28404 Federal Register / Vol. 66, No. 100 / Wednesday, May 23, 2001 / Proposed Rules

Compliance: Required as indicated, unless

accomplished previously.

To prevent loss of engine and fuel

indications essential for safe flight and

landing, accomplish the following:

Modification

(a) Within 6 months after the effective date

of this AD, modify the wiring for the internal

fuel/defuel panel, in accordance with

Bombardier Service Bulletin S.B. GEN–28–

010, Revision A, dated May 15, 2000.

Alternative Methods of Compliance

(b) An alternative method of compliance or

adjustment of the compliance time that

provides an acceptable level of safety may be

used if approved by the Manager, New York

Aircraft Certification Office (ACO), FAA.

Operators shall submit their requests through

an appropriate FAA Principal Maintenance

Inspector, who may add comments and then

send it to the Manager, New York ACO.

Note 2: Information concerning the

existence of approved alternative methods of

compliance with this AD, if any, may be

obtained from the New York ACO.

Special Flight Permits

(c) Special flight permits may be issued in

accordance with sections 21.197 and 21.199

of the Federal Aviation Regulations (14 CFR

21.197 and 21.199) to operate the airplane to

a location where the requirements of this AD

can be accomplished.

Note 3: The subject of this AD is addressed

in Canadian airworthiness directive CF–

2000–24, dated August 15, 2000.

Issued in Renton, Washington, on May 17,

2001.

Vi L. Lipski,

Manager, Transport Airplane Directorate,

Aircraft Certification Service.

[FR Doc. 01–12988 Filed 5–22–01; 8:45 am]

BILLING CODE 4910–13–P

DEPARTMENT OF COMMERCE

International Trade Administration

DEPARTMENT OF THE INTERIOR

15 CFR Part 303

[Docket No. 991228350–1118–02]

RIN: 0625–AA57

Office of Insular Affairs; Proposed

Changes in the Insular Possessions

Watch, Watch Movement and Jewelry

Program

AGENCIES: Import Administration,

International Trade Administration,

Department of Commerce; Office of

Insular Affairs, Department of the

Interior.

ACTION: Notice of proposed rulemaking

and request for comments.

SUMMARY: The Departments propose

amending their regulations governing

watch duty-exemption allocations and

the watch and jewelry duty-refund

benefits for producers in the United

States insular possessions (the U.S.

Virgin Islands, Guam, American Samoa

and the Commonwealth of the Northern

Mariana Islands). The proposed rule

would amend ITA regulations by further

clarifying the range of documents that

may be needed for verification of dutyfree shipments of jewelry into the

United States and by clarifying which

wages qualify as creditable and which

do not for purposes of calculating the

duty-refund for watches and jewelry.

We also propose amending the

regulations by making minor editorial

changes within the definition of new

firm for watches. Finally, we propose

amending the duty refund process by

dividing the amount of the annual duty

refund certificate into two installments.

These amendments are being proposed

to make grammatical changes, clarify a

portion of the regulations, update

methods of documentation and help

producers receive benefits in a more

timely fashion.

DATES: Written comments must be

received on or before June 22, 2001.

ADDRESSES: Address written comments

to Faye Robinson, Acting Director,

Statutory Import Programs Staff, Room

4211, U.S. Department of Commerce,

Washington, DC 20230.

FOR FURTHER INFORMATION CONTACT: Faye

Robinson, (202) 482–3526, same address

as above.

SUPPLEMENTARY INFORMATION: The

insular possessions watch industry

provision in section 110 of Pub. L. No.

97–446 (96 Stat. 2331) (1983), as

amended by section 602 of Pub. L. No.

103–465 (108 Stat. 4991) (1994);

additional U.S. Note 5 to chapter 91 of

the Harmonized Tariff Schedule of the

United States (‘‘HTSUS’’), as amended

by Pub. L. 94–241 (90 Stat. 263) (1976)

requires the Secretary of Commerce and

the Secretary of the Interior, acting

jointly, to establish a limit on the

quantity of watches and watch

movements which may be entered free

of duty during each calendar year. The

law also requires the Secretaries to

establish the shares of this limited

quantity which may be entered from the

Virgin Islands, Guam, American Samoa

and the Commonwealth of the Northern

Mariana Islands (‘‘CNMI’’). After the

Departments have verified the data

submitted on the annual application

(Form ITA–334P), the producers’ dutyexemption allocations are calculated

from the territorial share in accordance

with 15 CFR 303.14 and each producer

is issued a duty-exemption license. The

law further requires the Secretaries to

issue duty-refund certificates to each

territorial watch and watch movement

producer based on the company’s dutyfree shipments and creditable wages

paid during the previous calendar year.

Pub. L. 106–36 (113 Stat. 127) (1999)

authorizes the issuance of a duty-refund

certificate to each territorial jewelry

producer for any article of jewelry

provided for in heading 7113 of the

HTSUS which is the product of any

such territory. The value of the

certificate is based on creditable wages

paid and duty-free units shipped into

the United States during the previous

calendar year. Although the law

specifically mentions the U.S. Virgin

Islands, Guam and American Samoa, the

issuance of the duty-refund certificate

would also apply to the CNMI due to

the Covenant to Establish a

Commonwealth of the Northern Mariana

Islands in Political Union with the

United States of America (Pub. L. 94–

241), which states that goods from the

CNMI are entitled to the same tariff

treatment as imports from Guam. See

also 19 CFR 7.2(a). The law provides

that during the first two years,

beginning August 9, 1999, jewelry that

is assembled in the territories shall be

treated as a product of such territories.

Thereafter, in order to be considered a

product of such territories, the jewelry

must meet the U.S. Customs Service

substantial transformation requirements

(the jewelry must become a new and

different article of commerce as a result

of production or manufacture performed

in the territory). To receive duty-free

treatment, the jewelry must also satisfy

the requirements of General Note

3(a)(iv) of the HTSUS and applicable

Customs Regulations (19 CFR 7.3).

The law specifies, in addition, that

watch producer benefits shall not be

diminished as a consequence of

extending duty-refund benefits to

jewelry manufacturers. In the event that

the aggregate amount of the calculated

duty refunds for both watches and

jewelry exceeds the total amount

available under Pub. L. 97–446, as

amended by Pub. L. 103–465, the watch

producers shall receive their calculated

amounts; the jewelry producers would

then receive amounts proportionately

reduced from the remainder. See Pub. L.

106–36.

Proposed Amendments

We propose amending Subpart A

§ 303.2(a)(5), see 65 FR 8049 (Feb. 17,

2000), by making grammatical changes.

We also propose amending Subpart A

§ 303.2(a)(13) and Subpart B

§ 303.16(a)(9) to explain further what is

meant by special services under the

definition of wages excluded from being

Federal Register / Vol. 66, No. 100 / Wednesday, May 23, 2001 / Proposed Rules 28405

creditable towards the duty-refund in

response to requests for additional

clarification of this language. The new

language on wages not creditable

towards the duty refund would include

wages paid to any outside consultant or

those persons not involved in the day to

day assembly operations or

administrative work directly related to

the operation of the company. Examples

of wages that would not be creditable

toward the duty refund would be wages

paid to gardeners, construction workers,

electricians, plumbers or outside

lawyers and accountants. A producer

also wanted to know if two producers

worked on the same single piece of

jewelry, would each producer’s wages

for their portion of the work be

creditable towards each producer’s duty

refund. The jewelry producer explained

that the casting of precious metal is a

highly technical process which is very

capital intensive and expensive to set

up. The producer explained that it

would be very helpful if some

companies could subcontract such work

to a producer who was willing to make

the capital investment. The producer

also pointed out that having a local

caster available would be an added

inducement to other jewelry companies

to locate in the insular possessions. We

agree that given this unique two-step

manufacturing process in the

production of jewelry, that this request

has merit. Therefore, we propose

including specific language to address

this situation. The proposed regulatory

language would allow two separate

jewelry producers to have their portion

of the wages credited toward their own

duty refund for work on a single piece

of jewelry which had entered the U.S.

free of duty under the program if the

companies demonstrate that they

worked on the same piece of jewelry,

the jewelry received duty-free treatment

into the U.S., the companies maintained

production and payroll records for

dutiable as well as duty-free jewelry

shipments into the U.S. or other

destinations so that creditable as well as

non-creditable wages may be

determined, and the records are

sufficient for the Departments’

verification of the creditable wages and

duty-free units shipped into the United

States.

We further propose adding alternative

documents which may be needed or

used during the verification of the

amount of duty-free jewelry which

entered the United States under the

insular program. New shipping methods

and the fact that jewelry, unlike

watches, does not require a permit

(Form ITA–340P), necessitate new ways

to document duty-free entry into the

United States. Therefore, we propose

amending Subpart B § 303.17(b)(4) to

include methods of verification such as

requiring the consignee (receiver of

goods in the U.S.) to certify that

shipments which are otherwise

unsupported by Customs entry

documents or a certificate of origin did,

in fact, receive duty-free treatment.

These alternative reporting

requirements are necessary in order to

provide the Departments’ auditors with

sufficient documentation to verify dutyfree shipments.

Finally, we propose amending

Subpart A, § 303.2(b)(1) and § 303.12(a),

and Subpart B, § 303.16(b)(1) and

§ 303.19(a)(1) by providing for the

issuance of an interim duty refund

certificate which would authorize a

producer to receive a portion of the total

amount of the annual duty refund

certificate. The interim amount would

be based on reported duty-free

shipments and creditable wages paid

during the first six months of the same

calendar year in which the wages were

paid. The interim duty refund certificate

would be issued after the required

company data were received and the

calculations for each company are

completed. We propose requiring the

receipt of each producer’s data by the

end of July if the producer wishes to

receive an interim duty refund

certificate. The interim duty refund

certificate will be issued by the end of

August to all producers who have

provided the Departments with the data

necessary to calculate the duty refund

by the end of July. The verification

process and the calculation for the

annual duty refund certificate will

remain the same. However, that portion

of the duty refund that has already been

issued via the interim duty free

certificate to each producer will be

deducted from each producer’s annual

total duty refund amount. This

amendment is being proposed to

provide duty refund benefits to

producers in a more timely fashion.

Administrative Law Requirements

Regulatory Flexibility Act

In accordance with the Regulatory

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

Chief Counsel for Regulation at the

Department of Commerce has certified

to the Chief Counsel for Advocacy,

Small Business Administration, that the

proposed rule, if promulgated as final,

will not have a significant economic

impact on a substantial number of small

entities. This rulemaking would make

minor editorial changes and clarify

current language regarding creditable

wages neither of which will impose any

cost or have any other adverse economic

effect on the producers. The rulemaking

would also divide the total annual

amount of the duty refund certificate

into two installments, thereby allowing

producers to receive benefits in a more

timely fashion. Although the total

amount of a duty refund certificate will

not change, the proposed rule is

intended to have a positive effect on the

insular economies by helping the

producers improve their cash flows.

Finally, the proposed rulemaking would

include an alternative method of

verification of duty-free shipments of

jewelry into the United States for those

entries that did not receive Customs

entry documents or a certificate of

origin for each shipment. If producers

want credit for these duty-free

shipments, once a year the consignee

(receiver of the jewelry shipped into the

United States) or producer (if the

producer knows that the shipment

received duty-free entry into the United

States) would prepare a written

certification for the Departments’

auditors that the shipments received

duty-free treatment into the United

States. Proposing such a certification is

expected to have little, if any, economic

impact on a company that did not

receive Customs entry documentation.

We estimate the certification statement,

if used, would create a burden of about

ten minutes to complete at a cost of

approximately $20 annually.

Paperwork Reduction Act

This proposed rulemaking involves

new collection-of-information

requirements subject to review and

approval by the Office of Management

and Budget (OMB) under the Paperwork

Reduction Act of 1995, which have been

submitted to OMB for approval.

Changing the duty refund certificate

from an annual to a biannual basis will

require the use of three of the current

forms, modified to accommodate the

change. The public reporting burden for

these collection-of-information

requirements includes the time for

reviewing instructions, searching

existing data bases, gathering and

maintaining the data needed, and

completing and reviewing the collection

of information. The issuance of

payments under the duty refund

certificate on a biannual basis will

require the collection of data through

the use of a modified version of the

annual application, Form ITA–334P. We

estimate this will involve a burden of

about one hour per producer. One more

certificate of entitlement to a duty

refund, Form ITA–360P, would also

need to be issued to each producer per

28406 Federal Register / Vol. 66, No. 100 / Wednesday, May 23, 2001 / Proposed Rules

year. This form is completed by the

Department of Commerce and imposes

no burden hours on the producers. Form

ITA–361P, the request for refund of

duties, is currently used once or twice

a year per producer and takes about 10

minutes to complete. Because of the

proposed biannual duty refund, we

anticipate that most producers would

only complete the form between two to

three times a year in order to receive

such refunds in a more timely manner.

We expect Form ITA–361P will only

increase the burden by about 10 minutes

per producer. Finally, the proposed

rulemaking would include an

alternative method of verification of the

duty-free shipments of jewelry into the

United States for those entries that did

not receive Customs entry documents or

the country of origin certificates for each

shipment. This alternative would be in

the form of a written certification by the

consignee or, if he or she knows, by the

producer, that the shipments received

duty-free treatment. Because the jewelry

portion of the program is new, it is

difficult at this time to determine

whether this alternative certification

will be needed by the new companies or

whether they will be able to produce

standard Customs entry documents or

certificates of origin. The certification

by the consignee or producer would be

in the form of an annual statement

prepared for the auditor. We estimate

that it will take about ten minutes to

complete at a cost of approximately $20.

Collection activities are currently

approved by the Office of Management

and Budget under control numbers

0625–0040 and 0625–0134. Public

comment is sought regarding: Whether

the proposed collection-of-information

requirements are necessary for the

proper performance of the functions of

the agency, including whether the

information will have practical utility;

the accuracy of the burden estimate;

ways to enhance the quality, utility, and

clarity of the information to be

collected; and ways to minimize the

burden of the collection of information,

including the use of automated

collection techniques or other forms of

information technology. Send comments

regarding any of these burden estimates

or any other aspect of the collection-ofinformation to U.S. Department of

Commerce, ITA Information Officer,

Washington, DC 20230 and Office of

Information and Regulations Officer,

Office of Management and Budget,

Washington, DC 20503 (Att: OMB Desk

Officer).

Notwithstanding any other provision

of the law, no person is required to

respond to, nor shall any person be

subject to a penalty for failure to comply

with a collection of information unless

it displays a currently valid OMB

Control Number.

Plain English

The President has directed Federal

agencies to use plain language in their

communications with the public,

including regulations. To comply with

this directive, we seek public comment

on any ambiguity or unnecessary

complexity arising from the language

used in this proposed rule.

Executive Order 12866

It has been determined that the

proposed rulemaking is not significant

for purposes of Executive Order 12866.

List of Subjects in 15 CFR Part 303

Administrative practice and

procedure, American Samoa, Customs

duties and inspection, Guam, Imports,

Marketing quotas, Northern Mariana

Islands, Reporting and recordkeeping

requirements, Virgin Islands, Watches

and jewelry.

For reasons set forth above, The

Departments propose to amend 15 CFR

part 303 as follows:

PART 303—WATCHES, WATCH

MOVEMENTS AND JEWELRY

PROGRAM

1. The authority citation for 15 CFR

part 303 continues to read as follows:

Authority: Pub. L. 97–446, 96 Stat. 2331

(19 U.S.C. 1202, note); Pub. L. 103–465, 108

Stat. 4991; Pub. L. 94–241, 90 Stat. 263 (48

U.S.C. 1681, note); Pub. L. 106–36, 113

Stat.127,167.

2. Section 303.2 is amended as

follows:

A. The first sentence of § 303.2(a)(5) is

amended by removing ‘‘which may not

be’’ and adding in its place ‘‘not’’.

B. The second sentence of

§ 303.2(a)(13) is revised as set forth

below.

C. The last sentence of § 303.2(b)(1) is

amended by adding ‘‘and by producers

who wish to receive the duty refund in

installments on a biannual basis’’ at the

end of the sentence.

§ 303.2 Definitions and forms.

(a) * * *

(13) * * * Excluded, however, are

wages paid to any outside consultants or

other professional personnel, such as

lawyers and accountants, or to those

persons not involved in the day-to-day

assembly operations or administrative

work directly related to the operations

of the company, such as gardeners or

construction workers, and for the repair

of non-91/5 watches and movements to

the extent that such wages exceed the

foregoing percentage. * * *

* * * * *

3. Section 303.12(a)(1) is revised to

read as follows:

§ 303.12 Issuance and use of production

incentive certificates.

(a) Issuance of certificates. (1) The

total annual amount of the Certificate of

Entitlement, Form ITA–360, may be

divided and issued on a biannual basis.

The first portion of the total annual

certificate amount will be based on

reported duty-free shipments and

creditable wages paid during the first

six months of the calendar year, using

the formula in § 303.14(c). The

Departments require the receipt of the

data by July 31 for each producer who

wishes to receive an interim duty refund

certificate. The interim duty refund

certificate will be issued on or before

August 31 of the same calendar year in

which the wages were earned unless the

Departments have unresolved questions.

The process of determining the total

annual amount of the duty refund will

remain the same. The completed annual

application (Form ITA–334P) shall be

received by the Departments on or

before January 31 and the annual

verification of data and the calculation

of each producer’s total annual duty

refund, based on the verified data, will

continue to take place in February. Once

the calculations for each producer’s

duty refund has been completed, the

portion of the duty refund that has

already been issued to each producer

will be deducted from the total amount

of each producer’s annual duty refund

amount. The duty refund certificate will

continue to be issued by March 1 unless

the Departments have unresolved

questions.

* * * * *

4. Section 303.16 is amended as

follows:

A. The second sentence of

§ 303.16(a)(9) is removed and three

sentences are added in its place as set

forth below.

B. The last sentence of § 303.16(b)(1)

is amended by adding ‘‘and, with

special instructions for its completion,

by producers who wish to receive the

total annual amount of the duty refund

in installments on a biannual basis’’ at

the end of the sentence.

§ 303.16 Definitions and forms.

(a) * * *

(9) * * * Excluded, however, are

wages paid for outside consultants or

other professional personnel, such as

lawyers and accountants, or those

persons not involved in the day-to-day

assembly operations or the

Federal Register / Vol. 66, No. 100 / Wednesday, May 23, 2001 / Proposed Rules 28407

administrative work directly related to

the operations of the company, such as

gardeners or construction workers, plus

any wages paid for the assembly of

dutiable jewelry or for the repair of

dutiable jewelry to the extent that such

wages exceed the percentage set forth

above. No more than two insular

producers may have their wages

credited for their portion of the wages

paid for work on a single piece of

jewelry which entered the U.S. free of

duty under the program. Wages paid by

the two producers will be credited

proportionally provided both producers

demonstrate to the satisfaction of the

Secretaries that they worked on the

same piece of jewelry, the jewelry

received duty-free treatment into the

U.S., and the producers maintained

production and payroll records

sufficient for the Departments’

verification of the creditable wage

portion (see § 303.17(b)). * * *

* * * * *

§ 303.17 [Amended]

5. Section 303.17(b)(4) is amended by

adding ‘‘, or the certificate of origin for

the shipment, or, if a company did not

receive such documents from Customs,

a certification from the consignee that

the jewelry shipment received duty-free

treatment, or a certification from the

producer, if the producer can attest that

the jewelry shipment received duty-free

treatment’’ at the end of the paragraph.

6. Section 303.19(a)(1) is revised to

read as follows:

§ 303.19 Issuance and use of production

incentive certificates.

(a) Issuance of certificates. (1) The

total annual amount of the Certificate of

Entitlement, Form ITA–360, may be

divided and issued on a biannual basis.

The first portion of the total annual

certificate amount will be based on

reported duty-free shipments and

creditable wages paid during the first

six months of the calendar year, using

the formula in § 303.20(b). The

Departments require the receipt of the

data by July 31 for each producer who

wishes to receive an interim duty refund

certificate. The interim duty refund

certificate will be issued on or before

August 31 of the same year in which the

wages were earned unless the

Departments have unresolved questions.

The process of determining the total

annual amount of the duty refund will

remain the same. The completed annual

application (Form ITA–334P) shall be

received by the Departments on or

before January 31 and the annual

verification of data and calculation of

each producer’s total annual duty

refund, based on the verified data, will

continue to take place in February. Once

the calculations for each producer’s

duty refund has been completed, the

portion of the duty refund that has

already been issued to each producer

will be deducted from the total amount

of each producer’s annual duty refund

amount. The duty refund certificate will

continue to be issued by March 1 unless

the Departments have unresolved

questions.

* * * * *

Faryar Shirzad,

Assistant Secretary for Import

Administration, Department of Commerce.

Nikolao Pula,

Acting Director, Office of Insular Affairs,

Department of the Interior.

[FR Doc. 01–12861 Filed 5–22–01; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG–125237–00]

RIN 1545–AY60

Debt Instruments With Original Issue

Discount; Annuity Contracts; Hearing

Cancellation

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Cancellation of notice of public

hearing on proposed rulemaking.

SUMMARY: This document cancels the

public hearing on proposed regulations

relating to the federal income tax

treatment of annuity contracts issued by

certain insurance companies.

DATES: The public hearing originally

scheduled for Wednesday, May 30,

2001, at 10 a.m., is cancelled.

FOR FURTHER INFORMATION CONTACT:

LaNita Van Dyke of the Regulations

Unit, Office of Special Counsel

(Modernization & Strategic Planning),

(202) 622–7190 (not a toll-free number).

SUPPLEMENTARY INFORMATION: A notice

of proposed rulemaking and notice of

public hearing that appeared in the

Federal Register on Friday, January 12,

2001 (66 FR 2852), announced that a

public hearing was scheduled for

Wednesday, May 30, 2001, at 10 a.m., in

room 4718, Internal Revenue Building,

1111 Constitution Avenue, NW.,

Washington, DC. The subject of the

public hearing is proposed regulations

under sections 163(e) and 1271 through

1275 of the Internal Revenue Code. The

public comment period for these

proposed regulations expired on April

12, 2001.

The notice of proposed rulemaking

and notice of public hearing, instructed

those interested in testifying at the

public hearing to submit a request to

speak and an outline of the topics to be

addressed. As of Wednesday, May 16,

2001, no one has requested to speak.

Therefore, the public hearing scheduled

for Wednesday, May 30, 2001, is

cancelled.

LaNita Van Dyke,

Acting Chief, Regulations Unit, Office of

Special Counsel (Modernization & Strategic

Planning).

[FR Doc. 01–12736 Filed 5–22–01; 8:45 am]

BILLING CODE 4830–01–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG–106791–00]

RIN 1545–AY55

Liabilities Assumed in Certain

Corporate Transactions

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Cancellation of notice of public

hearing on proposed rulemaking.

SUMMARY: This document provides

notice of cancellation of a public

hearing on proposed regulations relating

to liabilities assumed in certain

corporate transactions.

DATES: The public hearing originally

scheduled for Thursday, May 31, 2001,

at 10 a.m., is cancelled.

FOR FURTHER INFORMATION CONTACT: Guy

R. Traynor of the Regulations Unit,

Office of Special Counsel, (202) 622–

7180 (not a toll-free number).

SUPPLEMENTARY INFORMATION: A notice

of proposed rulemaking and notice of

public hearing that appeared in the

Federal Register on January 4, 2001 (66

FR 748), announced that a public

hearing was scheduled for May 31, 2001

at 10 a.m., in room 4718, 1111

Constitution Avenue, NW., Washington,

DC. The subject of the public hearing is

proposed regulations under section 301

of the Internal Revenue Code. The

public comment period for these

regulations expired on May 10, 2001.

The notice of proposed rulemaking

and notice of public hearing, instructed

those interested in testifying at the

public hearing to submit a request to

speak and an outline of the topics to be

addressed. As of May 15, 2001, no one