past is precedent: executive power to authorize crude oil

Past is Precedent: Executive Power to Authorize Crude Oil Exports Prepared by Minority Staff for Ranking Member Lisa Murkowski U.S. Senate Committee on Energy & Natural Resources March 3, 2014 Introduction The federal government enacted a general prohibition on the export of crude oil during the energy shortages and price spikes of the 1970s. As a result of the unconventional fossil fuel revolution in recent years, however, energy production in the United States is at record levels, and crude oil production in particular is rising rapidly. According to the Energy Information Administration, production in the Bakken and Eagle Ford formations each exceeded one million barrels per day at certain points in 2013.1 The International Energy Agency has warned, however, that the mismatch between growing supplies of so-called “light tight oil” (and condensates) and a U.S. refining system geared towards processing heavy crude oil poses a threat to this resurgence in production.2 This expected collision has called into question the general prohibition on crude oil exports, which shuts off U.S. supply from overseas markets. The executive branch retains the statutory authority to authorize crude oil exports. In fact, presidents from both political parties have found limited exports to be in the national interest on multiple occasions. This report summaries this history and reprints the relevant documents from the White House and the Department of Commerce for the public. Restrictions on Petroleum Products In January 1981, President Reagan issued an executive order that removed price and allocation controls over petroleum products and crude oil. In October 1981, the Department of Commerce eliminated “quantitative restrictions” on the export of refined petroleum products, such as gasoline and diesel, stating:

“Free trade will benefit the balance of payments, take advantage of transportation efficiencies and allow the U.S. to respond quickly to its potential international responsibilities.”

These documents are available in Appendix A. 1 EIA, Short-Term Energy Outlook (February 2014), p. 5. 2 IEA, Oil Market Report (21 January 2014), pp. 23-26; Oil Market Report (18 January 2013), pp. 22-26.

2

Canadian Consumption In June 1985, President Reagan issued a finding that exports to Canada for consumption in Canada would be in the national interest. The finding referred to “substantial benefits” that would result from expanded crude oil trading, noting:

“These benefits would include the increased availability of reliable energy sources, economic efficiencies, and material enhancements to the energy security of both countries.”

The finding instructed the Secretary of Commerce “to take all other necessary and proper action to expeditiously implement this decision.” It was followed by a final rule. These documents are available in Appendix B. Exports from Alaska’s Cook Inlet In November 1985, Secretary of Commerce Malcolm Baldrige determined that exports from Alaska’s Cook Inlet would be in the national interest. The finding stated:

“The benefits that will ensue from these exports include increased incentives for investment in the exploration and development of domestic crude oil, transportation efficiencies, and material enhancements to the energy security of our allies. This initiative will also encourage other countries to remove trade barriers to U.S. goods and services. It does not affect our energy security as we retain the flexibility to react to changes in the world’s available oil supply.”

Department of Commerce documents are available in Appendix C. Additional Exports to Canada In December 1988, President Reagan issued a finding that additional exports of crude oil to Canada – specifically, 50,000 barrels per day from Alaska – would be in the national interest. The Department of Commerce followed this decision with an interim rule in January 1989 and a final rule in March 1990. These documents are available in Appendix D. California Heavy Crude In October 1992, President Bush issued a finding that exports of 25,000 barrels per day of heavy crude oil from California would be in the national interest. The final rule, published by the Department of Commerce during the Clinton administration in March 1995, stated:

“This final rule revises the licensing requirements and procedures that apply to exports of California heavy crude oil by removing a number of significant

3

restrictions, e.g., the prohibition against transportation crude oil by pipeline over rights-of way granted pursuant to the Mineral Leasing Act of 1920 and the requirement that any export of crude oil must be offset by importing an equal or greater volume of crude oil of equal or higher quality.”

These documents are available in Appendix E. Alaskan North Slope Crude Oil In April 1996, President Clinton issued a finding that exports of Alaskan North Slope crude would be in the national interest. The statement read:

“Permitting this oil to move freely in international commerce will contribute to economic growth, reduce dependence on imported oil, and create new jobs for American workers. It will not adversely affect oil supplies or gasoline prices on the West Cost, in Hawaii, or in the rest of the nation.”

The finding followed the passage of Public Law 104-58, which authorized such exports subject to a presidential determination. A final rule was published by the Department of Commerce in May 1996. These documents are available in Appendix F. Conclusion The historical record is clear that the executive branch retains the authority to permit crude oil exports under certain conditions. In fact, this was done on several occasions by successive administrations. The president has always acted with or through the Department of Commerce; in the cases of the U.S.-Canada Free Trade Agreement and Alaskan North Slope exports, the executive branch has collaborated with Congress. Even statutes that generally prohibit the export of crude oil contain provisions that permit the president to authorize exports under certain conditions. Acknowledgments Staff wish to thank the Senate Library for its assistance with this report.

APPENDIX A: Restrictions on Petroleum Products

Federal Resister I Vol. 46, No. 2(7 1 Friday, lanuary' 30, 1981 / Presidential Documents 9O

Presidential Documents

Executive Order 12287

Decontrol of Crude Oil and Refined Petroleum Products

By the authority vested in me as President by the Constitution and statutes ofthe United States of America, including the Emergency Petroleum AllocationAct of 1973, as amended (15 U.S.C. 751 et seq.), and notwithstanding thedelegations to the Secretary of Energy in Executive Order No. 11790, asamended by Executive Order No. 12038, and in order to provide for animmediate and orderly decontrol of crude oil and refined petroleum products,it is hereby ordered as follows:

Section 1. All crude oil and refined petroleum products are exempted from theprice and allocation controls adopted pursuant to the Emergency PetroleumAllocation Act of 1973, as amended. The Secretary of Energy shall promptlytake such action as is necessary to revoke the price and allocation regulationsmade unnecessary by this Order.

Sec. 2. Notwithstanding Section 1 of this Order;

(a) All reporting and record-keeping requirements in effect under the Emergen-cy Petroleum Allocation Act, as amended, shall continue in effect untileliminated or modified by the Secretary of Energy. The Secretary of Energyshall promptly review those requirements and shall eliminatethem, except forthose that are necessary for emergency planning and energy informationgathering purposes required by law.

(b) The State set-aside for middle distillates (Special Rule 10, 10 CFR Part 211,Subpart A, Appendix A) shall remain in effect until March 31; 1981.

(c) The special allocation of middle distillates for surface passenger masstransportation (Special Rule 9, 10 CFR Part 211, Subpart A, Appendix A) shallremain in effect until March 31, 1981.

(d) The Buy-Sell lists and orders issued prior to this Order under the Buy-SellProgram and the Emergency Buy-Sell Program (10 CFR 211.65) shall remain ineffect according to their terms and the Secretary of Energy may issue suchfurther orders as may be necessary to give effect to lists and orders issuedprior to this Order.

(e) The Canadian Allocation Program (10 CFR Part 214) shall remain in effectuntil March 31, 1981.

Sec. 3. The Secretary of Energy may, pursuant to Executive Order No. 11790,as amended by Executive Order No. 12038, adopt such regulations and takesuch actions as he deems necessary to implement this Order, including thepromulgation of entitlements notices for periods prior to this Order and theestablishment of a mechanism for entitlements adjustments for periods priorto this Order.

Fedeal egiter Va. 4, No 26/ Fida, Jauar 30 198 1 resdental ocuent

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9910 Federal Register / Vol. 46, No. 20 1 Friday, January 30, 1981 / Presidential Documents

Sec. 4. The Secretary of Energy is authorized to take such other actions as hedeems necessary to ensure that the purposes of this Order are effectuated.Sec. 5. Because advance notice of and public procedure on the decontrolprovided by this Order would be likely to cause actions that could lead toeconomic distortions and dislocations, and would therefore be contrary to thepublic interest, this Order shall be effective immediately.

THE WHITE HOUSE,January 28, 1981.

IFR Doc. 81-3646Filed 1-28-81; 4:38 pm]

Billing code 3195-01-M

Editorial Note: The President's statement of January 28, 1981, on signing Executive Order 12287,is printed in the Weekly Compilation of Presidential documents (vol. 17, no. 4).

RL"L

"4918 "'Federdl'Register I Vol. 46, No. 193 j Tuesday, -October 6, 1981 / Rules and RegulatiOns

'-basis points above an avertige of therate on'26 weekTreasury bills for the,previous. four weeks. This action isconsistent with recent actions of theDepository Institutioiis DeregulationCommittee and will'permit credit unionsto be more competitivein.periods ofdeclining interest rates.

The Boird has also removed alldividend, ceilings and the'14 daymininttn maturity on IRA/Keoghaccounts (SectiOn 701.35(h) (6)].Additionally, the NCUA Board hasauthorized Federal credit unions topermit transfers from existing accountsinto these new accounts withoutpenalty. This will provide credit unionsthe flexibility to design IRA/Keoghaccounts which'best meet their needsand the needs of their customers.Federal credit unions should note that inorder to avoid treatment of an accountas a "demand deposit" under FederalReserveRegulation D (with attendantreserve requirements) the accountshould carry an original maturity orrequired notice period of at least 14days, or the credit union should reservethe right to require at least 14 dayswritten notice of intended withdrawal.

Regulatory Flexibility Act -The NCUA Board certifies that these

rules will hot have a significanteconomic impact on-a substantialnumber of small credit unions becausethe rules will ipcrease managementflexibility and enhance their competitiveposition. Therefore, a regulatoryflexibility analysis is-not requiredpursuant to 5 U.S.C. 605(b).

Effective Date

The final rule increasing the dividendceiling on regular shares and sharedrafts and increasing the floor on thedividend ceiling for share certificatesare made effective in less than 30 daysbecause it relieves a restriction, 5 U.S.C.553(d)(1).

Accordingly, 12 CFR'701.35(h) isamended as set forth below.

Dated: September 30, 1981.(12 U.S.C. 1757(6], 1766(a)) ,Rosemary Brady,Secretary of the Board.

1. Section 701.35(h) is amended byrevising paragraphs (1), (2), and (4] andby adding paragraph (6) as set forthbelow:

§ 701.35 [Amended]"* it * * *t

(hi Maximum Dividend Rate.

(1) 12% on a share or share draftaccount.

(2) On a share certificate account; thefollowing schedule shall apply:

(i) Effective October 1, 1981, the-maximuh-n dividend rate shall equal thegreater of 12% or the average 22 yearyield for United States Treasurysecurities as most recently announced,prior to the, date of issuance of thecertificate. Effective August 1, i981,there shall be no dividend ceiling forshare certificates with a qualifyingperiod of 4 years or more;

(ii) Effective August 1, 1982, thereshall be no dividend ceiling on sharecertificates with qualifying-periods of 3years ormore. For share certificateswith qualifying periods of less than 3years, the maximum dividend rate shallequal the greater of 12% or the average.2year yield for United States Treasury,'securities as most recently announcedprior to the date of issuance of thecertificate;

(iii) Effective August 1, 1983, thereshall be no dividend ceiling on sharecertificates with qualifying period of 2years or more. For share certificateswith qualifying periods of less than 2years, the maximum dividend rate shallequal the greater of 12% or the rate on 52week United States Treasury bills asmost recently announced prior to thedate of issuance of the certificate;

(iv) Effective August1, 1984, thereshall be no dividend ceiling on sharecertificates with qualifying periods of 1year or more. For share certificates withqualifying periods of less than I year,the maximum dividend rate shall equalthe greater of 12% or the rate on 13 weekUnited States Treasury-bills as mostrecently announced prior to the date ofissuance of the certificate;

(v] Effective August 1, 1985, thereshall be no dividend ceiling on sharecertificates.

(4] To the extent that paragraph (h) (2)of this section would impose a lowermaximum dividend rate, a Federal creditunion may pay, on share certificates of$10,000 or more having a fixed term of 26weeks or more, up to a rate equaling thehigher of one quarter per cent above therate on 26-week United States Treasurybills as most recently announced priorto the date of issuance of the certificateor one quarter percent above theaverage rate on 28 week Treasury bills,over the four weeks priorto the date ofissuance of the certificate. In the case ofa rate determined pursuant thissubsection, however, compounding ofdividends is not permitted and thedividend rate may be rounded off onlyby rounding down.

(6] On an Individual Retirement 'Account or Keogh Plan share account orshare certificate representing aninvestment of retirement funds pursuantto § 724.1, a rate determined by moneymarket conditions. In the case of a sharocertificate, the maximum 14 dayqualifying period limitation set forth In§ 701.35(d)(1) does not apply. For thepurpose of permitting members totransfer their funds to these accountsfrom other share certificates existing asof November 1, 1981, Federal creditunions may waive the mandatorypenalty provision of subsection (e)(2).IFR Doe. 81-28994 Filed 10-541: 845 am]BILUNG CODE 7535-01-M

DEPARTMENT OF COMMERCE

International Trade Administration

15 CFR Parts 371,372, 376, 377 and399

Elimination of Quantitative Limitationson Exports of Refined PetroleumProductsAGENCY: Office of Industrial ResourceAdministration, International TradeAdministration, Commerce.ACTION: Final rule.

SUMMARY: This rule removesquantitative restrictions on the export ofall refined petroleum products-t hasbeen determined that foreign demandwill not have a serious Inflationaryimpact on the domestic economy, andquantity limitations are no longernecessary to protect domestic supplyfrom excessive drain of materials.Validated licensing requirementscontinue in effect for all refinedpetroleum products.

EFFECTIVE DATE: Effective date of action:October 2, 1981. (4 pm)FOR FURTHER INFORMATION CONTACT:Robert F, Kan, Manager, Short SupplyProgram, Resource Assessment Division,Office of Industrial ResourceAdministration, U.S. Department ofCommerce, P.O. Box 7138, Washington,D.C. 20044 (Telephone: 202-377-3795).SUPPLEMENTARY INFORMATION:

Rulemaking RequirementsIn connection with various rulemaktng

requirements, the Department ofCommerce has determined that:

1. Under sedtion 13(a) of the ExportAdministration Act of 1979 (Pub. L.96-72, 50 U.S.C. App. 2401 et seq.) ("theAct"), this rule is exempt from the publicparticipation in rulemaking proceduresof the Administrative Procedure Act.

Federal Register / Vol. 46, No. 193 / Tuesday, October 6, 1981 / Rules -and Regulations

-This rule does not impos new controlson exports, and is therefore exempt fromsection 13(b) of the Act, whichexpresses the intent of Congress thatwhere practicable "regulations imposingcontrols on exports" be published inproposed form.

2. This rule does not impose anynewinformation collection burden under thePaperwork Reduction Act of 1980, 44U.S.C. 3501 et seq.'It is estimated thatthe elimination of quantitativerestrictions on, the export of refinedpetroleum products will result in adecrease of 2,250 reporting hours foraffected. exporting firms.

3. This rule is not subject to therequirements of the RegulatoryFlexibilityAct, 5 U.S.C. 601 et seq.

4. This rule is a major rule within themeaning of section 1(b) of ExecutiveOrder 12291 (46 FR 13193, February 19,1981], "Federal Regulation." As providedfor in Section 8(b) of the ExecutiveOrder,an exemption to the requirementfor the preparation of a RegulatoryImpact Analysis was' obtained from theDirector, Office of Management andBudget on October 1, 1981.Therefore this' regulation is issued infina form. Although there is no formalcommentperiod, public comments onthis regulation are, welcome on acontinuing basis.

BackgroundOn December 13,1973 the Department

announced (38 FR 34442) that validatedexport licenses' would be required forthe export-ofcrude petroleum, gasoline,kerosene, fet fuel, distillate and residualfuel oils, butane, propane and naturalgas liquids. That Notice also advisedexporters that in order to be eligible toreceive shares of the quotas to beestablished on commodities other thancrude petroleum, statements of pastparticipation in exports were to besubmitted in a manner specified.

On January 23, 1974 (39 FR 3672,January 29, 1974) the Departmentexpanded upon the procedures for'issuing export licenses for quota andnonquota petroleum products- andincluded carbon-black feedstock oilamong the producis subject to validatedlicensing. Since petroleum andpetroleum products became subject torstrict quantitative control, nmunalchanges have been made to the program;however, atall times' exports of refinedpetroleum products continued, to be,authorized along historic lines tomaintain normal relationswith our.tradingpartners. From the start of theprogram, of contiols,, the export of crudeoil was- embargoed. Various refinementshave-been.made to theRegulations over

the years to reflect changes in thestatutes, but these changes have notaffected the embargo status of crude oil.

Restrictions on the exports of crudeand refined petroleum products wererenewed on a quarterly basis until July1977 when the.Department announcedthat controls would be maintainedwithout quarterly ren'ewals untilspecificaliy-modified or rescinded.Regulatory Changes

In line with the President's action onJanuary 28, 1981 to lift the remainingpricp and allocation controls on 6rudeoil, gasoline and propane, the Secretaryof Commerce has adopted therecommendations ofan interagencyTask Force that quantitative exportlimitations on refined petroleumproducts are no longer warranted.

The consensus of the "TaskForce onExport Control of Refined PetroleumProducts" chaired by the Department ofCommerce, and participated in by theDepartments of State. Treasury, Laborand Energy, and the U.S. Special TradeRepresentative, is that the lifting ofquantitative export restrictions on allrefined petroleum products willbe in thenational interest It was furtherdetermined that the domestic economyis no longer threatened by an excessivedrain of scarce petroleum supplies andthat foreign demand will not cause aserious inflationary impact on theeconomy. Furthermore, it has beendetermined that with an adequatesupply of crude petroleum and U.S.refineries operating below normalcapacity, U.S. consumers will benefitdirectly from the export of petroleumproducts because exports will permitU.S. refiners greater flexibility inproduct'output. The task force alsoadvised that it anticipates the potentialexport market generally would belimited to spot situations resulting inincreased U.S. refinery efficiency.

Freetrade-will benefit the balince ofpayments.-take advantage oftransportation efficiencies and allow theU.S. to respond quicldy to, its potentialinternational responsibilities.

Therefore, quantitative exportrestrictions are no longerrequired forthe following refined petroleumproducts: Aviation gasoline. gasoline,,jetfuel, keosene. distillate fuel oil, residualfuel oil, butane, propane, butane-propane mi, and naphthas. Thisrelaxation' of controls does not apply toother foreign policy or national securitycontrolswhich may affect these-products.

Validated license requirements oncarbon-black feedstock and asphalt arebeing removed- Licensing of theseproductswerebrginally imposed

because of theirpossible energy end-use..

Carbon-black feedstock oil as a petro-chemical feedstock in the manufactureof carbon black may nowbe exportedunder a general license, C-INA. If thisproduct is exported as residual fuel oil,the validated licensing requirementapplies. Asphalt, which was placedunder validated licensing control onApril 1.1977, to guarantee non-energyonly exports, may now be exportedusing General License G-NNR. Il,however, the product, either alone orblended, is to be exported for fuel usage,as residual fuel oil, it will require avalidated export license prior toshipmenL

On September 29,1975. short supplycontrols were extended to covermanufactured gas and synthetic naturalgas in view of a potential domesticnatural gas shortage and the possibilityof substitution for natural gas orliquefied petroleurugas or natural gasliquids'. In viewr of the impracticability ofthis happening. and the availability ofnatural gas, artificial gases may now beexported using General license C-AV..

As required by section 7(e) of theExport Administration Act of 1979, avalidated export license will be requiredprior to the export of refined petroleumproducts. Requirements for the fifing ofapplications for such licenses are listedbelow.

licenses may b& issued for shipmentsto all destinations with which the U.S.has normal trading relations. Thesechanges have been made in recognitionof the need to provide maximumflexibility to U.S. industry in re-enteringthe world petroleum product trade.Applications for 250,000 bbls or more ofany refined petroleum product m anyfiscal year will require Congressionalreview necessitating a 30-day delay mprocessing, as required by section 7(e) ofthe Act. Exporfer will be notified uponmaking applicatioirif their request toexport will be subject to the statutory30-day.

As a result of these changes GeneralLicense G-PCC is no longer necessary,and thus has been removed.

This rule does not alter the'generalrestriction on the export of crudepetroleum. This regulation simplyrestructures the existing regulatorylanguage without substantive changeand places in regulatory format theexistingprovisions of section 7(d] of theExport Administration Act of 1979concerning Alaskan North Slope CrudeOil.

Exporters are advised thatlicenseapplications will be reviewed on a case-by-case basis and will be acted upon

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49110 Federal Register / Vol. 46 No. 193 / Tuesday, October 6, 1981 / Rules and Regulations

favorably barring any overridingnational interest considerations. Also,,exporters are placed on notice -that ifthere is an interruption in theinternational supply of crude oil or otheraction resulting in a drastic change inthe U.S. or world petroleum supply-situation, quantitative restrictions maybe re-imposed.

Accordingly, the ExportAdministration.Regulations (15 CFRParts 368-399) are amended as follows:

PART 371-GENERAL LICENSES

1. Section 371.2(c)(10) is revised toread as follows:

§ 371.2 General Provisions.

(c) * * *(10) The commodity is listed in a

Supplement to'Part 377 as being undershort supply control, unless the export isauthorized under the provisions ofGeneral Licenses G-NNR, GLV, SHIPSTORES, PLANE STORES, RCS, G-FTZor GUS;* * * * *

§ 371.8 [Reserved]2. Section 371.8 is removed and

reserved.3. Section 371.9(b) is revised to read

as follows:

§ 371.9 General License SHIP STORES.• * * * *

(b) Restrictions on exports ofpetroleum and petroleum products.Crude petroleum and blends ofunrefined crude petroleum withpetroleum products may not be exportedunder this general license. Export of anypetroleum product listed in SupplementNo. 3 to part 377 may be made underthis general license provided theexporter, prior to the export of suchcommodity, has assembled documentaryevidence establishing that thecommodity was not produced or derivedfrom a Naval Petroleum Reserve. Suchdocumentary evidence may take theform of the affidavit prescribed in§ 377.6(e)(2), or it may consist of otherdocumentation establising the factualdata to be covered in such affidavit. Theexporter shall retain such documentaryevidence in his files for the periodprescribed m § 387.13(e), and is put onnotice that in appropriate cases, auditsof exporters' files may be conducted todetermine that such documentaryevidentie is available covering eachexport of a commodity listed inSupplement No. 3 to Part 377 that wasmade under General License SHIPSTORES. Any petroleum commodityidentified in Supplement No. 3 to Part377 which does not meet the conditions

for export under General License SHIPSTORES may be exported only under avalidated license issuedpursuant to§ 377.6(d)(3). Crude petroleum may beexported only under a validated licenseissued pursuant to § .377.6(d)(1).

4. Section 371.10(b)(2) is revised toread as follows:

§ 371.10 General License PLANE STORES.* * * * *

(b)(1) Restrictions on Petroleum andPetroleum Products for Use on Aircraft.[Reserved](2) No export of any petroleum productlisted in Supplement No. 3 to Part 377may be made under this general licenseunless the exporter, prior to the exportof such commodity, has assembleddocumentary evidence establishing thatthe commodity was not produced orderived from a Naval PetroleumReserve. Such documentary evidencemay take the form of the affidavitprescribed in § 377.6(e)(2), or it mayconsist of other documentationestablishing the factual data to becovered in such affidavit. The exportershall retain such documentary evidencein his files for the period prescribed in§ 387.13(e), and is put on notice that inappropriate cases, audits of exporters'files may be conducted to determinethat such documentary evidence isavailable covering each export of acommodity listed in Supplement No. 3 toPart 377, that was made under GeneralLicense PLANE STORES.

5. Section 371.12(e) is revised to readas follows:

§ 371.12 General Llcense'RCS; Shipmentsto U.S. or Canadian Vessels, Planes andAirline Installations or Agents.* * * * *

(e) Restrictions on petroluem andpetroleum products. Crude petroleumand blends of unrefined crude petroleumwith petroleum products may not beexported'under this general license.Export of any petroleum product listedin Supplement No. 3 to Part 377 may bemade under this general licenseprovided the exporter, prior to theexport of such commodity, hasassembled documentary evidenceestablishing that !he commodity was notproduced or derived from a NavalPetioleum Reserve. Such documentaryevidence may take the form of theaffidavit prescribed in § 377.6(e)(2), or itmay consist of otler documentationestablishing the factual data to becovered in such affidavit. The exportershall retain such documentary evidenceiithis files, for the period prescribed in

"§ 387.13(e), and.is put on n'otice that inappropriate cases, audits of exporters'files may be conducted to determine

that such documentary evidence Isavailable covering each export of acommodity listed in Supplement No. 3 toPart 377, that was made under GeneralLicense RCS. Any other petroleumcommodity listed in, Supplement No. 3 toPart 377, which does not meet theconditions for export under GeneralLicense RCS, may be exported onlyunder a validated license Issuedpursuant to § 377.6(d)(3). Crudepetroleum may be exported only under avalidated license issued pursuant to§ 377.6(d)(1).

6. Section 371.13 is amended byadding a new paragraph (o) to read asfollows:

§371.13 General License GUS; Shipmentsto Personnel and Agencies of the U.S.Government.* * * * *

(c) Petroleum exports. The provisionsof this § 371.13 do not apply to theproducts listed in Supplement No. 3 toPart 377 unless, in addition to meetingthe other requirements of § 371.13, theexporter, prior to exporting suchproducts, has assembled thedocumentary evidence described in§ 371.16 establishing that the productwas not derived from a Naval PetroleumReserve. Crude petroleum may beexported only under a validated licenseissued pursuant to § 377.6(d)(1).

7 Section 371.16(b) is revised to readas follows:

§371.16 General License G-NNR;Shipments of Certain Non-Naval ReservePetroleum Commodities.

(b) Prior to the export of a commodityunder this General License G-NNR,, theexporter must have assembleddocumentary evidence establishing thatthe commodity was not produced from aNaval Petroleum Reserve, Suchdocumentary evidence may take theform bf the affidavit prescribed In§ 377.6(e](2), or it may consist of otherdocumentation establishing the factualdata to be covered in such affidavit. Theexporter shall retain such documentaryevidence in his files for the periodprescribed in § 387.13(e), and is put on'notice that in appropriate cases, auditsmay be conducted of exporters' recordsto determine that such documentaryevidence-is available covering eachexport of a commodity listed in.,Supplement No. 3 to Part 377, that wasmade under General License G-NNR,Any commodity listed in PetroleumCommodity Group Q which does notmeet the conditions for export underGeneral License G-NNR, GLV, SHIPSTORES, PLANE STORES; BCS or GUS

Federal Register / Vol. 46, No. 193 / Tuesday, October 6, 1981 / Rules and Regulations

may be exported only under a validatedlicense issued pursuant to § 377.6(d)(3).

PART 372-INDIVIDUAL VALIDATEDLICENSES AND AMENDMENTS

8. Section 372.9(d)(3) is revised to readas follows:

§ 372.9 Issuance of validated licenses.* * * * *

(d)***(3) Special prowsions. If special

provisions for any commodity includeterms regarding the validity period of anindividual export license,these will befound in Part 376.* * * * *

PART 376-SPECIAL COMMODITYPOLICIES AND PROVISIONS

9. Section 376.9(c)(5) is revised to readas follows:-

§ 376.9 Ship stores, plane stores, supplies,and equipment.* -* * * *

(c)*-* *(5) Additionalinformation. State the

reasons why a general license ismapplicable-to the proposed exportunless the reasons are already indicatedelsewhere on the application or on anattachment If additional space isrequired, an attachment may be used.Also state the gross registered tonnage(GRT), type of main engines and ratedhorsepower, daily fuel consumptionrate, total fuel capacity, and fuel supplyon board, indicating specifically-ftenumber of days running supply from theport where additional supplies arerequested. In the case of aircraft, statemake and.model.-In addition, theaffidavit required by § 377.6(e)(2) mustaccompany the application. -.

PART 377--SHORT SUPPLYCONTROLS AND MONITORING

10. Section 377.6 is revised to read asfollows:

- § 377.6 Petroleum and petroleumproducts.

-The following provisions supplementthe regular requirements tor submittingan export license application (see Part372).

(a) Consignee in country of ultimatedestination. Where shipments arecontemplated to be made to consignees.in more than one country, the phrase"Various-see attached list"shall beentered in Item 7 of Form ITA-622P(Rev. 7-81).

(b) [Reserved].(c) [Reserved].(d) Issuance of export licenses.

-Petroleum Commodity Groups, as

identified m the following paragraphs.are defined in Supplement No. 2 to Part377 Submit each application for avalidated license to export a commodityfrom one of these groups to the Office ofExport Adnimstration, Attn: ShortSupply Program, Resource AssessmentDivision, U.S. Department of Commerce,P.O. Box 7138, Washington, D.C. 20044.Include with each license applicationthe docun~entation required by§ 377.6(e). Applications will beconsidered subject to the appropriateprovisions of this section.

(1) Group A. The export from theUnited States of crude petroleum andpartly refined petroJeum Is permittedonly as provided in this paragraph.Applications to export Group Acommodities shall include evidence ofan order as described in § 372.6, and thedocumentation described in § 377.6(e)(1) and (2). Different situations existdepending upon the source of the crudeoil and the nature of the proposeaexport transaction. Applications will beapproved if it is established to thesatisfaction of the Department ofCommerce that the export is consistentwith the national interest and thepurposes of the Energy Policy andConservation Act and one of thefollowing conditions is met:

(I) Alaskan North Slope Crude.Pursuant to section 7(d) of the ExportAdministration Act of 1979, AlaskanNorth Slope Crude Petroleum may beexported to an adjacent foreign countryto be refined and consumed therein inexchange for the same quantity of crudeoil being exported-from that country tothe U.S., provided:

(A) Such exchange will result, throughconvenience or increased efficiency oftransportation, in lower prices forconsumers of petroleum products in theU.S..

(B) Witlun 3 months following theinitiation of such exchange, thetransaction results in (1) acquisitioncosts to the refiners which purchase theimported crude oil being lower than theacquisition costs such refiners wouldhave to pay for the domesticallyproduced oil in the absence of such anexchange, and (2) not less than 75percent of such savings in costs must bereflected in wholesale and retail pricesof products refined from such importedcrude oil.

Note.-Paragraphs 377.6[d)(1) (Ii) through(vii) below apply to all crude oil, includingAlaskan North Slope Crude oIL

(ii) Temporary exports. The Group Acommodity is being exported forconvenience or increased efficiency oftransportation across parts of an

adjacent foreign state, and shall re-enterthe United States in4he same form.

(iii) Equivalent importation. Theexport will result directly in theimportation into the United States of anequal or greater quantify of that samecommodity. This kind of transaction iscarried out for convenience or increasedefficiency of transportation with personsor the government of an adjacent foreignstate.

(iv) NavalPetroleum Reserve Origin.The Group A commodity to be exportedmeets the following conditions:

(A) The commodity was producedfrom a Naval Petroleum Reserve;

(B) The commodity has not been andwill not be transported by pipeline overa Federal nght-of-way granted pursuantto Section 28(u) of the Mineral LeasingAct of 1920; and

(C) The President makes andpublishes an express findihg that theexport-

(1) Will not diminish the total quantityor quality of petroleum available to theUnited States;

(2) Is in the national interest; and(3) Is in accord with the Export

Administration Act of 1979.(v) Transported over rights-of-way

granted under the Mineral Leasing ActThe Group A commodity has been orwill be transported by pipeline overrights-of-way granted under Section 28of the Mineral Leasing Act of 1920 (30U.S.C. 185), and the President-

(A) Makes and publishes an expressfinding that the export-'

(1) Will not diminish the total quantityor quality of petroleum available to theUnited States;

(2) Will have a positive effect onconsumer oil prices by decreasing theaverage crude oil acquisition costs ofrefiners;

(3) Will be made only under contractsthat may be terminated if the petroleumsupplies of the United States areinterrupted or seriously threatened; and

(4) Is in the national interest and inaccordance with the provisions of theExport Administration Act; and

(B) Reports the finding described in(A) above to the Congress as an energyaction as defined in Section 551 of theEnergy Policy and Conservation Act (42U.S.C. 6421) and either-

(1) A 60-calendar day period duringwhich both Houses of Congress are incontinuous session, as defined inSection 551 of that Act, has elapsed andneither House has passed a resolutiondisapproving the findings; or

(2) Each House of Congress haspassed a resolution approving suchfinding or affirmatively stating in

49M1

49112 Federal Register / Vol. 46, No. 193 / Tuesday, October 6, 1981 / Rules and Regulations

substance, that such House does notobject to such findings.

(vi) Corresponding importation of thesame commodity. The Group Acommodity was not produced from theNaval Petroleum Reserves and was notand will not be transported by pipelineover rights-of-way granted pursuant toSection 28(u) of the Mineral Leasing Actof 1920, and the export is part of anoverall transaction which--

(A) Will result directly in theimportation into the United States of anequal or greater quantity and an equalor better quality of the same commodity;

(B) Will have a positive effect onconsumer oil prices by decreasing theaverage crude oil acquisition costs torefiners;

(C) Will take place only undercontracts that may be terminated if thepetroleum supplies of the United Statesare interrupted'or seriously threatened;

(D) Will be in the national interest;(E) Will be in accordance with the

Export Administration Act and thepurposes of theEnergy Policy andConservation Act;

(F) For compelling economic ortechnological reasons that are beyondthe control of the applicant, thecommodity cannot reasonably be -processed within the United States; and

(G) The Group A commodity to beimported into the United States wouldnot be available for import if the exporthad not taken place.

(vii) Corresponding importation ofrefined commodities. The Group Acommodity was not produted from theNaval Petroleum Reserves, and was notand will not be transported by pipelineover fights-of-way granted'underSection 28 of the Mineral Leasing Act of1920, and will be exported as part of anoverall transaction which-

(A) Will result directly in theimportation into the United States of aquantity and quality from otherPetroleum Commodity Groups that is notless than the quantity and quality ofcommodities that would be derived from-the refining of the commodity for whichan export license is sought;

(B) The commodities imported into theUnited States will be sold at prices nohigher than the lowest price at whichthey could have been sold if the exporthad not taken place and the Group Acommodities had been refined at thenearest U.S. refinery capable ofprocessing it within a reasonable periodof time; and

(C) For compelling economic or'technological reasons that are beyondthe control of the applicant, the Group Acommodity cannot reasonably beprocessed within the United States.

(2) Groups B, C, D, E, F, G, K, L, MandN. An applicatign for a validatedlicense to exporta commodityfromPetroleum Commodity Groups B, C, D ,F, G, K, L and M shall include evidenceof an order as described in § 372.6 andthe documentation described in§ 377.6[e)(2). An application for avalidated license to export a commodityfrom Petroleum Commodity Group Nmust be submitted with evidence of anorder, as described in § 372.6, and thedocumentation required by § 3776(e)(2)and (3). Applications will be consideredon individual merits and be acted uponfavorably barring any overridingnational interest considerations.

(3) Petroleum andpetroleum productsproduced from the NavalPetroleumReserves or which have been exchangedtherefor. (i) The export of thosecommodities listed in Supplement No. 3to Part 377 which were produced orderived from the Naval PetroleumReserves or which became available forexport as a result of an exchange of aNaval Petroleum Reserves-produced orderived commodity, is prohibitedpursuant to the provisions of 10 U.S.C.7430(e) as provided in § 377.6(d)(1.

(ii) Applications for a validatedlicense to export those commoditieslisted in Supplement No. 3 to Part 377which were produced or derived fromthe Naval Petroleum Reserves, or whichbecame available for export as a resultof an exchange for a Naval PetroleumReserves-produced or derivedcommodity, other than a commoditybelonging to Petroleum CommodityGroup A which is subject to theprovisions of § 377.6(d)(1), will beconsidered under the provisions of thisparagraph if submitted with evidence ofan order, as described in § 372.6, and thesupporting documentation describ6 m§ 377.6(e) (4) and (5). A validated licenseto export such a commodity may beissued only if it is demonstrated to thesatisfaction of the Department ofCommerce' -

(A) That the commodity will beexchanged in similar quantity forconvemence or increased efficiency oftransportation with persons or thegovernment of an adjacent foreign state,or

(B) That the commodity is beingexported temporarily for convemence orincreased efficiency of transportationacross parts of an adjacent foreign stateand will re-enter the United States, orif

(C] The President has made andpublished'dn express finding that such

'Natural gas and liquefied natural gas tL.N.G.).and synthetic natural gas commingled with naturalgas require-export authorization from the U.S.Department of Energy. See § 370.10(g).

export will not diminish the total qualityor quantity of petroleum available to theUnited States and that such export Is Inthe national interest and is In accordwith the Export Administration Act of1979.

(e) Documentation. An application fora validated license to export petroleumand petroleum products must besubmitted on Form ITA-622P,Application for Export License. Theexporter must submit with theapplication, documentary evidence of anorder as described in § 372.6(a) (1) and(2), and one or more to the followingdocuments, as required by theappropriate paragraph of § 377.6(d).

(1) A sworn affidavit, signed by anauthorized representative of theexporter, which demonstrates (inconjunction with such supportingevidence as may be required by theDepartment of Commerce) that theapplicable criteria of § 377.6(d)(1) aresatisfied;

(2) A sworn affidavit, signed by'anauthorized representative of theexporter, reading as follows (insertparagraph (a) or(b), as appropriate, andparagraphs (c) and (d)):Affidavit"I, (Name) , (Title) of(Company) - hereby certify that the(Quantity) - bbls. of (Commodity)

(a) I propose to export from the UnitedStates were not nor will not be producedfrom a Naval Petrolqut Reserve nor werethey derived from any crude oil, gases of allkinds (including nittural gas, hydrogen,carbon dioxide, helium, etc.).'naturalgasoline, and other related hydrocarbons (tarsands, asphalt, propane, butane, etc.) orollshale produced from a Naval PetroleumReserve.OR

(b) I propose to export from the UnitedStates. if they are the product of a refinery orpetrochemical plant utilizing as raw materialany'resource produced from a NavalPetroleum Reserve, the quantity of theproducts from that refinery or petrochemicalplant which are to be exported, do not andwill not exceed that portion of the totalproducts of that refinery or petrochemicalplant attributable to the non-Naval PetroleumReserve raw materials used in that plant,

(c) The petroleum commodities that Ipropose to export did not become availablefor export as a result ofan exchange for aNaval Petroleum Reserves-produced resourceor a product(s) derived therefrom.

(d) To the extent thatI do not havepersonal knowledge of the foregoing, I haveaddressed appropriate inquines to the refineror producer of the commodity(les) to be

Federal Register / Vol. 46, No. 193 / Tuesday, October 6, 1981 / Rules and Regulations

exported, and have been assured by thatperson that these statements are correct.'

The mdi idual who made theserepresentations to me is:(Name) - . (Title) - of(Company) , and he communicatedthese assurances to me on (Date)(Signature)

(3)i An end-use statement by theapplicant in affidavit format indicatingthe name, location and type of businessof the end-user, and the nature of theend-use; and

(i)A published technical data sheet(unless one has previously beensubmitted) or independent inspector'scertificate of analysis of the product tobe exported which clearly indicates thatthe commodity is properly classifiableunder'Petroleum Commodity Group N.

(4) A sworn affidavit, signed by theexporter or his authorizedrepresentative, together with suchsupporting evidence as may beappropriate, setting forth either-

(i) The facts necessary to establishthat the-conditions prescribed in§ 377.6(d)(3)(ii)(A) or (B) have been met;orP(ii) The reasons why the exporterbelieves that the President should beasked to make and publish an expressfinding that the proposed export will notdimimsh-the total quantity or quality ofpetroleum available to-the UnitedStates, and that such export is in thenational interest and is in accordancewith the Export.Administration Act of1979.

(5) If the Export Control CommodityNumber preceding the- commoditydescription m the Commodity ControlList (Supplement No. 1 to § 399.:1) isfollowed by the code letter "A," includethe documentation required by Part 375of these regulations for the country ofultimate.destination.

(0[Reserved].(g) Validityperod. A license issued

pursuant to this § 377.6 is subject to thesame validity period limitations as otherindividual validated licenses (see § 372.9(d)).

(h) Confidentiality. Anydocumientation required from theexporter under this section will betreated as confidential informationunder Section 12(c) of the ExportAdministration Act of 1979.

(i) CongressionalRevivew.Applications to export more than250,000 barrels of any refined petroleumproduct to any destination in a singlefiscal year will be subject to a 30-dayprocessing delay. Applications not

- 'This information 6ay be submitted immediatelyafter the export has taken place, if not known attime of application.

subject to this reporting requirementinclude:

(1).Foreign origin products which arern-transit through the United States, andhave not been entered for consumption.

(2] Temporary exports where theproduct will move in-transit or totemporary storage outside the UnitedStates and will be returned to the U.S.

(3) Product exchanges m equalquantity for efficiencies oftransportation.

(4) Processing of products (includingfractionation) with all the products to bereturned td'the United States.

Supplement No. 2 to Part 377 [Amended]

11. Supplement No. 2 to Part 377 isamended as follows:

a. By revising the heading "PetroleumProducts Subject to Validated Licensingand Histoncal Quotas" to read"Petroleum Products Subject toValidated Licensing in Accordance with§ 377.6(d) (2) and (3).

b. By removing the heading"Petroleum Products Subject toValidated Licensing But Not Quotas"

c. By removing Petroleum CommodityGroups H, J, and R.

d. By removing Petroleum Commodity Groups N-1, N-2, and N-3, and insertingin lieu thereof the following-

GROUP N

431.0290 Napihu.am but e=dtfrn qrmtr naens ,ech wo packacd and shod In durm or BbLcontanews not excoodiig 55 U.S. gaons per com!*w &d tVch wQ! be eipoted In sudh

475.3500475.6781

e. By revising the heading prior to P>etroleum Commodity Group Q to read"Petroleum Products Subject to Provisions of Either § 371.16 or § 377.6(d)(3y', andinserting 475.1505 above entry 475.1515 and inserting in numerical order by Sched-ule B Numbers, the following entries:

475.1505 SynthaCic aral gas A M LLu. F.

475.1570' Gas. maraact wod_... ......... ..... .. M CU. Ft475.6710 'Carbon .ck foodftock oa Bb.5112500 Petroleum asp. S. To.521.1120 Pavig trixturos, bhunwvou. basd on sa"+.t aud pctro.". $ Vake.

51atural gas arnd W.e nabxi 933 (LN.O.. and srnttc~ n~ara gas cornkrgk with -abxs gas. requ- ej-1oraautaion from the, IS. Departrrnt of Enorgy. Soo § 3MO.19L~

f. By removing the paragraphs entitled "Quantities", "Base Periods" and "Sub-mission Dates" and that portion of Supplement No. 2 entitled "Quarterly CountryQuotas"

PART 399-COMMODITY CONTROL UST AND RELATED MATTERS

Supplement No. I to § 399.1 (Amended]12. Entry No. 1702A of the Commodity Control List, Supplement No. 1 to § 399.1

is amended by revising the parenthetical sentences to read as follows:

1702A Hydrausc foj46s.. P_-swWOSWdYT ,, 500 MG ,

(See § 377.6[d)(3) and §§ 377.6[e) (4) and (5) for special documentation requirements. Also see§ 371.5(d) for special provisions regarding shipments under General iUcense GLV.

(Secs. 5, 7, 13, 15, Export Administration Act of 1979. 93 Stat. 503 (50 U.S.C. app. 2401 et seq.);sec. 103. Pub. L 94-163 (42 U.S.C. 022); sec. 101 Pub. L 93-153 amending (30 U.S.C. 185]; sec.201 (10), Pub. L. 94-258, 90 Stat. 309. amending 10 U.S.C. 7430, E.O. 12214. (45 FR 29783. May6, 1980); Department Organization Order 10-3. (45 FR 6141, January 25. 1980); InternationalTrade Administration Organization and Function Orders 41-1 (45 FR 11882. February 22.1980) and 41-4 (45 FR 65003. October 1, 1980))

Dated. September 30. 1981.Bo Denysyk,Deputy Assistant Secretaryfor Export Adniftfstrotion International Trade Adumstmton.LFR Doc. 81-M3 Filed 10-5- = =1

6111i G cooc as-25-u

49113

APPENDIX B: Canadian Consumption

25189

Federal Register Presidential DocumentsVol. 50, No. 117

Tuesday, June 18, 1985

Title 3-

The President Presidential Findings of June 14, 1985

United States-Canadian Crude Oil Transfers

On March 18, 1985, at the Quebec Summit, I joined Prime Minister Mulroney inendorsing a Trade Declaration with the objective of liberalizing energy trade,including crude oil, between the United States and Canada. Both Governmentsrecognized the substantial benefits that would ensue from broadened crude oiltransfers and exchanges between these two historic trading partners andallies. These benefits would include the increased availability of reliableenergy sources, economic efficiencies, and material enhancements to theenergy security of both countries. Following this Declaration, Canada declaredthat it would permit Canadian crude oil to be freely exported to the UnitedStates effective June 1, 1985.

Before crude oil exports to Canada can be authorized, I must make certainfindings and determinations under statutes that restrict exports of crude oil. Ihave decided to make the necessary findings and determinations under thefollowing statutes: Section 103 of the Energy Policy and Conservation Act (42U.S.C. 6212); section 28 of the Mineral Lands Leasing Act of 1920, as amendedby the Trans-Alaska Pipeline Authorization Act of 1973 (30 U.S.C. 185); andsection 28 of the Outer Continental Shelf Lands Act (43 U.S.C. 1354) (crude oiltransported over the Trans-Alaska Pipeline or derived from the Naval Petrole-um Reserves is excluded).

I hereby find and determine that exports of crude oil under these statutes arein the U.S national interest, and I further find and determine that such U.S.crude oil exports to Canada-

* will not diminish the total quantity or quality of petroleum available tothe United States;

" will not increase reliance on imported oil;

" are in accord with provisions of the Export Administration Act of 1979;and

* are consistent with the purposes of the Energy Policy and ConservationAct.

Therefore, such domestic crude oil may be exported to Canada for consump-tion or use therein.

These findings and determinations shall be published in the Federal Register. Idirect the Secretary of Commerce to take all other necessary and properaction to expeditiously implement this decision.

THE WHITE HOUSE,June 14, 1985.

[FR Doc. 85-14782

Filed 6-17-85; 9:35 am]

Billing code 3195-O1-M

26145

Rules and Regulations Federal Register

Vol. 50, No. 122

Tuesday, -June 25, 1985

This section of the FEDERAL REGISTERcontains regulatory documents havinggeneral applicability and legal effect, mostof which are keyed to and codified inthe Code of Federal Regulations, which ispublished under 50 titles pursuant to 44U.S.C. 1510.The Code of Federal Regulations is soldby the Superintendent of Documents.Prices of new books are listed in thefirst FEDERAL REGISTER issue of eachweek.



15 CFR Part 377

[Docket No. 50698-5098]

Exports of Crude Oil to Canada forConsumption or Use Therein

AGENCY: International TradeAdministration, Commerce.

ACTION: Final rule.

SUMMARY: On June 14, 1985, PresidentReagan determined that crude oilexports to Canada are in the nationalinterest and made the necessaryfindings under the Energy Policy andConservation Act, the Mineral LandsLeasing Act, and the Outer ContinentalShelf Lands Act to permit exports toCanada of crude oil subject to thosestatutory restrictions (50 FR 25189, June18, 1985). To implement thisdetermination, Part 377 of the ExportAdministration Regulations is beingrevised to permit crude oil exports toCanada for consumption or use therein,provided that it was not transported viathe Trans-Alaska Pipeline and was notproduced from Naval PetroleumReserves.EFFECTIVE DATE: June 25, 1985.FOR FURTHER INFORMATION CONTACT:Rodney A. Joseph, Acting Manager,Short Supply Program, Room 3876,Office of Industrial ResourceAdministration, U.S. Department ofCommerce, Washington, DC 20230,Telephone: 202/377-3984.SUPPLEMENTARY INFORMATION:

Rulemaking Requirements

1. Since this rule pertains to a foreignaffairs function of the United States, theproposed rulemaking procedures and thedelay in effective date required under

the Administrative Procedures Act areinapplicable.

2. This rule contains a collection ofinformation requirement subject to thePaperwork Reduction Act of 1980, 44U.S.C. 3501 et seq. The collection of thisinformation has been approved by theOffice of Management and Budget (OMBcontrol number 0625-0001).

3. This rule is not subject to therequirements of the RegulatoryFlexibility Act, 5 U.S.C. 601 et seq.because a notice of proposedrulemaking is not required to bepublished. Accordingly, no initial orfinal Regulatory Flexibility Analysis hasor will be prepared.

4. Since this rule pertains to a foreignaffairs function, it is not a rule withinthe meaning of section 1(a) of ExecutiveOrder 12291 (46 FR 13193, February 19,1981), "Federal Regulation."

Therefore, this regulation is issued infinal form. Although there is no formalcomment period, public comments onthis regulation are welcome on acontinuing basis.

List of Subjects in 15 CFR Part 377

Exports.

PART 377-SHORT SUPPLYCONTROLS AND MONITORING

1. The authority citation for Part 377 isrevised to read as follows:

Authority: Secs. 203, 206, Pub. L. 95-223, asamended (50 U.S.C. 1702.1704); E.O. 12470 ofMarch 30, 1984 (49 FR 13099, April 3, 1984);Presidential Notice of March 28, 1985 (50 FR12513, March 29, 1985); Sec. 103, Pub. L. 94-163, as amended, (42 U.S.C. 6212); Sec. 28,Pub. L .93-153, (30 U.S.C. 185); Sec. 28, Pub. L.95-372, (43 U.S.C. 1354); E.O. 11912 of April 3,1976 (41 FR 15825, as amended); andPresidential Findings (50 FR 25189, June 18,1985)

2. Accordingly, the ExportAdministration Regulations (15 CFR Part368-399) are amended by adding§ 377.6(d)(1)(viii) as follows:

§ 377.6 Petroleum and petroleumproducts.

(d) * * *(1) * * *(viii) Exports to Canada for

consumption or use therein. The GroupA commodity was not produced fromthe Naval Petroleum Reserves and wasnot and will not be transported bypipeline over rights-of-way grantedpursuant to Sec. 203 of the Trans-Alaska

Pipeline Authorization Act and is beingexported to Canada for consumption oruse therein.

Issued: June 20,1985.William T. Archey,Acting Assistant Secretary for TradeAdministration.[FR Doc. 85-15284 Filed 6-24-85; 8:45 am]BILLING CODE 3510-25-M

SECURITIES AND EXCHANGE

COMMISSION

17 CFR Parts 230, 239, 270, and 274

[Release Nos. 33-6588; IC-14575; File No.S7-1007]

Registration Forms for InsuranceCompany Separate Accounts ThatOffer Variable Annuity Contracts

AGENCY: Securities and ExchangeCommission.

ACTION: Adoption of forms, ruleamendments, and publication ofguidelines.

SUMMARY: The Commission is adopting:(1) Form N-3, a new registration form forcertain separate accounts registeredunder the Investment Company Act of1940 as management investmentcompanies, and certain other separateaccounts; (2) Form N-4, a registrationform for certain separate accountsregistered under the InvestmentCompany Act of 1940 as unit investmenttrusts, and certain other separateaccounts; and (3) related ruleamendments. The Commission is alsopublishing staff guidelines for thepreparation of Forms N-3 and N-4. TheCommission is adopting the foregoing tointegrate and codify disclosurerequirements for insurance companyseparate accounts that offer variableannuity contracts and to shorten andsimplify the prospectus provided toinvestors, while making more extensiveinformation available for those whorequest it. Separate accounts will bepermitted to use existing registrationforms during a transition period ofapproximately one year.

DATE: The amended rules will beeffective July 25, 1985. The new formsand guidelines will be available forregistration of separate accounts and for

APPENDIX C: Exports from Alaska’s Cook Inlet

52798 Federal Register / Vol. 50, No. 248 / Thursday, December 26, 1985 / Proposed Rules

established body of technicalregulations for which frequent androutine amendments are necessary tokeep them operationally current. It.therefore: (1) Is not a "major rule" underExecutiveOrder 12291; (2) is not a"significant rule" under DOT RegulatoryPolicies and Procedures (44 FR 11034;February 26, 1979); and (3) does notwarrant preparation of a regulatoryevaulation as the anticipated impact isso minimal. Since this is a routine matterthat will only affect air trafficprocedures and air navigation, it iscertified that this rule, whenpromulgated, will not have a significanteconomic impact on a substantialnumber of small entities under thecriteria of the Regulatory Flexibility Act,


Aviation safety. Airspace, Transitionarea.

The Proposed Amendment

PART 71-[AMENDED]

Accordingly, pursuant to the authoritydelegated to me, the Federal AviationAdministration {FAA) proposes toamend Part 71 of the Federal AviationRegulations (14 CFR Part 71) as follows:

1. The authority citation for Part 71continues to read as follows:

Authority: 49 U.S.C. 1348fa), 13541a).'1510:Executive Order 10854; 49 U.S.C. 106(g)(Revised Public Law 97-449, January 12.1983 [1114 CFR 11.651: 49 CFR 1.47.

§ 71.181 [Amended]2. By amending § 71.181 ,as follows:

Tallossee, AL-/Revoked]

By revoking the title and text.

Issued in East Point, Georgia, on December16, 1985.1. Stiglin,Acting Director, Southern Region.IFR Doc. 85-30405 Filed 12-24-85; 8:45 amBILLING CODE 4910-13-M



15 CFR Part 377

[Docket No. 51298-51981

Exports of Crude Oil Derived fromAlaska's Cook Inlet.

AGENCY: Office of Industrial ResourceAdministration, International TradeAdministration, Commerce.ACTION: Notice of proposed rulemaking.

SUMMARY: On November 6, 1985. theSecretary of Commerce, with the

concurrence of the Secretaries of State,Energy, and Treasury, determined thatpermitting the export of crude oilderived from Alaska's Cook Inlet is-inthe national interest and consistent withthe purposes of he Energy Policy andConservtion Act.

Accordingly, the Department ofCommerce proposes to revise Part 377 ofthe Export Administration Regulations(EAR) to permit exports of crude oilderived from Cook Inlet.

Only crude oil derived from statewaters in Alask's Cook Inlet and notsubject to the restrictions contained inthe Export Administration Act of 1979,as amended, Naval Petroleum ReservesProduction Act of 1976, OuterContinental Shelf Lands Act, or MineralLands Leasing Act of 1920, as amended,will be eligible to be exported under thisproposed rule.DATE: Comments must be submitted onor before February 24, 1986.ADDRESSES: Send written commenls(three copies) to Mr. Rodney A. Joseph,Acting Manager, Short Supply Program.Room 3876, Office Industrail ResourceAdministration, International TradeAdministration, U.S. Department ofCommerce, Washington, D.C. 20230.

The public rulemaking docket may beinspected at the Freedom of InformationRecords Inspection Facility,International Trade Administration,Room 4104, U.S. Department ofCommerce, 14th and ConstitutionAvenue, NW., Washington. DC 20230FOR FURTHER INFORMATION CONTACT:Mr. Rodney A. Joseph, Acting Manager,Short Supply Program, Telephone: 202/377-3984.SUPPLEMENTARY INFORMATION: OnNovember 6, 1985. Secretary ofCommerce Malcolm Baldrige made thefollowing national interest finding:

National Interest Findings for Exports ofCrude Oil Derived from Alaska' CookInlet

This Administration has concludedthat the national interest will be servedby permitting the export of crude oilderived from Alaska's Cook Inlet. Thebenefits that Will ensue from theseexports include increased incentives forinvestment in the exploration anddevelopment of domestic crude oil,transportation efficiencies, and materialenhancements to the energy security ofour allies. This initiative will alsoencourage other countries to removetrade barriers to U.S. goods andservices. It does not affect our energysecurity as we retain the flexibility toreact to changes in the world's availableoil supply.

Only crude oil derived from Alaska'sCook Inlet and not subject to therestrictions contained in the ExportAdministration Act of 1979, as amended,Naval Petroleum Prdduction Act cf 1976,Outer Continental Shelf Lands Act orMineral Lands Leasing Act of 1920, asamended, will be eligible to be exportedunder this initiative. The initiative thusapplies to crude oil which isadvantageously located for export tradeand which is not subject to specialstatutory provisions on export.

Before any Cook Inlet crude oil maybe exported, certain findings anddeterminations must be made undersection 103 of the Energy Policy andConservation Act (42 U.S.C. 6212).Accordingly, pursuant to authoritydelegated to the Secretary of Commerceby Executive Order 11912 (41 FR 15825),and based on the consultations withother appropriate U.S. Governmentofficials, I hereby find and detemine thatthe export of crude oil derived fromAlaska's Cook Inlet is in the nationalinterest and consistent with thepurposes of the Energy Policy andConservation Act.

I have directed the InternationalTrade Administration to initiate thenecessary rulemaking procedures toimplement this decision.Malcolm Baldridge,Secretary of Commerce

This rule proposes to implement thatdecision by modifying section 377 of theExport Administration Regulations.Under the proposed rule, a neweligibility category would be created-Exports from Alaska's Cook Inlet. Eachexporter would be required to submit alicense application along withsupporting information demonstatingthat the export qualifies under this newcategory. No export could be madewithout the Department of Commercefirst issuing an individual validatedlicense.

Only crude oil derived from statewaters in Alaska's Cook Inlet and notsubject to the restrictions contained inthe Export Administration Act of 1979,as amended, Naval Petroleum ReservesProduction Act of 1976, OuterContinental Shelf Lands Act, or MineralLands Leasing Act of 1920, as amended,will be eligible to be exported under thisproposed rule. This excludes domesticcrude oil derived from the North Slopeor Outer Continental Shelf, or crude ,oiltransported over a federal right-of-way.

Exporters should be aware that anylicenses issued will have a term of notgreater than one year. Moreover, theyshould also be aware that outstandiaglicenses are subject to revocation if

Federal Register*/ Vol. 50, No. 248 / Thursday, December 26, 1985 / Proposed Rules

there is serious interruption to availableU.S. oil supplies.

In connection with various rulemakingrequirements, the Office of IndustrialResource Administration hasdetermined that

1. This proposed rule is not a majorrule within the meaning of section 1 ofExecutive Order 12291 because it is notlikely to result in (1) an annual effect'onthe economy of $100 million or more: (2]a major increase in costs or prices forconsumers, individual industries,Federal, State or local governmentagencies, or geographic regions; or (3)significant adverse effects oncompetition, employment, investment,productivity, innovation, or in the abilityof United States-based enterprises tocompete with foreign-based enterprisesin domestic or export markets.Therefore, preparation of a RegulatoryImpact Analysis is not required, andneither a preliminary nor a finalRegulatory Impact Analysis has been orwill be prepared.

2. Consistent with section 103 of theEnergy Policy and Conservation Act,these revisions are being issued inproposed form. Comments from thepublic on this proposed rule will beconsidered in. formulating a final rule, ifreceived no later than February 24, 1986.Comments received after that date willbe consider-ed if possible. All publiccomments received will be placed in thepublic rulemaking docket and ,vill beavailable for public inspection andcopying..

In the interest of accuracy andcompleteness, written comments arepreferred. Written comments (three (3)copies) should be sent to the addressindicated in the address section above.Oral comments should be directed toRodney A. Joseph, OIRA, (2021 377-3984.If oral comments are received. theDepartment of Commerce officialreceiving such comments will prepare amemorandum summarizing thesubstance of the comments andidentifying the individual making thecomments, as well as the person onwhose behalf they purport to be made.All such memoranda will be placed inthe public rulemaking docket and will beavailable for public review and copying.

Written comments accompanied by arequest that part or all or the materialcontained be treated confidentially willnot be considered in developing the finalregulation. Such comments andmaterials will be returned te thesubmitter.

Communications from agencies of theUnited States Government or foreign .governments will not be made availablefor public inspection.

The public rulemaking docketconcerning this regulation will bemaintained in the International TradeAdministration's Freedom ofInformation Records Inspection Facility,at the address indicated in the addresssection above. Records in this facilitymay be inspected and copied inaccordance with regulations publishedin Part 4 of Title 15 of the Code ofFederal Regulations. Informationpertaining to the inspection and copyingof records may be obtained from Ms.Patricia L. Mann, International TradeAdministration's Freedom ofInformation Officer, at the RecordsInspection Facility address providedabove, or by calling (202) 377-3031.

3. The General Counsel of theDepartment of Commerce has certifiedto the Chief Counsel for Advocacy of theSmall Business Administration that thisrule will not have a significant economicimpact on a substantial number of smallbusinesses. This is because theproposed rule relieves a U.S.government prohibition on crude oilexports derived from Alaska's CookInlet and has no direct or indirect costsof compliance other than a routinelicensing requirement. As a result,neither an initial nor final RegulatoryFlexibility Analysis has been or will beprepared.

4. This rule contains collections ofinformation requirements subject to thePaperwork Reduction Act of 1980 (44U.S.C. 3501, et seq). These collectionshave been approved by the Office ofManagement and Budget under controlnumbers 0625-0001 and 0625-0155.


Exports.


Acordingly, Part 377 of Title 15, Codeof Federal Regulations, is amended toread as follows:


Authority: Pub. L. 96-72. 93 Stat 503, 50U.S.C. app. 2401 el seq. as amended by Pub.L. 97-145, of Dec. 29, 1981 and by Pub. L. 99-64 of luly 12,1985, E.O. 12525 of July 12, 1985(50 FR 28757, July 16, 19851: Sec. 103, Pub. L.97-163, as amended, (42 U.S.C. 6212) asamended br Pub. L. 99-58 of July 2,1985: Sec.28 Pub. L. 937153, (30 U.S.C. 1851; Sec. 28 Pub.L. 95-372, f43 U.S.C. 1354); E.O. 11912 of April3, 1976 (41 FR 15825, as amended): Sec. 101and 201 (11)[e) Pub. L. 94-258. (10 U.S.C. 7420and 7430(e)); and Presidential Findings (50 FR25189, June 18, 1985).-

2. Section 377.6(d)(1)(ix) is added asfollows:


(d) *( ) * , ,

(ix) Exports from Alaska's Cook Inlet.The Group A commodity was ddrivedfrom the state waters of Alaska's CookInlet and has not been and will not betransported by a pipeline over a federalright-of-way granted pursuant to section28(u) of the Mineral Lands Leasing Actof 1920 or by section 203 of the Trans-Alaska Pipeline Authorization Act.'

Issued: December 20. 1985.John A. Richards. Director,Office of Industrial Resource A drninistration.JFR Doc. 85-30515 Filed 12-24-85; 8:45 am]BILLING CODE 3300-00-M

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 4, 6, 10, 12, 19 and 54

Proposal to Eliminate CertainInformation Collection Requirements

AGENCY: Customs Service, Treasury.

ACTION: Proposed rule.

SUMMARY: In accordance with thedirectives of the Paperwork ReductionAct. Customs has reviewed itsregulations in an attemptto reduce oreliminate obsolete or burdensomeregulatory information collectionrequirements. That review revealednumerous collection requirements whichCustoms believes may no longer benecessary. This notice invites commentsin regard to this matter before making afinal decision as to the retention ordeletion of these requirements.DATE: Comments must be received on orbefore February 24, 1986.

ADDRESS: Comments (preferably intriplicate) may be submitted to, andinspected at, the Regulations ControlBranch, Room 2426, U.S. CustomsService, 1301 Constitution Avenue, NW.,Washington, DC 20229.FOR FURTHER INFORMATION CONTACT:flerb Geller. Duty Assessment Division,(202-535-4161). or Pat Barbare, Office ofInspection and Control (202-566-8151).U.S. Customs Service, 1301 ConstitutionAvenue, NW., Washington. DC 20229.

On November 0, 1985, the Secretary ofCommerce determined that the export of crude oilderived from state waters in Alaska's Cook Inlet isconsistent with the national interest and thepurposes of the Energy Policy and ConservationAct.

52799

20252 Federal Register / Vol. 51, No. 107 / Wednesday, June 4, 1986 / Rules and Regulations

PART 39-AMENDED]

Adoption of the Amendment

Accordingly, pursuant to the authoritydelegated to me, the Federal AviationAdministration (FAA) amends Part 39 ofthe Federal Aviation Regulation (FAR)as follows:


Authority: 49 U.S.C. 1354(a), 1421 and 1423;49 US.C. 106(g) (Revised. Pub. L. 97-449,,January 12,1983)1 and 14 CFR' 1'.89:

2. By adding to Section 39.13 thefollowing new airworthiness directive(AD):Garrett Turbine Engine Company (formerly

the AiResearch Manufacturing Companyof Arizona): Applies to all ModelTFE731-2, -3, and -3R turbofan enginesinstalled is aircraft certified in allcategories equipped with fanr rotor discs,part number 3073436-1, -2 -3,. and-4 and3072162-1, -2, -3, and -4.

Compliance is required as indicated unlessalready accomplished.

To prevent failure, of the fan rotor disc dueto fatigue cracking, accomplish, the following:

(a)' For fan rotor discs with 40000or lessoperating cycles on the effective date of thisAD, remove fan rotor disc from service beforereaching 4100 total operating cycles.

(b) For fan rotor discs with more than 4000but with, 600a or less operating cycles on theeffective, date of this AD;.remove fan rotordisc from service within the next 100operating cycles, or prior to reaching 6005total operating cycles whichever occurs first.

Cc) For fan rotor discs with more than 6000but with 8000 or less operating cycles on theeffective date of this AD, remove fan rotordisc from service within the next 5 operatingcycles or prior to.reaching8001 totaloperating cycles whichever occurs first.

(dl For fan rotor discs with more than 8000operating cycles on the' effective date of thisAD, remove fan rotor disc from service priorto further flight.

Notes: (1) An operating cycle4s consideredas any engine operating sequence. involvingan engine start, at least one acceleration to 80percent or more low pressure rotor speedand an engine shutdown. An alternatemethod of determining cycles is to considereach airplane landing as one cycle; Fan rotordfscs which have had their cyclic livescalculated by any other method are to havetheir cyclic lives recalculated using one of thetwo methods specified above.

(2), It has come to the attention of the FAAthat some life limit log cards in the engine logbook were incorrectly filled out in that the"dash number"' of the disc part numbers (i.e.-1f-2/-3-/-4) may have been left off. Thisshould be corrected when the: disc is nextavailable to read the entire part number. Allfan rotor. discs are -1,-2, -3, -4. and areaffected by this AD. Fan rotor discs may bereturned to GTEC for evaluation. Shippinginformation is contained in Garrett AlertService Bulletin No. TFE731-A72-3328Revision 2' dated April 4, 1986.

Aircraft may be ferried in accordance with

the provisions of FAR 21.197 and 21.199 to abase where the AD can be accomplished.

Upon request, an equivalent means ofcompliance with the requirements of this ADmay be approved by the Manager, WesternAircraft Certification Office, P.O. Box 92007,Worldway Postal Center, Los Angeles,California 90009.

Upon, submission of substantiating data byan owner or operator through an FAAmaintenance inspector, theManager,Western Aircraft Certification Office, P.O.Box 92007, Worldway Postal Center, LosAngeles, California 90009-2007 may adjustthe compliance time specified in this AD.

This amendment supersedes Priority LetterAD 86-04-02 issued February 14, 1986.

There are two-effective dates for thissuperseding AD..

For those operators who received PriorityLetter AD 86-04--02, the effective date of thisAD is the date of the priority letter AD.

The effective date of this AD is June 16,1986, for operators with fan rotor disc partnumber 3073436-4 or 3072162-4 installed andfor operators who did not receive the priorityletter AD.

Issued in Burlington, Massachusetts, onMay 22, 1986.Robert E. Whittington,Director, New EngfandRegion.[FR Doc. 86-12476; Filed 6;-3-86 8:45 am]BILUNG CODE. 4910-13-M


International Trade. Administration

15 CFR Part 377[Docket No. 51298-6092]

Exports of Crude Oil Derived FromAlaska's-Cook InletAGENCY: Office of Industrial ResourceAdministration, International TradeAdministration, Commerce.ACTION: Final rule.

SUMMARY: This final rule modifiessection 377 of the Export AdministrationRegulations by creating a new eligibilitycategory under S 377.6(d)(1)-Exports ofcrude oil from Alaska's Cook Inlet. Eachexporter is required to submit a licenseapplication along with supportinginformation demonstrating that theproposed export qualifies under thisnew category. No export can be madewithout the Department of Commercefirst issuing an individual validatedlicense. Exporters should be aware thatany licenses issued will have a term ofnot greater than one year. Moreover,they should also be aware thatoutstanding licenses may be revoked ifthere is serious interruption to availableU.S. oil supplies.

This rule is issued in final formfollowing review and consideration ofcomments received in response to aproposed rule published on December26, 1985 (50 FR 52798).

Only crude oil derived from state-owned submerged lands' in Alaska'sCook Inlet and not subject to therestrictions contained in the ExportAdministration Act of 1979, as amended,Naval Petroleum Reserves ProductionAct of 1976, Outer Continental ShelfLands Act, or Mineral Lands LeasingAct of 1920, as amended, is eligible to beexported under this rule. This excludesdomestic crude oil derived from theNorth Slope or Outer Continental Shelf,or crude oil transported over a federalright-of-way granted pursuant to theMineral Lands Leasing Act or the Trans-Alaska Pipeline Authorization Act.EFFECTIVE DATE: June 4,, 1986.

FOR FURTHER INFORMATION CONTACT.Mr. Rodney A. Joseph, Acting Manager,Short Supply Program, Room 3876,Office of Industrial ResourceAdministration, U.S. Department ofCommerce, Washington, D.C. 20230,Telephone: 202/377-3984.SUPPLEMENTARY INFORMATION: OnDecember 26, 1985, the Department ofCommerce published in the FederalRegister (50 FR 52798) a noticerequesting public comments on aproposed rule to revise Part 377 of theExport Administration Regulations(EAR) to permit exports of crude oilderived from Alaska'i Cook Inlet. Theproposed rule was intended toimplement a finding made by CommerceSecretary Malcolm Baldrige onNovember 6, 1985 under section 103 ofthe Energy Policy and Conservation Act(EPCA), that the export of Cook Inlet oilwas in the national interest andconsistent with the purposes 6f EPCA("national interest finding"]. TheSecretary's finding followed a decisionby President Reagan contained in aPresidential Policy Directive, datedOctober 24, 1985, based on therecommendation of the Economic PolicyCouncil, to use his administrativeauthority to permit the sale of Cook Inletoil to other countries.

The State of Alaska estimates the1986 crude oil production from state-owned submerged lands in Cook Inlet atapproximately 40,000 barrels per day.This production has been declining, andis expected to continue to decline, atapproximately 15 percent per year. Theoil is produced by a number ofcompanies and serves several U.S.markets, which are expected to continueto use some of the oil.

Without further development of CookInlet resources, it is estimated that nomore than 20,000 barrels per day may beavailable for export and most likely only4,000 to 5,000 barrels per day of stateroyalty oil may be exported. This

Federal Register / Vol. 51, No. 107 / Wednesday, June, 4, 1986 / Rules and' Regulations

quantity would require only a few vesselsailings a year and would have aminimal impact on the shipping industry.

Comments

The Department, received 32comments. in response to the notice ofproposed rulemaking, including onecomment which consisted of nineseparate statements, for a total of 40comments. All of the'commentatorsaddressed the substance of the decision,to permit the export of oil from Alaska'sCook Inlet. Twenty-seven commentatorsfavored and 13 commentators opposedsuch exports. Six of the commentatorschallenged the Secretary's nationalinterest finding based on proceduralgrounds. Only fbur-commentatorsaddressed the proposed rule itself.These comments related to the.definition of Cook Inlet oil and to thedocumentation requirements supporting,export license applications.

The Office. of the. Governor of theState of Alaska commented, on thedefinition.of the. area included under"Cook Inlet" in the proposed regulationsrecommending the phrase "state-owned'submerged lands-" The proposedregulations had used the term "statewaters of Alaska's Cook Inlet". Thefinal rule adopts the recommendationbecause "state-owned submergedlands" is a more precise term.

Two oil producers also commented onthe definition of "Cook Inlet" suggestinginclusion ofonshore Cook Inlet fields.Export from onshore fields in the CookInlet Basin would invoke, other statutoryexport restrictions, most notably theMineral Lands Leasing Act of 1920 asamended (MLLA). Therefore, that areais not included within the. definition.

The Coalition to Keep Alaska Oilquestioned the Department's ability toinsure compliance with the MLLA.License applications submitted under§ 377.6(d) of'the EAR are subject to thedocumentation requirements of§ 377.6(e). Section 377.6(e) requires: (1)Documentary evidence of an order asdescribed in § 372.6(a)(l) and (2); (2) asworn affidavit, signed by an authorizedrepresentative of the exporter, whichdemonstrates (in conjunction with suchsupporting evidence as may be requiredby the Department of Commerce] thatthe applicable criteria of § 377.6(d)(1)are satisfied; and (3) an affidavit,attesting that the crude oil has not beennor will be produced from a NavalPetroleum Reserve.

The affidavit required by item 2 must,state that the crude oil to be exportediwas derived from- state-ownedsubmerged lands in Alaska's Cook Inletand has not been and will notbetransported by a pipeline over a federal

right-of-way'granted pursuant to section28(u) of the Mineral Lands LeasingActof 1920 or by section 203 of the Trans-Alaska Pipeline Authorization Act. Theapplicant also will be required to-provide documented independentverification of the origin of the.crude oil.The Department has the right underexisting regulations to require anyadditional supporting-documentation.

The remaining comments received didnot address the proposed rule but ratherthe Secretary's national interest finding.

The comments that challenged thesubstance of the Secretary's findingalleged that: Exports would not increase

'incentives for investment in theexploration and development ofdomestic crude oil would notresult intransportation efficiencies; and, wouldnot materially enhance the energysecurity-of our allies. The favorablecomments received concluded that:Increased export market opportunitieswould provide economic incentives fordbmestic;oil exploration and'development; that transport of-oil toPacific Rim countries'is.more efficientthan' to' the U.S. Gulf Coast; thatallowing Pacific Rim allies to purchaseoil from more-diverse sourcesstrengthens. their energy security; and..that removing restrictions on crude oilexports would'provide' an incentive forour trading partners tb remove barriersto U.S. goods.

Comment, that challenged: theSecretary's national interest finding onprocedural grounds asserted that EPCAand the Administrative ProcedureActrequire public notice and comment priorto the finding; that- the notice of'proposed)rulemakihg failed to disclosewhether EPCA's "mandated" criteriawere considered' in making the finding-and, that' the notice did not make publicthe substance of advice received fromany government agency concerning thefinding.

The notice of proposed rulemakingmet all. applicable statutory provisionsrelating, to notice and.commentrequirements. Neither the language ofthe applicable statutory. provisions, norany reasonable interpretation of 'the.language..imposes a notice andcomment requirementwith respect tothe national interest finding:Furthermore, EPCA does not "mandate"criteria. It grants, the, Secretary-broaddiscretion in making the'finding subject;only to the criteria that exemption bebased on a "reasonable clhssification orbasis" as the Secretary'determines tobeappropriate and consistent with thenational interest and the purposes ofEPCA. The basis-for the Secretary'sfinding was includedwith the proposed,rule. Finally, advice obtained from other

agencies is not routinely placed ih thepublic record so as,to facilitate frankinteragency communication inrulemaking. decisions.

Another. comment stated that thenational interest finding was improperunder the delegation provisions insection 2 ofPExecutive, Order 11912because the rule did not state. that theSecretary had consulted with theSecretary ofDefense or other agencies.Section2,of: the Executive Ordercites,.section:5(a). of the 1969 ExportAdministration Act. That section of theAct did notrequire consultation with theSecretary of Defense specifically butmerely charged the.Secretary to seekinformation and advice from other.agencies. As stated with the proposedrulei the Secretary's decision was takenin "consultation with other appropriateU.S. Government: officials" and as notedabove, after a decision by the Presidentpursuant to a recommendation of theEconomic Policy Council.

Finally,,comments were receivedconcerning the classification of theproposed rule. as not, a major rule. underE.O. 12291, alleging that exports of oilwould result in- an annual impact on theeconomy of $100 million or more. Theconclusion in the comment was basedon the theoretical effects of Alaska oilexport's in general and.not.Cook Inlet oilspecifically. The Department confirmsits conclusion that the readily forseeableimpact of this rule is less than $100'million annually.


In connection with various. rulemakingrequirements, the Office of IndustrialResource Administration has.dbtermined that:

1. This final rule is not a major rulewithin the meaning of section 1 ofExecutive Order 12291 because it is notlikely to result in (1) an, annual effect onithe economy' of $100 million or more; (2).a major increase in costs or prices forconsumers; individualindustries,Federal, State or local governmentagencies, or geographic regions; or (3)significant adverse effects oncompetition, employment, investment,productivity, innovation, or in theability of United States-basedenterprises to compete with foreign-based enterprisesin domestic or exportmarkets. Therefore, preparation of aRegulatory Impact Analysis is notrequired, andneither a preliminary nor afinal Regulatory, Impact Analysis hasbeen or will be prepared.

2. The, General Counsel of theDepartment of Commerce has certifiedto the.ChiefiCounsel for Advocacy of theSmall Business Administration that this

20253-

20254 Federal Register / Vol. 51, No. 107 / Wednesday, June 4, 1986 / Rules and Regulations

final rule will not have a significanteconomic impact on a substantialnumber of small entities. This is becausethe rule relieves a U.S. governmentprohibition on crude oil exports derivedfrom Alaska's Cook Inlet and has nodirect or indirect costs of complianceother than a routine licensingrequirement. As a result, neither aninitial nor final Regulatory FlexibilityAnalysis has been or will be prepared.

3. This rule affects collections ofinformation subject to the requirementsof the Paperwork Reduction Act of 1980(44 U.S.C. 3501, et seq). Thesecollections have been approved by theOffice of Management and Budget undercontrol numbers 0625-0001 and 0625-.0155.

4. This rule is effective June 4, 1986since it is a substantive rule thatrelieves a restriction on certain crude oilexports, and therefore is excepted undersection 553(d)(1) of the AdministrativeProcedure Act (5 U.S.C. 553) from therequirement of a thirty (30) day delay ineffective date.

List of Subjects in 15 CFR Part 377Administrative practice and

procedure, Exports, Forests and forestproducts, Petroleum, Reporting andrecordkeeping requirements.

Accordingly, Part 377 of Title 15, Codeof Federal Regulations, is amended asfollows:



Authority: Pub. L 96-72. 93 Stat 503, 50U.S.C. app. 2401 et seq. as amended by Pub.L 97-145, of Dec. 29,1981 and by Pub. L. 99-64 of July 12, 1985, E.O. 12525 of July 12,1985(50 FR 28757, July 16, 1985); Sec. 103, Pub. L94-163, as amended, (42 U.S.C. 6212) asamended by Pub. L 99-58 of July 2,1985; Sec.28 Pub. L. 93-153, (30 U.S.C. 185); Sec. 28 Pub.L. 95-372, (43 U.S.C 1354); E.O. 11912 of April3, 1976 (41 FR 15825, as amended); Sec. 101and 201(11)(e) Pub. L. 94-258, (10 U.S.C. 7420and 7430(e)); and Presidential Findings (50 FR25189, June 18,1985).

2. Section 377.6(d)(1)(ix) is added asfollows:


(d) * * *(1) * * *

(ix) Exports from Alaska's Cook Inlet.The Group A commodity was derivedfrom the state-owned submerged landsof Alaska's Cook Inlet and has not beenand will not be transported by a pipelineover a federal right-of-way grantedpursuant to section 28(u) of the Mineral

Lands Leasing Act of 1920 or by section203 of the Trans-Alaska PipelineAuthorization Act.'* * * * *

Issued May 30, 1986.Paul Freedenberg,Assistant Secretaryfor Trade Administration.[FR Doc. 86-12490 Filed 6-3-86; 8:45 am]BILLING CODE 3510-OT-M


COMMISSION

17 CFR Part 230

[Release No. 33-6645; File No. S7-38-84]

Definition of Annuity Contract orOptional Annuity Contract

AGENCY: Securities and ExchangeCommission.ACTION: Adoption of rule.

SUMMARY: The Commission is adoptinga rule, which establishes a" "safe harbor"for certain forms of annuity contractsthat will not be deemed subject to thefederal securities laws. The Commissionis also withdrawing its generalstatement of policy regarding the factorswhich should be considered in anydetermination of the status under thefederal securities laws of certaincontracts issued by insurancecompanies. The "safe harbor" ruleenables a corporation subject toinsurance regulation by any state tooffer and sell a contract with reasonableassurance that it falls within themeaning of the phrase "annuity contractor optional annuity contract," as used insection 3(a)(8) of the Securities Act of1933, provided that the rule's conditionsare satisfied. The release also addressesseveral related matters.EFFECTIVE DATE: June 4, 1986.FOR FURTHER INFORMATION CONTACT:Brian M. Kaplowitz, Special Counsel,(202) 272-2061, or Joseph R. Fleming,Attorney, (202) 272-3017, Office ofInsurance Products and LegalCompliance, Division of InvestmentManagement, Securities and ExchangeCommission, 450 Fifth Street, NW.,Washington, DC 20549.SUPPLEMENTARY INFORMATION: TheSecurities and Exchange Commission(!'Commission") today is adopting rule151 under the Securities Act of 1933 [15U.S.C. 77a et seq.] ("Act") relating tocertain types of annuity contracts issued

"On November 6. 1985, the Secretary ofCommerce determined that the export of crude oilderived from Alaska's Cook Inlet is consistent withthe national interest and the purposes of the EnergyPolicy and Conservation Act.

by insurance companies, including whatare generally known as guaranteedinvestment contracts.' Simultaneously,the Commission is withdrawingSecurities Act Release No. 6051 (April 5,1979) ("Release 6051"), 44 FR 21626(April 11, 1979), an interpretative releaseconcerning the availability of section3(a)(8) of the Act to certain contractsissued by insurance companies. Rule 151provides "safe harbor" from the federalsecurities laws for an "annuity contractor optional annuity contract," as thoseterms are used in section 3(a)(8) of theAct, that satisfies all of the rule'sconditions. The rule specifies a three-prong test for determining whether aninsurer is able to find refuge for itscontract in the "safe harbor." Theannuity or optional annuity contractmust (1) be issued by a corporation (an"insurer") subject to the supervision ofthe state insurance commissioner, bankcommissioner, or any agency or officerperforming like functions; (2) includecertain guarantees of principal andinterest sufficient for the insurer to bedeemed to assume the investment risk;and (3) not be marketed primarily as -aninvestment. The general purpose of therule is to provide greater certaintyregarding the availability of section3(a)(8) to certain annuity products andto facilitate the Commission's effectiveadministration of its statuteq. TheCommission is also expressing its viewson several ancillary items relating to thesubject matter of the rule.

Rule 151 was proposed for publiccomment on November 21, 1984.2 Theoriginal comment period closedFebruary 15, 1985, but was subsequentlyextended to April 15, 1985.3 In response

I The contracts included within this term arediscussed in Securities Act Rel. No. 5838 (June 22,1977) [42 FR 32861 (June 28,1977)]. As relevant here,these contracts, generally speaking, are deferredannuities under which the purchaser agrees to paymoney to an insurer (either in a lump sum or ininstallments) and the insurer promises to payinterest at a guaranteed rate for the life of thecontract. In some contracts, the insurer mayperiodically pay discretionary excess interest overand above the guaranteed rate. In addition, virtuallyall of these contracts allow the purchaser to buy anannuity with the monies accumulated under thecontract. Finally, these contracts are issued oneither an individual or a group basis.

£ The reasons for proposing rule 151 and theadministrative history of the rule are set forth inSecurities Act Release No. 6558 (November 21, 1984)("proposing release") [49 FR 46750 (November 28,1984)1.

"See Securities Act Rel. No. 6586 (February 15,1985) [50 FR 7186 (February 21,1985)]. Thisextension of the comment period was made at therequest of the insurance Industry's principal tradeassociation to give it more time to study andprepare comments on the proposed rule,

APPENDIX D: Additional Exports to Canada

Federal Register Presidential DocumentsVol. 54, No. 3

Thursday, January 5. 1989

Title 3- Presidential Findings of December 31, 1988

The President United States-Canada Free-Trade Agreement Regarding CertainAlaska Crude Oil and Naval Petroleum Reserves Petroleum

On September 28, 1988, I signed the United States-Canada Free-Trade Agree-ment Implementation Act of 1988. Section 305 of that Act implements Annex902.5 of the United States-Canada Free-Trade Agreement that deals with tradein energy goods, including crude oil. Section 305(a) amends section 7(d) of theExport Administration Act of 1979, as amended, to permit the export toCanada of up to 50,000 barrels per day of crude oil that has been transportedby pipeline over a right-of-way granted pursuant to Section 203 of the Trans-Alaska Pipeline Authorization Act ("TAPS crude oil").

On June 14, 1985, I made a finding that the exports of certain crude oil toCanada are in the national interest.,Before exports of these 50,000 barrels perday of crude oil to Canada can be authorized, I must make certain additionalfindings and determinations. I have decided to make the necessary findingsand determinations under the following statutes: Section 103 of the EnergyPolicy and Conservation Act (42 U.S.C. 6212); Section 28(u) of the MineralLeasing Act, as amended by the Trans-Alaska Pipeline Authorization Act of1973 (30 U.S.C. 185(u)); Section 28 of the Outer Continental Shelf Lands Act (43U.S.C. 1354); and 10 U.S.C. 7430(e).

To further implement Chapter Nine of the Free-Trade Agreement with regardto trade in energy goods, and as indicated in Chapter Nine of the Statement ofAdministrative Action that I transmitted to the Congress with the Free-TradeAgreement, I also am making these findings and determinations with regard toexports of petroleum (as defined in 10 U.S.C. § 7420(3)) from the NavalPetroleum Reserves, where proof is lacking that those exports are not derivedfrom or commingled with petroleum from the Naval Petroleum Reserves.

I hereby find and determine that exports of petroleum under these statutes arein the U.S. national interest, and I further find and determine that such U.S.petroleum exports to Canada-

* will not diminish the total quality or quantity of petroleum available to theUnited States;

* will not increase reliance on imported oil;

" are in accord with provisions of the Export Administration Act of 1979, asamended; and

* are consistent with the purposes of the Energy Policy and Conservation Act.

Therefore, effective upon the entry into force of the Free-Trade Agreement forthe United States, such domestic petroleum may be exported to Canada,exports of crude oil to be for consumption or use therein.

272 Federal Register / Vol. 54, No. 3 / Thursday, January 5, 1989 / Presidential Documents

These findings and determinations shall be published in the Federal Register. Idirect the Secretary of Commerce to take all necessary and proper action toexpeditiously implement this decision.

[FR Doc. 89-281

Filed 1-4-89; 9:36 am]

Billing code 3195-O1-M

THE WHITE HOUSE,December 31, 1988.

0 crAJ Q 5-%

Federal Register / Vol. 54, No. 9 / Friday, January 13, 1989 / Rules and Regulations

Mount Airy, NC-Mount Airy/Surry County,NDB-A, Amdt. 2

Whiteville, NC-Columbus County Muni,NDB RWY 5, Amdt. 3

Charleston, SC-Charleston AFB/lntl, VOR/DME or TACAN RWY 3, Amdt. 12

Charleston, SC-Charleston AFB/Intl, VOR/DME or TACAN RWY 15, Amdt. 13

Charleston, SC-Charleston AFB/Intl, VORIDME or TACAN RWY 21, Amdt. 12

Charleston, SC--Charleston AFB/Intl, VOR/DME or TACAN RWY 33, Arndt. 12

Charleston, SC-Charleston AFB/Inti,RADAR-I, Arndt. 15

... Effective February 9, 1989

Windsor Locks, CT-Bradley Intl, VOR RWY15, Orig.

Muncie. IN-Delaware County-Johnson Field,NDB RWY 32, Arndt. 10

Muncie, IN-Delaware County-Johnson Field,ILS RWY 32, Amdt. 7

Baltimore, MD--Martin State, NDB RWY 14,Amdt. 6

Baltimore, MD-Martin State, NDB RWY 32,Arndt. 6

Falls City, NE-Brenner Field, NDB-A, Amdt.2

Cleveland, OH-Cleveland-Hopkins Intl. ILSRWY 28, Amdt. 19

Cleveland, OH-Cleveland-Hopkins Intl,RADAR-I, Amdt. 31

Cleveland, Oi-Cleveland-Hopkins Intl.RNAV RWY 10, Amdt. 10

... Effective December 23, 1988

Baltimore, MD-Martin State, VOR/DME orTACAN 1 RWY 14, Amdt. 4

Baltimore, MD-Martin State, IS RWY 32,Amdt. 2

Baltimore, MD-Martin State, RNAV RWY14, Amdt. 3

[FR Doc. 89-795 Filed 1-12-89: 8:45arnIBILLING CODE 4910-13-M


Bureau of Export Administration

15 CFR Part 777

[Docket No. 81269-8269]

Exports of Certain Alaska Crude Oil toCanada

AGENCY: Bureau of ExportAdministration, Commerce.ACTION: Interim rule with request forcomments.

SUMMARY: Section 777.6(d)(1) of theExport Administration Regulations(EAR) permits the export of crude oil foruse or consumption in Canada. exceptfor crude oil transported by pipelineover a right-of-way granted pursuant to-section 203 of the Trans-Alaska PipelineAuthorization Act (Alaska crude oil)and crude oil from the Naval PetroleumReserves. This rule amends that sectionof the EAR to authorize the export of50,000 barrels per day of Alaska crude

oil to Canada. The amendment made bythis rule implements Annex 902.5 of theUnited States-Canada FreeTradeAgreement which became effective onJanuary 1, 1989.EFFECTIVE OATES: This rule is effectiveJanuary 13, 1989. Comments must bereceived by February 13, 1989.ADDRESSES: Written comments (sixcopies) should be sent to: Rodney A.Joseph, Office of Technology and PolicyAnalysis, Bureau of ExportAdministration, Department ofCommerce, Room 1600, Washington, DC20230.

FOR FURTHER INFORMATION CONTACT:

Rodney A. Joseph, Office of Technologyand Policy Analysis, Bureau of ExportAdministration, Telephone: (202)377-8171.

SUPPLEMENTARY INFORMATION:

BackgroundOn September 28, 1988, President

Reagan signed the United States-Canada Free-Trade AgreementImplementation Act of 1988 (Pub. L.100-449). Section 305 of that Actimplements Annex 902.5(3) of the UnitedStates-Canada Free-Trade Agreementthat deals with trade in energy goods,including a provision to export up to50,000 barrels per day of Alaska NorthSlope crude oil. In order to implementthis provision, section 305(a) amendssection 7(d) of the ExportAdministration Act of 1979, as amended,to permit the export to Canada of 50,000barrels per day of crude oil that hasbeen transported by pipeline over aright-of-way granted pursuant to section203 of the Trans-Alaska PipelineAuthorization Act. In addition, onDecember 31, 1988, President Reaganmade certain findings anddeterminations under four other statutesthat restrict exports of crude oil,specifically: section 103 of the EnergyPolicy and Conservation Act (42 U.S.C.6212]; section 28(u) of the MineralLeasing Act, as amended by the Trans-Alaska Pipeline Authorization Act of1973 (30 U.S.C. 185fu)); section 28 of theOuter Continental Shelf Lands Act (43U.S.C. 1354); and 10 U.S.C. 7430(e).

The Statement of AdministrativeAction that accompanied the Free-TradeAgreement to the Congress contained adescription of all the actions that wouldbe taken to implement the crude oilprovision, including a change in the EARto allow petroleum (crude or products)to be exported, even in the absence ofproof that the petroleum is notcommingled with products of the NavalPetroleum Reserves.

This interim rule amends § 777.6 ofthe Export Administration Regulationsto provide for the licensing of the 50,000barrels per day to Canada to bedistributed quarterly among applicantson a pro rata basis. In accordance withthe implementation Act, this interim rulerequires that any ocean transportationof Alaska crude oil authorization underthis rule be by vessels documentedunder section 12106 of Title 46, UnitedStates Code. Furthermore, this interimrule provides that an application mustbe submitted on Form BXA-622P, thatan applicant must have tide to or acontract to purchase the quantity statedon the application, that licensedquantities for four calendar quartersmay be combined into one or moreshipments, ant that the applicant cannottransfer the license to another person.

This rule establishes procedures andtime limits for filing applications and theprocedures to followed in approvingquantities for export by applicants. Foreach calendar quarter, applications maybe filed in February, May, August, andNovember preceding the quarter forwhich authorization will be requested.Applications will be issued prior to thebeginnihg of a quarter. For the FirstQuarter of 1989, applications will beaccepted until February 1; 1989.Validated licenses will be issued byFebruary 15, 1989. The quantitiesauthorized will be computed based onthe total amount of oil permitted by thisrule for the period February 15 throughMarch 31.

The interim rule also contains aprovision to ensure that petroleumexports are not disallowed because oflack of proof that those exports are notderived from or commingled withpetroleum from the Naval PetroleumReserves.

This rule is being issued in interimform to permit timely implementation ofthe terms of the Agreement, whileproviding for public comment prior tothe development of the final regulations.Comments are encouraged on allaspects of this rule. Comments areparticularly requested concerning themethod for determining the quantity tobe authorized for each validated licenseand how licensed quantities should bedetermined when a pro-rata sharewould be less than an economicalshipment quantity.

Rulemaking Requirements andInvitation to Comment

1. Because this rule concerns a foreignaffairs function of the United States, it isnot a rule or regulation within themeaning of section 1(a) of ExecutiveOrder 12291, and it is not subject to the

1349


requirements of that Order. Accordingly,no preliminary or final RegulatoryImpact Analysis has to be or will beprepared.

2. This rule 'Contains a collections ofinformation subject to the requirementsof the Paperwork Reduction Act of 1980(44 U.S.C. 3501 et seq.). Thesecollections have been approved by theOffice of Management and Budget undercontrol numbers 0694-0005 and 0694-0027. The public reporting burden toapply for a short supply crude oil licenseis estimated to average 4 hours. Sendcomments regarding the burden estimateor any other aspect of this collection ofinformation, including suggestions forreducing this burden, to the Office ofAdministration, Bureau of ExportAdministration, Room 3889, Departmentof Commerce, Washington, DC 20230and to the Office of Management andBudget Paperwork Reduction Projects,0694-0005 and 0694-0027, Washington,DC 20503.

3. Because a notice of proposedrulemaking and an opportunity forpublic comment are not required to begiven for this rule by section 553 of theAdministrative Procedures Act (5 U.S.C.553), or by any other law, under sections603(a) and 604(a) of the RegulatoryFlexibility Act (5 U.S.C. 603(a) and604(a)) no initial or final RegulatoryFlexibility Analysis has to be or will beprepared.

4. Section 13(a) of the ExportAdministration Act of 1979, as amended(50 U.S.C. app. 2412(a)), exempts thisrule from all requirements of section 553of the Administrative Procedure Act(APA) (5 U.S.C. 553), including thoserequiring publication of a notice ofproposed rulemaking, an opportunity forpublic comment, and a delay in effectivedate. This rule is also exempt from theserequirements because it involves aforeign affairs function of the UnitedStates in that it implements a part of theUnited States-Canada Free-TradeAgreement.

This rule is not subject to therequirements of section 13(b) of theExport Administration Act because it isnot imposing new controls. Further, noother law requires that a notice ofproposed rulemaking and an opportunityfor public comment be given for thisrule.

However, because of the importanceof the issues raised by these regulations,this rule is issued in interim form andcomments will be considered in thedevelopment of final regulations.Accordingly, the Department encouragesinterested persons who wish tocomment to do so at the earliestpossible time to permit the fullestconsideration of their views.

The period for submission ofcomments will close February 13, 1989.The Department will consider allcomments received before the close ofthe comment period in developing finalregulations. Comments received afterthe end of the comment period will beconsidered if possible, but theirconsideration cannot be assured. TheDepartment will not accept publiccomments accompanied by a requestthat part or all of the material be treatedconfidentially because of its businessproprietary nature or for any otherreason. The Department will return suchcomments and materials to the personsubmitting the comments and will notconsider them in the development offinal regulations. All public commentson these regulations will be a matter ofpublic record and will be available forpublic inspection and copying. In theinterest of accuracy and completeness,the Department requires comments inwritten form. Oral comments must befollowed by written memoranda, whichwill also be a matter of public recordand will be available for public reviewand copying. Communications fromagencies of the United StatesGovernment or foreign governments willnot be made available for publicinspection.

The public record concerning theseregulations will be maintained in theBureau of Export AdministrationFreedom of Information RecordsInspection Facility, Room 4086,Department of Commerce, 14th Streetand Pennsylvania Avenue NW.,Washington, DC 20230. Records in thisfacility, including written publiccomments and memoranda summarizingthe substance of oral communications,may be inspected and copied inaccordance with regulations publishedin Part 4 of Title 15 of the Code ofFederal Regulations. Information aboutthe inspection and copying of records atthe facility may be obtained fromMargaret Cornejo, Bureau of ExportAdministration Freedom of InformationOfficer, at the above address or bycalling (202) 377-2593.

5. This interim rule does not containpolicies with Federalism implicationssufficient to warrant preparation of aFederalism assessment under ExecutiveOrder 12612.


Administrative practice andprocedure, Exports, Forests and forestproducts, Petroleum, and Reporting andrecordkeeping requirements.

Accordingly, Part 777 of the ExportAdministration Regulations (15 CFRParts 768 through 799) is amended asfollows:

PART 777-[AMENDED]

1. The authority citation for 15 CFRPart 777 is revised to read as follows:

Authority: Pub. L. 96-72, 93 Stat. 503 (50U.S.C. app. 2401 et seq.), as amended by Pub.L. 97-145 of December 29, 1981, by Pub. L. 99-64 of July 12, 1985, by Pub. L. 100-180 ofDecember 4, 1987, by Pub. L. 100-418 ofAugust 23, 1988, and by Pub. L. 100-449 ofSeptember 28, 1988: E.O. 12525 of July 12, 1985(50 FR 28757), July 16, 1985); sec. 103, Pub. L.94-163 of December 22. 1985 (42 U.S.C. 6212).as amended by Pub. L. 99-58 of July 2,1985;sec. 101, Pub. L. 93-153 of November 16. 1973(30 U.S.C. 185): sec. 28, Pub. L. 95-372 ofSeptember 18, 1978 (43 U.S.C. 1354); E.O.11912 of April 13, 1976 (41 FR 15825. April 15,1976), as amended: secs. 201(1) and 201(11)()e,Pub. L. 94-258 of April 5, 1976 (10 U.S.C. 7420and 7430(e)); Presidential Findings of June 14,1985 (50 FR 25189, June 18, 1985) andDecember 31, 1988 (54 FR 271, January 5,1989); and sec. 125, Pub. L. 99-64 of luly 12,1985 (46 U.S.C. 466(c)).

2. In § 777.6, paragraph (d) is amendedby revising the introductory text, byrevising the NOTE that followsparagraph (d)(1)(i)(B), and by adding anew paragraph (d)(1)(x), as follows:


(d) Issuance of Export Licenses.Petroleum Commodity Groups, asidentified in the following paragraphs,are defined in Supplement No. 2 to Part777. Submit each application for avalidated license to export a commodityfrom one of these groups to: Office ofExport Licensing, ATTN: Short Supply,Bureau of Export Administration, U.S.Department of Commerce, Washington.DC 20230.

Include with each license applicationthe documentation required by§ 777.6(e). Applications will beconsidered subject to the appropriateprovisions of this section.

(1) * * *(i) * *(B) * *

Note: Paragraphs 777.6(d)(1) (ii) through(vii) and (x) below apply to all crude oil,including Alaska North Slope crude oil.

(x) Exports of Certain Alaska CrudeOil to Canada. The Group A commoditywill be exported under the followingconditions:

(A) The commodity is domesticallyproduced, has been transported bypipeline over a right-of-way grantedpursuant to section 203 of the TransAlaska Pipeline Authorization Act (43U.S.C. 1652), and is being exported toCanada for consumption. in Canada:

1350


(B) Any ocean transportation of thecommodity will be made by vesselsdocumented for United States coastwisetrade under 46 U.S.C. 12106. Only bargevoyages between the State ofWashington and Vancouver, BritishColumbia, and comparable barge-movements across waters between theU.S. and Canada may be excluded fromthis requirement. The Department ofCommerce will determine, inconsultation with the MaritimeAdministration, whether suchtransportation is "ocean" transportation;and

(C) The export complies with theprovisions contained in paragraph Vf) ofthis section.

3. In § 777.6, paragraph (eJ(2), isamended by revising the introductorytext and the introductory text of theaffidavit and by removing paragraph (d)of the affidavit and footnote 3 asfollows:

§ 777.6 Petroleum and petroleumproducts.* *t * . *

(e) DocumentationL(1) * * *(2) A sworn affidavit, signed by an

authorized representative of theexporter, reading as follows (insertparagraph (a) or (b), as appropriate, andparagraph (c)):

AFFIDAVIT1.(Name)

(Title)of(Company)HEREBY CERTIFY that to the best of myknowledge and belief the

LQuantity)bbls of

(Commodity)

4. In § 777.6, paragraph (f) is added toread as follows:


(f Exports of Certain Alaska CrudeOil Pursurnt to § 777.6(d)l()xJ Anaverage of no more than 50,000 barrelsper day of Alaska crude oil' transportedby pipeline over a right-of-way granted

- pursuant to section 203 of the Trans-Alaska Pipeline Authorization Act foruse or consumption in Canada will beauthorized as follows-

(1} Authorization to export suchAlaska crude oil will be granted on aquarterly basis. Applications will beaccepted by the Office of ExportLicensing no earlier than two months

prior to the beginning of the calendarquarter in question, but must bereceived no later than the first day ofthe month preceding the calendarquarter. For example, for the calendarquarter beginning April 1 and endingJune 30, applications will be acceptedbeginning February 1, but must bereceived no later than March 1.

(2) The quantity stated on eachapplication must be the total number ofbarrels for the quarter-not a per dayrate. This quantity must not exceed50,000 barrels times the number ofcalendar days in the quarter.

(3) Each application shall includesupport documents providing evidencethat the applicant has either.

(i) Title to the quantity of barrelsstated in the application or

(ii) A contract to purchase thequantity of barrels stated in theapplication.

(4) The quantity of barrels authorizedon each validated license for exportduring the calendar quarter will bedetermined by the Office of ExportLicensing as a prorated amount basedon:

(i) The number of licenses issued forthe quarter;

(ii) The quantity requested on eachlicense application: and

(iii) The total number ofbarrels thatmay be exported by all license holdersduring the quarter (50,000 barrels perday multiplied by the number ofcalendar days during the quarter).,

(5) Applicant may combine theirlicensed quantities for as many as fourconsecutive calendar quarters into oneor more shipments, provided that thevalidity period of none of the affectedlicenses has expired.

Dated: January 10. 1989.Michael E. Zacharia,Assistant Secretary for ErportAdministration.[FR Doc. 89-902 Filed 1-12-89: 8:45 am]BILLING CODE 3510-T-M

Bureau of Economic Analysis

15 CFR Part 806

[Docket No. 80858-262]

Direct Investment Surveys; Change InReporting Requirements for theAnnual Survey of Foreign DirectInvestment In the United States

AGENCY: Bureau of Economic Analysis,Commerce.ACTION: Final rule.

SUMMARY: This final rule amends 15CFR Part 806,by changing the reportingrequirements for the BE-15, AnnualSmvey of Foreign Direct Investment inthe United States. The survey is amandatory survey conducted by theBureau of Economic Analysis (BEA),U.S. Department of Commerce, underauthority of the International Investmentand Trade in Services Survey Act. Under a proposed rule publishedearlier in the Federal Register, BEA hadplanned to raise the exemption level forthe BE-15 survey-the level belowwhich reports are not required-from$10 million to $20 million. Sincepublication of the proposed rule, BEAhas received public comment opposingthe raising of the exemption level. Underthis final rule,. the exemption level forthe survey will remain at $10 million,but, in order to keep the reportingburden to a minimum, a short form willbe instituted for reporting by foreign-owned U.S. affiliates between the $10and $20 million levels.

EFFECTIVE DATE:.This rule. will beeffective February 13,. 1989.FOR FURTHER INFORMATION CONTACT:Betty L Barker. Chief, InternationalInvestment Division (BE-50), Bureau ofEconomic Analysis. U.S. Department ofCommerce, Washington, DC 20230;phone (202) 523-0659.

SUPPLEMENTARY INFORMATION: In theSeptember 20, 1988, Federal Register,Volume 53. No. 182, 53 FR 36468, theBureau of Economic Analysis publisheda notice of proposed rulemaking to raisethe exemption level for the BE-15,Annual Survey of Foreign DirectInvestment in the United States, from$10 million to $20 million, primarily tominimize the burden on respondents.Thereafter, a number of letterscommenting on. the proposed rule werereceived by BEA. One letter supportedthe increase in the exemption level onthe grounds that it would have reducedthe survey reporting burden withoutcausing significant loss of data. Theother letters opposed the increase in theexemption level on the grounds that itwould have resulted in a deteriorationof the database..

Because large affiliates account for avery high percentage of the foreigndirect investment universe in valueterms, the icrease in the exemptionlevel would not have significantlyreduced the reliability of the dataoverall or for the vast majority ofcountry, industry, and State cellspublished. However, it could haveadversely affected the data for certaincountries, industries, and States inwhich small investments account for a

1351

Federal Register / Vol. 55, No. 53 / Monday, March 19, 1990 / Rules and Regulations

. Dated: March 13, 1990.James M. LeMunyon.Deputy Assistant Secretary for ExportAdministration.

[FR Doc. 90-6176 Filed 3-16-90; 8:45 am]BILLING CODE 3510-OT-M

15 CFR Part 776

[Docket No. 91176-92761

Expansion and Imposition of ForeignPolicy Controls on Chemical WeaponPrecursors; Technical Amendment

AGENCY: Bureau of ExportAdministration, Commerce.ACTION: Interim rule; technicalamendment.

SUMMARY: An interim rule, with requestfor public comment, revising foreignpolicy controls on the export of certainchemical weapon precursors waspublished in the Federal Register onDecember 20, 1989 (54 FR 52017-52022).That rule expanded the number ofcountries to which a license is requiredfor the export of 3 chemicals andimposed foreign policy controls on 19additional chemicals. The rule alsoimposed new reexport licensingrequirements for shipments of all U.S.origin precursor chemicals from thirdcountries to Iran, Iraq, Syria and Libya.

On December 12 1989, theDepartment of Commerce submitted areport to Congress in accordance withsection 6 of the Export AdministrationAct, as amended, to support theimposition and expansion of controls.Where reference was made to the dateof this report in the regulatory text of thepublished interim rule. the phrase"Notice to Congress" appeared insteadof the date. This document corrects therule by replacing "Notice to Congress",where it incorrectly appears in threeparagraphs, with the date "December 12,1989".

See the Corrections section of thisFederal Register for additionalcorrections.

EFFECTIVE DATE: This rule is effectiveMarch 19, 1990.

FOR FURTHER INFORMATION CONTACT.Karen Spencer, Regulations Branch,Office of Technology and PolicyAnalysis, Bureau of ExportAdministration, Telephone: (202) 377-4819.



1. This rule is consistent withExecutive Orders 12291 and 12661.

2. This rule does not involvecollections-of information subject to therequirements of the PaperworkReduction Act of 1980 (44 U.S.C. 3501 etseq.).

3. This rule does not contain policieswith Federalism implications sufficientto warrant preparation of a Federalismassessment under Executive Order12612.

4. Because a notice of proposed"rulemaking and an opportunity forpublic comment are not required to begiven for this rule by section 553 of theAdministrative Procedure Act (5 U.S.C.553), or by any other law, under sections603(a) and 604(a) of the RegulatoryFlexibility Act (5 U.S.C. 603(a) and604(a)) no initial or final RegulatoryFlexibility Analysis has to be or will beprepared.

5. Section 13(a) of the ExportAdministration Act of 1979 (EAA), asamended (50 U.S.C. app. 2412(a)),exempts this rule from all requirementsof section 553 of the Administrative,Procedure Act (APA) (5 U.S.C. 553),including those requiring publication ofa notice of proposed rulemaking, anopportunity for public comment, and adelay in effective date. Further, no otherlaw requires that a notice of proposedrulemaking and an opportunity forpublic comment be given for this rule.

List of Subjects in'15 CFR Part 776

Exports, Reporting and recordkeepingrequirements.

Accordingly, the ExportAdministration Regulations (15 CFRparts 730-799) are amended as follows:

PART 776--[AMENDED]

1. The authority citation for part 776continues to read as follows:

Authority- Pub. L. 96-72, 93 Stat. 503 (50U.SC. app. 2401 et seq.), as amended by Pub.L 97-145 of December 29,1981, by Pub. L100-418 of August 23, 1988; and by Pub. L 99-64 of July 12, 1985; F.O. 12525 of July 12, 1985(50 FR 28757, July 16, 1985).

§ 776.19 [Amended]2. Section 776.19 is amended by

revising the phrase "(Notice toCongress)" to read "December 12, 1989"in paragraph (f), in the first sentence ofparagraph (g), and in the third sentenceof paragraph (h).

Datecd March 8, 1990.James M. LeMunyon.Deputy Assistant Secretary for ExportAdministration.[FR Doc. 90-5993 Filed 3-16-90, 8:45 am]BILLING CODE 3510-DT-M

15 CFR Part 777

[Docket No. 81269-00141

Exports of Certain Alaska Crude Oil toCanada

AGENCY: Bureau of ExportAdministration, Commerce.ACTION: Final rule.

SUMMARY: This final rule adopts-withcertain minor changes based on publiccomments-the revisions made by theinterim rule on Alaska crude oil thatwas published in the Federal Register onJanuary 13, 1989 (54 FR 1249).-Theinterim rule revised § 777.6 of the ExportAdministration Regulations (EAR),which contains short supply exportcontrols on petroleum and petroleumproducts.

Section 777.6(d)(1) of the EARcurrently permits the export of crude oilfor use or consumption in Canada,except for crude oil transported bypipeline over a right-of-way grantedpursuant to section 203 of the Trans-Alaska Pipeline Authorization Act(Alaska crude oil) and crude oil from theNaval Petroleum Reserves. The interimrule amended § 777.6 to authorize theexport of 50,000 barrels per ' day ofAlaska crude oil to Canada. Thisamendment implemented Annex 902.5 ofthe United States-Canada Free-TradeAgreement which became effective onJanuary 1, 1989.

This- final rule makes certainprocedural changes that are based, inpart, on the public comments receivedby the Department of Commerce on theinterim rule. The most significant ofthese changes is the elimination of theNaval Petroleum Reserve affidavitrequirement in § 777.6(e)(2). Thosepersons who submit applications toexport crude oil pursuant to § 777.6(d(1)(vi) through (d)(1)(viii) or§ 777.6(d)(1[x) will no longer berequired to submit an affidavit certifyingthat the oil is not from a NavalPetroleum Reserve. This change willreduce the paperwork burden onapplicants.EFFECTIVE DATE: This rule is effectiveMarch 19, 1990.FOR FURTHER INFORMATION CONTACTBernard Kritzer, Office of IndustrialResource Administration, Bureau ofExportAdministration, Telephone: (202)377-4060.SUPPLEMENTARY INFORMATION:

Background

On September 28,1988, PresidentReagan signed the United States-Canada Free-Trade Agreement

10051

10052 Federal Register / Vol. 55, No. 53 / 'Monday, March 19, 1990 / Rules and Regulations

Implementation Act of 1988 (P.L. 100-449]. Section 305 of that Act implementsAnnex 902.5(3) of the United States-Canada Free-Trade Agreement thatdeals with trade in energy goods,including a provision to export up to50,000 barrels per day of Alaska NorthSlope crude oil. In order to implementthis provision, section 305(a) amendssection 7(d) of the ExportAdministration Act of 1979, as amended,to permit the export to Canada of 50,000barrels per day of crude oil that hasbeen transported by pipeline over aright-of-way granted pursuant to section203 of the Trans-Alaska PipelineAuthorization Act. In addition, onDecember 31, 1988, President Reaganmade certain findings anddeterminations under four other statutesthat restrict exports of crude oil,specifically: section 103 of the EnergyPolicy and Conservation Act (42 U.S.C.6212); section 28(u) of the MineralLeasing Act, as amended by the Trans-Alaska Pipeline Authorization Act of1973 (30 U.S.C. 185(u)); section 28 of theOuter Continental Shelf Lands Act (43U.S.C. 1354); and 10 U.S.C. 7430(e).

The Statement of AdministrativeAction that accompanied the Free-TradeAgreement to the Congress contained adescription of all the actions that wouldbe taken to implement the crude oilprovision, including a change in the EARto allow petroleum (crude or products)to be exported, even in the absence ofproof that the petroleum is notcommingled with products of the NavalPetroleum Reserves.

The interim rule of January 13, 1989(54 FR 1249) amended § 777.6 of theExport Administration Regulations toprovide for the licensing of the 50,000barrels per day to Canada to bedistributed quarterly among applicantson a pro rate basis. In accordance withthe Implementation Act, the interim rulerequired that any ocean transportationof Alaska crude oil authorized under therule be by vessels documented undersection 12106 of title 46, United StatesCode.

The interim rule establishedprocedures and time limits for filingapplications and the procedures to befollowed in approving quantities forexport by applicants. This final rulemakes certain changes in the applicationprocedures and the time limits forsubmitting various documents. For eachcalendar quarter, applications now mustbe filed between the 1st day and the25th day of the second month (i.e.,February, May, August, and November)preceding the quarter for which exportauthorization is requested. The'interimrule provided a slightly longer period in

which to file applications-from the. 1stday of the second month preceding thecalendar quarter to the 1st day of themonth preceding the quarter. The finalrule shortens the submission period inorder to permit export licenses to beissued in a more timely manner.Issuance of licenses is expected to occuron or about the 1st day of the monthpreceding the quarter in question. Thischange was made in response to publiccomments urging that applications be.acted upon by the 1st day of the monthpreceding the quarter.

The interim rule also 'contained aprovision to ensure that petroleumexports would not be disallowedbecause of lack of proof that thoseexports were not derived from orcommingled with petroleum from theNaval Petroleum Reserves. This finalrule revises the interim rule byeliminating the Naval Petroleum Reserveaffidavit requirement contained in§ 777.6(e). This change means that aNaval Petroleum Reserve affidavit is nolonger required for applications toexport crude oil pursuant to theprovisions of § 777.6 (d)(1)(vi) through(d)(1)(viii) or for applications to exportAlaska crude oil under § 777.6(d)(1)(x).The Department decided to eliminatethe affidavit requirement after reviewingpublic comments on the interim rule andconcluding that removal of therequirement would be consistent withthe focus of the United States-CanadaFree-Tra de Agreement, which is toremove impediments to trade betweenthe United States and Canada.

The final rule also revises § 777.6(f) topermit the Office of Export Licensing toadd the unallocated volume from acalendar quarter to the quota availablefor each succeeding quarter in the samecalendar year. However, unallocatedportions will not be made available forallocation in a new calendar year.

The Department of Commercereceived twelve public comments on theinterim rule. As indicated above, thisfinal rule incorporates a number of therecommendations contained in thepublic comments. The remainingcomments-which were considered bythe Department, but not included amongthe changes in this final rule-focusedprimarily upon exports of Alaska NorthSlope crude oil by pipeline andtransportation of the oil by barges notdocumented for U.S. coastwise trade.

Two comments argued that shipmentsof crude oil to Canada should not bepermitted directly via pipeline.However, a report by the House Energyand Commerce Committee [H. Rep. No.816-III, 100th Cong., 2d Sess. (1988)]indicates that pipeline transportation

from the U.S. to Canada was intended tobe allowed. Therefore, this final rule-.like the-interim rule--does not prohibitpipeline transportation.

A few objections were voicedconcerning the exclusion of certainbarge voyages from the generalrequirement that all oceantransportation of Alaskan crude oil toCanada be in U.S. flag vessels withoutexception. One comment suggested thatapplicants be required to state themethod and routing of transportationproposed for each shipment in order todetermine whether contemplated bargemovements constitute "oceantransport". The Department hasconsidered all comments on this subjectand has determined that nothing in theU.S.-Canada Free-Trade AgreementImplementation Act of 1988 (the Act) orin the legislative history supportsremoval of the existing exclusion.


1. This rule complies with ExecutiveOrders 12291 and 12656.

2. This rule contains collections ofinformation subject to the requirementsof the Paperwork Reduction Act of 1980(44 U.S.C. 3501 et seq.). This amendmentwill result in a slight reduction of thepaperwork burden on applicants. Thesecollections have been approved by theOffice of Management and Budget undercontrol numbers 0694-0005 and 0694-0027. The public reporting burden toapply for a short supply crude oil licenseis estimated to average 4 hours. Sendcomments regarding the burden estimateor any other aspect of this collection ofinformation, including suggestions forreducing this burden, to the Office ofAdministration, Bureau of ExportAdministration, Room 3889, Departmentof Commerce, Washington, DC 20230and to the Office of Management andBudget Paperwork Reduction Projects,0694-0005 and 0694-0027, Washington,DC 20503.


4. Because a notice of proposedrulemaking and an opportunity forpublic comment are not required to begiven for this rule by section 553 of theAdministrative Procedures Act (5 U.S.C.553), or by any other law, under sections603(a) and 604(a) of the RegulatoryFlexibility Act (5 U.S.C. 603(a) and604(a)) no initial or final RegulatoryFlexibility Analysis has to be or will beprepared.

5. Section 13(a) of the ExportAdministration Act of 1979, as amended

Federal Register / Vol. 55, No. 53 / Monday, March 19, 1990 / Rules and Regulati6ns

(50 U.S.C. app. 2412(a)), exempts thisrule from all requirements of section 553of the Administrative Procedure Act(APA) (5 U.S.C. 553), including thoserequiring publication of a notice ofproposed rulemaking, an opportunity forpublic comment, and a delay in effectivedate. This rule is also exempt from theserequirements because it involves aforeign affairs function of the UnitedStates in that it implements a part of theUnited States-Canada Free-TradeAgreement. This rule is not subject tothe requirements of section 13(b) of theExport Administration Act because it isnot imposing new controls.

Nevertheless, because of theimportance of the issues raised by theseregulations, this rule was issued in ,interim form and public comments weresolicited. Although there is no formalcomment period on this final rule, publiccomments are welcome on a continuingbasis. Comments should be submitted toBernard Kritzer, Office of IndustrialResource Administration, Bureau ofExport Administration, U.S. Departmentof Commerce, Room 3878, Washington,DC 20230.


Administrative practice andprocedure, Exports, Forests and forestproducts, Petroleum, and Reporting andrecordkeeping requirements.

Accordingly, the interim ruleamending 15 CFR part 777 of the ExportAdministration Regulations (15 CFRparts 730799) that was published at 54FR 1349 on January 13,1989, is adoptedas a final rule with the followingchanges:

1. The authority citation for 15 CFRpart 777 continues to read as follows:

Authority: Pub. L. 96-72, 93 Stat. 503 ( 50U.S.C. app. 2401 et seq.), as amended by Pub.L. 97-145 of December 29, 1981, by Pub. L. 99-64 of July 12,1985, by Pub. L. 100-180 ofDecember 4, 1987, by Pub. L. 100-418 ofAugust 23, 1988, and by Pub. L. 100-449 ofSeptember 28, 1988; E.O. 12525 of July 12, 1985(50 FR 28757, July 16, 1985); sec. 103, Pub.L.94-163 of December 22, 1985 (42 U.S.C. 6212),as amended by Pub. L. 99-58 of July 2,1985;sec. 101, Pub. L. 93-153 of November 16, 1973(30 U.S.C. 185); sec. 28, Pub. L 95-372 ofSeptember 18, 1978 (43 U.S.C. 1354); E.O.11912 of April 13, 1976 (41 FR 15825, April 15,1976), as amended; secs. 201(1) and 201(11)(e),Pub. L. 94-258 of April 5, 1976 (10 U.S.C. 7420and 7430(e)); Presidential Findings of June 14,1985 (50 FR 25189, June 18,1985) andDecember 31, 1988 (54 FR 271, January 5,1989); and sec. 125, Pub. L. 99-64 of July 12,1985 (46 U.S.C. 466(c)).

PART 777--AMENDED]

§ 777.6 [Amended]2. Section 777.6(d) is amended by

removing the words "and (x)" in the

NOTE that follows paragraph(d)(1)(i)(B); by removing the phrase "wasnot produced from the Naval PetroleumReserves and" in the introductory text ofparagraph (d)(1)(vi) and paragraph(d)(1)(viii); and by removing the phrase"was not produced from the NavalPetroleum Reserves, and" in theintroductory text of paragraph (d)(1)(vii).

(3) Section 777.6(e) is amended byremoving paragraph (e)(2) and byredesignating paragraphs (e)[3), (e)(4),and (e)(5) as paragraphs (e)(2), (e)(3),and (e)(4), respectively.

4. Section 777.6(f) is amended byrevising paragraph (f)(1); by removingparagraph (f)(4)(i); by redesignatingparagraphs (f)(4)(ii) and (f)(4)(iii) asparagraphs (f)(4)(i) and (f)(4)(ii),respectively; and by adding a newparagraph (f)(6), as follows:

§ 777.6 Petroleum and petroleumproducts.* .* * "* *

(f) **

(1) Authorization to export suchAlaska crude oil will be granted on aquarterly basis. Applications will beaccepted by the Office of Export

* Licensing no earlier than two monthsprior to the beginning of the calendarquarter in question, but must bereceived no later than the 25th day ofthe second month preceding the ,calendar quarter. For example, for thecalendar quarter beginning April 1 andending June 30, applications will beaccepted beginning February 1, but mustbe received no later than February 25.

(6) The Office of Export Licensing willcarry forward any portion of the 50,000barrels per day quota that has not beenallocated during a calendar quarter,except that no unallocated portions willbe carried over to a new calendar year.The unallocated volume for a calendarquarter will be added, until expended, to

-the quotas available for each quarterthrough the end of the calendar year.

Dated: March 13, 1990.James M. LeMunyon,Deputy Assistant Secretary for ExportAdministration.[FR Doc. 90-6177 Filed 3-16-90; 8:45 am]BILLING CODE 3510-OT-M

FEDERAL TRADE COMMISSION

16 CFR Part 460

RIN 3084-AA09

Trade Regulation Rule: Labeling andAdvertising of Home Insulation

AGENCY: Federal Trade Commission.

ACTION: Final rule.

SUMMARY: The Federal TradeCommission (the "Commission"),pursuant to the Federal TradeCommission Act, 15 U.S.C. 41 et seq.,issues two technical, non-substantiveamendments to its Trade RegulationRule Concerning the Labeling andAdvertising of Home Insulation (the "R-value Rule"), 16 CFR part 460. The 'Commission issues the first amendmentto § 460.5(a)(2) of the R-value Rule, inresponse to a petition filed by an .industry group and following a review ofwritten Comments on the amen4mentsolicited by.the Commission (54 FR11385). The Rule as interpreted by theCommission previously requiredmanufacturers of loose:fill celluloseinsulation to use one of two specificsettled density test procedures. Theamendment requires use of'the settleddensity test procedure adopted in ASTMC739-88. The Commission issues thesecond amendment to §§ 460.5(a),460.5(b) and 460.5(d)(1) of the R-valueRule to specify the versions of ASTMtest procedures C 177, C 518, C 236 or C976 that must be used to determine theR-values of home insulation products.EFFECTIVE DATE: The amendments areeffective April 18, 1990. The Vincorporation by reference of certainpublications listed in the regulations isapproved by the Director of the FederalRegister as of April 18, 1990.FOR FURTHER INFORMATION CONTACT:Kent C. Howerton, R-value RuleCoordinator, Federal TradeCommission, Washington, DC 20580,(202) 326-3013.SUPPLEMENTARY INFORMATION:

I. Cellulose Settled Density TestProcedure

A. Commission's Tentative Decision

The Cellulose Industry StandardsEnforcement Program ("CISEP"), anindustry association of celluloseinsulation manufacturers, requested thatthe Commission adopt a revised versionof the blower cyclone shaker ("BCS")settled density test procedure under§ 460.5(a)(2) of the Commission's R-value Rule. The revised procedure hadbeen adopted by the American Societyof Testing and Materials ("ASTM") inits standard specification ASTM C 739-86 for cellulose loose-fill insulation.

On March 20, 1989, the C6mmissionannounced its tentative decision to issuea technical amendment to the R-valueRule, adopting the revised.testprocedure in ASTM C 739-86 as the onlyprocedure allowed under § 460.5(a)(2)(54 FR 11385). This decision was based

"i6653

APPENDIX E: California Heavy Crude

Title 3-The President

its traditional allies-the United States and other Western donors. There-fore Afghanistan no longer fits the definition of a "Marxist-Leninist state."

In 1986, President Reagan exercised a special statutory authority to denynondiscriminatory (most-favored-nation) trade treatment to the products ofAfghanistan (Proclamation 5437 pursuant to section 118 of Pub. L. 99-190).Providing the new Afghan leadership with nondiscriminatory trade treat-ment will signal our commitment to help restore the Afghan economy.

The foregoing actions of the President under these three statutes underscorethe support of the United States for the leaders and people of Afghanistanas they address the ravages of a decade of war and seek to rebuild theircountry and their society.

Memorandum of October 22, 1992

Exports of Domestically Produced Heavy Crude Oil

Memorandum for the Secretary of Commerce [and] the Secretary of Energy

On January 2, 1990, the Department of Commerce transmitted to the Con-gress a report entitled "U.S. Crude Oil Exports" that was required underSection 2424 of the Omnibus Trade and Competitiveness Act of 1988. Thereport recommended modifying the existing restrictions on the export ofcrude oil produced in the lower 48 states to allow the export of Californiaheavy crude. Building on that report, the National Energy Strategy, releasedin February 1991, recommended authorizing the export of California heavycrude oil in order to reduce well abandonments, prevent loss of existing do-mestic oil reserves, and further diversify world oil production.

Before exports of such heavy crude oil can be authorized, certain findingsand determinations must be made under Section 103 of the Energy Policyand Conservation Act (42 U.S.C. 6212(b)), Section 28(u) of the Mineral Leas-ing Act as amended by the Trans-Alaska Pipeline Authorization Act of 1973(30 U.S.C. 185(u)), and the Export Administration Act of 1979, as amended,and continued in effect through my invocation of the International Emergen-cy Economic Powers Act.

By the authority vested in me as President by the Constitution and the lawsof the United States of America, including the laws cited herein and Execu-tive Order 12730, I hereby find and determine that exports of Californiaheavy crude oil having a gravity of 20 degrees API or lower are in the na-tional interest, and I find and determine that such petroleum exports:

(1) are in accordance with the provisions of the Export AdministrationAct of 1979, as amended;

(2) are consistent with the purpose of the Energy Policy and Conserva-tion Act; and

(3) will not diminish the total quality or quantity of petroleum availableto the United States.

Other Presidential Documents

In making these findings, I have taken into account the national interest asrelated to the need to leave uninterrupted or unimpaired:

(1) exchanges in similar quantity for convenience or increased efficien-cy of transportation with persons or the government of a foreign state;

(2) temporary exports for convenience or increased efficiency of trans-portation across parts of an adjacent foreign state which exports reenterthe United States; and

(3) the historical trading relations of the United States with Canadaand Mexico.

Further, I direct the Secretary of Commerce, based on the findings and de-terminations herein, to modify the existing'restrictions on the export ofcrude oil produced in the lower 48 states to allow the export of Californiaheavy crude oil and, as part of these actions, the Secretary of Commerceshall initially allow the export of an average quantity of 25,000 barrels perday of California heavy crude oil having a gravity of 20 degrees API orlower.

To assist the Secretary of Commerce in carrying out these actions, I directthe Secretary of Energy, in consultation with the Secretaries of Commerce,the Interior, Transportation and other interested agencies, to review peri-odically such crude oil exports in light of then-existing market circum-stances. Based on the results of these reviews, the Secretary of Energy isauthorized to recommend to the Secretary of Commerce that adjustmentsbe made in the quantity of California heavy crude oil allowed to be export-ed. Such adjustments shall allow the export of the maximum quantity thatwill not diminish the total quantity or quelity of petroleum available to theUnited States. The Secretary of Commerce shall take necessary, proper andprompt action to implement the Secretary of Energy's recommendation.

The Secretary of Commerce is authorized and directed to publish thismemorandum in the Federal Register.

GEORGE BUSHTHE WHITE HOUSE,Washington, October 22, 1992.

Notice of October 25, 1M2

Continuation of Iran Emergency

On November 14, 1979, by Executive Order No. 12170, the President de-clared a national energency to deal with the threat to the national security,foreign policy, and economy of the United States constituted by the situa-tion in Iran. Notices of the continuation of this national emergency havebeen transmitted annually by the President to the Congress and the FederalRegister, most recently on November 12, 1991. Because our relations withIran have not yet returned to normal, and the process of implementing theJanuary 19, 1981, agreements with Iran is still underway, the national emer-

13900 Federal Register / Vol. !59. No.' 57 / Thuirsday, March 24, -1994 /'Proposed Rules

flight, replace the bolt with a serviceablemagnafluxed bolt or with a new bolt, inaccordance with the service bulletin.

(2) Replace each existing MLGretiactactuator bracket retaining bolt, Item 840 (P/N AIR 123940). with a new bolt, P/N AIR134736. in accordance with the servicebulletin.

(c) At the next MLG overhaul, or within.12,000 landings after the effective date of thisAD. whichever occurs earlier, remove theexisting nose landing gear-trunnion pin crossbolt, PIN NAS 1305-54D,.and replace it witha new bolt, PIN NAS 1305-50D, inaccordance with Paragraphs C. through F. of,the Accomplishment Instructions of SaabService Bulletin 340-32-094, dated October29. 1993.

(d) An alternative method of compliance oradjustment of the compliance time thatprovides an acceptable level of safety may beused if approved by the Manager,Standardization Branch., ANM-1 13, FAA.Transport Airplane Directorate. Operatorsshall submit their requests through anappropriate FAA Principal MaintenanceInspector. who may add comments and thensend it to the Manager. StandardizationBranch. ANM-113.

Note: Information concerning the existenceof approved alternative methods ofcompliance with this AD, if any, may beobtained from the Manager, StandardizationBranch. ANM-113.

(a) Special flight permits may be issued inaccordance with Federal AviationRegulations (FAR) 21.19.7 and 21.199 tooperate the airplane to a.location where the.requirements of this AD can beaccomplished.

Issued in Renton, Washington, on March18, 1994.Darrell N. Pederson,Acting Manager. Transport AirplaneDirectorate, Aircraft Certification Service.IFR Dc. 94-6909 Filed 3-23-94; 8:45 amlBIU.NO CODE 4010-13-U

.DEPARTMENT OF COMMERCE


15 CFR Part 777

(Docket No. 930653-3153

RIN 0894-AA70

Exports of Certain California Crude Oi-

AGENCY: Bureau of ExportAdministration, Commerce.ACTION: Proposed rule with a request forcomments.,

SUMMARY: The Bureau of ExportAdministration (BXA) is proposing toamend the short supply provisions ofthe Export Administration Regulations(EAR) by revising the restrictions onexports to initially allow the export ofup to 25,000 barrels per day ofCalifornia heavy crude oil having a

gravity of 20 degrees API or lower. Thechanges proposed by this rule are basedon the President's October 22, 1992,memorandum to the Secretary ofCommerce to modify existingrestrictions on the export of certainCalifornia heavy crude oil. This noticedelineates the actions the Department istaking to implement the President'sdecision. It also proposes specificregulatory changes implementing those-actions and solicits public comments.

DATES: Comments must be received byApril 25, 1994.

ADDRESSES: Written comments (sixcopies) should be sent to BernardKritzer, Senior Industry Analyst,.Officeof Foreign Availability, room 1087. U.S.Department of Commerce, 14th Streetand Pennsylvania Avenue NW;,Washington, DC 20230.

FOR FURTHER INFORMATION CONTACT:Bernard Kritzer, Office of ForeignAvailability (OFA), Bureau of ExportAdministration, Telephone: (202) 482-0074.


Background

Section 777.6(d)(1).of the ExportAdministration Regulations (EAR)restricts exports of crude petroleum,including reconstituted crudepetroleum, tar sands and crude shaleoil. This rule proposes to amend§ 777.6(d)(1) to permit exports of certain.California crude oil.pursuant to aPresidential Memorandum of October22. 1992,1 in which the Presidentdetermined that exports of Californiaheavy crude oil having a gravity of 20degrees API or lower. were in thenational interest. Before the Presidentauthorized this export of crude oil, hemade findings and determinationsunder three statutes: Section 10i of theEnergy Policy and Conservation Act (42U.S.C. 6212(b)); section 28(u) of theMineral Leasing Act, as amended by theTrans-Alaska Pipeline AuthorizationAct of 1973 (30 U.S.C. 185(u)); andprovisions of the Export AdministrationAct, as amended, and to the extentconsistent with law, continued in effect'through the President's invocation ofthe International Emergency EconomicPowers Act. The Export AdministrationAct was continued on March 27, 1993.by Public Law 103-10. The Presidentmade findings that exports of Californiaheavy crude oil having a gravity of 20degrees API or lower: (1) Were in accordwith the provisions of the Export

£ The President's memorandum of October 22.1992. "Exports of Domestically Produced HeavyCrude Oil" (3 CFR. 1992 Comp.. p. 382).

Administration Act of 1979, asamended;

(2) Were consistent with the purposesof the Energy Pblicy and ConservationAct; and

(3) Would not diminish the totalquality or .quantity of petroleumavailable to the United States.

Based upon the above findings, thePresident authorized the Secretary ofCommerce to modify the existingrestrictions on the export of crude oilproduced in the lower 48 states toinitially allow the export of an averagequantity of 25.000 barrels per day (MB/D) of California heavy crude oil havinga gravity of 20 degrees API or lower.

The President also directed theSecretary of Energy, in consultationwith the Secretaries of Commerce, theInterior, Transportation, and otherinterested agencies, to conduct periodicreviews of such exports in light of then.existing market circumstances. Basedupon the results of these marketreviews, the President authorized theSecretary of Energy to recommend to theSecretary of Commerce that adjustmentsbe made in the quantity of Californiaheavy crude oil that may be authorizedfor export (i.e., adjustments to the initialaverage authorized level of 25 MB/D).

Department of Commerce ActionsThe Department proposes to take the

following actions to implement thePresident's decision: (1) Propose rules toimplement the President's decision;

(72) Solicit public comments on therules; and.

(3) Publish a final rule implementingthe President's findings and taking intoaccount public comments on thisproposed rule and other relevantevidence.

The Department of Commerce'sProposals

This notice proposes to amend § 777.6of the Export AdministrationRegulations (EAR) to allow the licensingof exports of up to 25 MB/D per day ofCalifornia heavy crude oil having agravity of 20 degrees API or lower.

To implement this program, theDepartment proposes to: (1) Grantlicenses for these exports on a first-come-first-served basis; (2) authorize theexport of up to 25 percent (2.28 millionbarrels) of the annual authorizedvolume (9.125 million barrels) of suchCalifornia crude oil per license; (3)approve only one application percompany, including its affiliates, as longas there are other-outstanding non-affiliate company-applications in thatmonth; (4) allow the licensee up to 90days from the issuance of the license toexport the oil; (5) require the licensee to

Federal Register /.Vol. 59, ,No. 57 / Thursday, March 24, 1994 / Proposed Rules

certify to the Department in writing thatthe export(s) occuired during the 90-daylicense term; (6) carry forward anyportion of the 25 MB/D quota that theDepartment has not licensed, exceptthat the Department will not carryforward unlicensed portions more than30 days into a new calendar year; (7)return to the available quota volume alllicensed volumes not shipped duringthe 90-day term of an export license,except that the Department will notcarry forward unshipped portions morethan 30 days into the new calendar year;and (8) allow a 10 percent shippingtolerance on the licensed, but notshipped volume of barrels and a 25percent shipping tolerance on the totaldollar value of the license, respectively.

The Department proposes to requirethat a prospective exporter: (1) Submitan applicati6n on BXA Form 622-P; (2)-state the total number of barrels forexport during the 90-day license termnot a per day rate; (3) includesupporting documents proving that theapplicant has: (i) Title to.the quantity ofbarrels stated in the-application, or anaccepted order for the purchase of thequantity of barrels stated intheapplication, (ii) a verifiable contract ofsale to export the crude oil contingenton the applicant obtaining an exportlicense, (iii) documentation proving thatthe crude oil to be exported has agravity of 20 degrees API or lower, (iv)documentation proving that the crudeoil was derived from production withinthe state of California, including its statesubmerged lands, (v) documentationcertifying that the crude oil was notproduced or derived from a' U.S. NavalPetroleum Reserve, and (vi) , : .documentation certifying that thecrideoil was not produced from the' .submerged lands of the U.S. OuterContinental Shelf; and (4) export thelicensed volumes within 90 days of theIssuance of the license and to report theexport to the Department of Commerce.In addition, the Department will allowthe applicant to combine licensedquantities into one or more shipments,provided that the validity period ofnone of the affected licenses hasexpired. As set forth in the EAR, theapplicant cannot transfer a license toanother person.

An applicant can file for a license atany time during the calendar year. TheDepartment, however, will process onlyone license per applicant per month aslong as there are other non-affiliatedapplications pending during that month.The Department Will issue validated,licenses expbditiously as long as thereare sufficient quantities of theauthorized heavy crude oil Volumesavailable. If there is no available volume

of heavy crude oil, the Department willreturn the application without action. Ifthe volume of heavy crude oil availablefor export is less than the applicantrequested, the Department will contactthe applicant and determine if theapplicant wants the available volume. Ifnot, the Department will return theapplication without action.If theapplicant wants the available volume,the Department will request that theapplicant amend its application toreflect the lesser volume

The Department will apply theprocedures eventually adopted inresponse to this proposed rulemakingwith additional notice and comment toany future increase in the export volumethat the Secretary of Energy may fromtime to time recommend to theDepartment of Commerce.

Nature of the Export MarketIn developing an approach'to

implementing the President's decision,the Department is taking into account 'the nature of the'heavy crude oil exportmarket. The Department's 1989 "Reportto the Congress on U.S. Crude Oil .Exports," (pp. IV-4-IV-11) concludedthat opportunities to export Californiaheavy crude generally consist of spotmarket rather than year-round exportactivity. The report found thatopportunities to export.California heavycrude oil occur intermittently andrandomly throughout the year when theprice of these oils are low and the priceof Pacific Rim substitutes are high. TheDepartment's recent experience :monitoring licensed export volumesstrongly supports this position..TheDeparinient recognized the need,therefore, to develop licensing,,procedures permitting firms'to take,advantage of brief windows ofopportunity and to conduct spot in arketexport transactions.

The 1989 Commerce Report alsoidentified numerous potential , :.participants in such a market with awide range of economic strengths andcapabilities. The study found thatallowing limited exports of Californiaheavy crude oil would enable somefirms (e.g., the independent producers)to expand their crude oil marketingopportunities, to maintain their existingoil production, and to earn additionalrevenue to reinvest in exploring for newdomestic oil reserves. "

The Department also recognized thathaving only one applicant could reducethe effectiveness of the export program.For example, an exporter could, in alicensing program without time limits,apply for and obtain an export licensefor the entire 25 MB/D per day for a oneyear period. If, however, the firm did

not export the oil because of someproblem with the transaction, the.license would never be.used. Thiswould limit the number of potentialexporters, deny commercial I .

opportunities to other participants, andfrustrate the intent of the President'sexport initiative. This concern arguedfor limiting the term of an export licenseto insure that the licensee used thelicense and exported the oil, or that thevolume of oil quickly became-availableto other interested applicants. ,

There was also a need to assure thatlicenses issued to exporters would be incommercially viable volumes since thetotal volume initially authorized forexport is low-9.125 million barrelsannually. It would be difficult toachieve economically viable shipmentsif the Department were to issuenumerous licenses for small volumes(e.g., 100,000 barrels).

Departmental Considerations

Given the noted market dynamics andcommercial consideration, the. "Department considers it necessary todevelop a licensing regimethat: (1) Isequitable; (2) minimizes gbvernmentinvolvement in commercialtransactions; (3) makes licensesavailable to a wide number ofparticipants; (4) reviews licenseapplications expeditiously to allowfirms to take advantage of time-sensitivespot market trading opportunities; (5)prevents a firm from obtaining a license'and not exporting the oil; (6) allows foreconomically viable export cargoes; and(7) does no*t impose unneqessaryadministrative burdens.on exporters.

Although the Departmentproposps toimplement the option of first-come-first-served, the Department will'consider"and may adopt any of the options in thisrulemaking, or an alternative proposalthat addresses the above considerations.In fact, the Department did considerseveral different options; they arediscussed below. The Department issoliciting comments from interestedparties on the most effective approachfor the Department to implement thePresident's decision.

Option #1-First-Come-First-Served

Under this option, the Departmentwould grant licenses for the export ofCalifornia heavy crude oil on a first-come-first-served basis. This optioninvolves the minimum governmentmanagement of an export licensingregime and intervention in the market.There are numerous variations to thisoption which involve the number oftimes per year ;that the Departmentwould review and authorize exportlicenses. The.Department could grant

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Federal Register / Vol. 59, No. 57 / Thursday, March 24, 1994 / Proposed Rules

the licenses annually, quarterly ormonthly on a first-come-first-servedbasis. There are also numerousvariations on the volume of oil theDepartment could authorize per license.Under one variation the Departmentcould license the entire export volume(9.125 million barrels) to the first firmthat filed an export license application.

Although licensing the entire volumeat one time would achieve theDepartment's objective of minimizingthe government's role in exporttransactions, it may result in limitingthis export opportunity to the first firmthat filed a license application. TheDepartment, however, wants to ensurethat the potential benefits of theprogram are diffused among many firmsand utilized. This option, therefore,calls for limiting the quantity perlicense (i.e., 25 percent of the totalauthorized volume) and for each licenseto have a 90 day limit. In addition, acompany and its affiliates can receiveonly one license per month as long asthere are -other outstanding applications.

The Department considers this optionto be the best means available to providea number of opportunities (at least four)for a number of firms to participate inheavy crude oil exports with aminimum of government interference inthe export transaction. The Departmentalso considers that the 90 day licenseterm would assure the utilization of thelicense or the rapid return of the volumeof oil to the quota so others may use it.

On the negative side, a singlecompany.could request and receive forfour months in a row a license covering25 percent of the authorized volume ofoil just by being the earliest applicant tofile with the Department. In addition,this option would require theDepartment to keep running accountson the amount available for licensing atany one time. The Department,however, should be able to handle thisbecause the authorized export volumesare small and the exports are likely tooccur intermittently rather than yearround.

Option #2-Prorationing

Prorationing procedures, such as theone the Department uses for the AlaskanNorth Slope/Canada (ANS/Canada)crude oil export regime, offer someadvantages but also involve a greatermeasure of government involvementthan does licensing on a first-come-first-servedbasis.

On the positive side, this option mayensure that more firms could participatein the export program than would be thecase under licensing option #1. Thisoption also would assure everyone who

applies would get some portion of the oauthorized export volume._ On the negative side, this optionwould entail active governmentinvolvement in administering an exportprorationing regime on a year roundbasis. In addition, a prorationingscheme could be difficult to administerand could result in economically notviable volumes. The volume ofCalifornia heavy crude oil exports (25MB/D) allowed under the President'sOctober 22, 1992 decision amounts toone-half of the volume authorized forthe ANS/Canada export regime (50 MB/D). Over the past four years the demandfor ANS exports to Western Canada hasnot forced the Department to prorateexports among competing applications.This may not be the case in theCalifornia situation where the volume ismuch smaller and more firms haveexpressed an interest in participating inthis program. Although several licenseeswith small volumes could possiblycombine volumes to make oneshipment, it would not help exporters,that had contracts to deliver largevolumes.

Option #3-Pre-Qualification WithExport Nominations

This option would result in a greaterdegree of government management thanwould be the case under any of theother options described above because itwould involve a two'step reviewprocess of all export licensingtransactions.

Under this procedure, potentialexporters would provide enoughinformation to allow the Department topro-qualify a firm as an exporter andsubsequently grant final exportauthorization to the firm upon theprovision of satisfactory informationregarding end-users and intermediateconsignees, if any.

The first step would involve theDepartment pre-qualifying exportersbased upon the following criteria: (1)The firm is a commercial entity that isinterested in exporting California heavycrude oil; (2) the applicant candemonstrate that an end-user isinterested in purchasing oil from themas evidenced by a letter/telex.

The nominations process-step 2-would operate as follows:

1. On a monthly basis, a pro-qualifiedexporter would nominate the quantity itwould like to export during the month.

2. A pre-qualified exporter wouldhave to submit his nomination no laterthan 10 calendar days before the firstday of the month.

3. At the outset of each month, theDepartment would notify pro-qualifiedexporters of how much oil was available

for export pursuant to the quota for themonth. (It.could provide notice byhaving firms telephone a specialnumber and/or talk with a licensingofficer.)

4. When nominating export volumes,the licensee would be required toprovide the Department withdocumentation establishing: (a) Title tothe oil or a contract to purchase the oilsubject to approval of the exporttransaction; (b) a contract or contingentcontract to export the oil subject toapproval of the export transaction. TheDepartment would also have to approvethe intermediate and ultimate foreignconsignees for the oil, and;

5. The licensee would have 30 days tocomplete the export. If the export didnot occur during the 30 day license,term, the Department would return thevolume to the quota. If the licenseeshipped part of the volume, theDepartment would return unshippedvolumes to the quota.

Other key provis.ions include:1. The Department would allow the

export of up to a total of 2,281,000barrels during any 30 day period.

2. The Department would limitindividual company exports to1,000,000 barrels of oil during any 30day period.

3. The Department would processonly one nomination per firm per 30day period as long as there areoutstanding nominations from non-affiliated firms.

The Department would implement thefollowing provision in the event thevolume of crude oil nominated forexport exceeds the amount allowedduring a 30 day period: 1. It wouldallocate to each applicant an equal shareof the authorized volume. For example,if five licensees nominated a total overthe authorized volume of exports, theDepartment would allocate each party20 percent of the volume available forexport (i.e., 456,000 barrels out the totalof 2,281,000 barrels available), and

2. Licensees would be allowed tocombine volumes to achieve economic-sized cargoes.

On the positive side, this optionwould be responsive to the spot-marketnature of the market. The pre-qualifyingprocess may ensure that many firms hadthe opportunity to participate in theexport program.

On the negative side, the Departmentconsiders the two-step review processunnecessarily bureaucratic. Thisapproach would require the Departmentto actively manage licenses and keeprunning accounts on the amountsavailable for licensing at any one time.In addition, exporters would have tocontact the Department on an ongoing

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Federal Register / Vol. 59, No. 57 / Thursday, March i4, 1994 / Proposed Rules

basis to determine what volume was* available for export during a givenmonth. Exporters would have toconstantly report on whether theyconducted exports and whether theyexceeded their authorized export level.The Department would also have toestablish a procedure to screen and pre-qualify new entrants on a continuousbasis to ensure that they would receivean opportunity to participate in theexport program.

The Department invites writtencomments from interested parties thatmay assist it in implementing thePresident's decision. Specifically, wesolicit information concerning thefollowing:

(1) What are the pros and cons of eachof the licensing options presented, andwhich, if any, do you prefer?

(2) Are there other licensingapproaches that would better allow U.S.exporters to take advantage of thisopportunity? If you have a specificlicensing scheme in mind, pleaseexplain it, discuss the pros and cons ofthe selected option, and explain howthe Department should implement yourapproach.

(2) Should the Department reviewexport license applications monthly, ormore or less frequently (e.g., quarterly,semiannually, annually, continuously)?Are exports of up to 2.28 million barrelsper license sufficient to make licensesavailable to more than one companywhile retaining the commercial viabilityof the exports? If not, what is theoptimal cargo size (barrels) foreconomically viable export shipments?

(3) Should an exporter have more orless than a 90-day license to exportCalifornia crude oil in a spot markettrading environment? What would bethe optimal time to allow an exporter topursue business activities while notdenying opportunities to otherexporters?

(4) Should the Department carry overexport volumes not shipped in onecalendar year to the next year? What isthe optimal time that the Departmentshould carry over volumes not shippedduring one calendar year?

(5) Are there any specific heavycrudes, with particular assay properties,that the Department should excludefrom licensing? Comments in this areashould indicate the specific source andtype of crude, its full assay, the uniquenature of the assay, the availability ofsubstitutes and the special user.

Comment ProceduresThe Department is issuing this rule in

proposed form and will consider publiccomments In the development of thefinal regulations. The Department

encourages interested persons who wishto comment to do so at the earliestpossible time to permit the fullestconsideration of their views.

The following procedures will applyto any comments submitted pursuant tothis procedure: (1) Interested parties areinvited to submit written comments (6copies), opinions, data, information, oradvice with respect to this notice to theaddress above by the dates specifiedabove;

(2) The Department will consider allcomments received before the close ofthe comment period in developing finalregulations. While comments receivedafter the end of the comment period willbe considered if possible, this cannot beassured;

(3) All public comments on theseregulations will be a matter of publicrecord and will be available for publicinspection and copying.(Communications from agencies of theUnited States Government or foreigngovernments will not be made availablefor public inspection.);. (4) In the interest of accuracy andcompleteness, the Department requirescomments in written form. Oralcomments must be followed by writtenmemoranda which will also be a matterof public record and will be availablefor public review and copying;

(5) The Department will not acceptpublic comments accompanied by arequest that a part or all of the materialbe treated confidentially because of itsbusiness proprietary nature or for anyother reason. The Department willreturn such comments and materials tothe person submitting the commentsand will not consider them in thedevelopment of final regulations; and

(6) The comments received inresponse to this notice will bemaintained in the Bureau of ExportAdministration Freedom of InformationRecords Inspection Facility, room 4525,Department of Commerce, 14th Streetand Pennsylvania Avenue, NW.,Washington, DC 20230. Interestedparties may inspect and copy records inthis facility, including written publiccomments and memorandasummarizing the substance of oralcommunications, in accordance withregulations published in part 4 of title15 of the Code of Federal Regulations.Information about the inspection andcopying of records at the facility may beobtained from Margaret Cornejo, Bureauof Export Administration Freedom ofInformation Officer, at the aboveaddress or by calling (202) 482-5653.

Rulemaking Requirements1. This proposed rule contains

collections of information subject to the

requirements of the PaperworkReduction Act of 1980 (44 U.S.C. 3501et seq.) The public reporting burden forthis collection of information isestimated to average 12 hours perresponse, including the time requiredfor reviewing instructions, searchingand maintaining the necessary data, andcompleting and reviewing the collectionof information. Send commentsregarding this burden to: BernardKritzer, Senior Industry Analyst, Officeof Foreign Availability, room 1087, U.S.Department of Commerce, 14th Streetand Pennsylvania Avenue, NW.,Washington, D.C., 20230; and to theOffice of Information and RegulatoryAffairs, Office of Management andBudget, Washington, DC 20503. ProjectNo. 0694-AA70.

2. Because a notice of proposedrulemaking and an opportunity forpublic comment are not required to begiven for this rule by section 553 of theAdministrative Procedure Act (5 U.S.C.553) or by any other law, under section3(a) of the Regulatory Flexibility Act (5U.S.C. 603(a) and 604(a)) no initial orfinal Regulatory Flexibility Analysis hasto be or will be prepared.

3. This proposed rule does notcontain policies with Federalismimplications sufficient to warrantpreparation of a Federalism assessmentunder Executive Order 12612.

4. This rule was not subject to reviewby the Office of Management andBudget under Executive Order 12866.List of Subjects in 15 CFR Part 777

Administrative practice andprocedure, Exports, Forest and forestproducts, Petroleum, Reporting andrecordkeeping requirements.

Accordingly, part 777 of the ExportAdministration Regulations (15 CFRparts 730-799) is proposed to beamended as follows:


Authority: Pub. 90-351, 82 Stat. 197 (18U.S.C. 2510 et seq.), as amended-, sec. 101,Pub. L. b3-153, 87 Stat. 576 (30 U.S.C. 185),as amended; sec. 103, Pub. L. 94-163, 89Stat. 877 (42 U.S.C, 6212), as amended; secs.201 and 201(11)(e), Pub. L. 94-258, 90 Stat.309 (10 U.S.C. 7420 and 7430(e)), asamended; Pub. L. 95-223, 91 Stat 1626 (50U.S.C. 1701 et seq.); Pub. L. 95-242, 92 Stat.120 (22 U.S.C. 3201 et seq. and 42 U.S.C.2139a); sec. 208, Pub. L. 95-372, 92 Stat. 668(43 U.S.C. 1354);'Pub. L. 96-72, 93 Stat.'503(50 U.S.C. App. 2401 et seq.), as amended;E.O. 11912 of April 13, 1976 (41 FR 15825,April 15, 1976); E.O. 12002 of July 7, 1977(42 FR 35623, July 7, 1977), as amended; E.O.12058 of May 11, 1978 (43 FR 20947, May16, 1978); E.O. 12214 of May 2.1980 (45 FR29783, May 6, 1980); E.O.12730 of September30, 1990 (55 FR 40373, October 2, 1990), as

l3§03

Federal Register /'. Vol. 59; No. 571 7Thursday,. March, 24, 1994'/\Proposed Rules

continued by Notice of September 25, 1992(57 FR 44649, September 28, 1992); and E.O.12735 of November 16, 1990 (55 FR 48587,November 20, 1990), as continued by Noticeof November 14,1991 (56 FR 58171,November 15, 1991).

PART 777-[AMENDED]

3. Section 777.6 is amended byadding a new paragraph (d)(1)(xii) anda new paragraph (k) to read as follows:

§ 777.6 Petroleum and petroleumproducts.* . * * * *

(d) * * *(1) * * *

(xii) Exports of certain Californiacrude oil. California heavy crude oil canbe exported under the followingconditions: (A) The commodity has agravity of 20 degrees API or lower;

(B) The commodity is produced in thestate of California, including itssubmerged state lands; "

(C) The applicant certifies by affidavitthat: (1) The commodity is not producedor derived from a U.S. Naval PetroleumReserve;

(2) The commodity is not producedfrom the submerged lands of the U.S.Outer Continental Shelf; and

(3) All aspects of the transactioncomply with the provisions ofparagraph (k) of this section.* * * * *

(k) Exports of California heavy crudeoil pursuant to § 777.6(d)(1)(xii). Theexport of California heavy crude oil willbe allowed for an average of no morethan 25,000 barrels per day (MB/D) (orsuch greater or lesser volume as theSecretary of Commerce authorizes basedon the determination andrecommendation of the Secretary ofEnergy) California heavy crude oilhaving a gravity of 20 degrees API orlower as follows:

(1) Applicants must submitapplications on Form BXA-622P to thefollowing address: Office of ExportLicensing, ATTN: Short Supply,Petroleum, Bureau of Export -.Administration, U.S. Department ofCommerce, P.O. Box 273, Washington,DC 20044.

(2) The quantity stated on eachapplication must be the total number ofbarrels-not a per day-rate. Thisquantity must not exceed 2.28 millionbarrels or 25 percent of the annualauthorized export quota.

(3) Each application shall beaccompanied by documents that show:

i) The applicant has or will acquire atitle to the quantity of barrels stated inthe application by providing either anaccepted contract or bill of sale for thequantity of barrels stated in the

application; or a contract to purchasethe quantity of barrels stated in theapplication, which may be contingentupon issuance of an export license tothe applicant;

(ii) Contract(s) to export the quantityof barrels stated in the application,which may be contingent upon issuanceof the export license to the applicant.

(iii) The crude oil: (A) Has a gravityof 20 degrees API or lower;

(B) Was produced within the state ofCalifornia, including its submerged statelands;

(C) Was not produced or derived froma U.S. Naval Petroleum Reserve; and

(D) Was not produced fromsubmerged lands of the U.S. OuterContinental Shelf.

(4) OEL will adhere to the followingprocedures for licensing exports dfCalifornia crude oil:

i) OEL will issue validated licensesfor approved applications in the orderin which OEL received the application(date-time stamped), with the totalquantity authorized not to exceed 25percent (2.28 million barrels) of theannual (9.125 million barrels)authorized volume per license. If anyunused quota exists, OEL will continueto issue licenses for the unused portionof the quota.

(ii) OEL will approve only oneapplication per month for eachcompany and its affiliates, as long asthere are other non-affiliatedapplications pending during that month.

(iii) OEL will carry forward anyportion of the 25 MB/D quota that OELhas not licensed, except that OEL will.not carry over any unallocated portionsmore than 30 days into a new calendaryear.

(iv) OEL will return to the availableauthorized export quota any portion ofthe 25 MB/D quota that OEL hadlicensed but a licensee had not shippedwithin the 90 day authorized licenseterm, except that OEL will not carryover unshipped volumes more than 30.days into a new calendar year.

(5) License holders:(i) Have 90 calendar days from the

date OEL issued the license to exportthe quantity authorized on the license.The exporter is required to provide OELwith a certified statement confirmingthe date and quantity of exports.

(ii) May combine authorizedquantities into one or more shipments,provided that the validity period ofnone of the affected licenses hasexpirbd.

{iii) Are prohibited from transferringthe license to another party. See, 15 CFRpart 787.

(6) OEL will allow, pursuant to§ 786.7(c) of this subchapter, a 10

percent shipping tolerance on theunshipped balance based upon thevolume of barrels it has authorized. Inaddition to the 10 percent tolerance onthe unshipped volume of barrels, OELwill allow a 25 percent shippingtolerance on the total dollar value of thelicense.

(7) OEL:(i) Will not carry over to the next

calendar year pending applications fromthe previous year.

(ii) Will apply the proceduresdescribed in this section withoutnotifying the public concerning anyincrease in export volume authorized bythe Secretary of Energy from time totime.

Dated: March 17, 1994.Sue E. Eckert,Assistant Secretaryfor ExportAdministration.[FR Doc. 94-6885 Filed 3-23-94; 8:45 am]BILLING CODE 3510-OT-P

DEPARTMENT OF STATE

Bureau of Economic and Business

Affairs

22 CFR Part 89

[Public Notice 1969]

Foreign Prohibitions on LongshoreWork by U.S. Nationals

AGENCY: Department of State.ACTION: Advance notice of proposedrulemaking.

SUMMARY: In accordance with theImmigration and Nationality Act of1952, as amended, the Department ofState is compiling information to updatethe list, by particular activity, ofcountries that prohibit by law,regulation or in practice crewmembersaboard U.S. vessels from performinglongshore work.DATES: Interested parties are invited tosubmit comments in triplicate by April25, 1994.ADDRESSES: For mailing publiccomments: Office of Maritime and LandTransport (EB/TRA/MA), room 5828,Department of State, Washington, DC.20520-5816.FOR FURTHER INFORMATION CONTACT:Stephen M. Miller, Office of Maritimeand Land Transport, Department ofState, (202) 647-6961.SUPPLEMENTARY INFORMATION: Section258(d)(2) of the Immigration andNationality Act of 1952, as added by theImmigration Act of 1990, Public Law101-649, 8 U.S.C. § 1288 (hereinafter:the Act) directs the Secretary of State

13904


replace the actuator as specified in paragraph(b) of this AD at intervals not to exceed 6,500hours TIS;

(ii) If both nut tube assemblies, P/NAA56142, were not replaced with newassemblies during overhaul, reinspect asspecified in paragraph (a) of this AD atintervals not to exceed 250 hours TIS, andreplace the actuator as specified in paragraph(b) of this AD at intervals not to exceed 5,000hours TIS.

(3) Replace the pitch trim actuator with anew part of improved design, P/N 27-19008-01 or 27-19008-02, in accordance with theinstructions in the applicable maintenancemanual.

(i) This replacement eliminates therepetitive inspection requirement of this AD.

(ii) This replacement may be accomplishedat any time to eliminate the inspectionrequirement of this AD.

(c) Special flight permits may be issued inaccordance with sections 21.197 and 21.199of the Federal Aviation Regulations (14 CFR21.197 and 21.199) to operate the airplane toa location where the requirements of this ADcan be accomplished.

(d) An alternative method of compliance oradjustment of the initial or repetitivecompliance times that provides an equivalentlevel of safety may be approved by theManager, Airplane Certification Office(ACO), FAA, 2601 Meacham Boulevard, FortWorth, Texas 76193-0150. The request shallbe forwarded through an appropriate FAAMaintenance Inspector, who may addcomments and then send it to the Manager,Fort Worth ACO.

Note 4: Information concerning theexistence of approved alternative methodspfcompliance with this AD, if any, may beobtained from the Fort Worth ACO.

(e) The inspections and modificationrequired by this AD shall be done inaccordance with Fairchild Aircraft SA226Series Service Letter 226-SL-005, andFairchild Aircraft SA227 Series ServiceLetter 227-SL-011, both Issued: April 8,1993, Revised: March 2, 1995, as applicable.This incorporation by reference is approvedby the Director of the Federal Register inaccordance with 5 U.S.C. 552(a) and 1 CFRpart 51. Copies may be obtained from FieldSupport Engineering, Fairchild Aircraft, P.O.Box 790490, San Antonio, Texas 78279-0490. Copies may be inspected at the FAA,Central Region, Office of the Assistant ChiefCounsel, Room 1558, 601 E. 12th Street,Kansas City, Missouri, or at. the Office of theFederal Register, 800 North Capitol Street,NW., suite 700, Washington, DC.

(fQ This amendment (39-9180) becomeseffective on April 17, 1995.

Issued in Kansas City, Missouri, on March17, 1995.Dwight A. Young,Acting Manager, Small Airplane Directorate,Aircraft Certification Service.[FR Doc. 95-7113 Filed 3-24-95; 8:45 am]

BILLING CODE 4910-13-U

14 CFR Part 71

[Airspace Docket No. 94-AGL-23]

Establishment of Class D Airspace;Akron-Canton, OH

AGENCY: Federal AviationAdministration (FAA), DOT.

ACTION: Final rule; correction.

SUMMARY: This action corrects an errorin the airspace designation of theAkron-Canton, OH Class D airspace arealegal description published in a finalrule on February 23, 1995, (60 FR10014) establishing Class D airspace forAkron-Canton Regional Airport, Akron,OH.

EFFECTIVE DATE: 0901 UTC, May 25,1995.

FOR FURTHER INFORMATION CONTACT:Nancy Cibic, Air Traffic Division,System Management Branch, AGL-530,Federal Aviation Administration, 2300East Devon Avenue, Des Plaines, Illinois60018, telephone (708) 294-7573.SUPPLEMENTARY INFORMATION:

History

Federal Register Document 95-4439,published on February 23, 1995 (60 FR10014), established Class D airspace forAkron-Canton Regional Airport, Akron,Ohio. The Class D surface and radiusarea indicated in the legal descriptionwere published incorrectly. This actioncorrects those errors.

Correction to Final Rule

Accordingly, pursuant to theauthority delegated to me, the airspacedesignation for Akron, Ohio, Class Dairspace, as published in the FederalRegister on February 23, 1995, (60 FR10014), (Federal Register Document 95-4439, page 10014, column 2), iscorrected in the final rule to theincorporation by reference 14 CFR 71.1as follows:

§71.1 [Corrected]Paragraph 5000 General

AGL OH D Akron-Canton, OH [Corrected](Lat. 40'54'59"N., long. 81026'32"W.)

That airspace extending upward from thesurface to and including 5,200 feet MSLwithin a 5-mile radius of the Akron-CantonRegional Airport, OH. This Class D airspacearea is effective during the specific dates andtimes established in advance by a Notice to.Airmen. The effective date and time willthereafter be published in the Airport FacilityDirectory.

Issued in Des Plaines, Illinois on March 16,1995.Roger Wall,Manager, Air Traffic Division.

[FR Doc. 95-7498 Filed 3-24-95; 8:45 am]BILUNG CODE 4910-13-M



15 CFR Part 777

[Docket No. 930653-4299]

RIN 0694-AA70

Exports of Certain California Crude Oil

AGENCY: Bureau of ExportAdministration, Commerce.

ACTION: Final rule.

SUMMARY: The Bureau of ExportAdministration (BXA) is amending theshort supply provisions of the ExportAdministration Regulations (EAR) byrevising the restrictions on exports ofcrude oil produced in the lower 48states to allow exports, under individualvalidated licenses, of up to 25,000barrels per day (MB/D) of Californiaheavy crude oil having a gravity of 20.0degrees API or lower.

This final rule revises the licensingrequirements and procedures that applyto exports of California heavy crude oilby removing a number of significantrestrictions, e.g., the prohibition againsttransporting crude oil by pipeline overrights-of-way granted pursuant to theMineral Leasing Act of 1920 and therequirement that any export of crude oilmust be offset by importing an equal orgreater volume of crude oil of equal orhigher quality.

In order to minimize proceduraldelays in licensing exports of Californiaheavy crude oil, BXA's Office ofChemical and Biological Controls andTreaty Compliance (CBTC) will issuelicenses on a first-come, first-served,basis, Based on comments received onthe March 24, 1994, proposed rule, thisrule a*ows CBTC to issue licensescontingent upon the exportersubmitting, prior to any export under alicense, documentation showing that theexporter has title to the oil (or a contractto purchase the oil) and a contract toexport the oil. This change indocumentation requirements shouldprovide exporters with greater flexibilityin completing small cargo transactionson the spot market. Such transactionsare likely to account for the bulk ofCalifornia heavy crude oil exports.EFFECTIVE DATE: March 27, 1995.

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15670 Federal Register / Vol. 60, No. 58 / Monday, March 27, 1995 / Rules and Regulations

FOR FURTHER INFORMATION CONTACT:Bernard Kritzer, Office of Chemical andBiological Controls and TreatyCompliance (CBTC), Bureau of ExportAdministration, Telephone: (202) 482-0894.


Background

Section 777.6(d)(1) of the ExportAdministration Regulations (EAR)restricts exports of crude petroleum,including reconstituted crudepetroleum, tar sands, and crude shaleoil. This rule amends § 777.6(d)(1) topermit exports of certain Californiacrude oil pursuant to a Presidentialmemorandum of October 22, 1992,1 inwhich the President determined thatexports of California heavy crude oilhaving a gravity of 20.0 degrees API orlower were in the national interest. Priorto authorizing the export of thisCalifornia crude oil, the President madecertain findings and determinationsunder the following statutes:

(1) Section 103 of the Energy Policyand Conservation Act (42 U.S.C.6212(b));

(2) Section 28(u) of the MineralLeasing Act, as amended by the Trans-Alaska Pipeline Authorization Act of1973 (30 U.S.C. 185(u)); and

(3) The provisions of the ExportAdministration Act of 1979 (EAA), asamended, to the extent permitted withlaw, continued in effect after its August20, 1994, expiration through thePresident's inyocation of theInternational Emergency EconomicPowers Act in Executive Order 12924 ofAugust 19, 1994.

The President made findings thatexports of California heavy crude oilhaving a gravity of 20.0 degrees API orlower:

(1) Are in accordance with theprovisions of the Export AdministrationAct of 1979, as amended;

(2) Are consistent with the purpose ofthe Energy Policy and Conservation Act;and

(3) Will not diminish the total qualityor quantity of petroleum availabl~to theUnited States.

Based on the above findings, thePresident authorized the Secretary ofCommerce to modify the existingrestrictions on the export of crude oilproduced in the lower 48 states to allowinitially the export of an averagequantity of 25 MB/D of California heavycrude oil having a gravity of 20.0degrees API or lower.

I The President's memorandum of October 22,1992, was published in the Federal Register Vol.57, No. 226, November 23. 1992, p. 54895.

The President also directed theSecretary of Energy, in consultationwith the Secretaries of Commerce, theInterior, Transportation, and otherinterested agencies, to conduct periodicreviews of such exporty in light of then-existing market circumstances. Inaddition, the President authorized theSecretary of Energy to recommend to theSecretary of Commerce, based on theresults of these periodic reviews, what,if any, adjustments should be made inthe quantity of California heavy crudeoil that may be authorized for export(i.e., adjustments to the currentlyauthorized level of 25 MB/D).

Publication of Proposed Rule (March24, 1994)

In response to the President'sdecision, the Department published aproposed rule and request for publiccomments in the Federal Register onMarch 24, 1994 (59 FR 13900). Theproposed rule would have allowed theCBTC to authorize exports of up to 25MB/D of California heavy crude oilhaving a gravity of 20.0 degrees API orlower. The March 24 rule proposed thatCBTC would grant export licenses on afirst-come, first-served, basis with thequantity authorized on any one licensenot to exceed 25 percent (2.28 millionbarrels) of the annual authorizedvolume (i.e., 9.125 million barrels). Theproposed rule would have allowedCBTC to approve only one applicationper month from each company and itsaffiliates, as long as applications fromnon-affiliated companies were stillpending. In addition, the validity periodfor licenses would have been 90 days;and CBTC would have returned to theavailable authorized export quota anyvolumes that had been licensed but notexported during the 90-day validityperiod, except that no unshippedvolumes would have been carried overmore than 30 days into a new calendaryear. Any unlicensed portion of thequota would have been carried forwardby CBTC from month to month, exceptthat no volumes would have beencarried forward more than 30 days intoa new calendar year. The proposed rulewould have allowed exporters a 10-percent tolerance on the unshippedbalance based on the number of barrelsauthorized on the license, as well as a25-percent tolerance on the total dollarvalue of the license.

Applicants would have been subjectto a number of documentationrequirements under the proposed rule:(1) Documentation showing that theapplicant has or will acquire title to thequantity of barrels stated in theapplication; (2) a contract to export thequantity of barrels stated in the

application; (3) documentation showingthat the crude oil has a gravity of 20.0degrees API or lower and was producedwithin the state of California; and (4) anaffidavit that the crude oil was notproduced or derived from a U.S. NavalPetroleum Reserve and was notproduced from the submerged lands ofthe U.S. Outer Continental Shelf.

Finally, the proposed rule solicitedpublic comments on three possiblelicense allocation schemes: (1) The first-come, first-served licensing schemedescribed in the proposed rule; (2) aprorationing scheme similar to the oneused for exports of Alaskan North Slopecrude oil to Canada; and (3) a licensingscheme employing pre-qualificationwith export nominations.

Public Comments on the Proposed Rule

The Bureau of Export Administration(BXA) received seven comments on theMarch 24, 1994, proposed rule. Onecommenter opposed allowing exports ofup to 25 MB/D of California heavy crudeoil, asserting that this change wouldprovide little or no economic benefitsfor California crude oil producers andwould likely result in price increases inthe domestic fuel market. Twocommenters had no objections toallowing the export of an average of 25MB/D of California heavy crude oil, buturged the Department not to increasethis level without a formal publicrulemaking.

One commenter felt that the 25 MB/D average was quite small relative to thepotential marketable oil and suggestedthat state and local governmentalentities should be exempted from thislimit. This commenter expressed nopreference concerning the method bywhich licenses would be allocated andnoted that the rule probably would nothave a significant impact on inlandproducers because many of them lackedaccess to heated oil pipelines totransport crude oil to export terminals.

Two commenters urged BXA to dropthe proposed requirement thatapplicants provide documentationshowing the existence of a contract toexport California heavy crude oil,because this requirement would make itdifficult for companies to completesmall cargo transactions on the spotmarket. One alternative that wassuggested would permit applicants tosubmit one application per quarter, forcargoes not exceeding 500,000 barrels,to be supported by nonbinding letters ofintent, instead of a signed contract.

Several alternative licensing regimeswere suggested. One commentersuggested two alternative regimes.Under the first alternative, applicantswould be allowed to identify potential


supply sources and end-users, subject toapproval by BXA, and would then beallowed to make shipments involvingthese approved parties, providing proofof compliance and performance to BXAafter each shipment. The secondalternative would involve the issuanceof two types of licenses: (1) short-term(30- to 90-day) licenses not exceeding500,000 barrels, with unused portionsreturned to the available quota, and (2)longer term (6- to 12-month) licenses of1 to 2 million barrels, with up to halfthe amount returned to the availablequota if no shipment is made within 3months. This commenter also urged thatapplicants be allowed to apply forlicenses several months in advance ofthe effective date. Finally, thecommenter suggested that licensees whofail to make any shipments under theirlicenses be given a lower priority whenfiling applications for subsequentlicenses.

Another commenter suggested analternative licensing regime that wouldinvolve a prorationing mechanism witha validity period of not less than 1 yearand a minimum quantity of 500,000barrels. This commenter also favoredeliminating the one application permonth limitation and removing the 25MB/D cap on exports.

Finally, one commenter urged theCommerce Department to work towardeliminating export restrictions onCalifornia heavy crude oil producedfrom the submerged lands of the U.S.Outer Continental Shelf and, as part ofthis action, increase the proposedgravity limit from 20 degrees API to 22degrees API.Changes Made by This Final Rule

The Department reviewed the publiccomments on the March 24, 1994,proposed rule and decided to retain, forthe most part, the licensing regimecontained in that rule (i.e., first-come,first served). However, the Departmentrecognizes that a number of concernswere raised in the public comments onthe proposed rule and, where practical,has made changes in this final rule toaddress these concerns.

This final rule makes certainsignificant changes in thedocumentation requirements for licenseapplications to export California heavycrude oil. These changes are based onthe Department's review of the publiccomments on the proposed rule, itsconsultations with industryrepresentatives familiar with theCalifornia heavy crude oil exportmarket, and its review of certain in-house data on actual shipments ofCalifornia heavy crude oil undervalidated export licenses. The

documentation requirements in theproposed rule specified that eachapplication must be accompanied by: (1)a contract or bill of sale, showing titleto the crude oil, and (2) a contract toexport the crude oil. Severalcommenters felt that this requirementwould make it difficult for companies tocomplete small cargo transactions onthe spot market, noting that thetimeframe for completing small cargotransactions can be very short and thata limited window of opportunity couldbe missed if proof of a contract had tobe obtained before an export licensecould be issued. These commenters alsonoted that the negative effects of theprior proof of contract requirementcould be quite significant because thebulk of California heavy crude oilexports are spot market transactions.

Because of the unique characteristicsof the California heavy crude oil exportmarket (most sales consist of small spotmarket transactions), the Departmentdecided to modify the proof of contractrequirement. This final rule requiresthat each application be accompaniedby documentary evidence of an order asdescribed in § 772.6(a)(2), such as aletter of intent. Although this final ruledoes not require proof of a contract atthe time an application is submitted, alllicenses to export California heavycrude oil will be subject to the conditionthat the licensee submit to the CBTC,prior to any export under the license,documentation proving that the licenseehas: (1) title to the quantity of barrelsstated in the application and (2) acontract to export the quantity stated onthe application. This change willprovide applicants with greaterflexibility to engage in spot markettransactions. Applicants will be able toobtain export licenses more quickly,since they will not have to wait untilthey have a firm contract to submit theirapplications. They also will haveadditional time in which to obtain proofof a contract, since they are onlyrequired to submit such proof to CBTCat some point prior to the time of export.

To encourage applicants to apply fora validated license only when they havea real opportunity to make an exportsale, this final rule requires CBTC toconsider the following factors whendetermining what action should betaken on individual applications:

(1) The number of validated licensesto export California heavy crude oil thathave been issued to the applicant or itsaffiliates during the current calendaryear;

(2) The number of applicationspending in CBTC that have beensubmitted by applicants who have notbeen issued validated licenses to export

California heavy crude oil during thecurrent calendar year; and,

(3) The percentage of California heavycrude oil authorized under exportlicenses previously issued to theapplicant that has actually beenexported by the applicant.

Another significant change indocumentation requirements involvesthe affidavit requirement contained in§ 777.6(d)(1)(xii) of the proposed rule.This requirement has been replaced inthe final rule by a certificationrequirement, ie., the applicant isrequired to certify that: (1) thecommodity has a gravity of 20.0 degreesAPI or lower; (2) the commodity isproduced in the state of California; (3)the commodity is not produced orderived from a U.S. Naval PetroleumReserve; and (4) the commodity is notproduced from the submerged lands ofthe U.S. Outer Continental Shelf.

The Department decided to retain thefirst-come, first-served, mechanism thatwas proposed in the March 24, 1994,rule because it provides a greater degreeof flexibility and administrativesimplicity than the prorationing andpre-qualification licensing alternativesthat also were described in the proposedrule. Under the first-come, first-servedlicensing regime adopted in this finalrule, CBTC will accept only oneapplication per month from eachcompany and its affiliates (regardless of'whether or not applications from non-affiliated companies are pending) for atotal quantity not to exceed 25 percent(2.28 million barrels) of the annual(9.125 million barrels) authorizedvolume of California heavy crude oil.CBTC will issue licenses in the order inwhich it receives applications, with alllicenses having the same validityperiod, i.e., 90 calendar days. TheDepartment considered establishing alonger validity period, but felt that the90-day term provided the bestcompromise between the needs of spotmarket applicants and applicantsanticipating larger volume transactionscovering a longer term. Since licenseesare permitted to wait until immediatelyprior to making shipments under theirlicenses before providing CBTC withdocumentation showing proof of titleand a contract to export, the Departmentfelt that the 90-day license term wasnecessary to ensure that no applicantwould tie up large volumes of Californiaheavy crude oil for a significant periodof time (e.g., for six months to a year),without having received a firm contractoffer, thereby denying commercialopportunities to other applicants.

This final rule also implements theprovisions of the proposed ruleconcerning: (1) volumes that have not

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15672 Federal Register / Vol. 60, No. 58 / Monday, March 27, 1995 / Rules and Regulations

been licensed for export and (2) licensedvolumes that have not been exportedprior to the expiration date of thelicense. CBTC will carry forward anyportion of the 25,000 barrel per dayquota that has not been licensed andwill return to the available authorizedquota any portion that has beenlicensed, but not shipped, within the90-day validity period of the license,except that these volumes will not becarried over more than 30 days into anew calendar year. This approach willensure that the total volume availablefor export in any one year does notsignificantly exceed the annual (9.125million barrels) authorized volume ofCalifornia heavy crude oil. If marketconditions dictate that an adjustmentshould be made in the annualauthorized volume, the Secretary ofEnergy is authorized to recommend thatthe Secretary of Commerce make thenecessary adjustment.

Consistent with the March 24, 1994,proposed rule, this final rule allowslicensees to combine authorizedquantities into one or more shipments,provided that the validity period ofnone of the affected licenses hasexpired. In addition, this rule retains theshipping tolerances set forth in theproposed rule, i.e., a 10-percenttolerance on the unshipped balance(based on the number of barrelsauthorized on the license) and a 25-percent tolerance on the total dollarvalue of the license. This final rule alsoprohibits licensees from transferringtheir licenses to other parties withoutprior written authorization from CBTC,in accordance with § 772.13.

The Department considered the effecton the environment of exports ofCalifornia heavy crude oil in its 1989"Report to Congress on U.S. Crude OilExports" which recommended theliberalization of export restrictionsresulting in the 1992 Presidentialdetermination. The Department alsoconducted an assessment in connectionwith the approval of an export licenseapplication during 1991. In both cases,the Department determined that theexport of California heavy crude wouldnot have a significant impact on theenvironment.

The Department completed anassessment of the environmental affectsof the export of California crude oil inconnection with the present rulemaking.The assessment confirmed the previousfindings that the export would not havea significant impact on the environment.On October 12, 1994, the NationalOceanic and AtmosphericAdministration (NOAA) approved theassessment, including the conclusionthat exports of California heavy crude

oil will not have a significant impact onthe human environment in accordancewith the Council on EnvironmentalQuality's regulations implementing theNational Environmental Protection Act.The environmental assessment isavailable for public inspection in RoomH-4513.


1. This rule was determined to besignificant for the purposes of ExecutiveOrder 12866.

2. This rule contains a collection ofinformation subject to the requirementsof the Paperwork Reduction Act of 1980(44 U.S.C. 3501 et seq.). The publicreporting burden for this collection ofinformation is estimated to average 12hours per response, including the timerequired for reviewing instructions,searching and maintaining the necessarydata, and completing and reviewing thecollection of information. Sendcomments regarding this burden to:Bernard Kritzer, Manager, Short SupplyProgram, Office of Chemical andBiological Controls and TreatyCompliance, Room 2096, U.S.Department of Commerce, 14th Streetand Pennsylvania Avenue, N.W.,Washington, DC 20230; and to theOffice of Information and RegulatoryAffairs, Office of Management andBudget, Washington, D.C. 20503 (ATTN:Paperwork Reduction Project-0694-0027).


4. A noticelof proposed rulemakingand an opportunity for public commentwere not required for this rulemaking bysection 13(a) of the ExportAdministration Act of 1979, as amended(50 U.S.C.A. app. 2401-2420 (1991,Supp. 1993), and Pub:L. No. 103-277,July 5, 1994). Although the ExportAdministration Act expired on August20, 1994, the President invoked theInternational Emergency EconomicPowers Act and determined that, to theextent permitted by law, the provisionsof the Export Administration Act shallbe carried out under Executive Order12924 of August 19, 1994, so as tocontinue in full force and effect andamend, as necessary, the export controlsystem heretofore maintained by theExport Administration Regulations andAct. As such, under section,3(a) of theRegulatory Flexibility Act (5 U.S.C.603(a) and 604(a)) no initial or finalRegulatory Flexibility Analysis has beenor will be prepared.

List of Subjects in 15 CFR Part 777Administrative practice and

procedure, Exports, Forest and forestproducts, Petroleum, Reporting andrecordkeeping requirements.

Accordingly, Part 777 of the ExportAdministration Regulations (15 CFRParts 730-799) is amended as follows:

1. The authority citation for 15 CFRPart 777 continues to read as follows:

Authority: Pub. 90-351, 82 Stat. 197 (18U.S.C. 2510 et seq.), as amended; sec. 101,Pub. L. 93-153, 87 Stat. 576 (30 U.S.C. 185),as amended; sec. 103, Pub. L. 94-163, 89Stat. 877 (42 U.S.C. 6212), as amended; secs.201 and 201(11)(e), Pub. L. 94-258, 90 Stat.309 (10 U.S.C. 7420 and 7430(e)), asamended; Pub. L. 95-223, 91 Stat 1626 (50U.S.C. 1701 et seq.); Pub. L. 95-242, 92 Stat.120 (22 U.S.C. 3201 et seq. and 42 U.S.C.2139a); sec. 208, Pub. L. 95-372, 92 Stat. 668(43 U.S.C. 1354); Pub. L. 96-72, 93 Stat. 503(50 U.S.C. App. 2401 et seq.), as amended;E.O. 11912 of April 13, 1976 (41 FR 15825,April 15, 1976); E.O. 12002 of July 7, 1977(42 FR 35623, July 7, 1977), as amended; E.O.12058 of May 11, 1978 (43 FR 20947, May16, 1978); E.O. 12214 of May 2, 1980 (45 FR29783, May 6, 1980); E.O. 12730 ofSeptember 30, 1990 (55 FR 40373, October 2,1990), as continued by Notice of September25, 1992 (57 FR 44649, September 28, 1992);E.O. 12735 of November 16, 1990 (55 FR48587, November 20, 1990), as continued byNotice of November 12, 1993 (58 FR 60361,November 15, 1993), and E.O. 12924 ofAugust 19, 1994 (59 FR 43437, August 23,1994).

PART 777-[AMENDED]

2, Section 777.6 is amended byadding a new paragraph (d)(1)(xii) anda new paragraph (k) to read as follows:

§777.6 Petroleum and petroleumproducts.* * * *

(d) * * *(1) * * *

(xii) Exports of certain Californiacrude oil. California heavy crude oilmay be exported under the followingconditions:

(A) The applicant certifies that:(1) The commodity has a gravity of

20.0 degrees API or lower;(2) The-commodity is produced in the

state of California, including itssubmerged state lands;

(3) The commodity is not produced orderived from a U.S. Naval PetroleumReserve;

(4) The commodity is not producedfrom the submerged lands of the U.S.Outer Continental Shelf;

(B) All aspects of the transactioncomply with the provisions ofparagraph (k) of this section.* * * * *

(k) Exports of certain California crudeoil pursuant to § 777.6(d)(1)(xii). The


export of California heavy crude oilhaving a gravity of 20.0 degrees API orlower, at an average volume not toexceed 25 MB/D, will be authorized asfollows.

(1) Applicants must submit theirapplications on Form BXA-622P to thefollowing address: Office of ExporterServices, ATTN: Short SupplyProgram-Petroleum, Bureau of ExportAdministration, U.S. Department ofCommerce, P.O. Box 273, Washington,DC 20044.

(2) The quantity stated on eachapplication must be the total number ofbarrels proposed to be exported underthe license-not a per-day rate. Thisquantity must not exceed 25 percent ofthe annual authorized export quota.Potential applicants may inquire of BXAas to the amount of the annualauthorized export quota available.

(3) Each application shall beaccompanied by a certification by theapplicant that the California heavycrude oil:

(i) Has a gravity of 20.0 degrees APIor lower;

(ii) Was produced within the state ofCalifornia, including its submerged statelands;

(iii) Was not produced or derivedfrom a U.S. Naval Petroleum Reserve;and

(iv) Was not produced fromsubmerged lands of the U.S. OuterContinental Shelf.

(4) Each license application must bebased on an order, as defined by§ 772.6(a) of this subchapter and mustbe accompanied by documentaryevidence of an order as described in§ 772.6(a)(2), e.g., a letter of intent.

(5) The Office of Chemical andBiological Controls and TreatyCompliance (CBTC) will adhere to thefollowing procedures for licensingexports of California heavy crude oil:

(i) CBTC will issue individualvalidated licenses for approvedapplications in the order in which theapplications are received (date-timestamped upon receipt by CBTC), withthe total quantity authorized for any onelicense not to exceed 25 percent of theannual authorized volume of Californiaheavy crude oil.

(ii) CBTC will approve only oneapplication per month for eachcompany and its affiliates.

(iii) CBTC will consider the followingfactors (among others) whendetermining what action should betaken on individual licenseapplications:

(A) The number of validated licensesto export California heavy crude oil thathave been issued to the applicant or its

affiliates during the then-currentcalendar year;

(B) The number of applicationspending in CBTC that have beensubmitted by applicants who have notpreviously been issued validatedlicenses under this section to exportCalifornia heavy crude oil during thethen-current calendar year: and,

(C) The percentage of the total amountof California heavy crude oil authorizedunder other export licenses previouslyissued to the applicant pursuant to thissection that has actually been exportedby the applicant.

(iv) CBTC will approve applicationscontingent upon the licensee providingdocumentation meeting therequirements of both paragraphs(k)(5)(iv) (A) and (B) of this section priorto any export under the license:

(A) Documentation showing that theapplicant has or will acquire title to thequantity of barrels stated in theapplication. Such documentation shallbe either:

(1) An accepted contract or bill of salefor the quantity of barrels stated in theapplication; or

(2) A contract to purchase thequantity of barrels stated in theapplication, which may be contingentupon issuance of an export license tothe applicant.

(B) Documentation showing that theapplicant has a contract to export thequantity of barrels stated in theapplication. The contract which may becontingent upon issuance of the exportlicense to the applicant.

(v) CBTC will carry forward anyportion of the 25 MB/D quota that hasnot been licensed, except that nounallocated portions will be carriedforward more than 90 days into a newcalendar year. Applications to exportagainst any carry forward must be filedwith CBTC by January 15 of the carry-forward year.

(vi) CBTC will return to the availableauthorized export quota any portion ofthe 25 MB/D per day quota that hasbeen licensed, but not shipped, duringthe 90-day validity period of the license.

(vii) CBTC will not carry over to thenext calendar year pending applicationsfrom the previous year.

(6) License holders:(i) Have 90 calendar days from the

date the license was issued to export thequantity of California heavy crude oilauthorized on the license. Within 30days of any export under the license, theexporter must provide CBTC with acertified statement confirming the dateand quantity of California heavy crudeoil exported.

(ii) Must submit to CBTC, prior to anyexport under the license, the

documentation required by paragraph(k)(5)(iv) of this section.

(iii) May combine authorizedquantities into one or more shipments,provided that the validity period ofnone of the affected licenses hasexpired.

(iv) Are prohibited from transferringthe license to another party withoutprior written authorization from CBTCin accordance with § 772.13 of thissubchapter.

(7) CBTC will allow, pursuant to§ 786.7(c) of this subchapter, a 10-percent tolerance on the unshippedbalance based upon the volume ofbarrels it has authorized. CBTC willallow a 25-percent shipping toleranceon the total dollar value of the license.

Dated: March 22, 1995.Sue E. Eckert,Assistant Secretary for ExportAdministration.iFR Doc. 95-7525 Filed 3-24-95; 8:45 amlBILUNO CODE 3510-OT-P


COMMISSION

17 CFR Part 200

[Release No. 34-35483A]

Organization and ProgramManagement; Correction

AGENCY: Securities and ExchangeCommission.ACTION: Correction to final rule.

SUMMARY: This document contains acorrection to the final rule which waspublished on Monday, March 20, 1995(60 FR 14622). The rule updated theCommission's rules on organization andprogram management.EFFECTIVE DATE: March 27, 1995.FOR FURTHER INFORMATION CONTACT:David M. Goldenberg, Office ofRegulatory Policy, Division ofInvestment Management, (202) 942-4525.


Background .The Commission has undertaken a

comprehensive review of the rulesgoverning its organization and programmanagement. The final rule that is thesubject of this correction results fromthat review.

Need for CorrectionAs published, the final rule describes

in the section entitled "SupplementaryInformation" certain amendments that,while approved by the Commission,

15673

APPENDIX F: Alaskan North Slope Crude Oil


upon the public interest in sound environmental management and protec-tion of cultural, biological, or historic resources.This suspension shall take effect immediately and shall continue in effectfor the period in which subsection 325(a) and subsection 325(b) of tile Actwould otherwise be in effect.

You are authorized and directed to publish this memorandum in the Fed-eral Register.

WILLIAM J. CLINTONTHE WHITE HOUSE,Washington, April 26, 1996.

Memorandum of April 26, 1996

Suspension of Subsection 119(a) of the Department of theInterior and Related Agencies Appropriations Act, 1996,("Act") as set forth in Section 101(c) of Title I of theOmnibus Consolidated Rescissions and Appropriations Actof 1996 (H.R. 3019) Regarding the Mojave National Preserve

Memorandum for the Secretary of the InteriorBy the authority vested in me by subsection 119(b) of the Department ofthe Interior and Related Agencies Appropriations Act, 1996, ("Act") as setforth in section 101(c) of title I of the Omnibus Consolidated Rescissionsand Appropriations Act of 1996 (H.R. 3019), and section 301 of title 3,United States Code, I hereby suspend subsection 119(a) of the Act becauseI have determined that such suspension is appropriate based upon the pub-lic interest in sound environmental management, sustainable resource use,protection of national or locally-affected interests, and protection of cul-tural, biological, or historic resources.This suspension shall take effect immediately and shall continue until sub-section 119(a) expires.You are authorized and directed to report this suspension to the Congressand to publish this memorandum in the Federal Register.


Memorandum of April 28, 1996

Exports of Alaskan North Slope (ANS) Crude C ii

Memorandum for the Secretary of Commerce [and] the Secretary of EnergyPursuant to section 28(s) of the Mineral Leasing Act, as amended, 30 U.S.C.185, 1 hereby determine that exports of crude oil transported over right-of-

Other Presidential Documents

way granted pursuant to section 203 of the Trans-Alaska Pipeline Author-ization Act are in the national interest. In making this determination, I havetaken into account the conclusions of an interagency working group, whichfound that such oil exports:

-will not diminish the total quantity or quality of petroleum availableto the United States; and

-are not likely to cause sustained material oil supply shortages or sus-tained oil price increases significantly above world market levels thatwould cause sustained material adverse employment effects in the UnitedStates or that would cause substantial harm to consumers, including thoselocated in noncontiguous States and Pacific Territories.

I have also considered the interagency group's conclusions regarding poten-tial environmental impacts of lifting the ban. Based on their findings andrecommendations, I have concluded that exports of such crude oil will notpose significant risks to the environment if certain terms and conditions aremet.

Therefore, pursuant to section 28(s) of the Mineral Leasing Act I direct theSecretary of Commerce to promulgate immediately a general license, or alicense exception, authorizing exports of such crude oil, subject to appro-priate documentation requirements, and consistent with the following con-ditions:

-tankers exporting ANS exports must use the same route that they dofor shipments to Hawaii until they reach a point 300 miles due south ofCape Hinchinbrook Light and then turn toward Asian destinations. Afterreaching that point, tankers in the ANS oil trade must remain outside ofthe 200 nautical-miles Exclusive Economic Zone of the United States as de-fined in the Fisheries Conservation and Management Act (16 U.S.C. 1811).This condition also applies to tankers returning from foreign ports toValdez, Alaska. Exceptions can be made at the discretion of the vessel mas-ter only to ensure the safety of the vessel;

-that export tankers be equipped with satellite-based communicationssystems that will enable the Coast Guard independently to determine theirlocation. The Coast Guard will conduct appropriate monitoring of the tank-ers, a measure that will ensure compliance with the 200-mile condition,and help the Coast Guard respond quickly to any emergencies;

-the owner or operator of an Alaskan North Slope crude oil export tank-ship shall maintain a Critical Area Inspection Plan for each tankship in thetrade in accordance with the U.S. Coast Guard's Navigation and InspectionCircular No. 15-91 as amended, which shall include an annual internalsurvey of the vessel's cargo block tanks; and

-the owner or operator of an Alaskan North Slope crude oil export tank-ship shall adopt a mandatory program of deep water ballast exchange (i.e.,in 2,000 meters water depth). Exceptions can be made at the discretion ofthe captain only in order to ensure the safety of the vessel. Recordkeepingsubject to Coast Guard audit will be required as part of this regime.


The Secretary of Commerce is authorized and directed to inform the appro-priate committees of the Congress of this determination and to publish itin the Federal Register.


Presidential Determination No. 96-23 of April 30, 1990

Suspending Prohibitions on Certain Sales and Leases Underthe Anti-Economic Discrimination Act of 1994

Memorandum for the Secretary of StatePursuant to the authority vested in me by Section 564 of the Foreign Rela-tions Authorization Act ("the Act"), Fiscal Years 1994 and 1995, PublicLaw 103-236, as amended, I hereby:

(1) determine and certify that the following countries do rot :urrontlymaintain a policy or practice of sending letters to United Stares firms re-questing compliance with, or soliciting information regarding compliancewith, the Arab League secondary or tertiary boycott of Isrmel:

Jordan and Mauritania;(2) determine that extension of suspension of the application of Section

564(a) of the Act to the following countries until May 1, 1997, will promotethe objectives of Section 564:

Algeria, Bahrain, Bangladesh, Kuwait, Lebanon, Oman, Qatar, SaudiArabia, and the United Arab Emirates.You are authorized and directed to report this determination to the appro-priate committees of the Congress and to publish it in the Federal Register.


Presidential Determination No. 96-24 of May 9, 1996

Assistance Program for the New Independent States of theFormer Soviet Union

Memorandum for the Secretary of StatePursuant to subsection (o) under the heading "Assistance for the Now Inde-pendent States of the Former Soviet Union" in title II of the Foreign Oper-ations, Export Financing, and Related Programs Appropriations Act, 1996(Public Law 104-107) and section 301 of title 3, United States Code, I here-by determine that it is important to the national security interest of theUnited States to make available funds appropriated under that headingwithout regard to the restriction in that subsection.

Federal Register / Vol. 61, No. 106 / Friday, May 31, 1996 / Rules and Regulations

emergency regulation under DOTRegulatory Policies and Procedures (44FR 11034, February 26, 1979). If it isdetermined that this emergencyregulation otherwise would besignificant under DOT RegulatoryPolicies and Procedures, a finalregulatory evaluation will be preparedand placed in the Rules Docket. A copyof it, if filed, may be obtained from theRules Docket at the location providedunder the caption ADDRESSES.


Air transportation, Aircraft, Aviationsafety, Incorporation by reference,Safety.

Adoption of the Amendment

Accordingly, pursuant to theauthority delegated to me by theAdministrator, the Federal AviationAdministration amends part 39 of theFederal Aviation Regulations (14 CFRpart 39) as follows:

PART 39-AIRWORTHINESSDIRECTIVES

1. The authority citation for part 39continues to read as follows:

Authority: 49 USC 106 (g), 40113, 44701.

§39.13 [Amended]2. Section 39.13 is amended by

adding the following new airworthinessdirective:

96-11-14 SAAB Aircraft Ab: Amendment39 9639. Docket 96 NM 102 AD.

Applicability: Model SAAB 2000 seriesairplanes; having serial numbers 004 through039, inclusive; certificated in any category.

Note 1: This AD applies to each airplaneidentified in the preceding applicabilityprovision, regardless of whether it has beenotherwise modified, altered, or repaired inthe area subject to the requirements of thisAD. For airplanes that have been modified,altered, or repaired so that the performanceof the requirements of this AD is affected, theowner/operator must request approval for analternative method of compliance inaccordance with paragraph (f) of this AD. Therequest should include an assessment of theeffect of the modification, alteration, or repairon the unsafe condition addressed by thisAD; and, if the unsafe condition has not beeneliminated, the request should includespecific proposed actions to address it.

Compliance: Required as indicated, unlessaccomplished previously.

To prevent fatigue cracking of the lower ribof the rudder and subsequent reducedcontrollability of the airplane, accomplishthe following:

(a) Within 20 days after the effective dateof this AD: Perform a visual inspection todetect cracking of the lower rib of the rudder,in accordance with Saab Service Bulletin2000 55 005, dated February 2, 1996.

(b) If no cracking is detected: Thereafter,repeat the inspection required by paragraph

(a) of this AD at intervals not to exceed 400hours time-in-service, in accordance withSaab Service Bulletin 2000 55 005, datedFebruary 2, 1996.

(c) If any cracking is detected that is 25 mmin length or less: Prior to further flight,perform a temporary repair in accordancewith paragraph 2.C. of the AccomplishmentInstructions of Saab Service Bulletin 200055 005, dated February 2, 1996. Thereafter,repeat the inspections required by paragraph(a) of this AD at intervals not to exceed 7days.

(d) If any cracking is detected that is morethan 25 mm in length: Prior to further flight,repair it in accordance with a methodapproved by the Manager, StandardizationBranch, ANM 113, FAA, Transport AirplaneDirectorate.

(e) Modification of the lower rib of therudder (Modification No. 5736), inaccordance with Saab Service Bulletin 200055 006, dated April 23, 1996, constitutesterminating action for the repetitiveinspection requirements of this AD.

(f) An alternative method of compliance oradjustment of the compliance time thatprovides an acceptable level of safety may beused if approved by the Manager,Standardization Branch, ANM 113.Operators shall submit their requests throughan appropriate FAA Principal MaintenanceInspector, who may add comments and thensend it to the Manager, StandardizationBranch, ANM 113.

Note 2: Information concerning theexistence of approved alternative methods ofcompliance with this AD, if any, may beobtained from the Standardization Branch,ANM 113.

(g) Special flight permits may be issued inaccordance with sections 21.197 and 21.199of the Federal Aviation Regulations (14 CFR21.197 and 21.199) to operate the airplane toa location where the requirements of this ADcan be accomplished.

(h) The inspections and temporary repairshall be done in accordance with SaabService Bulletin 2000 55 005, datedFebruary 2, 1996. This incorporation byreference was approved by the Director of theFederal Register in accordance with 5 U.S.C.552(a) and 1 CFR part 51. Copies may beobtained from SAAB Aircraft AB, SAABAircraft Product Support, S 581.88,Link6ping, Sweden. Copies may be inspectedat the FAA, Transport Airplane Directorate,1601 Lind Avenue, SW., Renton,Washington; or at the Office of the FederalRegister, 800 North Capitol Street, NW., suite700, Washington, DC.

(i) This amendment becomes effective onJune 17, 1996.

Issued in Renton, Washington, on May 22,1996.

John J. Hickey,

ActingManager, Transport A irplaneDirectorate, Aircraft Certification Service.

[FR Doc. 96 13496 Filed 5 30 96; 8:45 am]

BILLING CODE 4910-13-P



15 CFR Parts 754, 758, and 762

[Docket No.960523147-01]

RIN 0694-AB44

Exports of Alaskan North Slope CrudeOil; Establishment of LicenseException TAPS

AGENCY: Bureau of ExportAdministration, Commerce

ACTION: Final rule.

SUMMARY: The Bureau of ExportAdministration is amending the shortsupply provisions of the ExportAdministration Regulations to modifythe restrictions on exports of AlaskanNorth Slope crude oil and establishLicense Exception TAPS authorizingsuch exports, with certain conditions.License Exception TAPS is based on: 1)Public Law 104-58, which allows forthe export of crude oil transported bypipeline over right-of-way grantedpursuant to section 203 of the Trans-Alaska Pipeline Authorization Act(TAPS); 2) the President's April 28,1996 determination that exports are inthe national interest; and 3) thePresident's direction to the Secretary ofCommerce to issue a License Exceptionwith conditions for export of TAPScrude oil.

EFFECTIVE DATE: May 28, 1996.

FOR FURTHER INFORMATION CONTACT:Bernard Kritzer, Office of Chemical andBiological Controls and TreatyCompliance, Bureau of ExportAdministration, Department ofCommerce, Telephone: (202) 482-0894.


Background

Section 7(d) of the ExportAdministration Act of 1979, (50 U.S.C.app. 2406) restricts exports of crude oiltransported over right-of-way grantedpursuant to section 203 of the Trans-Alaska Pipeline Authorization Act (43U.S.C. 1652), with certain exceptions,unless the President makes certainfindings, recommends exports to theCongress on the basis of those findings,and the Congress then agrees to therecommendation by joint resolutionenacted into law. Although the ExportAdministration Act (EAA) expired onAugust 20, 1994, the President invokedthe International Emergency EconomicPowers Act and continued in effect, tothe extent permitted by law, theprovisions of the EAA and the EAR inExecutive Order 12924 of August 19,

27255

27256 Federal Register / Vol. 61, No. 106 / Friday, May 31, 1996 / Rules and Regulations

1994, and notice of August 15, 1995 (60FR 42767).

On November 28, 1995, the Presidentsigned into law Public Law 104-58,which created a new section 28(s) of theMineral Leasing Act (30 U.S.C. 185).Public Law 104-58 allows exports of oiltransported over right-of-way grantedpursuant to section 203 of the Trans-Alaska Pipeline Authorization Act (43U.S.C. 1652), "notwithstanding anyprovision of this Act or any otherprovision of law (including anyregulation)," unless the President findsthat such exports are not in the nationalinterest.

To address the economic andenvironmental issues identified inPublic Law 104-58, the NationalEconomic Council and the Council onEnvironmental Quality working withthe Department of Commerce's Bureauof Export Administration, coordinatedan intensive interagency review of theeffects of lifting the export ban on oiltransported over right-of-way grantedpursuant to section 203 of the Trans-Alaska Pipeline Authorization Act(TAPS oil). After extensive publichearings, the review of publiccomments, and analytical evaluation,the interagency working group foundthat the exports are not likely to pose asignificant impact to the economy or theenvironment.

On April 28, 1996, the Presidentdetermined that, subject to certainconditions described below, exports ofcrude oil transported over right-of-waygranted pursuant to section 203 of theTrans-Alaska Pipeline AuthorizationAct (TAPS) are in the national interest.The President found that such exports:

(1) Will not diminish the totalquantity or quality of petroleumavailable to the United States;

(2) Will not pose significant risks tothe environment with the imposition ofa series of measures to further ensurethe safety of the environment; and

(3) Are not likely to cause sustainedmaterial oil supply shortages orsustained oil price increases aboveworld market levels that would causesustained material adverse employmenteffects in the United States or thatwould cause substantial harm toconsumers, including those located innoncontiguous States and Pacificterritories.

The President directed the Secretaryof Commerce to issue a LicenseException, authorizing exports of TAPSoil, subject to certain conditionsdesigned to preserve the environment.

This final rule amends part 754 of theExport Administration Regulations(EAR) by establishing a new LicenseException TAPS. License Exception

TAPS authorizes exports of oiltransported over right-of-way grantedpursuant to section 203 of the Trans-Alaska Pipeline Authorization Act (42U.S.C. 1652) provided that thetransaction meets the followingconditions:

(1) The TAPS oil is transported by avessel documented under the laws ofthe United States and owned by acitizen of the United States (inaccordance with section 2 of theShipping Act, 1916 (46 U.S.C. app.802));

(2) All tankers involved in the TAPSoil export trade use the same route thatthey do for shipments to Hawaii untilthey reach a point 300 miles due southof Cape Hinchinbrook Light and thenturn toward Asian destinations. Afterreaching that point, tankers in the TAPSoil export trade must remain outside ofthe 200 nautical mile ExclusiveEconomic Zone, as defined in 16 U.S.C.1802(6). Tankers returning from foreignports to Valdez, Alaska must abide bythe same restrictions, in reverse, ontheir return route. This condition shallnot be construed to limit any statutory,treaty or Common Law rights and dutiesimposed upon and enjoyed by tankersin the TAPS oil export trade, including,but not limited to,force majeure andmaritime search and rescue rules;

(3) The owner or operator of a tankerexporting TAPS oil shall:

(a) Adopt a mandatory program ofdeep water ballast exchange (i.e., at least2,000 meters water depth). Exceptionscan be made at the discretion of thecaptain only in order to ensure thesafety of the vessel and crew. Specifiedrecords shall be maintained and madeavailable for audit by governmentofficials.

(b) Be equipped with satellite-basedcommunications systems that willenable the Coast Guard independentlyto determine the tanker's location;

(c) Maintain a Critical Area InspectionPlan for each tanker in the TAPS oilexport trade in accordance with the U.S.Coast Guard's Navigation andInspection Circular No. 15-91 asamended, which shall include anannual internal survey of the vessel'scargo block tanks; and

(4) The exporter files with BXA aShipper's Export Declaration coveringthe export not later than 21 days afterthe export has occurred.

This final rule also makes otherconforming changes in the short supplyprovisions of the EAR by revising part754 concerning TAPS oil exports, theexport clearance provisions of part 758regarding the requirement to submit theShippers' Export Declaration (SED) tothe Bureau of Export Administration,

and the recordkeeping requirements ofpart 762.

The Export AdministrationRegulations (EAR) have been totallyamended by an interim rule publishedon March 25, 1996 (61 FR 12714), whichprovides for a transition period withinwhich exporters can take advantage ofboth the old rules and the new rulesuntil November 1, 1996. This rulepermits exports of TAPS oil pursuant toa License Exception. Exporters canmake exports of TAPS oil under thisexception as of the effective date of thisrule. Accordingly, the old rule is notbeing revised.


1. This final rule has been determinedto be significant for the purpose ofExecutive Order 12866.

2. Notwithstanding any otherprovision of the law, no person isrequired to respond to, nor shall anyperson be subject to a penalty for failureto comply with a collection ofinformation, subject to the requirementsof the Paperwork Reduction Act, unlessthat collection of information displays acurrently valid Office of Managementand Budget Control Number. This rulecontains a collection of informationsubject to the Paperwork Reduction Act,which is cleared by the Office ofManagement and Budget under existingOMB Control Number 0694-0027. Thepublic reporting burdens for the newcollections of information are estimatedto range between 5 and 10 minutes forthe Shipper's Export Declarationrequirement, and 30 minutes per voyagefor the Ballast Water Exchangecollection. These estimates include thetime for reviewing instructions,searching existing data sources,gathering and maintaining the dataneeded, and completing and reviewingthe collections of information. Sendcomments regarding these burdenestimates or any other aspect of thesecollections of information, includingsuggestions for reducing the burden, toBernard Kritzer, Office of Chemical andBiological Controls and TreatyCompliance, Bureau of ExportAdministration, Department ofCommerce, Room 2705, 14th Street andPennsylvania Avenue, N.W.,Washington, D.C. 20230.


4. This rule is being issued withoutnotice of proposed rulemaking andopportunity for comment becausePublic Law 104-58: (1) provides that theadministrative action under this Act is

Federal Register / Vol. 61, No. 106 / Friday, May 31, 1996 / Rules and Regulations

not subject to sections 551 and 553-559of the Administrative Procedures Act (5U.S.C. 551, 553-559); and (2) requiresthese regulations to be issued within 30days of the President's national interestdetermination.

5. Under 8 U.S.C. 808(2), there is goodcause that notice and public procedurethereon are unnecessary and contrary tothe public interest. Notice and publicprocedure are unnecessary becausePublic Law 104-58 exempts rulemakingunder this Act from the notice andcomment requirements of theAdministrative Procedures Act andrequires regulations to be issued within30 days of the President's nationalinterest determination. Notice andpublic procedure are contrary to thepublic interest because they woulddelay allowing the exports that thePresident, as authorized by Public Law104-58, has determined are in thenational interest.

List of Subjects

15 CFR Part 754

Exports, Foreign trade, Forests andforest products, Petroleum, Reportingand recordkeeping requirements.

15 CFR Part 758

Administrative practice andprocedure, Exports, Foreign trade,Reporting and recordkeepingrequirements.

15 CFR Part 762

Administrative practice andprocedure, Business and industry,Confidential business information,Exports, Foreign trade, Reporting andrecordkeeping requirements.


Authority: 50 U.S.C. app. 2401 et seq.; 50U.S.C. 1701 et seq.; 10 U.S.C. 7420; 10 U.S.C.7430(e); Sec. 201, Pub. L. 104 58, 109 Stat.557 (30 U.S.C. 185(s)); 30 U.S.C. 185(u); 42U.S.C. 6212; 43 U.S.C. 1354; 46 U.S.C. app.466c; E.O. 12924, 59 FR 43437, 3 CFR, 1994Comp., p. 917; Notice of August 15, 1995 (60FR 42767, August 17, 1995).


Authority: 50 U.S.C. app. 2401 et seq.; 50U.S.C. 1701 et seq.; E.O. 12924, 59 FR 43437,3 CFR, 1994 Comp., p. 917; Notice of August15, 1995 (60 FR 42767, August 17, 1995).


Authority: 50 U.S.C. app. 2401 et seq.; 50U.S.C. 1701 et seq.; E.O. 12924, 59 FR 43437,3 CFR, 1994 Comp., p. 917; Notice of August15, 1995 (60 FR 42767, August 17, 1995).

PART 754-[AMENDED]

4. In § 754.2 the following changes aremade:

a. in paragraph (a), the phrase"Reserves paragraph (i) of this sectionfor a License Exception for certainshipments of samples." is revised toread "Reserves, paragraph (i) of thissection for a License Exception forcertain shipments of samples, andparagraph (J) of this section for a LicenseException for exports of oil transportedby pipeline over right-of-way grantedpursuant to section 203 of the Trans-Alaska Pipeline Authorization Act (43U.S.C. 1652).".

b. paragraph (c)(1)(i) is amended byadding the following sentence at theend: "The President made adetermination on April 28, 1996."; and

c. a new paragraph (J) is added to readas follows:

§754.2 Crude oil.

(j) License Exception for exports ofTAPS Crude Oil. (1) License ExceptionTAPS may be used to export oiltransported over right-of-way grantedpursuant to section 203 of the Trans-Alaska Pipeline Authorization Act(TAPS), provided the followingconditions are met:

(i) The TAPS oil is transported by avessel documented under the laws ofthe United States and owned by acitizen of the United States (inaccordance with section 2 of theShipping Act, 1916 (46 U.S.C. app.802));

(ii) All tankers involved in the TAPSexport trade use the same route thatthey do for shipments to Hawaii untilthey reach a point 300 miles due southof Cape Hinchinbrook Light and thenturn toward Asian destinations. Afterreaching that point, tankers in the TAPSoil export trade must remain outside ofthe 200 nautical mile ExclusiveEconomic Zone, as defined in 16 U.S.C.1802(6). Tankers returning from foreignports to Valdez, Alaska must abide bythe same restrictions, in reverse, ontheir return route. This condition shallnot be construed to limit any statutory,treaty or Common Law rights and dutiesimposed upon and enjoyed by tankersin the TAPS oil export trade, including,but not limited to,force majeure andmaritime search and rescue rules; and

(iii) The owner or operator of a tankerexporting TAPS oil shall:

(A) Adopt a mandatory program ofdeep water ballast exchange (i.e., at least2,000 meters water depth). Exceptionscan be made at the discretion of thecaptain only in order to ensure thesafety of the vessel and crew. Records

must be maintained in accordance withparagraph (j)(3) of this section.

(B) Be equipped with satellite-basedcommunications systems that willenable the Coast Guard independentlyto determine the tanker's location; and

(C) Maintain a Critical AreaInspection Plan for each tanker in theTAPS oil export trade in accordancewith the U.S. Coast Guard's Navigationand Inspection Circular No. 15-91 asamended, which shall include anannual internal survey of the vessel'scargo block tanks.

(2) Shipper's Export Declaration. Inaddition to the requirements ofparagraph 0)(1) of this section, for eachexport under License Exceptions TAPS,the exporter must file with BXA aShipper's Export Declaration (SED)covering the export not later than 21days after the export has occurred. TheSED shall be sent to the followingaddress: Manager, Short SupplyProgram, Department of Commerce,Office of Chemical and BiologicalControls and Treaty Compliance,Bureau of Export Administration, Room2075, Washington, D.C. 20230.

(3) Recordkeeping requirements fordeep water ballast exchange. (i) Asrequired by paragraph (j)(1)(iii)(A) ofthis section, the master of each vesselcarrying TAPS oil under the provisionsof this section shall keep records thatinclude the following information, andprovide such information to the Captainof the Port (COTP), U.S. Coast Guard,upon request:

(A) The vessel's name, port of registry,and official number or call sign;

(B) The name of the vessel's owner(s);(C) Whether ballast water is being

carried;(D) The original location and salinity,

if known, of ballast water taken on,before an exchange;

(E) The location, date, and time of anyballast water exchange; and

(F) The signature of the masterattesting to the accuracy of theinformation provided and certifyingcompliance with the requirements ofthis paragraph.

(ii) The COTP or other appropriatefederal agency representatives may takesamples of ballast water to assess thecompliance with, and the effectivenessof, the requirements of paragraph(j)(3)(i) of this section.

5. Section 758.3 is amended byrevising paragraph (d)(2) that wasformerly reserved to read as follows:

§758.3 Shipper's Export Declaration(SED).

(d)***(2) You are required under the

provisions of § 754.20)(2) of the EAR.

27257

27258 Federal Register / Vol. 61, No. 106 / Friday, May 31, 1996 / Rules and Regulations

PART 762-[AMENDED]

6. Section 762.2 is amended by:a. Redesignating paragraphs (b)(26)

through (b)(34) as (b)(27) through (b)(35)respectively; and

b. adding a new paragraph (b)(26).

§762.2 Records to be retained.* * * * *

(b) **(26) Section 754.20)(3),

Recordkeeping requirements for deepwater ballast exchange.* * * * *

Dated: May 28, 1996.lain S. Baird,Deputy Assistant SecretaryforExportAdministration.

[FR Doc. 96 13708 Filed 5 28 96; 2:33 pm]BILLING CODE 3510-DT-P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 8673]

RIN 1545-AM01

Enterprise Zone Facility Bonds

AGENCY: Internal Revenue Service (IRS),Treasury.ACTION: Final regulations.

SUMMARY: This document contains finalregulations relating to enterprise zonefacility bonds issued by State and localgovernments. These regulations reflectchanges to the law made by theOmnibus Budget Reconciliation Act of1993. These regulations affect issuers ofenterprise zone facility bonds.EFFECTIVE DATE: These regulations areeffective May 31, 1996.

For dates of applicability of theseregulations to enterprise zone facilitybond issues, see § 1.1394-1(q) of theseregulations.FOR FURTHER INFORMATION CONTACT:Loretta J. Finger, (202) 622-3980 (not atoll-free number).


Background

On December 30, 1994, proposedregulations (FI-72-88) were publishedin the Federal Register (59 FR 67658) toprovide guidance under sections 141(relating to private activity bonds and toqualified bonds), 145 (relating toqualified 501(c)(3) bonds), 148 (relatingto arbitrage), 150 (relating to change ofuse), and 1394 (relating to enterprisezone facility bonds). On June 8, 1995,the IRS held a public hearing on the

proposed regulations. Writtencomments responding to the proposedregulations were received.

This Treasury decision addresses theissues relating to enterprise zone facilitybonds. Later guidance will be publishedrelating to sections 141, 145, 148, and150. After consideration of all thecomments, the proposed regulationsunder section 1394 (relating toenterprise zone facility bonds) areadopted as revised by this Treasurydecision. The principal revisions to theproposed regulations under section1394 are discussed below.

Explanation of Provisions

Section 1394 applies to bonds issuedto provide enterprise zone facilities inboth empowerment zones andenterprise communities (zones).

A. Period of Compliance

The proposed regulations in generalrequire compliance with therequirements applicable to enterprisezone facility bonds throughout the termof the enterprise zone facility bonds.The proposed regulations provide twoexceptions to this general rule: (i) Abusiness that is first established inconnection with the issuance ofenterprise zone facility bonds does notneed to meet the requirements of anenterprise zone business and enterprisezone property until the "testing date,"

which is the later of one year after theissue date or one year after the date onwhich the financed property is placedin service, and (ii) the issuer andprincipal user of the facility arepermitted a one-year period to curenoncompliance.

The final regulations modify thegeneral rule to require compliance withthe requirements applicable toenterprise zone facility bondsthroughout the greater of (i) theremainder of the period during whichthe zone designation is in effect undersection 1391 (zone designation period),and (ii) the period that ends on theweighted average maturity date of theenterprise zone facility bonds. The finalregulations also provide that, in general,compliance with the requirementsapplicable to enterprise zone facilitybonds is not required after the date onwhich the last of the enterprise zonefacility bonds of the issue cease to beoutstanding.

1. Start of Compliance Period

Commentators requested that thetesting date provisions be extended toall businesses, not just start-upbusinesses. Commentators alsosuggested lengthening the start-upperiod. The final regulations follow the

recommendation to expand the testingdate provisions to all issuers andprincipal users of property financedwith enterprise zone facility bonds if theissuer and the principal user reasonablyexpect that the requirements will be metby the testing date and proceed withdue diligence to comply with therequirements. The start-up period isincreased to the later of 18 months afterthe issue date or 18 months after thedate on which the financed property isplaced in service.

2. Compliance Period for CertainRequirements

Commentators suggested thatcompliance with the requirements foran enterprise zone business should bebased only on reasonable expectationson the issue date. Commentatorssuggested that, alternatively, therequired compliance period should bereduced to either (i) three years (similarto the test period for qualified smallissue manufacturing bonds), or (ii) theremainder of the zone designationperiod.

Issuers and principal users should berequired to meet the requirementsapplicable to enterprise zone facilitybonds for a meaningful period of timein order to further the goals of economicdevelopment in the zones. Therefore, forpurposes of meeting the requirementsapplicable to enterprise zone facilitybonds, the final regulations in generalrequire issuers and principal users offinanced property to meet therequirements throughout the greater of(i) the remainder of the zone designationperiod, and (ii) the period that ends onthe weighted average maturity date ofthe enterprise zone facility bonds.

While compliance is generally notrequired after the enterprise zonefacility bonds are retired, the finalregulations do require issuers andprincipal users to meet the requirementsof an enterprise zone business andenterprise zone property for a minimumcompliance period of at least three yearsafter the initial testing date. The finalregulations permit the issuer to identifyan alternative initial testing date. Thisalternative initial testing date is a dateafter the issue date of the enterprisezone facility bonds and prior to theinitial testing date that would have beenotherwise determined under the finalregulations.

Principal users are subject to thechange in use penalty of section 1394(e)throughout the greater of (i) theremainder of the zone designationperiod, and (ii) the period that ends onthe weighted average maturity date ofthe enterprise zone facility bonds.