20628 Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules and Regulations

FDC 5/1547/SSI/ FI/P Malcom

McKinnon, Brunswick, GA. VOR or GPS

RWY 4, AMDT 14A...S–4 MDA 460/

HAT 444 all cats. vis 11⁄2 cat D. This

becomes VOR or GPS RWY 4 AMDT

14B.

Hancock

Houghton County Memorial

Michigan

NDB OR GPS RWY 31 AMDT 11...

FDC Date: 04/12/95

FDC 5/1578/CMX/ FI/P Houghton

County Memorial, Hancock, MI. NDB or

GPS RWY 31 AMDT 11...MSA from CM

LOM 090–270 3400, 270–090 2700. This

is NDB or GPS RWY 31 AMDT 11A.

[FR Doc. 95–10385 Filed 4–2–95; 8:45 am]

BILLING CODE 4910–13–M

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 146

[T.D. 95–35]

RIN 1515–AB20

Petroleum Refineries in Foreign Trade

Subzones

AGENCY: Customs Service, Department

of the Treasury.

ACTION: Final rule.

SUMMARY: This document amends the

Customs Regulations by adding special

procedures and requirements governing

the operations of crude petroleum

refineries approved as foreign trade

subzones, in implementation of section

9002 of the Technical and

Miscellaneous Revenue Act of 1988,

which amended the Foreign Trade

Zones Act to make specific provision for

petroleum refinery subzones.

EFFECTIVE DATE: These regulations are

effective October 24, 1995.

FOR FURTHER INFORMATION CONTACT: For

Legal aspects: Bill Rosoff, Chief, Entry

Rulings Branch (202)482–7040. For

Operational aspects: Louis Hryniw,

Regulatory Audit (202)927–1100.

SUPPLEMENTARY INFORMATION:

Background

On August 10, 1992 (57 FR 35530),

Customs published a document in the

Federal Register proposing to amend

the Customs Regulations to add special

procedures and requirements governing

the operations of crude petroleum

refineries approved as foreign trade

subzones, in implementation of section

9002 of the Technical and

Miscellaneous Revenue Act of 1988

which amended the Foreign Trade

Zones Act, 19 U.S.C. 81c(d), to make

specific provision for petroleum refinery

subzones.

Briefly, as stated in the August 10,

1992, notice of proposed rulemaking,

the statutory amendment obviates the

need to determine exactly when and

where in the manufacturing process

crude and other feedstocks become

other products. In so doing, it permits

refiners as well as Customs to assess the

relative value of such multiple products

at the end of the manufacturing period

during which such products were

produced, when the actual quantities of

these products resulting from the

refining process can be measured with

certainty. Also, the amendment permits

the products refined in a subzone

during a manufacturing period to be

attributed to a given crude or other

feedstocks introduced into production

during the period, to the extent that

such products were producible (could

have been produced) therefrom in the

quantities removed from the subzone.

As a result of extensive and varied

input received from the oil refinery and

foreign trade zone communities, as well

as from other interested parties, in

response to the initial notice of

proposed rulemaking, Customs

published a significantly revised notice

on March 4, 1994 (59 FR 10342) and

solicited additional public comment on

the revised proposed rule.

The following discussion includes a

summary of the various comments

received in response to the March 4,

1994, notice of proposed rulemaking,

together with an explanation and

analysis regarding the sections to be

added, eliminated or further revised.

The final rule as revised is thereafter set

forth.

Discussion of Comments

Comment: Two commenters suggested

deletion of proposed § 146.92(a)(1), (2)

and (3) because it is already covered in

proposed § 146.93.

Customs Response: Customs agrees

and, therefore, these three subsections

have been deleted.

Comment: Three commenters

suggested that the definition in

proposed § 146.92(b) be expanded to

include products from natural gas

production and blendstocks and,

additionally, that the definition state

that Customs may add other

merchandise to this definition by way of

a ruling.

Two commenters suggested the

inclusion of ‘‘other hydrocarbon

feedstocks, light olefins, and other

aromatics and their derivatives’’ in this

definition.

Customs Response: Regarding the

suggestion that this definition may be

modified by a ruling, Customs

regulations may not be modified or

changed by way of a ruling. Any

changes to the regulations would have

to follow regulatory procedures. It is not

clear to Customs how natural gas

production and blendstocks apply to

producibility. Any change to T.D. 66–16

to include feedstocks or products not

listed must include supporting records

and a technical explanation of the

change. Therefore, this suggestion has

not been adopted.

Comment: One commenter suggested

that the word ‘‘means’’ in proposed

§ 146.92(c) be changed to ‘‘is based on’’.

Another commenter suggested deletion

of ‘‘utilizing T.D. 66–16 (see

§ 146.92(h)), and’’ and insertion of

‘‘volumetric’’ between ‘‘any’’ and

‘‘loss’’.

Customs Response: The suggested

change has been adopted with respect to

addition of the word ‘‘volumetric’’ and

§ 146.92(c) has been reworded. Customs

disagrees that the phrase ‘‘utilizing T.D.

66–16’’ should be deleted. The word

‘‘means’’ should be retained since this

section defines terms for use in this

subpart.

Comment: The suggestion was made

that proposed § 146.92(d) be re-worded

to read as follows:

Final product means any product that

is produced in a petroleum refinery

subzone from feedstock processed

therein, and thereafter removed

therefrom or consumed within the zone.

Two commenters suggested that the

phrase ‘‘and or hydrocarbon product’’

be inserted after ‘‘product’’ and before

‘‘that’’. Another commenter suggested

that the phrase ‘‘lost or destroyed in the

subzone as provided in

§ 146.53(c)(1)(iv)’’ be inserted after

‘‘therefrom’’.

Customs Response: The first

suggestion regarding the rewording of

§ 146.92(d) has been adopted. The use of

attribution by records requires that the

amounts removed or consumed actually

be measured; such method is not

acceptable to account for unmeasured

losses. This suggestion has not been

adopted. It is Customs position that 19

U.S.C. 81c(d) applies only to crude

petroleum products and not to

hydrocarbons in general. Therefore, this

suggestion was not adopted.

Comment: Two commenters suggested

that the words ‘‘or manufacturer’’ be

inserted after ‘‘refiner’’ and that the

words ‘‘production facility’’ be inserted

after ‘‘refinery’’ in proposed § 146.92(e).

One commenter suggested deletion of

the phrase ‘‘for which * * * subzone’’

because attribution is addressed
Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules and Regulations 20629

elsewhere in the regulations. Another

commenter recommended that the word

‘‘for’’ after ‘‘month’’ be deleted and

replaced with ‘‘within’’.

Customs Response: Regarding the first

suggestion, the purpose of these

regulations is to implement 19 U.S.C.

81c(d). That statutory provision only

applies to crude petroleum refineries in

foreign trade zones. Therefore, there is

no basis to extend these regulations to

‘‘production facilities.’’ The suggestion

to remove the reference to final products

consumed or removed from the subzone

has not been adopted since the statute

provides an attribution formula to be

used at specific subzones. The word

‘‘for’’ is shorter than ‘‘within’’ and there

is no change in substance.

Comment: One commenter proposed

addition of a definition of ‘‘Petroleum’’

to read as follows:

Petroleum means a feedstock listed on

the top line of the tables set forth in T.D.

66–16 and includes any hydrocarbon

feedstock produced from natural gas

liquids or comprised of natural gas

liquids.

Customs Response: Customs disagrees

that such a definition is necessary and,

therefore, has not included this

definition in the final rule.

Comment: Two commenters

recommended that the phrase ‘‘listed on

the top line of the tables set forth in T.D.

66–16’’ be replaced with ‘‘as defined

herein into final products as defined

herein’’. One commenter suggested that

the following phrase be added at the

end of proposed § 146.92(f):

* * * and includes any facility that

processes a hydrocarbon feedstock

utilizing one or more of the units in the

definition of a refinery operating unit.

Two other commenters advocated renaming this definition ‘‘Petroleum

refinery or production facility’’ and then

adding the following:

Production facility means a facility

that primarily converts hydrocarbon

feedstocks, light olefins, aromatics and

their derivatives into primarily light

olefin products such as ethylene or

propylene or other products such as

toluene, benzene, or derivatives of

olefins and aromatic products such as

cyclohexane, acrylates, alcohols,

caprolactam, or other petrochemical

products.

Customs Response: As previously

stated, there is no authority to extend

the application of 19 U.S.C. 81c(d)

beyond a crude petroleum refinery.

Comment: Two commenters proposed

deletion of ‘‘market’’ and ‘‘each month’’

from the definition in proposed

§ 146.92(g).

Customs Response: Customs disagrees

with this suggestion. A refiner has the

option to use the market value of each

product or a published standard value

such as Platts.

Comment: Two commenters suggested

addition of the phrase ‘‘is an inventory

control’’ before the word ‘‘method’’ in

proposed § 146.92(h) and replacement

of the phrase ‘‘set forth in T.D. 66–16’’

with ‘‘as verified and adopted by the

Secretary of the Treasury’’.

Customs Response: The suggested

changes have not been adopted.

Producibility is not an inventory control

because it does not reflect actual

feedstocks in inventory at any given

time. It is a statutory method to account

for import duties owed on privileged

foreign feedstocks. The Industry

Standards of Potential Production are

set forth in T.D. 66–16 and, even if that

Treasury Decision is modified in the

future, the reference will always be to

‘‘T.D. 66–16 as modified by T.D.——’’.

Comment: Four commenters

suggested replacement of the definition

in proposed § 146.92(i) with the

following language:

Relative value means a factor assigned

to each final product attributed to the

separation from a privileged foreign

feedstock equal to the ratio of its ‘‘price

of product’’ to the average ‘‘price of

product’’ for all final products at the

time of separation.

Customs Response: Customs disagrees

with this suggestion because ‘‘relative

value’’ is a dollar value assigned to

products and not a factor. Therefore, the

definition remains as proposed.

Comment: Two commenters suggested

addition of ‘‘or production operating

unit’’ to the title of § 146.92 and

insertion of the following language in

the definition:

Production operating unit means a

unit in a production facility in which

feedstock is processed such as a thermal

cracking furnace or distillation tower.

Four commenters suggested deletion

of proposed § 146.92(j) (definition of

‘‘Refinery operating unit’’) in its

entirety. Alternatively, one commenter

suggested the definition should read as

‘‘a facility within a refinery wherein

feedstocks lose their unique physical

identity or may undergo changes in

physical characteristics’’. Another

commenter agreed with the proposed

definition but also suggested adding the

words, ‘‘including, but not limited to,

API gravity, distillation traits, chemical

characteristics, etc.’’ Yet another

commenter proposed deletion of any

reference to ‘‘operating unit’’ in this

section and in proposed §§ 146.93(a) (1)

and (4), 146.93(b), 146.94(a), and

146.96(a)(1).

Customs Response: Customs agrees

with the position asserted by the

commenters that the manufacture and

manipulation of feedstocks begins on

admission to a refinery subzone because

a refiner deliberately mixes various

feedstocks on admission to achieve

optimum characteristics for processing.

For that reason, proposed § 146.92(j) is

unnecessary and has been deleted.

Based on the assertion by refiners that

the mixing occurs on admission, the

admission of feedstock in nonprivileged

status will be binding and a postadmission request for privileged status

will be denied unless the refiner

establishes that the feedstock was not

manipulated or manufactured to effect a

change in tariff classification. A new

§ 146.93(e) has been added to reflect this

position.

Comment: Two commenters suggested

revising proposed § 146.92(k) to read as

follows:

Time of separation in the case of

privileged foreign feedstock means the

manufacturing period in which such

feedstock is deemed to have been

separated into two or more final

feedstocks.

Customs Response: Customs disagrees

with this suggestion since it merely

adds words without changing the

substance of the definition.

Comment: Three commenters

proposed inclusion of the following

language in proposed § 146.93(a)

immediately following ‘‘Attribution’’

and before ‘‘(1) Producibility’’:

(a) Attribution. All final products

removed from or consumed within a

petroleum refinery zone must be

attributed to feedstock processed within

said petroleum refinery zone in the

current or prior manufacturing period.

Attribution must be based on records

maintained by the operator. Attribution

may be made by applying one of the

authorized inventory control methods

set forth in this section. Records may be

maintained on a weight or volume basis.

Two commenters suggested that the

phrase ‘‘have been introduced into a

refinery operating unit’’ in proposed

§ 146.93(a)(1) be replaced with ‘‘are

eligible for attribution, as set forth in

paragraph (b), of this section * * *’’.

Another commenter proposed

replacement of the same phrase with

‘‘are eligible for attribution, as set forth

in paragraph (a)(4) of this section

* * *’’. A third commenter

recommended replacement of the same

phrase with the words ‘‘are eligible for

attribution * * *’’.

Two other commenters suggested the

inclusion of the phrase ‘‘or production

operating unit’’ after ‘‘refinery operating

unit’’.

Customs Response: Because Customs

accepts the assertions of refiners that
20630 Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules and Regulations

they begin to manipulate all feedstocks

on admission to achieve an optimum set

of characteristics for processing,

Customs has modified § 146.93(a)(1)

accordingly.

Comment: Two commenters

recommended that ‘‘[i]n addition, an

operator may use such other inventory

control method(s) as approved by the

Secretary of the Treasury that protects

the revenue’’ be added at the end of

proposed § 146.93(a)(3).

Customs Response: Customs

disagrees. The provision for additional

methods is covered by § 146.96.

Comment: Two commenters suggested

re-designating proposed § 146.93(a)(4)

as (b). The commenters propose the

section should read as follows:

(b) Feedstock eligible for attribution.

Feedstock admitted into the refinery

zone or subzone is eligible for

attribution to any final product in

accordance with the operator’s

inventory control method.

One commenter suggested the entire

proposed section be deleted and

replaced with:

(4) Feedstock eligible for attribution.

Feedstock admitted into the refinery

zone or subzone is eligible for

attribution to the extent that such

feedstock is not remaining in tank

inventory at the end of the

manufacturing period as determined in

accordance with the operator’s zone

procedure. For a given manufacturing

period, the quantity of feedstock eligible

for attribution may be computed as

beginning inventory, plus receipts less

shipments of feedstock out of the zone,

minus ending inventory.

Customs Response: Customs has

incorporated some of the suggested

language and, therefore, § 146.93(a)(4)

(redesignated as § 146.93(b)) has been

reworded.

Comment: Four commenters

suggested redesignating proposed

§ 146.93(b) as (c) and replacing the

phrase ‘‘introduced into a refinery

operating unit’’ with ‘‘eligible for

attribution under § 146.93(b) * * *’’.

Customs Response: Customs agrees

and has so modified the wording of this

section (redesignated as § 146.93(d)).

Comment: Four commenters

suggested redesignating proposed

§ 146.93(c) as (d), and deletion of the

sentence ‘‘(a)d valorem * * * relative

value calculation’’ because duties are

not relevant to the relative value

calculation.

Customs Response: Customs disagrees

and this language has been retained.

Comment: One commenter

recommended deletion of proposed

§ 146.94(a) in its entirety. Another

commenter suggested that a refiner

should only be required to maintain

appropriate inventory records to

substantiate feedstocks processed and

remaining in ending inventory. Two

other commenters suggested that the

section should read as follows:

(a) Feedstock processed. The operator

must maintain appropriate inventory

records during the manufacturing

period to substantiate the feedstock

eligible for attribution under

§ 146.93(a)(4) and in accordance with

the operator’s selected inventory control

method.

Another variation was offered by a

commenter who suggested the section

should read as follows:

(a) Feedstock processed. The operator

shall maintain appropriate inventory

records to establish the quantity of

feedstock eligible for attribution under

§ 146.93(a)(4) during each

manufacturing period.

Customs Response: Customs disagrees

that this subsection should be deleted in

its entirety. However, Customs does

agree with the suggested changes and

§ 146.94(a) has been reworded to reflect

the refiners’ assertion that feedstocks are

manipulated or manufactured on

admission.

Comment: Two commenters proposed

replacement of the language in proposed

§ 146.94(b) with the following:

The operator shall maintain records to

establish the quantity of products

consumed in or removed from the zone

or subzone during the entry period.

Another commenter suggested

replacing this proposed section with:

(b) Final product removed, consumed,

lost or destroyed. The operator shall

maintain appropriate inventory records

to establish the quantity of final

products removed from, consumed in,

lost, or destroyed in the subzone during

the manufacturing period.

Customs Response: Customs disagrees

with the suggested changes for the

reasons noted in the Customs Response

with respect to § 146.92(d).

Comment: Three commenters

suggested deletion of any references to

‘‘week’’ in proposed § 146.94(c) and

insertion of ‘‘approved entry period’’

instead.

Customs Response: As was explained

in the March 4, 1994, Federal Register

notice, while a manufacturing or

accounting period may be greater than

a week, there is no authority to permit

a consumption entry covering products

removed from a zone to exceed one

week. Thus, the language of § 146.94(c)

remains in substance as originally

proposed.

Comment: Two commenters suggested

deletion of the phrase ‘‘* * * is

dutiable if entered for consumption

unless otherwise exempt from duty’’ in

proposed § 146.94(d) and that it be

replaced with ‘‘shall be treated as

foreign merchandise when entered for

consumption’’.

Customs Response: The relevancy of

this suggested change is not understood

and, therefore, the suggestion has not

been adopted. All merchandise, except

for domestic status merchandise, when

entered for consumption is foreign

merchandise.

Comment: One commenter suggested

that the title to proposed § 146.94(e)

should read ‘‘Attributing gain or loss;

acceptable methods’’ instead of the

proposed title. Another commenter

remarked that the regulations should

specify that determination of gain or

loss may be done either at time of

separation (production) or at time of

removal from or consumption in the

zone.

Customs Response: Neither of these

suggested changes have been adopted

since they merely add words without

changing the substance.

Comment: One commenter suggested

that the word ‘‘account’’ in proposed

§ 146.94(e)(1) be replaced with

‘‘attribute’’.

Customs Response: Customs

disagrees. Attribution refers to matching

actual measured amounts of privileged

foreign feedstock consumed in, or

removed from, the subzone refinery in

the form of final products against the

limits imposed by T.D. 66–16 or other

approved method.

Comment: One commenter proposed

insertion of the phrase ‘‘or loss’’ after

‘‘volume gain’’ in proposed

§ 146.94(e)(2) and insertion of the

following at the end of the section:

The operator may determine the

feedstock factor using values associated

with the total removals from and

consumption in the zone or subzone for

the period in lieu of using such values

for production during the period.

Customs Response: Customs agrees

with respect to the first suggestion.

Regarding the second suggestion, it is

not clear which ‘‘period’’ the

commenter is referring to. Customs has

agreed with prior comments that the

manufacturing period will be up to a

calendar month. Therefore, this change

was not adopted.

Comment: One commenter suggested

insertion of the following language at

the end of proposed § 146.94(e)(3):

* * * at either:

(A) The time of separation, or

(B) The time of removal from or

consumption in the zone or subzone.

Customs Response: Customs

disagrees. As noted above, prior

commentors had requested that the
Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules and Regulations 20631

manufacturing period not exceed a

calendar month and Customs revised

the regulations accordingly.

Comment: A commenter suggested

that deviations from T.D. 66–16 be

provided for.

Customs Response: Customs agrees

and has amended § 146.95(a)(3) to

permit deviations from T.D. 66–16 with

approval from Customs. It requires that

any such deviation not be inconsistent

with any related claim for drawback

under 19 U.S.C. 1313.

Comment: Two commenters

advocated incorporation of the entire

proposed § 146.95 into proposed

§ 146.96.

Customs Response: Customs agrees.

Therefore, proposed § 146.96 is now

redesignated as § 146.95.

Comment: Three commenters

suggested that any references to ‘‘listed

in’’ in proposed § 146.95(b) should be

replaced with ‘‘provided for’’.

Customs Response: Customs agrees

with this suggestion and has so changed

§ 146.95(b) (redesignated as

§ 146.95(a)(2)).

Comment: One commenter suggested

the following: replacement of the words

‘‘using the * * * in T.D. 66–16’’ in

proposed § 146.96(a)(1) with the

provisions of § 146.95—to be

denominated as new subparagraphs (2)

and (3); replacement of the words ‘‘not

listed’’ with the words ‘‘not provided

for’’; and replacement of the reference to

‘‘T.D. 66–16’’ with the words ‘‘industry

standards of potential production on a

practical operating basis’’.

One commenter noted that proposed

§ 146.96(a)(1) should not be limited to

feedstocks introduced into the refinery

operating unit. Another commenter

suggested replacing the phrase

‘‘introduced into a refinery operating

unit’’ with ‘‘eligible for attribution’’.

A commenter proposed deletion of

the sentence ‘‘The operator is * * *

prior period.’’ and the phrase ‘‘* * *

using the * * * T.D. 66–16’’.

Customs Response: Customs does not

agree that references to T.D. 66–16

should be deleted from these

regulations. Attribution uses the

industry standards of potential

production on a practical operating

basis as set forth in T.D. 66–16. End

products which are admitted into the

zone and subsequently entered for

consumption without any further

processing are eligible for attribution,

and the text has been modified to reflect

this. The definition of a refinery in

§ 146.92(f) refers to feedstocks and

products listed in T.D. 66–16. Thus, to

avoid confusion the same terminology is

used here.

Comment: Two commenters suggested

deletion of proposed § 146.96(a)(2) in its

entirety. Other commenters suggested

moving the example in this proposed

section to the Appendix.

Customs Response: Customs disagrees

that § 146.96(a)(2) (redesignated at

§ 146.95(b)) should be deleted.

However, the example has been moved

to the appendix.

Comment: All of the comments

received suggested that the appendix

include some introductory language to

the effect that where there is any

inconsistency between an example and

the regulation, the regulation prevails.

Customs Response: Customs agrees

and has incorporated this change.

Comment: Four of the comments

received suggested that any references

to ‘‘actual production records’’ and

‘‘recordation’’ in proposed § 146.96(b)

be changed to ‘‘refinery accounting

records’’ and ‘‘accounting principles’’,

respectively. The suggestion was also

made that the example be included in

the appendix.

Customs Response: Customs disagrees

regarding the rewording of § 146.96(b)

(redesignated as § 146.95(c)).

Accounting records could mean records

that summarize net activity over a

period. Customs needs to verify actual

amounts admitted into, removed from,

or consumed in a refinery subzone.

Customs also needs to know if any

adjustment was made to those amounts

recorded rather than a period-end

summary which nets the amount

without disclosing the existence of any

adjustment. The example is more

appropriately placed within the section

because it illustrates the precise

principle applied.

Comment: One commenter proposed

including introductory language in

proposed § 146.97(a) as follows:

An operator may use the FIFO method

of inventory accounting. The use of this

method is illustrated in the appendix to

this subpart.

Customs Response: Customs disagrees

because § 146.93(a)(3) already provides

that FIFO may be used as an inventory

method.

Comment: Most commenters

suggested addition of a new § 146.97(d)

to provide as follows:

(d) Appeal to the Commissioner. In

the event that the Director, Office of

Regulatory Audit fails to approve a

request under paragraph (c) of this

section, an operator may file an appeal

with the Commissioner of Customs for

further review. Denial by the

Commissioner of Customs may be

appealed to the Court of International

Trade under 28 U.S.C. 1581(i).

Customs Response: Customs disagrees

with this suggestion. The proposal

would change the statutory scope of

jurisdiction of the Court which is

beyond this rulemaking.

Comment: One commenter noted that

the proposed regulations do not address

zone-to-zone transfers and accounting

for non-privileged foreign goods.

Customs Response: It is Customs

position that these regulations are not

the appropriate vehicle for addressing

the issue of accounting for nonprivileged status merchandise.

Additionally, these regulations do not

authorize the use of zone-to-zone

transfers where the start of a

manufacturing period in one zone

refinery would be carried over to

another zone refinery. Customs would

consider promulgating regulations to

handle such transfers but only if

interested parties submitted detailed

mathematical examples, with dates,

showing how such transfers would be

recorded by both the first and

subsequent refineries, together with

how the end products that are removed

from the last zone would be entered for

consumption, consumed in the zone, or

withdrawn for exportation as defined in

§§ 146.92 (e), (g), (i), and (j). Such a

proposal must discuss the

responsibilities of each refiner in the

transfer chain with respect to

recordkeeping and duty liability if there

was a failure to maintain these records

by one or more of the transferors.

Comment: A commenter noted that

privileged foreign merchandise

‘‘liquidations’’ are not liquidations

within the meaning of 19 U.S.C. 1500.

Customs has the right to correct the

classification and appraisement until

the bulletin notice of liquidation is

posted and the protest period begins.

Prior to such final notice, the importer

has the right and obligation to change

classification when conditions warrant.

Such change of classification does not

affect zone status.

Customs Response: Customs basically

agrees and has made modified § 146.65

to clarify this point.

Conclusion

Based on the above, Customs believes

that the proposed regulatory

amendments should be adopted as a

final rule with the following changes:

§ 146.65 is revised to reflect Customs

authority under 19 U.S.C. 1500 to fix the

final classification of merchandise

classified as privileged merchandise;

§ 146.91 is revised to eliminate

unnecessary references to eligible

feedstock (the second sentence) and to

include a new third sentence to clarify

that these regulations do not address
20632 Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules and Regulations

zone-to-zone transfers; in § 146.92, one

definition is deleted (§ 146.92(j)) and

one definition is added (§ 146.92(k));

§ 146.93 is expanded to include

privileged status after admission

(paragraph (e)) and new paragraph (b) is

added to clarify feedstock eligible for

attribution; in § 146.94, paragraph (a) is

revised to clarify recordkeeping

requirements applicable to feedstocks

admitted into the subzone; and in

§ 146.95, language is added to

subparagraphs (a)(3) (i) and (ii)

regarding attribution to product or

feedstock not listed in T.D. 66–16, and

to subparagraphs (b) regarding Customs

use of refinery operating records. Other

changes to the proposed regulations

involve the renumbering of two

provisions caused by the incorporation

of proposed § 146.95 into the text of

proposed § 146.96, which is

redesignated as § 146.95; a

corresponding renumbering changes

occur in proposed § 146.97, which is

now redesignated as § 146.96. Also, the

example contained in proposed

§ 146.96(a)(2) is moved to the appendix,

which contains expanded examples.

The Regulatory Flexibility Act and

Executive Order 12866

Based on the supplementary

information set forth above, pursuant to

the provisions of the Regulatory

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

is certified that the regulations will not

have a significant economic impact on

a substantial number of small entities.

Accordingly, the regulations are not

subject to the regulatory analysis or

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

604. This document does not meet the

criteria for a ‘‘significant regulatory

action’’ as specified in E.O. 12866.

Paperwork Reduction Act

The collection of information

requirements contained in these final

regulations have been reviewed and

approved by the Office of Management

and Budget (OMB) in accordance with

Paperwork Reduction Act of 1980 (44

U.S.C. 3507) under control number

1515–0189. The estimated average

annual burden associated with this

collection is 18,824 hours, or 2,353

hours per respondent or recordkeeper.

Comments concerning the accuracy of

this burden estimate and suggestions for

reducing this burden should be directed

to the U.S. Customs Service, Paperwork

Management Branch, Room 6316, 1301

Constitution Avenue, NW., Washington,

DC 20229, or the Office of Management

and Budget, Attention: Desk Officer for

the Department of the Treasury, Office

of Information and Regulatory Affairs,

Washington, DC 20503.

Drafting Information

The principal author of this document

was Russell Berger, Regulations Branch,

U.S. Customs Service. However,

personnel from other offices

participated in its development.

List of Subjects in 19 CFR Part 146

Customs duties and inspection, Entry,

Exports, Foreign-trade zones, Imports,

Penalties, Petroleum, Reporting and

recordkeeping requirements.

Amendments to the Regulations

For the reasons stated above, the

proposed amendments to part 146 of the

Customs Regulations (19 CFR part 146),

which were published at 59 FR 10342

on March 1, 1994, are adopted as a final

rule as set forth below.

PART 146—FOREIGN-TRADE ZONES

1. The general authority citation for

part 146 is revised to read as follows:

Authority: 19 U.S.C. 66, 81a–81u, 1202

(General Note 20, Harmonized Tariff

Schedule of the United States (HTSUS)),

1623, 1624.

* * * * *

2. In § 146.65, paragraph (a)(1) is

amended by adding a sentence at the

end to read as follows:

§ 146.65 Classification, valuation, and

liquidation.

(a) Classification.—(1) * * *

Notwithstanding the grant of privileged

status, Customs may correct any

misclassification of any such entered

merchandise when it posts the bulletin

notice of liquidation under § 159.9 of

this chapter.

* * * * *

3. Part 146 is amended by adding a

new subpart H and appendix to read as

follows:

Subpart H—Petroleum Refineries in

Foreign-Trade Subzones

Sec.

146.91 Applicability.

146.92 Definitions.

146.93 Inventory control and recordkeeping

system.

146.94 Records concerning establishment of

manufacturing period.

146.95 Methods of attribution.

146.96 Approval of other recordkeeping

systems.

Appendix to Part 146—Guidelines for

Determining Producibility and Relative

Values for Oil Refinery Zones

Subpart H—Petroleum Refineries in

Foreign-Trade Subzones

§ 146.91 Applicability.

This subpart applies only to a

petroleum refinery (as defined herein)

engaged in refining petroleum in a

foreign-trade zone or subzone. Further,

the provisions relating to zones

generally, which are set forth elsewhere

in this part, including documentation

and document retention requirements,

and entry procedures, such as weekly

entry, shall apply as well to a refinery

subzone, insofar as applicable to and

not inconsistent with the specific

provisions of this subpart. It does not

cover zone-to-zone transfers in which

the fact of removal from one zone is

ignored.

§ 146.92 Definitions.

(a) Attribution. ‘‘Attribution’’ means

the association of a final product with

its source material.

(b) Feedstocks. ‘‘Feedstocks’’ means

crude petroleum or intermediate

product that is used in a petroleum

refinery to make a final product.

(c) Feedstock factor. ‘‘Feedstock

factor’’ means the relative value of final

products utilizing T.D. 66–16 (see

§ 146.92(h)), and which takes into

account any volumetric loss or gain.

(d) Final product. ‘‘Final product’’

means any petroleum product that is

produced in a refinery subzone and

thereafter removed therefrom or

consumed within the zone.

(e) Manufacturing period.

‘‘Manufacturing period’’ means a period

selected by the refiner which must be no

more than a calendar month basis, for

which attribution to a source feedstock

must be made for every final product

made, consumed in, or removed from

the refinery subzone.

(f) Petroleum refinery. ‘‘Petroleum

refinery’’ means a facility that refines a

feedstock listed on the top line of the

tables set forth in T.D. 66–16 into a

product listed in the left column of the

tables set forth in T.D. 66–16.

(g) Price of product. ‘‘Price of

product’’ means the average per unit

market value of each final product for a

given manufacturing period or the

published standard product value if

updated each month.

(h) Producibility. ‘‘Producibility’’ is a

method of attributing products to

feedstocks for petroleum manufacturing

in accordance with the Industry

Standards of Potential Production set

forth in T.D. 66–16.

(i) Relative value. ‘‘Relative value’’

means a value assigned to each final

product attributed to the separation

from a privileged foreign feedstock

based on the ratio of the final product’s

value compared to the privileged foreign

feedstock’s duty.

(j) Time of Separation. ‘‘Time of

separation’’ means the manufacturing

period in which a privileged foreign

status feedstock is deemed to have been
Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules and Regulations 20633

separated into two or more final

products.

(k) Weighted Average. ‘‘Weighted

average’’ means the relative value of

merchandise, which is determined by

dividing the total value of shipments in

a given period by the total quantity

shipped in the same given period. See

example in section VI of the appendix

to this part.

§ 146.93 Inventory control and

recordkeeping system.

(a) Attribution. All final products

removed from or consumed within a

petroleum refinery subzone must be

attributed to feedstock admitted into

said petroleum refinery subzone in the

current or prior manufacturing period.

Attribution must be based on records

maintained by the operator. Attribution

may be made by applying one of the

authorized methods set forth in this

section. Records must be maintained on

a weight or volume basis.

(1) Producibility. The producibility

method of attribution requires that

records be kept to attribute final

products to feedstocks which are

eligible for attribution as set forth in this

section during the current or prior

manufacturing period.

(2) Actual production records. An

operator may use its actual production

records as provided for under

§ 146.95(b) of this subpart.

(3) Other inventory method. An

operator may use the FIFO (first-in, firstout) method of accounting (see

§ 191.22(c) of this chapter). The use of

this method is illustrated in the

appendix to this part.

(b) Feedstock eligible for attribution.

Only a feedstock that has been admitted

into the refinery subzone is eligible for

attribution. For a given manufacturing

period, the quantity of feedstock eligible

for attribution may be computed as

beginning inventory, plus receipts less

shipments of feedstock out of the

subzone, and less ending inventory.

(c) Consumption or removal of final

product. Each final product that is

consumed in or removed from a refinery

subzone must be attributed to a

feedstock eligible for attribution during

the current or a prior manufacturing

period. Each final product attributed as

being produced from the separation of a

privileged foreign status feedstock must

be assigned the proper relative value as

set forth in paragraph (d) of this section.

(d) Relative value. A relative value

calculation is required when two or

more final products are produced as the

result of the separation of privileged

foreign status feedstock. Ad valorem

and compound rates of duty must be

converted to specific rates of duty in

order to make a relative value

calculation.

(e) Privileged status after admission.

Nonprivileged status feedstock is

eligible for privileged status only if the

request shows to the satisfaction of the

Customs Service that there was no

manipulation or manufacture of the

feedstock to change its tariff

classification before the request is

granted. The absence of such

manipulation or manufacture can be

shown by demonstrating that the

feedstock was placed in an empty tank,

in a tank that contained only feedstock

with the same nominal specifications or

providing a sample which shows there

was no change in tariff status. The

existence of negligible amounts of other

feedstocks may be disregarded only in

accordance with § 146.95(b). A request

for after-admission privileged foreign

status shall be denied unless the

feedstock’s tank records from admission

to the time that the request is made

accompany the request. A refiner who

makes such a request shall not put any

other feedstock having different

nominal specifications into the tank

until the request for privileged status is

granted. The Customs Service will deny

or revoke a post-admission request if a

refiner fails to retain the integrity of the

feedstock in the tank.

(f) Consistent use required. The

operator must use the selected method,

measurement (weight or volume), and

the price of product consistently (see

§ 146.92(g) of this subpart and

paragraph (a) of this section).

§ 146.94 Records concerning

establishment of manufacturing period.

(a) Feedstock admitted into the

refinery subzone. The operator must

maintain appropriate inventory records

during the manufacturing period to

substantiate the feedstock(s) eligible for

attribution under § 146.93(b) and in

accordance with the operator’s selected

attribution method.

(b) Final product consumed in or

removed from subzone. The operator

must record the date and amount of

each final product consumed in, or

removed from the subzone.

(c) Consumption or removal. The

consumption or removal of a final

product during a week may be

considered to have occurred on the last

day of that week for purposes of

attribution and relative value

calculation instead of the actual day on

which the removal or consumption

occurred, unless the refiner elects to

attribute using the FIFO method (see

section II of the appendix to this part).

(d) Gain or loss. A gain or loss that

occurs during a manufacturing period

must be taken into account in

determining the attribution of a final

product to a feedstock and the relative

value calculation of privileged foreign

feedstocks. Any gain in a final product

attributed to a non-privileged foreign

status feedstock is dutiable if entered for

consumption unless otherwise exempt

from duty.

(e) Determining gain or loss;

acceptable methods.—(1) Converting

volume to weight. Volume

measurements may be converted to

weight measurements using American

Petroleum Institute conversion factors to

account for gain or loss.

(2) Calculating feedstock factor to

account for volume gain or loss. A

feedstock factor may be calculated by

dividing the value per barrel of

production per product category by the

quotient of the total value of production

divided by all feedstock consumed. This

factor would be applied to a finished

product that has been attributed to a

feedstock to account for volume gain.

(3) Calculating volume difference.

Volume difference may be determined

by comparing the amount of feedstocks

introduced for a given period with the

amount of final products produced

during the period, and then assigning

the volume change to each final product

proportionately.

§ 146.95 Methods of attribution.

(a) Producibility.—(1) General. A

subzone operator must attribute the

source of each final product. The

operator is limited in this regard to

feedstocks which were eligible for

attribution during the current or prior

manufacturing period. Attribution of

final products is allowable to the extent

that the quantity of such products could

have been produced from such

feedstocks, using the industry standards

of potential production on a practical

operating basis, as published in T.D. 66–

16. Once attribution is made for a

particular product, that attribution is

binding. Subsequent attributions of

feedstock to product must take prior

attributions into account. Each refiner

shall keep records showing each

attribution.

(2) Industry standards of potential

production. The industry standards of

potential production on a practical

operating basis necessary for the

producibility attribution method are

contained in tables published in T.D.

66–16. With these tables, a subzone

operator may attribute final products

consumed in, or removed from, the

subzone to feedstocks during the current

or a prior manufacturing period.

(3) Attribution to product or feedstock

not listed in T.D. 66–16. (i) For purposes
20634 Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules and Regulations

of attribution, where a final product or

a feedstock is not listed in T.D. 66–16,

the operator must submit a proposed

attribution schedule, supported by a

technical memorandum, to the

appropriate district director. The district

director shall refer the request to the

Director, Office of Regulatory Audit

(‘‘ORA’’), who will verify the refiner’s

records and will coordinate with the

Director, Office of Laboratories and

Scientific Services (‘‘OLSS’’). The

Director, ORA, shall either approve or

deny the request. If the request is

approved, the Director, ORA, shall

publish a modification of T.D. 66–16. If

an operator elects to show attribution on

a producibility basis, but fails to keep

records on that basis, the operator shall

use its actual operating records to

determine attribution and any necessary

relative value calculation upon the

Customs Service demand and subject to

verification.

(ii) An operator may attribute a final

product to a feedstock in excess of the

amount allowed under T.D. 66–16,

when authorized by Customs, without

losing the ability to attribute under T.D.

66–16 for all other feedstock-final

product combinations. The operator

must use its actual production records

for the requested feedstock-final product

combination. The operator must agree in

writing that it will not, and it will not

enable any other person, to file a

drawback claim under 19 U.S.C. 1313

inconsistent with those actual

production records for that feedstockfinal product combination. The operator

shall file its request in accordance with

paragraph (a)(3) of this section. The

Director, ORA, and the Director, OLSS,

must determine whether T.D. 66–16

needs to be modified and shall publish

in the Customs Bulletin each approval

granted under this paragraph and

request public comments with each

such approval.

(4) Attribution to privileged foreign

feedstock; relative value. If a final

product is attributed to the separation of

a privileged foreign feedstock a relative

value must be assigned (see section IV

of the appendix to this part).

(b) Refinery operating records. An

operator may use the actual refinery

operating records to attribute the

feedstocks used to the removed or

consumed products. Customs shall

accept the operator’s operating

conventions to the extent that the

operator demonstrates that it actually

uses these conventions in its refinery

operations. Whatever conventions are

elected by the operator, they must be

used consistently in order to be

acceptable to Customs. Additionally,

Customs may use these records to test

the validity of admissions into the

subzone, consumption within and

removals from the subzone.

Example. If the operator mixes three equal

quantities of material in a day tank and treats

that product as a three-part mixture in its

production unit, Customs will accept the

resulting product as composed of the three

materials. If, in the alternative, the operator

assumes that the three products do not mix

and treats the first product as being

composed of the first material put into the

day tank, the second product as composed of

the second material put into the day tank,

and the third product as being composed of

the third material put into the day tank,

Customs will accept that convention also.

§ 146.96 Approval of other recordkeeping

systems.

(a) Approval procedure. An operator

must seek prior approval of another

recordkeeping procedure by submitting

the following to the Director, Office of

Regulatory Audit:

(1) An explanation of the method

describing how attribution will be made

when a finished product is removed

from or consumed in the subzone, and

how and when the feedstocks will be

decremented;

(2) A mathematical example covering

at least two months which shows the

amounts attributed, all necessary

relative value calculations, the dates of

consumption and removal, and the

amounts and dates that the transactions

are reported to Customs.

(b) Failure to comply. Requests

received that fail to comply with

paragraph (a) of this section will be

returned to the requester with the

defects noted by the Director, Office of

Regulatory Audit.

(c) Determination by Director. When

the Director, Office of Regulatory Audit,

determines that the recordkeeping

procedures provide an acceptable basis

for verifying the admissions and

removals from or consumption in a

refinery subzone, the Director will issue

a written approval to the applicant.

Appendix to Part 146—Guidelines for

Determining Producibility and Relative

Values for Oil Refinery Zones

Where an example is set out in this

appendix, the example is for purposes of

illustrating the application of a provision,

and where there is any inconsistency

between the example and the provision, the

provision prevails to the extent of the

inconsistency. Alternative formats are also

acceptable so long as they are consistent with

the provisions of this part.

I. Attribution Using Producibility Showing

Manufacturing Periods From Admission to

Removal Within a Calender Month.

Volume losses and gains accounted for by

weight.

Day 1

Receipt into the refinery subzone during a

30-day month:

50,000 pounds privileged foreign (PF) class II

crude oil.

50,000 pounds PF class III crude oil.

50,000 pounds domestic status class III crude

oil.

Day 10

Removal from the refinery subzone for

exportation of 50,000 pounds of aviation

gasoline.

The period of manufacture for the aviation

gasoline is Day 1 to Day 10. The refiner must

first attribute the designated source of the

aviation gasoline.

In order to maximize the duty benefit

conferred by the zone operation, the refiner

chooses to attribute the exported aviation

gasoline to the privileged foreign status crude

oil. Under the tables for potential production

(T.V. 66–16), class II crude has a 30%

potential, and class III has a 40% potential.

The maximum aviation gasoline producible

from the class II crude oil is 15,000 pounds

(50,000 × .30). The maximum aviation

gasoline producible from the privileged

foreign status class III crude oil is 20,000

pounds (50,000 × .40). The domestic class III

crude would also make 20,000 pounds of

aviation gasoline.

The refiner could attribute 15,000 pounds

of the privileged foreign class II crude oil,

20,000 pounds of the privileged foreign class

III crude oil, and 15,000 pounds of the

domestic class III crude oil as the source of

the 50,000 pounds of the aviation gasoline

that was exported; 35,000 pounds of class II

crude oil would be available for further

production for other than aviation gasoline,

30,000 pounds of privileged foreign class III

crude oil would be available for further

production for other than aviation gasoline,

and 35,000 pounds of domestic status class

III crude oil would be available for further

production, of which up to 5,000 pounds

could be attributed to aviation gasoline.

Day 21

Receipt in the refinery subzone:

50,000 pounds PF status class I crude oil.

50,000 pounds PF status class IV crude oil.

Day 30

Removal from the refinery subzone:

30,000 pounds of motor gasoline for

consumption.

10,000 pounds of jet fuel sold to the US Air

Force for use in military aircraft.

10,000 pounds of aviation gasoline sold to a

U.S. commuter airline for domestic flights.

10,000 pounds of kerosene for exportation.

To the extent that the crude oils that

entered production on Day 1 are attributed as

the designated sources for the products

removed on Day 30, the period of

manufacture is Day 1 to Day 30. If the refiner

chooses to attribute the crude oils that were

admitted on Day 21 as the designated sources

of the products removed on Day 30 using the

production standards published in T.D. 66–

16, the manufacturing period is Day 21 to

Day 30. This choice will be important if a

relative value calculation on the privileged

foreign status crude oil is required, because
Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules and Regulations 20635

the law requires the value used for

computing the relative value to be the

average per unit value of each product for the

manufacturing period. Relative value must be

calculated if a source feedstock is separated

into two or more products that are removed

from the subzone refinery. If the average per

unit value for each product differs between

the manufacturing period from Day 1 to Day

30 and the manufacturing period from Day 21

to Day 30, the correct period must be used

in the calculation.

In order to minimize duty liability, the

refiner would try to attribute the production

of the exported kerosene and the sale of the

jet fuel to the US Air Force to the privileged

foreign crude oils. For the same reason, the

refiner would try to attribute the removed

motor gasoline and the aviation gasoline for

the commuter airline to the domestic crude

oil.

Accordingly, the refiner chooses to

attribute up to 5,000 pounds of the domestic

status class III crude as the source of the

10,000 pounds of aviation gasoline removed

from the subzone refinery for the commuter

airline. Since no other aviation gasoline

could have been produced from the crude

oils that were admitted into the refinery

subzone Day 1, the refiner must attribute the

remainder to the crude oils that entered

production on Day 21. Again, using the

production standards from T.D. 66–16, the

class I crude could produce aviation gasoline

in an amount up to 10,000 pounds (50,000

× .20). Likewise, the class IV crude oil could

produce aviation gasoline in an amount up

to 8,500 pounds (50,000 × .17).

The refiner selects use of the class I crude

as the source of the aviation gasoline. The

refiner could attribute up to 27,300 pounds

(35,000¥5,000 × .91) of the domestic class III

crude oil as the source of the motor gasoline.

This would leave 2,700 pounds of domestic

class III crude available for further

production for other than aviation gasoline or

motor gasoline. The remaining motor

gasoline removed (also 2,700 pounds) must

be attributed to a privileged foreign crude oil.

The refiner selects the privileged foreign

class II crude oil that entered production on

Day 1 as the source for the remaining 2,700

pounds of motor gasoline.

This would leave 32,300 pounds of

privileged foreign class II crude oil available

for further production, of which no more

than 27,400 pounds could be designated as

the source of motor gasoline. The refiner

attributes the jet fuel that is removed from

the refinery subzone for the US Air Force for

use in military aircraft to the privileged

foreign class II crude oil. The refiner could

attribute up to 20,995 pounds of jet fuel from

that class II crude oil (32,300 × .65).

Designating that class II crude oil as the

source of the 10,000 pounds of jet fuel leaves

22,300 pounds of privileged foreign class II

crude oil available for further production, of

which up to 10,995 pounds could be

attributed as the source of the jet fuel.

Because the motor gasoline and the jet fuel,

under the foregoing attribution, would be

considered to have been separated from the

privileged foreign class II crude oil, a relative

value calculation would be required.

The jet fuel is eligible for removal from the

subzone free of duty by virtue of 19 U.S.C.

1309(a)(1)(A). The refiner could attribute the

privileged foreign class II crude oil as being

the source of the 10,000 pounds of jet fuel

(22,300 × .65). The refiner chooses to

attribute the privileged foreign class III crude

oil as the source of the jet fuel. The refiner

could attribute to that class III crude oil up

to 15,000 pounds of kerosene (30,000 × .50).

II. Attribution on a FIFO Basis

(Accounting for volume losses or gains by the

weight method)

Day 1–5

Transfer, into the Refinery Subzone, from

one or more storage tanks into process 150

barrels of Privileged Foreign (PF) Class II

crude oil, equivalent to 50,000 pounds.

Day 6

Removal from the refinery subzone 119

barrels of residual oils to customs territory,

equivalent to 40,000 pounds.

Since the operator uses the FIFO method

of attribution, as the product is removed from

the subzone, or consumed or lost within the

subzone, attribution must be to the oldest

feedstock available for attribution.

Accordingly, the 40,000 pounds of residual

oils will be attributed to 40,000 pounds of the

PF Class II crude oil from Day 1–5.

Day 10

Transfer, into the refinery subzone, from

one or more storage tanks 4 barrels of

domestic motor gasoline blend stock,

equivalent to 1,000 pounds to motor gasoline

blending tank.

Day 6–15

Transfer, into the refinery subzone, from

one or more storage tanks into process 320

barrels of Domestic Class III crude oil,

equivalent to 100,000 pounds.

Day 16

Removal from the refinery subzone 14

barrels of asphalt to customs territory,

equivalent to 5,000 pounds.

The 5,000 pounds of asphalt will be

attributed to 5,000 pounds of PF Class II

crude oil from Day 1–5.

Day 17

Removal from the refinery subzone, 324

barrels of motor gasoline to customs territory,

equivalent to 81,000 pounds.

The 81,000 pounds of motor gasoline will

be attributed to 1,000 pounds of domestic

motor gasoline blend stock from Day 10, to

the remaining 5,000 pounds of PF Class II

crude oil from Day 1–5 and 75,000 pounds

of domestic Class III crude oil from Day 6–

15.

Day 16–20

Transfer, into the refinery subzone, from

one or more storage tanks into process 169

barrels of Privileged Foreign (PF) Class III

crude oil, equivalent to 50,000 pounds.

Day 22

Removal from the refinery subzone, 214

barrels of jet fuel for exportation, equivalent

to 60,000 pounds.

The 60,000 pounds of jet fuel will be

attributed to the remaining 25,000 pounds of

domestic Class III crude oil from Day 6–15

and 35,000 pounds of PF Class III crude oil

from Day 16–20.

Day 21–25

Transfer, into the refinery subzone from

one or more storage tanks into process, 143

barrels of domestic Class I crude oil,

equivalent to 50,000 pounds.

Day 30 (End of the Manufacturing Period)

It is determined that during the

manufacturing period just ended, that 34

barrels of fuel, equivalent to 10,000 pounds

was consumed, and 5 barrels of oil,

equivalent to 1,500 pounds was lost in the

refining production process within the

refinery subzone.

The 10,000 pounds of fuel consumed will

be attributed 10,000 pounds of PF Class III

crude oil from Day 16–20. The 1,500 pounds

of oil lost in the refining production process

will be attributed to 1,500 pounds of PF Class

III crude oil from Day 16–20. The remaining

3,500 pounds of PF Class III crude oil from

Day 16–20 will be the first to be attributed

during the next manufacturing period.

III. Relative Value Calculation

Because privileged foreign feedstocks

transferred into process during Day 1–5 and

Day 16–20 have two or more products

attributed to them, each feedstock will

require a relative value calculation.

Relative value calculation for UIN Day 1–

5, 50,000 pounds, equivalent to 150 barrels.

A

Lbs

B

BBLS

C

$/BBL

D

Product

value

E

R.V.

Factor

F

R.V.

BBL

G

Dutiable

BBL

Residual oil ............................................... 40,000 119 15.00 1,785 .9047 108 108

Asphalt ...................................................... 5,000 14 13.00 182 .7840 11 11

Motor gasoline .......................................... 5,000 20 26.00 520 1.5682 31 31

Totals ............................................. 50,000 153 ................... 2,487 ................... 150 150

A=Pounds Attributed.

B=Equivalent Barrels.
20636 Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules and Regulations

C=Price of Product.

D=B×C.

E=C/(Total of Column D/Attributed Crude BBLS).

Residual Oil RV Factor=15.00/(2,487/150)=.9047.

F=B×E.

G=Dutiable Barrels.

Since all products attributed to the 50,000 pounds (150 BBLS) of PF Class II crude entered customs territory duty equals $7.88

(150×.0525).

Feedstock factor calculation for UIN Day 16–20, 46,500 pounds equivalent to 157 barrels.

Lbs BBLS $/BBL Product

value

Feedstock

factor R.V. BBL DutiableBBL

Jet Fuel ..................................................... 35,000 125 27.00 3,375 1.1030 138 0

Fuel ........................................................... 10,000 34 12.00 408 0.4902 17 0

Consumed Process Loss .......................... 1,500 5 12.00 60 0.4902 2 0

Totals ............................................. 46,500 164 ................... 3,843 ................... 157 0

Since jet fuel was exported, no duty is applicable. Fuel consumed for refinery process was consumed within the subzone premises

and did not enter customs territory, thus no duty is applicable (assume refinery not barred by duty-free consumption restriction).

Likewise, the process loss occurred entirely within the subzone. Therefore, no duty is applicable.

IV. Attribution to Privileged Foreign Feedstock; Relative Value; Monthly Manufacturing Period, Weekly Entries, Attribution to a

Prior Period; Volume Loss or Gain Shown by Volume Differences.

An operator who elects to attribute on a monthly basis files the following estimated removal of final products

for the first week in September:

Jet Fuel (deemed exported on international flights) ...................................................................................................................................... 20,000

Gasoline—Domestic Consumption ................................................................................................................................................................ 15,000

Duty-free certified as emergency war material .............................................................................................................................................. 10,000

Petroleum coke exportations ......................................................................................................................................................................... 10,000

Distillate for consumption ............................................................................................................................................................................... 5,000

Petrochemicals exported ............................................................................................................................................................................... 10,000

Total removals ..................................................................................................................................................................................... 70,000

Because it does not elect to make attributions for feedstocks that were charged to operating units during the same week, the

operator attributes the estimated removals to final products made during August from the following feedstocks:

Class II PF (privileged foreign) crude ............................................................................................................................................................ 20,000

Class III PF crude .......................................................................................................................................................................................... 35,000

Class III D (domestic) crude .......................................................................................................................................................................... 20,000

Class III NPF (nonprivileged foreign crude ................................................................................................................................................... 20,000

95,000

During August the operator produced from those feedstocks:

Jet ................................................................................................................................................................................................................ 35,000

Gasoline ....................................................................................................................................................................................................... 40,000

Petroleum Coke ........................................................................................................................................................................................... 10,000

Distillate ........................................................................................................................................................................................................ 5,000

Petrochemicals ............................................................................................................................................................................................. 15,000

105,000

There is a gain of 105,000¥95,000=10,000

Using the tables in T.D. 66–16, the following choices are available for attribution:

Charged Jet Gasoline Petrolum

coke Distillate Petro-chemical

Class II PF Crude ............................................................. 20,000 13,000 17,200 4,400 17,200 5,000

Class III PF Crude ............................................................ 35,000 24,500 31,850 14,000 31,150 10,150

Class III D Crude .............................................................. 20,000 14,000 18,200 8,000 17,800 5,800

Class III NPF Crude ......................................................... 20,000 14,000 18,200 8,000 17,800 5,800

Feedstock factors are calculated:

Barrels Value

barrels Value Feedstockfactors

Gasoline ........................................................................................................................... 40,000 $25 $1,000,000 .9117

Jet Fuel ............................................................................................................................. 35,000 23 805,000 .8388

Distillate ............................................................................................................................ 5,000 20 100,000 .7294

Petroleum Coke ................................................................................................................ 10,000 10 100,000 .3647

Petrochemicals ................................................................................................................. 15,000 40 600,000 1.4587
Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules and Regulations 20637

Barrels Value

barrels Value Feedstockfactors

105,000 ................... 2,605,000

Gain .................................................................................................................................. ¥10,000 $2,605,000 ................... ...................

Total ....................................................................................................................... 1 95,000 =$27.42 average value p/bbl

Using the feedstock factor the refiner makes the following attributions:

Jet Fuel ....................................................... 24,192 (20,291 feedstock attributed to Class III PF Crude).

10,808 Class III NPF Crude (attribution of 9066 solely for purpose of accounting for the

amount of NPF used).

35,000

Gasoline .................................................. 5,000 (4,559 feedstock attributed to Class III PF Crude).

5,000 Class III NPF Crude (attribution of 4599 solely for purpose of accounting for the

amount of NPF used).

15,000 (13,676 feedstock attributed to Class III D Crude).

Petroleum Coke .......................................... 8,418 (3,070 feedstock attributed to Class II PF Crude).

1,582 Class III NPF Crude (attribution of 577 solely for purposes of accounting for the

amount of NPF used).

10,000

Distillate ...................................................... 5,000 (3,647 feedstock attributed to Class III Domestic).

Petrochemicals ........................................... 3,975 (5,800 feedstock attributed to Class III NPF Crude).

6,025 (8,789 feedstock attributed to Class III PF Crude).

10,000

V. Weekly Entry, Weekly Manufacturing Period, and Relative Values Calculated on the Actual Weighted Average Values at the

End of the Week.

On the weekly estimated production CF 3461, the refiner is required to provide a pro forma invoice or schedule showing the

number of units of each type of merchandise to be removed during the week and their zone and dutiable values. For example,

on CF 3461 the refiner estimates the following shipments and relative values for the next week and files this on the preceding

Friday.

Product week 1 PF shipments

(MBBLS)

Value/barrel

(platts) Total value

Motor Gasoline ............................................................................................................................. 20,000 $35 $700,000

Total Alkylate ................................................................................................................................ 25,000 35 875,000

Heavy Reformate ......................................................................................................................... 60,000 35 2,100,000

Reformer Feed ............................................................................................................................. 110,000 35 3,850,000

Raffinates ..................................................................................................................................... 200,000 35 7,000,000

Jet Fuel ........................................................................................................................................ 200,000 35 7,000,000

Total ................................................................................................................................... 615,000 ....................... $21,525,000

Attributed Feedstock—Class III Crude: 615,000@ $105=$64,575 (estimated duties)

During that week the refiner actually removes the following products and reports those on the CF 7501 filed within 10 business

days after the CF 3461 is filed. Column 3 is the actual ‘‘weighted average’’ value for the manufacturing period, therefore, no reconciliation

is necessary.

1

Product

2

PF

Shipments

(mbbls)

3

Value/

barrel

(wt. avg.)

4

Total

value

(2)×(3)

5

Relative

value

factor

(3)/(8)

6

Feedstock

distribu.

(5)×(2)

7

Liq.

duties

(6)×(10)

(9)

Week 1:

Motor Gasoline .................................. 19,977 $35.70 $713,179 1.104545 22,065 $2,317

Total Alkylate ..................................... 22,907 42.50 973,548 1.314935 30,121 3,163

Heavy Reformate ............................... 58,164 31.42 1,827,513 .972123 56,542 5,937

Reformer Feed .................................. 100,279 31.42 3,150,766 .972123 97,484 10,235

Raffinates ........................................... 170,293 29.55 5,032,158 .914266 155,693 16,348

Jet Fuel .............................................. 168,433 30.04 5,059,727 .929426 156,546 16,437

Total ............................................... 540,053 ....................... 16,756,891 ....................... 518,451 54,437

(9) (10)

Class III Crude Consumed 518,451×$.105 = $54,437

Volumetric Gain 21,602

Avg. Value/Barrel Crude Consumed=$16,756,891÷518,451=$32.321 (8)

This example shows volumetric gain of 21,602 mbbls. However, in that PF was requested, liquidated duties are only on actual

feedstock (class III crude) used in the refining process. (518,451 @ $.105=$54,437).
20638 Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules and Regulations

VI. Weekly Entry, Monthly Manufacturing Period, and Relative Values Calculated on the Actual Weighted Average Values at the

End of the Month.

For example, on the CF 3461 the refiner estimates the following shipments and relative values for the next week and files this

on the preceding Friday.

1

Product

2

PF

shipments

(mbbls)

3

Value/

barrel

(platts)

4

Total

value

Week 1:

Motor Gasoline ...................................................................................................................... 20,000 $35 $700,000

Total Alkylate ........................................................................................................................ 25,000 35 875,000

Heavy Reformate .................................................................................................................. 60,000 35 2,100,000

Reformer Feed ...................................................................................................................... 110,000 35 3,850,000

Raffinates .............................................................................................................................. 200,000 35 7,000,000

Jet Fuel ................................................................................................................................. 200,000 35 7,000,000

Total ................................................................................................................................... 615,000 ....................... 21,525,000

Attributed Feedstock—Class III Crude: 615,000 @ $.105=$64,575 (estimated duties)

During the week the refiner actually removes the following products and reports those on the CF 7501 filed within 10 business

days after the CF 3461 is filed. The reported relative values may be an estimate based on Platts, prior period actual prices, or

the refiner’s transfer prices. For this example, the estimates are based on the refiner’s actual transfer prices. Listed below are the

data to be shown on the weekly CF 7501s with actual quantities shipped and estimated values for weeks 1–5.

1

Product

2

PF

shipments

(mbbls)

3

Value/

barrel

(estimates)

4

Total

value

(2)×(3)

5

Relative

value

factor

(3)/(8)

6

Feedstock

distrib.

(5)×(2)

7

Liq.

duties

(6)×(10)

(9)

Week 1:

Motor Gasoline .................................. 19,977 $35.70 $713,179 1.104545 22,065 $2,317

Total Alkylate ..................................... 22,907 42.50 973,548 1.314935 30,121 3,163

Heavy Reformate ............................... 58,164 31.42 1,827,513 .972123 56,542 5,937

Reformer Feed .................................. 100,279 31.42 3,150,766 .972123 97,484 10,235

Raffinates ........................................... 170,293 29.55 5,032,158 .914266 155,693 16,348

Jet Fuel .............................................. 168,433 30.04 5,059,727 .929426 156,546 16,437

Total ............................................... 540,053 ....................... 16,756,891 ....................... 518,451 $54,437

(9) (10)

Class III Crude Consumed 518,451×$.105=$54,437

Volumetric Gain 21,602

Avg. Value/Barrel Crude Consumed=$16,756,891÷518,451=$32.321 (8)

1

Product

2

PF

shipments

(mbbls)

3

Value/

barrel

(estimated)

4

Total

value

5

Relative

value

factor

6

Feedstock

distrib.

7

Liq.

duties

Week 2:

Motor Gasoline .................................. 20,651 $36.90 $762,022 1.145429 23,654 $2,484

Total Alkylate ..................................... 23,435 44.25 1,036,999 1.373584 32,190 3,380

Heavy Reformate ............................... 59,819 30.35 1,815,507 .942108 56,358 5,918

Reformer Feed .................................. 101,167 30.10 3,045,127 .934347 94,526 9,925

Raffinates ........................................... 172,317 29.30 5,048,888 .909514 156,726 16,456

Jet fuel ............................................... 165,291 30.70 5,074,434 .952972 157,519 16,539

Total ............................................... 542,680 ....................... $16,782,977 ....................... 520,973 $54,702

Class III Crude Consumed 520,973×$.105 = $54,702

Volumetric Gain 21,707

Avg. Value/Barrel Crude Consumed = $32.215

1

Product

2

PF

shipments

(mbbls)

3

Value/

barrel

(estimated)

4

Total

value

5

Relative

value

factor

6

Feedstock

distrib.

7

Liq.

duties

Week 3:

Motor Gasoline .................................. 18,689 $34.90 $652,246 1.091819 20,405 $2,142

Total Alkylate ..................................... 21,511 40.25 865,818 1.259190 27,087 2,844

Heavy Reformate ............................... 57,371 30.90 1,772,764 .966682 55,460 5,823

Reformer Feed .................................. 99,707 30.90 3,080,946 .966682 96,386 10,121

Raffinates ........................................... 168,112 29.65 4,984,521 .927577 155,938 16,374
Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules and Regulations 20639

1

Product

2

PF

shipments

(mbbls)

3

Value/

barrel

(estimated)

4

Total

value

5

Relative

value

factor

6

Feedstock

distrib.

7

Liq.

duties

Jet Fuel .............................................. 172,092 29.85 5,136,946 .933834 160,707 16,874

Total ............................................... 537,482 ....................... $16,493,241 ....................... 515,983 $54,178

Class III Crude Consumed 515,983 × $.105 = $54,178

Volumetric Gain 21,499

Avg. Value/Barrel Crude Consumed = $31.965

1

Product

2

PF

shipments

(mbbls)

3

Value/

barrel

(estimated)

4

Total

value

5

Relative

value

factor

6

Feedstock

distrib.

7

Liq.

duties

Week 4:

Motor Gasoline .................................. 21,905 $32.85 $719,579 1.027237 22,502 $2,363

Total Alkylate ..................................... 22,552 38.75 873,890 1.211733 27,327 2,869

Heavy Reformate ............................... 58,116 29.60 1,720,234 0.925607 53,791 5,648

Reformer Feed .................................. 101,058 29.40 2,971,105 0.919353 92,908 9,755

Raffinates ........................................... 169,823 30.15 5,120,163 0.942806 160,110 16,812

Jet Fuel .............................................. 171,493 31.05 5,324,858 0.970949 166,511 17,484

Total ............................................... 544,947 ....................... $16,729,829 ....................... 523,149 $54,931

Class III Crude Consumed 523,149 × $.105 = $54,931

Gain 21,798

Avg. Value/Barrel Crude Consumed = $31.979

1

Product

2

PF

shipments

(mbbls)

3

Value/

barrel

(estimated)

4

Total

value

5

Relative

value

factor

6

Feedstock

distrib.

7

Liq.

duties

Week 5:

Motor Gasoline .................................. 8,990 $37.25 $334,878 1.136260 10,215 $1,073

Total Alkylate ..................................... 9,984 45.10 450,278 1.375713 13,735 1,442

Heavy Reformate ............................... 25,351 31.50 798,557 0.960864 24,360 2,558

Reformer Feed .................................. 43,492 31.35 1,363,474 0.956288 41,592 4,367

Raffinates ........................................... 75,172 29.95 2,251,401 0.913583 68,677 7,211

Jet fuel ............................................... 75,795 30.56 2,316,295 0.932190 70,654 7,418

Total ............................................... 238,784 ....................... $7,514,883 ....................... 229,233 $24,069

Class III Crude Consumed 229,233 × $.105 = $24,069

Gain 9,551

Avg. Value/Barrel Crude Consumed = $32.783

As provided in the regulations, the refiner files an amended CF 7501 for each week based on the refiner’s actual

weighted average values for the month, as shown below.

Product Value/ barrel (MBBLS)

Month End:

Motor Gasoline .......................................................................................................................................................................... $35.27

Total Alkylate ............................................................................................................................................................................. 41.84

Heavy Reformate ...................................................................................................................................................................... 30.66

Reformer Feed .......................................................................................................................................................................... 30.54

Raffinates .................................................................................................................................................................................. 29.69

Jet Fuel ...................................................................................................................................................................................... 30.42

RECONCILIATION OF WEEK 1 USING MONTH’S END ACTUAL WEIGHTED AVERAGE VALUES

1

Product

2

PF

shipments

(mbbls)

3

Value/

barrel

(wt. avg.)

actual

4

Total

value

(2)×(3)

5

Relative

value

factor

(3)/(8)

6

Feedstock

distri.

(5)×(2)

7

Amended

wt. avg.

duties

(6)×(10)

(9)

Motor Gasoline ......................................... 19,977 $35.27 $704,589 1.095716 21,889 $2,298

Total Alkylate ............................................ 22,907 41.84 958,429 1.299823 29,775 3,126

Heavy Reformate ...................................... 58,164 30.66 1,783,308 .952499 55,401 5,817

Reformer Feed .......................................... 100,279 30.54 3,062,521 .948771 95,141 9,990

Raffinates .................................................. 170,293 29.69 5,055,999 .922365 157,072 16,493
20640 Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules and Regulations

RECONCILIATION OF WEEK 1 USING MONTH’S END ACTUAL WEIGHTED AVERAGE VALUES—Continued

1

Product

2

PF

shipments

(mbbls)

3

Value/

barrel

(wt. avg.)

actual

4

Total

value

(2)×(3)

5

Relative

value

factor

(3)/(8)

6

Feedstock

distri.

(5)×(2)

7

Amended

wt. avg.

duties

(6)×(10)

(9)

Jet Fuel ..................................................... 168,433 30.42 5,123,732 .945043 159,176 16,713

Total ................................................... 540,053 ....................... $16,688,578 ....................... 518,454 54,437

(9) (10)

Class III Crude Consumed = 518,454 × $.105 = $54,437

Volumetric Gain 21,599

Avg.Value/Bbl Crude Consumed = $16,688,578 ÷ 518,454 = $32.189 (8)

Note: No change in amended total duties, because duty is computed on total quantity of class III crude used. The difference

is amongst the various products, i.e., estimated weekly CF 7501 duties paid for Motor Gasoline was $2,317, while the reconciled

amount as shown above is $2,298. Additional duties owed or refunds due would depend on the reconciliation of the weekly entry

as an entirety.

VII. Weekly entry, monthly manufacturing period, relative values calculated on prior manufacturing period’s actual weighted average

values. The prior period (PP) values are set forth below:

Product Value/Barrel

(wt. avg.)

Motor Gasoline .................................................................................................................................................................................... § 35.28

Total Alkylate ....................................................................................................................................................................................... 41.90

Heavy Reformate ................................................................................................................................................................................. 31.78

Reformer Feed ..................................................................................................................................................................................... 30.02

Raffinates ............................................................................................................................................................................................. 31.10

Jet Fuel ................................................................................................................................................................................................ 28.80

Thereafter, the information provided or both the CF 3461 and CF 7501 filed for each weekly entry with respect to relative values

would remain the same. The only estimated amount would be the quantity to be removed on the CF 3461 as shown below. On

the CF 3461 the refiner estimates the following shipments and uses a prior manufacturing period’s actual weighted average values.

1

Product

2

PF

shipments

(mbbls)

3

Value/

barrel

(PP) (wt. avg.)

4

Total

value

Week 1

Motor Gasoline ...................................................................................................................... 20,000 $35.28 $705,600

Total Alkylate ........................................................................................................................ 25,000 41.90 1,047,500

Heavy Reformate .................................................................................................................. 60,000 31.78 1,906,800

Reformer Feed ...................................................................................................................... 110,000 30.02 3,302,200

Raffinates .............................................................................................................................. 200,000 31.10 6,220,000

Jet Fuel ................................................................................................................................. 200,000 28.80 5,760,000

Total ................................................................................................................................... 615,000 ....................... 18,942,100

Attributed Feedstock—Class III Crude: 615,000 @ $.105 = $64,575 (estimated duties)

On the CF 7501, the refiner reports the following shipments and uses a prior manufacturing period’s actual average values.

1

Product

2

PF shipments

(mbbls)

3

Value/

barrel

(PP)

(wt. avg.)

4

Total

value

(2)×(3)

5

Relative

value

factor

(3)/(8)

6

Feedstock

distri.

(5)×(2)

7

Liq.

duties

(6)×(10)

(9)

Week 1:

Motor Gasoline .................................. 19,977 $35.28 $704,789 1.097219 21,919 $2,902

Total Alkylate ..................................... 22,907 41.90 959,803 1.303104 29,850 3,134

Heavy Reformate ............................... 58,164 31.78 1,848,452 .988368 57,486 6,036

Reformer Feed .................................. 100,279 30.02 3,010,376 .933632 93,623 9,830

Raffinates ........................................... 170,293 31.10 5,296,112 .967220 164,710 17,295

Jet Fuel .............................................. 168,433 28.80 4,850,870 .895689 150,863 15,840

Total ............................................... 540,053 ....................... $16,670,402 ....................... 518,451 $54,437

(9) (10)

Class III Crude Used 518,451 × $.105 = $54,437

Volumetric Gain 21,602

Avg. Value/Barrel Crude Used = $16,670,402 ÷ 518,451 = $32.154 (8)
Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules and Regulations 20641

1

Product

2

PF

shipments

(mbbls)

3

Value/

barrel

(PP)

(wt. avg.)

4

Total

value

5

Relative

value

factor

6

Feedstock

distri.

7

Liq.

duties

Week 2:

Motor Gasoline .................................. 20,651 $35.28 $728,567 1.096128 22,636 $2,377

Total Alkylate ..................................... 23,435 41.90 981,926 1.301808 30,508 3,203

Heavy Reformate ............................... 59,819 31.78 1,901,048 .987386 59,064 6,202

Reformer Feed .................................. 101,167 30.02 3,037,033 .932704 94,359 9,908

Raffinates ........................................... 172,317 31.10 5,359,059 .966259 166,503 17,483

Jet Fuel .............................................. 165,291 28.80 4,760,381 .894799 147,903 15,529

Total ............................................... 542,680 ....................... 16,768,014 ....................... 520,973 54,702

Class III Crude Used 520,973×$.105=$54,702

Volumetric Gain 21,707

Avg. Value/Barrel Crude Used=$32.186

1

Product

2

PF

shipments

(mbbls)

3

Value/

barrel

(PP)

(wt. avg.)

4

Total

value

5

Relative

value

factor

6

Feedstock

distri.

7

Liq.

duties

Week 3:

Motor Gasoline .................................. 18,689 $35.28 $659,348 1.099168 20,542 $2,157

Total Alkylate ..................................... 21,511 41.90 901,311 1.305418 28,081 2,948

Heavy Reformate ............................... 57,371 31.78 1,823,250 .990124 56,803 5,964

Reformer Feed .................................. 99,707 30.02 2,993,204 .935290 93,254 9,792

Raffinates ........................................... 168,112 31.10 5,228,283 .968938 162,889 17,103

Jet Fuel .............................................. 172,092 28.80 4,956,250 .897280 154,414 16,214

Total ............................................... 537,482 ....................... 16,561,646 ....................... 515,983 54,178

Class III Crude Used 515,983×$.105=$54,178

Volumetric Gain 21,499

Avg. Value/Barrel Crude Used=$32.097

1

Product

2

PF

shipments

(mbbls)

3

Value/

barrel

(PP)

(wt. avg.)

4

Total

value

5

Relative

value

factor

6

Feedstock

distri.

7

Liq.

duties

Week 4:

Motor Gasoline .................................. 21,905 $35.28 $772,808 1.097390 24,038 $2,524

Total Alkylate ..................................... 22,552 41.90 944,929 1.303306 29,391 3,086

Heavy Reformate ............................... 58,116 31.78 1,846,926 .988522 57,447 6,032

Reformer Feed .................................. 101,058 30.02 3,033,761 .933777 94,365 9,908

Raffinates ........................................... 169,823 31.10 5,281,495 .967371 164,281 17,250

Jet Fuel .............................................. 171,493 28.80 4,938,998 .895829 153,627 16,131

Total ............................................... 544,947 ....................... 16,818,917 ....................... 523,149 54,931

Class III Crude Used 523,149×$.105=$54,931

Volumetric Gain 21,798

Avg. Value/Barrel Crude Used=$32.149

1

Product

2

PF

shipments

(mbbls)

3

Value/

barrel

(PP)

(wt. avg.)

4

Total

value

5

Relative

value

factor

6

Feedstock

distri.

7

Liq.

duties

Week 5:

Motor Gasoline .................................. 8,990 $35.28 $317,167 1.097698 9,868 $1,036

Total Alkylate ..................................... 9,984 41.90 418,330 1.303671 13,016 1,367

Heavy Reformate ............................... 25,351 31.78 805,655 .988799 25,067 2,632

Reformer Feed .................................. 43,492 30.02 1,305,630 .934039 40,623 4,265

Raffinates ........................................... 75,172 31.10 2,337,849 .967642 72,740 7,638

Jet Fuel .............................................. 75,795 28.80 2,182,896 .896080 67,919 7,131

Total ............................................... 238,784 ....................... 7,367,527 ....................... 229,233 24,069

Class III Crude Used 229,233×$.105=$24,069

Volumetric Gain 9,551

Avg. Value/Barrel Crude Used=$32.14

At the end of the month, the refiner must calculate its actual weighted average values for use in the subsequent period.
20642 Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules and Regulations

RECONCILIATION OF RELATIVE VALUE FOR THE SUBSEQUENT PERIOD

1

Product

2

PF

shipments

(mbbls)

3

Value/

barrel

(PP)

(wt. avg.)

4

Total

value

(2×3)

5

Relative

value

factor

(3)/(8)

6

Feedstock

distri.

(5×2)

7

Liq.

duties

(6×(10)

(9)

Month End:

Motor Gasoline .................................. 90,212 $35.27 $3,181,777 1.095682 98,844 $10,379

Total Alkylate ..................................... 100,389 41.84 4,200,276 1.299783 130,484 13,701

Heavy Reformate ............................... 258,821 30.66 7,935,452 .952470 246,519 25,885

Reformer Feed .................................. 445,703 30.54 13,611,770 .948742 422,857 44,400

Raffinates ........................................... 755,717 29.69 22,437,238 .922336 697,025 73,188

Jet Fuel .............................................. 753,104 30.42 22,909,424 .945014 711,694 74,726

Total ............................................... 2,403,946 ....................... 74,275,937 ....................... 2,307,423 242,279

(9) (10)

Class III Crude Used 2,307,423×$.105=$242,279

Volumetric Gain 96,523

Avg. Value/Barrel Crude Used=$74,275,937÷2,307,423=$32.19 (8)

Note: Actual monthly reconciliation data could result in attributions on a product basis that are less than or greater than weekly

distributions. This is due to the ‘‘weighing’’ of the data i.e., motor gasoline on a weekly basis was $10,996 as compared to $10,379

as above. No additional duties are due to the averaging.

Michael H. Lane,

Acting Commissioner of Customs.

Approved: April 5, 1995.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 95–10226 Filed 4–26–95; 8:45 am]

BILLING CODE 4820–02–P

DEPARTMENT OF VETERANS

AFFAIRS

38 CFR Part 3

RIN 2900–AH37

Time Limit for Filing a Claim for REPS

Benefits

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

SUMMARY: This document amends the

Department of Veterans Affairs (VA)

adjudication regulations concerning the

special allowance known as REPS

(Restored Entitlement Program for

Survivors). This amendment is

necessary to conform the regulations to

a decision of the United States Court of

Appeals for the Federal Circuit which

upheld a decision of the United States

Court of Veterans Appeals invalidating

the VA regulation establishing a time

limit for filing a claim for REPS benefits.

The purpose of the amendment is to

remove the time limit.

EFFECTIVE DATE: This amendment is

effective April 27, 1995.

FOR FURTHER INFORMATION CONTACT: Paul

Trowbridge, Consultant, Regulations

Staff, Compensation and Pension

Service, Veterans Benefits

Administration, 810 Vermont Avenue,

NW, Washington, DC 20420, telephone

(202) 273–7210.

SUPPLEMENTARY INFORMATION: The

Omnibus Budget Reconciliation Act of

1981 amended title 42, United States

Code, to terminate or reduce payment of

the Social Security child’s insurance

benefit and to terminate the mother’s

benefit at the point at which the

youngest child reached age 16.

Previously, the mother’s benefit had

terminated when the youngest child

reached age 18. Section 156 of Pub. L.

97–377, which established a program

known as the Restored Entitlement

Program for Survivors or REPS, in effect,

restored such terminated or reduced

benefits for surviving spouses and

children of veterans who died on active

duty prior to August 13, 1981, or died

as a result of service-connected

disability incurred or aggravated prior to

that date.

Under the authority granted in section

156, VA issued regulations, codified at

38 CFR 3.812, which implemented the

statute. Paragraph (f) of § 3.812 provided

that benefits could be paid from the first

day of the month during which the

claimant first became eligible, if

application was filed within 11 months

following that month. This paragraph

was amended on June 28, 1993, to

require that the application be filed

within 6 months of the month during

which the claimant first became eligible

in order for benefits to be payable from

the first day of the month in which

eligibility arose.

The United States Court of Veterans

Appeals struck down subsections (2)

and (3) of 38 CFR 3.812(f), which

specified the time limits for filing an

application for REPS benefits, in the

case of Cole v. Derwinski, 2 Vet. App.

400 (1992), aff’d, 35 F.3d 551 (Fed. Cir.

1994), involving a claim for the REPS

mother’s benefit. The court relied on its

Cole decision in Skinner v. Brown, 4

Vet. App. 141 (1993), aff’d, 27 F.3d 1571

(Fed. Cir. 1994), a case involving a claim

for the REPS child’s benefit.

In affirming the Court of Veterans

Appeals decision, the United States

Court of Appeals for the Federal Circuit

held that the VA regulation denying

retroactive payment to claimants who

failed to file a REPS claim within 6

months of the month entitlement arose

was contrary to the plain meaning of the

REPS statute, which imposes no time

restrictions on filing, and was therefore

invalid. Paragraph (f) of 38 CFR 3.812 is

therefore amended to show that there is

no time limit for filing a claim for REPS

benefits. The only restriction on

payment to an otherwise eligible

claimant is that no payment can be

made for any period prior to January 1,

1983, the effective date set by the REPS

statute.

This final rule constitutes an

interpretive rule. Accordingly, it is

made effective upon publication.

The Secretary of Veterans Affairs

certifies that this final rule will not have