22034 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Proposed Rules

Corporation Y, shareholder A, has an

attributable interest in a SMR application.

Another shareholder in Corporation Y,

shareholder B, has a nonattributable interest

in the same SMR application. While neither

shareholder has enough shares to

individually control Corporation Y, together

they have the power to control Corporation

Y. Through the common investment of

shareholders A and B in the SMR

application, Corporation Y would still be

deemed an affiliate of the applicant.

(i) Spousal Affiliation. Both spouses

are deemed to own or control or have

the power to control interests owned or

controlled by either of them, unless they

are subject to a legal separation

recognized by a court of competent

jurisdiction in the United States.

(ii) Kinship Affiliation. Immediate

family members will be presumed to

own or control or have the power to

control interests owned or controlled by

other immediate family members. In

this context ‘‘immediate family

member’’ means father, mother,

husband, wife, son, daughter, brother,

sister, father- or mother-in-law, son- or

daughter-in-law, brother- or sister-inlaw, step-father, or -mother, stepbrother, or -sister, step-son, or

-daughter, half brother or sister. This

presumption may be rebutted by

showing that

(A) The family members are

estranged,

(B) The family ties are remote, or

(C) The family members are not

closely involved with each in business

matters.

Example for paragraph (h)(3)(ii). A owns a

controlling interest in Corporation X. A’s

sister-in-law, B, has an attributable interest in

an SMR application. Because A and B have

a presumptive kinship affiliation, A’s interest

in Corporation X is attributable to B, and thus

to the applicant, unless B rebuts the

presumption with the necessary showing.

(4) Affiliation through stock

ownership. (i) An applicant is presumed

to control or have the power to control

a concern if he or she owns or controls

or has the power to control 50 percent

or more of its voting stock.

(ii) An applicant is presumed to

control or have the power to control a

concern even though he or she owns,

controls or has the power to control less

than 50 percent of the concern’s voting

stock, if the block of stock he or she

owns, controls or has the power to

control is large as compared with any

other outstanding block of stock.

(iii) If two or more persons each owns,

controls or has the power to control less

than 50 percent of the voting stock of a

concern, such minority holdings are

equal or approximately equal in size,

and the aggregate of these minority

holdings is large as compared with any

other stock holding, the presumption

arises that each one of these persons

individually controls or has the power

to control the concern; however, such

presumption may be rebutted by a

showing that such control or power to

control, in fact, does not exist.

(5) Affiliation arising under stock

options, convertible debentures, and

agreements to merge. Stock options,

convertible debentures, and agreements

to merge (including agreements in

principle) are generally considered to

have a present effect on the power to

control the concern. Therefore, in

making a size determination, such

options, debentures, and agreements

will generally be treated as though the

rights held thereunder had been

exercised. However, neither an affiliate

nor an applicant can use such options

and debentures to appear to terminate

its control over another concern before

it actually does so.

Example 1 for paragraph (h)(5). If company

B holds an option to purchase a controlling

interest in company A, who holds an

attributable interest in an SMR application,

the situation is treated as though company B

had exercised its rights and had become

owner of a controlling interest in company A.

The gross revenues of company B must be

taken into account in determining the size of

the applicant.

Example 2 for paragraph (h)(5). If a large

company, BigCo, holds 70% (70 of 100

outstanding shares) of the voting stock of

company A, who holds an attributable

interest in an SMR application, and gives a

third party, SmallCo, an option to purchase

50 of the 70 shares owned by BigCo, BigCo

will be deemed to be an affiliate of company,

and thus the applicant, until SmallCo

actually exercises its options to purchase

such shares. In order to prevent BigCo from

circumventing the intent of the rule which

requires such options to be considered on a

fully diluted basis, the option is not

considered to have present effect in this case.

Example 3 for paragraph (h)(5). If company

A has entered into an agreement to merge

with company B in the future, the situation

is treated as though the merger has taken

place.

(6) Affiliation under voting trusts. (i)

Stock interests held in trust shall be

deemed controlled by any person who

holds or shares the power to vote such

stock, to any person who has the sole

power to sell such stock, and to any

person who has the right to revoke the

trust at will or to replace the trustee at

will.

(ii) If a trustee has a familial, personal

or extra-trust business relationship to

the grantor or the beneficiary, the stock

interests held in trust will be deemed

controlled by the grantor or beneficiary,

as appropriate.

(iii) If the primary purpose of a voting

trust, or similar agreement, is to separate

voting power from beneficial ownership

of voting stock for the purpose of

shifting control of or the power to

control a concern in order that such

concern or another concern may meet

the Commission’s size standards, such

voting trust shall not be considered

valid for this purpose regardless of

whether it is or is not recognized within

the appropriate jurisdiction.

(7) Affiliation through common

management. Affiliation generally arises

where officers, directors, or key

employees serve as the majority or

otherwise as the controlling element of

the board of directors and/or the

management of another entity.

(8) Affiliation through common

facilities. Affiliation generally arises

where one concern shares office space

and/or employees and/or other facilities

with another concern, particularly

where such concerns are in the same or

related industry or field of operations,

or where such concerns were formerly

affiliated, and through these sharing

arrangements one concern has control,

or potential control, of the other

concern.

(9) Affiliation through contractual

relationships. Affiliation generally

arises where one concern is dependent

upon another concern for contracts and

business to such a degree that one

concern has control, or potential

control, of the other concern.

(10) Affiliation under joint venture

arrangements. (i) A joint venture for size

determination purposes is an

association of concerns and/or

individuals, with interests in any degree

or proportion, formed by contract,

express or implied, to engage in and

carry out a single, specific business

venture for joint profit for which

purpose they combine their efforts,

property, money, skill and knowledge,

but not on a continuing or permanent

basis for conducting business generally.

The determination whether an entity is

a joint venture is based upon the facts

of the business operation, regardless of

how the business operation may be

designated by the parties involved. An

agreement to share profits/losses

proportionate to each party’s

contribution to the business operation is

a significant factor in determining

whether the business operation is a joint

venture.

(ii) The parties to a joint venture are

considered to be affiliated with each

other.

[FR Doc. 95–11010 Filed 5–2–95; 12:52 pm]

BILLING CODE 6712–01–M
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Proposed Rules 22035

1The affiliated organizations include: American

Train Dispatchers Department; International

Brotherhood of Locomotive Engineers; Brotherhood

of Locomotive Engineers; Brotherhood of

Maintenance of Way Employees; Brotherhood of

Railroad Signalmen; Hotel Employees and

Restaurant Employees International Union;

International Brotherhood of Boilermakers, Iron

Ship Builders, Blacksmiths, Forgers and Helpers;

International Brotherhood of Electrical Workers;

International Brotherhood of Firemen and Oilers;

and Sheet Metal Workers’ International Association.

DEPARTMENT OF DEFENSE

48 CFR Part 219

Defense Federal Acquisition

Regulation Supplement; Evaluation

Preference for Small Disadvantaged

Business Concerns

AGENCY: Department of Defense.

ACTION: Proposed rule with request for

comments.

SUMMARY: The Director of Defense

Procurement is proposing to amend the

Defense Federal Acquisition Regulation

Supplement to state that the evaluation

preference for small disadvantaged

business concerns shall not be used in

acquisitions for long distance

telecommunications services.

DATES: Comments on the proposed rule

should be submitted in writing to the

address shown below on or before July

3, 1995, to be considered in the

formulation of the final rule.

ADDRESSES: Interested parties should

submit written comments to: Defense

Acquisition Regulations Council, Attn:

Ms. Amy Williams,

PDUSD(A&T)DP(DAR), IMD 3D139,

3062 Defense Pentagon, Washington, DC

20301–3062. Telefax number (703) 602–

0350. Please cite DFARS Case 95–D008

in all correspondence related to this

issue.

FOR FURTHER INFORMATION CONTACT: Ms.

Amy Williams, (703) 602–0131.

SUPPLEMENTARY INFORMATION:

A. Background

Subpart 219.70 of the Defense Federal

Acquisition Regulation Supplement

(DFARS) provides policy and

procedures for use of an evaluation

preference for offers from small

disadvantaged business (SDB) concerns

in competitive acquisitions. SDB

concerns receiving the evaluation

preference in acquisitions for services

must agree that at least 50 percent of the

cost of personnel for contract

performance will be spent for

employees of the SDB concern.

This DFARS rule proposes to make

the SDB evaluation preference

inapplicable to acquisitions for long

distance telecommunications services,

as it is often necessary for large long

distance carriers to provide more than

50 percent of the labor under contracts

for long distance telecommunications

services.

B. Regulatory Flexibility Act

The proposed change to DFARS Part

219 may have a significant economic

impact on a substantial number of small

entities within the meaning of the

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

et seq., because the rule eliminates the

evaluation preference for small

disadvantaged business concerns in

acquisitions for long distance

telecommunications services. An Initial

Regulatory Flexibility Analysis (IRFA)

has been prepared and may be obtained

from the address stated herein. A copy

of the IRFA has been submitted to the

Chief Counsel for Advocacy of the Small

Business Administration. Comments are

invited. Comments from small entities

concerning the affected DFARS subpart

will be considered in accordance with

Section 610 of the Act. Such comments

must be submitted separately and cite

DFARS Case 95–D008 in

correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act does

not apply because the rule does not

impose any information collection

requirements which require the

approval of the Office of Management

and Budget under 44 U.S.C. 3501, et

seq.

List of Subjects in 48 CFR Part 219

Government procurement.

Michele P. Peterson,

Executive Editor, Defense Acquisition

Regulations Council.

Therefore, 48 CFR Part 219 is

proposed to be amended as follows:

1. The authority citation for 48 CFR

Part 219 continues to read as follows:

Authority: 41 U.S.C. 421 and 48 CFR

Chapter 1.

PART 219—SMALL BUSINESS AND

SMALL DISADVANTAGED BUSINESS

CONCERNS

2. Section 219.7001(b) is revised to

read as follows:

219.7001 Applicability.

* * * * *

(b) Do not use the evaluation

preference in acquisitions which—

(1) Use small purchase procedures;

(2) Are set-aside for small

disadvantaged businesses;

(3) Are set-aside for small businesses;

(4) Are for commissary or exchange

resale; or

(5) Are for long distance

telecommunications services.

[FR Doc. 95–11020 Filed 5–3–95; 8:45 am]

BILLING CODE 5000–04–M

INTERSTATE COMMERCE

COMMISSION

49 CFR Part 1121

[Ex Parte No. 400 (Sub-No. 4)]

New Procedures in Rail Exemption

Revocation Proceedings

AGENCY: Interstate Commerce

Commission.

ACTION: Advance notice of proposed

rulemaking.

SUMMARY: The Commission is requesting

comments on a proposal by the Railway

Labor Executives’ Association and its

affiliated labor organizations to establish

procedural rules to govern the filing and

processing of petitions to revoke

exemptions.

DATES: Written comments are due on

June 19, 1995.

ADDRESSES: Send an original and 10

copies of comments, referring to Ex

Parte No. 400 (Sub-No. 4), to: Office of

the Secretary, Case Control Branch,

Interstate Commerce Commission, 1201

Constitution Avenue NW., Washington,

DC 20423.

FOR FURTHER INFORMATION CONTACT:

Beryl Gordon, (202) 927–5610. [TDD for

the hearing impaired: (202) 927–5721.]

SUPPLEMENTARY INFORMATION: By

petition filed December 30, 1994, the

Railway Labor Executives’ Association

and its affiliated labor organizations

(RLEA) 1 ask that we establish formal

procedural rules to govern petitions to

revoke exemptions brought under 49

U.S.C. 10505(d) or 49 CFR 1152.25(e).

RLEA proposes a set of rules which, it

asserts, provides the parties and the

Commission with a specific procedure

for filing and processing petitions to

revoke exemptions. These rules would

require, among other things, that a

petition to revoke be filed to initiate a

proceeding, containing a concise, plain

statement of the grounds for revocation,

as well as the relief sought. The rules

would further require that respondent(s)

reply within 15 days, setting forth,

among other things, a concise, plain

statement of the reasons why the

petition should not be granted.

Discovery would commence with the