed

uniform rule concept, (2) sets forth

proposals, as discussed in detail below,

to amend the interim regulatory texts

contained in T.D. 94–4 published at 59

FR 110 and corrected at 59 FR 5082, (3)

republishes all of the proposed

regulatory amendments published at 59

FR 141 on January 3, 1994, with certain

changes thereto as discussed in detail

below, and (4) invites public comments

on the appropriate effective date for a

final rule on this matter. It is the

intention of Customs to address in this

document only those comments

submitted in response to the January 3,

1994, notices that involve substantive

changes to the interim or proposed texts

requiring further public comment

procedures; other such previously

submitted comments will be addressed

in an appropriate final rule or other

document to be published at a later

date. Comments will be accepted and

considered in response to this document

only in regard to the following: (1) The

proposed changes to the interim

regulatory texts as discussed and set

forth below; (2) all other proposed

regulatory amendments as discussed

and set forth below which represent a

substantive change to the proposals

published on January 3, 1994; and (3)

the final rule delayed effective date

issue. Accordingly, comments which

concern other issues involved in the

January 3, 1994, documents, or which

do not otherwise relate to the new

proposals set forth in this document,

will not be accepted and considered by

Customs. For purposes of this

document, the background sections of

the January 3, 1994, interim and

proposed rule documents are applicable

except where otherwise required by a

change set forth in this document.

Supplemental Background Information

Based on an apparent

misunderstanding reflected in some of

the comments received in response to

the January 3, 1994, notice of proposed

rulemaking, Customs believes that

further clarification of the purpose of

the development of these rules for all

non-preference country of origin

purposes is needed. This

misunderstanding most probably

stemmed from the following statement

made in the Background portion of that

document: ‘‘The change in tariff

classification standard was specifically

developed as an alternative to the

traditional substantial transformation
22314 Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules

rule in order to obviate the problems

described above.’’ This statement

referred only to the distinction in format

between the proposed rulemaking,

which defines substantial

transformation on the basis of published

rules, and the traditional application of

the substantial transformation principle.

Customs was not proposing that the

criteria for origin determination be

based on a new standard; quite to the

contrary, Customs intended that the

same standard, substantial

transformation, be applicable. As stated

in the Discussion of Proposals portion of

the January 3, 1994, notice of proposed

rulemaking, the new Part 102 rules,

which are proposed to be used for all

non-preference country of origin

determinations, are specifically

intended to ‘‘codify’’, rather than

constitute an alternative to the

substantial transformation rule, i.e., ‘‘the

criteria for determining whether a good

has become a ‘new and different article

of commerce’ as a result of a

manufacturing process in a given

country,’’ and to ‘‘provide the results

that would be reached under the caseby-case application of the substantial

transformation rule.’’

The interim Part 102 rules, which

Customs proposes to use for all nonpreference country of origin

determinations, are in fact specifically

designed to implement the principles of

the substantial transformation standard.

In this regard, it should be noted that

Customs views as relevant all court

decisions involving substantial

transformation for purposes of country

of origin determination, regardless of

the purpose for which the origin

determination is being made. As

favorably noted by the Court of

International Trade in Target

Sportswear, Inc. v. United States, Slip

Op. 95–7 (January 23, 1995), the

purpose of these rules is ‘‘to add more

certainty and uniformity to the

substantial transformation test.’’ A

summary of court decisions involving

substantial transformation for country of

origin purposes and their relationship to

the interim Part 102 rules is set forth

below in order to demonstrate the

approach which Customs took in

drafting the interim and proposed rules

at issue, including the further proposals

set forth in this document.

1. Country of Origin Marking Cases

With regard to country of origin

marking, the area in which the

substantial transformation principle is

employed most often, the Part 102 rules

will implement this principle consistent

with court decisions in this area.

U.S. v. Gibson-Thomsen Co., Inc., 27

CCPA 267 (1970). The court held that

the manufacturer of hair and tooth

brushes from imported wood blocks and

toothbrush handles was the ‘‘ultimate

purchaser’’ by having manufactured the

imported articles into new articles

having a new name, character, and use.

In this case, wooden toothbrush handles

and brush blocks were imported for use

in the manufacture of tooth and hair

brushes. In the manufacture of the

brushes, holes were bored into the

handles and blocks; bristles were

inserted and imbedded; the bristles

were trimmed; and the handles were

polished and stamped. In the opinion of

the court, the imported wood blocks and

handles lost their identities in a tariff

sense as a result of the assembly process

and became an integral part of a new

article. Therefore, the court held that the

imported articles were substantially

transformed in the United States so that

country of origin marking of the hair

and tooth brushes was not required. The

Part 102 rules are consistent with this

case since the § 102.20 specific tariff

shift rule for hairbrushes and

toothbrushes allows a change to heading

9603 from any other heading, and the

components which make up the

finished toothbrushes and hairbrushes

(handles, brush blocks, bristles) are all

classified outside heading 9603.

National Juice Products Assn. v. U.S.,

628 F.Supp. 978 (CIT 1986). In this case

the court upheld Customs’

determination that production of frozen

concentrated and reconstituted orange

juice from manufacturing concentrate is

not a substantial transformation. The

court also upheld Customs’

determination that the manufacturing

concentrate imparts the essential

character to the juice and makes it

orange juice. The court noted that the

addition of water, orange essences, and

oils to the concentrate, while making it

suitable for retail sale, does not change

the fundamental character of the

product, which is still essentially the

product of juices. The court concluded

that the orange juice processors in the

United States are not the ultimate

purchasers of the imported product

because consumers are the last

purchasers to receive the product in

essentially the form in which it is

imported. Thus, in accordance with 19

U.S.C. 1304, the court held that the

retail packaging must indicate the

country of origin of the manufacturing

concentrate. The Part 102 rule which

covers reconstituted orange juice (and

which specifies a change to subheading

2009.11 through 2009.30 from any other

chapter) is consistent with National

Juice. Thus, just as the court in National

Juice found that the process of mixing

various ingredients with foreign

manufacturing concentrate to create

reconstituted orange juice did not result

in a substantial transformation, the

applicable Part 102 rule likewise does

not allow origin to be conferred by a

change from manufacturing concentrate

to reconstituted orange juice.

Uniroyal, Inc. v. U.S., 542 F.Supp.

1026 (CIT 1983). In Indonesia, an upper

was manufactured from sheets of leather

into a substantially complete shoe, that

is, it was ‘‘lasted’’ or permanently

molded so that it was in its ultimate

shape, form, and size when exported.

The uppers were shipped to the United

States where pre-shaped, pre-sized

outsoles were attached to the uppers.

The court held that despite the name

change (upper to shoe) there was no

substantial transformation because the

attachment of the outsole to the upper

was a minor manufacturing or

combining process which left the

identity of the upper intact. The upper

when imported was readily recognizable

as a distinct item apart from the outsole

to which it was attached. The court

found that the imported upper was the

very ‘‘essence’’ of the finished shoe.

Therefore, the court held that the

operations performed in the United

States did not constitute a substantial

transformation and therefore the uppers

were required to be marked with the

country of origin. The Part 102 standard

is consistent with the court’s holding in

Uniroyal because the specific tariff shift

rule for shoes (headings 6401–6405)

provides for a change to heading 6401

through 6405 from any tariff item

outside that group except from formed

uppers.

Koru North America v. U.S., 701

F.Supp. 229 (CIT 1988). In this case,

Hoki fish caught off the coast of New

Zealand were beheaded, de-tailed,

eviscerated, and frozen aboard the ships

in New Zealand. The fish were then sent

to Korea for further processing which

included thawing, skinning, boning,

trimming, glazing, refreezing, and

packaging the fish for shipment to the

United States. The court held that the

processing in Korea constitutes a

substantial transformation. The court

based this finding on a change in name

and character, noting that there was a

name change from ‘‘headed and gutted

Hoki’’ to ‘‘individually quick-frozen

fillets’’ as a result of the processing

performed in Korea. The court also

noted that the two types of fish are

classified in separate tariff provisions.

The court also found that the processing

in Korea resulted in a change in the

fundamental nature and character of the
Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules 22315

fresh fish. The court noted that the

fillets are considered discrete

commercial goods and are sold in

separate areas and markets different

from the headed and gutted fish.

Therefore, the court held that the Hoki

should be properly marked as products

of Korea. The Part 102 rules are

consistent with this court decision since

the rule for frozen fish fillets (heading

0304) allows a change to frozen fish

fillets of heading 0304 from any other

heading, and frozen, beheaded, detailed, eviscerated fish are classified in

heading 0303 rather than in heading

0304.

MBI Merchandise Industries Inc. v.

United States, 16 CIT 495 (1992). The

court held that any Korean magnetic

pages of a photo album were

substantially transformed in Taiwan and

in the People’s Republic of China when

they were incorporated into the finished

photo album. The court noted that the

character of the pages was transformed

from refills into a fully salable photo

album (classifiable in heading 4820).

The court also stated that the use of the

pages was also transformed from loose

refill pages to completed albums

suitable for display on a customer’s

bookshelf, the primary purpose of a

photo album. Finally, the court found

that the combination of the various parts

(cover, pages, binder, and label) results

in an item having a new identity.

Distinguishing the Uniroyal case

discussed above, the court found that

the pages in this case were not the

‘‘essence’’ of the photo albums. The

court also considered the value added as

a result of making the photo albums as

support for the conclusion that the

photo album pages were substantially

transformed. The permitted changes

under the applicable Part 102 tariff shift

rule include a change to heading 4820

from any other heading, and the loose

filler paper is classified outside of

heading 4820. Thus, under the Part 102

rules the magnetic pages will be

transformed into products of the

country in which the albums were

produced, consistent with the

conclusion reached by the court in

M.B.I.

Carlson Furniture Industries v. United

States, 65 Cust.Ct. 474 (1970). In the

United States, wooden chair parts

imported from Japan were assembled

and fitted together, glued, the joints

steel-pinned, the legs cut to length and

leveled, and, in some instances, the

chairs upholstered and the legs fitted

with glides and casters. The court held

that the work performed on the

imported articles by the importer was

substantial in nature and more than the

mere assembly of parts together. The

court further stated that the result of the

assembly of the chair parts was the

transformation of the parts into a

‘‘functional whole’’—which resulted in

a new and different article of commerce.

The court concluded that the importer

was the ‘‘ultimate purchaser’’ of the

imported articles, so that the marking of

the country of origin on the containers

in which such articles were imported

was deemed sufficient to meet the

statutory marking requirements. The

Part 102 rules are consistent with this

court decision. In this case, the goods

for which country of origin had to be

determined were ‘‘chairs’’, which are

classified under subheadings 9401.10

through 9401.80 for which the following

§ 102.20 tariff shift rule is prescribed: A

change to subheading 9401.10 through

9401.80 from any subheading outside

that group, except from subheading

9403.10 through 9403.80, and except a

change from subheading 9401.90 or

9403.90 when that change is pursuant to

GRI 2(a). The Court in Carlson Furniture

also found that the imported articles

were ‘‘not chairs in unassembled or

knocked-down condition’’, but were ‘‘at

best the wooden parts which go into the

making of chairs’’. Since the chair parts

were assembled into finished chairs by

the U.S. importer, the change in

classification from the imported chair

parts to finished chairs did not occur

pursuant to GRI (2)(a). Consequently,

the assembly and other processing of the

chair parts, classifiable under 9401.90,

would be treated as a substantial

transformation under the Part 102 rules.

Midwood Industries, Inc. v. United

States, 313 F.Supp. 951 (Cust.Ct. 1970).

In this case, steel forgings manufactured

in West Germany, England, or Italy were

imported into the United States where

they were manufactured into flanges

and fittings. The purpose of the fittings

was to connect pipes of matching sizes.

To that end, the forgings were faced,

bored, threaded or bevelled, drilled, or

spot-faced, or they were heated and one

end was reduced in size and diameter

by compression, excess steel was

removed, and the ends were aligned,

trimmed, and bevelled for welding

purposes. In finding that the steel

forgings were substantially transformed

in the United States, the court drew a

distinction between consumer and

producer goods, stating that the

imported articles are ‘‘not in fact used

by the consumer in such state of

manufacture and are not capable of use

by the consumer in that state.’’ The Part

102 rules do not stipulate that all

forgings manufactured into flanges and

fittings undergo a substantial

transformation. The Court of

International Trade has not employed

the consumer-good-versus-producergood analysis used by the Customs

Court in Midwood. Nor does Customs

believe that the court is bound to follow

that reasoning. Cf. Algoma Steel Corp.,

Ltd. v. U.S., 865 F.2d 240, 243 (Fed.Cir.

1989). In Midwood, the Customs Court

based its decision on an analysis of the

facts presented regarding the

manufacturing processes employed by a

single pipe fittings company circa 1970

as well as the legal arguments presented

in that case. The court noted that it did

not need ‘‘to determine whether or not

the processes employed’’ at the

plaintiff’s plant were ‘‘generally

prevalent throughout any segment of the

industry in the United States.’’

Midwood, 313 F.Supp. at 956. Customs

believes that the Midwood result would

have been consistent with the proposed

rules set forth in this document had it

been presented as such. Consequently,

Customs is confident that the Court of

International Trade will sustain the

uniform rules of general applicability

contained herein, which are relevant to

current industry practices and are

entirely consistent with the general

principles enunciated by the court.

National Hand Tool Corp. v. United

States, 16 CIT 308 (1992). The articles

involved in this case were nine kinds of

components of hand tools which were

further processed and assembled in the

United States. The components were

either cold-formed or hot-forged in

Taiwan into their final shape before

importation. Some of the tools

underwent a heat treatment, were

reshaped by bending, or were further

machined by knurling in the United

States, and other articles were

electroplated in the United States. The

various components were then

assembled in the United States to

produce the finished tools. The court

found that there was no name change

and that the character of the imported

articles remained unchanged after heat

treatment, electroplating, and assembly.

The court stated that although there may

be changes in the characteristics of the

material, they did not change the

character of the articles. The court also

found no change in use as a result of the

processing in United States. Finally, the

court found that there was no reason to

find a substantial transformation on the

basis of the value-added in the United

States. Accordingly, since the

operations performed in the United

States did not result in a substantial

transformation, the court held that the

imported articles must be marked to

indicate the country of origin pursuant

to 19 U.S.C. 1304. The Part 102 rules are
22316 Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules

totally consistent with the application of

the substantial transformation principle

in this case, not only in the case of hand

tools but also as applied to other

products involving similar processing

operations.

2. Subheading 9802.00.80 and Products

of the United States

This document sets forth, without

change, the proposal contained in the

January 3, 1994, notice of proposed

rulemaking to amend § 10.14 of the

Customs Regulations to provide for

application of the Part 102 rules for

purposes of determining when imported

foreign materials are substantially

transformed in the United States so as

to be considered products of the United

States and thus not subject to duty

under subheading 9802.00.80, HTSUS,

when exported for assembly abroad and

then returned to the United States. The

Part 102 rules are totally consistent with

the following court decision which

involved substantial transformation for

purposes of determining country of

origin in connection with item 807.00,

TSUS (the predecessor to subheading

9802.00.80, HTSUS).

Data General Corporation v. United

States, 4 CIT 182 (1982). The court

considered the question of whether

programming a programmable read only

memory (PROM) imported into the

United States constitutes a substantial

transformation. The court analyzed the

processing in terms of the name,

character, and use test. The court found

that there was a change in name in that

a PROM when programmed is no longer

a PROM and is sometimes referred to as

a read only memory (ROM). The court

found that there was also a change in

character as a result of the programming

which changed the pattern of

interconnections with the PROM.

According to the court, a distinct

physical change was effected in the

PROM by the opening or closing of the

fuses. Citing Uniroyal, the court stated

that the ‘‘essence’’ of the article, its

pattern of interconnections or stored

memory, was established by the

programming. The court also noted that

there was a change in use in that the

PROM had no function or use except for

programming. The court analogized

programming a PROM to assembling the

components on a printed circuit board,

which is cited in 19 CFR 10.14(b) as an

example of substantial transformation.

Therefore, the court held that

programming the PROM resulted in a

substantial transformation into a

‘‘fabricated component’’ which was a

product of the United States for

purposes of item 807.00, TSUS. The

result reached in this case is reflected in

the Part 102 rules since the applicable

tariff shift rule (subheadings 8541–8542)

allows a change to any programmed

chips from any unprogrammed.

3. Application of Most-Favored-Nation

Duty Rates

The Part 102 rules are consistent with

the court’s application of the substantial

transformation principle in the

following case which involved the

question of whether the most favorednation duty rate (as opposed to the

higher column 2 duty rate) should be

applied to the imported merchandise at

issue.

Coastal States Marketing, Inc. v.

United States, 646 F. Supp. 255 (CIT

1986). The court held that mixing gas oil

from the Soviet Union and fuel oil from

Italy in Italy does not result in a new

and different article of commerce so that

the mixture becomes a product of Italy.

The court concluded that there was no

change in the appearance, character,

identity, or use of the Russian oil to

warrant the conclusion that the

imported blend was solely a product of

Italy. Furthermore, the court stated that

the essential character of the Russian

component as a fuel oil used primarily

for heating remained unchanged. The

court found that ‘‘although a change in

tariff classification is certainly not

controlling * * * the same

classification treatment of the products

* * * is some indication that the

imported blend was not a new and

different product.’’ Accordingly, the

Part 102 rules do not allow a change of

origin when fuel oil and gas oil, both of

which are classified in heading 2710,

are simply blended together.

4. Voluntary Restraint Arrangement

Cases

On balance, and as explained below,

the Part 102 rules are consistent with

the following cases involving

substantial transformation for purposes

of determining origin in the trade policy

area. These cases involved voluntary

restraint arrangements that the United

States had with various countries

regarding the exportation of steel

products to the United States.

Ferrostaal Metals Corporation v. U.S.,

664 F.Supp. 535 (CIT 1987). In New

Zealand, full hard cold rolled steel sheet

imported from Japan was annealed and

galvanized by a process known as

‘‘continuous hot-dip galvanizing’’ to

produce galvanized steel sheet. The

court held that the hot-dipped

galvanized steel sheet was a new and

different article of commerce when

compared to the full hard cold rolled

steel sheet. In making this

determination, the court found that the

processing of the hard cold rolled steel

sheet into hot-dipped galvanized steel

sheet results in a change in name,

character, and use. The court noted the

change in name, that is, from full hard

cold rolled steel sheet to continuous

hot-dip galvanized steel sheet. The court

also stated that the annealing and

galvanizing process resulted in a change

in character by significantly altering the

mechanical properties and chemical

composition of the steel. In addition, the

court noted that cold-rolled steel cannot

be used for the same purposes as steel

that has undergone the hot-dip

galvanizing process. The Ferrostaal

opinion represents a trial court’s

resolution of a single, particular dispute

involving a specific product and

process. The case was not appealed.

While the Court of International Trade’s

substantial transformation analysis in

Ferrostaal remains relevant, Customs

has not codified the specific result of

Ferrostaal and does not propose it as a

uniform rule of general applicability

based on a comprehensive review of

industry practices. Again, Customs

believes that the Ferrostaal court would

have reached the result contained in

those rules had they been presented as

such to the court. Moreover, Customs is

confident that the Court of International

Trade will sustain those rules based on

an industry-wide analysis,

notwithstanding the result that was

reached based on the particular facts of

a single case. Cf. Algoma Steel Corp.,

Ltd. v. U.S., 865 F.2d 240, 243 (Fed.Cir.

1989).

Superior Wire v. United States, 867

F.2d 1409 (CAFC 1989). The Court of

Appeals for the Federal Circuit affirmed

the Court of International Trade

decision that the process of drawing

wire in Canada from wire rod produced

in Spain is not a substantial

transformation. The lower court had

employed the traditional name,

character, and use test, finding that,

although there is a name change from

wire rod to wire, there is no change in

character or use when wire rod is drawn

into wire. Therefore, the court held that

wire drawn in Canada from Spanish

wire rod was not substantially

transformed for purposes of determining

the country of origin under the

voluntary restraint arrangement between

the United States and Spain, thus

resulting in Spain remaining the

country of origin of the imported steel.

The Part 102 rules are consistent with

the court’s application of the substantial

transformation principle in this case:

the specific § 102.20 tariff shift rule

applicable to such goods provides for a

change to heading 7223 (wire) from any
Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules 22317

other heading, except from heading

7221 through 7222 (wire rod).

5. Generalized System of Preferences

Cases

Although the Generalized System of

Preferences (GSP) statute currently

requires that the imported article must

be product of a designated beneficiary

developing country (BDC) in order to be

eligible for GSP duty-free treatment, all

of the court decisions to date involved

Customs entries pre-dating that

statutory provision and thus focused

only on the GSP statutory preference

standard that 35 percent of the value

consist of materials the product of a

BDC plus direct costs of processing

performed in the BDC. These cases

remain relevant as examples of

substantial transformation analysis to

the extent that the question addressed

by the court did not involve the origin

of the final product exported from the

BDC but rather involved whether a

material imported into the BDC was

substantially transformed into a new

and different intermediate article of

commerce in the BDC before being used

to make the good exported from the

BDC, so that its value could be counted

toward the 35 percent requirement.

Although the court in each of the cases

discussed below did not specifically

address the issue of the origin of the

final article exported to the United

States, it appears both that all of the

involved goods as exported to the

United States were products of the BDC

and that the same conclusion would be

reached under the Part 102 rules.

Texas Instruments v. U.S., 681 F.2d

778 (CCPA 1982). The court held that

silicon chips, wire and lead strips,

which were imported into a BDC where

they were assembled into integrated

circuits and photodiodes, and where the

chips had first to be severed from

silicon slices prior to the assembly

process, were substantially transformed

into ‘‘materials produced in the BDC’’

which were then used in the production

of electronic camera parts exported to

the United States.

Azteca Milling Co. v. U.S., 703

F.Supp. 949 (CIT 1988), and F.F. Zuniga

Refractarios Monterrey, 996 F.2d 1203

(CAFC 1992). These GSP cases involved

the issue of whether there existed a new

and different article of commerce versus

‘‘materials in process advancing toward

the finished product’’. In Azteca Milling

which involved corn flour imported into

the United States, the court found that

the production of corn flour nixtamal

and masa from imported corn did not

result in a substantial transformation

into new and different articles of

commerce, since the nixtamal and masa

were ‘‘clearly recognizable as processed

corn.’’ Similarly, the court in Zuniga

found that the production of a casting

slip for kiln furniture from imported dry

materials did not result in a substantial

transformation into new and different

articles of commerce since the casting

slip was only a ‘‘transitional stage of a

material in process, advancing toward

the finished product’’, the kiln

furniture. The casting slip, like the

nixtamal and masa in Azteca, was not

found by the court to be ‘‘readily

susceptible of trade’’.

Torrington v. United States, 764 F.2d

1563 (CAFC 1985). The court held that

the production of swage needle blanks

from imported wire and the further

production of sewing machine needles

from swage blanks represented a double

substantial transformation of the

imported wire. The Part 102 rules

support the trial court’s first finding of

a substantial transformation—the

transformation of wire into unfinished

sewing machine needles—but not the

second finding regarding the

transformation from unfinished to

finished needles. The appellate court’s

decision upholding the second

substantial transformation found by the

trial court was based on a rare citation

of the producer good-consumer good

standard of Midwood, which the courts

have not favored. Moreover, the court’s

decision appears to have been

influenced heavily by its desire to

effectuate what it believed to be the

intent of Congress. In sustaining the trial

court’s finding of double substantial

transformation, the court noted the

Congressional intent behind the GSP

statute, which was to foster

industrialization of BDCs, and focused

on the ‘‘actual manufacturing process by

which the intermediate article becomes

the final product’’. In this regard, the

court concluded that in light of the

significant manufacturing process, there

was not a ‘‘mere pass-through’’

operation in the BDC.

6. Textile Cases

The court decisions involving

substantial transformation of textiles

and textile products were superseded by

the rules of origin established under

§ 12.130 of the Customs Regulations (19

CFR 12.130) for textiles and textile

products subject to the U.S. textile

import program. The authority to

promulgate these rules was upheld by

the court in Mast Industries v. Regan,

596 F.Supp. 1597 (CIT 1984). In that

case, the court found that the

promulgation of § 12.130, which was at

the direction of the President and which

set forth rules for the determination of

country of origin for textiles and textile

products subject to import quotas, was

fully in accordance with law. See also

Target Sportswear, Inc. v. United States,

supra. This document republishes the

January 3, 1994, proposals to delete

paragraphs (d) and (e) from § 12.130 and

to amend paragraph (b) thereof to crossrefer to the Part 102 rules as Customs in

T.D. 90–17 made those § 12.130 rules

generally applicable for textiles and

textile products. Thus, the Part 102

rules track the principles of, as well as

the origin results that would be reached

under, § 12.130 in the case of textiles

and textile products.

Proposed Changes to the Interim and

Proposed Texts and Proposed Delayed

Effective Date

A. Proposed Amendments to the Interim

Rules

1. Part 102 General Origin Criteria

Section 102.11—General Rules

It is proposed to revise paragraph (d)

of interim § 102.11 in part to simplify

the text but principally in order to

ensure that paragraph (d) will provide

for an origin determination in all cases

in which origin cannot be determined

under paragraph (a), (b) or (c). Customs

notes that the interim paragraph (d) text

in some cases will not effectuate an

origin determination when the good in

question last undergoes production in a

country where only minor processing

was performed with respect to that

good. For example, various furniture

parts classifiable under subheading

9403.90, HTSUS, enter Country A from

various countries; in Country A, the

parts are collected and packaged into

unassembled boxes of desks and tables

classifiable under subheading 9403.30,

HTSUS, pursuant to GRI 2(a) which are

then shipped to Country B. The interim

§ 102.20 tariff shift rule for goods

classified in subheading 9403.30

provides for ‘‘a change to subheading

9403.10 thorugh 9403.80 from any

subheading outside that group, except

from subheading 9401.10 through

9401.80, and except a change from

subheading 9401.90 or 9403.90 when

that change is pursuant to GRI 2(a).’’ In

the stated example this tariff shift rule

will not be met because the change in

classification indeed does occur as a

result of classification of the collection

of furniture parts as the unassembled

desks and tables pursuant to GRI 2(a);

thus, origin cannot be determined under

interim § 102.11(a)(3). If no single

component can be found to impart the

essential character to the desks and

tables, then origin of the goods also

cannot be determined under interim

§ 102.11 (b). Moreover, since the desks
22318 Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules

and tables are not classified as sets,

mixtures or composite goods under the

HTSUS, origin cannot be determined

under interim § 102.11(c). Finally, since

the parts came into Country A from

various countries and only minor

processing (packaging) was performed

in Country A to make the goods, the

origin of the goods cannot be

determined under interim § 102.11(d)(1)

or (2). Thus, no determination of origin

can be achieved under the interim texts

with regard to the good described in this

example.

In order to address the problem

outlined above, the proposed revision of

paragraph (d) as set forth below

incorporates the following three

subparagraphs: subparagraph (1) covers

a good produced only as a result of

minor processing and provides in such

a case that the country of origin of the

good is the country or countries of

origin of each single material that merits

equal consideration for determining the

essential character of the good;

subparagraph (2) covers a good

produced by simple assembly, where

the assembled parts that merit equal

consideration for determining the

essential character of the good are from

the same country, and provides in such

a case that the country of origin of the

good is the country of origin of those

parts; and subparagraph (3) covers cases

in which the country of origin of a good

cannot be determined under paragraph

(d)(1) or (d)(2) and provides that in such

cases the country of origin of the good

is the last country in which the good

underwent production.

Removal of § 102.14—Goods Returned

Based on comments received and as a

result of further internal review,

Customs has reconsidered the position

stated in T.D. 94–4 that U.S. Note 2(a),

Subchapter II, Chapter 98, HTSUS, has

application for general country of origin

purposes. In light of this change in

position, it is proposed to remove this

section (see also the proposed revision

of interim § 102.19 discussed below).

Removal of § 102.16—Good and its

Parts; Parts of Parts

It is proposed to remove interim

§ 102.16 which sets forth special origin

rules where, for any of several specified

reasons, a part of a good or a part of a

part does not undergo an applicable

change in tariff classification provided

for in § 102.20. The experience of

Customs in administering the interim

NAFTA Marking Rules has shown that

the hierarchical application of §§ 102.11

(b) through (d), coupled with the

proposed change to § 102.11(d)

discussed above, yield an appropriate

origin result that codifies the substantial

transformation principle. Accordingly,

Customs no longer believes that § 102.16

is necessary.

Section 102.17—Non-qualifying

Operations

It is proposed to revise the

introductory text of interim § 102.17 to

clarify the intent that the section applies

whenever the change in tariff

classification or other condition

specified in § 102.20 was met only as a

result of one or more of the listed nonqualifying operations having been

performed with respect to the good.

In addition, it is proposed to revise

paragraph (e) of interim § 102.17 which

specifies, as a ‘‘non-qualifying

operation’’ for purposes of section

102.20, any process or work the sole

object of which is demonstrated by a

preponderance of evidence to be the

circumvention of the Part 102 rules.

Upon reconsideration of this provision,

it is Customs view that this provision is

not administrable since the text does not

make clear how it is possible for a

person to ‘‘circumvent’’ these rules.

First, if the § 102.20 rule or any other

Part 102 rule does not preclude a

specific operation from being the means

by which a foreign material satisfies a

§ 102.20 rule, any operation is deemed

allowable under Part 102. Second, if a

Part 102 rule specifically precludes a

type of operation (for example, ‘‘simple

assembly’’ or ‘‘dismantling or

disassembly’’) and it was only as a

result of such an operation that the

change in tariff classification

requirement or other conditions

specified for the foreign material under

the § 102.20 rule were met, the § 102.20

rule is simply not deemed to have been

satisfied. In either case, there could not

have been a ‘‘circumvention’’ of the

rules as a result of the operation, since

either the Part 102 rules permitted the

operation or, as a result of the operation,

the Part 102 rules were not satisfied.

Nevertheless, to further protect

against circumstances which may

appear to be a ‘‘circumvention’’ of the

spirit or intent of the Part 102 rules,

Customs proposes to redraft paragraph

(e) of § 102.17 to specify, as an

additional ‘‘non-qualifying operation’’,

collecting parts that, as such, are

classifiable in the same tariff provision

as an assembled good pursuant to

General Rule of Interpretation (GRI) 2(a),

without any additional operation other

than minor processing. Thus, no

specified change in tariff classification

will be deemed to have occurred if such

change resulted solely from the act of

collecting parts which are then

classified under the tariff provision

applicable to the assembled good. If, on

the other hand, in addition to the

collecting of parts, processing

constituting more than minor processing

also occurred in the country in question,

this rule would be inapplicable.

Section 102.18—Rules of Interpretation

It is proposed to revise paragraph (a)

of interim § 102.18 in order to: (1)

Simplify, and thus clarify the

application of, the introductory text; (2)

remove subparagraph (a)(1)(i) which

refers to the collection of parts classified

as an assembled good and thus would

become redundant because it would be

encompassed within the broader terms

of proposed new § 102.17(e) as

discussed above (which would apply to

all tariff shift rules rather than to only

those rules that specifically cite

classification under GRI 2(a) as a basis

for not allowing a specified change in

tariff classification); (3) remove

paragraph (a)(2) which would no longer

be needed in view of the proposed

removal of paragraph (a)(1)(i) from this

section; and (4) simplify the remaining

portion of paragraph (a) (subparagraph

(a)(1)(ii) in the interim text) and remove

therefrom the unnecessary reference to

‘‘a subassembly’’.

In addition, it is proposed to revise

paragraph (b) of interim § 102.18 in

order to effect the following changes: (1)

The removal of the undefined

parenthetical reference to ‘‘selfproduced materials’’ in interim

subparagraph (b)(2); (2) the reversal of

the order of interim subparagraphs (b)(1)

and (b)(2); (3) in newly designated

subparagraph (b)(1), the addition of new

subparagraphs (b)(1)(i) and (b)(1)(ii) to

clarify and illustrate, by way of a

statement and an example in each case,

the intended operation of the

subparagraph (b)(1) rule; and (4) the

simplification, and thus clarification, of

the paragraph (b) text.

Section 102.19—NAFTA Preference

Override

It is proposed to make some editorial

modifications to the text of interim

§ 102.19, to designate that text as

paragraph (a), and to add a new

paragraph (b). New paragraph (b) is

intended to facilitate the application of

the appropriate NAFTA preferential

duty rate under General Note 12(a),

HTSUS, in the case of originating goods

the origin of which is determined to be

the United States under the Part 102

provisions. It should be noted that the

term ‘‘Customs duty’’ used in this new

paragraph (b) is intended to include

merchandise processing fees which are

treated as Customs duties under
Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules 22319

§ 24.23(e) of the Customs Regulations

(19 CFR 24.23(e)).

2. Section 102.20 Specific Rules

Customs proposes to make a number

of amendments to the tariff shift rules

and other requirements set forth in

interim § 102.20. These proposed

amendments, and the reasons therefor,

are summarized below with reference to

the HTSUS provisions and general types

of goods involved.

Elimination of the Specific Rules

Referring to ‘‘Substantial

Transformation’’

Customs proposes to amend the tariff

shift rules for headings/subheadings

1901.90, 2103.90, 4823.20 through

4823.59, 4823.70 through 4823.90,

6811.90, 6812.90, 6814.90, 7010 through

7018, 7019.90, 7020, 8708.99, 9110,

9401.90, 9403.90, and 9606.21 through

9606.29, by eliminating in each case the

rule which permits a specified change

‘‘if that change results in a substantial

transformation.’’ In administering the

interim Part 102 rules Customs has

determined that these specific

statements in the rules are redundant

and do not need to be included in

§ 102.20 in order to codify the

substantial transformation principle. As

a result of this proposal and the

proposed removal of § 102.16 discussed

above, the term ‘‘substantial

transformation’’ would no longer appear

in the Part 102 texts; accordingly, it is

also proposed to remove the definition

of ‘‘substantial transformation’’ in

interim § 102.1(p).

Section II Note

It is proposed to amend the Note

under Section II by adding the words

‘‘or from whole plants,’’ after the words

‘‘slips or other live parts of plants,’’.

This proposed change is intended to

clarify, consistent with the definition of

‘‘a good wholly obtained or produced’’

in interim § 102.1(g), that when an

agricultural product is grown and

harvested from a plant that was

transplanted from another country, the

product has its origin in the country in

which the product was harvested.

Headings 0904–0910 (Spices)

It is proposed to delete the second

tariff shift rule for headings 0904–0910,

which provides for a change to crushed,

ground, or powdered products of

heading 0904 through 0910 (principally

spice products) from within Chapter 9,

if put up for retail sale. Customs is of

the opinion that processing raw spices

to create crushed, ground or powdered

spices, whether or not accompanied by

cleaning, merely changes the form of the

spice and does not result in any

significant change in the name,

character or use of the product. This

view is consistent with previous

Customs rulings which have held that

the processing of raw cheese into grated

cheese packed for retail sale does not

constitute a substantial transformation.

Subheading 1517.90 (Vegetable Oils

Consisting of Preparations and

Mixtures)

The interim rule requires a change

from any other chapter. It is proposed to

amend this rule by adding a second

tariff shift rule which would allow a

change from any other heading so long

as the resulting product contains no

more than 60 percent by volume of a

single oil ingredient from a single

country. This change would make the

rule for mixtures of different types of

oils consistent with the rule for a similar

type of product, mixtures of different

types of fruit juices (heading 2009.90),

and would incorporate the results

reached under the traditional

application of the substantial

transformation rule with respect to such

types of products.

Headings 4104–4107 (Leather)

Based both on a comment and on

further review by Customs, it is

proposed to delete the second tariff shift

rule which allows a change to finished

leather of heading 4104 through 4107

from wet blue hides or leather. This

proposed change reflects the following

considerations: (1) There is no

established definition of the term

‘‘finished leather’’ and, in fact, the

meaning of the term can vary according

to the end use of the goods; and (2) the

processes necessary to change wet blues

to finished leather can vary and may

not, in all cases, result in a change in

the country of origin, as reflected in

rulings issued by Customs.

New Chapter 42 Note

It is proposed to add a Note to the

Chapter 42 rules to ensure that a single

country of origin always will be

identifiable in the case of textile goods.

This new Note is modeled on Note 3 to

the Section XI rules and thus also

reflects the proposed amendment to that

Note as discussed below.

Headings 4810–4814 (Coated Paper)

Customs proposes to revise this

interim tariff shift rule by dividing it

into separate rules for heading 4810,

subheading 4811.10 through 4811.31,

subheading 4811.39, subheading

4811.40 through 4811.90, and headings

4812 through 4814. Of these five

proposed new rules, only the proposed

rule for subheading 4811.39 would

constitute a substantive change from the

current interim rule for headings 4810

through 4814. The proposed rule for

subheading 4811.39 would disallow a

change from paper of heading 4804 to

paper that is only ‘‘coated, impregnated

or covered with plastics’’. This is

consistent with Customs rulings which

generally have held that laminating,

coating or encapsulating does not result

in a substantial transformation.

Subheadings 4823.70–4823.90 (Other

Paper, Paperboard, etc. Products)

It is proposed to amend the tariff shift

rule which would remain (if the

‘‘substantial transformation’’ rule is

eliminated as proposed above) to

specify a change ‘‘from any other

subheading, including another

subheading within that group’’ rather

than a change ‘‘from any other chapter’’.

This amendment would result in a more

liberal rule which reflects the

conclusions reached by Customs under

the traditional approach.

Section XI (Textiles)

The proposed amendments to the

interim § 102.20 specific rules

applicable to textiles as discussed below

are intended to conform the rules in

question to the practice of, and

positions taken by, Customs in the caseby-case administration of § 12.130 of the

Customs Regulations (19 CFR 12.130):

a. Note (1)d

In response to a comment, it is

proposed to replace the word ‘‘body’’ by

the words ‘‘major parts’’ and to delete

the words ‘‘together with its sleeves

and/or legs’’, in order to preclude

interpretation of this Note as not

applying to garments that have padding

in the body and linings in the sleeves.

b. New Note (1)f

It is proposed to add a new Note (1)f

to clarify the meaning of ‘‘minor

embellishments’’ (see the proposed

amendment to the specific rules

applicable to goods of headings 6302

and 6304 as discussed below).

c. Note 3

It is proposed to amend Note 3 by

adding a sentence at the end to cover a

case where more than one component

determines classification or where the

component that determines

classification is attributable to more

than one country. This new sentence

provides that in such cases the country

of origin shall be the last country in

which the good underwent production

other than minor processing. Customs

believes that this amendment is
22320 Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules

necessary for purposes of administration

of the U.S. textile import program which

makes no provision for multiple

countries of origin.

d. Heading 5105 (Wool Tops)

It is proposed to add a second tariff

shift rule for headings 5101–5105 in

order to reflect the Customs position

that the processing of greasy wool into

combed wool is a substantial

transformation.

e. Heading 5609 (Articles of Yarn)

It is proposed to amend the tariff shift

rule for heading 5609 to include, in the

exception language, a reference covering

headings 5604 and 5605 which include

different types of yarns. This proposed

change would reflect the Customs view

that the assembly or other processing of

such yarns into articles classifiable in

heading 5609 does not constitute a

substantial transformation.

f. Heading 5804 (Net Fabrics)

Customs has determined that, under

certain circumstances, it is

commercially feasible to convert made

up nets of heading 5608 to netting of

subheading 5804.10 by simple cutting,

and Customs does not believe that such

a tariff shift should confer origin.

Accordingly, it is proposed to divide the

interim heading 5804 tariff shift rules

into two sets of rules, one for

subheading 5804.10 and the other for

the remainder of the heading, in order

to add in the case of subheading 5804.10

an exception involving a change to that

subheading from heading 5608.

g. Subheadings 5806.10–5806.39

(Narrow Fabrics)

It is proposed to amend the first tariff

shift rule for subheadings 5806.10–

5806.39 by adding heading 5801 to the

listed exceptions. Heading 5801

provides for woven pile and chenille

fabrics, and it is the position of Customs

that the processing of those fabrics into

goods classifiable in subheadings

5806.10–5806.39 does not constitute a

substantial transformation.

h. Heading 5810 (Embroidered Fabric)

In response to several similar

comments, it is proposed to rearrange,

and revise the wording of, the two tariff

shift rules for goods of this heading in

order to conform to prior rulings

regarding the weight and effect of the

embroidery.

i. Heading 5903 (Coated Fabrics)

It is proposed to amend the first tariff

shift rule for this heading by replacing

the exclusion reference to subheadings

‘‘5806.31 through 5806.39’’ by a

reference to heading ‘‘5806’’. This will

have the principal effect of widening the

reference to include woven pile fabrics

which were inadvertently omitted from

the exclusion language in this tariff shift

rule.

j. Headings 6101, 6102, 6201 and 6202

(Assembled Garments)

In response to a comment, it is

proposed to amend the third tariff shift

rule for each of these headings in order

to conform the wording to that used in

other § 102.20 rules which specify a

change ‘‘to assembled garments from

unassembled parts’’.

k. Subheadings 6103.21–6103.29,

6104.21–6104.29, 6203.21–6203.29 and

6204–21–6204.29 (Ensembles)

In response to a comment, it is

proposed to add to each of these

subheadings two new tariff shift rules in

order to make the rules for suits (see, for

example, the interim rules for

subheadings 6103.11–6103.19)

applicable to sets of garments

(ensembles) that are essentially the same

as suits.

l. Headings 6115–6117 and 6213–6214

(Shawls, Scarves, and the Like and

Handkerchiefs)

In response to a comment, it is

proposed to divide the interim tariff

shift rule for headings 6115–6117 in

order to set forth a separate rule for

subheading 6117.10 which would allow

a change from greige fabric to shawls,

scarves, etc. by means of dyeing,

printing, cutting and stitching. The

proposed separate rules set forth in this

document for headings 6115–6116 and

for subheadings 6117.20–6117.90 reflect

the terms of the interim rule.

In response to the same commenter, it

is proposed to amend the interim rule

for headings 6213–6214: (1) to remove

the knit-to-shape proviso which does

not appear to be appropriate for the type

of goods covered; and (2) to add a

second tariff shift rule for the same

reason stated above for subheading

6117.10.

m. Heading 6205 (Shirts)

In response to a comment, it is

proposed to delete the word ‘‘shoulder’’

before ‘‘yokes’’ in the second and third

tariff shift rules because (1) yokes on

shirts by definition are only in the

shoulder area and (2) this would

conform the wording to the terminology

used in the rules under headings 6105,

6106 and 6206.

n. Headings 6302 and 6304 (Bed Linen

and Other Furnishings)

In response to a comment, it is

proposed for each of these headings to

add a second tariff shift rule to the

interim paragraph (1) rule to reflect

current Customs rulings. The proviso in

each new rule, which requires at least

cutting ‘‘finished fabric’’ on all sides

and hemming ‘‘all cut edges’’ and ‘‘at

least one other subsequent process’’,

clarifies the fact that fabric finishing

operations are not considered and

eliminates any uncertainty regarding the

minimum amount of hemming that

must be performed. The present view of

Customs is that such minor

embellishments should not be

considered.

o. Heading 6303 (Curtains, Blinds and

Valences)

In the second tariff shift rule, it is

proposed to amend the proviso as

follows: (1) to require ‘‘more than’’

(rather than ‘‘at least’’) cutting on all

sides ‘‘and’’ hemming the cut edges; (2)

by removing the requirement for ‘‘a

significant sewing or assembly

operation’’; and (3) by adding at the end

the words ‘‘and with no consideration

being given to minor processing’’.

Customs believes that the ‘‘minor

processing’’ standard, which is defined

in § 102.1(m), is preferable to the

undefined ‘‘significant’’ standard; thus,

processing which is other than ‘‘minor’’

should, by definition, be considered

significant.

In addition, it is proposed to amend

the third tariff shift rule by adding a

reference to heading 5811 so as to

include quilted fabrics in the listed

exceptions since a good may contain a

small amount of quilted fabric without

being considered a ‘‘quilted article’’.

p. Subheadings 6306.91–6306.99

(Awnings, Sunblinds and Camping

Goods)

It is proposed to amend this tariff shift

rule by adding language at the end of

the proviso to clarify that minor

processing may not be considered in

determining whether the proviso

conditions have been met.

q. Subheading 6307.90 (Made up

Articles)

Customs believes that the interim

tariff shift rule should be amended to

prescribe that the sewing or assembly

operation be ‘‘substantial’’ in amount

rather than simply ‘‘significant’’. While

this proposed amendment appears to be

minor and does not materially alleviate

the subjectivity of the rule, Customs

notes that it: (1) effectively changes the

test for manufacturing or processing
Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules 22321

operations from a qualitative standard to

a quantitative standard, which is how

Customs has been applying § 12.130;

and (2) conforms the terminology used

in the rule to the wording of § 12.130.

New Chapter 65 Note

It is proposed to add a Note to the

Chapter 65 rules to ensure that a single

country of origin always will be

identifiable in the case of textile goods.

As in the case of the new Note proposed

for the Chapter 42 rules as discussed

above, this new Note is modeled on

Note 3 to the Section XI rules and thus

reflects the proposed amendment to that

Section XI Note as discussed above.

Headings 7010–7018 (Glass Articles)

With particular regard to lead crystal

stemware of heading 7013, a commenter

argued that the interim rules for

headings 7010–7018 represent an

abandonment of existing principles

used for determining country of origin

and such action would significantly

harm its client’s business. This

commenter cited, as an example of an

existing principle, Headquarters Ruling

Letter (HRL) 734387 dated June 8, 1992,

in which Customs held that the

processing in Ireland of uncut lead

crystal stemware ‘‘blanks’’ originating in

various continental European countries

‘‘substantially transformed’’ the

‘‘blanks’’ into ‘‘formal crystal

stemware’’, thus making Ireland the

country of origin of the finished

product.

Customs on a number of occasions

has previously ruled on the question of

whether extensive and intricate cutting

of crystal constituted a substantial

transformation. In HRL 734387

mentioned by the commenter, Customs

ruled that crystal glassware ‘‘blanks’’

were substantially transformed into

formal, elegant stemware suitable for

indoor decoration by the extensive

hand-cutting operations performed in

Ireland. Customs based this

determination on the fact that the handcutting operation was a substantial and

intricate processing operation

performed by highly skilled craftsmen

which significantly changed the

appearance and the shape of the

stemware, imparting a decorative use to

the glassware. Customs also noted that

the glassware lost its identity as mere

glassware and became a new article

bought primarily for its appearance

rather than for its utilitarian use.

Similarly, in HRL 734283 dated June 16,

1992, Customs found that a crystal

blank bowl, vase and basket were

substantially transformed as a result of

extensive and intricate hand-cutting

done in Ireland. In another ruling, HRL

734653 dated October 22, 1992,

Customs found that crystal blank bowls,

which were hand-cut in the United

States, were substantially transformed

by the extensive operations performed

there.

Most recently, Customs held in HRL

735310 dated April 6, 1994, that handcutting and acid polishing crystal

stemware blanks in the United States

resulted in a substantial transformation

of the blanks. Customs found in this

case that the hand-cutting and polishing

operations were extensive and intricate

and were performed entirely in a single

country, the United States.

The foregoing cases are to be

distinguished from HRL 731617 dated

September 1, 1989, in which Customs

held that the grinding and polishing of

aluminum trays and bowls in Mexico

did not substantially transform the

articles. Customs held that neither the

grinding nor the polishing changed the

fundamental character or use of the

articles. Rather, Customs concluded that

it was the constituent material,

aluminum alloy, coupled with the shape

and design of the articles created by the

U.S. sandcasting process, that imparted

the essential character to the finished

articles and determined their ultimate

use.

Customs, however, also concluded

that in certain cases the operation of

cutting stemware did not result in a

substantial transformation. One such

case was HRL 733036 dated April 9,

1990, in which Customs found that

there was no change in name, character

or use caused by the simple hand cuts

made to the glass in East Germany

which, although attractive, did not

increase the value of the stemware.

The case-by-case application of the

substantial transformation standard in

this area has been very controversial

over the years. Therefore, in order to

allow the results that would be achieved

under the case-by-case approach while

promoting objectivity and predictability

of origin determinations involving these

articles, Customs is proposing in this

document to amend the interim rules

prescribed for headings 7010–7018 to

include a new rule that specifies a

change from uncut and unpolished

glassware blanks of heading 7013 to cut

and polished glassware of that heading,

provided that there has been a

substantial amount of both cutting and

polishing operations in a single country.

As an example, Customs would

consider the goods covered by HRL

735310, discussed above, as meeting

this proposed new standard.

Also, upon further review of these

rules, Customs has discovered that the

specific rule applicable to goods

classified in heading 7011, which covers

glass envelopes and parts thereof for

electrical lamps, cathode-ray tubes or

similar items, does not reflect Customs

position regarding substantial

transformation. This rule allows

changes from glass profiles, classified in

subheading 7003.30. In HRL 557387

dated October 1, 1993, Customs ruled

that glass face plates for cathode ray

tubes, classified in subheading 7011.20,

which were produced in Mexico from

Korean-origin glass profiles classified in

subheading 7003.30, had not been

substantially transformed into a product

of Mexico. Customs concluded that ‘‘the

essential form, shape and character of

the glass product [the face plates] were

determined by the manufacturing

operation in Korea’’ for the production

of the profiles. Since Customs continues

to maintain the position stated in HRL

557387, it is proposed to modify the

interim § 102.20 specific rules to

disallow a change to heading 7011 from

subheading 7003.30.

Finally, Customs has reconsidered the

necessity for that provision contained in

the interim rules for headings 7010

through 7018 which precludes a tariff

shift from heading 7020. Customs

believes that in order for such a change

in tariff classification to occur, there

would have to be either (1) a genuine

creation of a new and different article

having a new name, character or use, or

(2) a tariff classification change resulting

solely from a non-qualifying operation,

such as a ‘‘change in end use’’ or

‘‘dismantling or disassembly’’, which

pursuant to § 102.17 would not confer

origin. Since the Part 102 rules already

accomplish the purpose behind the

limitation regarding a shift from heading

7020, it is proposed to remove that

limitation. In addition, it is proposed to

modify the interim rules to specifically

allow a change from another heading

within the group, because the same

principles would apply in such a case.

Accordingly, in order to reflect the

above considerations, it is proposed to

replace the interim rules for headings

7010–7018 with a new structure

involving one rule for heading 7010, one

rule for heading 7011, and two rules for

headings 7012–7018.

Subheadings 8301.10–8301.50

(Padlocks, Locks, Clasps and Frames)

It is proposed to amend the tariff shift

rule for these subheadings in order to

rectify the incorrect reference ‘‘8301.40’’

which should read ‘‘8301.50’’ so as to

correspond to the subheadings covered

in the ‘‘HTSUS’’ column.
22322 Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules

Section XVI—Note

This note, which disallows tariff

changes within Chapters 84 and 85

occurring only as a result of the

application of GRI 2(a), would no longer

appear necessary since the proposed

amendment to interim § 102.17(e), as

discussed above, would accomplish the

same purpose. Accordingly, it is

proposed to delete this note.

Subheading 8401.20 (Machinery and

Apparatus for Isotopic Separation)

It is proposed to modify the text of the

interim tariff shift rule, and to add a

second tariff shift rule, in order to

clarify that no change is allowed from

parts of subheading 8401.20 to parts of

the same subheading. Thus, under the

proposed new standard for subheading

8401.20, a change from parts of

subheading 8401.20 is allowed only if

the change is to completed machinery

and apparatus of that subheading.

Subheading 8415.90 (Parts of Air

Conditioning Machines)

The interim rule allows a change to

this subheading ‘‘from any other

heading, except a change resulting from

a simple assembly.’’ It is proposed to

revise this rule to allow a change to this

subheading ‘‘from any other

subheading, except when the change is

from heading 7411, 7608, 8414, 8501,

and 8535 through 8537 as a result of

merely a simple assembly.’’ Under this

proposed change, the simple assembly

limitation is specified only with

reference to headings from which a tariff

shift could possibly result merely from

a simple assembly as defined in

§ 102.1(o).

Subheadings 8470.10–8471.91

(Calculating, Accounting and ADP

Machines)

The interim rule allows a change to

these subheadings ‘‘from any other

subheading, except when resulting from

a simple assembly.’’ It is proposed to

revise this rule to allow a change to

these subheadings either ‘‘from any

subheading outside that group, except

from heading 8473’’ or ‘‘from any

subheading within that group or from

heading 8473, provided the change is

not the result of merely a simple

assembly.’’ Under this proposed change,

the simple assembly limitation is

specified only with reference to that

heading from which a tariff shift could

possibly result merely from a simple

assembly as defined in § 102.1(o). Thus,

under the proposed rule, changes would

be allowed to subheading 8470.10

through 8471.91 from any subheading

outside that group, except heading 8473.

Subheadings 8471.92–8472.90 (Other

Machines for Transcribing or Processing

Coded Data and Other Office Machines)

The interim rule allows a change to

these subheadings ‘‘from any other

subheading, except when resulting from

a simple assembly.’’ It is proposed to

revise this rule in the same manner, and

for the same reasons, as stated above for

subheadings 8470.10–8471.91.

Heading 8473 (Parts and Accessories of

Machines of Headings 8469–8472)

The interim tariff shift rule provides

for a change to this heading ‘‘from any

other heading, except heading 8501,

when resulting from a simple

assembly.’’ Upon a further review,

Customs has identified other provisions

from which a change to heading 8473

could possibly result merely from a

simple assembly as defined in

§ 102.1(o). Therefore, it is proposed to

revise this rule to allow a change to this

heading ‘‘from any other heading,

except when the change is from heading

8414, 8501, 8504, 8534, 8541, or 8542 as

a result of merely a simple assembly.’’

Subheadings 8474.10–8474.80

(Machinery for Sorting, Grinding, etc.)

The interim rule allows a change to

these subheadings ‘‘from any other

subheading, except when resulting from

a simple assembly.’’ It is proposed to

revise this rule to allow a change to

these subheadings either ‘‘from any

subheading outside that group, except

heading 8501’’ or ‘‘from a subheading

within that group or heading 8501,

provided the change is not the result of

a simple assembly.’’ Under this

proposed change the simple assembly

limitation is specified only with

reference to those tariff provisions from

which a tariff shift could possibly result

merely from a simple assembly as

defined in § 102.1(o), in consideration of

the fact that the machinery in this group

is very similar and frequently consists of

little more than a motor with some form

of attachment.

Subheadings 8482.10–8482.80

(Bearings)

A commenter cited HRL 083455 dated

September 6, 1989, which held that the

assembly of a tapered roller bearing was

a simple assembly that did not result in

a substantial transformation; therefore,

the country of origin was held to be

Romania where the cup and cone were

manufactured. This commenter noted

that although the second tariff shift rule

under subheadings 8482.10–8482.80 is

not a total departure from this ruling

since the rule provides for bearings with

domestic inner and outer races,

nevertheless, this tariff shift rule is

inconsistent with the ruling insofar as it

allows for assemblies of parts which

incorporate only domestic balls/rollers.

Another commenter asserted that the

rollers or balls represent a small

percentage of the value (5 to 10 percent

of the cost of production) and cited a

finding by the Commission of the

European Communities that the process

or operations which result in the

manufacture of balls or rollers or needle

bearings and cages are of minor

importance compared with the

manufacture of the inner and outer rings

and may be disregarded for the purposes

of defining the origin of roller bearings.

In light of both the imputed minimal

value of the balls/rollers and the fact

that the above-cited ruling held that the

cup and cone provide the essential

character of the bearing, it is proposed

to amend the second tariff shift rule for

goods of subheadings 8482.10–8482.80

to not allow origin to be based upon the

country where the balls and rollers are

made.

Subheading 8512.40 (Windshield

Wipers, Defrosters and Demisters)

The interim rule allows a change to

this subheading ‘‘from any other

subheading, except when resulting from

a simple assembly.’’ It is proposed to

revise this rule to allow a change to this

subheading ‘‘from any other

subheading, except when the change is

from subheading 8512.90 or heading

8501 as a result of a simple assembly.’’

Under this proposed change, the simple

assembly limitation is specified only

with reference to those tariff provisions

from which a tariff shift could possibly

result merely from a simple assembly as

defined in § 102.1(o).

Subheadings 8517.10–8517.82

(Telephone and Telegraph Apparatus)

The interim rule allows a change to

these subheadings ‘‘from any other

subheading, including another

subheading within that group, except

when resulting from a simple

assembly.’’ It is proposed to revise this

rule to allow a change to these

subheadings either ‘‘from any

subheading outside that group, except

from subheading 8517.90’’ or ‘‘from

subheading 8517.90, provided the

change is not the result of a simple

assembly.’’ Under this proposed change,

the simple assembly limitation is

specified only with reference to that

subheading from which a tariff shift

could possibly result merely from a

simple assembly as defined in

§ 102.1(o).
Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules 22323

Subheadings 8528.10–8528.20

(Television Receivers)

The interim rule allows a change to

these subheadings ‘‘from any other

subheading, including another

subheading within that group.’’ Thus,

the interim rule allows a change from

television tubes. Customs believes that

the television tube may determine origin

for some television sets. Accordingly, it

is proposed to add an exclusion for

television tubes (subheadings 8540.11

through 8540.12).

Subheadings 8531.10–8531.80 (Other

Electric Sound or Visual Signaling

Apparatus)

The interim rule allows a change to

these subheadings ‘‘from any other

subheading, including another

subheading within that group, except

when resulting from a simple

assembly.’’ It is proposed to revise this

rule to allow a change to these

subheadings ‘‘from any other

subheading, including another

subheading within that group, except

when the change is from subheading

8531.90 as a result of a simple

assembly.’’ Under this proposed change,

the simple assembly limitation is

specified only with reference to that

subheading from which a tariff shift

could possibly result merely from a

simple assembly as defined in

§ 102.1(o).

Headings 8541–8542 (Semiconductor

Devices and Integrated Circuits)

It is proposed to modify the second

and third interim tariff shift rules for

these headings. The proposed change to

the second rule would clarify that,

under this rule, a change from an

unmounted chip, die or wafer of

heading 8541 or 8542 is allowed only if

the change is to a mounted chip, die or

wafer of heading 8541 or 8542. With

regard to the third tariff shift rule,

which refers to a change ‘‘to any

programmed chips from any

unprogrammed chips’’, the proposed

change is intended to align the rule

more closely with the court decision

upon which the rule was based (Data

General Corporation v. United States, 4

CIT 182 (1982), discussed above, in

which the court specifically held that

the programming of PROMs is a

substantial transformation).

Headings 9101–9107 (Clocks and

Watches) and Headings 9108–9109

(Finished Clock and Watch Movements)

Under the interim § 102.20 rule

applicable to headings 9101–9107, a

change in classification to that group

from any other heading, except headings

9108–9110, will result in a country of

origin change. Headings 9108–9110

encompass complete and incomplete

watch and clock movements, assembled

and unassembled. Under the interim

§ 102.20 rule applicable to headings

9108–9109 (complete and assembled

watch and clock movements), a change

to either of these headings from any

other heading, with the exception of

heading 9110, will effect a country of

origin change. Heading 9110 includes:

complete watch and clock movements,

unassembled or partly assembled

(movement sets); incomplete watch or

clock or watch movements, assembled;

and ‘‘rough’’ watch or clock movements

(sets of unassembled parts of the type

described in Additional U.S. Note 1(g)).

A commenter stated that since, under

current international practice, the

movement will often originate in one

country or in several countries while

assembly of the watch or clock may take

place in another country, country of

origin will not be determined on the

basis of the interim § 102.20 tariff shift

rule applicable to watches and clocks of

headings 9101–9107. With respect to

finished movements of headings 9108–

9109, this commenter was similarly of

the opinion that the specified interim

§ 102.20 tariff shift rule will frequently

be inapplicable since parts of

movements classified under heading

9110 often originate in one country

while the movement may be assembled

in a second country. This commenter

argued that the interim rules do not

reflect commercial reality because

substantial assembly operations may

take place in the country where the

movement is assembled.

It has been the longstanding position

of Customs that the country of origin of

a watch or clock is the country of

manufacture of the watch or clock

movement. The addition of the hands,

dial, case, or watchband add definition

to the watch but do not change the

character or use of the watch or clock

movement which is the ‘‘guts’’ of the

time piece. See, for example, HRL

735197 dated January 4, 1994. This

Customs position is based on the

determination that the last substantial

transformation of a finished watch or

clock is the assembly of the movement.

The interim § 102.20 rule applicable to

watches and clocks (the rule for

headings 9101–9107) was intended to

track current practice, and does so, with

the exception noted below. The interim

§ 102.20 rule applicable to complete

movements (the rule for headings 9108–

9109) also essentially followed present

practice, with the exception noted

below, since incomplete or partial

movements encompassed by heading

9110 are the ‘‘guts’’ of the complete

movement.

Customs notes, however, that heading

9110 also includes ‘‘complete watch or

clock movements, unassembled’’ and

‘‘rough’’ watch or clock movements.

Since under current practice Customs

has repeatedly held that the assembly of

individual parts to create a movement

(or other similar good of heading 9110)

results in a substantial transformation

(see, for example, HRL 733533 dated

August 3, 1990), it is apparent that the

exception language in the interim

§ 102.20 rules for watches and clocks of

headings 9101–9107 and for complete

and assembled movements of headings

9108–9109 does not reflect this practice.

Accordingly, it is proposed to amend

the § 102.20 rules for clocks and

watches and for complete and

assembled movements by adding in

each case a second rule to allow changes

from complete movements,

unassembled (movement sets), of

subheadings 9110.11 or 9110.90, or from

rough movements of subheading

9110.19 or 9110.90.

Subheadings 9404.10–9404.30 and

9404.90 (Bedding and Similar

Furnishings)

It is proposed to replace the § 102.20

listings for subheadings 9404.10–

9404.30 and 9404.90 by the following:

(1) subheadings 9404.10–9404.29, the

tariff shift rule for which would be in

substance the same as the interim rule

prescribed for subheadings 9404.10–

9404.30; and (2) subheadings 9404.30–

9404.90, the tariff shift rule for which

would, in the case of sleeping bags,

comforters, pillows, and similar filled

articles, allow a change in the country

of origin as a result of the insertion of

down and/or feathers but not as a result

of the insertion of other materials. In

addition, it is proposed to add a Note to

the Chapter 94 rules which would set

forth a country of origin rule for goods

of subheadings 9404.30 through 9404.90

which do not meet the appropriate tariff

shift rule specified for those

subheadings.

3. Part 134

Section 134.32

In § 134.32 of the Customs

Regulations (19 CFR 134.32), it is

proposed to remove paragraph (r)

(which was adopted in T.D. 94–4 in

order to add an exception to marking

requirements in the case of non-textile

U.S. goods that are exported and

returned after repairs or alterations

performed abroad). In light of the

proposed removal of interim § 102.14 as

discussed above, Customs believes that
22324 Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules

this paragraph would no longer be

appropriate or necessary.

Section 134.43

T.D. 94–4 amended § 134.43 of the

Customs Regulations (19 CFR 134.43) by

adding a new paragraph (e) which

prescribed specific methods of marking

goods covered by interim § 102.14. In

light of the proposed removal of interim

§ 102.14 as discussed above, Customs

proposes to remove this paragraph (e)

which would no longer appear

necessary or appropriate.

B. Proposed Changes to the Proposed

Regulatory Amendments

As stated above, the purpose of this

document is also to republish all of the

proposed regulatory amendments

contained in the January 3, 1994, notice

of proposed rulemaking in order that

certain changes thereto may be

proposed with opportunity for public

comment thereon. The changes to the

January 3, 1994, proposals reflected in

this document are discussed below.

Elimination of Proposed Amendment to

§ 4.80b

The January 3, 1994, notice of

proposed rulemaking included a

proposal to amend § 4.80b of the

Customs Regulations (19 CFR 4.80b) by

adding at the end of paragraph (a) a

sentence stating that the Part 102 rules

apply for purposes of determining

whether merchandise is manufactured

or processed into a new and different

product. On further review, Customs

has determined that this proposed

amendment should not be made.

The Jones Act (46 U.S.C. App. 883),

pursuant to which § 4.80b is

promulgated, is designed to reserve the

coastwise trade for qualified U.S.

vessels, a purpose which is not

necessarily related to the origin of the

goods involved in such trade. Thus, the

term ‘‘new and different product’’ as

used in § 4.80b relates only to the

criteria for deeming merchandise not to

have been ‘‘transported coastwise’’ for

purposes of the Jones Act. Customs has

not interpreted the § 4.80b language to

be synonymous with the term

‘‘substantial transformation’’, that is, the

requirement that an article be subjected

to a processing that results in a ‘‘new

and different article of commerce,

having a new name, character and/or

use’’ different from that which it

originally possessed. For example,

pursuant to T.D. 91–32 and several

rulings issued in accordance with this

T.D., Customs has established a practice

under § 4.80b to determine, solely on

the basis of whether there has been a

change in ASTM grade, whether a ‘‘new

and different product’’ results from a

fuel oil blending operation. Such a

minimal change has not been ruled

sufficient in itself to effect a ‘‘substantial

transformation’’.

Accordingly, the proposed

amendments set forth in this document

do not include a proposal to amend

§ 4.80b.

Removal of § 10.22

Section 10.22 of the Customs

Regulations (19 CFR 10.22) provides

that for all assembled goods which are

‘‘entitled to’’ (whether or not they are in

fact the subject of a claim for) a duty

allowance under subheading

9802.00.80, HTSUS, the country of

assembly is the country of origin of such

goods for marking purposes. Thus,

§ 10.22 operates in practice as an

exception to the country of origin

marking requirements of Part 134 of the

Customs Regulations.

Subheading 9802.00.80 duty

treatment can be properly applied to

assembled goods having only a few U.S.

components, with most of the other

components originating in countries

other than either the United States or

the country of assembly. In such a case,

the true country of origin as determined

under the Part 102 rules may be one of

those other foreign countries, whereas

by application of § 10.22 the country of

origin for marking purposes would be

the country of assembly. Thus, if the

regulatory amendments set forth in the

January 3, 1994, notice of proposed

rulemaking and republished in this

document (the basic intent of which is

to result in uniform application of the

rules of origin contained in Part 102) are

adopted as a final rule, retention of

§ 10.22 could lead to incorrect or

inconsistent country of origin

determinations and country of origin

marking. Accordingly, Customs

proposes in this document to remove

§ 10.22.

Additional Amendment to § 177.22(a)

The January 3, 1994, notice of

proposed rulemaking included a

proposed amendment to § 177.22(a) of

the Customs Regulations (19 CFR

177.22(a)) which defines ‘‘country of

origin’’ for purposes of government

procurement country of origin

determinations. This proposed

amendment consisted of adding at the

end thereof a sentence stating that the

expression ‘‘wholly the growth, product,

or manufacture’’ refers to articles wholly

obtained or produced within the

meaning of interim § 102.1(g).

In response to a comment from the

Office of General Counsel, General

Services Administration (GSA),

Customs is proposing to revise

§ 177.22(a) in order to also make

reference to use of the Part 102 rules for

determining when there is a ‘‘new and

different article’’ for purposes of that

section. This provision would be similar

to the proposals to amend §§ 10.176 and

10.195 of the Customs Regulations (19

CFR 10.176 and 10.195) as contained in

the January 3, 1994, notice of proposed

rulemaking and as set forth below.

Customs also notes that, as stated to

Customs by the GSA, this additional

amendment will be consistent with

Article 1004 of the NAFTA which

requires that, if the parties apply the

marking rules established pursuant to

NAFTA Annex 311 in their normal

course of trade (as Customs is proposing

in this document to apply the Part 102

rules), such rules will be applicable for

NAFTA government procurement

purposes.

C. Final Rule Delayed Effective Date

In consideration of the fact that the

regulatory amendments set forth in the

January 3, 1994, notice of proposed

rulemaking, as republished in this

document with the changes discussed

above, would have the effect of making

the Part 102 interim rules applicable for

all country of origin determinations

under the Customs and related laws,

including for purposes of country of

origin marking, Customs believes that,

in keeping with the principle

enunciated in National Juice Products

Association v. United States, 10 CIT 48,

628 F.Supp. 978 (CIT 1986), it would be

an appropriate exercise of

administrative discretion in this

particular case to solicit comments from

the public regarding a proposed delayed

effective date.

Although National Juice Products

involved a change of Customs position

effected through an interpretive ruling

rather than through amendments to the

Customs Regulations, and

notwithstanding the fact that the Part

102 rules merely codify Customs’

existing position regarding substantial

transformation, Customs believes that

the circumstances cited by the Court to

justify a delayed effective date in that

case would be no less applicable here.

Accordingly, it is proposed that, if

Customs determines that the proposed

amendments set forth in the January 3,

1994, notice of proposed rulemaking as

republished in this document with the

changes discussed above, together with

the interim regulations published as

T.D. 94–4 and the proposed changes

thereto as set forth in this document,

should be adopted as a final rule with

whatever changes as may be necessary

to address comments submitted by the
Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules 22325

public, the regulatory changes

incorporated in the final rule would

become effective 90 days after the date

of publication of that final rule

document in the Federal Register.

Comments from the public are invited

on this proposal for a delayed effective

date.

Comments

Before adopting the proposed

amendments as a final rule,

consideration will be given to any

written comments (preferably in

triplicate) timely submitted to Customs.

Comments submitted will be available

for public inspection in accordance with

the Freedom of Information Act (5

U.S.C. 552), § 1.4, Treasury Department

Regulations (31 CFR 1.4), and

§ 103.11(b), Customs Regulations (19

CFR 103.11(b)), on regular business days

between the hours of 9:00 a.m. and 4:30

p.m. at the Regulations Branch, Office of

Regulations and Rulings, Franklin

Court, 1099 14th Street, NW., Suite

4000, Washington, DC.

Executive Order 12866

This document does not meet the

criteria for a ‘‘significant regulatory

action’’ as specified in E.O. 12866.

Regulatory Flexibility Act

Pursuant to the provisions of the

Regulatory Flexibility Act (5 U.S.C. 601

et seq.), it is certified that, if adopted,

the proposed amendments will not have

a significant economic impact on a

substantial number of small entities.

Accordingly, the proposed amendments

are not subject to the regulatory analysis

or other requirements of 5 U.S.C. 603

and 604.

Drafting Information

The principal author of this document

was Francis W. Foote, Office of

Regulations and Rulings, U.S. Customs

Service. However, personnel from other

offices participated in its development.

List of Subjects

19 CFR Part 10

Customs duties and inspection,

Imports, Reporting and recordkeeping

requirements.

19 CFR Part 12

Customs duties and inspection,

Labeling, Marking, Reporting and

recordkeeping requirements, Textiles

and textile products.

19 CFR Part 102

Customs duties and inspections,

Imports, Reporting and recordkeeping

requirements, Rules of origin, Trade

agreements.

19 CFR Part 134

Country of origin, Customs duties and

inspections, Imports, Labeling, Marking,

Packaging and containers.

19 CFR Part 177

Administrative practice and

procedures, Customs duties and

inspection, Imports, Reporting and

recordkeeping requirements.

Proposed Amendments to the

Regulations

For the reasons stated above, it is

proposed to amend Chapter I of Title 19,

Code of Federal Regulations (19 CFR

Chapter I), as set forth below.

PART 10—ARTICLES CONDITIONALLY

FREE, SUBJECT TO A REDUCED

RATE, ETC.

1. The general authority citation for

part 10 and the specific authority

citations for §§ 10.171–10.178 and

§§ 10.191–10.198 continue to read as

follows, and the specific authority

citation for § 10.22 is removed:

Authority: 19 U.S.C. 66, 1202 (General

Note 17, Harmonized Tariff Schedule of the

United States), 1321, 1481, 1484, 1498, 1508,

1623, 1624;

* * * * *

Sections 10.171–10.178 also issued

under 19 U.S.C. 2461 et seq.;

Sections 10.191–10.198 also issued

under 19 U.S.C. 2701 et seq.;

* * * * *

2. Section 10.12 is amended by

revising the last sentence of paragraph

(e) to read as follows:

§ 10.12 Definitions.

* * * * *

(e) * * * If the article consists wholly

or partially of foreign components or

materials, the manufacturing process

must be such that the foreign

components or materials have been

substantially transformed as provided in

§ 10.14(b).

3. Section 10.14 is amended by

revising the text in paragraph (b)

preceding the examples to read as

follows:

§ 10.14 Fabricated components subject to

the exemption.

* * * * *

(b) Substantial transformation of

foreign-made articles or materials.

Foreign-made articles or materials will

become products of the United States if

they undergo a process of manufacture

in the United States which results in

their substantial transformation.

Substantial transformation occurs when

under part 102 of this chapter, the

country of origin of a good which is

produced in the United States from

foreign materials is determined to be the

United States.

* * * * *

4. Section 10.22 is removed.

5. Section 10.171 is amended by

adding a new paragraph (c) to read as

follows:

§ 10.171 General.

* * * * *

(c) Wholly the growth, product, or

manufacture defined. For purposes of

§§ 10.171 through 10.178, the

expression ‘‘wholly the growth, product,

or manufacture’’ refers to articles and

materials wholly obtained or produced

within the meaning of § 102.1(g) of this

chapter.

6. Section 10.176(a) is revised to read

as follows:

§ 10.176 Country of origin criteria.

(a) Merchandise produced in a

beneficiary developing country or any

two or more countries which are

members of the same association of

countries. Any article which is wholly

the growth, product, or manufacture of

a beneficiary developing country or of

any two or more countries that are

members of the same association of

countries or which is a new or different

article of commerce that has been

grown, produced, or manufactured in a

beneficiary developing country, and

which is imported directly from such

beneficiary developing country or

member countries, may qualify for dutyfree entry under the Generalized System

of Preferences (GSP). However, dutyfree entry under GSP may be accorded

only if the sum of the cost or value of

the materials produced in the

beneficiary developing country or any

two or more countries which are

members of the same association of

countries that is treated as one country

under section 502(a)(3), Trade Act of

1974, as amended (19 U.S.C. 2462(a)(3)),

plus the direct costs of processing

operations performed in such

beneficiary developing country or

member countries, is not less than 35

percent of the appraised value of the

article at the time of its entry into the

customs territory of the United States.

For purposes of this section, a ‘‘new and

different article of commerce’’ exists

when under part 102 of this chapter, the

country of origin of a good, which is

produced in a beneficiary developing

country from foreign materials, is

determined to be that beneficiary

developing country.

* * * * *

7. Section 10.191(b)(3) is revised to

read as follows:
22326 Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules

§ 10.191 General.

* * * * *

(b) Definitions.

* * * * *

(3) Wholly the growth, product, or

manufacture. For purposes of § 10.191

through § 10.198, the expression

‘‘wholly the growth, product, or

manufacture’’ refers to articles and

materials wholly obtained or produced

within the meaning of § 102.1(g) of this

chapter.

* * * * *

8. Section 10.195(a)(1) is amended by

adding a sentence at the end to read as

follows:

§ 10.195 Country of origin criteria.

(a) Articles produced in a beneficiary

country. (1) * * * For purposes of this

section, a ‘‘new and different article of

commerce’’ exists when under part 102

of this chapter, the country of origin of

a good, which is produced in a

beneficiary country from foreign

materials, is determined to be that

beneficiary country.

* * * * *

PART 12—SPECIAL CLASSES OF

MERCHANDISE

1. The authority citation for part 12

continues to read in part as follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202

(General Note 20, Harmonized Tariff

Schedule of the United States (HTSUS)),

1624;

* * * * *

Sections 12.130 and 12.131 also

issued under 7 U.S.C. 1854;

* * * * *

2. Section 12.130 is amended by

removing paragraphs (d) and (e) and

redesignating paragraphs (f) through (i)

as paragraphs (d) through (g), and by

revising paragraph (b) to read as follows:

§ 12.130 Textiles and textile products

country of origin.

* * * * *

(b) Country of origin. For the purpose

of this section and except as provided

in paragraph (c) of this section, a textile

or textile product, subject to section

204, Agricultural Act of 1956, as

amended, imported into the customs

territory of the United States shall be a

product of a particular foreign territory

or country, or insular possession of the

U.S., if it is wholly obtained or

produced (as defined in § 102.1(g) of

this chapter) in that foreign territory or

country, or insular possession.

However, except as provided in

paragraph (c) of this section, a textile or

textile product, subject to section 204 of

the Agricultural Act of 1956, as

amended, which consists of materials

produced or derived from, or processed

in, more than one foreign territory or

country, or insular possession of the

U.S., shall be a product of that foreign

territory or country, or insular

possession, where it last underwent a

substantial transformation. A textile or

textile product will be considered to

have undergone a substantial

transformation when under part 102 of

this chapter, the country of origin of a

good, which is produced in a country

from foreign materials, is determined to

be that country.

* * * * *

PART 102—RULES OF ORIGIN

1. The authority citation for part 102

is revised to read as follows:

Authority: 19 U.S.C. 66, 1202 (General

Note 20, Harmonized Tariff Schedule of the

United States), 1624, and the North American

Free Trade Agreement Implementation Act,

Pub. L. 103–182, 107 Stat. 2057.

2. Section 102.0 is revised to read as

follows:

§ 102.0 Scope.

This part sets forth rules for

determining the country of origin of

imported goods for purposes of the

Customs and related laws and the

navigation laws of the United States.

The rules in this part regarding goods

wholly obtained or produced in a

country are intended to apply for all

such purposes. The rules in this part

which determine when a good becomes

a new and different article of commerce

as a result of manufacturing processes in

a given country, also are intended to

apply for all purposes where this

requirement exists for ‘‘country of

origin’’ or ‘‘product of’’ determinations

under the Customs laws. The rules in

this part also will be applied by the

United States for determining when a

good is a good of a North American

Free-Trade Agreement (NAFTA) country

for the purposes specified under Annex

311 of the NAFTA.

§ 102.1 [Amended]

3. In section 102.1, paragraph (p) is

removed and paragraph (q) is

redesignated as paragraph (p).

4. Section 102.11(d) is revised to read

as follows:

§ 102.11 General rules.

* * * * *

(d) Where the country of origin of a

good cannot be determined under

paragraph (a), (b) or (c) of this section,

the country of origin of the good shall

be determined as follows:

(1) If the good was produced only as

a result of minor processing, the country

of origin of the good is the country or

countries of origin of each material that

merits equal consideration for

determining the essential character of

the good;

(2) If the good was produced by

simple assembly and the assembled

parts that merit equal consideration for

determining the essential character of

the good are from the same country, the

country of origin of the good is the

country of origin of those parts; or

(3) If the country of origin of the good

cannot be determined under paragraph

(d)(1) or (d)(2) of this section, the

country of origin of the good is the last

country in which the good underwent

production.

§ 102.14 [Removed]

5. Section 102.14 is removed and

reserved.

§ 102.16 [Removed]

6. Section 102.16 is removed and

reserved.

7. Section 102.17 is amended by

revising the introductory text and

paragraph (e) to read as follows:

§ 102.17 Non-qualifying operations.

A foreign material shall not be

considered to have undergone an

applicable change in tariff classification

specified in § 102.20 or to have met any

other applicable requirements of that

section merely by reason of one or more

of the following:

* * * * *

(e) Collecting parts that, as collected,

are classifiable in the same tariff

provision as an assembled good

pursuant to General Rule of

Interpretation 2(a), without any

additional operation other than minor

processing.

8. Section 102.18 is revised to read as

follows:

§ 102.18 Rules of interpretation.

(a) When General Rule of

Interpretation (GRI) 2(a) is referred to in

§ 102.20 as an exception to an allowed

change in tariff classification, this

means that such change will not be

acceptable for purposes of that section

if the change results from the assembly

of parts into an incomplete or

unfinished good which is classifiable in

the same manner as a complete or

finished good pursuant to GRI 2(a).

(b)(1) For purposes of identifying the

material or materials that impart the

essential character of a good under

§ 102.11, the only materials that shall be

taken into consideration are those

domestic or foreign materials that are

classified in a tariff provision from

which a change in tariff classification is
Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules 22327

not allowed under the § 102.20 specific

rule or other requirements applicable to

the good. For purposes of this paragraph

(b)(1):

(i) The materials that may be

considered must be classified in a tariff

provision from which a change in tariff

classification is not allowed under the

specific rule or other requirements

applicable to the good under

consideration. For example, in the case

of a good classified in HTSUS

subheading 8607.11 (the rule for which

specifies a change to subheading

8607.11 from any other subheading,

except from subheading 8607.12, and

except from subheading 8607.19 when

that change is pursuant to GRI 2(a)), the

only materials that may be considered

for purposes of identifying the materials

that impart the essential character of the

good are those that are classified in

subheadings 8607.11, 8607.12 and, if

the tariff shift is pursuant to GRI 2(a),

8607.19; and

(ii) Materials that may be considered

include materials produced by the

producer of the good and incorporated

in the good. For example, if a producer

of a good purchases raw materials and

converts those raw materials into a

component that is incorporated in the

good, that component is a material that

may be considered for purposes of

identifying the materials that impart the

essential character of the good, provided

that the component is classified in a

tariff provision from which a change in

tariff classification is not allowed under

the specific rule or other requirements

applicable to the good.

(2) For purposes of determining

which material or materials impart the

essential character of a good under

§ 102.11, various factors may be

examined depending upon the type of

good involved. These factors include,

but are not limited to, the following:

(i) The nature of each material, such

as its bulk, quantity, weight or value;

and

(ii) The role of each material in

relation to the use of the good.

9. Section 102.19 is revised to read as

follows:

§ 102.19 NAFTA preference override.

(a) Except in the case of goods

covered by paragraph (b) of this section,

if a good which is originating within the

meaning of § 181.1(q) of this chapter is

not determined under § 102.11 (a) or (b)

to be a good of a single NAFTA country,

the country of origin of such good is the

last NAFTA country in which that good

underwent production other than minor

processing, provided that a Certificate of

Origin (see § 181.11 of this chapter) has

been completed and signed for the good.

(b) If, under any other provision of

this part, the country of origin of a good

which is originating within the meaning

of § 181.1(q) of this chapter is

determined to be the United States and

that good has been exported from, and

returned to, the United States after

having been advanced in value or

improved in condition in another

NAFTA country, the country of origin of

such good for Customs duty purposes is

the last NAFTA country in which that

good was advanced in value or

improved in condition before its return

to the United States.

10. In § 102.20, the table is amended

by revising the Note and removing the

entry for HTSUS 09.04–09.10 under

Section II, by adding a Chapter 42 Note

under Section VIII, by removing the

entry for HTSUS 4810–4814 under

Section X, by revising Note (1)d and

adding a new Note (1)f and revising

Note (3) and removing the entry for

HTSUS 5804 and removing the entry for

HTSUS 6115–6117 under Section XI, by

adding a Chapter 65 Note under Section

XII, by removing the entry for HTSUS

7010–7018 under Section XIII, by

removing the Note to Section XVI, by

adding a Chapter 94 Note and removing

the entry for HTSUS 9404.10–9404.30

and removing the entry for HTSUS

9404.90 under Section XX, and by

adding and revising the following

HTSUS entries in numerical order to

read as follows:

§ 102.20 Specific rules by tariff

classification.

* * * * *

HTSUS—Tariff Shift and/or Other

Requirements

* * * * *

(b) Section II: Chapters 6 through 14.

Note: Notwithstanding the specific rules of

this section, an agricultural or horticultural

good grown in the territory of a country shall

be treated as a good of that country even if

grown from seed or bulbs, root stock,

cuttings, slips or other live parts of plants, or

from whole plants, imported from a foreign

country.

* * * * *

0904–0910 A change to heading 0904

through 0910 from any other

chapter; or A change to subheading

0910.91 from any other subheading,

provided that a single spice

ingredient of foreign origin

constitutes no more than 60 percent

by weight of the good.

* * * * *

1517.90 A change to subheading

1517.90 from any other chapter; or

A change to subheading 1517.90

from any other heading provided

that no single oil ingredient of

foreign origin constitutes more than

60 percent by volume of the good.

* * * * *

1901.90 A change to subheading

1901.90 from any other heading.

* * * * *

2103.90 A change to subheading

2103.90 from any other subheading.

* * * * *

4104–4107 A change to headings 4104

through 4107 from any other

heading, including another heading

within that group.

* * * * *

Chapter 42 Note: For the purposes of

§ 102.11(b) of the General Rules, except for

sets, where a textile good classifiable in

Chapter 42 does not meet the tariff shift and/

or other requirements of the heading or

subheading under which it is classifiable, the

country of origin of that good shall be the

country of origin of the component which

determines the classification of that good.

However, if more than one component

determines classification or the component

that determines classification has its origin in

more than one country, the country of origin

of the good shall be the last country in which

the good underwent production other than

minor processing.

* * * * *

4810 A change to heading 4810 from

any other heading.

4811.10–4811.31 A change to

subheading 4811.10 through

4811.31 from any other heading.

4811.39 A change to subheading

4811.39 from any other heading,

except from heading 4804.

4811.40–4811.90 A change to

subheading 4811.40 through

4811.90 from any other heading.

4812–4814 A change to heading 4812

through 4814 from any other

heading, including a heading

within that group.

* * * * *

4823.20–4823.59 A change to

subheading 4823.20 through

4823.59 from any other chapter.

* * * * *

4823.70–4823.90 A change to

subheading 4823.70 through

4823.90 from any other subheading,

including another subheading

within that group.

* * * * *

(k) Section XI: Chapters 50 through

63.

Notes: (1) * * *

d. The phrase ‘‘fully lined, fully padded, or

fully insulated’’, as used in chapters 61 and

62, means that the major parts of the garment

are entirely lined, padded, or insulated, but

this does not include waistbands less than

fifteen centimeters wide, cuffs less than ten

centimeters wide, plackets, collars, shoulder

straps, and the like.

* * * * *
22328 Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules

f. The phrase ‘‘minor embellishments’’, as

used in headings 6302 and 6304, refers to

relatively insignificant methods used to

enhance the visual appeal of a good, e.g.,

piping, capping, small amounts of

embroidery.

* * * * *

(3) For the purposes of § 102.11(b) of the

General Rules, except for sets, where a good

classifiable in Chapter 61 through 63 does

not meet the tariff shift and/or other

requirements of the heading or subheading

under which it is classifiable, the country of

origin of that good shall be the single country

where the component which determines the

classification of that good was cut or formed

(e.g. knit to shape). However, if more than

one component determines classification or

the component that determines classification

has its origin in more than one country, the

country of origin of the good shall be the last

country in which the good underwent

production other than minor processing.

* * * * *

5101–5105 A change to heading 5101

through 5105 from any other

chapter; or A change to combed

wool of heading 5105 from greasy

wool of heading 5101.

* * * * *

5609 A change to heading 5609 from

any other heading except from

heading 5004 through 5007, 5106

through 5113, 5204 through 5212,

5306 through 5311, 5401 through

5408, 5508 through 5516, and 5604

through 5607.

* * * * *

5804.10 A change to subheading

5804.10 from any other heading

except from heading 5608; or

A change from greige fabric of

subheading 5804.10 to finished

fabric of that same subheading by

dyeing and printing, plus two or

more of the following finishing

operations—bleaching, shrinking,

fulling, napping, decating,

permanent stiffening, weighting,

permanent embossing, or moireing.

5804.21–5804.30 A change to

subheadings 5804.21 through

5804.30 from any subheading

outside that group; or

A change from greige fabric of

subheadings 5804.21 through

5804.30 to finished fabric of those

same subheadings by dyeing and

printing, plus two or more of the

following finishing operations—

bleaching, shrinking, fulling,

napping, decating, permanent

stiffening, weighting, permanent

embossing, or moireing.

* * * * *

5806.10–5806.39 A change to

subheading 5806.10 through

5806.39 from any heading except

from heading 5007, 5111 through

5113, 5208 through 5212, 5309

through 5311, 5407 through 5408,

5512 through 5516, and 5801; or

A change from greige fabric of

subheading 5806.10 through

5806.39 to finished fabric of those

same subheadings by dyeing and

printing, plus two or more of the

following finishing operations—

bleaching, shrinking, fulling,

napping, decating, permanent

stiffening, weighting, permanent

embossing, or moireing.

* * * * *

5810 A change of the ground fabric to

heading 5810 from any other

chapter except heading 5007, 5111

through 5113, 5208 through 5212,

5309 through 5311, 5407 through

5408, 5512 through 5516, 5602,

5603, 5608, 5903, 5907, 6001, and

6002; or

Where the weight of the embroidery

comprises seven percent or more of

the weight of the foreign fabric and

the embroidery changes the

commercial character of the base

fabric, a change to heading 5810

from any other heading.

* * * * *

5903 A change to heading 5903 from

any other heading except from

heading 5007, 5111 through 5113,

5208 through 5212, 5309 through

5311, 5407 through 5408, 5512

through 5516, 5803, 5806, 5808,

and 6002; or

(1) For woven fabric, a change to

heading 5903 from any other

heading, provided that the

impregnation, coating, covering, or

lamination accounts for at least 15

percent of the total weight of the

fabric; or

(2) For knit fabric, a change to

heading 5903 from any other

heading, provided that the

impregnation, coating, covering, or

lamination accounts for at least 20

percent of the total weight of the

fabric.

* * * * *

6101 A change to heading 6101 from

any other chapter; or

A change to assembled garments of

heading 6101, except (1) anoraks,

windbreakers, and similar articles,

not fully lined, fully padded, or

fully insulated, and (2) capes,

cloaks, and similar articles, from

either subheading 6117.90 or

subheading 6217.90, provided that

no major part has been knit to

shape; or

A change to assembled garments from

unassembled parts classified in

heading 6101 as a result of the

application of GRI 2(a), except (1)

anoraks, windbreakers, and similar

articles, not fully lined, fully

padded, or fully insulated, and (2)

capes, cloaks, and similar articles,

provided that no major part has

been knit to shape.

6102 A change to heading 6102 from

any other chapter; or

A change to assembled garments of

heading 6102, except (1) anoraks,

windbreakers, and similar articles,

not fully lined, fully padded, or

fully insulated, and (2) capes,

cloaks, and similar articles, from

either subheading 6117.90 or

subheading 6217.90, provided that

no major part has been knit to

shape; or

A change to assembled garments from

unassembled parts classified in

heading 6102 as a result of the

application of GRI 2(a), except (1)

anoraks, windbreakers, and similar

articles, not fully lined, fully

padded, or fully insulated, and (2)

capes, cloaks, and similar articles,

provided that no major part has

been knit to shape.

* * * * *

6103.21–6103.29 Each garment in an

ensemble shall be treated separately

and the marking rule applicable to

each garment is the rule that would

apply if the garment were

separately entered; or

If the ensemble contains a suit-like

jacket or blazer, a change to

assembled garments of subheading

6103.21 through 6103.29 from

either subheading 6117.90 or

subheading 6217.90; or

If the ensemble contains a suit-like

jacket or blazer, a change to

assembled garments from

unassembled parts classified in

subheading 6103.21 through

6103.29 as a result of the

application of GRI 2(a), provided

that no major part has been knit to

shape.

* * * * *

6104.21–6104.29 Each garment in an

ensemble shall be treated separately

and the marking rule applicable to

each garment is the rule that would

apply if the garment were

separately entered; or

If the ensemble contains a suit-like

jacket or blazer, a change to

assembled garments of subheading

6104.21 through 6104.29 from

either subheading 6117.90 or

subheading 6217.90; or

If the ensemble contains a suit-like

jacket or blazer, a change to

assembled garments from

unassembled parts classified in

subheading 6104.21 through

6104.29 as a result of the
Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules 22329

application of GRI 2(a), provided

that no major part has been knit to

shape.

* * * * *

6115–6116 A change to heading 6115

through 6116 from any other

chapter.

6117.10 A change to subheading

6117.10 from any other chapter

except chapter 60; or A change to

subheading 6117.10 from greige

fabric of chapter 60 by bleaching,

dyeing, printing, cutting on all

sides, and stitching.

6117.20–6117.90 A change to

subheading 6117.20 through

6117.90 from any other chapter.

6201 A change to heading 6201 from

any other chapter, provided that no

major part has been knit to shape;

or

A change to assembled garments of

heading 6201, except (1) anoraks,

windbreakers, and similar articles,

not fully lined, fully padded, or

fully insulated, and (2) capes,

cloaks, and similar articles, from

either subheading 6217.90 or

subheading 6117.90, provided that

no major part has been knit to

shape; or

A change to assembled garments from

unassembled parts classified in

heading 6201 as a result of the

application of GRI 2(a), except (1)

anoraks, windbreakers, and similar

articles, not fully lined, fully

padded, or fully insulated, and (2)

capes, cloaks, and similar articles,

provided that no major part has

been knit to shape.

6202 A change to heading 6202 from

any other chapter; or

A change to assembled garments of

heading 6202, except (1) anoraks,

windbreakers, and similar articles,

not fully lined, fully padded, or

fully insulated, and (2) capes,

cloaks, and similar articles, from

either subheading 6217.90 or

subheading 6117.90, provided that

no major part has been knit to

shape; or

A change to assembled garments from

unassembled parts classified in

heading 6202 as a result of the

application of GRI 2(a), except (1)

anoraks, windbreakers, and similar

articles, not fully lined, fully

padded, or fully insulated, and (2)

capes, cloaks, and similar articles,

provided that no major part has

been knit to shape.

* * * * *

6203.21–6203.29 Each garment in an

ensemble shall be treated separately

and the marking rule applicable to

each garment is the rule that would

apply if the garment were

separately entered; or

If the ensemble contains a suit-like

jacket or blazer, a change to

assembled garments of subheading

6203.21 through 6203.29 from

either subheading 6217.90 or

subheading 6117.90; or

If the ensemble contains a suit-like

jacket or blazer, a change to

assembled garments from

unassembled parts classified in

subheading 6203.21 through

6203.29 as a result of the

application of GRI 2(a), provided

that no major part has been knit to

shape.

* * * * *

6204.21–6204.29 Each garment in an

ensemble shall be treated separately

and the marking rule applicable to

each garment is the rule that would

apply if the garment were

separately entered; or

If the ensemble contains a suit-like

jacket or blazer, a change to

assembled garments of subheading

6204.21 through 6204.29 from

either subheading 6217.90 or

subheading 6117.90; or

If the ensemble contains a suit-like

jacket or blazer, a change to

assembled garments from

unassembled parts classified in

subheading 6204.21 through

6204.29 as a result of the

application of GRI 2(a), provided

that no major part has been knit to

shape.

* * * * *

6205 A change to heading 6205 from

any other chapter, provided that no

major part has been knit to shape;

or

A change to assembled tailored long

sleeve shirts with collars, cuffs, fullfront openings with plackets, and

yokes, or to assembled fully lined,

fully padded, or fully insulated

shirts, of heading 6205, from either

subheading 6217.90 or subheading

6117.90, provided that no major

part has been knit to shape; or

A change to assembled tailored long

sleeve shirts with collars, cuffs, fullfront openings with plackets, and

yokes, or to assembled fully lined,

fully padded, or fully insulated

shirts, from unassembled parts

classified in heading 6205 as a

result of the application of GRI 2(a),

provided that no major part has

been knit to shape.

* * * * *

6213–6214 A change to heading 6213

through 6214 from any other

chapter except from heading 5007,

5111 through 5113, 5208 through

5212, 5309 through 5311, 5407

through 5408, 5512 through 5516,

5602 through 5603, 5801 through

5806, 5808 through 5811, 5901,

5903, and 5906 through 5907; or

A change to heading 6213 through

6214 from greige fabric of heading

5007, 5111 through 5113, 5208

through 5212, 5309 through 5311,

5407 through 5408, 5512 through

5516, 5602 through 5603, 5801

through 5806, 5808 through 5811,

by bleaching, dyeing, printing,

cutting on all sides, and stitching.

* * * * *

6302 (1) Except for quilted goods

provided for in (2) below, a change

to heading 6302 from any other

heading except from heading 5007,

5111 through 5113, 5208 through

5212, 5309 through 5311, 5407

through 5408, 5512 through 5516,

5602 through 5603, 5801 through

5804, 5806, 5809 through 5810,

5901, 5903, 5906 through 5907, and

6001 through 6002; or

Except for quilted goods provided for

in (2) below, a change to heading

6302 from heading 5007, 5111

through 5113, 5208 through 5212,

5309 through 5311, 5407 through

5408, 5512 through 5516, 5602

through 5603, 5801 through 5804,

5806, 5809 through 5810, 5901,

5903, 5906 through 5907, and 6001

through 6002, provided that the

change is the result of cutting

finished fabric on all sides and

hemming all cut edges plus at least

one other subsequent process, with

no consideration being given to the

addition of minor embellishments.

(2) For quilted goods, either (a) a

change to heading 6302 from any

other heading except from

subheading 6307.90, provided that

both the cutting of the top and

bottom fabrics, and the entire

assembly of the quilted goods, are

done in one country; or (b) If (a) is

not satisfied, then the country of

origin shall be the country which

produced the fabric, or fabrics,

which impart the essential

character to the goods.

6303 (1) For quilted goods, a change to

heading 6303 from any other

heading except from subheading

6307.90, provided that both the

cutting of the top and bottom

fabrics, and the entire assembly of

the quilted goods, are done in one

country. If this rule is not satisfied,

then the country of origin shall be

the country which produced the

fabric, or fabrics, which impart the

essential character to the goods; or

(2) For curtains, drapes, or valances,
22330 Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules

except for goods provided for in (1)

above, a change to heading 6303

from any other heading, provided

that the change is the result of more

than cutting on all sides and

hemming the cut edges and with no

consideration being given to minor

processing.

(3) For goods not meeting paragraphs

(1) or (2) above, and all other goods,

a change to heading 6303 from any

other heading except from heading

5007, 5111 through 5113, 5208

through 5212, 5309 through 5311,

5407 through 5408, 5512 through

5516, 5602 through 5603, 5801

through 5804, 5806, 5809 through

5810, 5811, 5901, 5903, 5906

through 5907, and 6001 through

6002.

6304 (1) Except for quilted goods,

pillow covers, and pillow shams

provided for in (2) and (3) below, a

change to heading 6304 from any

other heading except from heading

5007, 5111 through 5113, 5208

through 5212, 5309 through 5311,

5407 through 5408, 5512 through

5516, 5602 through 5603, 5801

through 5804, 5806, 5809 through

5810, 5901, 5903 through 5904,

5906 through 5907, and 6001

through 6002; or

Except for quilted goods, pillow

covers, and pillow shams provided

for in (2) and (3) below, a change to

heading 6304 from any other

heading except heading 5007, 5111

through 5113, 5208 through 5212,

5309 through 5311, 5407 through

5408, 5512 through 5516, 5602

through 5603, 5801 through 5804,

5806, 5809 through 5810, 5901,

5903, 5906 through 5907, and 6001

through 6002, provided that the

change is the result of cutting

finished fabric on all sides and

hemming all cut edges plus at least

one other subsequent process, with

no consideration being given to the

addition of minor embellishments.

(2) For quilted goods, a change to

heading 6304 from any other

heading except from subheading

6307.90, provided that both the

cutting of the top and bottom

fabrics, and the entire assembly of

the quilted goods, are done in one

country. If this rule is not satisfied,

then the country of origin shall be

the country which produced the

fabric, or fabrics, which impart the

essential character to the goods;

(3) For pillow covers and pillow

shams, a change to heading 6304

from any other heading.

* * * * *

6306.91–6306.99 A change to

subheading 6306.91 through

6306.99 from any other heading

except from subheading 6307.90,

provided that the change is the

result of more than cutting and

hemming processes and with no

consideration being given to minor

processing.

* * * * *

6307.90 A change to subheading

6307.90 from any other heading,

provided that the change is the

result of at least cutting and a

substantial amount of either sewing

or assembly operations.

* * * * *

Chapter 65 Note: For the purposes of

§ 102.11(b) of the General Rules, except for

sets, where a textile good classifiable in

Chapter 65 does not meet the tariff shift and/

or other requirements of the heading or

subheading under which it is classifiable, the

country of origin of that good shall be the

country of origin of the component which

determines the classification of that good.

However, if more than one component

determines classification or the component

that determines classification has its origin in

more than one country, the country of origin

of the good shall be the last country in which

the good underwent production other than

minor processing.

* * * * *

6811.90 A change to subheading

6811.90 from any other heading.

* * * * *

6812.90 A change to subheading

6812.90 from any other heading.

* * * * *

6814.90 A change to subheading

6814.90 from any other heading.

* * * * *

7010 A change to heading 7010 from

any other heading.

7011 change to heading 7011 from any

other heading, except from

subheading 7003.30.

7012–7018 A change to heading 7012

through 7018 from any other

heading, including another heading

within that group; or

A change from uncut and unpolished

glassware blanks of heading 7013 to

cut and polished glassware of

heading 7013, provided that there

has been a substantial amount of

both cutting and polishing

operations in a single country.

* * * * *

7019.90 A change to subheading

7019.90 from any other heading.

7020 A change to heading 7020 from

any other heading, except from

heading 7010 through 7018.

* * * * *

8301.10–8301.50 A change to

subheading 8301.10 through

8301.50 from any other subheading,

including any subheading within

that group, except a change from

subheading 8301.60 when that

change is pursuant to GRI 2(a).

* * * * *

8401.20 A change to subheading

8401.20 from any other subheading;

or

A change to completed machinery

and apparatus of subheading

8401.20 from parts of that same

subheading.

* * * * *

8415.90 A change to subheading

8415.90 from any other subheading,

except when the change is from

heading 7411, 7608, 8414, 8501,

and 8535 through 8537 as a result

of a simple assembly.

* * * * *

8470.10–8471.91 A change to

subheading 8470.10 through

8471.91 from any subheading

outside that group, except from

heading 8473; or

A change to subheading 8470.10

through 8471.91 from any

subheading within that group or

from heading 8473, provided the

change is not the result of a simple

assembly.

8471.92–8472.90 A change to

subheading 8471.92 through

8472.90 from any subheading

outside that group, except heading

8473; or

A change to subheading 8471.92

through 8472.90 from any

subheading within that group or

from heading 8473, provided the

change is not the result of a simple

assembly.

8473 A change to heading 8473 from

any other heading, except when the

change is from heading 8414, 8501,

8504, 8534, 8541, or 8542 as a result

of a simple assembly.

8474.10–8474.80 A change to

subheading 8474.10 through

8474.80 from any subheading

outside that group, except heading

8501; or

A change to subheading 8474.10

through 8474.80 from any

subheading within that group or

heading 8501, provided the change

is not the result of a simple

assembly.

* * * * *

8482.10–8482.80 A change to

subheading 8482.10 through

8482.80 from any other heading; or

A change to subheading 8482.10

through 8482.80 from any other

subheading, including another

subheading within that group,

except from inner or outer races or

rings of subheading 8482.99.

* * * * *
Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules 22331

8512.40 A change to subheading

8512.40 from any other subheading,

except when the change is from

subheading 8512.90 or heading

8501 as a result of a simple

assembly.

* * * * *

8517.10–8517.82 A change to

subheading 8517.10 through

8517.82 from any subheading

outside that group, except from

subheading 8517.90; or

A change to subheading 8517.10

through 8517.82 from subheading

8517.90, provided the change is not

the result of a simple assembly.

* * * * *

8528.10–8528.20 A change to

subheading 8528.10 through

8528.20 from any other subheading,

including another subheading

within that group, except from

subheading 8540.11 through

8540.12.

* * * * *

8531.10–8531.80 A change to

subheading 8531.10 through

8531.80 from any other subheading,

including another subheading

within that group, except when the

change is from subheading 8531.90

as a result of a simple assembly.

* * * * *

8541–8542 A change to heading 8541

through 8542 from any other

subheading, including another

subheading within that group; or

A change to a mounted chip, die or

wafer of heading 8541 or 8542 from

an unmounted chip, die or wafer of

heading 8541 or 8542; or

A change to a programmed ‘‘read only

memory’’ (ROM) chip from an

unprogrammed ‘‘programmable

read only memory’’ (PROM) chip.

* * * * *

8708.99 A change to subheading

8708.99 from any other subheading.

* * * * *

9101–9107 A change to heading 9101

through 9107 from any heading

outside that group, except heading

9108 through 9110; or

A change to heading 9101 through

9107 from complete movements,

unassembled, of subheading

9110.11 or 9110.90, or from rough

movements of subheading 9110.19

or 9110.90.

9108–9109 A change to heading 9108

through 9109 from any heading

outside that group, except heading

9110; or

A change to heading 9108 through

9109 from complete movements,

unassembled, of subheading

9110.11 or 9110.90, or from rough

movements of subheading 9110.19

or 9110.90.

9110 A change to heading 9110 from

any other heading, except from

subheading 9114.90.

* * * * *

Chapter 94 Note: For a good classifiable in

subheadings 9404.30 through 9404.90 which

does not meet the appropriate tariff shift rule

specified for those subheadings, the country

of origin is the country where all cutting and

sewing operations required to form the outer

shell were performed. If all cutting and

sewing operations required to form the outer

shell were not performed in a single country,

the country of origin will be the single

country where the component of the outer

shell which determines the classification of

that good was produced. If a single country

did not produce a component of the outer

shell which determines the classification of

that good, then the country of origin will be

the country in which the good last

underwent a substantial assembly process.

* * * * *

9401.90 A change to subheading

9401.90 from any other heading,

except from subheading 9403.90.

* * * * *

9403.90 A change to subheading

9403.90 from any other heading,

except from subheading 9401.90.

9404.10–9404.29 A change to

subheading 9404.10 through

9404.29 from any other heading.

9404.30–9404.90 A change to down

and/or feather filled goods of

subheading 9404.30 through

9404.90 from any other heading; or

For all other goods of subheading

9404.30 through 9404.90, a change

from any other heading except from

heading 5007, 5111 through 5113,

5208 through 5212, 5309 through

5311, 5407 through 5408, 5512

through 5516, 5602 through 5603,

5801 through 5804, 5806, 5809

through 5810, 5901, 5903 through

5904, 5906 through 5907, 6001

through 6002, and 6307.90.

* * * * *

9606.21–9606.29 A change to

subheading 9606.21 through

9606.29 from any other heading.

* * * * *

PART 134—COUNTRY OF ORIGIN

MARKING

1. The authority citation for part 134

is revised to read as follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202

(General Note 20, Harmonized Tariff

Schedule of the United States), 1304, 1624.

2. Section 134.1 is amended by

revising paragraph (b), redesignating

paragraphs (d) through (j) as (e) through

(k), adding a new paragraph (d), and

revising newly designated paragraphs

(e) (1) and (2) to read as follows:

§ 134.1 Definitions.

* * * * *

(b) Country of origin. ‘‘Country of

origin’’, when used with reference to

any article of foreign origin imported

into the United States, means the

country in which the article was wholly

obtained or produced within the

meaning of § 102.1(e) of this chapter, or,

in the case of an article not wholly

obtained or produced in one country,

the country where the article last

underwent a substantial transformation

prior to its importation into the United

States.

* * * * *

(d) Substantial transformation.

‘‘Substantial transformation’’ occurs

when, under part 102 of this chapter,

the country of origin of a good, which

is produced in a country from foreign

materials, is determined to be that

country.

(e) Ultimate purchaser. * * *

(1) If an imported article will be used

in further processing, the processor will

be the ‘‘ultimate purchaser’’ if he

subjects the imported article to a

process which results in a substantial

transformation of the article.

(2) If the process does not result in a

substantial transformation of the

imported article, the consumer or user

of the article, who obtains the article

after the processing, will be regarded as

the ‘‘ultimate purchaser’’.

* * * * *

§ 134.32 [Amended]

3. In § 134.32, paragraph (r) is

removed.

4. Section 134.35 is revised to read as

follows:

§ 134.35 Articles substantially transformed

after importation.

If an imported article will be used in

further processing in the United States,

the processor will be considered the

ultimate purchaser if such article is

determined to be a good of the United

States under part 102 of this chapter. In

such a case, the imported article is

excepted from individual marking

pursuant to 19 U.S.C. 1304(a)(3)(D) and

§ 134.32(d), provided the container in

which it is imported will reasonably

indicate the country of origin of the

article to the ultimate purchaser.

§ 134.43 [Amended]

5. In § 134.43, paragraph (e) is

removed.

PART 177—ADMINISTRATIVE

RULINGS

1. The general authority citation for

part 177 is revised to read as follows:
22332 Federal Register / Vol. 60, No. 87 / Friday, May 5, 1995 / Proposed Rules

Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202

(General Note 20, Harmonized Tariff

Schedule of the United States), 1624;

* * * * *

2. In § 177.22, paragraph (a) is revised

to read as follows:

§ 177.22 Definitions.

(a) Country of origin. For the purpose

of this subpart, an article is a product of

a country or instrumentality only if it is

wholly the growth, product, or

manufacture of that country or

instrumentality or, in the case of an

article which consists in whole or in

part of materials from another country

or instrumentality, it has been

substantially transformed into a new

and different article of commerce. The

term ‘‘instrumentality’’ shall not be

construed to include any agency or

division of the government of a country,

but may be construed to include such

arrangements as the European Economic

Community. For purposes of this

section, an article is ‘‘wholly the

growth, product, or manufacture’’ of a

country or instrumentality if it is wholly

obtained or produced (as defined in

§ 102.1(g) of this chapter) in that

country or instrumentality, and a ‘‘new

and different article of commerce’’

exists when under part 102 of this

chapter, the country of origin of a good,

which is produced in a country or

instrumentality from foreign materials,

is determined to be that country or

instrumentality.

* * * * *

George J. Weise,

Commissioner of Customs.

Approved: April 19, 1995.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 95–10856 Filed 5–4–95; 8:45 am]

BILLING CODE 4820–02–P

DEPARTMENT OF THE INTERIOR

Office of Surface Mining Reclamation

and Enforcement

30 CFR Part 931

New Mexico Regulatory Program

AGENCY: Office of Surface Mining

Reclamation and Enforcement (OSM),

Interior.

ACTION: Proposed rule; public comment

period and opportunity for public

hearing on proposed amendment.

SUMMARY: OSM is announcing receipt of

a proposed amendment to the New

Mexico regulatory program (hereinafter,

the ‘‘New Mexico program’’) under the

Surface Mining Control and

Reclamation Act of 1977 (SMCRA). The

proposed amendment consists of

revisions to and additions of rules

pertaining to definitions, designation of

lands unsuitable for surface coal

mining, permit application information,

minimum requirements for reclamation

and operation plans in permit

applications, review and approval or

denial of permit applications and permit

conditions, performance standards for

coal exploration, and performance

standards for surface coal mining

operations. The amendment is intended

to revise the New Mexico program to be

consistent with the corresponding

Federal regulations.

DATES: Written comments must be

received by 4:00 p.m., m.d.t. June 5,

1995. If requested, a public hearing on

the proposed amendment will be held

on May 30, 1995. Requests to present

oral testimony at the hearing must be

received by 4:00 p.m., m.d.t. on May 22,

1995.

ADDRESSES: Written comments should

be mailed or hand delivered to Thomas

Ehmett at the address listed below.

Copies of the New Mexico program,

the proposed amendment, and all

written comments received in response

to this document will be available for

public review at the addresses listed

below during normal business hours,

Monday through Friday, excluding

holidays. Each requester may receive

one free copy of the proposed

amendment by contacting OSM’s

Albuquerque Field Office.

Thomas E. Ehmett, Acting Director,

Albuquerque Field Office, Office of

Surface Mining Reclamation and

Enforcement, 505 Marquette Avenue,

NW., Suite 1200, Albuquerque, New

Mexico 87102

New Mexico Energy and Minerals

Department, Mining and Minerals

Division, 2040 South Pacheco Street,

Santa Fe, New Mexico 87505,

Telephone: (505) 827–5970

FOR FURTHER INFORMATION CONTACT:

Thomas Ehmett, Telephone: (505) 766–

1486.

SUPPLEMENTARY INFORMATION:

I. Background on the New Mexico

Program

On December 31, 1980, the Secretary

of the Interior conditionally approved

the New Mexico program. General

background information on the New

Mexico program, including the

Secretary’s findings, the disposition of

comments, and the conditions of

approval of the New Mexico program

can be found in the December 31, 1980,

Federal Register (45 FR 86459).

Subsequent actions concerning New

Mexico’s program and program

amendments can be found at 30 CFR

931.11, 931.15, 931.16, and 931.30.

II. Proposed Amendment

By letter dated April 13, 1995, New

Mexico submitted a proposed

amendment to its program

(administrative record No. NM–739)

pursuant to SMCRA (U.S.C. 1201 et

seq.). New Mexico submitted the

proposed amendment in response to the

required program amendments at 30

CFR 931.16(c), (d), and (f) through (s)

(56 FR 67520, December 31, 1991, and

58 FR 65907, December 17, 1993) and at

its own initiative. The provisions of the

New Mexico rules that New Mexico

proposes to revise are: Coal Surface

Mining Commission (CSMC) Rule 80–1–

5, definitions; CSMC Rule 80–1–4–15,

designation of lands unsuitable for

surface coal mining; CSMC Rule 80–1–

7–14, permit application information;

CSMC Rule 80–1–9–39, minimum

requirements for reclamation and

operation plans in permit applications;

CSMC Rules 80–1–11–17, 80–1–11–19,

80–1–11–20, and 80–1–11–29, review of

and approval or denial of permit

applications and permit conditions;

CSMC Rule 80–1–19–15, performance

standards for coal exploration; and

CSMC Rules 80–1–20–41 and 49, 80–1–

20–82, 80–1–20–89, 80–1–20–93, 80–1–

20–97, 80–1–20–116 and 117, 80–1–20–

124, and 80–1–20–150, performance

standards for surface coal mining

operations.

Specifically, New Mexico proposes to

revise CSMC Rule 80–1–5 to define

‘‘qualified laboratories’’ and ‘‘SMCRA;’’

CSMC Rule 80–1–4–15(b)(1) to require

that New Mexico publish in its State

Register receipt of a petition to

designate lands unsuitable for surface

coal mining; and CSMC Rule 80–1–7–

14(c) to require that a permit application

include information on all violations

received pursuant to SMCRA.

Concerning minimum requirements

for reclamation and operation plans in

permit applications, New Mexico

proposes to revise CSMC Rule 80–1–9–

39(c) to require a permit application to

include a description of measures that

an operator would use to mitigate or

remedy subsidence-related material

damage to the land and occupied

residential dwellings, structures related

thereto, and noncommercial buildings

where the damage resulted from

underground mining operations

conducted after October 24, 1992; and

CSMC Rule 80–1–9–39(d) to delete in its

entirety paragraph (d)(2), concerning an

exception from subsidence control

measures.